Dah Chong Hong, Ltd. v. Silk Greenhouse, Inc., 89-674-CIV-T-17(A).

• Citation: 719 F. Supp. 1072
• Decision Date: 06 September 1989
• Docket Number: No. 89-674-CIV-T-17(A).,89-674-CIV-T-17(A).
• Parties: DAH CHONG HONG, LTD., Plaintiff, v. SILK GREENHOUSE, INC., et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

719 F. Supp. 1072

DAH CHONG HONG, LTD., Plaintiff, v. SILK GREENHOUSE, INC., et al., Defendants.

No. 89-674-CIV-T-17(A).

United States District Court, M.D. Florida, Tampa Division.

September 6, 1989.

Carl D. Motes, Maguire, Voorhis & Wells, P.A., Orlando, Fla., for plaintiff.

Robert V. Williams, Taub & Williams, P.A., Tampa, Fla., for defendants.

ORDER ON MOTION TO DISMISS AND STRIKE

KOVACHEVICH, District Judge.

This cause is before the Court on Defendants' motion to dismiss Counts I, III, IV, V, VI and VII and motion to dismiss or strike claims for punitive damages and injunctive relief, filed June 16, 1989, and response thereto, filed June 26, 1989.

A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that Plaintiff can prove no set of facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). A trial court, in ruling on a motion to dismiss, is required to view the complaint in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1947).

Motions to strike on the grounds of insufficiency, immateriality, irrelevancy, and redundancy are not favored, often being considered "time wasters", and will usually be denied unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties. Poston v. American President Lines, Ltd., 452 F.Supp. 568, 570 (S.D.Fla. 1978), citing Augustus v. Board of Public Instruction, 306 F.2d 862 (5th Cir.1962). In evaluating a motion to strike, the Court must treat all well pleaded facts as admitted and cannot consider matters beyond the pleadings. U.S. Oil Co., Inc. v. Koch Refining Co., 518 F.Supp. 957, 959 (E.D.Wis. 1981).

Complaint in this cause was filed May 12, 1989, against Silk Greenhouse, Inc. (Greenhouse), Jere Bradwell, and D. Von Adkins. The complaint contained the following causes of action: 1) violation of 18 U.S.C. Section 1962(c), RICO Act; 2) breach of contract only against Defendant Greenhouse; 3) unjust enrichment only against Defendant Greenhouse; 4) common law fraud only against Defendant Greenhouse; 5) equitable fraud only against Defendant Greenhouse; 6) tortious interference with contractual relations, including employee piracy, only against Defendant Greenhouse; 7) theft of trade secrets only against Defendant Greenhouse; and 8) default of guaranties as to Defendants Bradwell and Adkins. Defendants seek dismissal of all counts except II (breach of contract) and VIII (default on guaranties).

COUNT I

As to Count I (RICO violations), Defendants allege that the complaint fails to state a cause of action. Initially, Defendants assert that the complaint fails to allege the commission of any predicate act in violation of the RICO Act by Defendants Bradwell and Adkins.

This portion of the motion to dismiss is based on Defendants' assertion that the complaint fails to comply with Rule 9(b), Fed.R.Civ.P., which requires pleading fraud with particularity. Fulfillment of the particularity standard requires the complaint to give defendants fair notice of the nature of the claim, notice of the grounds the claim rests on, and must be based on a reasonable belief that a wrong has been committed. Zuckerman v. Franz, 573 F.Supp 351, 355-56 (S.D.Fla.1983).

Rule 9(b) is satisfied if there is sufficient identification of the circumstances constituting fraud so an adequate answer may be prepared. Lipton v. Documation, Inc., 1982 Transfer Binder Fed.Sec.L.Rep. (CCH) 98, 788, 1982 WL 1324 (M.D.Fla. 1982), citing Denny v. Carey 72 F.R.D. 574 (E.D.Pa.1976).

Rule 9(b) must be read in conjunction with Rule 8, Fed.R.Civ.P., notice pleading. The application of Rule 9(b) should not abrogate the concept of notice pleading. The Eleventh Circuit has stated that: "Allegations of date, time or place satisfy the Rule 9(b) requirement that the circumstances of the alleged fraud must be pleaded with particularity ..." Durham v. Business Management Associates, 847 F.2d 1505, 1512 (11th Cir.1988). The Court, after review of the complaint, is satisfied that it sufficiently pleads fraud.

Defendants next assert that Count I should be dismissed because Plaintiff has adequate common law remedies. In this circuit it appears that a plaintiff must have been injured by a pattern of racketeering activity, a showing that a party has committed two "indictable" acts. Banco de Desarrollo Agropecuario v. Gibbs, 640 F.Supp. 1168 (S.D.Fla.1986). Acts that are part of the same scheme or transaction can qualify as distinct predicate acts. Bank of America v. Touche Ross & Co., 782 F.2d 966 (11th Cir.1986). The Supreme Court during the last term stated:

... developing a meaningful concept of "pattern" within the existing statutory framework has proved to be no easy task.

It is, nevertheless, a task we must undertake in order to decide this case. Our guides in the endeavor must be the text of the statute and its legislative history. We find no support in those sources for the proposition, espoused by the Court of Appeals for the Eighth Circuit in this case, that predicate acts of racketeering may form a pattern only when they are part of separate illegal schemes. Nor can we agree with those courts that have suggested that a pattern is established merely proving two predicate acts, (cite omitted), or with amici in this case who argue that the word "pattern" refers only to predicates that are indicative of a perpetrator involved in organized crime or its functional equivalent. In our view, Congress had a more natural and commonsense approach to RICO's pattern element in mind, intending a more stringent requirement than proof simply of two predicates, but also envisioning a concept of sufficient breadth that it might encompass multiple predicates within a single scheme that were related and that amounted to, or threatened the likelihood of, continued criminal activity.

H.J., Inc. v. Northwestern Bell Telephone Co., ___ U.S. ___, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989).

The Court went on to state that the intent of Congress was that, to prove a pattern of racketeering activity, the plaintiff must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity. Id., ___ U.S. at ___, 109 S.Ct. at 2900-01. Whether the predicates proved establish a threat of continued racketeering activity depends on the specific facts of each case. Id., ___ U.S. at ___, 109 S.Ct. at 2902.

The Court finds that the complaint pleads, with sufficient particularity, two or more acts of racketeering activity, including wire and mail fraud. Plaintiff may be able to prove that the multiple predicates alleged constituted a "pattern" by establishing that they satisfy the requirements of relationship and continuity. The motion to dismiss Count I will be denied.

COUNT III

Defendants seek to dismiss Count III (unjust enrichment) because Plaintiff has adequate remedy at law. Defendants assert that it is clear that a cause of action for unjust enrichment is not available where there is an enforceable agreement that the complaint alleges express agreements in effect; and, therefore, that the count should be dismissed.

Plaintiff agrees with the allegation of the motion that a claim for unjust enrichment is not available where there exists an enforceable agreement. However, Plaintiff alleges that he should be allowed to plead unjust enrichment as an alternative to the breach of contract claim. The Court agrees.

COUNTS IV AND V

Defendants assert that Counts IV and V should be dismissed for failure to state a cause of action. The first allegation of this section of the motion to dismiss is that the complaint fails to comply with Rule 9(b), Fed.R.Civ.P. The Court has already considered this question in the earlier discussion of Count I and rejected the assertion.

Next Defendants assert that the allegation of fraud relates to promises of future performance (the promise to pay for goods sixty (60) days after receipt) and is not actionable fraud under Florida law. A promise is actionable fraud where a promisor had "a positive intent not to perform" or where the promise was made without a present intent to perform. Bissett v. Ply-Gem Industries, Inc., 533 F.2d 142, 145 (5th Cir.1976).

Plaintiff pleads, and Defendants admit the complaint contains the assertions, that Defendant Greenhouse did not intend to perform the promise. Rule 9(b) provides that "malice, intent, knowledge, and other conditions of mind" may be generally averred. The complaint is sufficient in this regard.

As to Count V for equitable...