Facts
- A subcontractor sued a general contractor in federal court over a construction subcontract, alleging nonpayment and wrongful termination.
- The complaint asserted contract-based claims and a separate fraud claim.
- The fraud theory alleged that, in the spring or summer of 1985, the contractor’s “agents and employees” represented the subcontractor would be “paid in full.”
- The subcontractor alleged those assurances were knowingly false because the contractor had already devised a plan to terminate the subcontract and avoid paying amounts allegedly due.
- The contractor moved to dismiss the fraud claim for failure to plead fraud with particularity under Federal Rule of Civil Procedure 9(b).
- The subcontractor amended its complaint, but the fraud allegations remained materially the same; the contractor renewed its motion to dismiss.
- The subcontractor did not file a response to the renewed motion.
Issues
- Whether the amended complaint pleaded fraud with sufficient particularity under Federal Rule of Civil Procedure 9(b), including the time, place, speaker, and content of the alleged misrepresentations.
- Whether the alleged misrepresentations and “scheme” described a tort claim for fraud distinct from a dispute over contractual performance and termination.
Decision
- The court granted the contractor’s motion to dismiss the fraud claim under Rule 9(b).
- The court concluded the fraud allegations were stated in generalized, conclusory terms and lacked the required detail as to who made the statements, what precisely was said, and when and where the statements occurred.
- The contract-based claims were not dismissed and continued in the case.
Legal Principles
- Under Federal Rule of Civil Procedure 9(b), a party alleging fraud must plead the circumstances constituting fraud with particularity, typically including the time, place, contents of the false representation, the identity of the speaker, and what was obtained by the alleged fraud.
- Broad allegations that unnamed representatives engaged in a “scheme” to avoid contractual obligations, without specific supporting facts, do not satisfy Rule 9(b).
- A breach of contract dispute cannot be converted into a fraud claim merely by alleging nonperformance was intentional; a viable fraud claim requires specific, actionable misrepresentations and reliance that are not coextensive with contract duties.
Conclusion
The court dismissed the subcontractor’s fraud count because the amended complaint did not allege fraud with the specificity required by Rule 9(b) and, as pleaded, amounted to an attempt to recast an alleged nonpayment and wrongful termination dispute as tort fraud without particularized facts.