The opinion of the court was delivered by: Elaine E. Bucklo, United States District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiff Circle Group Internet, Inc. ("CGI"), a consulting firm,
retained defendant Fleishman-Hillard, Inc. ("FH"), a public relations
firm, to perform a variety of public relations and marketing services for
CGI. On July 3, 2000, the parties executed a contract outlining the
services FH was to perform and the fees CGI was to pay. FH allegedly
failed to complete its obligations as promised. CGI sued FH in the
Circuit Court of Cook County, Illinois, for breach of contract, breach of
implied-in-fact contract, and fraudulent misrepresentation, seeking
damages for FH's alleged nonperformance. FH removed the case on the basis
of diversity and now moves under Rule 12(b)6 of the Federal Rules of
Civil Procedure to dismiss the suit against it for failure to state a
claim on which relief can be granted. I deny the motion.
CGI's complaint contains three separate counts. Count I accuses FR of
breach of contract. In its motion and reply seeking dismissal of this
count, FR relies solely on the argument that CGI fails to state a claim
for breach of contract because FH fully performed its obligations under
the contract. This is a factual defense that cannot be addressed in a
motion to dismiss. A motion to dismiss should be granted only when it is
clear beyond doubt that the plaintiff can prove no set of facts to
support the allegations in his claim. Strasburger v. Board of Educ.,
143 F.3d 351, 359 (7th Cir. 1998). There are many possible sets of facts
that might support CGI's claim. Therefore, I decline to dismiss Count I.
Count II of CGI's complaint accuses FH of breach of contract
implied-in-fact. FH argues that this count should be dismissed because
the parties had an express agreement, and it would be inconsistent for
this court to find that the parties had both express and implied
agreements on the same subject matter. However, the parties have agreed
that Missouri law governs their agreement, and in Missouri, "the finding
of both an express and implied contract is not inconsistent where . . .
the terms of the implied contract do not materially alter or differ from
the express agreement." Hudson v. DeLonjay, 732 S.W.2d 922, 928 (Mo. Ct.
App. 1987). As CGI alleges an implied-in-fact contract that does not
differ from the written contract at all, there is no inconsistency
between the two claims under Missouri law, and I deny the motion to
dismiss Count II.
Count III of CGI's complaint alleges fraudulent misrepresentation,
stating that in order to induce CGI to enter the contract, FH's
representatives falsely described their firm as the foremost public
relations firm in the world and falsely promised to generate a steady
stream of media attention.
FH bases its argument that Count III should be dismissed on two
theories. First, it argues that CGI has failed to plead every essential
element of fraud, as required by Missouri law, and has failed to do so
"with particularity" as required by the Federal Rules. Missouri
procedural law, such as its pleading rules, is inapplicable here. The
Federal Rules, which govern the adequacy of pleading in this court,
require only that in any averment of fraud, the complaint must state the
circumstances of fraud "with particularity," Fed. R. Civ. P. 9(b), including
the who, what, where and when of the alleged fraud. Ackerman v.
Northwestern Mut. Life Ins. Co., 172 F.3d 467 (7th Cir. 1999). The
complaint states that on June 30, 2000 ("when"), at CGI's Mundelein
office ("where"), FH officers Michael Zimmerman and Greg Connel ("who")
stated that FH is the foremost public relations firm in the world and
that FH would generate a steady stream of media coverage for CGI
("what"). This is sufficient to satisfy the requirements of Rule 9(b).
Wafra Leasing Corp. 2999 1-A v. Prime Capital Corp., 204 F. Supp.2d 1120,
1125-26 (N.D. Ill. 2002) (Bucklo, J.).
Next, FH claims that the alleged misrepresentations are not fraudulent
because they reflected the opinions of the speakers. In Missouri,
"expressions of opinion cannot constitute fraud." Constance v. B.B.C.
Development Co., 25 S.W.3d 571, 587 (Mo. Ct. App. 2000). Fact is defined
as any matter that is susceptible to exact knowledge, and opinion as any
matter that cannot be known exactly, although this rule is subject to the
circumstances of a particular case. Reis v. Peabody Coal Co.,
997 S.W.2d 49, 65 (Mo. Ct. App. 1999). The two statements allegedly made
by ELI officers seem quite clearly to be statements of opinion. Whether a
public relations firm is "foremost" in the country is
not susceptible to
exact knowledge, and the level of media coverage FH would generate in the
future is virtually by definition unknowable. However, "the general rule
[that expressions of opinion cannot constitute fraud] is inapplicable
if, in addition to expressing an opinion, material facts have been
withheld." Constance, 25 S.W.3d at 587. Count III complains that the FH
officers knew that they would be unable to fulfill their promises due to
a change in the media climate and the unwillingness of journalists to
deal with FH's staff. Such withholding of critical information by the
officers could constitute fraud. Therefore, FH has failed to show that
there is no set of facts CGI could prove that could support its
conclusions. I decline to dismiss Count III.
The motion to dismiss is DENIED.
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