Walters v. JD Palatine, L.L.C.
REPORT AND RECOMMENDATIONS re 35 Motion to Dismiss for Failure to State a Claim filed by JD Palatine, L.L.C.. Signed by Judge Andrew W. Austin. (ml)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
J.D. PALATINE, L.L.C.
REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
THE HONORABLE LEE YEAKEL
UNITED STATES DISTRICT JUDGE
Before the Court are Defendant’s Motion for Dismissal of Plaintiff’s Fraud Claim Under
Rule 12(b)(6) (Dkt. No. 35); and Plaintiff’s Response in Opposition to Defendant’s Motion (Dkt.
No. 37). The District Court referred the above-motion to the undersigned Magistrate Judge for
Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B), Federal Rule of Civil Procedure
72 and Rule 1(c) of Appendix C of the Local Rules.
I. GENERAL BACKGROUND
Plaintiff Mark Walters brings this suit alleging that JD Palatine, LLC (Palatine) violated
various provisions of the Fair Credit Reporting Act (FCRA). In June 2015, Walters was denied a
consulting contract, allegedly due to a criminal background report performed by Palatine. Following
the denial of the contract, Walters filed a written dispute to Palatine stating that the background
check contained inaccurate information. Walters requested a re-investigation of the information.
According to Walters, Tim Planz, Vice President of Operations at Palatine, stated that “he would
look into the matter and get back as soon as possible” and that he was familiar with the FCRA.
However, Walters alleges that Palatine failed to conduct the re-investigation within thirty days, in
violation of the FCRA. Additionally, after discovery, Walters was granted leave to amend his
complaint to add two claims: fraud and misrepresentation. He contends that Palatine misrepresented
that it would conduct the re-investigation within thirty days, which caused an injury to Walters. He
claims that this misrepresentation is the basis for both his fraud and misrepresentation claims, as well
as his previous claims under the FCRA.
Palatine previously moved to dismiss the fraud and misrepresentation claims, contending
that Walters failed to meet the heightened pleading standards of FED. R. CIV. P. 9(b). The Court
recommended dismissal of Walter’s fraud and misrepresentation claims, and the District Judge
adopted the Report and Recommendation on February 8, 2017. Dkt. No. 31. Walters was then given
an opportunity to amend his complaint, in which he once again alleged fraud and negligent
misrepresentation. Palatine filed a second motion to dismiss, moving solely to dismiss Walter’s
For allegations of fraud, the rules require a heightened pleading standard. Rule 9(b) requires
plaintiffs to “state with particularity the circumstances constituting fraud.” FED. R. CIV. P. 9(b). The
Fifth Circuit “interprets Rule 9(b) strictly, requiring the plaintiff to specify the statements contended
to be fraudulent, identify the speaker, state when and where the statements were made, and explain
why the statements were fraudulent.” Flaherty & Crumrine Preferred Income Fund, Inc. v. TXU
Corp., 565 F.3d 200, 207 (5th Cir. 2009). In other words, the plaintiff must identify the “who, what,
when, and where” of the fraud claim. Williams v. WMX Techs., Inc., 112 F.3d 175, 178 (5th Cir.
1997). However, “[m]alice, intent, knowledge, and other conditions of a person’s mind may be
alleged generally.” FED. R. CIV. P. 9(b).
Palatine argues that after amending, Walters still fails to meet the heightened pleading
standard of Rule 9(b). In Texas, a claim for fraud requires:
(1) that a material representation was made; (2) the representation was false; (3)
when the representation was made, the speaker knew it was false or made it
recklessly without any knowledge of the truth and as a positive assertion; (4) the
speaker made the representation with the intent that the other party should act upon
it; (5) the party acted in reliance on the representation; and (6) the party thereby
In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001).
In the Report and Recommendation on Palatine’s first motion to dismiss, the Court found that
Walters had failed to identify the who, what, when, where, and how of his claim as required. His
amended complaint, however, satisfies this standard. Walters specified the date on which the
statement was made, the contents of the statement, the identity of the speaker, and the medium by
which the statement was made. Walters also sufficiently alleges that the statement was material and
that he suffered an injury from his reliance on it. While Palatine argues that Walters failed to
provide any support for his allegations that the speaker knew the statement was false or made
recklessly or that it was made with the required intent, knowledge and intent may be pled generally.
FED. R. CIV. P. 9(b). As such, Walter has sufficiently pled his claim for fraud.
The undersigned RECOMMENDS that the District Court DENY the Defendant’s Motion
for Dismissal of Plaintiff’s Fraud Claim Under Rule 12(b)(6) (Dkt. No. 35).
The parties may file objections to this Report and Recommendation. A party filing objections
must specifically identify those findings or recommendations to which objections are being made.
The District Court need not consider frivolous, conclusive, or general objections. See Battle v.
United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations
contained in this Report within fourteen (14) days after the party is served with a copy of the Report
shall bar that party from de novo review by the District Court of the proposed findings and
recommendations in the Report and, except upon grounds of plain error, shall bar the party from
appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the
District Court. See 28 U.S.C. § 636(b)(1)(c); Thomas v. Arn, 474 U.S. 140, 150-53, 106 S. Ct. 466,
472-74 (1985); Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en
To the extent that a party has not been served by the Clerk with this Report &
Recommendation electronically pursuant to the CM/ECF procedures of this District, the Clerk is
directed to mail such party a copy of this Report and Recommendation by certified mail, return
SIGNED this 2nd day of June, 2017.
ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE
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