The opinion of the court was delivered by: Goettel, District Judge.
In August 1988, we dismissed Counts 2 and 3 of the
plaintiffs' first amended complaint for failure to plead
allegations of fraud with particularity. Subsequent to that
decision, the plaintiffs filed a second amended complaint. The
defendant answered this pleading and the parties proceeded to
conduct extensive discovery. In deed, discovery was to be
completed by December 15, 1989, a week ago.
In September 1989, the plaintiffs filed a third amended
complaint which revised various factual allegations to conform
with evidence adduced during discovery. The defendant has now
moved to dismiss Counts 3 and 4 of the third amended complaint,
which allege the same claims as Counts 2 and 3 of the first
amended complaint, for failure to plead fraud with
particularity, or, in the alternative, to dismiss for failure
to state a claim.
It is beyond peradventure that the purpose of the Rule 9(b)
particularity requirement for fraud allegations is to put the
defendant on "notice of precisely what he is charged with."
Goldman v. Beldman, 754 F.2d 1059, 1070 (2d Cir. 1985). This
requires the plaintiff to identify the precise statements made
that contain misrepresentations, as well as the parties to the
conversation and the time and place that the statements were
made. Bresson v. Thomson McKinnon Securities, Inc., 641 F. Supp. 338,
346 (S.D.N.Y. 1986). The defendant contends that, while
the second amended complaint was sufficiently detailed, the
revisions made in the third amended complaint remove the
requisite element of particularity. Thus, the defendant seeks
dismissal of Counts 3 and 4.
The difference between the second and third amended
complaints can be summarized quite simply. A central allegation
of the fraud claims in the second amended complaint focused on
defendant's alleged promise to adjust its prices to NCC in
order to bring profits on the NCC contract in line with with
those realized on other large accounts. In the third amended
complaint, this claim has been altered to allege that defendant
promised to adjust its prices if actual experience demonstrated
that its costs were lower than anticipated. Third amended
complaint, paragraphs 21, 84, 89, 90. The defendant's
contention that the plaintiffs' so-called retreat from their
initial allegation raises Rule 9(b) problems is unfounded. The
plaintiffs' amended allegation may raise different issues of
proof, but it does not, by virtue of its characterization,
render Counts 3 and 4 insufficiently particular.
More troublesome, however, is another change made in
paragraph 21 of the third amended complaint. In the second
amended complaint, the plaintiffs alleged that the promise to
adjust prices was made by Mr. Dawson of World Color Press to
Mr. Haley of NCC. In the third amended complaint, however, the
allegation has been generalized to read that "World assured NCC
repeatedly . . ." This was a matter of concern to us on
defendant's initial 9(b) motion. In that decision, we noted
that the parties were identified only as World and Publisher.
"Not stated in any of these examples is who at World made the
allegedly false representations, to whom it was made and why
the statement was false." NCC Sunday Inserts v. World Color
Press, Inc., 692 F. Supp. 327, 329 (S.D.N.Y. 1988). The same
problem exists in the current pleading of paragraph 21. We are
troubled by the notion that after one year of extensive
discovery the plaintiffs are less sure of who made the
communications essential to their fraud allegations than they
were at the time of their second amended complaint.
Based on counsel's argument today we are advised this was
simply and oversight in the drafting which could be corrected.
We will, however, give the plaintiffs one more chance to
identify the who, what, when and where of the alleged
misrepresentation. If they are not able to do so within 20
days, a dismissal of that count with prejudice will be
The defendant also challenges the legal sufficiency of the
plaintiffs' fraud claims. While we agree that the plaintiffs'
complaint presents a weak fraud case, one that attempts to
convert contractual claims into fraud, the pleading is not so
deficient as to warrant dismissal on the merits at this time.
The defendant's challenges may be raised more appropriately in
their summary judgment motion planned for early next year.
Consequently, defendant's motion to dismiss the complaint for
failure to plead fraud with particularity is granted with
respect to the count mentioned above with 20 days leave to
replead. In all other respects, the motion is denied.
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