O'Reilly Automotive Stores, Inc. v. Reflexis Systems, Inc.

Filing 40

ORDER provisionally granting 14 Motion to Dismiss for Failure to State a Claim. Plaintiff may, within 14 days, file a motion for leave to amend, with an attached amended complaint. Failure to do so will result in the dismissal of Count V with prejudice. Signed on 10/13/20 by District Judge Roseann Ketchmark. (Dollar, Jordan)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
SOUTHERN DIVISION
O'REILLY AUTOMOTIVE STORES,
INC.,

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Plaintiff,
v.
REFLEXIS SYSTEMS, INC.,
Defendant.

Case No. 6:20-03163-CV-RK

ORDER
Before the Court is the motion to dismiss Count V of Plaintiff’s Complaint filed by
Defendant Reflexis Systems, Inc. (Doc. 14.) The motion is fully briefed. (Docs. 15, 17, 35.)
After careful consideration, the motion is PROVISIONALLY GRANTED.

The Court

PROVISIONALLY DISMISSES Count V.
Background
The following background is taken from the Complaint. (Doc. 1-2.) O’Reilly sells aftermarket automobile parts and ancillary products. This case stems from a project between O’Reilly
and Reflexis, where the parties entered into a Master Agreement on April 15, 2014, for Reflexis
to provide O’Reilly with a software system and services for timekeeping and scheduling. Leading
up to the agreement, the parties discussed O’Reilly’s requirements, which included that the
software system would be hosted at O’Reilly’s corporate data center in Springfield, Missouri. The
software system also needed to ensure compliance with local laws and regulations and ensure
efficient scheduling of O’Reilly’s workforce. O’Reilly alleges that, for a period of three years,
Reflexis was unable to provide a successful pilot system to test in a store. According to O’Reilly,
by summer 2017, Reflexis suggested that the project shift to a version that could be hosted in the
cloud, rather than on-premises. The parties then entered into a Statement of Work Addendum on
June 30, 2017, where additional requirements were set forth for the new proposed cloud system.
Ultimately, on June 25, 2019, O’Reilly provided Reflexis with a notice of failure and termination
due to Reflexis not providing the agreed to software.
O’Reilly filed this action on April 28, 2020, asserting claims for damages based on theories
of breach of contract (Count I), money had and received (Count II), unjust enrichment (Count III),

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negligent misrepresentation (Count IV), fraudulent misrepresentation (Count V), breach of express
warranty (Count VI), and breach of implied warranty (Count VII). Reflexis seeks to dismiss
O’Reilly’s fraudulent misrepresentation claim (Count V) for failure to properly plead allegations
of fraud under Federal Rules of Civil Procedure 12(b)(6) and 9(b). O’Reilly responds that while
it believes it has pled sufficient facts in support of Count V, if the Court disagrees, O’Reilly should
be permitted to amend Count V.
Legal Standards
Federal Rule of Civil Procedure 12(b)(6) allows a defendant to file a motion to dismiss a
party’s claims for “failure to state a claim upon which relief can be granted[.]” To survive a motion
to dismiss, a complaint must allege “enough facts to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible if “the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court
“accept[s] the allegations contained in the complaint as true and draw[s] all reasonable inferences
in favor of the nonmoving party.” Cole v. Homier Distrib. Co., 599 F.3d 856, 861 (8th Cir. 2010)
(quotation marks and citation omitted).
Federal Rule of Civil Procedure 9(b) requires a plaintiff to “state with particularity the
circumstances constituting fraud or mistake.” Whereas, “[m]alice, intent, knowledge, and other
conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). “This particularity
requirement demands a higher degree of notice than that required for other claims, and is intended
to enable the defendant to respond specifically and quickly to the potentially damaging
allegations.” United States ex rel. Benaissa v. Trinity Health, 963 F.3d 733, 739 (8th Cir. 2020)
(quoting United States ex rel. Costner v. URS Consultants, Inc., 317 F.3d 883, 888 (8th Cir. 2003))
(internal quotation marks omitted). To satisfy the particularity requirement, “the complaint must
plead such facts as the time, place, and content of the defendant’s false representations, as well as
the details of the defendant’s fraudulent acts, including when the acts occurred, who engaged in
them, and what was obtained as a result.” Id. (quoting United States ex rel. Joshi v. St. Luke’s
Hosp., Inc., 441 F.3d 552, 556 (8th Cir. 2006)). “Put another way, the claim must identify who,
what, where, when, and how.” United States ex rel. v. St. Luke’s Hosp., Inc., 441 F.3d 552, 556
(8th Cir. 2006) (citing Costner, 317 F.3d at 888) (internal quotation marks omitted).

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Discussion
To state a claim for fraudulent misrepresentation under Missouri law, 1 a plaintiff must
plead:
(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge
of its falsity or ignorance of its truth; (5) the speaker’s intent that it should be acted
on by the person in the manner reasonably contemplated; (6) the hearer’s ignorance
of the falsity of the representation; (7) the hearer’s reliance on the representation
being true; (8) the hearer’s right to rely thereon; and (9) the hearer’s consequent
and proximately caused injury.
Renaissance Leasing, LLC v. Vermeer Mfg. Co., 322 S.W.3d 112, 131-32 (Mo. 2010).
Reflexis argues that O’Reilly’s allegations fail to state the “who, when, or where” details
of its actions to support the fraudulent misrepresentation claim. Reflexis further argues that
O’Reilly failed to allege facts demonstrating that Reflexis knew its representations were false at
the time they were made. The Court will address each of those arguments in turn.
To begin, merely naming Reflexis as the “who” falls short of the particularity requirement.
See Wivell v. Wells Fargo Bank, N.A., 773 F.3d 887, 898 (8th Cir. 2014) (Rule 9 particularity
requirement not met where complaint did not identify the company representatives who engaged
in the alleged misrepresentations). The Complaint itself identifies only one individual at Reflexis,
its CEO, Prashanth Palkurthi, but does not attribute to him any particular alleged
misrepresentation. (Doc. 1-2 at ¶¶ 30, 33.) However, two more individuals at Reflexis are
identified in attachments to the Complaint as signatories to the parties’ agreements: the Master
Agreement is signed by Daniel Clarke, Reflexis’ VP and CFO (e.g., Doc. 17-1 at 49); the Statement
of Work Addendum is signed by Brion D. Lucy, Reflexis’ CFO (Doc. 17-1 at 64). Those
attachments are incorporated into the Complaint and can be considered by the Court. See
Fed.R.Civ.P. 10(c); Abels v. Farmers Commodities Corp., 259 F.3d 910, 921 (8th Cir. 2001).
On the other hand, O’Reilly also alleges that Reflexis made numerous misrepresentations
leading up, and subsequent to, the signing of both the Master Agreement and the Statement of
Work Addendum without attributing them to a particular speaker at Reflexis. (Doc. 1-2 at ¶¶ 5, 9,
22, 26, 35, 79). Such allegations are insufficient to state a claim. Miner v. Schrieber, No. 4:19CV-95-SPM, 2020 U.S. Dist. LEXIS 116462, at *16 (E.D. Mo. July 2, 2020) (citing Owen Cont’l
Dev., LLC v. Vill. Green Mngmt., 2011 WL 5330412, at *5 (E.D. Mo. Nov. 4, 2011)) (vague

1

It is undisputed that Missouri substantive law applies.

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references to “Defendant” or “Defendants” do not satisfy Rule 9’s particularity requirement;
generally, the statements alleged to be fraudulent must be linked to a speaker). In addition,
O’Reilly does not sufficiently allege “when” and “where” these misrepresentations were made.
From the Complaint, outside of representations that are memorialized in the parties’ agreements,
it appears that alleged misrepresentations occurred (1) sometime prior to April 15, 2014, when the
Master Agreement was signed, (2) sometime between April 15 and June 30, 2017, when the
Statement of Work Addendum was signed, and (3) sometime in 2019 before O’Reilly sent Reflexis
its notice of termination letter on June 25, 2019. This is insufficient to satisfy Rule 9’s particularity
requirement as to “when.” See Miner, 2020 U.S. Dist. LEXIS 116462, at *17 (failing to identify
the dates when the alleged misrepresentations were made does not satisfy Rule 9’s particularity
requirement; “September to October of 2017” is insufficient). O’Reilly also falls short of pleading
“where” these misrepresentations occurred given that it does not allege whether they occurred by
telephone, in person, or in writing. See id. Because O’Reilly seeks to make claims for additional
representations, it makes it unclear exactly what representations form the basis of Count V. Thus,
the motion to dismiss will be provisionally granted.
Reflexis also alleges O’Reilly failed to allege facts demonstrating that Reflexis knew its
representations were false at the time they were made. Although “[m]alice, intent, knowledge,
and other conditions of a person’s mind may be alleged generally[,]” Fed. R. Civ. P. 9(b), a plaintiff
must allege circumstances surrounding the alleged misrepresentations from which it could be
reasonably inferred that the speaker either knew that the statement was false or that the speaker
was reckless as to its falsity, Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843, 853 (8th Cir.
2014). Here, O’Reilly’s allegations as to knowledge are sufficient. First, the Complaint clearly
alleges Reflexis promised it could deliver a system meeting O’Reilly’s specification, but failed to
deliver on its obligations arising from the memorialized agreements. According to the Complaint,
no acceptable product was ever delivered to O’Reilly. From this, assuming Plaintiff can make
sufficient allegations as to the individuals, it can be inferred that the representations were false or
that the individual or individuals were reckless as to its falsity. Second, O’Reilly specifically
alleges that Reflexis knew of the representations’ falsity or was reckless as to its falsity. These
allegations, in context of the circumstances of the entire Complaint are sufficient.
O’Reilly requests leave to amend its fraudulent misrepresentation claim to meet the
particularity requirement, but did not attach a proposed pleading as required by L.R. 15.1(a).
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Conclusion
Accordingly, and for the reasons set forth above, the motion to dismiss Count V is
PROVISIONALLY GRANTED. Within fourteen (14) days of the date of this Order, O’Reilly
may file a motion for leave to amend with an attached proposed amended complaint. Failure to
file a motion for leave to amend within that time, or failure to attach a proposed amended complaint
that satisfies Rule 9’s particularity requirement, will result in dismissal of Count V with prejudice.
IT IS SO ORDERED.
s/ Roseann A. Ketchmark
ROSEANN A. KETCHMARK, JUDGE
UNITED STATES DISTRICT COURT
DATED: October 13, 2020

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