The opinion of the court was delivered by: WEXLER
Plaintiff Philip Carlucci, d/b/a P.C. Waterproofing Co. ("Carlucci") brings this litigation against defendants Owens-Corning Fiberglas Corporation ("Owens-Corning"), RJC Associates, Inc. ("RJC"), Robert Capazzi, and Jeffrey Capazzi, and "John Doe, Individually and John Doe Corporation, Being One Or More Defendants Whose Names Are Presently Unknown." Plaintiff alleges that certain actions taken by defendants violated the Sherman and Clayton Antitrust Acts, 15 U.S.C. §§ 1, 2, 3, 13, 15, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-68, Articles 22 and 33 of the New York General Business Law, N.Y. Gen. Bus. L. §§ 340-47, 680-95, and the common law of the State of New York. Owens-Corning now moves for an order pursuant to Fed. R. Civ. P. 9(b) and 12 dismissing certain counts of plaintiff's complaint for failure to state a claim and allege fraud with particularity.
This case is currently before the Court upon a motion to dismiss. The material allegations of plaintiff's complaint, along with such reasonable inferences as might be drawn in plaintiff's favor, must therefore at this time be taken as admitted. Gargiul v. Tompkins, 704 F.2d 661 (2d Cir. 1983), vacated on other grounds, 465 U.S. 1016, 104 S. Ct. 1263, 79 L. Ed. 2d 670 (1984); Murray v. City of Milford, 380 F.2d 468 (2d Cir. 1967). The Court may dismiss the counts of the complaint against which Owens-Corning now moves only if it is clear that no relief could be granted for these claims under any set of facts that could be proved consistent with the complaint's allegations. Hishon v. King & Spalding, 467 U.S. 69, 104 S. Ct. 2229, 81 L. Ed. 2d 59 (1984). Furthermore, the Court is restricted on defendant's motion to evaluating the legal sufficiency of the pleadings. Scheuer v. Rhodes, 416 U.S. 232, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974). A motion such as defendant's is addressed to the face of the pleadings and the Court may look only within the four corners of the complaint or to statements or documents attached as exhibits to or clearly incorporated by reference in the pleadings. Fed. R. Civ. P. 10(c): Goldman v. Belden, 754 F.2d 1059 (2d Cir. 1985): Ryder Energy Distribution Corp. v. Merrill Lynch Commodities, Inc., 748 F.2d 774 (2d Cir. 1984).
In accordance with these principles, the Court takes its statement of the facts relevant to Owens-Corning's motion from Carlucci's complaint. In or about October, 1985, Carlucci contacted a Harrison, New Jersey office of Owens-Corning to inquire as to whether plaintiff might be designated a distributor or contractor authorized to purchase and resell "Tuff-n-'Dri," a waterproofing material developed, manufactured, and sold by Owens-Corning for application to exterior concrete foundations. Carlucci asserts that, after extensive discussions held in Suffolk County, New York, plaintiff was advised that he had been approved as a distributor or contractor for Tuff-n-Dri, and, in or about November, 1985, purchased certain equipment and apparatus required to conduct business operations employing the waterproofing material. Also in or about November, 1985, plaintiff ordered, paid for, and received from Owens-Corning approximately five hundred gallons of Tuff-n-Dri.
Shortly after the acceptance of plaintiff's order for Tuff-n-Dri, Owens-Corning purportedly contacted Carlucci on several occasions and advised plaintiff that his resale price, which was below that of other Owens-Corning distributors and contractors, was too low. Carlucci nonetheless continued to sell at the lower price. On November 21, 1985, Owens-Corning terminated plaintiff's status as a distributor or contractor, allegedly because of an unlawful agreement between Owens-Corning, RJC, which is an Owens-Corning distributor and contractor, Robert and Jeffrey Capazzi, and unnamed others "already, or about to be, engaged in the Owens-Corning program relating to" Tuff-n-Dri. This supposed agreement between defendants and others is designed to control the price, sale, distribution, and application of Tuff-n-Dri in New York City, Nassau and Suffolk Counties, the State of New York, and the United States. Carlucci further asserts that Owens-Corning terminated plaintiff as a distributor or contractor not at its own behest, but upon the insistence of RJC, Richard and Jeffrey Capuzzi, and unnamed others.
Plaintiff's complaint contains six counts. Count I constitutes an antitrust claim. Count II alleges a fraudulent scheme to control the exterior concrete foundation waterproofing market, an ongoing pattern of racketeering activity, and a conspiracy, and seeks that defendants be held liable for treble damages under RICO. Count III states a claim for breach of contract, while Count IV alleges violation of the New York Franchise Sales Act, N.Y. Gen. Bus. L. §§ 680-95. Count V asserts that RJC and Robert and Jeffrey Capazzi intentionally, maliciously, and wrongfully caused Owens-Corning to breach its agreement with Carlucci. Count VI sounds in fraud. Owens-Corning's motion is addressed to Counts II, IV, and VI.
The Court will first turn to Owens-Corning's contention that Count VI of the complaint, plaintiff's common-law fraud claim, should be dismissed. Owens-Corning bases its argument for dismissal of Count VI upon two grounds, namely, that Carlucci has failed to allege fraud with the particularity required by Fed. R. Civ. P. 9(b) and that, in any event, the complaint does not allege facts sufficient to state a cause of action sounding in fraud.
Carlucci's complaint contains allegations of a number of purportedly fraudulent actions by Owens-Corning. Owens-Corning, for instance, supposedly falsely advised plaintiff that it would assist Carlucci in establishing a market for Tuff-n-Dri and explain to Carlucci the manner in which Tuff-n-Dri should be applied. Additionally, Owens-Corning allegedly falsely advised plaintiff as to the number of installations of Tuff-n-Dri Carlucci might expect to make and made other misrepresentations designed to induce plaintiff into entering into an agreement with Owens-Corning and expending money and energy on the formulation of business operations. Owens-Corning also assertedly made other "untrue and misleading statements," omissions of "material fact," and "false and misleading representations" that are not further specified in the complaint.
Fed. R. Civ. P. 9(b) mandates that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Mere conclusory allegations of fraudulent or deceptive behavior are insufficient to satisfy Rule 9(b). Decker v. Massey-Ferguson, Ltd., 681 F.2d 111, 114-15 (2d Cir. 1982). As the Second Circuit noted in Segal v. Gordon, 467 F.2d 602 (2d Cir. 1972), it is a serious matter to charge a defendant with fraud, and a court should not allow allegations of fraud to stand unless a plaintiff is both in a position to and willing to put himself on record as to the specific nature of the fraud. 467 F.2d at 607 (quoting 1A W. Barron & A. Holtzoff, Federal Practice and Procedure § 302, at 215-16 (Wright rev. 1960)). Allegations of fraud sufficient to comply with Rule 9(b) must set forth matters such as the time, place, and contents of purportedly false representations, as well as the identity of persons making such representations. Luce v. Edelstein, 802 F.2d 49, slip op. (2d Cir. 1986); The Limited, Inc. v. McCrory Corp., No. 85 Civ. 7444, slip op. (S.D.N.Y. August 1, 1986); Robertson v. National Basketball Association, 67 F.R.D. 691, 697 (S.D.N.Y. 1975). Furthermore, allegations of fraud resting on nothing more than "information and belief" are generally inadequate under Rule 9(b) and, even when such allegations pertain to matters peculiarly within the adverse parties' knowledge, Rule 9(b) requires that the allegations be accompanied by a statement of facts upon which the asserted "information and belief" is founded. Luce, No. 86-7120; Segal, 467 F.2d at 608; The Limited, Inc., No. 85-7444.
Consideration of Carlucci's complaint in light of these principles leads to the inexorable conclusion that plaintiff's allegations of fraud are insufficient. The allegations contained in the complaint are pled almost entirely upon "information and belief" and are nothing but conclusory. Plaintiff has completely failed to identify any particular persons making false representations or provide any specifics as to the time or place at which the supposed misrepresentations were made. The contents of the assorted misrepresentations too have been set forth in only the most general of manners, and no statement of facts discloses the bases of plaintiff's belief that Owens-Corning acted fraudulently. The Court therefore finds that plaintiff's complaint fails to satisfy the requirements of Rule 9(b).
Failure to comply with Rule 9(b) ordinarily results, not in outright dismissal, but in an order that a plaintiff amend his complaint so as to conform with the Rule. Luce, No. 86-7120; Yoder v. Orthomolecular Nutrition Institute, Inc., 751 F.2d 555, 562 (2d Cir. 1985). In fact, dismissal of a complaint for failure to satisfy Rule 9(b) without granting leave to amend may, under certain circumstances, be deemed a reversible abuse of discretion. Luce, No. 86-7120. Owens-Corning argues, however, that the granting of such leave to amend the fraud claim in the instant case is unnecessary since the factual ...