Borsheim Builders Supply, Inc. v. Merrick Bank Corp.
Decision Date | 03 June 2019 |
Docket Number | Case No. 1:17-cv-186 |
Citation | 387 F.Supp.3d 957 |
Parties | BORSHEIM BUILDERS SUPPLY, INC., Plaintiff, v. MERRICK BANK CORPORATION, a Utah Corporation, and HSBC Card Services, Inc., a Delaware Corporation, Defendants. |
Court | U.S. District Court — District of North Dakota |
Mark Schwab, Grande, Frisk & Thompson, Fargo, ND, for Plaintiff.
Blaine T. Johnson, Benjamin J. Sand, Crowley Fleck PLLP, Bismarck, ND, Paul Aldo Grammatico, Pro Hac Vice, Katten Muchin Rosenman LLP, Los Angeles, CA, for Defendants.
ORDER GRANTING MOTIONS TO DISMISS
Before the court are motions to dismiss filed by Merrick Bank Corporation ("Merrick") and HSBC Card Services, Inc. ("HSBC") (collectively the "defendants").
For the reasons set forth below, the motions are granted.1
Plaintiff Borsheim Builders Supply, Inc. initiated this action by the filing of its complaint on September 11, 2017. In this action, plaintiff attempts to recover from defendants money that one of plaintiff's employees, Daphney Harstad ("Harstad"), fraudulently diverted and used to pay off personal debts she owed on credit cards issued by defendants. In relevant part, the complaint alleges:
(Doc. No. 1) (emphasis in bold eliminated). In seeking to recover the embezzled money, plaintiff asserts claims for conversion, negligence, aiding and abetting fraud, and money had and received.
In the motions to dismiss now before the court, defendants argue that plaintiff's claims must be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) for failure state a claim upon which relief can be granted. More particularly, defendants argue that the claims are not legally cognizable for various reasons. They also argue the claims are time-barred. Finally, defendants contend that the aiding and abetting fraud claim must be dismissed because of the failure to plead it with the particularity required by Fed. R. Civ. P. 9(b).
Defendants argue that plaintiff has failed to plead its claim of aiding and abetting Harstad's fraudulent conduct with the particularity required by Fed. R. Civ. 9. According to the defendants:
[a]bsent from the claim are any particular references to (1) the bank employees or representatives who had knowledge of and provided substantial assistance to Harstad in carrying out her fraudulent scheme; (2) the specific checks used to perpetuate the fraudulent scheme; (3) when the alleged fraudulent scheme was agreed upon; (4) how the fraudulent scheme was carried out. Simply put, the claim fails to identify specifically the "who, what, where, when, and how" of the alleged fraud and should be dismissed.
(Doc. No. 8, p. 13). Defendants argue that because of these deficiencies plaintiff's fraud claim should be dismissed.
Fed. R. Civ. P. 12(b)(6) requires dismissal of an action if there has been a failure to state a claim upon which relief can be granted. To state a cognizable claim, the complaint need only meet the requirement of Rule 8(a)(2) that it contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). The exceptions are those claims covered by Rule 9(b), which will be addressed separately below.
While the pleading requirements of Rule 8(a)(2) are not onerous, more is required than simply expressing a desire for relief and declaring an entitlement to it. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 n.3, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (" Twombly"). The complaint must state enough to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Id. at 555, 127 S.Ct. 1955. Also, the complaint must state enough to satisfy the "plausibility standard" for stating a cognizable claim as established in Twombly and further amplified by the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662, 678–84, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (" Iqbal").
Under the Iqbal/ Twombly plausibility standard, the complaint must state enough factual matter, which if accepted as true, states a claim that is plausible on the face of the allegations. See id. A claim crosses the threshold of being plausible when the factual allegations do more than merely create a suspicion of a legally cognizable action and "raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Complaints that offer nothing more than labels and conclusions or a formulaic recitation of the elements are not sufficient. Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ; Iqbal, 556 U.S. at 680–81, 129 S.Ct. 1937.
Determining whether a complaint states a plausible claim is "a context specific task" that requires the court "to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. "A well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of the facts alleged is improbable, and ‘that a recovery is very remote and unlikely.’ " Twombly, 550 U.S. at 556, 127 S.Ct. 1955 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ).
Fraud claims must comply with the heightened pleading standards of Rule 9(b), which require plaintiffs to plead "the circumstances constituting fraud ... with particularity." Fed. R. Civ. P. 9(b). "Under Rule 9(b), a plaintiff must plead ‘such matters as the time, place and contents of false representations, as well as the identity of the person making the misrepresentation and what was obtained or given up thereby.’ " Abels v. Farmers Commodities Corp., 259 F.3d 910, 920 (8th Cir. 2001). "Therefore, the party must typically identify the ‘who, what, where, when, and how’ of the alleged fraud." United States ex rel. Costner v. URS Consultants, Inc., 317 F.3d 883, 888 (8th Cir. 2003). "This requirement is designed to enable defendants to respond ‘specifically, at an early stage of the case, to potentially damaging allegations of immoral and criminal conduct.’ " Abels, at 920. "Conclusory allegations that a defendant's conduct was fraudulent and deceptive are not sufficient to satisfy the rule." BJC Health Sys. v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir. 2007) (quoting Commercial Prop. Invs. v. Quality Inns Int'l Inc., 61 F.3d 639, 644 (8th Cir. 1995) ).
That being said, Cunningham v. PFL Life Ins. Co., 42 F. Supp. 2d 872, 885 (N.D. Iowa 1999) (quoting Roberts v. Francis, 128 F.3d 647, 651 n.5 (8th Cir. 1997) ). "The level of particularity required depends on, inter alia, the nature of the case and the relationship between the parties." Payne v. U.S., 247...
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