Dash BPO, LLC v. Greg Lindberg

• Court: Court of Appeals for the Fourth Circuit
• Decided: June 7, 2024
• Docket: 22-1146
• Status: Unpublished

Opinion

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UNPUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 22-1146

DASH BPO, LLC,

Plaintiff − Appellant,

v.

GREG E. LINDBERG; GLOBAL CREDIT & COLLECTION CORPORATION, d/b/a Affinity Global,

Defendants – Appellees.

Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. Louise W. Flanagan, District Judge. (5:20−cv−00625−FL)

Submitted: November 15, 2023 Decided: June 7, 2024

Before DIAZ, Chief Judge, QUATTLEBAUM, Circuit Judge, and Roderick C. YOUNG, United States District Judge for the Eastern District of Virginia, sitting by designation.

Affirmed by unpublished per curiam opinion.

ON BRIEF: John R. Buric, Preston O. Odom III, Jon P. Carroll, JAMES, MCELROY & DIEHL P.A., Charlotte, North Carolina, for Appellant. William G. Whitehill, CONDON TOBIN SLADEK THORNTON NERENBERG, PLLC, Dallas, Texas; Matthew Nis Leerberg, FOX ROTHSCHILD LLP, Raleigh, North Carolina, for Appellees.

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PER CURIAM:

Dash BPO, LLC appeals the district court’s order dismissing its complaint for

failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). As relevant to this

appeal, the complaint raised common law fraudulent concealment claims against Greg

Lindberg and Global Credit & Corporation, d/b/a Affinity Global (“Defendants”). It also

asserted a claim under the North Carolina Unfair and Deceptive Trade Practices Act, or, in

the alternative, the Illinois Consumer Fraud and Deceptive Practices Act or the Florida

Deceptive and Unfair Trade Practices Act.

The claims in Dash’s complaint arose following a breakdown of its business

relationship with Affinity after Lindberg, Affinity’s owner and principal, was indicted for

allegedly engaging in a yearlong (unrelated) bribery scheme in North Carolina. Dash

alleges that Affinity knew of and fraudulently concealed Lindberg’s criminal conduct from

Dash as the parties were negotiating—and ultimately entered into—an agreement to do

business together. And Dash contends that as a result of Lindberg’s conduct, which was

publicly exposed when Lindberg was indicted, it lost a lucrative contract and business

relationship with Bank of America, a client with whom Dash had worked before working

with Affinity.

The district court granted Defendants’ motion to dismiss after determining that Dash

had failed to plead with particularity: (1) that a fiduciary or special relationship existed

between Affinity and Dash giving rise to a duty for Affinity to disclose Lindberg’s criminal

conduct; (2) that a joint venture relationship existed between the parties giving rise to a

duty for Affinity to disclose that conduct; and (3) that Lindberg’s knowledge could be

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imputed to Affinity based on an alter ego theory or a “sole actor” agency theory. The

district court also dismissed Dash’s claims brought under the respective state-law unfair

trade practices statutes because those claims depended on Dash’s insufficiently pleaded

fraudulent concealment allegations.

We affirm.

I.

Daniel Elmalem formed Affinity in 2003 to provide “multi-national customer

management solutions, including . . . third-party debt recoveries.” J.A. 14 ¶ 7. Affinity

began providing such debt collection services for Bank of America beginning in 2014, and

Affinity and the Bank renewed this contract (the “Bank Contract”) in 2016 for a term of

three years.

In 2017, Greg Lindberg acquired an undisclosed number of shares of Affinity 1

through his U.S. holding company, GCC Holdings, which was in turn held by his

worldwide holding company, Eli Global, LLC. “As part of that transaction, GCC Holdings

acquired the rights to some, but not all” of Affinity’s client contracts. Id. at 15 ¶ 13. It

didn’t acquire the rights to the Bank of America debt-collection contract in the stock sale.

1 According to the complaint, Lindberg is the “sole managing member of Eli Global”; Eli Global is itself the “sole managing member of GCC Holdings”; and GCC Holdings, pursuant to the stock sale, is the “sole owner” of Affinity. J.A. 15–16 ¶ 14. The complaint further alleges that Lindberg “dominated and controlled, and dominates and controls, the decisions and operations of Eli Global, GCC Holdings and Affinity Global.” J.A. 16 ¶ 14.

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Rather, Elmalem formed Dash on August 17, 2017, to continue performance under the

Bank Contract following the acquisition.

At some point in 2018, Dash and Affinity began discussing the possibility of

transferring Dash’s operations (which included servicing the Bank Contract) to

Affinity. The parties eventually signed a “client brokering contract” (the “Agreement”),

see generally J.A. 30–34, under which Affinity would take on Dash’s operations and

clients—including servicing the Bank Contract—in exchange for Affinity paying Dash a

percentage of the revenue generated under Dash’s contracts.

But before Affinity could perform under the Agreement, Lindberg was indicted in

North Carolina for a bribery scheme unrelated to the business arrangement between Dash

and Affinity. When Lindberg’s indictment became public knowledge, Bank of America

terminated the Bank Contract.

“Dash attempted to salvage the business relationship by asking Bank of America if

it would separately contract with Dash to allow it to continue providing the first party

customer care contract work Dash,” and previously, Affinity, had “provided for years under

the [Bank] Contract.” J.A. 21 ¶ 41. But the Bank declined because Dash “was tied to

Affinity Global and, therefore, Lindberg.” Id.

Following the termination of the Bank Contract, Dash sued the Defendants in

federal court. In its complaint, Dash alleged that Lindberg,

through his unlawful conduct, [] destroyed Dash’s business relationship with Bank of America, frustrated the intent of the Agreement, deprived Dash of receiving the expected benefits under the Agreement, and interfered with Dash’s future ability to do business with Bank of America, thereby damaging Dash in the multiple hundreds of thousands of dollars.

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Id. at 21–22 ¶ 44.

The complaint alleges the following claims against both Defendants: common law

fraudulent concealment (Count One); a violation of the North Carolina Unfair and

Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1, et seq. (Count Five); or, in the

alternative, a violation of the Illinois Consumer Fraud and Deceptive Practices Act, 815

Ill. Comp. Stat. 505/1, et seq. (Count Six); or a violation of the Florida Deceptive and

Unfair Trade Practices Act, Fla. Stat. § 501.201, et seq. (Count Seven). 2

The district court granted Defendants’ motion to dismiss the complaint in its

entirety. This appeal followed.

II.

We review a district court’s order granting a motion to dismiss for failure to state a

claim pursuant to Rule 12(b)(6) de novo. Edmonson v. Eagle Nat’l Bank, 922 F.3d 535,

545 (4th Cir. 2019). Dash’s claims are also subject to pleading standards under Federal

Rules of Civil Procedure 8 and 9.

Under Rule 8(a)(2), a pleading must include “a short and plain statement of the

claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). This requires

more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of

action,” but it doesn’t require “detailed factual allegations.” Ashcroft v. Iqbal, 556 U.S.

2 After Defendants moved to dismiss, Dash voluntarily dismissed tortious interference claims alleged against Lindberg in Counts Two through Four of its complaint.

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662, 678 (2009). Rather, “[t]o survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its

face.” Id. (cleaned up).

A party raising a fraudulent concealment claim must also “state with particularity

the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Specifically, “a

plaintiff must plead the time, place, and contents of the false representations, as well as the

identity of the person making the misrepresentation and what he obtained thereby.”

Edmonson, 922 F.3d at 553 (cleaned up). Nonetheless, “a court should hesitate to dismiss

a complaint under Rule 9(b) if the court is satisfied (1) that the defendant has been made

aware of the particular circumstances for which [it] will have to prepare a defense at trial,

and (2) that the plaintiff has substantial pre[-]discovery evidence of those facts.” 3 Id.

(cleaned up).

“Because only the legal sufficiency of the complaint, and not the facts in support of

it, are tested under a Rule 12(b)(6) motion, we assume the truth of all facts alleged in the

complaint and the existence of any fact that can be proved, consistent with the complaint’s

allegations.” E. Shore Markets, Inc. v. J.D. Assocs. Ltd. P’ship, 213 F.3d 175, 180 (4th

Cir. 2000). However, “we need not accept the legal conclusions drawn from the facts.

3 Dash contends on appeal that “Rule 9(b) permits a relaxation of the ‘particularity’ requirement where the plaintiff lacks knowledge of facts important to the claim that may become known only through discovery.” Reply Br. at 2. But its arguments that this principle excuses it from alleging specific facts about Lindberg’s bribery scheme, see id. at 3–4—an issue that has little to do with the ultimate issues here—are inapposite.

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Similarly, we need not accept as true unwarranted inferences, unreasonable conclusions,

or arguments.” Id. (cleaned up).

With these standards in mind, we turn to the allegations in Dash’s complaint.

III.

A.

Dash maintains that it plausibly alleged in its complaint that (1) Affinity owed Dash

a fiduciary or special duty requiring Affinity to inform Dash of Lindberg’s misconduct

before the parties executed the Agreement; and (2) Affinity had sufficient knowledge of

Lindberg’s ongoing misconduct, either directly or because that knowledge was imputed to

Affinity.

Alternatively, Dash argues, Affinity’s “silence and suppression of material facts

created a duty to disclose Lindberg’s unlawful conduct” because such acts in combination

amounted to unlawful fraudulent concealment under Illinois law. Opening Br. at 19.

Under either of these theories, it asserts, “Dash sufficiently [pleaded] facts that gave rise

to a duty to speak.” Id.

To state a claim for fraudulent concealment under Illinois law, “a plaintiff must

allege that the defendant concealed a material fact when he was under a duty to disclose

that fact to plaintiff.” 4 Connick v. Suzuki Motor Co., 675 N.E.2d 584, 593 (Ill. 1996). “A

duty to disclose a material fact may arise out of several situations.” Id. For instance, if a

4 The parties agree that Illinois law governs Dash’s fraudulent concealment claims.

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plaintiff and a defendant are in a fiduciary or confidential relationship, then the defendant

is under a duty to disclose “all material facts.” Id. A duty to disclose may also arise from

a special relationship—that is, a relationship in which a “plaintiff places trust and

confidence in defendant, thereby placing defendant in a position of influence and

superiority over plaintiff.” Id. In that scenario, “[a] position of superiority may arise by

reason of friendship, agency, or experience.” Id.

Moreover, because Rule 9(b)’s heightened pleading standard applies to fraudulent

concealment claims, “[t]he plaintiff has the burden to plead with specificity . . . the

existence of a fiduciary or special relationship.” Greenberger v. GEICO Gen. Ins., 631

F.3d 392, 401 (7th Cir. 2011).

Illinois courts have also recognized a claim for fraudulent concealment stemming

from silence coupled with the active concealment of a material fact. Specifically, a “duty

to disclose” may arise “when the defendant’s acts contribute to the plaintiff’s

misapprehension of a material fact and the defendant intentionally fails to correct plaintiff’s

misapprehension.” Lefebvre Intergraphics, Inc. v. Sanden Mach. Ltd., 946 F. Supp. 1358,

1366 (N.D. Ill. 1996) (cleaned up). On this theory, “to [plausibly plead] the concealment

amounted to a fraudulent misrepresentation,” a plaintiff must allege:

(1) the concealment of a material fact; (2) the concealment was intended to induce a false belief, under circumstances creating a duty to speak; (3) the innocent party could not have discovered the truth through a reasonable inquiry or inspection, or was prevented from making a reasonable inquiry or inspection, and relied upon the silence as a representation that the fact did not exist; (4) the concealed information was such that the injured party would have acted differently had he been aware of it; and (5) that reliance by the person from whom the fact was concealed led to his injury.

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Stewart v. Thrasher, 610 N.E.2d 799, 804 (Ill. App. Ct. 1993) (cleaned up).

B.

Having reviewed the record, the parties’ briefs and the district court’s thorough

opinion, we agree with the district court that Dash failed to plead a fiduciary or special

relationship with the requisite specificity. See Dash BPO, LLC v. Lindberg, No. 5:20-CV-

625-FL, 2022 WL 107106, at *6–7 (E.D.N.C. Jan. 11, 2022). Nor did it do so as to any

claim of active concealment.

We also agree with the district court that Dash’s fraudulent concealment claims

can’t proceed as to Affinity for a second, separate reason: the complaint fails to allege

“facts giving rise to a plausible inference that defendant Affinity had knowledge of

defendant Lindberg’s unlawful conduct” under an alter ego or agency theory. 5 Id. at *7.

After all, “a party cannot fraudulently conceal information that it does not know.” Abazari

v. Rosalind Franklin Univ. of Med. & Sci., 40 N.E.3d 264, 621 (Ill. App. Ct. 2015); accord

Chicago Park Dist. v. Kenroy, Inc., 402 N.E.2d 181, 185 (Ill. 1980) (holding in response

to a statute of limitations defense that where there was “no apparent reason” based on the

allegations in the complaint “for the [plaintiff] to suspect that its fiduciary . . . had entered

into a scheme of bribery and fraud with the defendants until it became apparent during his

5 We also affirm the district court’s dismissal of Dash’s statutory unfair and deceptive trade practices claims—which are “premised upon defendants’ [alleged] fraudulent concealment” of Lindberg’s conduct—on the basis that a plaintiff cannot sustain such claims after failing to state a claim for fraudulent concealment. See id. at *10.

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prosecution,” the plaintiff was “[not] obliged to search for the misfeasance of its

[fiduciary]”).

Accordingly, we affirm on the sound reasoning of the district court. And we

dispense with oral argument because the facts and legal contentions are adequately

presented in the materials before the court and argument would not aid the decisional

process.

AFFIRMED