set forth in Counterclaim No. 2 also constitute a breach of the Agreement.
Presently before me is Microtel's motion to dismiss all of Country Inn's counterclaims. Microtel asserts that the first and second counterclaims should be dismissed because they are not pled with the particularity required under Fed. R. Civ. P. 9(b), and because they fail to constitute a cause of action for fraud.
Microtel asserts that the third cause of action should be dismissed because it fails to state a claim upon which relief can be granted (pursuant to Fed. R. Civ. P. 12(b)(6)).
For the reasons set forth below, I grant Microtel's motion in part and deny it in part.
A. The First and Second Counterclaims -- For Fraud.
Microtel's first argument in support of its motion to dismiss is that the first two counterclaims are not pleaded with sufficient particularity to satisfy Fed. R. Civ. P. 9(b). It is unnecessary for me to determine whether this is true because I agree with Microtel's second argument: I find as a matter of law that those counterclaims fail to state a claim upon which relief can be granted.
By its own terms, the Agreement is to be "interpreted and construed under the laws of the State of New York." Agreement at P 23. In New York, the elements of a common law fraud claim are a material, false representation, an intent to defraud, reasonable reliance on the representation, and damage to the plaintiff as a result. Banque Arabe et Internationale D'Investissement v. Maryland Nat'l Bank, 57 F.3d 146, 153 (2d Cir. 1995).
However, a claim for fraud will not be recognized where it is based "solely upon the failure to perform the promises of future acts which constitute the contractual obligations themselves." Chase v. Columbia Nat'l Corp., 832 F. Supp. 654, 660 (S.D.N.Y. 1993) (citations omitted); see also Zinaman v. USTS New York, Inc., 798 F. Supp. 128, 134 (S.D.N.Y. 1992) ("A failure to perform promises of future acts is merely a breach of contract to be enforced by an action on the contract") (citations omitted). If the rule were otherwise, then every contract breach would constitute a tort. Chase, supra, at 660 (citation omitted).
In a case involving a breach of contract, a fraud claim may arise only where the alleged misrepresentations concern a matter separate from the contract obligations themselves. In other words, a fraud claim may exist only where the alleged misrepresentations concern a "present" fact (i.e., the financial stability of the company) as opposed to a statement of future intent (i.e., that something will be provided as part of the proposed contract). Chase, supra, at 661.
In this case, none of the alleged misrepresentations set forth in the first and second counterclaims constitutes a "present" fact. For instance, Country Inn alleges that Microtel failed to do the following things in accordance with the Agreement: set up an "800" number for reservation referrals maintained by Microtel (Answer at PP 22; 29); provide advertising, marketing or promotional support (Answer at P 30); provide support regarding guest complaints (Answer at P 31); provide continuing consultation and advisory assistance (Answer at P 34); provide continuing training programs, conferences or seminars (Answer at P 36); distribute a national directory (Answer at P 37); establish a national advertising fund (Answer at P 38); and establish more than fifty Microtel franchises during the one-year period following March 1992 (Answer at P 39).
These are all alleged failures to perform promises of future acts. As such, they cannot be the bases for fraud (or fraudulent inducement) claims.
Both the first and second counterclaims are, therefore, dismissed.
B. The Third Counterclaim -- For Breach of Contract.
In its third counterclaim, Country Inn alleges that those same failings set forth in the second counterclaim (for fraud), constitute a breach of the Agreement. Specifically, Country Inn alleges that Microtel failed to do the following:
1. "Provide a corporate '800' number to arrange for reservations."
2. "Provide advertising, marketing and promotional support."