McLeod v. Costco Wholesale Corp.
| Docket Number | A23A1055 |
| Decision Date | 26 October 2023 |
| Parties | McLEOD v. COSTCO WHOLESALE CORP. et al. |
| Court | Georgia Court of Appeals |
This case highlights, to some degree, the differences between motions to dismiss for failure to state a claim and motions for summary judgment - and why those differences matter on appellate review. Ronald McLeod sued Costco Warehouse Corporation, Christopher Metheny, and seven additional individual defendants after Costco allegedly reneged on an agreement to pay McLeod for implementing a meat inventory management system at various Costco warehouses. The Superior Court of Gwinnett County, relying primarily on cases applying the summary judgment standard of OCGA § 9-11-56, granted Costco and Metheny's motion to dismiss for failure to state a claim pursuant to OCGA § 9-11-12 (b) (6).[1] McLeod appeals, raising seven separate enumerations of error. McLeod now acknowledges that his complaint failed to state a claim for quantum meruit, and so we affirm the trial court's judgment granting Costco and Metheny's motion to dismiss as to that claim. However, because we conclude that McLeod's remedy for a failure to plead certain counts related to fraud with particularity is a more definite statement, and because McLeod satisfied the minimal pleading requirements imposed by OCGA § 9-11-8 (a) (2) (A) as to his other claims, we reverse the remainder of the trial court's judgment granting Costco and Metheny's motion to dismiss and remand this case for further proceedings.
Permeating each claim in this case is Georgia's well-settled law that a motion to dismiss the complaint for failure to state a claim under OCGA § 9-11-12 (b) (6) . . should not be sustained unless (1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought.
(Citation, punctuation, and footnote omitted; emphasis supplied.) Lyle v. Fulcrum Loan Holdings, 354 Ga.App. 742 (841 S.E.2d 182) (2020); see also Depository Trust &Clearing Corp. v. Jones, 348 Ga.App. 474, 475 (823 S.E.2d 558) (2019); Osprey Cove Real Estate v Towerview Constr., 343 Ga.App. 436, 437 (1) (808 S.E.2d 425) (2017).
To that end, minimum pleading requirements are found in OCGA § 9-11-8 (a) (2) (A), which requires that the complaint contain a short and plain statement of the claims showing that the pleader is entitled to relief, and we have held that the touchstone is fair notice - "this short and plain statement must include enough detail to afford the defendant fair notice of the nature of the claim and a fair opportunity to frame a responsive pleading."
(Citation and punctuation omitted.) Osprey Cove Real Estate, 343 Ga.App. at 437 (1). "If, within the framework of the complaint, evidence may be introduced which will sustain a grant of the relief sought by the claimant, the complaint is sufficient and a motion to dismiss should be denied." (Citation omitted; emphasis supplied.) Depository Trust &Clearing Corp., 348 Ga.App. at 475. "Although a trial court's ruling on a motion to dismiss for failure to state a claim is subject to de novo review, we accept the allegations of fact that appear in the complaint and view those allegations in the light most favorable to the plaintiff." (Citation and punctuation omitted.) Id.; see also Osprey Cove Real Estate, 343 Ga.App. at 437 (1). Ultimately, "any doubts regarding the complaint must be construed in favor of the plaintiff." Norman v. Xytex Corp., 310 Ga. 127, 131 (2) (848 S.E.2d 835) (2020).
So viewed, McLeod's complaint reveals that he "developed a secret and confidential system designed to increase inventory accuracy, increase profits, and manage budgetary expenses associated with the commercial sale of meat and meat-related products" in 2002 (the "System"). In March 2018, Costco hired McLeod as a meat supervisor at its Alpharetta, Georgia warehouse. McLeod implemented the System during his third week of employment, and the warehouse realized a $65,000 increase in gross profit as a result. In 2019, Costco transferred McLeod to its newly opened Sharpsburg, Georgia warehouse as a meat cutter, and he suggested that management implement the System there as well.
On or about October 2, 2019, McLeod met with several Costco managers and employees, including Metheny, who commended McLeod for the System and claimed they would meet with Costco's chief executive officer to further implement the System. Prior to the meeting, Costco did not have a beef and pork ordering system or budgetary expense control system. A Costco general manager[2] allegedly promised McLeod monetary compensation and rewards for the further development and implementation of the System, and McLeod eventually implemented the System at Costco's Sharpsburg warehouse in November 2019. In addition, Metheny further induced McLeod's reliance on Costco's promises. McLeod also alleged that, during his employment and in reliance upon Costco's representations, McLeod shared various secrets and strategies related to the System with Costco and its employees. Although Costco implemented the System at additional locations and continues to benefit from it, Costco has never compensated McLeod for his work on the System.
McLeod sued Costco, Metheny, and seven additional Costco employees[3] for fraudulent misrepresentation, negligent misrepresentation, breach of contract, misappropriation and conversion of an unpatented or unpatentable idea, quantum meruit, promissory estoppel, punitive damages, injunctive relief, and attorney fees.[4] Following a hearing, the trial court granted Costco and Metheny's motion to dismiss,[5] and this appeal follows.[6]
1. Considering McLeod's second enumeration first,[7] he contends that the trial court erred in dismissing his causes of action for fraudulent misrepresentation and negligent misrepresentation. Because the general remedy for a failure to plead fraud-related claims is a more definite statement, rather than dismissal, we agree.
The tort of fraudulent misrepresentation has five essential elements: (1) the defendant made false representations; (2) the defendant knew the representations were false at the time (scienter); (3) the defendant made the representations intending to deceive the plaintiff; (4) the plaintiff justifiably relied upon such representations; and (5) the defendant's misrepresentations resulted in damages. See Grand Master Contracting v. Lincoln Apt. Mgmt., 314 Ga.App. 449, 451 (2) (724 S.E.2d 456) (2012). Similarly, "[t]he elements of a claim for negligent misrepresentation are: (1) the defendant's negligent supply of false information to foreseeable persons, known or unknown; (2) such persons' reasonable reliance upon that false information; and (3) economic injury proximately resulting from such reliance." (Citation and punctuation omitted.) Liberty Capital v. First Chatham Bank, 338 Ga.App. 48, 54 (2) (a) (789 S.E.2d 303) (2016).
In this case, McLeod's complaint included allegations that Costco representatives promised him monetary compensation and rewards for his development and implementation of the System, that McLeod relied upon Costco's representations when he shared sensitive information about the System with Costco and its employees, and that McLeod had not received any compensation as promised by Costco for his work on the System.
"In all averments of fraud or mistake, the circumstance constituting fraud or mistake shall be stated with particularity." OCGA § 9-11-9 (b). As Costco and Metheny rightly note, that did not happen in this case, as McLeod's complaint did not allege a confidential relationship or other circumstances with particularity. However, when faced with a complaint that fails to plead allegations of fraud with particularity, "the proper remedy to address such deficiencies in pleading is a . . . more definite statement, not a dismissal of the complaint or judgment on the pleadings, at least so long as the plaintiff is able and willing to amend his pleadings to conform to the statutory requirements." (Citation and punctuation omitted.) Osprey Cove Real Estate, 343 Ga.App. at 441 (3) (); see also Campbell v. Ailion, 338 Ga.App. 382, 388-389 (4) (790 S.E.2d 68) (2016). McLeod even cited that principle in his response to Costco and Metheny's motion to dismiss. Accordingly, we reverse the trial court's order dismissing McLeod's claims for fraudulent misrepresentation and negligent misrepresentation.[8] "On remand, . . . the trial court may order [McLeod] to plead a more definite statement of [his] fraud claim[s], provided the order identifies the ways in which [his] current complaint fails to conform to the pleading requirements of the Civil Practice Act." (Citation and punctuation omitted.) Campbell, 338 Ga.App. at 389 (4).
2. Next, in three enumerations of error, McLeod argues that the trial court erred in dismissing his claims for breach of contract, quantum meruit, and promissory estoppel. In part, we agree.
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