SARAH S. VANCE, District Judge.
Before the Court are plaintiffs' motion to dismiss defendants' counterclaim and plaintiffs' motion for sanctions under Federal Rule of Civil Procedure 11.
This case arises out of a motor vehicle accident in Orleans Parish.
On April 6, 2018, plaintiffs filed suit against Chambers, God's Way Trucking, and defendant Canal Insurance Company.
On July 3, 2018, defendants filed a counterclaim against plaintiffs.
Plaintiffs' motion to dismiss defendants' counterclaim is brought under Federal Rule of Civil Procedure 12(b)(6). To survive a Rule 12(b)(6) motion, a party must plead "sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when the party pleads facts that allow the court to "draw the reasonable inference that the [opposing party] is liable for the misconduct alleged." Id. at 678. A court must accept all well-pleaded facts as true and must draw all reasonable inferences in favor of the nonmoving party. See Lormand v. US Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).
A legally sufficient complaint or counterclaim must establish more than a "sheer possibility" that the party's claim is true. Iqbal, 556 U.S. at 678. It need not contain detailed factual allegations, but it must go beyond labels, legal conclusions, or formulaic recitations of the elements of a cause of action. Id. In other words, the face of the complaint or counterclaim must contain enough factual matter to raise a reasonable expectation that discovery will reveal relevant evidence of each element of the party's claim. Lormand, 565 F.3d at 257. The claim must be dismissed if there are insufficient factual allegations to raise a right to relief above the speculative level, Twombly, 550 U.S. at 555, or if it is apparent from the face of the complaint or counterclaim that there is an insuperable bar to relief, Jones v. Bock, 549 U.S. 199, 215 (2007).
Defendants' counterclaim asserts a claim for fraud, which Louisiana law defines as "a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other." La. Civ. Code art. 1953. The elements of a Louisiana fraud and intentional misrepresentation claim are: 1) a misrepresentation of a material fact; 2) made with intent to deceive; and 3) causing justifiable reliance with resultant injury. Kadlec Med. Ctr. v. Lakeview Anesthesia Assoc., 527 F.3d 412, 418 (5th Cir. 2008).
Defendants' fraud claim is subject to the heightened pleading requirement in Federal Rule of Civil Procedure 9(b). Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir. 2008). Under Rule 9(b), a party "must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). The Fifth Circuit "interprets Rule 9(b) strictly, requiring the [complaining party] 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, "Rule 9(b) requires `the who, what, when, where, and how' to be laid out." Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 723 (5th Cir. 2003) (quoting Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 1134, 1139 (5th Cir. 1992)). Finally, "although scienter may be `averred generally,' . . . pleading scienter requires more than a simple allegation that a [party] had fraudulent intent. To plead scienter adequately, a [complaining party] must set forth specific facts that support an inference of fraud." Tuchman v. DSC Commc'ns Corp., 14 F.3d 1061, 1068 (5th Cir. 1994) (quoting Fed. R. Civ. P. 9(b)).
Here, defendants have failed to satisfy even the less stringent Rule 12(b)(6) pleading standard because they do not allege that they justifiably relied on plaintiffs' alleged misrepresentations. See Iqbal, 556 U.S. at 678. Defendants do not allege any facts in their counterclaim addressing this element. Defendants contend in their opposition that plaintiffs' alleged misrepresentations were "used to deceive" them into "defend[ing] a meritless claim . . . in justifiable reliance."
Even if the Court were to consider defendants' belated allegation, dismissal would still be required because it does not satisfy the Rule 12(b)(6) requirement that a claim for relief must be "plausible on its face." Iqbal, 556 U.S. at 678. Defendants appear to assert that being forced to defend against what they see as a fraudulent claim for damages is equivalent to "justifiable reliance" on that claim. This contention misconstrues the definition of "reliance," which Black's Law Dictionary defines as "dependence or trust by a person." Black's Law Dictionary (10th ed. 2014). Any assertion that defendants depended upon or trusted plaintiffs' alleged misrepresentations is facially absurd, because defendants are contesting them in this litigation. It therefore defies comprehension how defendants have justifiably relied on plaintiffs' representations and been injured as a result.
Lastly, defendants fail to allege any facts in support of their conclusory allegation that plaintiffs intentionally caused the automobile collision. Defendants thus fall well short of their obligation to "set forth specific facts that support an inference of fraud." Tuchman v. DSC Commc'ns Corp., 14 F.3d at 1068; see also Fed. R. Civ. P. 9(b) (complaining party "must state with particularity the circumstances constituting fraud").
Because defendants have failed to sufficiently allege their fraud claim, the Court must dismiss the counterclaim. The Court finds that dismissal with prejudice is warranted. Defendants' fraud claim is not legally cognizable because they cannot allege justifiable reliance sufficiently under the set of facts they have presented. See Dumas v. Jefferson Par. Sewerage Dep't, No. 00-2993, 2001 WL 699045, at *3 (E.D. La. June 21, 2001) (dismissing complaint with prejudice when plaintiff's state law claims were not cognizable).
Plaintiffs assert that defendants should be sanctioned under Federal Rule of Civil Procedure 11 because their counterclaim lacks any evidentiary support.
If a party believes that an opposing party has violated Rule 11(b), it may move for sanctions under Rule 11(c). Rule 11(c) sets forth strict procedural requirements for how the party must proceed with its motion. Rule 11(c)(2) provides that
Fed. R. Civ. P. 11(c)(2). The requirements in Rule 11(c)(2) are strictly enforced. See Elliott v. Tilton, 64 F.3d 213, 216 (5th Cir. 1995) (holding that the district court's imposition of sanctions under Rule 11 was an abuse of discretion because the party seeking sanctions did not serve its motion for sanctions against the opposing party at least 21 days prior to filing); Johnson ex. rel. Wilson v. Dowd, 345 F. App'x 26, 30 (5th Cir. 2009) (affirming the district court's imposition of Rule 11 sanctions, in part, because plaintiff was served with the motion for sanctions 21 days before the motion was filed with the court); Richardson v. U.S. Bank Nat'l Ass'n, No. 09-7383, 2010 WL 4553673, at *1 (E.D. La. Oct. 29, 2010) (denying defendant's motion for sanctions for failure to comply with the requirements in Rule 11(c)).
Here, there is no indication in the record that plaintiffs complied with the requirements of Rule 11(c)(2). First, plaintiffs filed their motion for sanctions alongside their motion to dismiss, in violation of the requirement that motions for sanctions be filed "separately from any other motion." Fed. R. Civ. P. 11(c)(2). Second, while plaintiffs' counsel notified defendants' counsel that plaintiffs planned to move for sanctions,
For the foregoing reasons, plaintiffs' motion to dismiss defendants' counterclaim is GRANTED. Defendants' counterclaim is DISMISSED WITH PREJUDICE. Plaintiffs' motion for sanctions is DENIED.