X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The sale of stock is not enough to establish venue in Philadelphia, a common pleas court judge has ruled, effectively transferring an unjust enrichment case to Cambria County, Pennsylvania. Philadelphia Common Pleas Judge Albert W. Sheppard said that because neither the plaintiff nor the defendant resides in Philadelphia County, the sale of stock alone couldn’t establish venue. “Plaintiffs also argue that, pursuant to Pa.R.C.P. 2179 (4), the sale of stock constitutes a ‘transaction or occurrence’ forming the basis for the unjust enrichment cause of action such that venue would properly lie in Philadelphia County,” Sheppard wrote in Stein v. Crown American Realty Trust. “This court disagrees.” Plaintiffs David S. Stein, John B. Warden and Robert Parsons bought shares from Crown American Realty Trust about the time of an initial public offering. The plaintiffs claim that Crown and Mark E. Pasquerilla, individually and on behalf of the estate of Frank J. Pasquerilla, were unjustly enriched by the purchases. The plaintiffs assert that the August 1993 prospectus of Crown guaranteed that Crown would have enough earnings to maintain the same value dividend as that offered at the IPO. The dividend, however, was reduced after the IPO because of alleged financial difficulties that were not disclosed to the plaintiffs. Stein, Warden and Parsons sued Crown and Pasquerilla, asserting several claims but later amending their complaint to allege only a claim of unjust enrichment. Crown responded by filing preliminary objections asserting improper venue. Sheppard’s opinion, out of the Common Pleas Commerce Program, responds to those preliminary objections. Under statute, a suit can be brought in the county where the cause of action arose or the county where a “transaction or occurrence took place out of which the cause of action arose.” The plaintiffs assert that the cause of action for unjust enrichment arose in Philadelphia County because that is where the “transaction or occurrence,” the sale of stock, took place. To assert a cause of action in Pennsylvania, a plaintiff must show “benefits conferred on defendant by plaintiff, appreciation of such benefits by defendant, and acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value,” Sheppard wrote. Sheppard looked to the Supreme Court case Craig v. W.J. Thiel & Sons Inc. for guidance. In that case, the high court stated that placing an order, “one step in a series of several steps taken in the formation of a contract,” was only part of a transaction. Therefore, the Supreme Court said, venue was improper on the basis of the placing of an order. “To prevent future forum shopping, the court further held that a lawsuit could not proceed ‘in any county where any facet of a complex transaction occurred,’” Sheppard wrote. Therefore, Sheppard said, the sale of stock alone was insufficient to establish venue in Philadelphia County. Sheppard pointed out that none of the plaintiffs resides in Philadelphia County. In addition, he said, the defendants’ principal place of business is in Cambria County. “Looking specifically to the elements of the cause of action, … this court is convinced that the defendants, if they were unjustly enriched, would have been so in Cambria County,” Sheppard said. “Specifically, since defendants’ principal place of business is in Cambria County, any alleged monetary benefit conferred on the defendants by the plaintiffs would have occurred in Cambria County.” The court accordingly sustained Crown’s preliminary objections and transferred the case to Cambria County.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.