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New England Speed Factory, LLC v. Snap-On Equipment, LLC

United States District Court, N.D. Illinois, Eastern Division

December 20, 2019



          Jeffrey Cole Magistrate Judge.

         The plaintiff is a car repair business in New Hampshire, and the defendants are in equipment supply in Illinois. The plaintiff leased some automobile alignment equipment from defendants and claims the equipment proved to be defective. The plaintiff has brought a seven-count Complaint against the defendants, alleging breach of contract, breach of warranty, and fraud. The defendants have moved to dismiss the fraud and breach of warranty claims. As always, when considering a motion to dismiss, the court accepts the allegations in the Complaint as true. Manhattan Cmty. Access Corp. v. Halleck, __U.S.__, 139 S.Ct. 1921, 1927 (2019).

         According to the Complaint, the parties entered into an equipment lease agreement on April 25, 2018. Under the contract, plaintiff leased a vehicle lift and alignment rack for a term of 60 months at $1046.30 a month. In short, plaintiff complains that the equipment doesn't work: the safety locks on the lift do not function properly and the alignment rack does not work as it should, in that it takes several attempts before the equipment aligns vehicles properly, and sometimes that does not even get the job done. Plaintiff claims it has contacted defendant several times to replace or repair the allegedly defective equipment, to no avail. And so, plaintiff has filed s seven count Complaint against defendant, charging: Breach of Contract; Breach of Representations, Warranties, and Covenants; Breach of Implied Warranty of Fitness for a Particular Purpose; Violation of the Illinois Consumer Fraud and Deceptive Trade Practices Act (“ICFA”); Common Law Fraud; promissory estoppel; and common law fraudulent misrepresentation. The defendant has moved to dismiss all but the breach of contract and promissory estoppel claims.

         To survive a motion to dismiss the Complaint must “state a claim for relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A plaintiff must plead particularized factual content, not conclusory allegations that allow the court to plausibly infer the defendant is liable for the alleged misconduct. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The court may consider documents attached to the pleadings so long as the documents are referred to in the Complaint and are central to the plaintiff's claims. Doe v. Columbia Coll. Chicago, 933 F.3d 849, 853 (7th Cir. 2019). Here, plaintiff attached a copy of the lease to its Complaint, and the defendants attached a copy of the executed lease to their motion to dismiss. See Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir. 2002)(court may consider document “even if the document had merely been referred to in the complaint, provided it was a concededly authentic document central to the plaintiff's complaint (the usual example is a contract, in a suit for breach of contract).”).

         A. The Fraud Claims

         In the main, defendants contend that the fraud claims - Counts IV, V, and VII - are not plead with particularity as required by Fed.R.Civ.P. 9(b). Under Rule 9(b), a plaintiff “alleging fraud or mistake ... must state with particularity the circumstances constituting fraud or mistake.” As the Seventh Circuit has put it, “[t]he plaintiff must describe the ‘who, what, when, where, and how' of the fraud-‘the first paragraph of any newspaper story.'” United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 853 (7th Cir. 2009). See also United States ex rel. Berkowitz v. Automation Aids, Inc., 896 F.3d 834, 839-40 (7th Cir. 2018).

         While the plaintiff contends that allegations of fraud are not subject to a heightened pleading standard, [Dkt. # 24, at 4], the claim is inaccurate, as Rule 9(b) and case after case make plain. See, e.g., Greyer v. Illinois Dep't of Corr., 933 F.3d 871, 881 (7th Cir. 2019)(“Fraud allegations also trigger a more demanding pleading standard, see Fed.R.Civ.P. 9(b).”); Cornielsen v. Infinium Capital Mgmt., LLC, 916 F.3d 589, 598 (7th Cir. 2019)(“Heightened pleading requirements apply to complaints alleging fraud.”); NewSpin Sports, LLC v. Arrow Elecs., Inc., 910 F.3d 293, 299 (7th Cir. 2018)(“For fraud claims, a heightened pleading standard applies . . . .”); Greenberger v. GEICO Gen. Ins. Co., 631 F.3d 392, 399 (7th Cir. 2011)(“Claims for violation of the Consumer Fraud Act are subject to the same heightened pleading standards as other fraud claims; as such, they must satisfy the particularity requirement of Rule 9(b) of the Federal Rules of Civil Procedure.”). We are not at liberty to ignore the comments of the Congress and the Seventh Circuit.

         Plaintiff states that “[t]hroughout [its] complaint, Plaintiff identifies numerous occasions where the alleged fraud and or deception occurred.” [Dkt. #24, at 4]. But, “saying so does not make it so....” United States v. 5443 Suffield Terrace, Skokie, Ill., 607 F.3d 504, 510 (7th Cir.2010), and tellingly, plaintiff does not cite any of those paragraphs that supposedly satisfy Rule 9(b). Plaintiff's only arguable allegations of fraud are found at paragraphs 37-39 of its Complaint and are repeated at paragraphs 50-52, and 56-58:

Defendant represented to Plaintiff that the equipment was new prior to Plaintiff's leasing the equipment.
Defendants knew or should have to know that their statements were false or were made with reckless disregard for their truth or falsity, and/or that their concealment of certain fact was material to Plaintiff.
Defendants intended for Plaintiff to rely on the false statements of material fact and/or concealment of material facts.

[Dkt. #2, at Pars. 37-39, 50-52, 56-58].

         At best, the plaintiff's conclusory allegations are sketchy, yet, under Rule 9(b), sketchy is not good enough. Plaintiff “fails to provide the specific names, dates, times, or content of the misrepresentations or omissions that give rise to the alleged fraud.” Rocha v. Rudd, 826 F.3d 905, 911 (7th Cir. 2016); see also Cornielsen, 916 F.3d at 598 (heightened pleading standard for fraud “generally means describing the ‘who, what, when, where, and how' of the fraud.”). The Complaint is not even clear on whether a “defendant” or “defendants” made representations, moving from the singular to plural in its allegations. But, in a case involving multiple defendants, “‘the complaint should inform each defendant of the nature of his alleged participation in the fraud.'” Rocha, 826 F.3d at 911.

         While the plaintiff complains that it should have an opportunity to conduct discovery, [Dkt. #24 at 4-5], that puts the proverbial cart before the horse and ignores the teaching of Bell Atlantic. See also Frank H. Easterbrook, “Discovery as Abuse, ” 69 B.U.L.Rev. 635, 639 (1989). [See Dkt. # 24, at 4-5]. Indeed, as the Supreme Court emphasized in Bell Atl. Corp., “[i]t is no answer to say that a claim just shy of a plausible entitlement to relief can, if groundless, be weeded out early in the discovery process through ‘careful case management, ” given the common lament that the success of judicial supervision in checking discovery abuse has been on the modest side.” 550 U.S. at 559. See also Fidelity Nat'l Title Ins. Co. of N.Y. v. Intercounty Nat'l Title Ins. Co., 412 F.3d 745, ...

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