NOBLE ROMAN'S INC. v. B & MP, LLC et al
ENTRY ON DEFENDANTS' MOTION TO DISMISS: For the reasons set forth above, the Defendants' motion to dismiss is GRANTED, and Count III (mistakenly titled Count Two) of Plaintiff's complaint is DISMISSED WITHOUT PREJUDICE. See Barry Avi ation, Inc. v. Land O'Lakes Mun. Airport Comm'n, 377 F.3d 682, 687 (7th Cir. 2004) ("The better practice is to allow at least one amendment regardless of how unpromising the initial pleading appears because except in unusual circumstan ces it is unlikely that the court will be able to determine conclusively on the face of a defective pleading whether plaintiff actually can state a claim.") (citations and quotation marks omitted). Plaintiff shall have fourteen days within which to file an amended complaint that complies with the pleading requirements of Rule 9(b) ***SEE ENTRY FOR ADDITIONAL INFORMATION***. Signed by Judge William T. Lawrence on 10/8/2014. Copy sent via US Mail.(DW)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
NOBLE ROMAN’S INC.,
B & MP, LLC,
Cause No. 1:14-cv-206-WTL-MJD
ENTRY ON DEFENDANTS’ MOTION TO DISMISS
This cause is before the Court on Defendants’ motion to dismiss Count III (mistakenly
titled Count Two) of Plaintiff’s complaint (dkt. no. 20). The motion is fully briefed, and the
Court, being duly advised, GRANTS the motion, for the reasons set forth below.
Count III of Plaintiff’s complaint alleges a claim for common law fraud against the
Defendants. The Defendants move to dismiss the fraud claim pursuant to the heightened pleading
standards of Federal Rule of Civil Procedure 9(b). Under Rule 9(b), “circumstances constituting
fraud or mistake” must be plead “with particularity.” This means that allegations of fraud or
mistake in a complaint must include “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.” Windy City Metal Fabricators & Supply,
Inc. v. CIT Tech. Fin. Servs., Inc., 536 F.3d 663, 668 (7th Cir. 2008) (citations and quotation
marks omitted); see also DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.1990) (describing
Rule 9(b) particularity as “the who, what, when, where, and how: the first paragraph of any
newspaper story”). Of course, in ruling on Defendants’ motion to dismiss, the Court “must
accept all well pled facts as true and draw all permissible inferences in favor of the plaintiff.”
Agnew v. National Collegiate Athletic Ass’n, 638 F.3d 328, 334 (7th Cir. 2012).
On March 1, 2010, Plaintiff Noble Roman’s and Defendant B & MP, LLC entered into
two franchise agreements. At some point thereafter, B & MP began “purposely, intentionally,
and knowingly” misreporting its sales to Noble Roman’s in order to avoid paying the franchise
fees and/or royalties due Noble Roman’s under the franchise agreements. Compl. at ¶ 12.
Specifically, Noble Roman’s alleges, among other things, that B & MP committed common law
fraud when it “intentional[ly] and willful[ly] misreport[ed] . . . its sales to Noble Romans.”
Compl. at ¶ 26.
The Defendants argue that Noble Roman’s’ fraud claim falls short of the “who, what,
when, where, and how” pleading requirement of Rule 9(b). In response, Noble Roman’s argues
that the franchise agreements
set forth specific requirements for the reporting of sales and payment of franchise
fees and/or royalties. Section IV.B sets a Royalty Fee of 7% of Gross Sales,
payable weekly for the previous weeks’ Gross Sales. Section IV.B(2) specifies
that the franchisee shall report its weekly Gross Sales by facsimile or telephone
by noon on the Monday following the close of a week’s business.
. . . Fairly construed, NRI is specifically alleging that Defendants, in making the
weekly reports to NRI of Defendants’ Gross Sales, intentionally underreported
them for the express purpose of avoiding the 7% Royalty Fee.
Noble Roman’s’ Resp. at 4. Although the foregoing explanation satisfies the pleading
requirements of Rule 9(b), these specific facts and allegations are not included in the body of
Noble Roman’s’ complaint. As such, Noble Roman’s’ fraud claim fails to comply with the
heightened pleading requirements of Rule 9(b).
For the reasons set forth above, the Defendants’ motion to dismiss is GRANTED, and
Count III (mistakenly titled Count Two) of Plaintiff’s complaint is DISMISSED WITHOUT
PREJUDICE. See Barry Aviation, Inc. v. Land O’Lakes Mun. Airport Comm’n, 377 F.3d 682,
687 (7th Cir. 2004) (“The better practice is to allow at least one amendment regardless of how
unpromising the initial pleading appears because except in unusual circumstances it is unlikely
that the court will be able to determine conclusively on the face of a defective pleading whether
plaintiff actually can state a claim.”) (citations and quotation marks omitted).
Plaintiff shall have fourteen days within which to file an amended complaint that
complies with the pleading requirements of Rule 9(b).
SO ORDERED: 10/08/14
Hon. William T. Lawrence, Judge
United States District Court
Southern District of Indiana
Copies to all counsel of record via electronic communication.
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