Hardie-Tynes, Co. v. SKF United States, Inc.

• Decision Date: 16 May 2018
• Docket Number: Case No.: 2:16-CV-1417-VEH
• Parties: HARDIE-TYNES, CO., INC., Plaintiff, v. SKF USA, INC., Defendant.
• Court: U.S. District Court — Northern District of Alabama

HARDIE-TYNES, CO., INC., Plaintiff, v. SKF USA, INC., Defendant.

Case No.: 2:16-CV-1417-VEH

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

May 16, 2018

MEMORANDUM OPINION AND ORDER

I. Introduction

Plaintiff Hardie-Tynes, Co., Inc. ("Hardie-Tynes) initiated this commercial action against SKF USA, Inc. ("SKF") on August 29, 2016. (Doc. 1). Invoking diversity jurisdiction pursuant to 28 U.S.C. § 1332, Hardie-Tynes has alleged that SKF supplied deficient bearings for the Matlacha Bridge Replacement Project in Lee County, Florida (the "Project"). (Doc. 1 at 1; id. ¶ 1). On March 16, 2017, Hardie-Tynes sought leave to amend its complaint to include a fraudulent suppression count. (Doc. 28). After reviewing a round of briefing by the parties, the Court denied Hardie-Tynes's Motion for Leave To Amend Complaint (the "Amend Motion") on the grounds of futility on June 5, 2017. (See generally Doc. 39).

In compliance with the Court's 10-day deadline set out in Appendix III to the Uniform Initial Order (doc. 11 at 26 § F), on June 15, 2017, Hardie-Tynes filed a Motion for Reconsideration (the "Reconsideration Motion"). (Doc. 40). Hardie-Tynes also requested oral argument. (Doc. 41).

On June 23, 2017, SKF opposed the Reconsideration Motion on the basis that Hardie-Tynes did not meet the discretionary standard on reconsideration. (Doc. 42). The Court then set the Reconsideration Motion for a hearing and a deadline for SKF to respond to the merits of Hardie-Tynes's arguments. (Doc. 43).

SKF filed its merits-based opposition on July 17, 2017. (Doc. 44). Hardie-Tynes followed with its reply on July 31, 2017. (Doc. 45). On August 4, 2017, Hardie-Tynes filed a Notice of Corrected Proposed Amended Complaint. (Doc. 46).

The Court held a hearing on the Reconsideration Motion on August 17, 2017. (Doc. 48 at 1); (see also Doc. 49 (transcript of proceedings held on August 17, 2017)). Consistent with that hearing, the Court granted the Reconsideration Motion in that Hardie-Tynes was given the opportunity to file an amended verified fraud count with "factual allegations consistent both with the pleading requirements arising under Rules 8 and 9 of the Federal Rules of Civil Procedure and the substantive elements arising under APJI 18.05 and 18.08." (Doc. 9 at 2-3).

Hardie-Tynes filed an amended complaint with verified fraudulent suppression allegations on August 31, 2017. (Doc. 50). SKF followed with a Motion To DismissPlaintiff's Amended Complaint (Verified as to Count Four) (doc. 53) (the "Dismissal Motion") on September 25, 2107. The parties have briefed the Dismissal Motion.¹ (Docs. 54, 55). As analyzed below, the Dismissal Motion is GRANTED IN PART and otherwise is DENIED.²

II. Standards

A. Rule 12(b)(6)

A Rule 12(b)(6) motion attacks the legal sufficiency of the complaint. See FED. R. CIV. P. 12(b)(6) ("[A] party may assert the following defenses by motion: (6) failure to state a claim upon which relief can be granted[.]"). The Federal Rules of Civil Procedure require only that the complaint provide "'a short and plain statementof the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 103, 2 L. Ed. 2d 80 (1957) (footnote omitted) (quoting FED. R. CIV. P. 8(a)(2)), abrogated by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S. Ct. 1955, 1965, 167 L. Ed. 2d 929 (2007); see also FED. R. CIV. P. 8(a) (setting forth general pleading requirements for a complaint including providing "a short and plain statement of the claim showing that the pleader is entitled to relief").

While a plaintiff must provide the grounds of his entitlement to relief, Rule 8 does not mandate the inclusion of "detailed factual allegations" within a complaint. Twombly, 550 U.S. at 555, 127 S. Ct. at 1964 (quoting Conley, 355 U.S. at 47, 78 S. Ct. at 103). However, at the same time, "it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 550 U.S. at 563, 127 S. Ct. at 1969.

"[A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Iqbal, 556 U.S. at 679, 129 S. Ct. at 1950. "While legal conclusions can provide the framework of a complaint, they must be supported byfactual allegations." Id. "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. (emphasis added). "Under Twombly's construction of Rule 8 . . . [a plaintiff's] complaint [must] 'nudge[] [any] claims' . . . 'across the line from conceivable to plausible.' Ibid." Iqbal, 556 U.S. at 680, 129 S. Ct. at 1950-51.

A claim is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949. "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. (quoting Twombly, 550 U.S. at 556, 127 S. Ct. at 1965).

B. Rule 9(b)

FED. R. CIV. P. 9(b) states:

(b) Fraud or Mistake; Conditions of Mind. In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.

Id.; see also ALA. R. CIV. P. 9(b) (similar).

The Eleventh Circuit has synthesized the following framework for applying the Rule 9(b) standard:

"The particularity rule serves an important purpose in fraud actions by alerting defendants to the 'precise misconduct with which they are charged' and protecting defendants 'against spurious charges of immoral and fraudulent behavior.'" Durham v. Bus. Management Assocs., 847 F.2d 1505, 1511 (11th Cir. 1988) (quoting Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984)).³ The application of Rule 9(b), however, "must not abrogate the concept of notice pleading." Id. Rule 9(b) is satisfied if the complaint sets forth "(1) precisely what statements were made in what documents or oral representations or what omissions were made, and (2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same, and (3) the content of such statements and the manner in which they misled the plaintiff, and (4) what the defendants obtained as a consequence of the fraud." Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F.3d 1364, 1371 (11th Cir. 1997) (internal quotation omitted).

Ziemba v. Cascade Int'l, Inc., 256 F.3d 1194, 1202 (11th Cir. 2001).

Relying upon pre-Bonner Fifth Circuit precedent,⁴ the Supreme Court of Alabama has explained how a litigant pleads fraud with sufficient particularity:

Rule 9(b), ARCP, provides that when fraud is alleged the circumstances constituting the fraud shall be stated with particularity. This does not require every element to be stated with particularity, but the pleader must use more than generalized or conclusionary statements setting out the fraud. The pleader must state the time, the place, the contents or substance of the false representations, the fact misrepresented, and an identification of what has been obtained. See Committee Comments to Rule 9(b), ARCP.

Robinson v. Allstate Ins. Co., 399 So. 2d 288, 289-290 (Ala. 1981) (emphasis added) (citing Rubens v. Ellis, 202 F.2d 415 (5th Cir. 1953)); see also Rubens, 202 F.2d at 417 ("The form of these allegations is wholly insufficient under Civil Rule 9(b), which requires that in all averments of fraud or mistake, the circumstances constituting such fraud or mistake shall be stated with particularity.") (emphasis added); id. (describing plaintiff's collateral attack of a prior judgment on the ground of fraud as "only a categorical assertion" that inadequately "amounts only to a conclusion").

III. Analysis

A. Preliminary Considerations

Hardie-Tynes's amended complaint adds a fourth claim against SKF-one for fraudulent suppression. (Doc. 50 at 9-27 ¶¶ 31-90). As previously recognized by this Court, the elements of fraudulent suppression under Alabama law are "(1) that [SKF] had a duty to disclose the existing material fact; (2) that [SKF] suppressed this material fact; (3) that [SKF]'s suppression of this fact induced [Hardie-Tynes] to act or to refrain from acting; and (4) that [Hardie-Tynes] suffered actual damage as a proximate result."⁵ State Farm Fire & Cas. Co. v. Owen, 729 So. 2d 834, 837 (Ala.1998) (citing Booker v. United American Ins. Co., 700 So. 2d 1333, 1339 (Ala. 1997)). Additionally, the Code of Alabama clarifies that:

Suppression of a material fact which the party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from the particular circumstances of the case.

Ala. Code § 6-5-102.⁶

Further, "[t]he question whether a party had a duty to disclose is a question of law to be determined by the trial court." Barnett v. Funding Plus of Am., Inc., 740 So. 2d 1069, 1074 (Ala. 1999) (citing Owen, 729 So. 2d at 838). In deciding this threshold issue, this Court must consider:

(1) the relationship of the parties; (2) the relative knowledge of the parties; (3) the value of the particular fact; (4) the plaintiff's opportunity to ascertain the fact; (5) the customs of the trade; and (6) other relevant circumstances.

Owen, 729 So. 2d at 842-43; see also Sirmon v. Wyndham Vacation Resorts, Inc., 922 F. Supp. 2d...