Stone et al v. Koch Farms of Gadsden LLC
MEMORANDUM OPINION. Signed by Judge Robert B Propst on 1/8/2013. (AVC)
2013 Jan-08 PM 03:11
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ALABAMA
BOBBY JOE STONE;
TINA STONE BALLENTINE;
and PEGGY E. STONE
KOCH FARMS OF GADSDEN LLC
This cause comes on to be heard on the Motion to Dismiss filed by Koch Farms of
Gadsden, LLC (Koch) on November 8, 2012.
The motion is directed at Counts Two, Three and Four of the plaintiffs' complaint and
generally opposes any claim(s) for punitive damages.
The court does not consider claim(s) purportedly against fictitious parties. The
allegations in plaintiffs' complaint include:
(1) The plaintiffs own or have owned real estate in Cherokee County, Alabama which (is)
(was) operated as a farm, including raising poultry.
(2) The plaintiffs entered into a "Poultry Production Agreement" with Koch.2
(3) The agreement provided that Koch would provide poultry flocks, feed, medication
The court considers only the factual allegations in plaintiffs' complaint filed in the Circuit Court of
Cherokee County, Alabama on September 28, 2012.
No date of said agreement is alleged.
and other supplies to the plaintiffs, further, that plaintiffs would care, maintain and grow the
flocks until Koch obtained them for processing.
(4) Koch stopped sending plaintiffs flocks to be raised and cared for and specifically
refused to do so "on or about September 28, 2010."
(5) That if the plaintiffs had known that Koch would not honor its "promises," and
agreement (no mention of "representations" here), they would have explored alternate avenues to
maintain and fully operate the farm.
(6) Because plaintiffs relied on the "representations" (appearing again) "once plaintiffs
discovered that Koch would not honor its "agreement and promises" (note "agreement" and
"promises" only), plaintiffs were not in a position to obtain flocks from other sources." (There
are no allegations of the efforts made).3
Count One is clearly a breach of contract claim only. Its claim for punitive damages will
be struck. Count One alleges that the contract was in full force and effect. Further that the
contract was breached when Koch failed to provide additional flocks, inter alia, on or about
September 28, 2010.
Counts Two and Three state purported fraud claims. The purported fraud claims are
stated in a conclusory fashion without factual detail. No dates are stated; no specific statements
are stated; there are no allegations of any persons making promises or "representations" other
than those stated in the contract as earlier alleged. The motion will be granted as to Counts Two
and Three. See Target Media Partners Operating Co, LLC v Specialty Marketing Corp. (Ala.
At some points in the complaint the plaintiffs combine references to "promises" and "representations."
Presumably they felt that the conclusory term "representations" was more appropriate for fraud claims than promises.
Dec. 21, 2012) and its favorable reference to Justice Gorman Houston's concurrence in Hunt
Petroleum Corp. v. State of Alabama, 901 So.2d 1 (Ala. 2004). Justice Houston stated:
“I recently discussed the difference between breach-ofcontract and fraud claims in my special concurrence in Dickinson v.
Land Developers Construction Co., 882 So.2d 291 (Ala. 2003):
I write specially to address a particular problem:
the confusion surrounding the difference between a
claim alleging breach of contract and a claim alleging
fraud. There is a distinct difference between the two
claims but I fear that that distinction is all too often
lost in Alabama. Simply put, a plaintiff cannot
convert the mere failure to perform or to fulfill a
contractual promise into a fraud claim, and that
appears to be happening in this case.
"Under Alabama law, a plaintiff can, in some
instances, maintain a cause of action for fraud and
breach of contract arising from the same general
factual circumstances. See Duepree v. Gulner, 522
So.2d 242 (Ala. 1988). In Deupree, we held that the
plaintiffs, who had signed a contract to purchase a
Florida townhome from the defendant developer but
had not yet closed on the townhome, could recover for
both fraud and breach of contract based on the
developer's representations to the plaintiffs that there
would be no problems in acquiring the necessary
governmental approval for a boat slip appurtenant to
the property, when in fact there were substantial
problems. 522 So.2d at 243-45. We held that there
was evidence indicating that the plaintiffs would not
have closed on the townhome had the defendant
disclosed the truth about the governmental approval
process, and we held that the plaintiff could recover
for fraudulent suppression. 522 So.3d at 245. In
reaching this holding we also noted that a plaintiff can
recover for both breach of contract and fraud when
the plaintiff has been fraudulently induced (through
false statements about specific facts) into making a
"'"There are a number of situations in our law
whereby a plaintiff may derive benefits from a
contract and yet still recover for tortious action
concerning the contract, such as misrepresentation
and deceit. There is a line of cases wherein the facts
show misrepresentations concerning the goods that
the buyer purchases; e.g., a buyer purchases a horse
that the seller maintains has to good eyes, and the
buying later discovers that one the eyes is blind. In
the type of situation [fraudulent inducement], the
buyer need not forego the benefit received under the
contract in order to sue for the misrepresentations.
See Mutual Sav. Life Ins. Co. v. Osborne, 245 Ala. 15,
15 So.2d 713 (1943); Moore v. Oneonta Motor
Company, 223 Ala. 510, 137 So. 301 (1931);
Fairbanks, Morse and Co. v. Dees, 220 Ala. 41, 126
So. 624 (1929)."'
"Deupree, 522 So.2d at 244 (quoting Nationol Sec. Fire &
Cas. So. v. Vinson, 414 So.2d 49, 50-51 (Ala. 1982)). While the
Deupree decision characterized the alleged fraud at issue in that case
as fraudulent suppression, 522 So.2d at 244 ('[w]e hold that the fraud
alleged in this case was not fraud in the inception of the contract, but
in fraudulent concealments after the contract was made'), given the
fact that the plaintiffs had not yet closed on their townhome and the
fact that they alleged that they would not have closed on the
townhome if they had not been lied to, the fraud alleged in Deupree
appears to favor a claim for fraudulent inducement (to close on the
townhome and 'complete' the contract). Regardless, it is clear that to
assert a fraud claim that stems from the same general facts as one's
breach-of-contract claim, the fraud claim must be based on
representations independent from the promises in the contract and
must independently satisfy the elements of fraud. Deupree, 522 So.2d
"However, it is a universally held principle that the 'mere
failure to perform a [contractual] promise does not constitute fraud.'
Joun Brown Automation, Inc. v Nobles, 537 So.2d 614, 618 (Fla.
Dist. Ct. App. 1989). In fact a party to a contract may intentionally,
and even in bad faith (except in the insurance context), see American
Cast Iron Pipe Co. v. Williams, 591 So.2d 854, 857 (Ala. 1991),
break a contractual promise without that action becoming a fraud or
Also see U.S.F&G v. McKinnon, 356 So.2d 600 (Ala. 1978). See also various cases cited by the
Count Four is also subject to the Target case. Counts Two, Three and Four will be
dismissed. All punitive damage claims will also be dismissed.
This the 8th day of January, 2013.
ROBERT B. PROPST
SENIOR UNITED STATES DISTRICT JUDGE
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