H. RUSSEL HOLLAND, District Judge.
Defendants move to dismiss plaintiff's claims.
Plaintiff is Cash Depot, Inc. Defendants are Commercial ATM Services, LLC, d/b/a as Alaska ATM Service; Societe Financial, LLC d/b/a Alaska ATM Service; Societe Financial Group, LLC d/b/a/ Alaska ATM Service; James Dainis; and Dominic and Reynold Krueger.
Societe Financial Group is alleged to be the sole member of Commercial ATM; and Dainis is alleged to the sole member of both Societe Financial and Societe Financial Group.
Dainis is alleged to be the registered agent for Commercial ATM and Societe Financial and "Alaska ATM's principal."
On June 9, 2014, plaintiff "entered into an Automated Teller Machine (ATM) Service Agreement . . . with Alaska ATM."
Paragraph 2 of the ATM Agreement provides that
Paragraph 3 of the ATM Agreement provides:
Plaintiff alleges that Dainis and the Kruegers "were the individual couriers who had responsibility for filling [plaintiff's] ATM on behalf of Alaska ATM."
Plaintiff alleges that between June 25, 2014 and December 4, 2014, "$138,940.00 in vault cash disappeared from [plaintiff's] ATM."
On April 27, 2015, plaintiff commenced this action. Plaintiff's amended complaint contains the following eight counts: 1) breach of contract against Alaska ATM and Dainis, 2) conversion against all defendants, 3) fraudulent misrepresentation against all defendants, 4) conspiracy to commit fraud and conversion against all defendants, 5) unjust enrichment against all defendants, 6) unfair trade practices against all defendants, 7) joint and several liability under the UTPA against Alaska ATM and Dainis, and 8) punitive damages against all defendants.
Pursuant to Rules 8(a), 9(b), and 12(b)(6), Federal Rules of Civil Procedure, defendants now move to dismiss all claims against them, except for the breach of contract claim against Commercial ATM.
"Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a party's pleading to contain `a short and plain statement of the claim showing that the pleader is entitled to relief.'"
In Count I of its amended complaint, plaintiff asserts a breach of contract claim against Alaska ATM and Dainis. The ATM Agreement was between Alaska ATM Service and Cash Depot. Plaintiff has alleged that all three corporate defendants were doing business as Alaska ATM. Commercial ATM does not dispute that it does business as Alaska ATM and Commercial ATM does not move to dismiss plaintiff's breach of contract claim against it. However, Societe Financial and Societe Financial Group argue that this claim against them must be dismissed because they are not parties to the contract. They argue that Alaska ATM is a registered business name owned by Commercial ATM. A business name properly registered under Title 10, chapter 35 of the Alaska statutes "gives the person who has registered the name the exclusive right to the use of the name." AS 10.35.040(b). Thus, the Societe defendants argue that only Commercial ATM can use the name Alaska ATM, which means that plaintiff's contract was only with Commercial ATM.
Plaintiff has alleged sufficient facts to make it plausible that Societe Financial is doing business as Alaska ATM and thus could be a party to the ATM Agreement. Plaintiff has alleged that Societe Financial holds the business license for Alaska ATM which at least suggests that Societe Financial is doing business and holds itself out to the public as Alaska ATM. There are, however, no such facts alleged as to Societe Financial Group. All that is alleged is that Societe Financial Group is owned by Dainis and that it has the same address as the other two corporate defendants. These alleged facts do not suggest that Societe Financial Group is doing business as Alaska ATM.
But, plaintiff also alleges that the Societe defendants could be liable for breach of contract under a piercing the corporate veil theory. "Alaska law provides that although corporate veils should be pierced only in exceptional circumstances, it is appropriate to do so if the corporate form is used to defeat public convenience, justify wrong, commit fraud, or defend crime."
The Societe defendants argue that such a claim against them fails because plaintiff has alleged no facts that suggest that the corporate form has been abused by either Dainis or Commercial ATM. They also argue that the alter ego theory only attaches liability to an individual owner, officer or director of an entity by disregarding the corporate form of the entity. They insist that a piercing the corporate veil theory cannot be used to attach liability to a corporate entity.
Piercing the corporate veil is not an independent claim but rather a theory of liability.
Plaintiff also alleges that Dainis is the alter ego for the three corporate entities and thus is liable for breach of contract under a piercing the corporate veil theory. "Shareholders of a corporation may be liable for corporate debts if the shareholders control the corporation and abuse the corporate structure to prejudice an opposing party."
Dainis argues that plaintiff's breach of contract claim against him is not plausible because plaintiff has not alleged any facts to support its legal conclusion that Dainis is the alter ego of the three corporate entities. Specifically, Dainis argues that plaintiff has not alleged any facts to suggest that the corporate form was abused by him.
As discussed above, plaintiff was not required to plead factual support for this theory of liability. But even if plaintiff were, plaintiff has pled adequate factual support to make its piercing the corporate veil theory plausible. Plaintiff has alleged that the three corporations share ownership, that they all have the same business address, and that Dainis is the registered agent for at least two of the corporations. These alleged facts are sufficient to suggest that Dainis was the alter ego of one or more of the corporate defendants. Thus, Dainis is not entitled to dismissal of plaintiff's breach of contract claim against him.
Next, Commercial ATM argues that plaintiff's tort claims in Counts II-IV are not plausible because plaintiff cannot recover pure economic losses under a tort theory of liability. "Promises set forth in a contract must be enforced by an action on that contract. Only where the duty breached is one imposed by law, such as a traditional tort law duty furthering social policy, may an action between contracting parties sound in tort."
Plaintiff's tort claims are not barred by the economic loss doctrine. "Alaska law imposes an independent duty to refrain from the tort of intentional misrepresentation."
Defendants' argument that "social policies" that support a tort claim between contracting parties only apply when there is unequal bargaining positions between the parties is unavailing. Defendants cite to
Next, the three individual defendants argue that plaintiff's claims in Counts II-VIII against them must be dismissed because plaintiff has not stated any facts to support a legal theory of liability against an owner or employees of a company that has a contracting relationship with plaintiff. The three individual defendants contend that this is nothing more than a contract dispute and thus plaintiff's claims are limited to the entity with which it contracted, which in defendants' view is Commercial ATM. The Societe defendants similarly argue that plaintiff's claims in Counts II-VIII against them must be dismissed because plaintiff has alleged no facts to support its contention that they would be liable for any of these claims since they were not parties to the contract.
This argument fails. It is possible that if any of the individual defendants took the residual vault cash that they did so while acting outside the scope of their employment, which would make them personally liable. And as discussed above, it is plausible that the Societe defendants are contracting parties.
Next, the individual defendants and the Societe defendants move to dismiss plaintiff's Count II conversion claim. "The tort of conversion is an intentional exercise of dominion and control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel."
While the ATM Agreement did make Alaska ATM responsible for any loss of vault cash, that does not mean that the individual defendants could not be liable for conversion if they were not acting within the scope of their employment when they took the cash. As for the Societe defendants, again, as discussed above, if they were operating as Alaska ATM, then it is plausible that they had access to the cash and could be liable for conversion. Plaintiff's conversion claim is not subject to dismissal. Plaintiff's conspiracy to commit conversion claim in Count IV also survives the motions to dismiss.
Defendants next move to dismiss plaintiff's fraudulent misrepresentation claim. "[T]he elements of fraudulent misrepresentation are: (1) a misrepresentation of fact or intention, (2) made fraudulently (that is, with "scienter"), (3) for the purpose or with the expectation of inducing another to act in reliance, (4) with justifiable reliance by the recipient, (5) causing loss."
Plaintiff alleges that it "justifiably relied on the misrepresentations of James Dainis, Reynold Krueger, Dominic Krueger, and the Alaska ATM entities by authorizing James Dainis, Reynold Krueger, and Dominic Krueger to access Cash Depot's money."
Plaintiff has failed to plead this claim with particularity. With one exception, plaintiff has not alleged who made any of the alleged misrepresentations. It is not sufficient to allege that statements were made by Alaska ATM. Plaintiff must allege what individual made the alleged misrepresentations. Plaintiff has also not alleged to whom these statements were made nor has plaintiff alleged why some of these statements were false. Plaintiff's fraudulent misrepresentation claim is dismissed as is plaintiff's conspiracy to commit fraud claim in Count IV.
Defendants next move to dismiss plaintiff's unjust enrichment claim in Count V. "Unjust enrichment is an equitable doctrine which ordinarily falls within the trial court's broad discretion."
Defendants argue that plaintiff's unjust enrichment claim must be dismissed because plaintiff has failed to allege that it has no adequate remedy at law. Rather, defendants argue that the other claims that plaintiff has asserted suggest that plaintiff does in fact have an adequate remedy at law. Defendants contend that plaintiff cannot be pleading this claim in the alternative because nowhere in plaintiff's amended complaint does plaintiff state that is what it is doing.
"[T]he fact that the complaint in this case does not explicitly designate the [unjust enrichment] and contract [claim] as having been plead in the alternative is not dispositive. Under Rule 8, plaintiff need not use particular words to plead in the alternative as long as it can be reasonably inferred that this is what [he was] doing."
The individual defendants and the Societe defendants also argue that plaintiff's unjust enrichment claim against them must be dismissed because plaintiff has not alleged that they appreciated any benefit. They argue that plaintiff has not alleged that they had any access to or any opportunity to come into contact with the vault cash.
However, plaintiff has alleged that the three individuals were the couriers which would mean that they had access to the vault cash. And, plaintiff has alleged that all three corporate entities were synonymous with Alaska ATM and thus any of the three corporate entities could have had access to plaintiff's vault cash. Plaintiff's unjust enrichment claim survives the motions to dismiss.
Defendants next move to dismiss plaintiff's UTPA claim in Count V because plaintiff failed to "cite the statute relied upon in parentheses following the title of the pleading." D. Ak. L.R. 10.1(g). This argument fails because plaintiff has plainly cited AS 45.50.471 in parentheses under the title of its UTPA claim.
The individual and Societe defendants also argue that plaintiff lacks standing to bring an UTPA claim against them because plaintiff does not have an interest that has been adversely affected by them.
Plaintiff has alleged an injury (the taking of plaintiff's money in the course of trade or commerce) that is fairly traceable to the individual and Societe defendants. Plaintiff has alleged that all three corporate entities were synonymous with Alaska ATM and thus any of the three corporate entities could have had access to plaintiff's vault cash. As for the three individual defendants, plaintiff has alleged that all three were couriers which gave them access to the vault cash. Plaintiff's UTPA claim survives the motions to dismiss.
In Count VII, plaintiff asserts a claim that Alaska ATM and Dainis are jointly and severally liable under the UTPA. Plaintiff states that it included this count in its amended complaint to put the corporate defendants and Dainis on notice that they could be liable under the UTPA even if it were determined that the Kruegers took the money. Plaintiff contends that liability under the UTPA can extend to officers, directors and owners with authority to control the unfair act or practice if they had actual knowledge, were recklessly indifferent, or knew that it was highly probable that an employee or agent of the corporation would commit an unfair act or practice.
This claim is dismissed because "joint and several liability is a request for relief or a rule of contribution: it is not a cause of action."
Finally, plaintiff's claim for punitive damages in Count VIII is dismissed because "[p]unitive damages do not constitute a cause of action."
Defendants' motions to dismiss are granted in part and denied in part. Plaintiff's Counts VII and VIII are dismissed as is its Count III fraudulent misrepresentation claim and its conspiracy to commit fraud claim in Count IV. The motions are otherwise denied.
Plaintiff is given leave to amend its fraud claims and it may amend its UTPA claim to add its theory of liability that is currently pled as a separate cause of action in Count VII. Plaintiff may also amend its prayer for relief to add a request for punitive damages. Plaintiff's second amended complaint, should plaintiff elect to file one, shall be filed on or before November 2, 2015.