United States District Court, W.D. Texas, Austin Division
REPORT AND RECOMMENDATION OF THE UNITED STATES
W. AUSTIN UNITED STATES MAGISTRATE JUDGE.
HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE.
the Court are Defendant's Motion for Dismissal of
Plaintiff's Fraud Claim Under Rule 12(b)(6) (Dkt. No.
35); and Plaintiff's Response in Opposition to
Defendant's Motion (Dkt. No. 37). The District Court
referred the above-motion to the undersigned Magistrate Judge
for Report and Recommendation pursuant to 28 U.S.C. §
636(b)(1)(B), Federal Rule of Civil Procedure 72 and Rule
1(c) of Appendix C of the Local Rules.
Mark Walters brings this suit alleging that JD Palatine, LLC
(Palatine) violated various provisions of the Fair Credit
Reporting Act (FCRA). In June 2015, Walters was denied a
consulting contract, allegedly due to a criminal background
report performed by Palatine. Following the denial of the
contract, Walters filed a written dispute to Palatine stating
that the background check contained inaccurate information.
Walters requested a re-investigation of the information.
According to Walters, Tim Planz, Vice President of Operations
at Palatine, stated that “he would look into the matter
and get back as soon as possible” and that he was
familiar with the FCRA. However, Walters alleges that
Palatine failed to conduct the re-investigation within thirty
days, in violation of the FCRA. Additionally, after
discovery, Walters was granted leave to amend his complaint
to add two claims: fraud and misrepresentation. He contends
that Palatine misrepresented that it would conduct the
re-investigation within thirty days, which caused an injury
to Walters. He claims that this misrepresentation is the
basis for both his fraud and misrepresentation claims, as
well as his previous claims under the FCRA.
previously moved to dismiss the fraud and misrepresentation
claims, contending that Walters failed to meet the heightened
pleading standards of Fed.R.Civ.P. 9(b). The Court
recommended dismissal of Walter's fraud and
misrepresentation claims, and the District Judge adopted the
Report and Recommendation on February 8, 2017. Dkt. No. 31.
Walters was then given an opportunity to amend his complaint,
in which he once again alleged fraud and negligent
misrepresentation. Palatine filed a second motion to dismiss,
moving solely to dismiss Walter's fraud claim.
allegations of fraud, the rules require a heightened pleading
standard. Rule 9(b) requires plaintiffs to “state with
particularity the circumstances constituting fraud.”
Fed.R.Civ.P. 9(b). The Fifth Circuit “interprets Rule
9(b) strictly, requiring the plaintiff to specify the
statements contended to be fraudulent, identify the speaker,
state when and where the statements were made, and explain
why the statements were fraudulent.” Flaherty &
Crumrine Preferred Income Fund, Inc. v. TXU Corp., 565
F.3d 200, 207 (5th Cir. 2009). In other words, the plaintiff
must identify the “who, what, when, and where” of
the fraud claim. Williams v. WMX Techs., Inc., 112
F.3d 175, 178 (5th Cir. 1997). However, “[m]alice,
intent, knowledge, and other conditions of a person's
mind may be alleged generally.” Fed.R.Civ.P. 9(b).
argues that after amending, Walters still fails to meet the
heightened pleading standard of Rule 9(b). In Texas, a claim
for fraud requires:
(1) that a material representation was made; (2) the
representation was false; (3) when the representation was
made, the speaker knew it was false or made it recklessly
without any knowledge of the truth and as a positive
assertion; (4) the speaker made the representation with the
intent that the other party should act upon it; (5) the party
acted in reliance on the representation; and (6) the party
thereby suffered injury.
In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758
Report and Recommendation on Palatine's first motion to
dismiss, the Court found that Walters had failed to identify
the who, what, when, where, and how of his claim as required.
His amended complaint, however, satisfies this standard.
Walters specified the date on which the statement was made,
the contents of the statement, the identity of the speaker,
and the medium by which the statement was made. Walters also
sufficiently alleges that the statement was material and that
he suffered an injury from his reliance on it. While Palatine
argues that Walters failed to provide any support for his
allegations that the speaker knew the statement was false or
made recklessly or that it was made with the required intent,
knowledge and intent may be pled generally. Fed.R.Civ.P.
9(b). As such, Walter has sufficiently pled his claim for
undersigned RECOMMENDS that the District Court DENY the
Defendant's Motion for Dismissal of Plaintiff's Fraud