Bryan Corp. v. Chemwerth, Inc.

911 F. Supp. 2d 103, 2012 WL 6569203, 2012 U.S. Dist. LEXIS 177624
District Court, D. Massachusetts·Decided December 14, 2012·No. Civil Action No. 12-10446-MLW·Published·Cited by 5 cases

Opinion

MEMORANDUM OF DECISION AND ORDER ON DEFENDANT’S MOTION TO DISMISS COUNT V (FRAUD) OF COMPLAINT FOR DAMAGES

DEIN, United States Magistrate Judge.

I. INTRODUCTION

This action arises out of an agreement pursuant to which the plaintiff, Bryan Corporation (“Bryan Corp.”), agreed to [105] purchase the pharmaceutical ingredient Tobramycin Sulfate (“TS”) from the defendant ChemWerth, Inc. (“ChemWerth”). Bryan Corp. claims that in order to induce it to purchase TS from ChemWerth and to develop products that could expand ChemWerth’s TS market in the United States, ChemWerth falsely represented to Bryan Corp. that it would provide certain documents required by the United States Food and Drug Administration (“FDA”) so that Bryan Corp. could obtain FDA approval of its TS products. Bryan Corp. has asserted claims against the defendant for breach of contract (Count I), breach of implied covenant of good faith and fair dealing (Count II), promissory estoppel (Count III), negligent misrepresentation (Count IV), fraud (Count V), and violation of Mass. Gen. Laws ch. 93A (Count VI).

This matter is presently before the court on “Defendant’s Motion to Dismiss Count V (Fraud) of Plaintiffs Complaint for Damages” (Docket No. 15) brought pursuant to Fed.R.Civ.P. 12(b)(6).1 Therein, ChemWerth contends that Bryan Corp. has failed to plead fraud .with sufficient particularity as required by Fed.R.Civ.P. 9(b), and has failed to meet the notice pleading requirements of Fed.R.Civ.P. 8(a)(2), thereby warranting the dismissal of the fraud claim in its entirety. In the alternative, ChemWerth moves that the plaintiff be ordered to provide a more definite statement of its claim pursuant to Fed.R.Civ.P. 12(e). The parties have consented to the Magistrate Judge’s final jurisdiction pursuant to 28 U.S.C. § 636(c) for purposes of this motion.

For all the reasons detailed herein, this court finds the pleading of fraud to be sufficient, and the Motion to Dismiss (Docket No. 15) is DENIED. The court also DENIES the defendant’s alternative request for a more definite statement.

II. STATEMENT OF FACTS

When ruling on a motion to dismiss brought under Fed.R.Civ.P. 12(b)(6), the court must accept as true all well-pleaded facts, and give the plaintiff the benefit of all reasonable inferences. See Cooperman v. Individual, Inc., 171 F.3d 43, 46 (1st Cir.1999). Applying this standard to the instant case, the facts relevant to the motion to dismiss are as follows.

Background

Bryan Corp. “provides high quality medical devices and innovative pharmaceuticals to the global medical community.” Compl. ¶ 8. In 2006, Bryan Corp. was interested in developing new products or uses of TS that could receive FDA approval. Id. ¶ 13. ChemWerth held itself out as an agent for Chinese pharmaceutical ingredient manufacturers, and described itself “as having substantial expertise in ensuring that the manufacturers it represents in China produce pharmaceutical ingredients and documentation that meet FDA requirements.” Id. ¶ 11. Bryan Corp. contacted ChemWerth in connection with its plan to develop products with TS. Id. ¶ 14. ChemWerth allegedly represented that it would obtain and file with the FDA the documentation necessary to show that the TS manufactured in China by Chongqing Daxin Company Limited, Inc. (“Daxin”) met FDA standards. Id. ¶¶ 15-16. ChemWerth’s failure to obtain such documenta[106] tion forms the basis of the complaint. See id. ¶1. Thus, Bryan Corp. summarizes its claim as follows:

1. This action arises from Defendant ChemWerth’s fraud, misrepresentation and other misconduct in connection with the sale of a pharmaceutical ingredient (Tobramycin Sulfate) to Plaintiff Bryan Corp. To induce Plaintiff to buy Tobramycin Sulfate from ChemWerth and to develop products that could expand ChemWerth’s Tobramycin Sulfate market in the United States, ChemWerth represented and promised to Plaintiff that ChemWerth would provide certain documents regarding the Tobramycin Sulfate that Plaintiff required to obtain FDA approval of Plaintiffs Tobramycin Sulfate products.
2. ChemWerth’s representations and promises were false, and ChemWerth knew or should ’ have known that it would not and could not provide the necessary documents. Ultimately, ChemWerth did not provide the documents, and suggested that Bryan Corp. could cure the problem through misleading filings with FDA. Bryan Corp. refused to participate in such a scheme, and has lost millions of dollars that it spent seeking FDA approval of Tobramycin Sulfate products in reliance on ChemWerth’s promises and representations.

Id. ¶¶ 1-2. As detailed herein, Bryan Corp. makes numerous factual assertions in support of its claim.

The Alleged Misrepresentations

Bryan Corp. contends that ChemWerth made a number of misrepresentations about its ability and intention to produce documentation to satisfy FDA requirements. Specifically, but without limitation, Bryan Corp. alleges that ChemWerth states in its public website that it “collaborat[es] with manufacturers in establishing appropriate protocols and methodologies to prepare a sound and complete Drug Master File.” Id. ¶ 12. A Drug Master File (“DMF”) is a file which contains the information necessary to establish that the active pharmaceutical ingredients (“API”) in a product, in the instant case TS, is made in accordance with FDA requirements, including Good Manufacturing Practices (“GMPs”). Id. ¶ 10.

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Bryan Corp. v. Chemwerth, Inc., 911 F. Supp. 2d 103, 2012 WL 6569203, 2012 U.S. Dist. LEXIS 177624 (D. Mass. 2012).

911 F. Supp. 2d 103 (Bryan Corp. v. Chemwerth, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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