Rosales v. AT & T Information Systems, Inc., Civ. A. No. 88-C-1127.

• Decision Date: 12 December 1988
• Docket Number: Civ. A. No. 88-C-1127.
• Citation: 702 F. Supp. 1489
• Parties: Daniel J. ROSALES and National Business Communications, Inc., Plaintiffs, v. AT & T INFORMATION SYSTEMS, INC., Defendant.
• Court: U.S. District Court — District of Colorado

702 F. Supp. 1489

Daniel J. ROSALES and National Business Communications, Inc., Plaintiffs, v. AT & T INFORMATION SYSTEMS, INC., Defendant.

Civ. A. No. 88-C-1127.

United States District Court, D. Colorado.

December 12, 1988.

COPYRIGHT MATERIAL OMITTED

Dirk W. de Roos and Elizabeth A. MacDonald, Kutak Rock & Campbell, and Gary B. Witt, AT & T Information Systems, Inc., Denver, Colo., for defendant.

Gary S. Cohen, Denver, Colo., for plaintiffs.

ORDER

CARRIGAN, District Judge.

Plaintiff Daniel J. Rosales filed this action in the state district court for the City and County of Denver, Colorado, alleging a claim under 42 U.S.C. § 1981, together with various state law claims for relief. On July 19, 1988, the defendant AT & T Information Systems, Inc. ("AT & T") filed a verified petition for removal pursuant to 28 U.S.C. §§ 1441 and 1446. Jurisdiction is alleged to exist under 28 U.S.C. §§ 1331 and 1332.

On August 22, 1988, Rosales and an additional plaintiff, National Business Communications, Inc. ("National Business"), submitted an amended complaint. The amended complaint alleges the following facts: Rosales was employed by the defendant AT & T and its affiliated and predecessor companies, including Mountain States Telephone and Telegraph Company, from April 1970 to April 14, 1986. At some point during that time, Rosales decided to apply for an AT & T dealership. In late fall of 1985, and early 1986, Rosales had numerous conservations with "authorized agents and representatives" of AT & T concerning the award of an AT & T dealership to him. In reliance on those conversations, Rosales incorporated co-plaintiff National Business to serve as the legal entity that would obtain and hold his dealership. National Business then applied for an AT & T dealership.

The amended complaint further alleges that in February, March and early April of 1986, AT & T's authorized agents advised Rosales that National Business' application had been approved, albeit unofficially. On April 10, 1986, Rosales was informed "by AT & T's authorized agents and representatives" that the only reason for the delay in official approval of the dealership application was Rosales' employment with AT & T. He was told that AT & T's legal staff was concerned about a potential conflict of interest arising out of Rosales' employment with AT & T. "In reliance upon the representations of Defendant AT & T's authorized agents and representatives, Plaintiff Rosales resigned from his employment at Defendant AT & T." (¶ 10) Subsequently, however, AT & T rejected National Business' dealership application.

The amended complaint contains nine claims for relief. The first claim alleges that AT & T violated both plaintiffs' rights under 42 U.S.C. § 1981 when it rejected National Business' application. Plaintiffs assert that the application was denied because Rosales is of Hispanic-Mexican-American descent and race.

The second claim asserts that AT & T breached its fiduciary duty owed to the plaintiffs, and that such breach constituted constructive fraud by AT & T upon the plaintiffs. The third claim asserts that AT & T, and its "authorized agents and representatives," knowingly or recklessly misrepresented material facts to Rosales. The fourth claim asserts that AT & T, and its "authorized agents and representatives," negligently misrepresented material facts to Rosales.

The fifth claim for relief asserts that AT & T breached an express covenant of good faith and fair dealing. The sixth claim alleges that AT & T breached an implied covenant of good faith and fair dealing. The seventh claim asserts that a contract was created between the plaintiffs and AT & T, and that AT & T breached the contract. The eighth claim alleges that a contract was created between Rosales and AT & T for the award of an AT & T dealership to National Business, that National Business was a third party beneficiary, and that AT & T breached the contract. The ninth claim alleges that AT & T is liable to both plaintiffs under a promissory estoppel theory.

Currently pending is the defendant's Motion to Dismiss Amended Complaint, Or in the Alternative, Motion to Strike and Motion for More Definite Statement. Defendant additionally requests an award of costs and attorneys' fees reasonably incurred in responding to the plaintiffs' claims. The parties have briefed the issues and oral argument would not materially assist my decision.

Although it propounds additional arguments, AT & T primarily contends that each of the asserted nine claims for relief must be dismissed either: (1) because it fails to comply with the pleading requirement set forth in Rule 8(a)(2), Fed.R.Civ.P.; (2) pursuant to Rule 12(b)(6), Fed.R.Civ.P., because it fails to state a claim upon which relief may be granted; or (3) under Rule 9(b), Fed.R.Civ.P., because it fails to plead fraud with requisite particularity. Alternatively, AT & T requests that the plaintiffs be required, pursuant to Rule 12(e), Fed.R. Civ.P., to provide a more definite statement of the facts alleged in the first, second, third, seventh, eighth and ninth claims.

In reviewing the sufficiency of a complaint when tested by a motion to dismiss, I must accept as true the complaint's allegations and view them in a light most favorable to the plaintiffs. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). The complaint must stand unless it appears beyond doubt that the plaintiffs have alleged no set of facts that would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957).

To comply with Rule 8(a)(2), Fed.R. Civ.P., a pleading must contain, among other things, "a short and plain statement of the claim showing that the pleader is entitled to relief." Rule 8(a)(2) requires that a claim for relief provide adequate notice to the defendant of the claim(s) against it sufficient to permit it to prepare a defense or response.

Under Rule 9(b), Fed.R.Civ.P., "in all averments of fraud or mistake, the circumstances constituting the fraud shall be stated with particularity." To meet the Rule 9(b) standard a claimant must identify the circumstances constituting the fraud. Saine v. A.I.A., Inc., 582 F.Supp. 1299, 1303 (D.Colo.1984). More specifically, a plaintiff must: (1) identify the particular individuals with whom he or she dealt; (2) designate the occasion on which the fraudulent statements were made, and by whom; and (3) describe what misstatements and half truths were expressed and how. Id. (citing Noland v. Gurley, 566 F.Supp. 210, 216 (D.Colo.1983); and Trussell v. United Underwriters, Ltd., 228 F.Supp. 757, 774 (D.Colo.1964)).

Rule 12(e), Fed.R.Civ.P., provides, in relevant part:

"If a pleading to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, the party may move for a more definite statement before interposing a responsive pleading. The motion shall point out the defects complained of and the details desired."

"In view of liberal discovery rules and procedures available to all parties, a motion for more definite statement is generally discouraged unless the pleading is so unintelligible that the defendant does not understand the allegation and is unable to respond." Runyan v. United Brotherhood of Carpenters, 566 F.Supp. 600, 608 (D.Colo.1983).

I now address the defendant's contentions as they relate to each of the plaintiffs' claims for relief.

A. First Claim — 42 U.S.C. § 1981.

The first claim for relief alleges that AT & T rejected National Business' dealership application because of Rosales' Hispanic/Mexican American descent and race, and in so doing violated National Business' and Rosales' rights under 42 U.S. C. § 1981.

Section 1981 provides:

"All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other."

In Runyon v. McCrary, 427 U.S. 160, 96 S.Ct. 2586, 49 L.Ed.2d 415 (1976), the Court held that § 1981 prohibits racial discrimination in the making and enforcement of private contracts. It must be noted, however, that the Court recently decided to reconsider Runyon. Patterson v. McClean, ___ U.S. ___, 108 S.Ct. 1419, 99 L.Ed.2d 879 (1988). If Runyon is overruled then the plaintiffs will have no actionable claim under § 1981. Nevertheless, Runyon currently stands as the controlling authority and must be followed by lower courts.

1. Standing.

AT & T contends that both plaintiffs' § 1981 claims must be dismissed on the ground that National Business and Rosales lack standing to assert their § 1981 claims against AT & T. In determining whether either plaintiff has standing under § 1981, I shall consider each plaintiff's claim separately.

(a). Plaintiff National Business' Standing.

AT & T argues that National Business' claim under § 1981 must be dismissed because "a corporation has no racial identity and cannot bring a claim in its own right under § 1981." (Motion, at 2.) In support, AT & T relies on Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977). There a non-profit corporation, Metropolitan Housing Development Corporation ("MHDC"), sought a rezoning permit from the Village of Arlington Heights, Illinois, in order to construct racially integrated low and moderate income housing. MHDC and three individuals seeking to represent a class of "low and moderate income minority-group members who work or desire to work in Arlington Heights at rents they can afford" filed an action seeking declaratory and injunctive relief under the Equal...