United States District Court, S.D. West Virginia, Huntington Division
MEMORANDUM OPINION AND ORDER
C. CHAMBERS, UNITED STATES DISTRICT JUDGE
before the Court is a motion by Plaintiff, Fifth Third Bank,
to dismiss the counterclaims of Defendants, Revelation
Energy, LLC and Revelation Energy Holdings, LLC, pursuant to
Federal Rules of Civil Procedure Rule 12(b)(6). ECF No. 19.
For the following reasons, the Court GRANTS
Plaintiff's Motion to Dismiss Defendants'
filed the present Complaint on February 6, 2018, alleging
claims based on breach of contract. ECF No. 1. Electronic
summonses were issued to Defendants on February 7, 2018 and
served on February 12, 2018. ECF Nos. 2, 4-5. Though
Defendants' responsive pleadings were due by March 5,
2018, no answers or motions were filed on or before the
deadline. Accordingly, the Clerk entered default against
Defendants on March 12, 2018. ECF No. 9. On March 16, 2018,
Defendants filed an Answer to Plaintiff's Complaint,
which included two counterclaims. ECF No. 11. In their
counterclaims, Defendants allege causes of action under
theories of fraudulent inducement and breach of contract.
Id. Concurrently, Defendants filed their Motion to
Set Aside Entry of Default. ECF No. 12. The Court vacated the
entry of default on April 18, 2018. ECF No. 17. Pursuant to
Federal Rule of Civil Procedure Rule 12(a)(4), the Court set
the deadline for 12(b) motions as May 9, 2018. ECF No. 18.
Plaintiff timely filed its Motion to Dismiss Defendants'
Counterclaims on May 9, 2018. ECF No. 19.
STANDARD OF REVIEW
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007),
the United States Supreme Court disavowed the “no set
of facts” language found in Conley v. Gibson,
355 U.S. 41 (1957), which was long used to evaluate
complaints subject to 12(b)(6) motions. 550 U.S. at 563. In
its place, courts must now look for
“plausibility” in the complaint. This standard
requires a plaintiff to set forth the “grounds”
for an “entitle[ment] to relief” that is more
than mere “labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not
do.” Id. at 555 (internal quotation marks and
citations omitted). Accepting the factual allegations in the
complaint as true (even when doubtful), the allegations
“must be enough to raise a right to relief above the
speculative level . . . .” Id. (citations
omitted). If the allegations in the complaint, assuming their
truth, do “not raise a claim of entitlement to relief,
this basic deficiency should . . . be exposed at the point of
minimum expenditure of time and money by the parties and the
court.” Id. at 558 (internal quotation marks
and citations omitted).
Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme
Court explained the requirements of Rule 8 and the
“plausibility standard” in more detail. In
Iqbal, the Supreme Court reiterated that Rule 8 does
not demand “detailed factual allegations[.]” 556
U.S. at 678 (internal quotation marks and citations omitted).
However, a mere “unadorned,
the-defendant-unlawfully-harmed-me accusation” is
insufficient. Id. “To survive a motion to
dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.'” Id. (quoting
Twombly, 550 U.S. at 570). Facial plausibility
exists when a claim contains “factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Id. (citation omitted). The Supreme Court continued
by explaining that, although factual allegations in a
complaint must be accepted as true for purposes of a motion
to dismiss, this tenet does not apply to legal conclusions.
Id. “Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do
not suffice.” Id. (citation omitted). Whether
a plausible claim is stated in a complaint requires a court
to conduct a context-specific analysis, drawing upon the
court's own judicial experience and common sense.
Id. at 679. If the court finds from its analysis
that “the well-pleaded facts do not permit the court to
infer more than the mere possibility of misconduct, the
complaint has alleged-but it has not
‘show[n]'-‘that the pleader is entitled to
relief.'” Id. (quoting, in part,
Fed.R.Civ.P. 8(a)(2)). The Supreme Court further articulated
that “a court considering a motion to dismiss can
choose to begin by identifying pleadings that, because they
are no more than conclusions, are not entitled to the
assumption of truth. While legal conclusions can provide the
framework of a complaint, they must be supported by factual
Federal Rule of Civil Procedure Rule 9(b), there is a
heightened pleading standard where “special
matters” such as fraud must be “stated with
particularity.” Fed.R.Civ.P. Rule 9(b) “[T]he
circumstances required to be pled with particularity under
Rule 9(b) are the time, place, and contents of the false
representations, as well as the identity of the person making
the misrepresentation and what he obtained thereby.”
Harrison v. Westinghouse Savannah River Co., 176
F.3d 776, 784 (4th Cir.1999) (internal citations omitted).
Complaints that fail to meet these heightened pleading
requirements are subject to dismissal. Lasercomb Am.,
Inc. v. Reynolds, 911 F.2d 970, 980 (4th Cir.1990).
argues the allegations of fraud and breach of contract
contained in the counterclaims are insufficiently plead and
must be dismissed. Memo. Supp. Mot. Dismiss, ECF No.
20. The Court addresses each counterclaim in turn.
argue that during the contracting of the loan, Plaintiff
represented there were systems in place for communication if
repayment needed to be extended. Answer, p. 13, ECF
No. 11. Defendants further assert Plaintiff subsequently
refused to return communications when they were seeking to
extend their repayment. Id. Plaintiff counters that
these allegations have not satisfied the pleading
requirements of Rule 9(b), nor can Defendants plead any of
the elements required to allege fraudulent inducement.
Memo. Supp. Mot. Dismiss, at 5.
West Virginia law, the essential elements in an action for
fraud are: (1) the act claimed to be fraudulent was the act
of the defendant or induced by him; (2) it was material and
false; (3) plaintiff relied upon it and was justified under
the circumstances in relying upon it; and (4) plaintiff was
damaged because he relied upon it. Cordial v. Ernst &
Young, 483 S.E.2d 248, 259 ( W.Va. 1996). The burden of
proving fraud is “unquestionably heavy.” Elk
Ref. Co. v. Daniel, 199 F.2d 479, 482 (4th Cir. 1952);
Tri-State Asphalt Prod., Inc. v. McDonough Co., 391
S.E.2d 907, 912 ( W.Va. 1990)(quoting Calhoun County Bank
v. Ellison, 54 S.E.2d 182, 193 ( W.Va. 1949)
(“[A]llegations of fraud, when denied by proper
pleading, must be established by clear and convincing
proof.”)). Furthermore, there is a fine line to be
drawn between claims of fraud and breach of contract.
“We must be careful to distinguish between actual fraud
and artfully pleaded breach of contract claims.”
White v. Nat'l Steel Corp., 938 F.2d 474, 490
(4th Cir. 1991).
Rowe, the court addressed a plaintiff who tried to
“pile a fraud action onto their breach of
contract” claim. Rowe v. Aurora Commercial
Corp., No. CIV.A. 5:13-21369, 2014 WL 3810786, at *13
(S.D. W.Va. Aug. 1, 2014), aff'd, 599 Fed.Appx.
95 (4th Cir. 2015). The Plaintiff asserted he sufficiently
alleged all relevant factors by identifying:
“[d]efendants Aurora . . . and Nationstar . . . (who),
charged and/or attempted to charge plaintiffs interest in
excess of the agreed term (what) during the course of loan
servicing (how and when).” Id. (internal
quotations and citations omitted). ...