United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT, UNITED STATES DISTRICT JUDGE.
before the Court is Counter-Defendant Higher Perpetual
Energy, LLC's (“Higher Perpetual”) Motion to
Dismiss Counter-Plaintiff Higher Power Energy, LLC's
(“Higher Power”) Original Counterclaim (Dkt.
#25). After reviewing the relevant pleadings and motion, the
Court finds that the motion should be denied.
approximately July 27, 2007, Higher Perpetual and Higher
Power entered into a Lease Purchase Agreement, which enabled
a series of wind farm development projects (the “2007
Agreement”). On or about, January 17, 2011, the parties
entered into a new agreement-HP & HPE Supplemental De
Wind/SW1 Wind Farms, LLC Agreement (“Supplemental
Agreement)-which terminated and rendered void the 2007
Agreement. Subsequently, in the summer of 2012, the parties
entered into a Supplement to HP & HPE Supplemental De
Wind/SW1 Wind Farms, LLC Agreement (“Supplement to the
Supplemental Agreement”). Disputes arose regarding the
negotiations and implementation of such agreements, which
resulted in Higher Perpetual filing suit on June 12, 2017
(Dkt. #1). On October 19, 2017, Higher Perpetual filed its
First Amended Original Complaint (Dkt. #9). Subsequently, on
February 27, 2018, Higher Power filed its Original
Counterclaim (Dkt. #23). On March 20, 2018, Counter-Defendant
Higher Perpetual filed its Motion to Dismiss
Counter-Plaintiff Higher Power's Original Counterclaim
(Dkt. #25) pursuant to Federal Rules of Civil Procedure
12(b)(6) and 9(b). On April 3, 2018, Higher Power filed its
response (Dkt. #26). On April 10, 2018, Higher Perpetual
filed its reply (Dkt. #28).
Federal Rule of Civil Procedure 12(b)(6)
Federal Rules of Civil Procedure require that each claim in a
complaint include a “short and plain statement . . .
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). Each claim must include enough factual
allegations “to raise a right to relief above the
speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
12(b)(6) motion allows a party to move for dismissal of an
action when the complaint fails 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), the
Court must accept as true all well-pleaded facts in
plaintiff's complaint and view those facts in the light
most favorable to the plaintiff. Bowlby v. City of
Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). The Court
may consider “the complaint, any documents attached to
the complaint, and any documents attached to the motion to
dismiss that are central to the claim and referenced by the
complaint.” Lone Star Fund V (U.S.), L.P. v.
Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010).
The Court must then determine whether the complaint states a
claim for relief that is plausible on its face.
‘“A claim has facial plausibility when the
plaintiff pleads factual content that allows the [C]ourt to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.'” Gonzalez v.
Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
“But where the well- pleaded facts do not permit the
[C]ourt to infer more than the mere possibility of
misconduct, the complaint has alleged-but it has not
‘show[n]'-‘that the pleader is entitled to
relief.'” Iqbal, 556 U.S. at 679 (quoting
Iqbal, the Supreme Court established a two-step
approach for assessing the sufficiency of a complaint in the
context of a Rule 12(b)(6) motion. First, the Court should
identify and disregard conclusory allegations, for they are
“not entitled to the assumption of truth.”
Iqbal, 556 U.S. at 664. Second, the Court
“consider[s] the factual allegations in [the complaint]
to determine if they plausibly suggest an entitlement to
relief.” Id. “This standard
‘simply calls for enough facts to raise a reasonable
expectation that discovery will reveal evidence of the
necessary claims or elements.'” Morgan v.
Hubert, 335 Fed.Appx. 466, 470 (5th Cir. 2009) (citation
omitted). This evaluation will “be a context-specific
task that requires the reviewing [C]ourt to draw on its
judicial experience and common sense.” Iqbal,
556 U.S. at 679.
“[t]o survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.”' Id. at 678 (quoting
Twombly, 550 U.S. at 570).
Federal Rule of Civil Procedure 9(b)
9(b) states, “[i]n alleging fraud or mistake, a party
must state with particularity the circumstances constituting
fraud or mistake. Malice, intent, knowledge, and other
conditions of a person's mind may be alleged
generally.” Fed.R.Civ.P. 9(b).
9(b)'s particularity requirement generally means that the
pleader must set forth the “who, what, when, where, and
how” of the fraud alleged. United States ex rel.
Williams v. Bell Helicopter Textron, Inc., 417 F.3d 450,
453 (5th Cir. 2005). A plaintiff pleading fraud must
“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.” Herrmann Holdings Ltd. v. Lucent
Techs. Inc., 302 F.3d 552, 564-65 (5th Cir. 2002). The
goals of Rule 9(b) are to “provide defendants with
fair notice of the plaintiffs' claims, protect
defendants from harm to their reputation and goodwill,
reduce the number of strike suits, and prevent plaintiffs
from filing baseless claims.” U.S. ex rel. Grubbs
v. Kanneganti, 565 F.3d 180, 190 (5th Cir. 2009) (citing
Melder v. Morris, 27 F.3d 1097, 1100 (5th Cir.
1994)). Courts are to read Rule 9(b)'s heightened
pleading requirement in conjunction with Rule 8(a)'s
insistence on simple, concise, and direct allegations.
Williams v. WMX Techs., Inc., 112 F.3d 175, 178 (5th
Cir. 1997). However, this requirement “does not
‘reflect a subscription to fact pleading.'”
Grubbs, 565 F.3d at 186. “Claims alleging
violations of the Texas Insurance Code and the DTPA and those
asserting fraud, fraudulent inducement, fraudulent
concealment, and negligent misrepresentation are subject to
the requirements of Rule 9(b).” Frith v. Guardian
Life Ins. Co. of Am., 9 F.Supp.2d 734, 742 (S.D. Tex.
1998); see Berry v. Indianapolis Life Ins. Co., No.
3:08-CV-0248-B, 2010 WL 3422873, at *14 (N.D. Tex. Aug. 26,
2010) (“‘[W]hen the parties have not urged a
separate focus on the negligent misrepresentation claims,
' the Fifth Circuit has found negligent misrepresentation
claims subject to Rule 9(b) in the same manner as fraud
claims.”). Failure to comply with Rule 9(b)'s
requirements authorizes the Court to dismiss the pleadings as
it would for failure to state a claim under Rule 12(b)(6).
United States ex rel. Williams v. McKesson Corp.,
No. 3:12-CV-0371-B, 2014 WL 3353247, at *3 (N.D. Tex. July 9,
2014) (citing Lovelace v. Software Spectrum, Inc.,
78 F.3d 1015, 1017 (5th Cir. 1996)).
Power, in its Original Counterclaim (Dkt. #23), alleges
claims for common law fraud, negligent misrepresentation,
promissory estoppel, breach of contract, and a request for
declaratory relief. Higher Perpetual avers that each claim
warrants dismissal for various reasons. The Court addresses
each claim in turn.
Common Law Fraud
Power complains that Higher Perpetual, by and through its
principal David Tatton (“Tatton”), knowingly or
recklessly made false material representations of fact to
Higher Power (Dkt. #23 at pp. 7-8). Higher Perpetual avers
that Higher Power's fraud claim is time barred and fails
to satisfy the heightened pleading standards of Rule 9(b).
Higher Power responds that its fraud claim is timely pursuant
to the discovery rule and/or savings clause and that its
pleadings are sufficient under Rule 9(b). The Court addresses
each argument separately.
Statute of Limitations
Perpetual contends that Higher Power's fraud claim is
time barred because Higher Power filed such claim more than
seven years after the cause of action accrued. Further,
Higher Perpetual avers that neither the discovery rule nor
savings clause cures such untimeliness. Conversely, Higher
Power asserts that its fraud claim is timely pursuant to the
discovery rule and/or savings clause.
Texas law, the statute of limitations for fraud is four
years. Tex. Civ. Prac. & Rem. Code § 16.004(a).
Accrual occurs “when the fraud is perpetrated, or if
the fraud is concealed, from the time it is discovered or
could have been discovered by the exercise of reasonable
diligence.” Woods v. William M. Mercer, Inc.,
769 S.W.2d 515, 517 (Tex. 1988). “It is the
defendant's burden to establish the affirmative defense
of limitations, including ...