American Specialty Oils Company et al v. eWorkplace Solutions Inc. et al
Filing
18
OPINION AND ORDER granting 7 Dimension Funding's Motion to Dismiss; granting 11 Batchmaster Software's Motion to Dismiss. Signed by District Judge Robert H. Cleland. (LWag)
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UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
______________________________________________________________________
AMERICAN SPECIALTY OILS CO. and
SAFIE SPECIALTY FOODS CO. INC.
Plaintiffs,
v.
Case No. 20-11017
eWORKPLACE SOLUTIONS INC.
d/b/a BATCHMASTER SOFTWARE and
DIMENSION FUNDING, LLC
Defendants.
__________________________________/
OPINION AND ORDER GRANTING DEFENDANT BATCHMASTER’S MOTION TO
DISMISS, GRANTING DEFENDANT DIMENSION’S MOTION TO DISMISS, AND
DISMISSING THIS CASE
Plaintiffs American Specialty Oils Co. and Safie Specialty Foods Co. bring this
action for breach of contract, fraudulent inducement to contract, and conspiracy to
commit fraud against Defendant eWorkplace Solutions d/b/a BatchMaster Software
(“BatchMaster”). (ECF No. 4, PageID.37-45.) Plaintiffs bring a claim under conspiracy to
commit fraud against Defendant Dimension Funding, LLC (“Dimension”). (Id.,
PageID.44-45.)
Before the court are two motions to dismiss, one from each defendant. (ECF
Nos. 7, 11.) The motions have been fully briefed, (ECF Nos. 13, 14, 16, 17), and the
court does not find a hearing to be necessary. E.D. Mich. L.R. 7.1(f)(2). For the reasons
stated below, the court will grant Defendant BatchMaster’s motion to dismiss and grant
Defendant Dimension’s motion to dismiss.
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I. BACKGROUND
The following are facts as alleged in Plaintiffs’ complaint. In a motion to dismiss,
the court accepts Plaintiffs’ factual allegations as true but makes no overt finding as to
truth or falsity. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Defendant BatchMaster develops business management software for companies
operating in the food and beverage industries. (ECF No. 4, PageID.34, ¶ 11.) Plaintiffs
are separate companies. Plaintiff American Specialty Oils manufactures oil used in food
products while Plaintiff Safie Specialty Foods produces pickled foods such as dill
pickles. (Id., PageID.32, ¶¶ 1-2.) Defendant BatchMaster and Plaintiffs entered into
agreements by which Plaintiffs paid Defendant to provide food process management
software. (Id., PageID.34, ¶¶ 12-13.) According to the complaint, the software proved
defective which negatively affected Plaintiffs’ businesses. (Id., PageID.35-36, ¶¶ 18-20.)
Defendant Dimension provides financing for business software. (Id., PageID.36,
¶ 21.) Plaintiffs and Defendant Dimension entered into agreements to finance Plaintiffs’
purchases of Defendant BatchMaster’s software. (Id., PageID.36, ¶¶ 22-23.) According
to Plaintiffs, Defendant Dimension knew the software was defective and acted in
concert with Defendant BatchMaster to fund the purchases. (Id., ¶¶ 24-26.)
Plaintiffs filed their complaint against Defendant BatchMaster in April 2020. (ECF
No. 1.) They amended the complaint in May 2020, adding Defendant Dimension
Funding. (ECF No. 4.) Defendants filed motions to dismiss in lieu of filing answers.
(ECF Nos. 7, 11.)
2
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II. STANDARD
Under Federal Rule of Civil Procedure 12(b)(6) a party can move to dismiss a
complaint for “failure to state a claim upon which relief can be granted.” Under Rule
12(b)(6), the complaint is viewed in the light most favorable to the plaintiffs, the
allegations in the complaint are accepted as true, and all reasonable inferences are
drawn in favor of the plaintiffs. Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426,
430 (6th Cir. 2008). “To survive a motion to dismiss, a complaint must contain factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft,
556 U.S. at 678 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A
claim has facial plausibility when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. Determining plausibility is “a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.” Id. at 679. The
plaintiff must present “more than labels and conclusions.” Twombly, 550 U.S. at 545.
“[A] formulaic recitation of a cause of action's elements will not do.” Id.
When reviewing a motion to dismiss, the court “may not consider matters beyond
the complaint.” Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 613 (6th Cir. 2009).
However, the court may consider “documents incorporated into the complaint by
reference . . . and matters of which a court may take judicial notice.” Tellabs, Inc. v.
Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). The court may also consider “a
document that is not formally incorporated by reference or attached to a complaint”
when “[the] document is referred to in the complaint and is central to the plaintiff’s
claim.” Greenberg v. Life Ins. Co. of Va., 177 F.3d 507, 514 (6th Cir. 1999).
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Defendant BatchMaster moves to compel Plaintiffs into arbitration citing Federal
Rule of Civil Procedure 12(b)(1). (ECF No. 11, PageID.123.) Rule 12(b)(1) permits
dismissal of a complaint due to “lack of subject-matter jurisdiction.” The Sixth Circuit has
stated that a motion to compel arbitration “is more properly construed as a motion to
dismiss under Rule 12(b)(6).” Teamsters Local Union 480 v. United Parcel Serv., Inc.,
748 F.3d 281, 286 (6th Cir. 2014); accord Knight v. Idea Buyer, LLC, 723 F. App’x 300,
301 (6th Cir. 2018). Courts have also reviewed requests to compel arbitration as standalone motions, separate from Rule 12(b). See, e.g., NCR Corp. v. Korala Ass., Ltd, 512
F.3d 807, 812 (6th Cir. 2008).
III. DISCUSSION
The court will first address Defendant BatchMaster’s motion to dismiss and will
then turn to Defendant Dimension’s motion.
A. Defendant BatchMaster’s Motion to Dismiss
Defendant BatchMaster argues that the parties’ dispute is covered by arbitration
clauses. (ECF No. 11, PageID.118-21.) It cites provisions in both Plaintiffs’ contracts
that establish dispute resolution processes:
14.7 Dispute Resolution. It is agreed by Licensee and BSI that any
dispute(s) arising related to software, products, services or support
rendered under this Agreement or any payments due, shall be first
reported by following the steps described below prior to resorting to any
legal remedies available under this agreement.
(i) Problem Escalation . . .
(ii) Mediation . . .
14.8 Available Legal Remedies. In the event that any reported issues are
not resolved through mediation as provided for above, the parties agree
that the legal remedies available for such unresolved disputes will be
through submission to arbitration as provided by California law, and not by
4
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a lawsuit or by resorting to any court process except as California law
provides for judicial review of arbitration proceedings. Both parties to this
Agreement forfeit any rights to have any such disputes decided in a court
of law by a judge or before a jury, and instead are accepting the use of
arbitration.
(i) Arbitration . . . Arbitration proceedings shall be conducted in
Orange County, California . . .
(iii) Parties intend that the aforementioned Dispute Resolution and
Arbitration procedures in clauses 14.7 and 14.8 shall apply to all
software or other products provided or support and services
rendered, including those items covered under previous
applicable Purchase Documents.
(ECF No 11-3, PageID.158, Plaintiff Safie Specialty Foods’ Agreement; ECF No. 11-4,
PageID.171, Plaintiff American Specialty Oils’ Agreement.)
Plaintiffs do not contest that their contracts with Defendant BatchMaster contain
arbitration clauses, and that the clauses would apply to this dispute if they are valid.
Instead, Plaintiffs contend that the arbitration agreements are void because Defendant
fraudulently induced them to enter into the software licensing agreements. 1 (ECF No.
14, PageID.271; see also ECF No. 4, PageID.41-44, Plaintiffs’ Complaint.)
Under the Federal Arbitration Act (“FAA”), courts may “compel[] arbitration when
one party has failed or refused to comply with an arbitration agreement.” Masco Corp. v.
Zurich Am. Ins. Co., 382 F.3d 624, 626-27 (6th Cir. 2004) (citing 9 U.S.C. § 4). There is
a “strong federal policy in favor of arbitration.” Huffman v. Hilltop Cos., 747 F.3d 391,
395 (6th Cir. 2014). “[A]ny doubts concerning the scope of arbitrable issues should be
1
Plaintiffs also argue that they are not bound by the agreements’ merger clause
barring consideration of parole evidence. (ECF No. 14, PageID.271-73.) They cite the
Michigan Court of Appeals decision Custom Data Solutions Inc. v. Preferred Capital
Inc., 274 Mich. App. 239, 733 N.W.2d 102 (2007). Custom Data Solutions does not
analyze or mention an arbitration clause and is thus does not affect the court’s inquiry.
5
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resolved in favor of arbitration.” Id. at 627 (quoting Moses H. Cone, 460 U.S. 1, 24-25
(1983)). “There is a general presumption of arbitrability, and any doubts are to be
resolved in favor of arbitration unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation that covers the asserted
dispute.” Id. (quoting Highlands Wellmont Health Network, Inc. v. John Deere Health
Plan, Inc., 350 F.3d 568, 576-77 (6th Cir. 2003)).
Consistent with this policy preference, courts have consistently rejected attempts
to avoid arbitration clauses through allegations of fraudulent inducement. “[F]raud in the
procurement of an arbitration contract, like fraud in the procurement of any contract,
makes it void and unenforceable.” Arnold v. Arnold Corp.-Printed Comm’ns for Bus.,
920 F.2d 1269, 1277 (6th Cir. 1990) (quoting Moseley v. Elec. & Missile Facilities, Inc.,
374 U.S. 167, 172 (1963)). “[I]f the claim is fraud in the inducement of the arbitration
clause itself . . . the federal court may proceed to adjudicate it.” Id. (quoting Prima Paint
v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967)). However, “[the FAA] does not
permit the federal court to consider claims of fraud in the inducement of the contract
generally.” Id. (quoting Prima Paint, 388 U.S. at 404). Thus, “when claims involve ‘the
validity of the contract as a whole’ and not just the arbitration agreement, ‘such claims
are to be brought before the arbitrator, not the district court in deciding a petition to
compel arbitration.’” Fazio v. Lehman Bros., Inc., 340 F.3d 386, 395 (6th Cir. 2003)
(quoting Great Earth Cos. v. Simons, 288 F.3d 878, 892 (6th Cir. 2003)). For a federal
court to retain jurisdiction, “the complaint must contain a well-founded claim of fraud in
the inducement of the arbitration clause itself, standing apart from the whole agreement,
that would provide grounds for the revocation of the agreement to arbitrate.” Burden v.
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Check Into Cash of Ky., LLC, 267 F.3d 483, 491 (6th Cir. 2001) (quotations removed)
(emphasis in original); see also Highlands Wellmont Health Network, Inc., 350 F.3d at
576 (enforcing arbitration clause where there were “no separate allegations in the . . .
complaint that [the defendant] fraudulently induced [the plaintiff] to agree to an
arbitration clause”).
Here, the complaint alleges Defendant BatchMaster “made material
representations regarding the capabilities of [its] software” and “failed to advise Plaintiffs
of . . . serious and ongoing problems [with the program].” (ECF No. 4, PageID.41, ¶ 45,
PageID.42, ¶ 49.) As a result, Defendant BatchMaster “induce[d] Plaintiffs to enter into
the Software License Agreements.” (Id., PageID.42, ¶ 51-52.) Plaintiffs allege that
because they were fraudulently induced to enter into the agreements, the entire contract
as a whole, including the “provisions governing law § 14.6, Dispute Resolution
Procedure at § 14.7, and Limitations of Liability and Damages at § 12” are void. (Id.,
PageID.43, ¶ 56.)
The Sixth Circuit has repeatedly held that “pleading . . . an arbitration clause ‘was
part of a broader fraudulent scheme without more . . . is [not] sufficient to overcome the
strong federal policy in favor of arbitration.” Burden, 267 F.3d at 491 (quoting Arnold,
920 F.2d at 1280-81). That is the essence of Plaintiffs’ claims here. The complaint
includes no allegations of fraud “particular to the arbitration agreements [and] separate
from the [software licensing] agreements.” Id. at 491. There are no allegations detailing
how Defendant BatchMaster fraudulently induced Plaintiffs to sign onto an arbitration
clause. Instead, the allegations recite Defendant BatchMaster’s alleged
misrepresentations regarding the quality of its software and the value of the contract to
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Plaintiffs generally. (See ECF No. 4, PageID.41, ¶¶ 45-48.) Plaintiffs’ claim of fraudulent
inducement “relates to the contract as a whole,” of which the arbitration provisions are
only a part. Highlands Wellmont Health Network, Inc., 350 F.3d at 576.
There is nothing to differentiate Plaintiffs’ allegations of fraud as to the entire
software licensing contracts and the arbitration clauses specifically. Plaintiffs may have
a valid fraudulent inducement claim. But that question must be reviewed by an
arbitrator, who, under federal law, has the primary authority to determine “the validity of
[a] contract as a whole.” Fazio, 340 F.3d at 395.
Plaintiffs bring three claims against Defendant BatchMaster: breach of contract,
fraudulent inducement, and civil conspiracy. The parties’ arbitration agreements cover
“any dispute(s) arising related to software, products, services or support rendered under
th[e] Agreement[s] or any payments due.” ECF No 11-3, PageID.158; ECF No. 11-4,
PageID.171.) The Sixth Circuit has noted that contract language such as “arising out of”
and “related to” have “extremely broad” scope. Highlands Wellmont Health Network,
Inc., 350 F.3d at 578 (quoting Cincinnati Gas & Elec. Co. v. Benjamin F. Shaw Co., 706
F.2d 155, 160 (6th Cir. 1983)); Fazio, 340 F.3d at 396. To determine whether claims fall
within such arbitration clauses, “courts ask if an action could be maintained without
reference to the contract or relationship at issue.” Nestle Waters N. Am., Inc. v.
Bollman, 505 F.3d 498, 504 (6th Cir. 2007) (quoting Fazio, 340 F.3d at 395).
Plaintiffs’ first claim alleges that “Defendant BatchMaster . . . breached the
contracts by delivering . . . defective software.” (ECF No. 4, PageID.40, ¶ 41.) This claim
directly falls within the terms of the contract and is subject to arbitration. Plaintiffs’
second claim is fraudulent inducement. As described above, the fraudulent inducement
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claim expressly references the software licensing agreements; Plaintiffs allege
Defendant BatchMaster harmed them by inducing them to enter into the agreements.
(ECF No. 4, PageID.42-43, ¶¶ 51-52, 57.) Finally, Plaintiffs’ third claim is that Defendant
BatchMaster worked with Defendant Dimension to “put forth material
misrepresentations regarding the quality of [Defendant] BatchMaster’s product”
provided through the software licensing agreements. (Id., PageID.44, ¶ 64.) Defendants
allegedly worked together to make Defendant Dimension Plaintiffs’ exclusive financing
option for the software. (Id., ¶ 61.) Plaintiffs allege they were damaged by having to pay
“the cost of software licenses [and] cost of installation,” among other injuries. (Id.,
PageID.45, ¶ 68.) This claim is intimately tied to the commercial relationships created
through Plaintiffs and Defendant BatchMaster’s contracts. See Nestle Water N. Am.,
Inc., 505 F.3d at 505 (“In the course of interpreting [the relevant claim], it is almost
certain that reference will be made to [the contract with an arbitration clause].”); Fazio,
340 F.3d at 395 (“The lawsuit by necessity must describe why [the parties were
interacting] . . . and what [their] obligations were.”).
“[W]ithout reference to the contract[s] or relationship[s]” between Plaintiffs and
Defendant BatchMaster, the claims against Defendant BatchMaster cannot be
maintained. Nestle Waters N. Am., Inc. v. Bollman, 505 F.3d at 504. They are covered
by the parties’ arbitration agreement and must be dismissed. 2 9 U.S.C. § 4.
2
In reviewing motions to compel arbitration, courts also consider whether, “if
federal statutory claims are asserted, . . . Congress intended those claims to be
nonarbitrable.” Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000). In addition, “if
the court concludes that some, but not all, of the claims in the action are subject to
arbitration, it must determine whether to stay the remainder of the proceedings pending
arbitration.” Id. Nonetheless, Plaintiffs do not allege Defendant BatchMaster violated
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B. Defendant Dimension’s Motion to Dismiss
Neither Plaintiffs nor Defendant Dimension seek to compel arbitration of their
dispute. The sole claim against Defendant Dimension is civil conspiracy. The claim fails
under Federal Rule of Civil Procedure 9(b).
“A civil conspiracy is a combination of two or more persons, by some concerted
action, to accomplish a criminal or unlawful purpose, or to accomplish a lawful purpose
by criminal or unlawful means.” Advoc. Org. for Patients & Providers v. Auto Club Ins.
Ass’n, 257 Mich. App. 365, 670 N.W.2d 569, 580 (2003) (quoting Admiral Ins. Co. v.
Columbia Cas. Ins. Co., 194 Mich. App. 300, 486 N.W.2d 351, 358 (1992)). Civil
conspiracy is not a claim of its own; “it is necessary to prove a separate, actionable tort.”
Id. (quoting Early Detection Center, PC v. N.Y. Life Ins. Co., 157 Mich. App. 618, 403
N.W.2d 830, 836 (1986)).
Here, Plaintiffs have entitled Count III as “Conspiracy to Commit Fraud.” (ECF
No. 4, PageID.44.) Although not explicitly stated the in the complaint, Plaintiffs explain
in their briefing that the underlying tort claim is fraudulent inducement to contract. 3 (ECF
No. 13, PageID.245.)
federal statute, and all of Plaintiffs’ claims against Defendant BatchMaster will be
dismissed.
3
Defendant Dimension argues that Plaintiffs did not bring a fraudulent inducement
claim. (ECF No. 16, PageID.347.) While greater specificity in the complaint would have
been helpful, the court disagrees with Defendant Dimension’s analysis. Plaintiffs’ fraud
claim sufficiently implies fraudulent inducement. Plaintiffs allege they entered into
agreements to finance and purchase business management software after Defendants
made certain material misrepresentations. (Id., PageID.44, ¶¶ 66-67.) Plaintiffs also
allege their contracts with Defendant Dimension are void as a result of the fraud. (Id.,
PageID.45, ¶ 69.)
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The elements of a fraudulent inducement claim are the same as a general fraud
claim:
(1) the defendant made a material representation; (2) the representation
was false; (3) when the defendant made the representation, the defendant
knew that it was false, or made it recklessly, without knowledge of its truth
and as a positive assertion; (4) the defendant made the representation
with the intention that the plaintiff would act upon it; (5) the plaintiff acted
in reliance upon it; and (6) the plaintiff suffered damage.
Custom Data Sols., Inc. v. Preferred Capital, Inc., 274 Mich. App. 239, 733 N.W.2d 102,
104-05 (2006) (citing Belle Isle Grill Corp v Detroit, 256 Mich. App. 463, 666 N.W.2d
271, 280 (2003)).
Allegations of fraud are subject to enhanced pleading requirements. Under Rule
9(b), a plaintiff “must state with particularity the circumstances constituting fraud.” “The
[r]ule's purpose is to alert defendants as to the particulars of their alleged misconduct so
that they may respond. [It] is also designed to prevent fishing expeditions, . . . to protect
defendants' reputations from allegations of fraud, . . . and to narrow potentially wideranging discovery to relevant matters.” Chesbrough v. VPA, P.C., 655 F.3d 461, 466-67
(6th Cir. 2011) (quotations removed). “In complying with Rule 9(b), a plaintiff, at a
minimum, must ‘allege the time, place, and content of the alleged misrepresentation on
which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants;
and the injury resulting from the fraud.’” U.S. ex rel. Bledsoe v. Cmty. Health Sys., Inc.,
342 F.3d 634, 643 (6th Cir. 2003) (quoting Coffey v. Foamex L.P., 2 F.3d 157, 161-62
(6th Cir. 1993)). Phrased differently, “the plaintiff [must] specify the who, what, when,
where, and how of the alleged fraud.” Sanderson v. HCA-The Healthcare Co., 447 F.3d
873, 877 (6th Cir. 2006) (quotations removed). The court will “not accept claims that
11
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consist of no more than mere assertions and unsupported or unsupportable
conclusions.” Id. at 876.
Plaintiffs’ allegations of fraud on the part of Defendant Dimension fail to meet
Rule 9(b)’s enhanced pleading standard. The allegations are conclusory and do not
adequately inform Defendant Dimension of the nature of the claim. See Chesbrough,
655 F.3d at 466-67. Plaintiffs allege generally that Defendants “engaged in a concerted
effort to misrepresent a faulty product and defraud Plaintiffs.” (ECF No. 4, PageID.44.)
Yet there are no specific allegations describing acts Defendant Dimension took to
conspire with Defendant BatchMaster. Plaintiffs merely conclude that Defendants “acted
in concert” and that Defendant Dimension “was aware of [Defendant BatchMaster’s]
faulty product.” (Id., PageID.36, 44.) However, the complaint includes no specifics as to
how or when the fraudulent scheme was created, how it was run, or its scope. See U.S.
ex rel. Bledsoe, 342 F.3d at 643.
Plaintiffs assert that both Defendants “put forth material misrepresentations
regarding the quality of [Defendant] BatchMaster’s product,” and Defendant Dimension
“presented [the financing agreements to Plaintiffs] based upon material
misrepresentations.” (ECF No. 4, PageID.44.) These assertions fail to identify
misrepresentations Defendant Dimension specifically put forward or participated in. See
Thompson v. Bank of Am., N.A., 773 F.3d 741, 753 (6th Cir. 2014) (affirming dismissal
of a complaint under Rule 9(b) when the plaintiff failed to “indentif[y] the faulty
information” the defendant provided). Asserting that Defendant Dimension was involved
in a scheme and “misrepresentations” occurred is insufficient to state a claim under
Rule 9(b). See Sanderson, 447 F.3d at 877.
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Where Plaintiffs’ complaint actually describes misrepresentations, key details are
left out. “[T]he who, what, when, where, and how” are stated only in broad strokes and
with little explanation. Id. Plaintiffs allege Defendant BatchMaster represented that the
software would have “the capability to handle accounting, sales, purchasing and supply
management,” among other features. 4 (ECF No. 4, PageID.41.) But no details are
provided as to the place, date, and time of the alleged statements. Plaintiffs do not
specify an employee or officer working for Defendant BatchMaster who made the
representations, nor do they allege to which individuals in Plaintiffs’ companies the
representations were made. Plaintiffs merely state in general terms that Defendant
BatchMaster made misrepresentations to Plaintiffs regarding the quality of the software,
and, in October 2018, Plaintiffs entered the purchase agreements. (Id., PageID.34, 41.)
That does not satisfy Rule 9(b). Compare U.S. ex rel. SNAPP, Inc. v. Ford Motor Co.,
532 F.3d 496, 505 (6th Cir. 2008) (finding that a plaintiff satisfied Rule 9(b) when it
identified and attached specific financial reports filed with the federal government that
allegedly contained misrepresentations), with Ullmo ex rel. Ullmo v. Gilmour Academy,
273 F.3d 671, 678 (6th Cir. 2001) (affirming dismissal of a claim, despite allegations of
fraudulent representations, where the plaintiffs “did not plead any [specific]
representations in their complaint”).
The Sixth Circuit has affirmed dismissal of complaints containing greater factual
detail than the complaint in this case. In Republic Bank & Trust Co. v. Bear Stearns &
Co., Inc., a finance firm allegedly claimed securities backed by mortgage loans were
4
Plaintiffs do not allege Defendant Dimension made or participated in this
statement. (See ECF No. 4, PageID.41.)
13
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“reasonably safe” and “made according to reasonably prudent underwriting standards.”
683 F.3d 239, 245 (6th Cir. 2012). In fact, the mortgage loans were allegedly not issued
using “prudent underwriting standards” and the real estate used as security did not have
accurate valuations. Id. The plaintiff added that media reports and expert studies tied
the mortgage originators to unsound lending. Id. at 256. Nonetheless, the Sixth Circuit
found that the plaintiff had not alleged enough facts under Rule 9(b) to connect the
specific mortgage loans at issue with abusive lending practices. Id. The complaint
“[dealt] only in probabilities” and was properly dismissed. Id. Here, Plaintiffs allege
Defendant BatchMaster misrepresented the quality of the software product and that
Defendant Dimension was somehow involved. No detailed allegations connect
Defendant Dimension to any material misrepresentation that harmed Plaintiffs’
businesses. See Custom Data Sols., Inc., 733 N.W.2d at 104-05.
In Heinrich v. Waiting Angels Adoption Services, Inc., six couples alleged an
adoption service falsely advertised on its website that certain children were available for
adoption. 668 F.3d 393, 406 (6th Cir. 2012). The complaint alleged that the adoption
service failed to send additional photos of the children or their medical information; the
government allegedly had no records of a pending adoption case despite a couple
submitting an adoption request through the service; the service, according to the
couples, did not respond to their demands that service prove adoption and foster fees
went to the home country of the children; and the service allegedly provided a false
explanation for cancelling an adoption. Id. at 401. Further, the complaint alleged a
couple reached out to the adoption service and the service told them that a new and
previously unknown attorney was handling adoptions. Id. at 401-02. The service also
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allegedly informed the couple that the service did not have birth certificates for the
children. Id. Despite this added detail, the Sixth Circuit affirmed dismissal of the
complaint under Rule 9(b). Id. at 406. The court noted that the plaintiffs did not identify
who within the adoption service told the couple that the service did not possess birth
certifications. Id. In addition, while the allegations raised “suspicio[ns]” that the agency
was lying about the availability of children, there were not enough facts to allow a
reasonable inference “that the children advertised were actually unavailable.” Id. The
plaintiffs in Heinrich alleged far greater detail than the largely conclusory statements
made in Plaintiffs’ complaint. Yet the Heinrich plaintiffs, like Plaintiffs here, did not meet
Rule 9(b)’s enhancing pleading standard.
Having concluded that the claim against Defendant Dimension fails to satisfy
Rule 9(b), the remaining question is whether the claim should be dismissed with
prejudice. Plaintiffs assert that “[i]f the [c]ourt finds the allegations [in the complaint]
lacking, dismissal, particularly dismissal with prejudice, is . . . not appropriate.” (ECF No.
13, PageID.248.) However, Plaintiffs have not filed a motion to amend their complaint.
They previously amended the complaint in May 2020 as of right. See Fed. R. Civ. P.
15(a)(1). (ECF No. 4.) In addition, Plaintiffs do not offer a proposed amended complaint.
They do not explain how leave to amend would result in a properly pleaded claim.
The Sixth Circuit has repeatedly affirmed dismissal of claims with prejudice after
successful Rule 12(b) motions when the plaintiffs neither moved to amend nor offered
proposed amendments. See Islamic Center of Nashville v. Tennessee, 872 F.3d 377,
387 (6th Cir. 2017) (“Here, there is no indication that [the plaintiff] ever filed a motion to
amend or a proposed amendment with the district court.”); CNH Am. LLC v. Int’l Union,
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645 F.3d 785, 795 (6th Cir. 2011) (“[I]f a party does not file a motion to amend or a
proposed amended complaint, it is not an abuse of discretion for the district court to
dismiss the claims with prejudice.”). Furthermore, “a bare request in an opposition to a
motion to dismiss—without any indication of the particular grounds on which
amendment is sought does not constitute a motion [to amend].” La. Sch. Emps. Ret.
Sys. v. Ernst & Young, LLP, 622 F.3d 471, 486 (6th Cir. 2010) (quotations removed).
“Plaintiffs [are] not entitled to an advisory opinion from the [c]ourt informing them of the
deficiencies of the complaint and then an opportunity to cure those deficiencies.” Id.
(quotations removed); see also Islamic Center of Nashville, 872 F.3d at 387 n.7
(quotations removed) (“The problem with the lack of a motion or proposed amendment .
. . is that without viewing the proposed amendment, it is impossible for the district court
to determine whether leave to amend should have been granted.”).
Thus, a request such as Plaintiffs’, asking the court to “allow [them] to amend
their [c]omplaint” if “the court finds the allegations lacking,” (ECF No. 13, PageID.250),
lacking any detail as to how an amendment would support a viable claim, does not
prevent dismissal with prejudice. See La. Sch. Emps. Ret. Sys., 622 F.3d at 486
(affirming dismissal with prejudice when the plaintiffs asked in a brief opposing
dismissal for “an opportunity to move to amend the pleadings and demonstrate that an
amendment would cure any deficiencies”); Robbins v. New Cingular Wireless PCS,
LLC, 854 F.3d 315, 322 (6th Cir. 2017) (affirming dismissal with prejudice where the
plaintiffs requested in a brief that the court “afford [the plaintiffs] an opportunity to file an
amended complaint to address [any] concerns [the court identified]”).
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Case 3:20-cv-11017-RHC-RSW ECF No. 18, PageID.406 Filed 12/14/20 Page 17 of 18
Plaintiffs filed the complaint in April 2020, (ECF No. 1), and amended it in May
2020. (ECF No. 4.) They have had since July 2020, when Defendant Dimension filed its
motion to dismiss, to move to amend or present proposed amendments. (ECF No. 7.)
After almost four months, Plaintiffs provide the court with no basis to properly consider
whether further amendment is justified, Islamic Center of Nashville, 872 F.3d at 387 n.7,
asking in essence that the court identify deficiencies in the complaint without any
consequences. The court will not expend judicial resources on Plaintiffs’ behalf, La.
Sch. Emps. Ret. Sys., 622 F.3d at 486, and the claim against Defendant Dimension will
be dismissed with prejudice.
IV. CONCLUSION
Plaintiffs’ claims against Defendant BatchMaster are covered by arbitration
clauses. Under Rule 9(b), Plaintiffs have not pled with particularity the remaining civil
conspiracy claim against Defendant Dimension. Accordingly,
IT IS ORDERED that Defendant BatchMaster’s “Motion to Dismiss” (ECF No. 11)
is GRANTED. Plaintiffs’ claims of breach of contract (Count I), fraudulent inducement to
contract (Count II), and conspiracy to commit fraud as to Defendant BatchMaster (Count
III) are DISMISSED WITHOUT PREJUDICE.
IT IS FURTHER ORDERED that Defendant Dimension’s “Motion to Dismiss”
(ECF No. 7) is GRANTED. Plaintiffs’ claim of conspiracy to commit fraud as to
Defendant Dimension (Count III) is DISMISSED WITH PREJUDICE.
s/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: December 14, 2020
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Case 3:20-cv-11017-RHC-RSW ECF No. 18, PageID.407 Filed 12/14/20 Page 18 of 18
I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, December 14, 2020, by electronic and/or ordinary mail.
s/Lisa Wagner
Case Manager and Deputy Clerk
(810) 292-6522
S:\Cleland\Cleland\JUDGE'S DESK\C2 ORDERS\20-11017.AMERICANSPECIALTYOILS.MotionstoDismiss.RMK.4.docx
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