Kumud Hospitality v. SSN Williamsport, No. CV 24-00, 087 (Ct. of Common Pleas of Lyco. Co., Pa., November 25, 2025) (Linhardt, J.)
Plaintiffs Dineshkumar Jadav and Kumud Hospitality LLC commenced this action by Complaint filed on January 22, 2024, against Defendants SSN Williamsport LLC, SSN Hotel Management LLC, Piyush Bhaisadswala a/k/a Peter Bhai, and Pinky Bhaisadswala a/k/a Pinky Bhai (the “Complaint”). Plaintiffs’ claims arise out of a Membership Purchase Agreement dated November 15, 2015 (the “Agreement”) entered into among SSN Williamsport LLC, Kumud Hospitality LLC, and Peter Bhai.
In sum, Plaintiffs allege that Defendants engaged in a fraudulent scheme or schemes to avoid paying profits from SSN Williamsport to Plaintiffs. Jadev further alleges that he suffered health issues and that his marriage dissolved as a result of Defendants’ misconduct. Finally, Plaintiffs allege that SSN Williamsport sold the Inn to an unrelated third party on or about June 17, 2022, for two million three hundred seventeen thousand five hundred dollars ($2,317,500) and that Defendants falsely reported the sale price for tax purposes and paid Plaintiffs the sum of six hundred twelve thousand five hundred dollars ($612,500), which was less than their initial investment and included no profits or wages. Thereafter, on or about January 19, 2023, Defendants dissolved SSN Williamsport by filing a certificate of dissolution with the Secretary of State of this Commonwealth. Plaintiffs contend that they made a demand of Defendants for payment and turnover of business records pertaining to SSN Williamsport on or about September 13, 2023, but that Defendants refused to comply. Ultimately, Plaintiffs contend that they suffered “significant and irreparable financial and emotional damages” as a result of Defendants’ conduct and that they have filed this suit to recover the same.
Here, the persons, parties and things being sued for are the same as those in the prior action. Res judicata does not bar the instant action, however, because res judicata applies only where there has been a decision on the merits in the prior action. The New Jersey Federal Action was dismissed for lack of jurisdiction, and the Pennsylvania Federal Action was voluntarily withdrawn. ln both cases, the lawsuits were terminated without the courts having reached the merits of the dispute. The New Jersey State Action was dismissed “without prejudice,’ i.e., “[w]ithout loss of any rights; in a way that does not harm or cancel the legal rights or privileges of a party. “Indeed, a lawsuit that is dismissed “without prejudice” is “removed from the court’s docket in such a way that the plaintiff may refile the same suit on the same claim.” As the merits of the dispute were never reached in any of the prior actions, they do not bar this lawsuit on the basis of res judicata.
Therefore, the Court does not believe that Plaintiffs, by virtue of their failure to reply timely to Defendants’ New Matter, admitted any fact that, standing alone, compels entry of judgment on the pleadings against Plaintiffs. To the contrary, all of the allegations of the Defendants’ new matter were deemed denied before Plaintiffs filed their Reply. Accordingly, Defendants’ Motion is DENIED to the extent it seeks entry of judgment on the pleadings on the basis that Plaintiffs did not timely reply to the Defendants’ new matter.
Defendants contend that Kumud lacks capacity to sue within the Commonwealth because it is not registered to do business within this Commonwealth. Since the defect of Kumud not being registered to do business in the Commonwealth has been corrected, the Court will not enter judgment on the Pleadings against Kumud on this basis.85 Accordingly, Defendants’ Motion is DENIED to the extent it seeks entry of judgment on the pleadings on the basis that Kumud was not registered to do business in Pennsylvania when the action was filed.
Defendants contend that Plaintiffs’ claims under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (Count I) fail because they arise from a commercial transaction and not from the purchase or lease of goods and services primarily for personal, family or household purposes. The purpose of the UTPCPL is to protect the public from unfair or deceptive business practices. Here, Plaintiffs purchased an interest in a business entity. Such an interest is neither a good nor a service. Moreover. they did not purchase their interest primarily or personal, family or household purposes. Something purchased for commercial purposes only, such as Plaintiffs’ interest in SSN Williamsport, is not purchased “primarily for personal, family or household purposes.” Thus, a dispute concerning the same fails to state a cause of action under the UTPCPL.
Common law fraud, fraud in the inducement, negligent misrepresentation and breach of fiduciary duty are tort claims subject to a two-year statute of limitations and typically accrue on the date the injury is sustained.
The Complaint contains allegations of breaches occurring as early as 2015/16 and as late as 2022/23. Some of Plaintiffs’ tort claims may be barred by the statute of limitations; however, as determination of when those claims accrued is an issue of fact, the Court is unable to determine whether some or all of Plaintiffs’ tort claims have been filed after expiration of the applicable statute of limitations on the record presently before the Court. The parties, through discovery, can develop a factual record to determine specifically whether any of the tort claims are barred by the statute of limitations and, if there is no genuine dispute as to any material fact, file appropriate motions at a later date.
The gist of the action doctrine “is designed to maintain the conceptual distinction between breach of contract claims and tort claims” and “precludes plaintiffs from re-casting ordinary breach of contract claims into tort claims.
Accordingly, the Court will not dismiss Plaintiffs’ claims for common law fraud (Counts II, Ill), fraud in the inducement (Counts IV, V), negligent misrepresentation (Count IX). breach of fiduciary duty (Counts XVI, XVII), and conversion (Counts XVIII, XIX) pursuant to the gist of the action doctrine at this time. After discovery, Defendants may make an appropriate motion if Plaintiffs fail to adduce evidence refuting Defendants’ claim that the gravamen of each of their tort claims sounds in assumpsit.
Generally, “[t]he Economic Loss Doctrine provides that no cause of action exists for negligence that results solely in economic damages unaccompanied by physical injury or property damage. “Our Supreme Court has clarified, however, that the economic loss doctrine, as applied in Pennsylvania, does not preclude all negligence claims seeking solely economic damages. Rather, the Supreme Court has “unequivocally stated that ‘Pennsylvania has long recognized that purely economic losses are recoverable in a variety of tort actions’ and that ‘a plaintiff is not barred from recovering economic losses simply because the action sounds in tort rather than contract law.”‘ Pennsylvania follows “a ‘reasoned approach’ to applying the economic loss doctrine that ‘turns on the determination of the source of the duty plaintiff claims the defendant owed.” ‘Thus, “if the duty arises under a contract between the parties, a tort action will not lie from a breach of that duty. However, if the duty arises independently of any contractual duties between the parties, then a breach of that duty may support a tort action.
The Court will not dismiss Plaintiffs’ claims for common law fraud (Counts II, Ill), fraud in the inducement (Counts IV, V), negligent misrepresentation (Count lX), breach of fiduciary duty (Counts XVI, XVII), and conversion (Counts XVIII, XIX) pursuant to the economic loss doctrine at this time. After discovery, Defendants may make an appropriate motion if Plaintiffs fail to adduce evidence demonstrating that one or more of the duties allegedly owed to them and breached by the Defendants arises independently of any contractual duties between the parties.
Claims for breach of contract of the nature alleged here are subject to a four[1]year statute of limitations and accrue on the date of breach. Where the contract involves a promise to pay, the breach occurs when payment becomes due and remains unpaid.
The parties, through discovery, can develop a record to determine specifically whether any claims are so barred and may file appropriate motions at a later date should there be no dispute as to any material fact concerning the statute of limitations.
Promissory estoppel, unjust enrichment, and quantum meruit restitution are available only when there is no contract that a court can enforce. Hence, if there is an express contract that Plaintiffs can enforce, they cannot claim promissory estoppel, unjust enrichment, or quantum meruit restitution. A party in a civil action may plead and pursue inconsistent claims, but they cannot do so indefinitely. “[O]nce a party makes a ‘binding’ election of one remedy over other inconsistent remedies, it is precluded from thereafter maintaining an action on those inconsistent remedies.”A “binding” election occurs “when there has been a legal resolution, such as a settlement, a stipulation, a waiver, an expressed withdrawal or abandonment of claims, a judgment, or application of another exclusionary rule,” at which point the party can no longer pursue alternate, inconsistent claims. No such election having been made at this stage of the proceedings, Plaintiffs can plead the inconsistent claims of breach of express contract, promissory estoppel, unjust enrichment and quantum meruit restitution in the alternative. Accordingly, Defendants’ Motion to dismiss Plaintiffs’ claims for promissory estoppal (Counts X, XI), unjust enrichment (Counts XII, XIII), and quantum meruit restitution (Count XX) is DENIED.
The general duty of good faith and fair dealing is an implied provision of every agreement, absent an express provision.
Accordingly, Counts XIV and XV of the Complaint, Plaintiffs’ claims for breach of the covenant of good faith and fair dealing, are DISMISSED as independent causes of action, as they are subsumed within Plaintiffs’ breach of contract claims.
