United States District Court, N.D. Illinois, Eastern Division
July 1, 2004.
SA'BUTTAR HEALTH & MEDICAL, P.C., a North Carolina Corporation, Plaintiff,
TAP PHARMACEUTICALS, INC., a Delaware corporation, Defendant.
The opinion of the court was delivered by: JOAN H. LEFKOW, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Sa'Buttar Health & Medical, P.C. ("Clinic"), brings
this action against TAP Pharmaceuticals, Inc. ("TAP"), pursuant
to 28 U.S.C. § 1332,*fn1 alleging in Count I that TAP
breached its contract with the Clinic when TAP refused to fill an
order for the drug Lupron. In Count II, the Clinic alleges that
it was fraudulently induced to enter into a contract when TAP
falsely represented that it would provide a constant supply of
Lupron to the Clinic. In Count III, the Clinic contends repeated
assurances by TAP that an order of Lupron was temporarily
delayed, when in fact it was never shipped, constitutes fraud and
deceit. Before the court is TAP's motion under Federal Rule of
Civil Procedure 12(b)(6) to dismiss Count I and under Federal
Rules of Civil Procedure 9(b) and 12(b)(6) to dismiss Counts II
and III. For the reasons set forth below, the motion is granted. MOTION TO DISMISS STANDARDS
A motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) challenges the sufficiency of the complaint for failure
to state a claim upon which relief may be granted. Gen. Elec.
Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080
(7th Cir. 1997). Dismissal is appropriate only if it appears
beyond a doubt that the plaintiff can prove no set of facts in
support of its claim that would entitle it to relief. Conley v.
Gibson, 355 U.S. 41, 45-46 (1957); Kennedy v. Nat'l Juvenile
Det. Ass'n, 187 F.3d 690, 695 (7th Cir. 1999). In ruling on the
motion, the court accepts as true all well pleaded facts alleged
in the complaint, and it draws all reasonable inferences from
those facts in favor of the plaintiff. Jackson v. E.J. Brach
Corp., 176 F.3d 971, 977 (7th Cir. 1999); Zemke v. City of
Chicago, 100 F.3d 511, 513 (7th Cir. 1996).
In addition to the mandates of Rule 12(b)(6), Federal Rule of
Civil Procedure 9(b) requires "all averments of fraud" to be
"stated with particularity," although "[m]alice, intent,
knowledge, and other condition of mind of a person may be averred
generally." "The rule requires the plaintiff to state the
identity of the person who made the misrepresentation, the time,
place, and content of the misrepresentation, and the method by
which the misrepresentation was communicated to the plaintiff."
Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771,
777 (7th Cir. 1994); see also DiLeo v. Ernst & Young,
901 F.2d 624, 627 (7th Cir. 1990) ("Although states of mind may be
pleaded generally [under Rule 9(b)], the `circumstances' must be
pleaded in detail. This means the who, what, when, where, and
how: the first paragraph of any newspaper story."). ALLEGATIONS OF THE COMPLAINT
According to the Clinic's First Amended Complaint
("Complaint"), in November 1998, Al Woods, a sales representative
of TAP, told Dr. Buttar, President of the Clinic, that TAP would
provide the Clinic with a constant supply of Lupron, a drug used
in the treatment of cancer. Based on this statement, the Clinic
entered into an agreement with TAP whereby TAP would supply the
Clinic's requirements for the drug. After a few orders had been
placed by the Clinic and filled by TAP, Al Woods informed Dr.
Buttar the Clinic soon would be eligible for free samples of
Lupron. Al Woods suggested the Clinic use the free samples for
Medicare patients but submit claims for reimbursement to Medicare
even though the Clinic had not paid for them. He further
suggested a selling price for the drug to the Clinic's patients
that would be consistent with the prices of other physicians.
The Clinic rejected these suggestions because Dr. Buttar
believed they would work a fraud on Medicare and the Clinic's
patients. Then, on May 24, 1999, the Clinic placed an order for
Lupron with TAP but the order was not shipped. Several months
passed, during which time the Clinic was told on several
occasions that the medication was sure to arrive soon, but it
never came. As a result, the Clinic lost clientele, reputation,
and revenue due to its inability to provide Lupron to its
In support of its motion to dismiss Count I, for breach of
contract, TAP argues, (1) it did not breach the contract because
it never accepted the Clinic's May 24, 1999 order, (2) the Clinic
fails to allege breach of a written contract and therefore is
barred by the Statute of Frauds, and (3) the contract contains a
merger clause, making any previous oral agreement between Al Woods and the Clinic void. As for Count II, fraudulent
inducement, and Count III, fraud and deceit, TAP argues (4) the
Clinic fails to plead facts sufficient to establish a scheme to
defraud and (5) the Clinic fails to plead facts with sufficient
particularity as required by Federal Rule of Civil Procedure
9(b). Because the court dismisses Count I based on (1) above and
Counts II and III based on (4) above, it does not address the
A. Breach of Contract
Count I alleges that TAP's failure to fill and deliver an order
of Lupron placed by the Clinic on May 24, 1999, constitutes a
material breach of TAP's contractual duties. Typically, under
Rule 12(b)(6) the court is limited to the four corners of the
complaint when determining whether a plaintiff has adequately
pled a claim upon which relief may be granted. Rosenblum v.
Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir. 2002). A
narrow exception, however, allows a court to consider a document
attached to a motion to dismiss without having to turn the motion
into one for summary judgment, so long as that document is
central to the plaintiff's complaint. Wright v. Associated
Ins. Cos., Inc., 29 F.3d 1244, 1248 (7th Cir. 1994).
In this case, the contract underlying Count I is central to the
Clinic's breach of contract claim, and TAP has attached to its
motion to dismiss a copy of a written agreement between it and
the Clinic. TAP specifically relies on the standard terms of the
contract, which indicate each order received by TAP is subject to
its acceptance, either in writing or by performance, arguing that
the Clinic fails to allege in its Complaint that the May 24, 1999
order was ever accepted by TAP, as would be required for TAP to
have a contractual duty to subsequently fill the order.
Instead, the Clinic claims the contract attached by TAP to its
motion to dismiss is not the contract referred to in its
Complaint, but "a different agreement." The Clinic does not
provide any alternative contract in support of its position, although the
court infers that it refers to the oral agreement between Buttar
and Woods.*fn2 Rather, it claims the sole issue under
Rule 12(b)(6) is whether the Clinic has adequately alleged a breach of
contract action against TAP.
The court disagrees. The policy of the exception, to allow a
court to consider documents outside the four corners of the
complaint, is to prevent a plaintiff from evading dismissal under
Rule 12(b)(6) simply by failing to attach a contract that proves
his claim has no merit. Tierney v. Vahle, 304 F.3d 734, 738
(7th Cir. 2002). In this case, that appears to be what the Clinic
is trying to accomplish by alleging an oral agreement that
preceded the execution of the written document TAP provides.
Moreover, the court is not bound by the plaintiff's allegations
as to the effect of the attached contract but can independently
examine the contract and form its own conclusions. Rosenblum,
299 F.3d at 661. Here, the Clinic claims the contract attached by
TAP is unauthenticated but does not suggest that the document is
inauthentic. See Black v. Rodriguez, No. 01 C 1721, 2002 WL
31045390, at *1 n. 4 (N.D. Ill. Sept. 11, 2002) (citing
Waldridge v. American Hoechst Corp., 24 F.3d 918, 921 (7th
Cir. 1994) (on summary judgment*fn3 evidence need only be admissible in substance not form). The contract
provided by TAP is signed and dated by Dr. Buttar, President of
the Clinic, and the May 24, 1999 order falls within the effective
dates of the contract. Unless the Clinic has good faith grounds
to dispute its authenticity, the court may consider it.
Therefore, because the Clinic fails to provide a contract in
support of its position and because it fails to allege its May
24, 1999 order was ever accepted by TAP, the Clinic's claim for
breach of contract is dismissed.
B. Fraud Claims
In Count II of its Complaint, the Clinic contends it was
fraudulently induced by TAP to enter into a contract for the
supply of Lupron, in part, because TAP assured the Clinic a
constant supply of Lupron would be provided. Under Illinois law,
claims of fraudulent inducement are treated as common law fraud.
Zic v. Italian Government Travel Office, 130 F. Supp.2d 991,
995 (N.D. Ill. 2001). The elements of common law fraud include:
(1) a false statement of material fact, (2) defendant's knowledge
that the statement was false, (3) defendant's intent that the
statement induce the plaintiff, (4) plaintiff's reliance upon the
truth of the statement and (5) plaintiff's damages resulting from
reliance on the statement. Connick v. Suzuki Motor Co.,
174 Ill.2d 482, 496, 675 N.E.2d 584, 591 (1996).
According to the Clinic's Complaint, the false statement at
issue is TAP's promise to provide the Clinic with a constant
supply of Lupron. In Illinois, fraud based on a false
representation of intent to perform a promise or some future
conduct is called "promissory fraud." Doherty v. Kahn,
289 Ill. App.3d 544, 562, 682 N.E.2d 163, 176 (1997). Generally,
promissory fraud is not actionable in Illinois unless the promise
or representation of intention of future conduct is the scheme or device used to accomplish the
fraud. Id. This exception applies when a party makes a promise
without intending to keep the promise, but intending for another
party to rely on it and the other party does rely on the promise
to his detriment. Brdecka v. Gleaner Life Ins. Society, No.
02 C 3076, 2002 WL 1949743, at *3 (N.D. Ill. Aug. 23, 2002). In
this case, the Clinic claims that it relied on TAP's promise to
its detriment because the Clinic lost clientele, reputation, and
revenue when TAP cut-off its supply of Lupron.
Promissory fraud, however, is a disfavored cause of action in
Illinois because it is easy to allege and difficult to prove or
disprove. Bower v. Jones, 978 F.2d 1004, 1012 (N.D. Ill.
1992). Thus, the burden on a plaintiff claiming promissory fraud
is deliberately high. Id. To survive a motion to dismiss, a
plaintiff must be able to point to specific, objective
manifestations of fraudulent intent a scheme or device.
Hollymatic Corp. v. Holly Systems, Inc., 620 F. Supp. 1366,
1369 (N.D. Ill. 1985) (emphasis added).
In the instant case, the Clinic fails to provide any indication
of fraudulent intent on the part of TAP. Initial compliance with
a promise is contrary to the existence of fraudulent intent.
Stunfence, Inc. v. Gallagher Security, Inc., No. 01 C 9627,
2002 WL 31109456, at *2 (N.D. Ill. Sept. 20, 2002). In the
Clinic's Complaint, it admits that TAP received and filled
multiple orders for the Clinic before refusing to fill the May
24, 1999 order. TAP's initial compliance with its promise is an
indication that there was no fraudulent intent on the part of TAP
to induce the Clinic to purchase Lupron.
The Clinic contends TAP initially complied with its promise
because it had not yet approached the Clinic about participating
in TAP's scheme to defraud Medicare and the Clinic's patients.
The Clinic claims that TAP had no intention of supplying Lupron
to the Clinic if it refused to participate in TAP's scheme. However, promissory fraud
requires a showing that the promisor did not intend to keep the
promise at the time the promise was made. E.g., Brusilovsky v.
Figgie Int'l, No. 94 C 1506, 1995 WL 330809, at *6 (N.D. Ill.
May 30, 1995) (emphasis added). Under the circumstances alleged
by the Clinic, TAP could not have known whether it would or would
not keep its promise when the promise was made back in November,
Moreover, there could be no fraudulent intent on the part of
TAP because the Clinic voluntarily entered into a contract for
the supply of Lupron and that contract was not a requirements
contract. If TAP's promise to provide the Clinic with a constant
supply of Lupron was the false statement that induced the Clinic
into switching from a competitor's drug to Lupron, the terms of
the contract put the Clinic on notice that TAP could stop
shipments of Lupron at anytime. While it is unfortunate that the
Clinic suffered a loss because TAP refused to continue to provide
the Clinic with Lupron, the broken promise alone does not support
an inference of fraudulent intent on the part of TAP.
Still, the Clinic alleges that TAP's fraudulent intent is
evident from the close proximity between TAP's initial promise in
November, 1998 and the breach of that promise in May, 1999.
Indeed, a court may infer fraudulent intent where the breach of
promise occurs so close to the promise that the only possible
inference is that the promisor never intended to keep the
promise. Zic, 130 F. Supp.2d at 995-96. On the facts of this
case, the passage of several months between the promise and the
breach is too long to support an inference that TAP never
intended to keep its promise. Cf. id. at 996 (one year too long
to support an inference of fraudulent intent); Razdan v.
General Motors Corp., 979 F. Supp. 755, 759 (N.D. Ill. 1997)
("several months" too long). If a plaintiff cannot establish specific, objective
manifestations of fraudulent intent, then it is presumed that he
cannot prove facts at trial entitling him to relief.
Hollymatic, 620 F. Supp. at 1369. Therefore, given TAP's
initial compliance with its promise, the Clinic's failure to
plead facts showing that TAP did not intend to keep its promise
at the time the promise was made, and the amount of time between
the promise and the alleged breach, dismissal of the Clinic's
promissory fraud claim in Count II is proper.
In Count III of the Complaint, the Clinic contends TAP's
assurances that the May 24, 1999 order of Lupron was delayed,
when in fact it was never shipped, constitutes fraud. The Clinic
argues that TAP did not seek dismissal of this claim in its
motion to dismiss, but it was covered under TAP's argument that
the Clinic's Complaint is merely seeking recovery for promissory
fraud. Indeed, Count III is dismissed for the same reasons as
Count II. There is nothing pled in this Count suggesting that
TAP, when it made representations that the shipment of Lupron was
delayed, intended instead not to ship the supply of Lupron. Count
III of the Complaint, therefore, is also dismissed.
The Clinic was previously given an opportunity to amend its
Complaint after TAP had filed a motion to dismiss. Since this is
its second bite at the apple, it is clear that the Clinic is not
adequately able to state a claim. Accordingly, the dismissal of
the Clinic's Complaint shall be with prejudice. CONCLUSION
For the reasons stated above, TAP's motion to dismiss all
counts is granted [#18]. The Clinic's First Amended Complaint is
dismissed with prejudice. This case is terminated.