STATE OF MAINE . -. SUPERIOR COURT - I
CUMBERLAND, ss. CIVIL ACTION J I
% -. - ,. Docket No. CV-05-580
DAVRIC MAINE CORP.,
Plaintiff,
v. ORDER
SHAWN A. SCOTT, et al.,
Defendants.
Before the court is a motion by defendants Shawn Scott and Capital Seven LLC
to dismiss Counts I and I11 through IX of the complaint filed by plaintiff Davric Maine
Corporation.
At the same time as they filed their motion to dismiss, Scott and Capital Seven
filed an answer to the complaint. Davric opposed the motion to dismiss and at the
same time filed a motion for leave to file what Davric describes as a "clarified"
complaint. Scott and Capital Seven have not opposed Davric's motion for leave to
amend the complaint and instead argue that their motion to dismiss applies equally to
the complaint as clarified. See Defendants' Reply in Support of Motion to Dismiss dated March 1, 2006, at 1-2.
Davric's motion for leave to file a "clarified" complaint is therefore granted
without opposition and the complaint as amended on January 6, 2006 is therefore the
operative pleading for purposes of the instant motion and for all further proceedings.'
On a motion to dismiss, the material allegations of the complaint must be taken
as admitted. The complaint must be read in the light most favorable to the plaintiff to
Defendants shall file an amended answer to plaintiff's January 6,2006 complaint within 10 days of the filing of this order. determine if it sets forth elements of a cause of action or alleges facts that would entitle
plaintiff to relief pursuant to some legal theory. A claim shall only be dismissed when it
appears beyond a doubt that a plaintiff is not entitled to relief under any set of facts that
it might prove in support of its claim. In re Waee Payment Litigation, 2000 ME 162 ¶ 3,
756 A.2d 217, 220.
1. Counts I and I11 - Breach of Contract
Counts I and I11 of Davric's complaint allege that defendants breached sections
2.3 and 3.l(e) of the so-called Industry Agreement. & Complaint 4141 20-21, 71. Thus,
contrary to defendants' arguments, Davric is not relying upon an implied obligation of
good faith and fair dealing. There may be issues as to the meaning of contractual
obligations "to work to develop appropriate changes to ensure that gaming machines
will be associated with Scarborough Downs" and "to support all applications filed by
Davric," but those issues cannot be resolved in the context of a motion to dismiss.
In their reply memorandum, defendants argue that only Capital Seven was a
signatory to the Industry Agreement, and that Capital Seven is not alleged to have
engaged in the alleged breaches. First, this argument was not presented in defendants'
original memorandum, so it would not be an appropriate basis for dismissal even if it
were otherwise correct. Second, the complaint sufficiently alleges that Capital Seven is
an alter ego of defendant Scott and also alleges that actions to frustrate Davric's
attempts to secure local approvals were taken by undisclosed agents acting on behalf of
Capital Seven and Scott. Defendants' motion to dismiss is denied as to Counts I and 111. 2. Count IV - Wrongful Use of Civil Proceedings
Defendants argue that under Maine law, the dismissal of an action without a
determination on the merits cannot support a claim for wrongful use of civil
proceedings. There is authority to effect that a dismissal on procedural grounds does
not necessarily constitute a favorable termination for purposes of a subsequent
wrongful use of civil proceedings action. See Palmer Development Corp. v. Gordon,
1999 ME 22 ¶¶ 10-11, 723 A.2d 881, 884. However, both the Restatement (Second) of
Torts 5 674, comment j and the Law Court in Pepperell Trust Co. v. Mountain Heir
Financial Corp., 1998 ME 46
may consist of the withdrawal of a claim by the party who filed suit.
Count IV is sufficient to survive a motion to dismiss.
3. Count V - Defamation
Davric's claims of defamation are based on allegedly false statements made by
alleged agents of defendants concerning Penn National and Peter Carlino, Penn
National's CEO. The complaint alleges that Davric entered into a development
agreement with Penn National in the fall of 2003 to open a commercial racetrack with
gaming machnes, Complaint ¶ 29, and that defendants engaged, inter alia, in a
campaign of defamation to prevent such a racetrack. Id.'l[B 38-40,45-57,62-63,94. The
problem with tIus claim is that an action for defamation "is personal to the plaintiff and
cannot be founded on defamation of another." Prosser and Keaton, Torts 5 111 at 778 n.
48 (5' ed. 1984). Indeed, one of the requisites of an action for defamation is that the
defamatory statement be "of and concerning the plaintiff." Lester v. Powers, 596 A.2d
65/69 (Me. 1991) (emphasis added). In the court's view, what is alleged here is that (1) defendants' agents made
defamatory statements about Penn National and Carlino and (2) the agents
simultaneously stated that Davric was associated with Penn National and Carlino. Tlus
does not convert the statements in question into statements that defamed Davric.
Davric cannot pursue claims of defamation based on statements made about Penn
National and Carlino.
The complaint also alleges, without specifics, that defendants distributed false
and misleading information, "including personal information about Davric and its
president, Sharon Terry" to city counselors in Saco and Westbrook. Complaint ql 38.
See also id. 4[ 93 (allegation that defendants caused various statements to be made
concerning Davric and its officers). However, it is not sufficient to allege that
unspecified defamatory statements were made. If Davric is claiming actual defamatory
statements were made about Davric (as opposed to Penn National), the defendants are
entitled to sufficient notice of the contents of any those statements so as to be able to
determine whether defenses such as truth and privilege should be raised. See Lester v.
Powers, 596 A.2d at 68 n.4; Picard v. Brennan, 307 A.2d 833, 834-35 (Me. 1973).
Given that Davric has already had an opportunity to amend its complaint and
has not provided any specifics as to alleged defamatory statements about Davric itself,
Count V of the complaint shall be dismissed.
4. Count VI - Unjust Enrichment
Davric's unjust enrichment claim is somewhat problematic. The elements of a
claim for unjust enrichment are that (1)the plaintiff conferred a benefit on defendants;
(2) the defendants had knowledge of that benefit; and (3) defendants accepted the
benefit under circumstances that make it inequitable for the benefit to be retained without payment of its value. Forrest Associates v. Passamaquoddv Tribe, 2000 ME 195 91 14, 760 A.2d 1041, 1045-46. In this instance the alleged benefit conferred was the support Davric allegedly provided under the Industry Agreement, whch in turn
allegedly assisted defendants in obtaining the right to operate gaming machnes in
Bangor.
There may be problems with this theory including, inter alia, the issue of whether
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STATE OF MAINE . -. SUPERIOR COURT - I
CUMBERLAND, ss. CIVIL ACTION J I
% -. - ,. Docket No. CV-05-580
DAVRIC MAINE CORP.,
Plaintiff,
v. ORDER
SHAWN A. SCOTT, et al.,
Defendants.
Before the court is a motion by defendants Shawn Scott and Capital Seven LLC
to dismiss Counts I and I11 through IX of the complaint filed by plaintiff Davric Maine
Corporation.
At the same time as they filed their motion to dismiss, Scott and Capital Seven
filed an answer to the complaint. Davric opposed the motion to dismiss and at the
same time filed a motion for leave to file what Davric describes as a "clarified"
complaint. Scott and Capital Seven have not opposed Davric's motion for leave to
amend the complaint and instead argue that their motion to dismiss applies equally to
the complaint as clarified. See Defendants' Reply in Support of Motion to Dismiss dated March 1, 2006, at 1-2.
Davric's motion for leave to file a "clarified" complaint is therefore granted
without opposition and the complaint as amended on January 6, 2006 is therefore the
operative pleading for purposes of the instant motion and for all further proceedings.'
On a motion to dismiss, the material allegations of the complaint must be taken
as admitted. The complaint must be read in the light most favorable to the plaintiff to
Defendants shall file an amended answer to plaintiff's January 6,2006 complaint within 10 days of the filing of this order. determine if it sets forth elements of a cause of action or alleges facts that would entitle
plaintiff to relief pursuant to some legal theory. A claim shall only be dismissed when it
appears beyond a doubt that a plaintiff is not entitled to relief under any set of facts that
it might prove in support of its claim. In re Waee Payment Litigation, 2000 ME 162 ¶ 3,
756 A.2d 217, 220.
1. Counts I and I11 - Breach of Contract
Counts I and I11 of Davric's complaint allege that defendants breached sections
2.3 and 3.l(e) of the so-called Industry Agreement. & Complaint 4141 20-21, 71. Thus,
contrary to defendants' arguments, Davric is not relying upon an implied obligation of
good faith and fair dealing. There may be issues as to the meaning of contractual
obligations "to work to develop appropriate changes to ensure that gaming machines
will be associated with Scarborough Downs" and "to support all applications filed by
Davric," but those issues cannot be resolved in the context of a motion to dismiss.
In their reply memorandum, defendants argue that only Capital Seven was a
signatory to the Industry Agreement, and that Capital Seven is not alleged to have
engaged in the alleged breaches. First, this argument was not presented in defendants'
original memorandum, so it would not be an appropriate basis for dismissal even if it
were otherwise correct. Second, the complaint sufficiently alleges that Capital Seven is
an alter ego of defendant Scott and also alleges that actions to frustrate Davric's
attempts to secure local approvals were taken by undisclosed agents acting on behalf of
Capital Seven and Scott. Defendants' motion to dismiss is denied as to Counts I and 111. 2. Count IV - Wrongful Use of Civil Proceedings
Defendants argue that under Maine law, the dismissal of an action without a
determination on the merits cannot support a claim for wrongful use of civil
proceedings. There is authority to effect that a dismissal on procedural grounds does
not necessarily constitute a favorable termination for purposes of a subsequent
wrongful use of civil proceedings action. See Palmer Development Corp. v. Gordon,
1999 ME 22 ¶¶ 10-11, 723 A.2d 881, 884. However, both the Restatement (Second) of
Torts 5 674, comment j and the Law Court in Pepperell Trust Co. v. Mountain Heir
Financial Corp., 1998 ME 46
may consist of the withdrawal of a claim by the party who filed suit.
Count IV is sufficient to survive a motion to dismiss.
3. Count V - Defamation
Davric's claims of defamation are based on allegedly false statements made by
alleged agents of defendants concerning Penn National and Peter Carlino, Penn
National's CEO. The complaint alleges that Davric entered into a development
agreement with Penn National in the fall of 2003 to open a commercial racetrack with
gaming machnes, Complaint ¶ 29, and that defendants engaged, inter alia, in a
campaign of defamation to prevent such a racetrack. Id.'l[B 38-40,45-57,62-63,94. The
problem with tIus claim is that an action for defamation "is personal to the plaintiff and
cannot be founded on defamation of another." Prosser and Keaton, Torts 5 111 at 778 n.
48 (5' ed. 1984). Indeed, one of the requisites of an action for defamation is that the
defamatory statement be "of and concerning the plaintiff." Lester v. Powers, 596 A.2d
65/69 (Me. 1991) (emphasis added). In the court's view, what is alleged here is that (1) defendants' agents made
defamatory statements about Penn National and Carlino and (2) the agents
simultaneously stated that Davric was associated with Penn National and Carlino. Tlus
does not convert the statements in question into statements that defamed Davric.
Davric cannot pursue claims of defamation based on statements made about Penn
National and Carlino.
The complaint also alleges, without specifics, that defendants distributed false
and misleading information, "including personal information about Davric and its
president, Sharon Terry" to city counselors in Saco and Westbrook. Complaint ql 38.
See also id. 4[ 93 (allegation that defendants caused various statements to be made
concerning Davric and its officers). However, it is not sufficient to allege that
unspecified defamatory statements were made. If Davric is claiming actual defamatory
statements were made about Davric (as opposed to Penn National), the defendants are
entitled to sufficient notice of the contents of any those statements so as to be able to
determine whether defenses such as truth and privilege should be raised. See Lester v.
Powers, 596 A.2d at 68 n.4; Picard v. Brennan, 307 A.2d 833, 834-35 (Me. 1973).
Given that Davric has already had an opportunity to amend its complaint and
has not provided any specifics as to alleged defamatory statements about Davric itself,
Count V of the complaint shall be dismissed.
4. Count VI - Unjust Enrichment
Davric's unjust enrichment claim is somewhat problematic. The elements of a
claim for unjust enrichment are that (1)the plaintiff conferred a benefit on defendants;
(2) the defendants had knowledge of that benefit; and (3) defendants accepted the
benefit under circumstances that make it inequitable for the benefit to be retained without payment of its value. Forrest Associates v. Passamaquoddv Tribe, 2000 ME 195 91 14, 760 A.2d 1041, 1045-46. In this instance the alleged benefit conferred was the support Davric allegedly provided under the Industry Agreement, whch in turn
allegedly assisted defendants in obtaining the right to operate gaming machnes in
Bangor.
There may be problems with this theory including, inter alia, the issue of whether
and to what extent it can be determined that Davric's support benefited defendants and
how to value that benefit. The court also agrees that the amount recoverable under an
unjust enrichment theory is the value of the benefit conferred and retained - whch
would not necessarily be the same as the value of the monopoly position that
defendants allegedly obtained when the Bangor referendum passed and Davric was
unable to obtain passage of a similar local referendum.
However, these are issues for another day. On the face of the complaint, Davric
has adequately alleged a claim for unjust enrichment.
5. Count VII - Fraud
Notwithstanding defendants' arguments, the court concludes that Davric has
alleged fraud with sufficient particularity in this case.
6. Counts IX and X - Punitive Damages
Defendants argue that if only contractual claims were to survive for trial, the
punitive damage claims in Counts IX and X would have to be dismissed because
punitive damages are not available on contractual claim^.^ Because Davric's wrongful
There is also a question whether punitive damages are available for unjust enrichment.
5 use of civil proceedings and fraud claims remain in the case, however, defendants'
motion to dismiss must be denied with respect to Counts IX and X.
The entry shall be:
For the reasons stated, plaintiff's motion for leave to file a "clarified" complaint is
granted. Defendants' motion to dismiss is granted as to Count V of plaintiff's January
6, 2006 complaint and denied in all other respects. The clerk is directed to incorporate
tlus order in the docket by reference pursuant to Rule 79(a).
DATED: July 18,2006
L5
Thomas D. Warren Justice, Superior Court ' COLIRTS nd County 3x 287 le 041 12-0287
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