Spencer et al v. Vatterott Educational Centers, Inc. et al

Filing 70

OPINION AND ORDER by Magistrate Judge Kimberly E. West: Defendant Vatterott Educational Centers, Inc.'s Motion to Dismiss Plaintiffs' Amended Complaint (Docket Entry 44 ) is GRANTED as to Plaintiffs' claim for punitive damages. The Motion is DENIED in all other respects. Additionally, Defendant Stephanie Sanders' Motion to Dismiss (Docket No. 43 ) is DENIED. (neh, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF OKLAHOMA
JOHNNY SPENCER; and
MICHAEL CHAMBERS,
individually and
on behalf of all others
similarly situated,
Plaintiffs,
v.
VATTEROTT EDUCATIONAL
CENTERS, INC., a foreign for
profit business corporation;
and STEPHANIE SANDERS,
an individual,
Defendants.

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Case No. CIV-12-116-KEW

OPINION AND ORDER
This matter comes before the Court on Defendant Vatterott
Educational Centers, Inc.’s Motion to Dismiss Plaintiffs’ Amended
Complaint (Docket Entry #44) and the Motion to Dismiss Amended
Complaint filed by Defendant Stephanie Sanders (Docket Entry #43).
This Court previously ruled upon motions to dismiss relating to
Plaintiffs’ original Petition which was filed on September 30, 2011
in the District Court in and for Wagoner County, Oklahoma and
subsequently removed to this Court on March 13, 2012.

In that

ruling, Plaintiffs’ claim for breach of contract was not dismissed,
except to the extent Plaintiffs were seeking to recover for
anything other than the failure to deliver the contractually
promised hours of instruction.

However, Plaintiffs were directed

to file an Amended Complaint on the breach of contract claim and
set forth the “nature of the agreement and how it is manifested.”

See Opinion and Order, March 28, 2013 (Docket Entry #41).
With regard to the fraud claim also contained in Plaintiffs’
original Petition, Plaintiffs’ allegations were found lacking.

As

a result, they were afforded an opportunity to amend the Petition
setting forth with particularity (1) the identity of the parties
making the allegedly fraudulent statements; and (2) for each named
Plaintiff, the context of when the “felony friendly” statement was
said, to whom it was stated, where it was said, the specific
representation made, and how each individual Plaintiff was damaged
as a result of the representations made to them.

Id.

On April 12, 2013, the two remaining Plaintiffs filed their
Amended Complaint.

Without belaboring the record with a complete

recitation of the allegations in the new pleading, this Court will
adopt the general nature of the action from the prior Opinion and
Order and only reference the differences between the Petition and
Amended Complaint and the adequacy of Plaintiffs’ amendments.
On their breach of contract claim, Plaintiffs have added a
paragraph which states as follows:
Plaintiffs entered into an enrollment contract with
Defendant Vatterott in the fall of 2009. Specifically,
Plaintiff Spencer entered into an enrollment contract
with Defendant Vatterott on or about September 23, 2009
and Plaintiff Chambers entered into an enrollment
contract with Defendant Vatterott on or about October 12,
2009.
The parties’ agreement included, but was not
limited
to,
the
documents
of
enrollment
and
representations and promises made by Defendant Vatterott,
both as made directly to Plaintiffs and as reflected in
catalogues, bulletins, and circulars created by or for
Defendant Vatterott, as well as regulations of Defendant
2

Vatterott.
Amended Complaint, p. 2, ¶ 9.
As this Court previously noted, in order to assert a breach of
contract claim under Oklahoma law, Plaintiffs must set forth
sufficient facts to allege the following elements:

(1) the

formation of a contract; (2) a breach thereof; and (3) actual
damages suffered from that breach.

Digital Design Group, Inc. v.

Information Builders, Inc., 24 P.3d 834, 843 (Okla. 2001). To that
end, Plaintiffs have now alleged a plausible claim for breach of
contract

by

documents

alleging

and

various

a

contract
other

was

formed

publications

to

from

enrollment

Plaintiffs

by

Vatterott.

See Ross v. Creighton University, 957 F.2d 410, 416

(7th

1992)

Cir.

quoting

Zumbrun

v.

University

of

Southern

California, 101 Cal.Rptr. 499, 504 (1972)(“in the United States
that the ‘basic legal relation between a student and a private
university or college is contractual in nature. The catalogues,
bulletins, circulars, and regulations of the institution made
available to the matriculant become a part of the contract.’”).
This Court previously stated Plaintiffs had alleged sufficient
facts on the remaining two elements in the original Petition facts carried through and repeated in the Amended Complaint. While
it states Plaintiffs have still not adequately identified the
“certain

number

of

hours

of

instruction”

promised,

Vatterott

demands a level of specificity in the initial pleading which is not
required to state a plausible claim.
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Consequently, Plaintiffs’

breach of contract claim is considered plausible at this stage of
the proceedings.

Bell Atlantic Corp. v. Twombly, 550 U.S. 544

(2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009).
Defendants
particularity

also
of

challenge

the

the

factual

plausibility
representations

and

level

of

surrounding

Plaintiffs’ fraud claim contained in the Amended Complaint.

They

specifically contend the “failure to plead that the alleged fraud
caused them damages or that the alleged representations were in
fact false is, thus, fatal to [Plaintiffs’] fraud claim.”

On this

claim, Plaintiffs modified and amended the factual statement as
follows:
representations were made to Plaintiffs, as well as
potential class members, by Defendant Sanders and
Vatterott employee Cassie Milligan, that these industries
for which training was obtained through the college were
“felony friendly”, and that prior felony conviction(s)
would not hinder there (sic) ability in any way to become
employed subsequent to graduation from the program(s).
These representations were made to Plaintiff Spencer by
Sanders and Milligan at Vatterott’s Tulsa campus
immediately prior to his enrollment in September of 2009
and during his new student orientation in September of
2009. These representations were made to Plaintiff
Chambers by Defendant Sanders at Vatterott’s Tulsa campus
immediately prior to his enrollment in October of 2009.
Amended Complaint, p. 3, ¶ 14.
Additionally, Cassie Milligan’s name was added to all of the
allegations surrounding representations made to Plaintiffs’ at the
time of their enrollment.
Fed. R. Civ. P. 9(b) provides: “In all averments of fraud or
mistake, the circumstances constituting fraud or mistake shall be
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stated with particularity. Malice, intent, knowledge, and other
conditions of mind of a person may be averred generally.”

The

Tenth

the

Circuit

has

held

that

Rule

9(b)

requires

only

identification of the circumstances constituting fraud, and that it
does not require any particularity in connection with an averment
of intent, knowledge or condition of mind.

Seattle–First Nat’l

Bank v. Carlstedt, 800 F.2d 1008, 1011 (10th Cir. 1986).
As this Court noted in its prior Opinion and Order, the
requirements of Rule 9(b) must be read in conjunction with the
principles of Rule 8, which calls for pleadings to be “simple,
concise, and direct, . . . and to be construed as to do substantial
justice.”

Fed. R. Civ. P. 8(e), (f).

The purpose of Rule 9(b) is

“to afford defendant fair notice of plaintiff's claims and the
factual ground upon which [they] are based . . . .”

Farlow v.

Peat, Marwick, Mitchell & Co., 956 F.2d 982, 987 (10th Cir. 1992)
(citation omitted).

A complaint must “set forth the time, place

and contents of the false representation, the identity of the party
making

the

false

statements

and

the

consequences

thereof.”

Lawrence Nat'l Bank v. Edmonds, 924 F.2d 176, 180 (10th Cir. 1991).
In this case, Plaintiffs have set forth the time of the
alleged statements (September and October of 2009, immediately
prior to enrollment and during new student orientation); the place
of

the

false

representation

(Vatterott’s

Tulsa

campus);

the

identity of the part[ies] making the allegedly false statements

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(Sanders and Milligan); and the consequences thereof (enrollment in
Vatterott’s

identified

programs).

Plaintiffs

have

minimally

satisfied the requirement to set forth the ‘who, what, when, where
and how’ of the alleged fraud.

United States ex rel. Sikkenga v.

Regence Bluecross Blueshield of Utah, 472 F.3d 702, 726 (10th Cir.
2006).

The representations are sufficient to place Defendants on

notice of the allegations of fraud asserted against them.

Any

further examination of the sufficiency of the allegations would
require an analysis of the evidence Plaintiffs possess to support
their allegations - an analysis reserved for the more complete
presentation on summary judgment rather than during the dismissal
stage.
Vatterott also challenges Plaintiffs’ assertion of a claim for
punitive damages associated with their breach of contract claim.1
While recognizing that punitive damages are generally not available
for breach of a contract, Plaintiffs contend they may pursue the
claim as the breach of contract arises from Defendants’ fraud.
In the Amended Complaint, Plaintiffs only allege that their
claim for punitive damages arises in connection with their claim
for breach of contract.

Amended Complaint, p. 7, ¶ 40.

Oklahoma

law recognizes that a claim for punitive damages must be plead as

1

Plaintiffs originally filed a claim for attorneys’ fees in
connection with their breach of contract claim.
Vatterott sought
dismissal of this claim in its second dismissal motion.
However,
Plaintiffs dismissed this claim as reflected in the Notice filed on May
9, 2013.

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a part of an underlying claim for a breach of an obligation not
arising from contract.

McGivern, Gilliard & Curthoys v. Chartis

Claims, Inc., 2012 WL 2917336, at 2 (N.D. Okla.)(citation omitted);
Okla. Stat. tit. 23 § 9.1.

Contrary to Plaintiffs’ assertion in

their response, Plaintiffs have not plead fraud in connection with
the breach of contract as a basis for relief nor have they plead
punitive damages in connection with their fraud claim.

As such is

the case from the face of the Amended Complaint, it is a legal
impossibility for Plaintiffs to recover punitive damages in this
case

as

plead

and,

therefore,

Vatterott

is

entitled

to

the

dismissal of punitive damages as an element of damages which
Plaintiffs may seek to recover in this case.
IT IS THEREFORE ORDERED that Defendant Vatterott Educational
Centers, Inc.’s Motion to Dismiss Plaintiffs’ Amended Complaint
(Docket Entry #44) is hereby GRANTED as to Plaintiffs’ claim for
punitive damages.

The Motion is DENIED in all other respects.

IT IS FURTHER ORDERED that the Motion to Dismiss Amended
Complaint filed by Defendant Stephanie Sanders (Docket Entry #43)
is hereby DENIED.
IT IS SO ORDERED this 31st day of March, 2014.

______________________________
KIMBERLY E. WEST
UNITED STATES MAGISTRATE JUDGE

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