Ransom et al v. VFS, Inc. et al

Filing 21

MEMORANDUM OPINION AND ORDER granting in part and denying in part defendants' 7 Motion to Dismiss and Motion for a More Definite Statement. Motion is granted as to Plaintiffs' claims for fraud (Co unt Three) and breach of fiduciary duty (Count Five), and these claims are dismissed without prejudice. Motion is denied as to Plaintiffs' claim for conversion (Count Four). Motion for a More Definite Statement is denied. (Written Opinion). Signed by Judge John R. Tunheim on January 14, 2013. (DML)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
BILLY RANSOM, MICHAEL JOSEPH
HAYES, MARK HAAF, DANIEL
BRIAN BENSON, LEROY BLEDSOE,
DAVID A. RIECK, HERMAN
PEARSON, JEREMY PEARSON,
CLINTON PEARSON, TIMOTHY
RETHWISCH, DAVID PRESTOLT,
ROGER ENGLAND, ROBERT
REFFER, CHARLES L. DRAPER,
DANIEL WINTER, MARK
JURGENSEN, CLAYTON ELLIS,
PAUL SKAGTER, JOHN KEM,
RICHARD STONE, DANIEL BESS, and
LEE VAN BOVEN,

Civil No. 12-1197 (JRT/AJB)

MEMORANDUM OPINION AND
ORDER ON DEFENDANTS’
MOTION TO DISMISS AND
MOTION FOR A MORE
DEFINITE STATEMENT

Plaintiffs,
v.
VFS, INC., WARREN AMUNDSON,
and DONNA M. WALRAVEN,
Defendants.

Paul O. Taylor, TAYLOR & ASSOCIATES, LTD., 900 West 128th
Street, Suite 104, Burnsville, MN 55337, for plaintiffs.
Eric J. Steinhoff and Brian A. Wood, LIND JENSEN SULLIVAN &
PETERSON, PA, 901 Marquette Avenue South, Suite 1300, Minneapolis,
MN 55402; and Douglas Grawe, GRAWE LAW, PLLC, 800 Lone Oak
Road, Eagan, MN 55121, for defendants.

This action arises out of lease agreements between Plaintiffs, a group of individual
truck drivers, and Defendant VFS, Inc. (“VFS”), which provided that Plaintiffs would
haul cargo for VFS in exchange for certain compensation. Plaintiffs bring this action

27

alleging fraud, conversion,1 and breach of fiduciary duty against all Defendants, as well
as breach of contract and violation of the Federal Truth-In-Leasing Regulations under 49
U.S.C. § 14704(a)(1), against VFS. Defendants bring a motion to dismiss Plaintiffs’
fraud, conversion, and breach of fiduciary duty claims, and in the alternative bring a
motion for a more definite statement. Because Plaintiffs’ pleadings are insufficient with
respect to the fraud and breach of fiduciary duty claims, the Court will grant Defendants’
motion to dismiss these claims. The Court will deny Defendants’ motion to dismiss the
conversion claim and Defendants’ motion for a more definite statement.

BACKGROUND
Defendant VFS is a federally regulated motor carrier that hauls freight in interstate
commerce. (Compl. ¶ 23, May 17, 2012, Docket No. 1.) Defendant Warren Amundson
is the chief executive officer and owner of VFS, and Defendant Donna Walraven is
VFS’s bookkeeper. (Id. ¶¶ 24-25.) The Plaintiffs are owner-operator truck drivers who
were hired by VFS to haul freight. (Id. ¶¶ 28, 31.) The relationship between VFS and
each Plaintiff is governed by separate lease agreements. (Id. ¶ 31.) Under the lease
agreements, each truck driver agreed to lease his vehicle to and move freight for VFS in
exchange for receiving a percentage of the gross revenue on the freight. (Id. ¶ 31, Ex. A.)

1

Count Four of Plaintiffs’ complaint is titled “Theft.” However, the complaint alleges
“theft” of personal property without referencing any state statutes such as Minn. Stat. § 604.24,
which provides that “[a] person who steals personal property from another is civilly liable to the
owner of the property.” Because the complaint does not reference the civil theft statute, the
Court will assume that Plaintiffs intended to allege a cause of action for common law conversion.
Therefore, for purposes of this order, the Court will refer to Plaintiffs’ Count Four as the
“conversion claim.”

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Plaintiffs’ claims generally stem from VFS’s alleged failure to pay Plaintiffs the
agreed compensation. (Id. ¶ 37.) Plaintiffs allege that VFS, Amundson, and Walraven
understated the amount VFS billed to recipients of its freight, and therefore understated
the compensation to which each Plaintiff was entitled. (Id. ¶¶ 50, 56-57, 62-63.) VFS
then paid Plaintiffs the allegedly understated amounts. (Id. ¶¶ 55, 58, 63.) Plaintiffs
further allege that Defendants’ representations about compensation occurred in “periodic
settlement statements” (id. ¶¶ 56-57) and “[t]hroughout the terms of the lease . . . verbally
and in writing.” (Id. ¶ 51.)
Plaintiffs’ complaint alleges that the understated compensation amounts form the
basis for claims of fraud, conversion, and breach of a fiduciary duty to accurately report
Plaintiffs’ compensation. (Id. ¶¶ 50-64.)2 Defendants now move to dismiss Plaintiffs’
fraud, conversion, and breach of fiduciary duty claims, and in the alternative seek a more
definite statement.3

2

Plaintiffs also bring claims for breach of contract and violation of federal regulations
governing motor carriers against VFS that share a similar factual basis to the fraud, conversion,
and breach of fiduciary duty claims. Because Defendants have not moved for dismissal with
respect to the breach of contract and violation of federal regulations claims, the Court will not
address them.
3

Although the title of Defendants’ motion papers, “Defendants’ Motion to Dismiss or, in
the Alternative, for a More Definite Statement and Defendant VFS, Inc’s Motion for a More
Definite Statement” makes it somewhat unclear whether VFS, in addition to Amundson and
Walraven, is seeking dismissal of the fraud, conversion, and breach of fiduciary duty claims, the
text of the motion papers themselves clarify that Defendants are in fact seeking dismissal of the
fraud, conversion, and breach of fiduciary claims as to all Defendants. (Mot. to Dismiss, June 6,
2012, Docket No. 7.)

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ANALYSIS
I.

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM
A.

Standard of Review

Under Federal Rule of Civil Procedure 8(a), a pleading must contain “a short and
plain statement of the claim showing that the pleader is entitled to relief.” In reviewing a
motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(6), the Court
considers all facts alleged in the complaint as true to determine if the complaint states a
“‘claim to relief that is plausible on its face.’” See, e.g., Braden v. Wal-Mart Stores, Inc.,
588 F.3d 585, 594 (8th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
To survive a motion to dismiss, a complaint must provide more than “‘labels and
conclusions’ or ‘a formulaic recitation of the elements of a cause of action . . . .’”
Ashcroft, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (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.

“Where a complaint pleads facts that are merely consistent with a

defendant’s liability, it stops short of the line between possibility and plausibility,” and
therefore must be dismissed.

Id. (internal quotation marks omitted).

Finally, Rule

12(b)(6) “authorizes a court to dismiss a claim on the basis of a dispositive issue of law.”
Neitzke v. Williams, 490 U.S. 319, 326 (1989).

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B.

Personal Liability

The Court must first determine whether Plaintiffs can properly seek to hold
Amundson – a corporate officer and shareholder – and Walraven – a corporate employee
– personally liable for actions they took while acting in those corporate roles.

1.

Liability of Amundson

“An officer and shareholder of a corporation cannot be held personally liable for
the obligations of the corporation except in limited circumstances.” Universal Lending
Corp. v. Wirth Cos., 392 N.W.2d 322, 326 (Minn. Ct. App. 1986). These circumstances
include: (1) when the corporate entity is the alter ego of the shareholder and piercing the
corporate veil is necessary to avoid injustice, see Barton v. Moore, 558 N.W.2d 746, 749
(Minn. 1997); (2) when the officer has personally guaranteed the corporation’s
obligations, Universal Lending Corp., 392 N.W.2d at 326; and (3) when the officer has
actually participated in misdeeds of the corporation, see Ellingson v. World Amusement
Serv. Ass’n, 222 N.W. 335, 339 (Minn. 1928). Plaintiffs have not alleged that VFS is the
alter ego of Amundson,4 nor have they alleged that Amundson personally guaranteed the
compensation obligations of VFS under the lease agreements. Therefore, in order to
ascertain whether Plaintiffs properly seek to hold Amundson personally liable, the Court
4

Defendants argue that Amundson cannot be liable because Plaintiffs have failed to
plead facts establishing that VFS was the alter ego of Amundson. As explained below, it is not
necessary to pierce the corporate veil to hold a corporate officer liable when there is no attempt
to hold the corporate officer liable “solely because of his status as a stockholder or officer of the
corporation.” In re Dougherty, 482 N.W.2d 485, 490 (Minn. Ct. App. 1992). Rather, in such
situations, liability is individual and based on tortious conduct in which the corporate officer
personally engaged. Id.

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must determine whether the complaint, if adequately pled, could allege causes of action
against Amundson for his participation in the misdeeds of VFS.
“It is the universal rule that an officer of a corporation who takes part in the
commission of a tort by the corporation is personally liable therefor[.]” Ellingson, 222
N.W. at 339; see also Arena Dev. Grp., LLC v. Naegele Commc’ns, Inc., Civ. No. 062806, 2008 WL 1924179, at *7 (D. Minn. Apr. 29, 2008) (“[U]nder Minnesota law
corporate officers are liable for the torts they commit[.]”). In addition to the torts they
individually commit, corporate officers can also be personally liable for torts committed
by other corporate employees that the officers “participated in, directed, or w[ere]
negligent in failing to learn of and prevent.” Morgan v. Eaton’s Dude Ranch, 239
N.W.2d 761, 762 (Minn. 1976) (footnote omitted).
Plaintiffs’ complaint seeks to hold Amundson liable for fraud, conversion, and
breach of fiduciary duty. The general rule holding corporate officers liable for their own
torts applies to fraud as well as torts against personal property, such as conversion. See
Meyer v. Dygert, 156 F. Supp. 2d 1081, 1086 (D. Minn. 2001) (fraud); Holzer v. Tonka
Bay Yachts & Marine Sales, Inc., 386 N.W.2d 285, 287 (Minn. Ct. App. 1986)
(conversion). Additionally, one circumstance in which a corporate officer could owe a
plaintiff a fiduciary duty is when the corporate officer has assumed an independent
fiduciary duty toward the plaintiff. See Vincent v. Beck, C6-94-2636, 1995 WL 541470,

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at *2-3 (Minn. Ct. App. Sept. 12, 1995). Breach of such a fiduciary duty is a tort 5 for
which the corporate officer could be held personally liable.
The complaint alleges that “VFS, Inc., Warren Amundson, and Donna Walraven
made false representations to each Plaintiff,” that “Defendants, acting in concert with
each other, understated each Plaintiff’s compensation on periodic settlement statements
in order to commit acts of theft of funds due to each Plaintiff,” and that “Defendants
owed Plaintiffs a fiduciary duty to accurately report charges billed by VFS, Inc. to its
customers.” (Compl. ¶¶ 50, 58, 62.) Thus, Plaintiffs appear to be alleging Amundson’s
personal participation in the alleged fraud and conversion, and do not seek to hold
Amundson liable solely based in his capacity as VFS’s owner and chief executive officer.
Additionally, Plaintiffs appear to be alleging that each Defendant owed a fiduciary duty
to Plaintiffs. Without addressing the sufficiency of the complaint’s allegations in other
respects, which will be discussed below, the Court finds that such allegations, if properly
pled, could provide a proper basis for personal liability. Consequently, the Court finds
that the complaint could properly seek to hold Amundson personally liable for his own
tortious conduct.

2.

Liability of Walraven

Defendants argue that Walraven cannot be liable for torts she may have committed
while acting in the course and scope of her employment, because VFS would be
5

See Restatement (Second) of Torts § 897 & cmt. B (1979) (“A fiduciary who commits a
breach of his duty as a fiduciary is guilty of tortious conduct to the person for whom he should
act.”); see also In re Senior Cottages of Am., LLC, 482 F.3d 997, 1007 (8th Cir. 2007) (applying
the law for aiding and abetting a tort to claims for breach of fiduciary duty).

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vicariously liable for such torts. Therefore, Defendants argue that the Court must dismiss
the complaint’s allegations against Walraven.
“Respondeat superior is a common law doctrine ‘whereby a master is liable for his
servant’s torts committed in the course and scope of his employment.’” Horras v.
Leavitt, 495 F.3d 894, 904 (8th Cir. 2007) (quoting Burger Chef Sys., Inc. v. Govro, 407
F.2d 921, 925 (8th Cir. 1969)). Under the doctrine, the tortious conduct of a corporate
employee can be imputed to a corporation, “[b]ut that liability is joint and several; the
servant is not relieved.” Id. (internal quotation marks omitted); see also Kisch v. Skow,
233 N.W.2d 732, 734 (Minn. 1975) (“In Minnesota, we have characterized the liability of
master and servant . . . as joint and several.”). Therefore, simply because a corporation
may be vicariously liable for its employee’s allegedly tortious conduct, it does not follow
that the employee is not liable for her own conduct. Horras, 495 F.3d at 904.
The complaint alleges that Walraven made false representations concerning
Plaintiffs’ compensation, knew that such representations were false, and made the
representations to induce Plaintiffs to continue transporting shipments for VFS. (Compl.
¶¶ 50-54.) The complaint also alleges that Walraven, acting in concert with the other
Defendants, understated Plaintiffs’ compensation in order to commit theft. (Id. ¶¶ 5758.) Finally, the complaint alleges that all “Defendants,” including Walraven, owed a
fiduciary duty to Plaintiffs, and that Walraven breached that duty when she failed to
accurately report charges billed by VFS and Plaintiffs’ corresponding compensation. (Id.
¶¶ 62-64.) That Walraven’s conduct was undertaken in the course of her employment
does not relieve her of liability for allegedly tortious conduct. Therefore, again without

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addressing the sufficiency of the allegations in other respects, the Court finds that the
complaint could properly seek to hold Walraven personally liable for her own tortious
conduct.

C.

Count Four: Conversion

Under Minnesota law, conversion is “an act of willful interference with personal
property, done without lawful justification by which any person entitled thereto is
deprived of use or possession.” DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997)
(internal quotation marks omitted).

“In order to recover [for conversion], plaintiff

need[s] to prove only that he was the owner of the property taken, that it was taken by the
defendant and converted, and that it had value.” Fryberger v. Anderson, 260 N.W. 625,
626 (Minn. 1935).
Here, Plaintiffs have alleged that they had a property interest in the compensation
at issue and were wrongfully deprived of that interest by the acts of the three Defendants.
Specifically, Plaintiffs allege that they were owed certain compensation under the leases,
that the three Defendants caused the amount of compensation to be understated, that
Defendants paid Plaintiffs less than they were entitled to, and therefore Defendants
misappropriated Plaintiffs’ compensation. Assuming, as the Court must for purposes of a
motion to dismiss, that the allegations in the complaint are true, the Court finds that these
allegations are sufficient to state a claim for conversion. See FCA Constr. Co., LLC v.
Singles Roofing Co., Civ. No. 09-3700, 2011 WL 5275852, at *2 (D. Minn. Nov. 3,
2011) (denying a motion to dismiss a conversion claim where “plaintiff has alleged that it
held a property interest in the money at issue and was wrongfully deprived of its property

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interest in that money by [defendant]’s misappropriation of it”). Because the complaint
contains sufficient allegations to maintain a cause of action for conversion against all
Defendants, the Court will deny Defendants’ motion to dismiss with respect to the Count
Four.6

6

It is possible that Plaintiffs’ conversion claim could be dismissed because the heart of
Plaintiffs’ action is a breach of contract claim. “Minnesota law does not recognize an
independent tort for conduct that merely constitutes a breach of contract.” First Integrity Bank,
N.A. v. Ohio Cas. Ins. Co., Civ. No. 05-2761, 2006 WL 1371674, at *6 (D. Minn. May 15,
2006). Therefore, if “actions at the heart” of a tort claim “are identical to those which constitute
a breach of contract,” no separate tort cause of action exists. Id. “A tort is independent from a
breach of contract if ‘a relationship would exist which would give rise to the legal duty without
enforcement of the contract promise itself.’” Jones v. W. Union Fin. Servs., Inc., 513 F. Supp.
2d 1098 (D. Minn. 2007) (quoting Hanks v. Hubbard Broad., Inc., 493 N.W.2d 302, 308 (Minn.
Ct. App. 1992)). Defendants have not, however, raised this argument as a basis for dismissal,
and have not asked the Court to examine the relationship between the conversion claim and the
breach of contract claim asserted against VFS in Count One of the complaint. Therefore, the
Court will not decide whether Plaintiffs’ conversion claim should be dismissed on the basis that
the heart of Plaintiffs’ conversion claim may be a breach of contract.
Additionally, it is possible that Plaintiffs’ conversion claim could be dismissed because
the claim alleges conversion of unspecified money. See Halla v. NW Bank Minn., N.A., 601
N.W.2d 449 (Minn. Ct. App. 1999) (“Because cash is liquid and designed to be transferred, it is
‘a subject of conversion only when it is capable of being identified, and described as a specific
chattel.’” (quoting 89 C.J.S. Trover & Conversion § 23, at 541 (1955))); see also United Prairie
Bank-Mountain Lake v. Haugen Nutrition & Equip., LLC, 782 N.W.2d 263, 273 (Minn. Ct. App.
2010), rev’d in part on other grounds, 813 N.W.2d 49 (Minn. 2012) (“[T]he district court held
that once funds are deposited into a bank, they become the property of the bank, so conversion
cannot lie. We agree.” (footnote omitted)). Again, however, Defendants have not raised this
argument as a basis for dismissal. Nor have Defendants indicated whether the holdings of these
Minnesota cases would apply here, where Plaintiffs claim conversion of an interest in money that
they were entitled to but never received, as opposed to conversion of money already obtained.
Because Defendants have not raised this argument, the Court will not decide whether Plaintiffs’
conversion claim should be dismissed on the basis that Plaintiffs’ claim is based on conversion
of money.

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D.

Count Five: Fiduciary Duty

Under Minnesota law, “[a] fiduciary relationship is characterized by a ‘fiduciary’
who enjoys a superior position in terms of knowledge and authority and in whom the
other party places a high level of trust and confidence.” Carlson v. Sala Architects, Inc.,
732 N.W.2d 324, 330 (Minn. Ct. App. 2007) (citing Toombs v. Daniels, 361 N.W.2d 801,
809 (Minn. 1985)).

Fiduciary relationships “transcend[] the ordinary business

relationship which, if it involves reliance on a professional, surely involves a certain
degree of trust and a duty of good faith and yet is not classified as ‘fiduciary.’” Id. at
331.
Minnesota generally recognizes two categories of fiduciary relationships:
“relationships of a fiduciary nature per se, and relationships in which circumstances
establish a de facto fiduciary obligation.” Swenson v. Bender, 764 N.W.2d 596, 601
(Minn. Ct. App. 2009). Per se fiduciary relationships, such as those between attorneys
and clients, do not include the relationship between a commercial lessee and lessor. See
Thomas B. Olson & Assocs., P.A. v. Leffert, Jay & Polglaze, P.A., 756 N.W.2d 907, 914
(Minn. Ct. App. 2008) (listing per se fiduciary relationships).

Whether a de facto

fiduciary relationship exists is a question of fact, and evidence of financial control,
assurances and invited consequences, and disparities in business experience may be
sufficient to show the existence of such a fiduciary relationship. See Toombs, 361
N.W.2d at 809.7 However, where parties to a business transaction merely “deal[] at

7

See also Cherne Contracting Corp. v. Wausau Ins. Cos., 572 N.W.2d 339, 342 (Minn.
Ct. App. 1997); Kennedy v. Flo-Tronics, Inc., 143 N.W.2d 827, 830 (Minn. 1966).
(Footnote continued on next page.)

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arm’s length . . . a fiduciary relationship cannot be said to exist between the parties.”
Shema v. Thorpe Bros., 62 N.W.2d 86, 91 (Minn. 1953). Additionally, a fiduciary
relationship is not established “by the plaintiff having faith and confidence in the
defendant where the plaintiff should have known the defendant was representing an
adverse interest.” Hope v. Klabal, 457 F.3d 784, 791 (8th Cir. 2006)8; see also S. Minn.
Mun. Power Agency v. City of St. Peter, 433 N.W.2d 463, 468 (Minn. Ct. App. 1988).
The only allegation that the instant complaint makes with respect to the existence
of a fiduciary relationship between Plaintiffs and any of the Defendants is that
“Defendants owed Plaintiffs a fiduciary duty to accurately report charges billed by VFS,
Inc. to its customers, accurately report each Plaintiff’s compensation on settlement
statements, and ensure that each Plaintiffs’ portion of revenue billed by VFS, Inc. was
paid to each Plaintiff.” (Compl. ¶ 62.) The complaint does not allege any facts – such as
disparity in business experience or invited confidences – which would allow the Court to
reasonably infer that any or all of the Defendants could be liable for breach of a fiduciary
duty. Instead, the complaint offers only the conclusory label of a “fiduciary duty.” The
complaint also alleges with respect to breach of fiduciary duty that Plaintiffs “relied upon
____________________________________
(Footnote continued.)
8

The Hope case cited Wells-Dickey Trust Co. v. Lien, 204 N.W. 950, 952-53 (Minn.
1925), which concluded that a seller of property owed no fiduciary toward the buyer, even
though the buyer and seller were longtime friends and the seller had served as the executor of the
buyer’s husband’s estate, and Stark v. Equitable Life Assurance Society, 285 N.W. 466, 470
(Minn. 1939), which determined that an insurance agent did not have a fiduciary duty to a
plaintiff who was illiterate, had limited business experiences, and was the agent’s close friend
and business acquaintance.

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information reported to them by the Defendants.” (Compl. ¶ 61.) At most, this allegation
can be read as Plaintiffs imposing trust and confidence in Defendants, even though the
facts in the complaint indicate that Defendants were representing an adverse interest.
Such trust and confidence, absent other facts, is insufficient to establish a fiduciary duty
under Minnesota law. See Hope, 457 F.3d at 791. Therefore, the Court will dismiss
Count Five without prejudice, as Plaintiffs have not alleged sufficient facts to state a
claim for breach of fiduciary duty against any of the Defendants.

II.

MOTION TO DISMISS FOR LACK OF PARTICULARITY
Defendants argue that Plaintiffs’ fraud claim (Count Three) fails because the

complaint does not meet the particularity requirement of Federal Rule of Civil Procedure
9.

To properly plead a claim for fraud, “a party must state with particularity the

circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). To satisfy the
particularity requirement, “the complaint must allege such matters as the time, place, and
contents of false representations, as well as the identity of the person making the
misrepresentation and what was obtained or given up thereby.” Drobnak v. Andersen
Corp., 561 F.3d 778, 783 (8th Cir. 2009) (internal quotation marks omitted). In other
words, to survive a motion to dismiss, plaintiffs “must typically identify the who, what,
where, when, and how of the alleged fraud.” BJC Health Sys. v. Columbia Cas. Co., 478
F.3d 908, 917 (8th Cir. 2007) (internal quotation marks omitted). The purpose of the
heightened pleading standard is to give defendants an opportunity to respond quickly and
accurately to damaging fraud allegations. See United States ex rel. Joshi v. St. Luke’s
Hosp., Inc., 441 F.3d 552, 555 (8th Cir. 2006).

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“[C]onclusory allegations that a

defendant’s conduct was fraudulent and deceptive are not sufficient to satisfy the rule.”
Schaller Tel. Co. v. Golden Sky Sys., Inc., 298 F.3d 736, 746 (8th Cir. 2002) (internal
quotation marks omitted). But “Rule 9(b) does not require that the exact particulars of
every instance of fraud be alleged, so long as the complaint includes enough detail to
inform the defendant of the ‘core’ factual basis for the fraud claims.” McGregor v.
Uponor, Inc., Civ. No. 09-1136, 2010 WL 55985, at *3 (D. Minn. Jan. 4, 2010) (quoting
Commercial Prop. Invs., Inc. v. Quality Inns Int’l, Inc., 61 F.3d 639, 646 (8th Cir. 1995)).
In support of Plaintiffs’ fraud claim, the complaint alleges that “[t]hroughout the
terms of the leases between each Plaintiff and Defendants VFS, Inc., Defendants VFS,
Inc., Warren Amundson, and Donna Walraven made false representation to each
Plaintiff, verbally and in writing, concerning the amount of compensation that VFS, Inc.
was had [sic] received and/or had billed to its customers on shipments transported by
each Plaintiff.” (Compl. ¶ 50.)

The remainder of Count Three merely recites the

elements of common law fraud referencing the “false representations” identified in
Paragraph 50. (Id. ¶¶ 51-55.)
Here, although the complaint contains some of the necessary information, 9 the
Court finds that the allegations of fraud are insufficient to meet the pleading standard in

9

For example, the Court finds that the complaint contains enough particulars about the
when of Defendants’ purportedly fraudulent conduct to sufficiently apprise Defendants of the
nature of Plaintiffs’ fraud claims and allow Defendants to respond to the allegations. The
complaint specifies that the fraudulent conduct occurred during the lease terms. Although this
allegation does not contain specific dates, it is sufficient to notify Defendants generally of when
the alleged fraud occurred. See, e.g., Carlson v. A.L.S. Enters., Inc., Civ. No. 07-3970, 2008 WL
185710, at *3 (D. Minn. Jan. 18, 2008) (finding sufficient a description of when fraud occurred
where the complaint alleged that fraud had been occurring “on an ongoing basis” since the
(Footnote continued on next page.)

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Rule 9(b). First, Plaintiffs have failed to identify which Defendant made the alleged false
representations.

“‘Rule 9(b) does not allow a complaint to merely lump multiple

defendants together but require[s] plaintiffs to differentiate their allegations when suing
more than one defendant . . . and inform each defendant separately of the allegations
surrounding his alleged participation in the fraud.’” Petersen v. England, Civ. No. 092850, 2010 WL 3893797, at *10 (D. Minn. Sept. 30, 2010) (quoting Swartz v. KPMG
LLP, 476 F.3d 756, 764-65 (9th Cir. 2007)).
[W]hen a complaint accuses multiple defendants of participating in the
scheme to defraud, the plaintiff must take care to identify which of them
was responsible for the individual acts of fraud. If the requirements of Rule
9(b) were otherwise, a defendant would be forced to guess which
allegations in the complaint were properly pleaded against it, rendering it
difficult (if not impossible) to adequately frame a response, which is
precisely the problem that Rule 9(b) was designed to remedy.
Moua v. Jani-King of Minn., Inc., 613 F. Supp. 2d 1103, 1111 (D. Minn. 2009) (citations
Count Three does not meet Rule 9(b)’s

and internal quotation marks omitted).

particularity requirement because it identifies VFS, Amundson, and Walraven generally
as making false representations, but does not identify each Defendant’s role in any false
representations, or identify which Defendant made any particular misrepresentation. (See
Compl. ¶¶ 51-53 (discussing the “false representations made by the Defendants”

____________________________________
(Footnote continued.)

defendant began selling a certain product); Solvay Pharms., Inc. v. Global Pharms., 298
F. Supp. 2d 880, 885-86 (D. Minn. 2004) (finding sufficient a fraud claim which alleged that
defendants had been improperly marketing products for the past “several years”).

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(emphasis added)).)10 Without knowing which Defendant is alleged to have made the
misrepresentations in question, Defendants cannot properly respond to the complaint.
Second, the complaint fails to identify what statements constitute the alleged
fraud, and where these representations were made. The complaint alleges only that
Defendants “verbally and in writing” made misrepresentations “concerning the amount of
compensation that VFS, Inc. was had [sic] received and/or had billed to its customers on
shipments transported by each Plaintiff.” (Compl. ¶ 50.) The complaint does not specify
in what writings or oral communications these misrepresentations were made, what
figures “concerning the amount of compensation” were misrepresented, or in what
manner the figures had been misrepresented.11 Such pleading is insufficient to meet the
particularity requirement of Rule 9(b). See In re Mirapex Prods. Liab. Litig., 246 F.R.D.
10

See also Carlson, 2008 WL 185710, at *4 (dismissing a fraud claim where it was
unclear “whether Plaintiffs allege that all Defendants, some Defendants, or only one Defendant
made each of th[e] [fraudulent] statements, and thus it [wa]s equally unclear what role each
Defendant played in the purported fraud”).
11

Plaintiffs argue that it was impossible for them to ascertain and plead “the precise date
and amount of each false representation,” because “VFS failed to provide copies of the rated
freight bills to the Plaintiffs as it was required to do.” (Pl.’s Memo. in Opp. to Mot. to Dismiss at
8, July 9, 2012, Docket No. 14.) But in order for Plaintiffs to prove common law fraud, they
must have reasonably relied on a fraudulent misrepresentation. See Martens v. Minn. Mining &
Mfg. Co., 616 N.W.2d 732, 747 (Minn. 2000). If the alleged misrepresentations were never
communicated to Plaintiffs, the Defendants could not have committed fraud as a matter of law.
See In re St. Jude Med., Inc., 522 F.3d 836, 838 (8th Cir. 2008) (“[A] plaintiff must show that he
or she received the defendant’s alleged misrepresentation and relied on it.” (emphasis added)).
Therefore, Plaintiffs’ argument fails to excuse them from the burden of pleading fraud with
particularity on two levels. Either Defendants never communicated any false representations to
Plaintiffs, in which case no fraud claim exists, or Defendants communicated false representations
to Plaintiffs (in some form other than the freight bills that were allegedly never given to
Plaintiffs) and Plaintiffs must describe those communications in their complaint. Finally,
Defendants’ attorney submitted an affidavit stating that the ten freight bills requested by
Plaintiffs were sent to Plaintiffs’ counsel on February 20, 2012, three months before the
complaint was filed. (Aff. of Doug C. Grawe ¶¶ 2-3, July 16, 2012, Docket No. 19.)

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668, 671 (D. Minn. 2007) (finding a fraud claim deficient which merely alleged that
defendant “made false representations denying any link between [defendant’s product]
and compulsive gambling,” because the complaint did not cite “[s]pecific statements or
omissions”).12
Although Plaintiffs need not plead every detail of the alleged fraud, the allegations
must be sufficient to allow Defendants to respond. See Evangelical Lutheran Church in
Am. Bd. of Pensions v. Spherion Pac. Workforce LLC, Civ. No. 04-4791, 2005 WL
1041487, at *3 (D. Minn. May 4, 2005) (explaining that although some of plaintiff’s
allegations “suffer[ed] from a lack of specification,” the complaint “analyzed as a whole,
adequately

puts

[the

defendant]

on

notice

of

the

particular

instances

of

misrepresentation”). In the absence of allegations which specify which Defendant made
the misrepresentations and identify the misrepresentations themselves, the Court finds
that the complaint does not plead sufficient facts to allow Defendants to properly respond
12

See also BJC Health Sys., 478 F.3d at 917-18 (dismissing a fraud claim for lack of
particularity where, although plaintiffs identified a specific actuarial analysis as the basis for
their fraud claim, the complaint did “not specify where and how the analysis falls short”); Best
Buy Stores, L.P. v. Developers Diversified Realty Corp., Civ. No. 05-2310, 2007 WL 1242890,
at *1 (D. Minn. Apr. 27, 2007) (dismissing a fraud claim where the plaintiff had “not identified
with any specificity which provisions of the ‘leases, bills, invoices and reconciliations’ [were]
alleged to be fraudulent”). In contrast, fraud claims which survive motions to dismiss
specifically identify allegedly fraudulent statements, and where such statements were made. See,
e.g., Blue Cross & Blue Shield of Minn. v. Wells Fargo Bank, N.A., Civ. No. 11-2529, 2012 WL
1343147, at *3 (D. Minn. Apr. 18, 2012) (denying a motion to dismiss a fraud claim where the
complaint identified the corporate documents which contained the alleged misrepresentations as
well as “the precise alleged misrepresentations contained therein” and “alleged specifically what
allegedly fraudulent communications each individual plaintiff had with Wells Fargo and the
approximate time and date on which such communications took place”); McGregor, 2010 WL
55985, at *4 (finding sufficient a fraud claim which identified particular quotes from defendants’
website and advertising brochures which plaintiffs claimed were misrepresentations); Solvay
Pharms., 298 F. Supp. 2d at 885-86 (finding sufficient a fraud claim which identified particular
statements in promotional and marketing materials which were alleged to be false).

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to the allegations. Because the complaint fails to plead fraud with particularity, the Court
will dismiss Count Three as to all Defendants.

III.

MOTION FOR A MORE DEFINITE STATEMENT
Because the Court will deny Defendants’ motion to dismiss with respect to Count

Four, the Court will consider Defendants’ alternative request for a more definite
statement. Under Federal Rule of Civil Procedure 12(e) “[a] party may move for a more
definite statement of a pleading to which a responsive pleading is allowed but which is so
vague or ambiguous that the party cannot reasonably prepare a response.” The motion
for a more definite statement “must be made before filing a responsive pleading.” Id.
Because of the liberal notice-pleading standard governing federal pleadings “and the
availability of extensive discovery, Rule 12(e) motions are disfavored.” Radisson Hotels
Int’l, Inc. v. Westin Hotel Co., 931 F. Supp. 638, 644 (D. Minn. 1996). “Rule 12(e)
provides a remedy for unintelligible pleadings; it is not intended to correct a claimed lack
of detail.” Id. (internal quotation marks omitted). Therefore, “[w]hen examining whether
a more definite statement is required under Rule 12(e), the only question is whether it is
possible to frame a response to the pleading.” Lyon Fin. Sers., Inc. v. MBS Mgmt. Servs.,
Inc., Civ. No. 06-4562, 2007 WL 2893612, at *9 (D. Minn. Sept. 27, 2007) (citing
Century ‘21’ Shows v. Owens, 400 F.2d 603, 607 (8th Cir. 1968)).
Because Defendants have filed an answer to Plaintiffs’ complaint, their motion
does not comply with the requirement in Rule 12(e) that such a motion be made “before
filing a responsive pleading.” (See Answer, June 6, 2012, Docket No. 6.) Furthermore,
the fact that Defendants filed an answer indicates that Defendants’ did not believe the

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complaint to be truly unintelligible such that they could not frame a response. See Lyon
Fin. Servs. Inc., 2007 WL 2893612, at *9; Powerlock Sys., Inc. v. Duo-Lok, Inc., 56
F.R.D. 50, 52 (E.D. Wis. 1972). Therefore, the Court will deny Defendants’ motion for a
more definite statement.

ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1.

Defendants’ Motion to Dismiss [Docket No. 7] is GRANTED in part and

DENIED in part as follows:
a.

The motion is GRANTED as to Plaintiffs’ claims for fraud (Count

Three) and breach of fiduciary duty (Count Five), and these claims are
DISMISSED WITHOUT PREJUDICE.
b.

The motion is DENIED as to Plaintiffs’ claim for conversion (Count

Four).
2.

Defendants’ Motion for a More Definite Statement [Docket No. 7] is

DENIED.
DATED: January 14, 2013
at Minneapolis, Minnesota.

____s/
____
JOHN R. TUNHEIM
United States District Judge

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