Opinion
Civil Action Number 99-2776 Section "L" (5).
August 10, 2000.
ORDER REASONS
Before the Court is the motion of defendants Stuart and Pam Scott to dismiss plaintiffs' complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, defendants' motion to dismiss is DENIED.
I. BACKGROUND
This action arises out of the alleged sale of distributorships of Business Partners, Inc. ("BPI") to the plaintiffs, nine individuals, by the defendants, eighteen individuals, who are all alleged to be stockholders, associates or employees of BPI or its subsidiary, Kingdom of Toys ("KOT"). The plaintiffs filed this lawsuit on September 13, 1999, stating causes of action under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et seq., as well as state law claims for breach of contract, fraud, and wrongful misrepresentation. Plaintiffs allege that BPI is a supplier of Walt Disney toys and products which are sold through independent distributors and that the defendants induced each of the plaintiffs to purchase a distributorship through promotional sales seminars and newspaper advertisements Plaintiff contend that the defendants failed to perform their obligations under the contracts entered in connection with the sales. As to their RICO claims, plaintiffs claim that BPI was the enterprise through which the defendants made numerous misrepresentations that constituted predicate acts of wire and mail fraud.
Defendants Stuart and Pam Scott (the "Scott defendants") now move to dismiss plaintiffs' complaint on the ground that plaintiffs fail to state a claim upon which relief may be granted. Specifically, the Scotts argue that the plaintiffs claims of fraud are not pled with sufficient particularity, the face of the complaint demonstrates that the claims are prescribed, and the elements of fraud and breach of contract are not adequately alleged.
Plaintiffs respond that defendants' motion should be denied because the complaint and RICO case statement filed in the record by plaintiffs adequately state facts that, taken as true, would state claims of violations of RICO, fraud, breach of contract, and wrongful misrepresentation. Plaintiffs also attach two contracts to which defendant Stuart Scott and plaintiffs Judith Etzel and J.D. Etzel (the "Etzel plaintiffs") are signatories and which are among the contracts that form the basis of the controversy.
II. STANDARD FOR MOTIONS TO DISMISS
The Federal Rules of Civil Procedure permit a defendant to seek dismissal of a complaint based on the "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). When considering a motion to dismiss under Rule 12(b)(6), a district court should construe the complaint liberally in favor of the plaintiff, assuming all factual allegations to be true. See Leleux v. United States, 178 F.3d 750, 754 (5th Cir. 1999). Rule 12(b)(6) motions are viewed with disfavor and are rarely granted. See id. A complaint must be viewed in the light most favorable to the plaintiff and with every doubt resolved in his behalf and may not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
III. ANALYSIS
As to defendants' argument that plaintiffs fail to state their claims of fraud with sufficient particularity, the Court finds that plaintiffs have stated in ample detail the facts which, if proven, could support a finding of liability. In their sixteen-page complaint and thirty-nine-page RICO case statement, plaintiffs allege numerous statements made by all defendants, including the Scott defendants, that could support a finding that false statements or representations were knowingly made by the defendants to induce the plaintiffs to purchase a KOT distributorship. For example, plaintiffs allege that they were referred by defendants to alleged existing KOT distributors who recommended the distributorships to plaintiffs, that the plaintiffs, including the Etzels, relied on this information in deciding to purchase a distributorship, and that the references were not in fact actual KOT distributors. Compl. ¶¶ XIV, XV, XXI. The complaint sets forth with adequate specificity many other misrepresentations allegedly made by the defendants and the results of those falsehoods. Compl. at 11-12. Taken as true, these allegations are sufficient to withstand a Rule 12(b)(6) motion to dismiss.
Defendants acknowledge in their motion to dismiss that a district court may rely on matters of public record in addition to the complaint. See Cinel v. Connick, 15 F.3d 1338, 1343 n. 6 (5th Cir. 1994). The plaintiffs filed a RICO case statement in response to this Court's RICO standing order. The case statement provides the plaintiffs' claims of fraud in even more detail than their complaint, though the Court does not rely on those allegations in its ruling.
The Court also disagrees with defendants' argument that the complaint demonstrates that the plaintiffs' claims have prescribed. According to the complaint, the plaintiffs and defendants entered into distributorship agreements with the defendants beginning on September 13, 1999, through October of 1995. Plaintiffs filed their complaint on September, 13, 1999. Actions for breach of contract are subject to the ten year prescriptive period of La. C.C. art. 3499. See Roger v. Dufrene, 613 So.2d 947, 948 (La. 1993). The RICO claim has a four year statute of limitations. See Agency Holding Corp. v. Malley-Duff Assoc., Inc., 483 U.S. 143, 155-56 (1987). Again viewing the allegations in the complaint as true, the Court cannot rule that the plaintiffs' breach of contract claims or RICO claims have prescribed. While the Court recognizes that a one-year prescriptive period will apply to plaintiffs fraud claims, when the plaintiffs knew or should have known of the alleged fraud or misrepresentations is not apparent from the pleadings.
The Court notes that the plaintiffs attach documents, dated October 11, 1995, which facially appear to contain the signatures of defendant Stuart Scott and the Etzel plaintiffs, to their opposition to the motion to dismiss. However, the Court need not consider those exhibits to rule on defendants' motion to dismiss. Because the exhibits are not considered by this Court, the motion to dismiss is not converted to a motion for summary judgment. See Burns v. Harris County Bail Bond Bd., 139 F.3d 513, 517 (5th Cir. 1998), reh'g denied (1998).
Finally, the Court finds that the plaintiffs' complaint sets forth the basis for their claims in sufficient detail to put the defendants on notice and to enable the defendants to respond. The complaint states that the defendants made false statements and representations to the plaintiffs, that the plaintiffs relied on those statements and actions in purchasing distributorships through distributorship agreements, and that the plaintiffs sustained injuries as a result of those purchases. Compl. at 8-12. As stated above, the plaintiffs' complaint provides more factual detail than is required to state claims of fraud, breach of contract and intentional misrepresentation. See Guidry v. U.S. Tobacco Co., 188 F.3d 619, 632 (5th Cir. 1999) (stating that "even fraud may be pleaded without long or highly detailed particularity").
IV. CONCLUSION
The Court finds that the plaintiffs' complaint alleges facts that, if proven, would state claims for which plaintiffs could recover. Accordingly, the defendants' motion to dismiss must fail. For the foregoing reasons, the motion of defendants Stuart and Pam Scott to dismiss plaintiffs' complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is
HEREBY DENIED.