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Stewart v. Cornerstone Properties Plus, LLC

United States District Court, S.D. West Virginia, Huntington Division

August 8, 2019

JOSEPH M. STEWART and CARLA G. STEWART, Plaintiffs,
v.
CORNERSTONE PROPERTIES PLUS, LLC, an Ohio limited liability company, CORNERSTONE CONTRACTORS, INC., an Ohio corporation, APPALACHIAN POWER COMPANY, a corporation, Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. CHAMBERS UNITED STATES DISTRICT JUDGE

         Pending before the Court is the Motion to Dismiss the Second Amended Complaint filed by Defendants Cornerstone Properties Plus, LLC and Cornerstone Contractors, Inc. (together “Cornerstone Defendants”). ECF No. 9. For the following reasons, the Court DENIES the motion.

         I. BACKGROUND

         According to the Second Amended Complaint, Plaintiffs allege the following events. On February 2, 2016, Plaintiffs entered into an agreement with Cornerstone Defendants to purchase land in Culloden, West Virginia. Second Am. Compl., ¶ 6, ECF No. 7. Through the Cornerstone Defendants' agent, Plaintiffs closed on the purchase of the property on May 11, 2016. Id. ¶ 9. Prior to the sale of this land and while in their control, Cornerstone Defendants learned the value and habitability of the land was adversely impacted by surface water runoff. Id. ¶ 12. Cornerstone Defendants failed to disclose this issue to Plaintiffs prior to the sale, and discovery of this was made unascertainable by overgrowth on the land which, alternatively, Cornerstone Defendants allowed so as to fraudulently conceal the issue. Id. ¶¶ 13-16. Plaintiffs filed the instant action for fraud and failure to disclose, which was removed to this Court by Defendants on August 16, 2018. ECF No. 1. Plaintiffs subsequently filed the Second Amended Complaint, (ECF No. 7), and Cornerstone Defendants now move for its dismissal. ECF No. 9.

         II. LEGAL STANDARD

         When addressing a 12(b)(6) motion to dismiss, courts must look for “plausibility” in the complaint. Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). This standard requires a plaintiff to set forth the “grounds” for an “entitle[ment] to relief” that is more than mere “labels and conclusions.” 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). However, a mere “unadorned, the-defendant-unlawfully-harmed-me accusation” is insufficient. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citation omitted). While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. at 679. 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.

         When alleging fraud as a cause of action, a complaint must do so with particularity. Fed.R.Civ.P. 9(b). In order to comply with Rule 9(b), a plaintiff must ordinarily plead “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) (citations omitted). However, the Fourth Circuit warn that courts “should hesitate to dismiss a complaint under Rule 9(b) if the court is satisfied (1) that the defendant has been made aware of the particular circumstances for which she will have to prepare a defense at trial, and (2) that plaintiff has substantial prediscovery evidence of those facts.” Id.

         III. DISCUSSION

         Cornerstone Defendants claim Plaintiffs' Second Amended Complaint fails to state a claim for fraud with sufficient particularity and fails to assert more than conclusory allegations as to the claim for failure to disclose.[1] Mem. Supp. Mot. Dismiss, at 6, 12, ECF No. 10. However, a plain reading of the Second Amended Complaint reveals the deficiencies claimed by Cornerstone Defendants do not exist.

         A. Fraud

         A claim of fraud must normally contain “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, 176 F.3d at 784. “Fraud may be premised upon the willful nondisclosure of material information.” Johnston v. CitiFinancial, Inc., No. 5:17-03249, 2017 WL 4445983, at *3 (S.D. W.Va. Oct. 5, 2017).

         Here, Plaintiffs allege that Cornerstone Defendants entered into a purchase agreement with them on February 2, 2016 for property located at 1 Lucian Lane in Culloden, West Virginia. Second Am. Compl., ¶ 6. Those parties then closed on that purchase on May 11, 2016 with the Cornerstone Defendants' agent, Stephen T. Manns. Id. ¶ 9. During those times, Cornerstone Defendants are alleged to have willfully failed to disclose surface and ground water runoff in excess of normal conditions, which in turn adversely effected Plaintiff's construction endeavors. Id. ¶¶12-16. Implicit in the Second Amended Complaint is the allegation that Cornerstone Defendants acquired knowledge of this issue when they controlled the property prior to the sale and allowed defects to be fraudulently concealed by intentional overgrowth of flora. Id. ¶ 13.

         With the facts of time, location, place, and people involved listed in the four corners of the Second Amended Complaint, [2] Plaintiffs have sufficiently pleaded fraud under the heightened standard of Rule 9(b). Moreover, Plaintiffs have satisfied the purpose of the rule, as Cornerstone Defendants are certainly aware of the particular circumstances for which they will be required to prepare a defense at trial and Plaintiffs have the appropriate prediscovery knowledge of the fraud they have alleged. Accordingly, the motion to dismiss as it pertains to the claim for fraud is DENIED.

         B. ...


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