A second federal judge has rejected Tucker Arensberg’s second attempt to escape a lawsuit accusing the firm and one of its attorneys of engaging in fraudulent conduct in the sale of a $3 million Pennsylvania property to an oil-and-gas company.

Prime Energy and Chemical is alleging that Tucker Arensberg, through lawyer Michael Shiner, misrepresented its client’s ownership of a property in McKean County that Prime Energy contracted to buy. Prime Energy filed the lawsuit in March 2018. The parties entered mediation in December but the case was not resolved.

On Aug. 12, U.S. District Judge Yvette Kane of the Middle District of Pennsylvania denied Tucker Arensberg’s and Shiner’s motion to dismiss Prime Energy’s second amended complaint, finding that the previous ruling by U.S. District Chief Magistrate Judge Maureen Kelly of the Western District of Pennsylvania denying the firm’s motion to dismiss the original complaint constitutes the law of the case.

In its original complaint, Prime Energy alleged that it suffered damages of over $35 million from the alleged fraud, as well as $678,800 in lost deposits and other payments.

According to Prime Energy’s second amended complaint, filed Oct. 26, 2018, Tucker Arensberg represented Mark Thompson and Mid-East Oil Co.

Prime Energy alleged that the law firm misrepresented Thompson’s ownership of the 2,352-acre property in McKean County, referred to as the  Swamp Angel Property. The property was owned by a company called MarcellX, the complaint said, which Thompson purported to own, but which was actually owned by another family.

In October 2015, Prime Energy paid a $600,000 deposit, which was delivered to an account owned by Thompson, as well as an additional $78,800 to further the sale of the $3 million property, the complaint said. But Prime Energy alleges that money never made it to the escrow account it was intended for.

According to the complaint, Prime Energy discovered in March 2016 that the actual owners of MarcellX were David Prushnok, G. Daniel Prushnok and John Prushnok. Prime Energy then entered a purchase agreement with the Prushnoks to acquire the Swamp Angel Property for $3 million.

“The Prushnoks were not represented by Tucker Arensberg and Shiner, who had misrepresented their representation of MarcellX in connection with the PSA, but by another firm,” the complaint said. “And Prime Energy had to pay MarcellX an additional $400,000 deposit and did not receive any credit toward the purchase with the $678,800 fraudulently misappropriated by defendants and Thompson.”

In May 2016, Shiner, of Tucker Arensberg, sent a letter to Prime Energy acknowledging that he did not represent MarcellX, the complaint said.

Thompson has been a defendant in at least two other cases related to the Swamp Angel Property, one of which resulted in a $2 million judgment against Thompson. Prime Energy alleged that Tucker Arensberg also failed to disclose those civil actions, as well as a series of violations charged by the Pennsylvania Department of Environmental Protection.

In denying the defendants’ first motion to dismiss in July 2018, Kelly said Prime Energy sufficiently alleged that Shiner and fellow Tucker Arensberg attorney Kenneth Carroll III made fraudulent misrepresentations, and “that Shiner directly received a pecuniary benefit from the transaction.” (Carroll was dismissed from the case last November.)

Examining Tucker Arensberg’s and Shiner’s second motion to dismiss, Kane said the defendants failed to point to any exceptions to the law of the case doctrine that would warrant departing from Kelly’s previous ruling.

“Indeed, Judge Kelly specifically found the following allegations sufficient to withstand scrutiny on a motion to dismiss: that ‘defendants represented in the PSA that “the lease and the wells [the Swamp Angel Property]: (a) are not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; and (b) are not the subject of any pending or threatened claim, demand, filing, cause of action, administrative proceeding, governmental action[,] or other litigation,”‘” Kane said. “Accordingly, plaintiff’s assertion of facts in the second amended complaint pertaining to additional litigation and environmental enforcement proceedings comports with Judge Kelly’s determination that plaintiff has proffered sufficient factual allegations to support their claim that defendants fraudulently concealed the existence of pending actions pertaining to the property for purposes of a fraud claim.”

Kane added that, even if the law of the case doctrine didn’t apply, the plaintiff’s fraud claim was still “plainly sufficient” to be allowed to proceed.

“In the instant case, plaintiff has averred that the alleged misrepresentation regarding other actions involving the property was material to its entry into the PSA and monetary payments made in connection therewith, and had these actions been made known, plaintiff would not have engaged in the transactions described in the second amended complaint,” Kane said. ”

Counsel for Tucker Arensberg, James Schadel of Burns White in Pittsburgh, declined to comment.

Counsel for Prime Energy, Charles B. Manuel Jr. of Manuel & Associates in New York, also declined to comment.