United States District Court, W.D. Oklahoma
BENHAM CONSTRUCTORS, LLC f/k/a LEIDOS CONSTRUCTORS, LLC, Plaintiff,
SAULSBURY INDUSTRIES, INC, Defendant.
TIMOTHY D. DeGIUSTI, UNITED STATES DISTRICT JUDGE
the Court is Defendant Saulsbury Industries, Inc.'s
Motion to Dismiss Plaintiff's Fraudulent
Misrepresentation Claim [Doc. No. 32], filed pursuant to
Fed.R.Civ.P. 9(b) and 12(b)(6). Defendant seeks partial
dismissal of the Second Amended Complaint, asserting that
Plaintiff has failed to plead fraud with particularity and is
improperly attempting to recast its contract claim as a fraud
claim. Plaintiff has filed a response to the Motion, and
Defendant has replied. Thus, the Motion is ripe for decision.
Benham Constructors, LLC brings this diversity action as the
prime contractor on a construction project in Corpus Christi,
Texas, claiming that Defendant breached the parties'
written subcontract agreement through unsatisfactory and
untimely performance of its work on the project, and caused
Plaintiff to incur damages in excess of $8, 000, 000. As a
separate claim, Plaintiff asserts that Defendant fraudulently
induced Plaintiff to execute a particular written change
order (#18 out of 26 change orders) by falsely representing
that Defendant could and would accelerate its subcontract
work and meet certain deadlines. See Second Am.
Compl. [Doc. No. 27], ¶¶ 23-29. Plaintiff claims
Defendant's fraudulent conduct caused additional damages
of $1, 413, 200, which is the amount Plaintiff agreed to pay
under Change Order #18.
moves to dismiss only Plaintiff's fraud claim, arguing
that 1) Plaintiff has failed to meet the heightened pleading
standard for fraud, and 2) Plaintiff simply claims that
Defendant failed to perform contractual obligations under
Change Order #18 and the claim should be treated as one for
breach of contract.
survive a motion to dismiss [under Rule 12(b)(6)], a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Id. The question to be decided is “whether the
complaint sufficiently alleges facts supporting all the
elements necessary to establish an entitlement to relief
under the legal theory proposed.” Lane v.
Simon, 495 F.3d 1182, 1186 (10th Cir. 2007) (internal
of fraud are governed by the heightened pleading requirements
of Rule 9(b), which provides:
In alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake. Malice, intent, knowledge, and other conditions of a
person's mind may be alleged generally.
Fed. R. Civ. P. 9(b). “At a minimum, Rule 9(b) requires
that a plaintiff set forth the ‘who, what, when, where
and how' of the alleged fraud, and must set forth the
time, place, and contents of the false representation, the
identity of the party making the false statements and the
consequences thereof.” United States ex rel.
Sikkenga v. Regence Bluecross Blueshield, 472 F.3d 702,
726-27 (10th Cir. 2006) (internal quotations omitted);
see Toone v. Wells Fargo Bank, N.A., 716 F.3d 516,
522 (10th Cir. 2010); Tal v. Hogan, 453 F.3d 1244,
1263 (10th Cir. 2006). To determine if factual allegations
satisfy Rule 9(b), the Court reviews only the text of a
complaint; matters outside the pleading may not be considered
unless permitted by Rule 12(b)(6). See Toone, 716
F.3d at 521; Sikkenga, 472 F.3d at 726;
Tal, 453 F.3d at 1264 & n.24. The Court
“accept[s] as true all well-pleaded facts, as
distinguished from conclusory allegations, and view[s] those
facts in the light most favorable to the non-moving
party.” Sikkenga, 472 F.3d at 726.
Count II of the Second Amended Complaint, Plaintiff asserts a
fraud claim based on the following allegations: During the
construction project, the parties negotiated and executed
Change Order #18, by which Defendant “agreed to
increase its manpower, add a second shift, and make other
modifications to its performance in order to accelerate the
Subcontract Work and achieve certain schedule
milestones” and Plaintiff “agreed to pay
[Defendant] the sum of $1, 413, 200.” See
Second Am. Compl. [Doc. No. 27], ¶¶ 24-25.
“Prior to and at the time [Defendant] executed Change
Order #18, [Defendant] knew that it could not - or would not
- accelerate the Subcontract Work and achieve certain
schedule milestones. Nevertheless, [Defendant] represented to
[Plaintiff] that it could and would do so to induce
[Plaintiff] to execute Change Order #18 and pay more than
$1.4 million to [Defendant].” Id. ¶ 26.
Further, Defendant's “representations to
[Plaintiff] were false and material;” Plaintiff
“reasonably and actually relied upon [Defendant's]
false and material misrepresentations to its detriment by,
among other things, executing Change Order #18 and paying $1,
413, 200 to [Defendant];” and “[a]s a direct and
proximate result of [Defendant's] actions, [Plaintiff]
incurred damages in the amount of $1, 413, 200.”
Id. ¶¶ 27-29.
aside the issue of whether Plaintiff can simultaneously
assert contract and tort claims under the circumstances, the
question presented is whether the Second Amended Complaint
adequately states a claim of fraud in the manner required by
Rule 9(b) and Rule 12(b)(6).
summarized by the Oklahoma Supreme Court, a common law claim
of fraud requires proof of the following essential elements:
“1) a false material misrepresentation, 2) made as a
positive assertion which is either known to be false or is
made recklessly without knowledge of the truth, 3) with the
intention that it be acted upon, and 4) which is relied on by
the other party to his (or her) own detriment.”
Bowman v. Presley, 212 P.3d 1210, 1218 (Okla. 2009)
(footnotes omitted). The inadequacy of Plaintiff's fraud
claim asserted in the Second Amended Complaint is obvious
when examined under the Rule 9(b) standard. Plaintiff does
not describe the alleged false representation in sufficient
detail to know its contents, does not identify who made it,
and provides no basis to know when, where, or how it was
attempts through argument in its brief to supply the missing
information by providing a copy of Change Order #18, which is
central to its claim and may be considered. See Smith v.
United States, 561 F.3d 1090, 1098 (10th Cir. 2009);
GFF Corp. v. Assoc. Wholesale Grocers, Inc., 130
F.3d 1381, 1384-85 (10th Cir. 1997). Plaintiff points to the
representative of Defendant who signed the change order as
the person making the representations, the location of the
project as the place where the representations were made, and
the substance of Defendant's obligations under the change
order to supply the content of the