The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs Shahin Edalatdju and Nasila Edalatdju sued Guaranteed Rate, Inc. ("GRI") and Ben Lazer ("Lazer") for fraud and other causes of action under Illinois law in connection with real estate transactions they entered into in 2005. Both defendants have filed motions to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons discussed below, GRI's motion to dismiss is granted in part and denied in part; Lazer's motion to dismiss is denied.
In September 2005, American Invsco, a residential condominium developer, offered to sell the plaintiffs four condominium units in a building located at 10 East Ontario Street in Chicago. The offer was made as part of American Invsco's "2-2-2 Lease Program." Among other things, the program guaranteed the plaintiffs a monthly income sufficient to pay their debt service and other costs for the first two years following the purchase. On November 10, 2005, plaintiffs signed the purchase agreements for each of the units. Each agreement was contingent upon plaintiffs' ability to obtain financing.
In accordance with the 2-2-2 Program, plaintiffs were directed by American Invsco to GRI for financing. GRI's financing, in turn, was contingent upon obtaining an appraisal demonstrating that each of the four units had a market value equal to or greater than the purchase price in the corresponding purchase agreements. GRI employed Lazer to perform the appraisals. On November 21, 2005, Lazer submitted his appraisals, and the loans were approved. The closing took place on November 29, 2005.
In December 2007, plaintiffs contacted GRI, hoping to refinance their loans on the four condo units. GRI was unwilling. Plaintiffs claim that after the 2-2-2 Program had expired, they learned that the amount of rent American Invsco had paid them during the first two years following the purchase "was far greater than the actual market rent for their four units." Compl. ¶ 24. More specifically, they claim that "the true rental value of their units was substantially less than half of their monthly debt service and fixed costs for the units." Id. ¶ 25. Plaintiffs also allege that during this period, they asked for copies of Lazer's appraisal reports, but were told that the documents had been lost. Id. ¶ 23. They eventually obtained copies of the reports, but only after numerous requests over a two-month period. Id. In February, 2009, CitiMortgage (to whom GRI had sold its notes and first mortgages on plaintiffs' properties) initiated foreclosure proceedings.
Plaintiffs filed the instant suit in December 2009. The gravamen of their complaint is that GRI and Lazer misrepresented the value of the condo units and the standards in accordance with which the value of the units would be determined. The complaint asserts claims for fraud and conspiracy against both defendants, and a claim for negligent misrepresentation against Lazer.
A motion to dismiss pursuant to Rule 12(b)(6) tests the sufficiency of the complaint, not its merits. See, e.g., Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In resolving a Rule 12(b)(6) motion, all well-pleaded allegations in the complaint are taken as true, and all reasonable inferences are drawn in favor of the nonmoving party. See, e.g., McMillan v. Collection Prof'ls, Inc., 455 F.3d 754, 758 (7th Cir. 2006). Dismissal is warranted under Rule 12(b)(6) only where the plaintiff can prove no set of facts in support of his claims that would entitle him to relief. See, e.g., Goren v. New Vision Intern., Inc., 156 F.3d 721, 726 (7th Cir. 1998). "[I]t is not enough for a complaint to avoid foreclosing possible bases for relief; it must actually suggest that the plaintiff has a right to relief by providing allegations that raise a right to relief above the speculative level." E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 777 (7th Cir. 2007) (citations and quotation marks omitted).
In Count I of their complaint, plaintiffs assert a claim for fraud against both GRI and Lazer. "To state a fraud claim under Illinois law, a plaintiff must allege that the defendant: (i) made a false statement of material fact; (ii) knew or believed the statement to be false; (iii) intended to and, in fact, did induce the plaintiff to reasonably rely and act on the statement; and (iv) caused injury to the plaintiff." Reger Development, LLC v. National City Bank, 592 F.3d 759, 766 (7th Cir. 2010) (citing Redarowicz v. Ohlendorf, 441 N.E.2d 324, 331 (1982)). Fraud claims are subject to the heightened pleading requirements of Federal Rule 9(b). See, e.g., Last Atlantis Capital LLC v. AGS Specialist Partners, 533 F. Supp. 2d 828, 830 (N.D. Ill. 2008). Rule 9(b) provides that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). As the Seventh Circuit has put it, Rule 9(b) requires a party to allege "the who, what, when, where, and how: the first paragraph of any newspaper story." DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990).
GRI contends that plaintiffs' fraud claim should be dismissed because the complaint's allegations concerning its allegedly fraudulent conduct lack the particularity required under Rule 9(b). I agree. To begin with, plaintiffs fail to identify any particular fraudulent statement made by GRI. The complaint merely alleges that "GRI knowingly and intentionally represented to the Plaintiffs that GRI was processing and preparing Plaintiffs' loan applications in accordance with applicable federal and state laws and regulations and that GRI was and would exercise good faith in doing so." Pls.' Resp. to GRI at 9. Rule 9(b) requires that the content of allegedly fraudulent statements be identified with greater specificity. See, e.g., Graue Mill Development Corp. v. Colonial Bank & Trust Co. of Chicago, 927 F.2d 988, 993 (7th Cir. 1991) ("Graue Mill's complaint alleged that Colonial engaged in a scheme to defraud by making 'false representations that Colonial would disburse loan amounts in a prompt and expeditious manner, that Colonial would honor its obligations under the various agreements it entered into with Graue Mill and that Colonial would act in a reasonable and business-like manner in performing under these agreements.' This allegation -- the only one in the complaint that adverts to fraud -- fails to satisfy the requirements of Rule 9(b). Graue Mill has not alleged the specific content of any fraudulent statements or acts in its complaint.").
Plaintiffs' allegations of fraud against GRI are vague in other respects as well. The complaint does not clearly state who is alleged to have made the fraudulent assertions. In their response, plaintiffs identify Eric Burba, one of GRI's employees, as the maker of the statements. But while the complaint permits this inference, it does not specifically allege that Burba made the statements in question. Similarly, plaintiffs do not allege when the fraudulent statement or statements were made. It is possible to infer that the statements were made between October 2005 (when plaintiffs were first put in contact with GRI) and November 29, 2005 (the closing date). Once again, however, the complaint contains no explicit allegation to this effect.
Finally, the complaint does not specify how, or by what mode of communication, the allegedly fraudulent statements were made. See, e.g., Sequel Capital Corp. v. Airship Intern. Ltd., 148 F.R.D. 217, 219-20 (N.D. Ill. 1993) ("The absence of these circumstances may seem insignificant, and it may seem petty to dismiss the claim solely because the complaint does not allege a place or mode of communication. Very little will be accomplished by doing so. But to respond properly to a charge of fraud, defendants need to be appraised of the specific ...