Blanchard v. Folkman (In re Folkman)
| Decision Date | 10 March 2022 |
| Docket Number | Adversary 20-4083,20-40864 |
| Parties | IN RE: PAUL J. FOLKMAN xxx-xx-9912 and HSUEH MEI FOLKMAN xxx-xx-21981013 Royal Oaks Dr., McKinney, TX 75070, Debtors v. PAUL J. FOLKMAN, HSUEH MEI FOLKMAN, FOLKMAN DEVELOPMENT CORP., BROOKDALE CORPORATION, NRT NEW ENGLAND, LLC d/b/a Coldwell Banker Residential Brokerage, Defendants JEFFREY BLANCHARD and JANINE BLANCHARD, Plaintiffs |
| Court | U.S. Bankruptcy Court — Eastern District of Texas |
IN RE: PAUL J. FOLKMAN xxx-xx-9912 and HSUEH MEI FOLKMAN xxx-xx-21981013 Royal Oaks Dr., McKinney, TX 75070, Debtors
JEFFREY BLANCHARD and JANINE BLANCHARD, Plaintiffs
v.
PAUL J. FOLKMAN, HSUEH MEI FOLKMAN, FOLKMAN DEVELOPMENT CORP., BROOKDALE CORPORATION, NRT NEW ENGLAND, LLC d/b/a Coldwell Banker Residential Brokerage, Defendants
No. 20-40864
Adversary No. 20-4083
United States Bankruptcy Court, E.D. Texas, Sherman Division
March 10, 2022
Chapter 7
MEMORANDUM OF DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS
JOSHUA P. SEARCY UNITED STATES BANKRUPTCY JUDGE
Before the Court for consideration is the "Motion to Dismiss" (the "Motion") filed by the Defendant NRT New England LLC d/b/a Coldwell Banker Residential Brokerage (the "Defendant" or "Coldwell") on July 28, 2021. Defendant moves to dismiss Counts Six (6) through Nineteen (19) of the Complaint in this matter pursuant to Fed.R.Civ.P.
8(a), [1] 9(b), [2] and 12(b)(6).[3] In their "Complaint for Damages Against Defendants and Objections to Debtors' Discharge and Dischargeability" (the "Complaint"), Plaintiffs, Jeffrey Blanchard and Janine Blanchard (the "Plaintiffs"), allege a total of nineteen (19) different causes of action, including multiple counts against Coldwell under Massachusetts law. On August 11, 2021, Plaintiffs filed an objection in opposition to the Motion. Coldwell subsequently filed a reply, and Plaintiffs a surreply. Upon due consideration of the pleadings and the relevant legal authorities, the Court agrees in part with Coldwell's Motion, and finds that Plaintiffs should be required to amend their Complaint to provide a more definite statement of their claims. For the reasons stated in this Memorandum of Decision and Order, Coldwell's Motion should be GRANTED in part and DENIED in part.
I. Jurisdiction
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157(a), and the authority to enter a final judgment in this adversary proceeding because it constitutes a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I) and (J). The Court notes, however, that Plaintiffs have made a jury demand and allege numerous state law claims against Coldwell. Reference to this Court pursuant to the Order of Reference of
Bankruptcy Cases and Proceedings Nunc Pro Tunc, General Order 1984-08-06, of the United States District Court for the Eastern District of Texas has not been withdrawn.
II. Factual and Procedural Background[4]
The Complaint alleges that Debtors previously owned a single-family residence located at 190 Winter St., Mansfield, MA 02048 (the "Property").[5] This property was listed for sale by Coldwell on behalf of Debtors.[6] Plaintiffs offered to purchase and did in fact purchase the Property from Debtors.[7] After sale of the Property, Plaintiffs' allege that they discovered damaged pipes, mold, and water stains which had to be remedied.[8]Furthermore, Plaintiffs' allege that their son suffered a number of health problems as a result of these conditions.[9]
On July 13, 2020, Debtors, Paul J Folkman and Hsueh Mei Folkman filed a voluntary petition for Chapter 7 relief under Title 11 of the United States Code (the "Bankruptcy Code") in Case 20-40864[10] (the "Main Case").[11] Christopher Moser was
appointed as Chapter 7 Trustee and held a § 341 meeting of creditors on June 19, 2020. Debtors have not yet been granted a discharge.
On August 31, 2020, Plaintiffs filed the Complaint in this case against Debtors, Folkman Development Corporation, Brookdale Corporation, and Coldwell.[12]Subsequently, Plaintiffs voluntarily dismissed claims against Brookdale Corporation with prejudice.[13] Plaintiffs requested entry of default against Coldwell, which the Court denied.[14]
The Complaint lists nineteen (19) separate causes of action. Counts One (1) through Five (5) are not alleged against Coldwell and therefore are not addressed in this memorandum. Counts Six (6) through Nineteen (19) each allege a different cause of action against both Debtors and Coldwell. Only the counts regarding Coldwell are at issue in the Motion. Coldwell seeks dismissal of these counts based on: (1) a failure to comply with the strictures of Fed.R.Civ.P. 9(b); (2) a failure to allege the existence of a contract between Plaintiffs and Coldwell as a necessary element; or (3) a failure to allege facts sufficient to support the existence of a necessary element or intent. Plaintiffs filed
their "Objection to Coldwell's Motion to Dismiss" (the "Objection"), contending that they allege "facts sufficient to establish Massachusetts state law claims against Coldwell for violations of Massachusetts' tort and contract laws" in the Complaint.[15]
III. Relief Requested
Defendant seeks an order granting dismissal of Counts Six (6) through Nineteen (19) in the Complaint with respect to Coldwell only.
IV. Analysis
A. Legal Standards
A motion to dismiss under Fed.R.Civ.P. 12(b)(6) cannot be properly granted if a claim "may be supported by showing any set of facts consistent with the allegations in the complaint." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 546 (2007). Alternatively, a claim may not be dismissed based solely on a court's supposition that the pleader is unlikely "to find evidentiary support for his allegations or prove his claim to the satisfaction of the factfinder." Id. at n.8. Although detailed factual allegations are not required, a plaintiff must show they are entitled to relief using more than "labels and conclusions." Id. at 545. Furthermore, "a formulaic recitation of the elements of a cause of action will not do." Id. The complaint must be factually suggestive, so as to "raise a right to relief above the speculative level," and into the "realm of plausible liability." Id. at n.5. When considering a Rule 12(b)(6) motion, a court must accept all of the plaintiff's
allegations as true. Ballard v. Wall, 413 F.3d 510, 514 (5th Cir. 2005). Motions to dismiss under Rule 12(b)(6) are disfavored and rarely granted. Priester v. Lowndes County, 354 F.3d 414, 418 (5th Cir. 2004); Ollie v. Plano Independent School Dist., 564 F.Supp.2d 658, 660 (E.D. Tex. 2008).
Rule 9(b) requires the circumstances constituting fraud to be plead with "particularity." Williams v. WMX Technologies, Inc., 112 F.3d 175, 177 (5th Cir. 1997). Under the particularity requirement, the party asserting the fraud claim must allege "the existence of acts and circumstances sufficient to warrant the pleaded conclusion that fraud ha[s] occurred." Haber Oil Co. Inc. v. Swinehart (Matter of Haber Oil Co., Inc.), 12 F.3d 426, 439 (5th Cir. 1994); see also Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir. 2005) ("the Rule 9(b) standards require specificity as to the statements (or omissions) considered to be fraudulent, the speaker, when and why the statements were made, and an explanation why they are fraudulent."). "What constitutes 'particularity' will necessarily differ with the facts of each case." Shushany v. Allwaste, Inc., 992 F.2d 517, 521 (5th Cir. 1993). "At a minimum, [Rule 9] requires that a plaintiff set forth the 'who, what, when, where, and how' of the alleged fraud." U.S. ex rel. Williams v. Bell Helicopter Textron Inc., 417 F.3d 450, 453 (5th Cir.2005). Thus, the application of Rule 9(b) is flexible and influenced by the circumstances of the case. "Though Rule 9(b) requires parties asserting fraud claims to provide more specific allegations than that required of other claims, the Rule does not require plaintiffs to assert every fact they will attempt to
prove at trial. Rather, the Fed.R.Civ.P. 9(b) requirements "must be read in connection with Fed.R.Civ.P. 8 which requires only a short and plain statement of the claim showing that the pleader is entitled to relief." TransFirst Holdings, Inc. v. Phillips, No. 3:06-CV-2303-P, 2007 WL 1468553, at *2 (N. D. Tex. May 18, 2007).
Recently, the Hon. Eduardo Rodriguez considered "shotgun pleadings" in the context of a motion similar to that at issue. A "shotgun pleading" is one which fails "to one degree or another, and in one way or another, to give the defendants adequate notice of the claims against them and the grounds upon which each claim rests." Chowdary v. Ozcelebi (Ozcelebi), Nos. 20-70295, 21-7001, 2021 Bankr. LEXIS 3541, at *7 (Bankr.S.D.Tex. 2021). In Chowdary, the court identified four types of shotgun pleadings, including: (1) a complaint containing multiple counts adopting the allegations of all preceding counts, (2) a complaint full of conclusory, vague, and immaterial facts not obviously connected to a particular cause of action, (3) a complaint failing to separate into a different count each cause of action or claim for relief, and (4) a complaint which includes multiple claims against multiple defendants without specifying who is responsible for which acts or omissions. Chowdary, 2021 Bankr. LEXIS 3541, at *6-7 (citing Weiland v. Palm Beach Cty. Sheriff's Office, 792 F.3d 1313, 1321-23 (11th Cir. 2015). The lack of clarity in such complaints unduly burdens defendants and courts by obscuring through inadequate notice which claims are meritorious and which lack sufficient basis. To cure such a failure, a court may require submission of a more definite
statement pursuant to Fed.R.Civ.P. 12(e). Chowdary, 2021 Bankr. LEXIS 3541, at *7.
A motion for a more definite statement under Fed.R.Civ.P. 12(e) should only be granted when the pleading at issue "is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading." The motion must state the defects in the pleading and the details desired. A party, however, may not use a Rule 12(e) motion as a substitute for discovery. See Mitchell v. E-Z Way Towers, Inc., 269 F.2d 126, 132 (5th Cir.1959) ("[A] motion for a more definite statement is not to be used to assist in getting the facts in preparation for...
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