Orion Seafood v. Supreme Group

2012 DNH 146

• Court: District Court, D. New Hampshire
• Decided: August 29, 2012
• Docket: 11-CV-562-SM
• Status: Published

Opinion

Orion Seafood v . Supreme Group 11-CV-562-SM 8/29/12 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Orion Seafood International, Inc., Plaintiff

v. Case N o . 11-cv-562-SM Opinion N o . 2012 DNH 146 Supreme Group B.V., Supreme Logistics, and Supreme Foodservice GmbH, Defendants

O R D E R

Plaintiff, Orion Seafood International, Inc. (“Orion”)

brought this suit against Supreme Foodservice, GmbH (“Supreme

Foodservice”), Supreme Logistics FZE (UAE), and Supreme Group

B.V., for breach of contract, breach of the duty of good faith

and fair dealing, promissory estoppel, equitable estoppel,

fraudulent misrepresentation, and violation of the New Hampshire

Consumer Protection Act, N.H. Rev. Stat. Ann. (“RSA”) ch. 358–A.

As recounted more fully in a contemporaneous order denying

defendants’ motion to dismiss for lack of personal jurisdiction,

Orion alleges that defendants failed to perform their contractual

obligation to purchase some 750,000 pounds of lobster tail and,

further, fraudulently assured Orion of their continuing intent to

perform. Pursuant to Fed. R. Civ. P. 12(b)(6), 1 Supreme Foodservice

seeks dismissal of three counts of the complaint for failure to

state a claim. Because Supreme Foodservice “filed an answer on

the same day it filed this motion, the pleadings are closed and

the court will treat [the] motion to dismiss as a motion for

judgment on the pleadings” under Fed. R. Civ. P. 12(c). Conto v .

Concord Hosp., Inc., 2000 WL 36935, at *1 (D.N.H. Sept. 1 9 , 1999)

(DiClerico, J . ) . See also Level 3 Communications, LLC v . Webb,

Inc., 2012 WL 2199262, at *1 (E.D. V a . June 1 4 , 2012) (“Because

Accumark filed its Motion to Dismiss contemporaneously with its

Answer, the Court will treat the motion as seeking judgment on

the pleadings pursuant to Rule 12(c)”). Accordingly, in ruling

on Supreme Foodservice’s motion, all of the pleadings will be

considered, not just the complaint. Pérez– Acevedo v .

Rivero–Cubano, 520 F.3d 2 6 , 29 (1st Cir. 2008).

Standard of Review

“A motion for judgment on the pleadings under Federal Rule

of Civil Procedure 12(c) is treated much like a Rule 12(b)(6)

motion to dismiss.” Estate of Bennett v . Wainwright, 548 F.3d

1 Among its arguments, Supreme Foodservice says the equitable estoppel and fraudulent inducement claims have not been pled with “particularity,” as required by Fed. R. Civ. P. 9 ( b ) . “[L]ack of compliance with Rule 9(b)'s pleading requirements is treated as a failure to state a claim under Rule 12(b)(6).” Harrison v . Westinghouse Savannah River Co., 176 F.3d 776, 783 n.5 (4th Cir. 1999).

2 155, 163 (1st Cir. 2008) (citing Pérez– Acevedo, 520 F.3d at 2 9 ) .

When ruling on a motion for judgment on the pleadings, the court

takes the facts pled in the light most favorable to the plaintiff

and “draw[s] all reasonably supported inferences in [its] favor.”

Abraham v . Woods Hole Oceanographic Inst., 553 F.3d 1 1 4 , 115 (1st

Cir. 2009).

“To survive a Rule 12(b)(6) motion (and, by extension, a

Rule 12(c) motion) a complaint must contain factual allegations

that raise a right to relief above the speculative level.” Gray

v . Evercore Restructuring L.L.C., 544 F.3d 3 2 0 , 324 (1st Cir.

2008) (quotation omitted). In other words, except where

heightened pleading is otherwise required by rule or statute

(such as by Rule 9(b)), a Rule 12(c) motion will be denied where

the complaint alleges “facts sufficient to establish a ‘claim to

relief that is plausible on its face.’” Id. (quoting Trans–Spec

Truck Serv., Inc. v . Caterpillar Inc., 524 F.3d 315, 320 (1st

Cir. 2008)).

Discussion

Supreme Foodservice seeks dismissal of Orion’s fraudulent

misrepresentation (Count VI) claim on the ground that it does not

meet the heightened pleading requirements of Fed. R. Civ. P.

3 9(b). 2 Defendant also says that Orion’s CPA claim (Count VII)

must be dismissed because the complaint does not plausibly allege

the requisite level of “rascality.” See George v . Al Hoyt &

Sons, Inc., 162 N.H. 123, 129 (2011).

I. Fraudulent Misrepresentation

To state a claim for fraud, the complaint “must meet the

special pleading requirements of Fed. R. Civ. P. 9(b).” Gross v .

Summa Four, Inc., 1995 WL 806823, at *6 (D.N.H. Nov. 8 , 1995).

Rule 9(b) requires that a party alleging fraud “must state with

particularity the circumstances constituting fraud . . . .” Fed.

R. Civ. P. 9 ( b ) . Specifically, the complaint must “allege at a

minimum the identity of the person who made the fraudulent

statement, the time, place, and content of the misrepresentation,

the resulting injury, and the method by which the

misrepresentation was communicated.” Clearview Software Int'l

Inc. v . Ware, 2009 WL 2151017, at * 1 , n . 3 (D.N.H. July 1 5 , 2009)

(quotation omitted).

2 Supreme Foodservice also argues that the equitable estoppel claim (Count V ) must be dismissed for the same reason. It posits that, because an equitable estoppel claim is in the nature of an averment of fraud, Orion’s equitable estoppel claim must, but fails t o , meet the heightened pleading standard of Rule 9 ( b ) . Assuming Rule 9(b) applies to the equitable estoppel claim, it is sufficient under Rule 9(b) for the same reasons the fraud claim is sufficient.

4 Although Rule 9(b) allows “intent” and “knowledge” (such as

fraudulent intent or scienter) to be “alleged generally,” Fed. R.

Civ. P. 9 ( b ) , pleading these “conditions of a person’s mind,”

id., must still meet the minimum requirements of Rule 8 ( a ) , and

therefore, Iqbal’s “plausibility” standard. Ashcroft v . Iqbal,

556 U.S. 6 6 2 , 686-87 (2009) (“Rule 9 merely excuses a party from

pleading” state of mind “under an elevated pleading standard. It

does not give him license to evade the less rigid — though still

operative — strictures of Rule 8 . ” ) . Indeed, in this circuit,

consistent with Iqbal, it has long been the rule that a complaint

must allege the scienter element of fraud by “‘set[ting] forth

specific facts that make it reasonable to believe that defendant

knew that a statement was materially false or misleading.’”

North Am. Catholic Educ. Programming, Inc. v . Cardinale, 567 F.3d

8 , 13 (1st Cir. 2009) (quoting Greenstone v . Cambex Corp., 975

F.2d 2 2 , 25 (1st Cir. 1992)).

The complaint here alleges that “Supreme” fraudulently

misrepresented its intention to fulfill its obligation under the

parties’ agreement. Complaint ¶¶ 119-125, doc. n o . 2 0 , pgs. 20-

21. It recites the following statements in emails from “Supreme”

employees reassuring Orion of Supreme’s intention to place

purchase orders for lobster tail:

5 • In an email dated August 23, 2011, Diana Komarova (alleged in the complaint to be working for “Supreme”) stated that Supreme would place its first purchase order in September of 2011.

• In an email dated September 20, 2011, Komarova stated that a purchase order would be placed “on week 39 which is next week.”

• When no purchase orders were forthcoming, Komarova, by email dated September 29, 2011, reassured Orion that, if given two days, she would confirm the purchase order placement for the next week.

• In a second email dated September 29, Komarova stated “There is [sic] no changes to our original plan.”

• On October 4, 2011, Komarova again stated, in an email to Orion, that “there is [sic] no changes in our plan.”

• In response to Komarova’s October 4 email, Orion sent an email to Komarova and Armin Schroeder (whom the complaint identifies as also working for “Supreme”) inquiring when Supreme would begin issuing purchase orders. Schroeder responded that same day by email, stating that “the target volume remains the same and is approved with the customer” and that Supreme would be meeting with the customer shortly.

• On October 5, Schroeder requested that Orion “continue packing [lobster tail] as per the plan.”

Supreme Foodservice argues that the fraudulent

misrepresentation claim is deficient because (1) it does not

specify Supreme Foodservice’s role in the alleged

misrepresentations, and (2) it does not adequately allege

6 scienter, that i s , it does not adequately allege that Supreme

Foodervice knew that its reassurances of performance were false.

A. Supreme Foodservice’s Role

As required by Rule 9 ( b ) , the complaint identifies the

alleged false representations, including the individuals who made

them (Komarova, and Schroeder); the modes of communication

(email); the relevant dates; and the recipients’ names. Despite

these particulars, however, there is nothing in the complaint

linking Komarova and Schroeder to Supreme Foodservice (nor,

indeed, to any individual defendant). As Supreme Foodservice

points out, the complaint “refers to each individual defendant

only once in the introductory paragraph,” but thereafter uses

only the imprecise term “‘Supreme’ to refer to all three

defendants.” Doc. N o . 10-1, at pg. 9. Moreover, it is not

possible to infer from other factual allegations a link between

the movant here — Supreme Foodservice — and these individuals,

such that their alleged misrepresentations can reasonably be

attributed to that specific “Supreme” entity. In other words,

nothing on the face of the complaint suggests that these

individuals worked for, or on behalf o f , movant Supreme

Foodservice.

7 The result is that Orion’s fraud claim fails to

particularize Supreme Foodservice’s “role in the fraud.”

Securities and Exchange Comm. v . Patel, 2008 WL 782483, at *5

(D.N.H. Mar. 2 4 , 2008) (under Rule 9 ( b ) , “where . . . ‘multiple

defendants are involved, each defendant’s role in the fraud must

be particularized.’”) (quoting Manchester Mfg. Acquisitions, Inc.

v . Sears, Roebuck & Co., 802 F. Supp. 595, 600 (D.N.H. 1992)

(quotation omitted)). That would normally be enough to warrant

dismissal of the fraud claim. See e.g. L’Esperance v . HSBC

Consumer Lending, Inc., 2012 WL 345892, at *8 (D.N.H. Feb. 1 ,

2012) (McCafferty, M . J . ) . Here, however, admissions included in

Supreme Foodservice’s answer supply the missing link between the

allegedly false misrepresentations and Supreme Foodservice. In

its answer, Supreme Foodservice admits that emails sent by

Komarova and Schroeder were sent on its behalf. See e.g. Answer,

doc. 1 1 , pars. 22 and 49 (responding to the allegations that

“Diana Komarova of Supreme” and “Armin Schroeder of Supreme” sent

certain emails to Orion, defendant “admits the allegations . . .

to the extent that the word ‘Supreme’ is understood as meaning

only the Defendant Supreme Foodservice GmbH.”). Indeed, Supreme

Foodservice takes pains throughout its answer to concede its role

in the parties’ communications and to disavow any involvement by

the other two “Supreme” defendants. See McIntyre v . United

States, 336 F. Supp. 2d 8 7 , 97 n.5 (D. Mass. 2004) (on motion for

8 judgment on the pleadings, relying on defendant’s admission in

its answer to supply information missing from the complaint).

B. Scienter

Although dismissal of Orion’s fraud claim is not warranted

on the ground that it fails to link Supreme Foodservice to the

alleged misrepresentations, a question remains regarding the

allegation of scienter. To be sure, the complaint alleges

generally that “Supreme knew, on information and belief, that

these representations were false.” Complaint, doc. n o . 1 , ¶ 1 2 1 ,

pg. 2 0 . But, as Supreme Foodservice correctly points out, absent

additional allegations “set[ting] forth specific facts that make

it reasonable to believe that defendant knew that a statement was

materially false or misleading,” North American Catholic, 567

F.3d at 13 (quotation omitted), the fraud count would be subject

to dismissal.

Orion, in response, points to “specific facts” alleged in

the complaint which, it says, give rise to an adequate inference

that defendant knew its unconditional reassurances of performance

were false. Specifically, two Supreme Foodservice emails contain

statements by Komarova about the falling market demand for

lobster tails. On September 2 9 , 2011, Komarova reassured Orion

that there were “no changes to our original plan,” but also

9 stated, in an apparent attempt to explain Supreme Foodservice’s

delay in placing purchase orders with Orion, that “[w]e’re just

trying to control our pipeline in a better way as we’ve been

overstocked for a while.” Complaint ¶ 4 4 , doc. 1 , at pg. 1 0 . On

October 4 , 2011, Komarova told Orion that “there is [sic] no

changes in our plan,” but also stated that “demand has been

dropping steadily in recent weeks.” Id. at ¶ 4 7 .

Orion says that defendant’s knowledge that it would be

unable to place purchase orders with Orion can be inferred from

its knowledge of the declining lobster tail market. Although

barely, the “factual enhancement” of the general allegation of

scienter moves the fraud claim in this case across “the line

[from] possibility [to] plausibility.” Bell Atlantic Corp. v .

Twombly, 550 U.S. 5 4 4 , 557 (2007).

For the reasons stated, defendant’s motion for judgment on

the pleadings as to Counts VI is denied. The motion is also

denied with respect to the equitable estoppel claim (Count V ) for

the same reasons.

II. New Hampshire Consumer Protection Act

To state a claim under the New Hampshire CPA, RSA ch. 358-A,

plaintiff must plausibly allege that defendant committed any one

10 of fifteen enumerated unlawful acts constituting unfair or

deceptive conduct in trade or commerce, o r , that defendant’s

conduct “attain[ed] a level of rascality that would raise an

eyebrow of someone inured to the rough and tumble of the world of

commerce.” George, 162 N.H. at 129.

Orion’s CPA claim rests on the theory that defendant’s

conduct (i.e., knowingly giving false assurances that it would

buy the agreed-upon quantity of lobster tail) attained a level of

rascality actionable under the CPA. Supreme Foodservice says

that the complaint does not plausibly allege the required

rascality. Even construing (as it must) all allegations in the

light most favorable to Orion, the court agrees that the

complaint fails to state a claim under the CPA.

The parties here are sophisticated business entities who

negotiated at arms-length. Although the Act does apply to

business-to-business transactions, see Eastern Mountain Platform

Tennis, Inc. v . Sherwinn–Williams Co., 40 F.3d 4 9 2 , 497 (1st Cir.

1994), it is “especially difficult” to show rascality in such

circumstances. Knapp Shoes, Inc. v . Sylvania Shoe Mfg. Corp., 72

F.3d 1 9 0 , 200 (1st Cir. 1995) (applying rascality standard under

the Massachusetts consumer protection l a w ) . In other words, in

the “rough and tumble” of arms-length business transactions,

11 common disputes over broken promises ordinarily will not rise to

a level sufficient to support a claim under the Act. See Yorgo

Foods, Inc. v . Orics Indus., Inc., 2011 WL 4549392, at *13

(D.N.H. Sept. 2 9 , 2011).

That is so here, at least as the facts have been pled.

Defendant’s alleged wrongful actions — its allegedly false

assurances of performance and, ultimately, lack of performance —

relate primarily to expectations and obligations under the

agreement. See id. (holding that defendant’s “[r]epeated

assurances of performance, . . . even unrealistic assurances” did

not “rise to the level of rascality necessary to support a cause

of action under New Hampshire’s Consumer Protection Act.”)

To the extent defendant’s alleged conduct constituted fraud,

and not merely breach of contract, the allegations still do not

plausibly support a CPA claim. As noted, a (barely) sufficient

inference of fraudulent intent arises from the contrast between

what defendant knew about the falling market for lobster tail and

its continuing and unconditional assurances that it would fulfill

its purchase requirements. But while that inference saves

Orion’s fraudulent misrepresentation claim, it does not rescue

its CPA claim. Supreme Foodservice’s open disclosures to Orion

about the falling lobster tail market cut significantly against a

12 claim of “rascality.” In other words, viewing the facts alleged

in the light most favorable to Orion, the court finds that

Supreme Foodservice’s conduct would not raise eyebrows in the

competitive business of food procurement.

Accordingly, defendants’ motion for judgment on the

pleadings as to Orion’s claim under New Hampshire’s Consumer

Protection Act, Counts V , is granted.

Conclusion

For these reasons, defendant Supreme Foodservice’s motion

for judgment on the pleadings (document n o . 10) is granted with

regard to Count VII and denied with regard to Counts V and V I .

SO ORDERED.

fc^ •^"^"'^^

Steven J./McAuliffe Jnited States District Judge

August 2 9 , 2012

cc: Christopher Cole, Esq. Brian D. Duffy, Esq. Michael C . Harvell, Esq. Gordon J. MacDonald, Esq. Karyl R. Martin, Esq.