Enercon v. Global Computer Supplies, Inc.

• Decision Date: 22 December 2009
• Docket Number: No. 09-cv-394-P-S.,09-cv-394-P-S.
• Parties: ENERCON, Plaintiff, v. GLOBAL COMPUTER SUPPLIES, INC., Defendant.
• Court: U.S. District Court — District of Maine

675 F.Supp.2d 188

ENERCON, Plaintiff, v. GLOBAL COMPUTER SUPPLIES, INC., Defendant.

No. 09-cv-394-P-S.

United States District Court, D. Maine.

December 22, 2009.

COPYRIGHT MATERIAL OMITTED

Mark E. Dunlap, David A. Goldman, Norman, Hanson & Detroy, Portland, ME, for Plaintiff.

Peter J. Brann, Stacy O. Stitham, Brann & Isaacson, Lewiston, ME, for Defendant.

ORDER ON MOTION TO DISMISS

GEORGE Z. SINGAL, District Judge.

The dispute in this case arises from Plaintiff Enercon's purchase of certain computer software from Defendant Global Computer Supplies, Inc. ("Global"). After the software was delivered and Enercon had partially paid for it, Enercon realized it did not need any of the software and had been overcharged to boot. In a seven-count Complaint (Docket # 1-1) alleging fraud, negligence, mutual mistake, and statutory violations, Enercon seeks damages and rescission of its contracts with Global. Before the Court is Defendant's Motion to Dismiss (Docket # 10) ("Def.'s Mot.") pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6), which the Court GRANTS IN PART and DENIES IN PART for the reasons stated herein.

I. LEGAL STANDARD

A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) tests the "legal sufficiency" of a complaint. Gomes v. Univ. of Me. Sys., 304 F.Supp.2d 117, 120 (D.Me.2004). The general rule of pleading requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). This short and plain statement need only "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotation and alteration omitted). However, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (internal quotation omitted).

There is an exception to the general rule of pleading that applies to claims of fraud or mistake. See Alternative Sys Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 29 (1st Cir.2004); Westinghouse Elec. Co. v. Healy, 502 F.Supp.2d 138, 141 (D.Me.2007). These claims are "subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b)." United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 226 (1st Cir.2004). Rule 9(b) requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed. R.Civ.P. 9(b). The heightened requirement serves "(1) to place the defendants on notice and enable them to prepare meaningful responses; (2) to preclude the use of a groundless fraud claim as a pretext to discovering a wrong or as a `strike suit'; and (3) to safeguard defendants from frivolous charges which might damage their reputations." New England Data Servs., Inc. v. Becher, 829 F.2d 286, 289 (1st Cir.1987).

When considering a motion to dismiss pursuant to either Rule 9(b) or Rule 12(b)(6), the Court must accept as true all well-pleaded factual allegations and draw all reasonable inferences in Enercon's favor. Gargano v. Liberty Int'l Underwriters, Inc., 572 F.3d 45, 48 (1st Cir.2009). The Court will not, however, "credit conclusory assertions, subjective characterizations or outright vituperation." Barrington Cove Ltd. P'ship v. R.I. Hous. & Mortgage Fin. Corp., 246 F.3d 1, 5 (1st Cir.2001) (internal quotation omitted). Distinguishing sufficient from insufficient pleadings is "a context-specific task that requires the [Court] to draw on its judicial experience and common sense." Ashcroft, 129 S.Ct. at 1950.

II. FACTUAL BACKGROUND

Plaintiff Enercon, a Maine corporation, manufactures and sells electronic devices. These devices employ computer technologies or are designed for use in computers. In some cases, Enercon installs on these devices computer software, including Norton Antivirus and PC Anywhere software. To ensure that its customers obtain current, licensed versions of this software when they purchase Enercon's devices, Enercon purchases licenses for any software that it installs. It is then up to Enercon's customers to purchase renewal licenses or new or upgraded versions of the installed software, as the case may be.¹ Defendant Global is a Georgia corporation doing business in Maine. Global sells computer software, including Norton Antivirus and PC Anywhere software, as well as original and renewal licenses for that software. This case arises from a series of transactions between Enercon and Global that occurred during April 2008.

During the relevant timeframe, Global employed an individual named Tom Carra, who acted as Global's sales agent in its dealings with Enercon. Enercon employed an individual named Bambi Bahr, who was relatively new to her position as purchaser for Enercon. At some point in April 2008, Carra contacted Bahr by telephone. Carra told Bahr that Enercon's licenses for Norton Antivirus and PC Anywhere software had expired or were about to expire, and that Enercon had to renew the licenses. He also told her that if she ordered renewal licenses immediately, he could arrange for a three-month grace period so that the licenses that had already expired would not lapse. In other words, Carra told Bahr that if she acted quickly Enercon would be in compliance with its licensing agreements.

Following this call, Bahr filled out two purchase orders. The first, dated April 18, 2008, called for "1,000 units of Norton Antivirus and 1,000 units of PC Anywhere software." (Compl. ¶ 24.) The second, dated April 29, 2008, called for an additional "1,040 units of the Norton Antivirus and 1,040 units of the PC Anywhere software." (Id. ¶ 26.) The two purchase orders specified that the price for each unit of Norton Antivirus was $21.80 and the price for each unit of PC Anywhere software was $45.03. (See Compl. at Exs. 1, 2.) Global shipped the units specified in the first purchase order on April 29, 2008, and invoiced Enercon the next day for $66,830— the cost of all units shipped. Global shipped the units specified in the second purchase order on two dates. It shipped the first portion on May 1, 2008, and invoiced Enercon the next day for $24,058.80; it shipped the balance on May 21, 2008, and invoiced Enercon the next day for $45,444.40. All told, Global shipped to Enercon $136,333.20 worth of Norton Antivirus and PC Anywhere software, and invoiced Enercon accordingly. Enercon paid the first two invoices in full with a check, dated May 7, 2008, in the amount of $90,888.80. However, before it paid the third invoice, Enercon discovered it had no need for any of the units Bahr had ordered. By June 2008, Enercon had notified Global of the problem and has repeatedly requested that Global return the $90,888.80 payment. Global has refused.

Enercon explains that it is not obligated to renew the Norton Antivirus licenses and that the PC Anywhere software does not require renewal licenses at all. It alleges that Carra knew or should have known these facts when he called Bahr and told her that Enercon had to renew its licenses for this software. Enercon further alleges that Carra "negligently, intentionally or knowingly misrepresented the need for Enercon to renew these licenses and took advantage of an obviously inexperienced Enercon employee to push through these orders." (Compl. ¶ 39.) In addition, Enercon alleges that Global knowingly and intentionally overcharged it for the Norton Antivirus renewal licenses. Enercon says that Global charged it $21.80 per renewal license, which is the price of an original license, instead of the price for a renewal license, which is typically "a fraction of the original license fee."² (Id. ¶ 41.)

Based on these facts, Enercon pleads seven tort, contract, and statutory claims against Global. In Counts I, II, III, and VI, Enercon claims that Global is liable for the torts of intentional, negligent, and unintentional misrepresentation, and conversion. In Counts IV and V, Enercon effectively seeks rescission of its contracts with Global based on fraud in the inducement and mutual mistake of fact. In Count VII, Enercon claims Global is liable for violation of the Maine Unfair Trade Practices Act (the "UTPA"), 5 M.R.S.A. § 205-A, et seq.

III. DISCUSSION

Global advances three arguments for dismissal of Enercon's Complaint. First, it argues that Enercon does not have standing to recover under the UTPA because it did not purchase the Norton Anti-Virus renewal licenses and PC Anywhere software primarily for personal, family, or household purposes as the UTPA requires. Second, it argues that Maine does not recognize the tort of unintentional misrepresentation and that Count III must therefore be dismissed. Finally, it contends that Rule 9(b) requires dismissal of all of Enercon's remaining common law claims, which share a core allegation of fraud or mistake, because Enercon has failed to plead with sufficient particularity the circumstances constituting the fraud or mistake.

A. UTPA Violation (Count VII)

The UTPA "creates a private right of action only for those who have purchased goods, services or property `primarily for personal, family or household purposes.'" C-B Kenworth, Inc. v. Gen. Motors Corp., 706 F.Supp. 952, 957 (D.Me. 1988) (emphasis in original) (quoting 5 M.R.S.A. § 213(1)). Global points out that Enercon has not alleged that its purchases of the Norton Antivirus renewal licenses and PC Anywhere software fit within this explicit limitation. (See Def.'s Mot. at 2-4.) In response, Enercon says it is fair to infer that its...