Rosenfield v. Frank

DANIEL ROSENFIELD, Plaintiff, v. THOMAS P. FRANK, et al., Defendants.

CIVIL ACTION NO. 4:18-cv-00568

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF PENNSYLVANIA

June 4, 2019

(SAPORITO, M.J.)

MEMORANDUM

This is a diversity action brought by Daniel Rosenfield, a citizen of New York, against Thomas P. Frank, a citizen of Pennsylvania, and Numiscent, LLC, a Pennsylvania limited liability company.¹ Over the course of several years, Rosenfield entered into a series of transactions with the defendants in which he purchased more than sixty "Lincoln" pennies minted between 1909 and 1931. Rosenfield allegedly did so with the understanding that these were "rare, high-end, uncirculated, full 'red' Lincoln pennies." He now brings this action for damages, alleging that, based on the analysis by professional grading services, forty-six of the coins are actually worthless because they had been altered or improperlycleaned prior to his acquisition of them. He asserts state law claims for negligent misrepresentation, fraud, and unfair trade practices. For relief, he seeks more than $200,000 in compensatory damages, plus punitive damages, treble damages under the state unfair trade practices statutes, interest, costs, and attorney fees.

The defendants have answered the complaint and raised a counterclaim against the plaintiff, asserting a state law claim for abuse of process. For relief, the defendants seek unspecified damages, costs, and attorney fees. The plaintiff has filed an answer to the counterclaim.

The defendants have filed a motion for judgment on the pleadings under Rule 12(c), which is fully briefed and ripe for disposition.² (Doc. 16; see also Doc. 21; Doc. 22; Doc. 23.) For the reasons set forth below, the defendants' motion will be granted in part and denied in part, and thecomplaint will be dismissed, with leave to amend.

I. BACKGROUND

The plaintiff, Daniel Rosenfield, is a collector of valuable, high-end, uncirculated United States "Lincoln" pennies, minted between 1909 and 1931. In particular, he collected Lincoln pennies with a "red" color designation (commonly denoted in records as "RD"), which are significantly more valuable than Lincoln pennies with a "red brown" color designation (commonly denoted as "RB").

Over the course of several years,³ Rosenfield entered into a series of transactions⁴ with the defendants—Thomas P. Frank and Numiscent, LLC—and acquired at least 66 Lincoln pennies⁵ from the defendants for a total purchase price of $244,111. Rosenfield alleges that, at all times, he made it clear and expressed that he was only interested in buying therare, high-end, uncirculated full "red" or "RD" Lincoln pennies. He further alleges that, at all times, defendant Frank expressly represented to him that the defendants were only selling him rare, high-end, uncirculated, full "red" or "RD" Lincoln pennies. Specifically, Rosenfield alleges that Frank made multiple express representations by email claiming that these coins were in fact rare, valuable, uncirculated, full "red" or "RD" or "gem red" Lincoln pennies.⁶ Rosefield alleges that these representations were a critical factor in his valuation of these coins, that the representations were intended to induce him to purchase the coins, and that they did in fact induce him to purchase the coins in justifiable reliance on Frank's representations.

In 2016, following a cancer diagnosis, the plaintiff decided to have his Lincoln penny collection professionally graded. He sent an initial batch of eight coins to a nationally renowned vendor, Professional Coin Grading Service ("PCGS"). On March 28, 2016, PCGS reported back to Rosenfield that three of the eight coins could not be graded due to"questionable color"—that is, their color was not the genuine, original color of the coins because they had been acid washed, chemically altered, polished, improperly cleaned, or doctored in some way to make them appear (falsely) to be full "red" Lincoln pennies. Surprised by this report, Rosenfield then sent 53 more coins to PCGS for evaluation. Out of a total of 61 coins evaluated, PCGS determined that 46 coins could not be graded because they had "questionable color," meaning they had been altered or improperly cleaned. Rosenfield requested that PCGS re-evaluate these claims, but the results were the same.

Rosenfield sought a second opinion, sending 15 of the coins to be retested by another nationally renowned vendor, Numismatic Guaranty Corporation ("NGC"). Upon evaluation, NGC determined that all 15 of the coins submitted were either "improperly cleaned" or had "altered color."

Rosenfield alleges that he paid the defendants $217,181 for the 46 ungradable coins, but these 46 coins are actually worthless.

In his complaint, Rosenfield asserts three alternative state law causes of action. In Count I, he asserts a common law tort claim of negligent misrepresentation, seeking compensatory damages of $217,181plus interest and costs of suit. In Count II, he asserts a common law tort claim of fraud, seeking compensatory damages of $217,181 plus punitive damages, attorney fees, interest, and costs of suit. In Count III, he asserts a statutory claim under the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 P.S. § 201-1 et seq., seeking compensatory damages of $217,181 plus treble damages, attorney fees, interest, and costs of suit.

In answering the complaint, the defendants have raised a counterclaim, asserting a common law tort claim of abuse of process, seeking unliquidated compensatory damages, plus punitive damages, attorney fees, and costs of suit.

The defendants have filed a motion for judgment on the pleadings, together with a brief in support, seeking dismissal of the plaintiff's negligent misrepresentation, fraud, and unfair trade practices claims, and judgment in favor of the defendants on their abuse of process counterclaim. The plaintiff has filed a brief in opposition, but he has not moved for dismissal of the defendants' counterclaim. The defendants have filed a reply brief.

II. LEGAL STANDARD

The defendant has answered the complaint and moved for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure. Rule 12(c) provides that "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). "Under Rule 12(c), a court must accept all factual averments as true and draw all reasonable inferences in favor of the non-moving party." U.S. Fid. & Guar. Co. v. Tierney Assoc., Inc., 213 F. Supp. 2d 468, 469 (M.D. Pa. 2002) (citing Soc'y Hill Civic Ass'n v. Harris, 632 F.2d 1045, 1054 (3d Cir. 1980)); see also Westport Ins. Corp. v. Black, Davis & Shue Agency, Inc., 513 F. Supp. 2d 157, 163 (M.D. Pa. 2007) ("When deciding a motion for judgment on the pleadings, the court is directed to view 'the facts presented in the pleadings and the inferences drawn therefrom in the light most favorable to the nonmoving party.'") (quoting Hayes v. Cmty. Gen. Osteopathic Hosp., 940 F.2d 54, 56 (3d Cir. 1991)). In deciding a Rule 12(c) motion, we may also consider "matters of public record, and authentic documents upon which the complaint is based if attached to the complaint or as an exhibit to the motion." Chemi SpA v. GlaxoSmithKline, 356 F. Supp. 2d 495, 496-97 (E.D. Pa. 2005);see also Kilvitis v. Cty. of Luzerne, 52 F. Supp. 2d 403, 406 (M.D. Pa. 1999) ("In deciding a Rule 12(c) motion, however, a court may take judicial notice of any matter of public record."). Ultimately, "[a] party moving for judgment on the pleadings under Rule 12(c) must demonstrate that there are no disputed material facts and that judgment should be entered as a matter of law." U.S. Fid. & Guar., 213 F. Supp. 2d at 469-70 (citing Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289, 290-91 (3d Cir. 1988), and Inst. for Sci. Info., Inc. v. Gordon & Breach, Sci. Publishers, Inc., 931 F.2d 1002, 1005 (3d Cir. 1991)).

III. DISCUSSION

A. Statute of Limitations

The defendants have interposed a statute of limitations defense with respect to the first two counts of the complaint—negligent misrepresentation and fraud. Both of these common law tort claims are subject to a two-year statute of limitations.⁷ 42 Pa. Cons. Stat. § 5524(7).

"A party may raise a statute of limitations defense in a Rule 12(c) motion if its application is apparent on the face of the complaint." UnitedStates v. Cephalon, Inc., 159 F. Supp. 3d 550, 558 n.7 (E.D. Pa. 2016).

Federal Rule of Civil Procedure 8 does not require that a complaint anticipate or overcome affirmative defenses such as the untimeliness of a claim; thus, a complaint does not fail to state a claim simply because it omits facts that would defeat a statute of limitations defense. Consistent with this rule, a defendant may raise the statute of limitations defense in a Rule 12(b)(6) motion only if it is apparent on the face of the complaint that the claims are not time-barred. If the bar is not apparent on the face of the complaint, then it may not afford the basis for a dismissal of the complaint under Rule 12(b)(6). Federal courts have applied this same rule in the context of a motion for judgment on the pleadings.

Germinaro v. Fid. Nat'l Title Ins. Co., 107 F. Supp. 3d 439, 449 (W.D. Pa. 2015) (cleaned up)⁸ (citing and quoting Schmidt v. Skolas, 770 F.3d 241, 248-49 (3d Cir. 2014)).

The plaintiff's claims concern a series of transactions, the latest ofwhich was completed in late 2014, well more than two years before the commencement of this action on March 9, 2018. "As a general rule in Pennsylvania, 'the statute of limitations begins to run as soon as the right to institute and maintain a suit arises,' (i.e., upon the occurrence of the alleged breach of duty)." Downey v. First Indem. Ins., 214 F. Supp. 3d 414, 429 (E.D. Pa. 2016). "Mistake, misunderstanding, or lack of knowledge do not toll the running of the statute." Fine v. Checcio, 870 A.2d 850,...