IRWIN v. FEDERAL EXPRESS CORPORATION

Filing 14

MEMORANDUM OPINION AND ORDER signed by JUDGE THOMAS D. SCHROEDER on 11/04/2014 as set out herein. ORDERED that FedEx's motion to dismiss under Rule 12(b)(6) is GRANTED as to Irwin's seventh claim for relief (constructive fraud), which is DISMISSED without prejudice, and is otherwise DENIED.(Taylor, Abby)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
DAVID IRWIN,
Plaintiff,
v.
FEDERAL EXPRESS CORP., d/b/a
FEDEX EXPRESS,
Defendant.

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1:14cv557

MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, District Judge.
This case involves multiple claims by David Irwin arising
from his termination by Defendant Federal Express Corporation
(“FedEx”).

Before the court is FedEx’s motion to dismiss two of

them: the complaint’s claims for fraud and constructive fraud.
(Doc. 3.)

For the reasons set forth below, the motion is denied

as to the former but granted as to the latter.
I.

BACKGROUND
In 1999, FedEx acquired an air freight forwarding company

that was then renamed Caribbean Transportation Services (“CTS”).
(Compl. ¶ 5.)

Irwin was one of CTS’s three officers and, after

the acquisition, became its senior vice president.

(Id.)

Around June 1, 2009, FedEx merged with CTS, turning CTS
into another division of FedEx, now named FedEx Latin America.
(Id. ¶ 6.)

As a result of the merger, many positions were

eliminated — including Irwin’s.

(Id.)

Irwin began negotiating

a severance package with FedEx but stopped when the president of
FedEx Latin America asked him to remain employed as managing
director of Caribbean operations, which Irwin did.
In

February

2013,

employment agreement.

FedEx

drafted,

(Id. ¶ 8.)

and

(Id.)

Irwin

signed,

an

Under the agreement, Irwin

committed to continue working for FedEx until November 30, 2013,
and not to compete against FedEx for one year following the end
of his employment.

(Id.)

In return, FedEx agreed to pay Irwin

approximately $275,000.00 upon his departure.

(Id. ¶¶ 8, 14.)

The employment agreement also contained the following provision,
section 13(n), allowing FedEx to terminate Irwin’s employment
unilaterally:
to

the

“[I]f after executing this Agreement, but prior

effective

performance

date,

[Irwin]

deficiencies

that

engages
would

in

conduct

normally

or

has

result

in

termination, he will be terminated and his Agreement will be
null and void.”

(Id. ¶ 18.)

The agreement did not define what

conduct would “normally result in termination.”

(Id. ¶ 19.)

Irwin signed this agreement after his supervisor, Julio Columba,
told

him

that

FedEx

“would

likely

be

going

through

a

restructuring process” and that Irwin’s employment “may be in
immediate jeopardy if the agreement was not signed.”
Later,

FedEx

tried

to

persuade

2

Irwin

to

(Id. ¶ 8.)
abandon

the

In the summer of 2013, a FedEx agent1 asked Irwin to

agreement.
terminate

his

employment

on

August

31,

2013,

rather

than

November 30, 2013, the latter of which accorded with the terms
of the employment agreement.

(Id. ¶ 9.)

Irwin was told that

this request came because of FedEx’s “desire to achieve salary
cost

savings.”

(Id.)

This

agent

told

Irwin

that

“if

he

accepted the offer, his Employment Agreement would be honored.”
(Id.)

Irwin refused this offer to ensure a “smooth management

transition.”

(Id.)

On October 31, 2013, Irwin’s manager asked him to attend a
meeting on the next day, which Irwin thought could be for a
retirement party.

(Id. ¶ 10.)

As it turned out, that next day

Irwin was told that he was being suspended.
provided a reason.

(Id.)

(Id.)

He was not

Two weeks later, on November 15,

Irwin was called into his office to meet with two auditors.
(Id.

¶ 11.)

The

auditors

“nearly five years earlier.”

asked

him

(Id.)

about

events

occurring

Irwin explained that he was

not involved in the issues they raised.

(Id.)

Shortly thereafter, on November 27, FedEx told Irwin that
he would be fired, effective November 29, 2013.
FedEx

also

informed

Irwin

that

“null and void in its entirety.”

1

the

employment

(Id.)

Irwin’s complaint does not name this agent.

3

(Id. ¶ 12.)
agreement

was

FedEx did not cite any

(See id. ¶ 9.)

“facts or evidence” for terminating Irwin or for declaring the
agreement void.
quoted

section

termination.

(Id. ¶ 13.)
13(n)

of

The company relied on the above-

the

(Id. ¶ 18.)

employment

agreement

for

the

Irwin denies ever having engaged in

conduct that would “normally result in termination” under the
terms of the agreement.

(Id. ¶¶ 19–20.)

Irwin sought to review the evidence supporting his alleged
misconduct so he could respond, because he had so far carried
“an unblemished record, with no prior warnings or write-ups of
any

kind.”

¶ 15.)

appeals,

internal

(Id.

which

FedEx

refused;

FedEx

denied.

Irwin
(Id.

then

filed

¶¶ 16–17.)

According to Irwin, had he worked for one more day, he would
have

been

entitled

to

employment agreement.

$275,000

in

compensation

under

the

(Id. ¶ 14.)

Irwin alleges that he has honored all of his obligations
under the employment agreement and that FedEx has wrongfully
refused

to

initially

honor
in

Carolina.

the

its

own.

superior

(Doc. 1.)

(Id.
court

of

(Id.)

alleges seven claims for relief:
contract;

21.)

He

Guilford

brought
County,

suit
North

FedEx removed the action to this court

based on diversity jurisdiction.

employment

¶

two

In his complaint, Irwin

two claims for breach of the

claims

for

violations

of

North

Carolina’s Wage and Hour Act; one violation of North Carolina’s
Unfair

and

Deceptive

Trade

Practices
4

Act;

fraud;

and

constructive fraud.

FedEx now moves to dismiss Irwin’s fraud

(fourth claim for relief) and constructive fraud (seventh claim
for relief) claims pursuant to Rules 12(b)(6) and 9(b) of the
Federal Rules of Civil Procedure.
II.

ANALYSIS
A.

Standard of Review

Under

Federal

Rule

of

Civil

Procedure

12(b)(6),

“a

complaint must contain sufficient factual matter . . . to ‘state
a claim to relief that is plausible on its face.’”

Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).

A claim is plausible “when

the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for
the

misconduct

Twombly,
dismiss

550

alleged.”

U.S.

544,

“challenges

the

Id.
557

(quoting

(2007)).

legal

Bell
A

Atl.

12(b)(6)

sufficiency

of

a

Corp.

v.

motion

to

complaint

considered with the assumption that the facts alleged are true.”
Francis

v.

Giacomelli,

588

F.3d

186,

192

(4th

Cir.

2009)

(internal citations omitted).
This standard, along with Rule 8(a)(2) requiring only “a
short and plain statement of the claim,” generally governs the
specificity needed for pleadings.
a

plaintiff

“must

state

constituting fraud.”

with

But in cases alleging fraud,

particularity

Fed. R. Civ. P. 9(b).
5

the

circumstances

Procedurally, a

failure to comply with Rule 9(b) is treated as a failure to
state a claim under Rule 12(b)(6).

Harrison v. Westinghouse

Savannah River Co., 176 F.3d 776, 783 n.5 (4th Cir. 1999).

Rule

9(b) serves several policy objectives: “to provide defendants
with fair notice of claims against them and the factual ground
upon which they are based, forestall frivolous suits, prevent
fraud actions in which all the facts are learned only following
discovery,

and

protect

defendants’

goodwill

and

reputation.”

McCauley v. Home Loan Inv. Bank, F.S.B., 710 F.3d 551, 559 (4th
Cir. 2013).
The heightened standard of Rule 9(b) has certain minimum
requirements
plaintiff

for

must

the

pleader.

sufficiently

To

meet

describe

“the

this

standard,

time,

place,

the
and

contents of the false representations, as well as the identity
of the person making the misrepresentation and what he obtained
thereby.”

U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc.,

525 F.3d 370, 379 (4th Cir. 2008) (quoting Harrison, 176 F.3d at
784).

This minimum factual description is “often referred to as

the who, what, when, where, and how of the alleged fraud.”
(internal quotation marks omitted).

Id.

However, these facts need

not be the ones explicitly designated under the headings of a
plaintiff’s claims for relief.

Rather, in cases where a fraud

claim incorporates by reference all of the prior allegations in
a

complaint,

the

entire

complaint
6

is

examined

to

determine

whether the pleading requirements of Rule 9(b) are satisfied.
Adkins v. Crown Auto, Inc., 488 F.3d 225, 232 (4th Cir. 2007).
Rule
State

law

9(b)’s

heightened

claims

litigated

pleading
in

requirement

federal

court.

applies

U.S.

ex

to
rel.

Palmieri v. Alpharma, Inc., 928 F. Supp. 2d 840, 853 (D. Md.
2013) (citing

N. Am. Catholic Educ. Programming Found., Inc. v.

Cardinale, 567 F.3d 8, 13 (1st Cir. 2009)).
was

removed

diversity

from

North

jurisdiction

Carolina

and

relies

State
on

This case, which

court,

State-law

is

based

claims.

on
The

parties agree that Irwin’s fraud claim is subject to Rule 9(b).
(Doc. 4 at 4–5; Doc. 12 at 5.)
whether

a

heightened

pleading

They disagree, however, on

standard

also

applies

to

the

constructive fraud claim; FedEx argues that it does, and Irwin
contends it does not.
FedEx is correct:

(Doc. 12 at 12.)
A claim for constructive fraud arising

under North Carolina law is governed by Rule 9(b)’s heightened
pleading standard.

See Lawley v. Liberty Mut. Grp., Inc., No.

5:11-CV-00106-RLV, 2012 WL 4513622, at *5 (W.D.N.C. Sept. 28,
2012) (applying Rule 9(b) to North Carolina constructive fraud
claim); Ahmed v. Porter, No. 1:09CV101, 2009 WL 2581615, at *20
(W.D.N.C. June 23, 2009) (same); Nakell v. Liner Yankelevitz
Sunshine & Regenstreif, LLP, 394 F. Supp. 2d 762, 772 (M.D.N.C.
2005) (same); see also, e.g., Hunt v. Calhoun Cnty. Bank, Inc.,
8 F. Supp. 3d 720, 731 (2014) (applying Rule 9(b) to Virginia
7

constructive fraud claim); Brown v. Partipilo, No. 1:10CV110,
2011 WL 1562908, at *6 (N.D.W. Va. Apr. 22, 2011) (applying Rule
9(b) to West Virginia constructive fraud claim); Frank v. Branch
Banking & Trust Co., No. CIV. AMD 05-1292, 2006 WL 4396131, at
*2

(D.

Md.

constructive

Jan.
fraud

19,

2006)

claim),

(applying
aff’d

sub

Rule

9(b)

nom.

Frank

to

Maryland

v.

Banking & Trust Co., 191 F. App’x 180 (4th Cir. 2006).2

Branch
This is

because actual fraud and constructive fraud are but two ways to
deceive.

Like actual fraud, a claim for constructive fraud

risks a defendant’s “goodwill and reputation”; the claim also
risks confusion unless defendants have “fair notice of claims
against them and the factual ground upon which they are based.”
McCauley, 710 F.3d at 559.
While the particularity requirement is governed by Federal
Rule of Civil Procedure 9(b), substantive State law governs the
elements necessary to meet the standard.
&

Spence,

P.A.,

No.

5:07-CV-33-D,

See Higgins v. Spence

2008

WL

506187,

at

*5

(E.D.N.C. Feb. 21, 2008) (“Thus, while the heightened pleading
requirement of Rule 9(b) of the Federal Rules of Civil Procedure
applies in name, the court’s actual inquiry under Rule 9(b)
2

This is consistent with the approach taken by North Carolina courts,
which interprets North Carolina Rule of Civil Procedure 9(b) as a
“counterpart” to the federal rule.
Terry v. Terry, 273 S.E.2d 674,
678 (N.C. 1981) (holding that claims for constructive fraud require
heightened pleading, although the standard is less rigorous than that
for actual fraud).

8

focuses on the elements of the claim under substantive state
law.” (citation omitted)); Nakell, 394 F. Supp. 2d 762, 772
(M.D.N.C. 2005) (“However, the law of the state in which the
Court sits will control the content of the elements of the fraud
claim.
law

The specificity of the allegations as required by state

affects

(citation

the

pleading

omitted));

5A

requirements

Charles

A.

under

Wright

Rule

et

9(b).”

al.,

Federal

Practice and Procedure § 1297 (3d ed. 2004) (“When the governing
fraud law is less stringent than the traditional law of fraud,
therefore, not all of the elements outlined above need to be
pleaded,

and

the

application

of

Rule

9(b)

must

be

adjusted

accordingly.” (footnote omitted)).
Under

North

constructive

fraud

circumstances
confidence,

Carolina

“(1)

and

is

the

heightened

standard

for

when

met

which

(2)

law,

the

plaintiff

describes

the

of

trust

and

surrounded

the

created

[which]

led

the

relation

up

to

and

consummation of the transaction in which defendant is alleged to
have taken advantage of his position of trust to the hurt of
plaintiff.”
61

S.E.2d

Terry, 273 S.E.2d at 679 (quoting Rhodes v. Jones,
725,

4513622, at *5

725

(N.C.

1950));

see

also

Lawley,

2012

WL

(holding that a claim for constructive fraud

under North Carolina law is subject to Rule 9(b), but that this
“pleading

standard

is

less

exacting

than

with

actual

claims since there is no misrepresentation requirement”).
9

fraud

B.
In

Fourth Claim for Relief: Actual Fraud
North

elements:

Carolina,

“(1)

[f]alse

a

claim

for

representation

actual
or

fraud

has

concealment

five
of

a

material fact, (2) reasonably calculated to deceive, (3) made
with intent to deceive, (4) which does in fact deceive, (5)
resulting in damage to the injured party.”

Myers & Chapman,

Inc. v. Thomas G. Evans, Inc., 374 S.E.2d 385, 391 (N.C. 1988)
(quoting Ragsdale v. Kennedy, 209 S.E.2d 494, 500 (N.C. 1974)).
Although Irwin’s allegations directly under the heading of his
fourth

claim

for

relief

(Compl.

¶¶ 43–51)

do

not

meet

the

particularity requirements of Rule 9(b), his claim incorporates
by reference all preceding paragraphs (Compl. ¶ 42), which the
court

must

consider

in

determining

pleading standard has been met.
Irwin

argues

that

he

whether

the

heightened

See Adkins, 488 F.3d at 232.
sufficiently

pled

a

material

misrepresentation by describing the employment agreement between
himself and FedEx, in which FedEx promised to compensate him in
the form of $275,000 in exchange for his promise to continue
working for FedEx and not to compete when he leaves.
at

9;

Compl.

¶ 8.)

This

“looking to the future.”

was

a

promissory

(Doc. 12

representation,

McCormick v. Jackson, 183 S.E. 369,

370 (N.C. 1936) (per curiam).

A promissory representation is

not actionable fraud unless “it is made with intent to deceive
the promisee, and the promisor, at the time of making it, has no
10

intent to comply.”
S.E.2d

610,

616

Johnson v. Phoenix Mut. Life Ins. Co., 266
(N.C.

1980),

questioned

in

part

on

other

grounds, Myers & Chapman, Inc. v. Thomas G. Evans, Inc., 374
S.E.2d 385, 392 (N.C. 1988).

Irwin argues that his promissory

fraud theory is actionable under the rule in Johnson.

(Doc. 12

at 7.)
For this claim to survive a motion to dismiss for failure
to

state

a

claim,

Irwin

must

sufficiently

describe

the

circumstances showing that FedEx had no intent to perform under
the

employment

agreement.

He

generically

alleges

this,

on

information and belief, in his complaint at paragraph forty-six,
but this, alone, is insufficient under Rule 9(b).

N.C. Farmers’

Assistance Fund, Inc. v. Monsanto Co., 740 F. Supp. 2d 694, 705
(M.D.N.C. 2010) (requiring that allegations subject to Rule 9(b)
that are pled on information and belief provide the information
relied

on

belief).

or

the

Thus,

“plausible

the

court

reasons”
must

look

for

the

to

plaintiff’s

other

paragraphs

incorporated by reference.
The

court

finds

as

sufficient

support for this allegation.

three

specific

bases

of

First, Irwin alleges that he was

fired on November 29, 2013, just one day before he would have
been

entitled

to

compensation

under

the

employment

agreement

(Compl. ¶¶ 12, 14.), which plausibly suggests that FedEx wanted
to

avoid

its

obligations

under
11

the

employment

agreement.

Second,

he

alleges

that

FedEx

fired

him

for

conduct

that

occurred five years before he signed the employment agreement
(id. ¶¶ 11–13), despite the fact that he had not engaged in any
misconduct (id. ¶¶ 15, 20).3

This raises a plausible inference

that his dismissal was pretextual and that FedEx was sandbagging
all along.
a

FedEx

Third, Irwin also alleges that he was approached by

agent

seeking

to

induce

Irwin

into

terminating

his

employment early because of FedEx’s “desire to achieve salary
cost

savings”

motivation

for

(Compl.
FedEx

¶ 9.),
to

which

avoid

its

provides

a

obligations

plausible
under

the

agreement.
Taken together, these circumstances show, with sufficient
particularity,

that

FedEx

made

a

false

representation

of

a

material fact, reasonably calculated to deceive, and with the
intent to deceive
promises.
¶ 8)

and

because FedEx never intended to honor

its

Because Irwin signed the employment agreement (id.
allegedly

forewent

other

valuable

employment

opportunities (id. ¶ 49), the other elements of actual deception
and injury are also met.
person

making

the

material

Identifying FedEx generally as the
misrepresentation

satisfies Rule 9(b)’s “who” requirement.

3

in

the

contract

See McCauley, 710 F.3d

Because this is a motion to dismiss for failure to state a claim,
Irwin’s allegations of his own good behavior are presumed true.
See
Francis, 588 F.3d at 192.

12

at 559.
Thus, Irwin’s claim for actual fraud survives a motion to
dismiss for failure to state a claim.
where,

and

how”

of

the

alleged

The “who, what, when,

fraud

are

described

with

sufficient particularity to help FedEx prepare a defense, and
the allegations convince the court that Irwin has “substantial
prediscovery evidence” of those facts.

Harrison, 176 F.3d at

784.
C.

Seventh Claim for Relief: Constructive Fraud

A claim for constructive fraud under North Carolina has
three elements:
of

which

the

(1) a relationship of trust and confidence; (2)
defendant

took

advantage

in

order

to

himself; (3) which resulted in harm to the plaintiff.
Consol.
2004).

Planning,

Inc.,

603

S.E.2d

147,

156

(N.C.

benefit
White v.
Ct.

App.

Unlike actual fraud, constructive fraud does not require

proof of a “specific misrepresentation” or “intent to deceive.”
Forbis v. Neal, 649 S.E.2d 382, 388 (N.C. 2007).

As noted

earlier, because the claim is subject to Rule 9(b)’s heightened
pleading

requirements,

circumstances
confidence,

“(1)

and

Irwin

which

(2)

must

created

[which]

led

describe

the
up

relation
to

and

the

facts

and

trust

and

surrounded

the

of

consummation of the transaction in which defendant is alleged to
have taken advantage of his position of trust to the hurt of
plaintiff.”

Terry, 273 S.E.2d at 679 (quoting Rhodes v. Jones,
13

61 S.E.2d 725, 725 (N.C. 1950)).
A relationship of trust and confidence, also known as a
fiduciary relationship, has been broadly defined by the North
Carolina courts as one in which
there has been a special confidence reposed in one who
in equity and good conscience is bound to act in good
faith and with due regard to the interests of the one
reposing confidence . . . and it extends to any
possible case in which a fiduciary relationship exists
in fact, and in which there is confidence reposed on
one side, and resulting domination and influence on
the other.
Dalton v. Camp, 548 S.E.2d 704, 707–08 (N.C. 2001) (internal
quotation marks and brackets omitted).

As the Dalton court went

on to explain, “the broad parameters accorded the term have been
specifically limited in the context of employment situations.
Under the general rule, ‘the relation of employer and employee
is not one of those regarded as confidential.’”

Id. at 708

(citations omitted); see also Bonham v. Wolf Creek Acad., 767 F.
Supp. 2d 558, 567 (W.D.N.C. 2011) (“Further, even the legal
conclusion

that

employer-employee

a

fiduciary

relationship

relationship

finds

no

sprang
support

from
in

an

North

Carolina law . . . .”); Austin Maint. & Const., Inc. v. Crowder
Const. Co., 742 S.E.2d 535, 542 (N.C. Ct. App. 2012) (“[I]n the
absence

of

some

unusual

set

of

facts

that

would

suffice

to

differentiate the relationship between Plaintiff and Mr. Lanier
from other employer-employee relationships, Mr. Lanier did not

14

have a fiduciary relationship with Plaintiff.”).
FedEx cites various cases that apply this general rule and
find no fiduciary relationship between employers and employees.
(Doc. 4 at 9.)
case

where

a

In his response, Irwin does not point to any
North

Carolina

court

has

found

relationship between an employer and an employee.
at

10–13.)

And

this

court’s

own

research

a

fiduciary

(See Doc. 14

yielded

no

cases

that

fiduciary

helpful to Irwin.
But,

even

assuming

(without

deciding)

a

relationship between an employer and employee is theoretically
possible under North Carolina law on a constructive fraud claim,
Irwin fails to meet the heightened pleading standard to make one
plausible here.
fiduciary

First, Irwin does not plead any facts showing a

relationship

between

him

and

FedEx;

his

mere

“[a]llegations that a fiduciary relationship existed or that a
relationship

of

trust

and

confidence

existed

is

a

legal

conclusion, which is not entitled to an assumption of truth on a
motion to dismiss.”

Lawley, 2012 WL 4513622, at *6.

Nor does

he plead any “unusual set of facts” transforming this general
employer-employee relationship into one of a fiduciary.

Austin

Maint. & Const., 742 S.E.2d at 542.
Irwin claims that his supervisor “held a position of trust
and confidence” with him.

(Doc. 14 at 12.)

But the allegations

of the complaint do not bear out this legal conclusion.
15

For

example, there is no suggestion that FedEx exercised “domination
and influence” over him or “figuratively [held] all the cards”
in the relationship.

Crumley & Assocs., P.C. v. Charles Peed &

Assocs.,

S.E.2d

P.A.,

730

(citations omitted).

763,

767

(N.C.

Ct.

App.

2012)

Indeed, the facts suggest otherwise as

Irwin alleges that he chose to forego other job opportunities.
(Compl.

¶ 74.)

And

although

Irwin’s

position

had

been

eliminated at FedEx, this did not automatically convert Irwin’s
supervisor into Irwin’s confidant.

Irwin has pled no reason why

FedEx should be “bound to act in good faith and with due regard”
to

Irwin’s

interests

apart

from

that

of

a

normal

employer.

Dalton, 548 S.E.2d at 707 (quoting Abbitt v. Gregory, 160 S.E.
896, 906 (N.C. 1931)).

Thus, Irwin’s claim for constructive

fraud fails to state a claim upon which relief can be granted
and should be dismissed.
III. CONCLUSION
For the reasons stated,
IT

IS

THEREFORE

ORDERED

that

FedEx’s

motion

to

dismiss

under Rule 12(b)(6) is GRANTED as to Irwin’s seventh claim for
relief

(constructive

fraud),

which

is

DISMISSED

without

prejudice, and is otherwise DENIED.
/s/
Thomas D. Schroeder
United States District Judge
November 4, 2014

16