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Blackstone Consulting, Inc. v. R&R Food Services L.L.C.

United States District Court, W.D. Oklahoma

December 21, 2017

R&R FOOD SERVICES, L.L.C., and ROBERT L. BROWN, JR., Defendants.



         Plaintiff Blackstone Consulting Incorporated (“BCI”) filed this action in state court against defendants R&R Food Services L.L.C. (“R&R”) and Robert Brown, asserting a claim for breach of contract and requesting an accounting, a declaratory judgment, and injunctive relief. Defendants removed the case to this court, and have since answered the complaint. Defendants' answer also asserts counterclaims for (1) breach of contract, (2) fraudulent misrepresentation, (3) conversion, (4) tortious interference with contractual relations, (5) tortious interference with prospective economic advantage, (6) unjust enrichment, and (7) breach of the covenant of good faith and fair dealing. BIC has moved to dismiss counterclaims (2)-(7) pursuant to Fed.R.Civ.P. 12(b)(6).

         In considering whether claims should be dismissed under Fed.R.Civ.P. 12(b)(6), the court accepts all well-pleaded factual allegations of the complaint-or in this case the answer-as true, and views them in the light most favorable to the plaintiff, the non-moving party. S.E.C. v. Shields, 744 F.3d 633, 640 (10th Cir. 2014). To avoid dismissal, the complaint must allege “enough facts to state a claim to relief that is plausible on its face” and “raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). In other words, the facts alleged in the complaint must allow the court to infer the defendant's liability. Shields, 744 F.3d at 640 (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). The Twombly/Iqbal pleading standard “is a middle ground between heightened fact pleading, which is expressly rejected, and allowing complaints that are no more than labels and conclusions or a formulaic recitation of the elements of a cause of action, which the Court stated will not do.” Id. at 640-41.


         The background circumstances appear to be largely undisputed, as the allegations of both the petition and counterclaim are consistent. In January 2013, the Oklahoma Department of Rehabilitation Services (“ODRS”) selected defendants to operate a food service contract at the U.S. Army post at Fort Sill, Oklahoma. Defendant Brown is a blind licensed manager and the principal of R&R. R&R and ODRS contracted for R&R to operate food services at Fort Sill under the Randolph-Sheppard Act.[1] In February 2013, R&R selected BCI as its subcontractor, or “teaming partner.” R&R and BCI entered into a new contract for support services as to the Fort Sill contract in April of 2016. In October of 2016, the Department of the Army issued a “Cure Notice” to ODRS and R&R regarding the food service. R&R and BCI amended their contract in November 2016.

         The counterclaim alleges that, based on R&R's contract with ODRS, ODRS received payments from the food service contract with the Army and distributed those funds into the R&R business account at Bank Leumi USA. It alleges that R&R is the sole owner of that account. The counterclaims further alleges that, in February of 2017, BCI began “sweeping” payments from the account without R&R's approval, and transferred the money to a BCI account. R&R allegedly demanded the bank stop allowing the transactions, and the bank complied. The counterclaim alleges that BCI then began asking ODRS to make payments directly to a BCI account. ODRS allegedly refused, but froze payments from June and July of 2017 totaling over $3.9 million because of the dispute. The counterclaim also alleges ODRS eventually placed the funds in an escrow account by agreement of the parties and that, on August 1, 2017, a court order in a different proceeding removed R&R from operating the Fort Sill contract.


         Plaintiff's motion challenges all of defendants' counterclaims other than the one based on the parties' agreements. While it appears doubtful that this case will ultimately involve more than a resolution of the parties' competing contract rights, the court concludes it is premature to dismiss now the bulk of defendants' counterclaims.

         1. Claim for fraudulent misrepresentation

         In Oklahoma, the elements of fraud are

(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). Under Fed.R.Civ.P. 9(b), the circumstances constituting fraud must be pled with particularity.[2] “At a minimum, Rule 9(b) requires that a plaintiff set forth the who, what, when, where and how of the alleged fraud” and “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 of Utah, 472 F.3d 702, 726-27 (10th Cir. 2006).

         Here, defendants claim that they were fraudulently induced to enter into the teaming partner contract based on BCI's false representations that it would assist defendants in becoming independent and eventually able to perform the food service contract without BCI's help. Defendants claim that, contrary to this promise, BCI deliberately acted in a fashion inconsistent with that agreement, that it usurped power and management authority from them, and did not help them become autonomous.

         BCI seeks dismissal of this claim for two reasons. First, it argues that while the initial teaming partner contract specified that BCI would provide assistance in way to help defendants become autonomous, the amendment to the contract did not include that provision. BCI claims the omission of the specific contractual provision from the amended contract means it cannot be the basis for a fraudulent inducement claim, relying on authorities dealing with the alteration of contracts by a new contract. That may well be true as to contractual obligations, but plaintiff's authorities do not speak to a fraudulent inducement claim, which sounds in tort, and there is no apparent reason why such a result would follow. The fraudulent inducement claim goes to the issue of why defendants agreed to team with BCI in the ...

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