Filed: Jul. 24, 2008
Latest Update: Feb. 21, 2020
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FILED FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS ELEVENTH CIRCUIT July 24, 2008 No. 07-13421 THOMAS K. KAHN _ CLERK D. C. Docket No. 06-00118-CV-FTM-29-DNF WEST COAST ROOFING AND WATERPROOFING, INC., on behalf of itself and a class of persons similarly situated, Plaintiff-Appellant Cross- Appellee, versus JOHNS MANVILLE, INC., a Berkshire Hathaway subsidiary, JOHNS MANVILLE INTERNATIONAL, INC., GAF MATERIALS CORPORATION, Defendants-Appel
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FILED FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS ELEVENTH CIRCUIT July 24, 2008 No. 07-13421 THOMAS K. KAHN _ CLERK D. C. Docket No. 06-00118-CV-FTM-29-DNF WEST COAST ROOFING AND WATERPROOFING, INC., on behalf of itself and a class of persons similarly situated, Plaintiff-Appellant Cross- Appellee, versus JOHNS MANVILLE, INC., a Berkshire Hathaway subsidiary, JOHNS MANVILLE INTERNATIONAL, INC., GAF MATERIALS CORPORATION, Defendants-Appell..
More
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
July 24, 2008
No. 07-13421 THOMAS K. KAHN
______________________ CLERK
D. C. Docket No. 06-00118-CV-FTM-29-DNF
WEST COAST ROOFING AND WATERPROOFING, INC.,
on behalf of itself and a class of persons similarly situated,
Plaintiff-Appellant
Cross- Appellee,
versus
JOHNS MANVILLE, INC.,
a Berkshire Hathaway subsidiary,
JOHNS MANVILLE INTERNATIONAL, INC.,
GAF MATERIALS CORPORATION,
Defendants-Appellees
Cross-Appellants,
BRIDGESTONE AMERICAS HOLDING, INC.,
d.b.a. Firestone Tire & Rubber Company,
VARIOUS JOHN DOES 1-1000
BFS DIVERSIFIED PRODUCTS, LLC,
d.b.a. Firestone Tire & Rubber Company,
Defendants-Appellees.
________________________
Appeals from the United States District Court
for the Middle District of Florida
_________________________
(July 24, 2008)
Before BARKETT, FAY and STAPLETON,* Circuit Judges
PER CURIAM:
Plaintiff West Coast Roofing & Waterproofing, Inc. (“West Coast
Roofing”) filed a ten count class action complaint against defendants Johns
Manville, Inc. (“Johns Manville”), Bridgestone Americas Holdings, Inc., d/b/a
Firestone Tire & Rubber Company (“Firestone”), and GAF Materials Corporation
(“GAF”), alleging several fraud-related causes of action, violations of state
building codes, and conspiracy. The District Court dismissed the eight counts it
characterized as “fraud-based claims” for failure to state a claim under Fed. R.
Civ. P. 9(b), including a RICO claim that was the sole federal claim asserted. The
Court ruled that the complaint stated a claim against all three defendants for
violations of Florida’s Building Code and conspiracy to violate Florida’s Building
Code, but it declined to exercise further supplemental jurisdiction over those
counts.
* Honorable Walter K. Stapleton, United States Circuit Judge for the Third Circuit Court
of Appeals, sitting by designation.
2
I. Background
Plaintiff West Coast Roofing is a roofing contractor that purchases and
installs “built-up bituminous roofing systems” for commercial and other
construction projects. These roofing systems incorporate “tapered perlite,” a rigid
board insulation. Defendants Firestone and GAF manufacture and sell bituminous
roofing systems and system components to contractors such as plaintiff. Their
roofing systems incorporate tapered perlite material, including tapered perlite
procured from defendant Johns Manville. Plaintiff avers that it has purchased
bituminous roofing systems from defendants since the 1980s.
Plaintiff’s roofing systems must meet state and local building code
regulations. Those regulations require that plaintiff’s roofs are able to withstand
minimum levels of “wind uplift pressures” so that the roofs do not fail in
hurricanes or other windstorms. Plaintiff is required to certify that the roofs it
installs satisfy the code’s requirements. Plaintiff avers that, in so doing, it must
rely on representations of the designers, manufacturers and suppliers of the
roofing systems, including defendants. Plaintiff further alleges that it purchased
roofing systems from defendants Firestone and GAF in reliance upon
representations made by those companies regarding the wind uplift capacities of
their roofs.
In 2005, plaintiff purchased from Firestone and installed a built-up
3
bituminous roofing system, which included tapered perlite insulation sold by
Johns Manville, for a construction project called the Riva Del Lago (“Riva”)
project in Fort Myers, Florida. Plaintiff avers that its client, the owner of the
building, subsequently conducted independent testing of the Riva roof’s uplift
capacity to determine whether it complied with the Florida Building Code, and the
roof failed the wind uplift test by “huge margins, because the tapered perlite
insulation literally tore apart, causing the roof system to separate from the
building.” Second Amended Complaint at 13 ¶ 30. Plaintiff avers that it was
required “by its contractual commitments to the owner and contractor and the
building code, to install concrete pavers over the built-up roofing system to
remediate the problem, at a cost in excess of $260,000.” Second Amended
Complaint at 15 ¶ 35.
Plaintiff further alleges that the Riva project was not an isolated incident;
plaintiff alleges that defendants have made “continuous fraudulent
representations” regarding the wind uplift capacities of their roofing systems for
more than a decade, and that “[t]he built-up roofing systems sold and
recommended by Defendants Firestone and GAF do not meet their stated uplift
capacities because the tapered perlite manufactured and sold by Johns Manville
fails, tearing apart at a fraction of the capacity represented by Johns Manville and
well below building code requirements.” Second Amended Complaint at 12 ¶ 28.
4
Plaintiff avers that “[f]urther investigation revealed that Defendants knew or
should have known that all of their perlite roofing systems cannot withstand
applicable wind uplift requirements....” Second Amended Complaint at 13 ¶ 31.
II. Proceedings
Plaintiff voluntarily amended its initial pleading in a First Amended
Complaint, and each of the defendants moved to dismiss. The District Court
granted in part and denied in part all three motions. The Court characterized
several of plaintiff’s claims as “fraud-based claims” and granted defendants’
motions to dismiss them, without prejudice, finding that the complaint failed to
plead fraud with adequate particularity under Fed. R. Civ. P. 9(b). The Court,
however, found that under Fed. R. Civ. P. 8(a)’s notice pleading standard, the
complaint stated a claim for violations of the Florida Building Code and
conspiracy to violate the Florida Building Code.
Plaintiff next filed a ten count Second Amended Complaint (“Complaint”).1
Plaintiff attached to this pleading seven exhibits, totaling roughly 245 pages,
which plaintiff alleged are “examples” of defendants’ misrepresentations
1
The Complaint’s ten counts are as follows: (1) fraud in the inducement (against Firestone
and GAF only); (2) common law fraud; (3) fraudulent concealment; (4) negligent
misrepresentation; (5) information negligently supplied for the guidance of others; (6) violations
of the Florida building code, Fla. Stat. § 553.84; (7) violation of Florida’s Unfair and Deceptive
Trade Practices Act, Fla. Stat. § 501.238(8); (8) violation of other state unfair trade practices
acts; (9) civil conspiracy; and (10) violation of RICO, 18 U.S.C. § 1961(5), predicated on mail
and wire fraud violations.
5
regarding the wind uplift capacities of their roofing systems.2
Each of the three named defendants again moved to dismiss, and the District
Court again granted the motions in part and denied them in part. The Court found
Fed. R. Civ. P. 9(b) applicable to eight of the claims (counts 1-5, 7-8 and 10) and
analyzed those jointly to determine whether the allegations satisfied Rule 9's
particularity requirement. The Court dismissed those claims, this time with
prejudice, on the grounds that plaintiff again failed to plead fraud with
particularity. The Court also dismissed the conspiracy claim, Count 9, insofar as it
was predicated on those counts. While reiterating its view that the allegations
regarding the Florida Building Code and conspiracy to violate that Code stated a
claim, the Court dismissed those claims without prejudice. It found that the
Second Amended Complaint had failed to satisfy the requirements for diversity
jurisdiction, and that further exercise of supplemental jurisdiction was
inappropriate because it had dismissed the RICO claim in Count 10, the only claim
over which it had federal question jurisdiction. The Court entered final judgment,
2
Plaintiff filed its complaint as a putative class action on behalf of “all persons that have
purchased and/or installed built-up bituminous roofing systems designed, advertised,
recommended and/or manufactured by Firestone and GAF which included tapered perlite
materials advertised, manufactured and supplied by Johns Manville and their distributors
throughout the United States,” Second Amended Complaint at 4 ¶ 11, a class which, plaintiff
believes, exceeds 1,000 members. Second Amended Complaint at 5 ¶ 12. There has been no
class certification.
6
and these appeals followed.3
III. Analysis
In its appeal, plaintiff West Coast Roofing argues (1) that the District Court
erred when it ruled that the Second Amended Complaint failed to plead fraud with
particularity; that (2) the District Court abused its discretion by dismissing the
fraud-based claims with prejudice; and that (3) the District Court erred when it
concluded that plaintiff had failed to establish the requirements for diversity
jurisdiction.
Defendants GAF and Johns Manville cross-appealed the District Court’s
denial of their motion to dismiss with prejudice plaintiff’s claims for violations of
the Florida Building Code and conspiracy to violate the Building Code. Firestone
has not cross-appealed.
A. Particularity of the Fraud Allegations
Federal Rule of Civil Procedure 9(b) states:
(a) Fraud or Mistake; Conditions of Mind. In 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. Rule Civ. P. 9(b) (“Rule 9(b)”). The “particularity” requirement “serves an
3
We have jurisdiction pursuant to 28 U.S.C. § 1291. We review de novo the District
Court’s grant or denial of a motion to dismiss, accepting as true all well-pled facts alleged in the
complaint. Corsello v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir. 2005).
7
important purpose in fraud actions by alerting defendants to the ‘precise
misconduct with which they are charged’ and protecting defendants ‘against
spurious charges of immoral and fraudulent behavior.’” Ziemba v. Cascade
Intern., Inc., 256 F.3d 1194, 1202 (11th Cir. 2001) (citation omitted). See also
Friedlander v. Nims,
755 F.2d 810, 813 n.3 (11th Cir. 1985) (Rule 9(b) serves to
“eliminate fraud actions in which all the facts are learned through discovery after
the complaint is filed”).
To satisfy Rule 9(b)’s “particularity” standard, we generally require that a
complaint identify (1) the precise statements, documents or misrepresentations
made; (2) the time and place of and persons responsible for the statement; (3) the
content and manner in which the statements misled the plaintiff; and (4) what the
Defendants gains by the alleged fraud. Ambrosia Coal & Const. Co. v. Pages
Morales, 482 F.3d 1309, 1316-17 (11th Cir. 2007). See also U.S. ex el. Atkins v.
McInteer,
470 F.3d 1350, 1357 (11th Cir. 2006). Furthermore, Rule 9(b) requires
more than conclusory allegations that certain statements were fraudulent; it
requires that a complaint plead facts giving rise to an inference of fraud. See U.S.
ex rel. Clausen v. Laboratory Corp. of America, Inc.,
290 F.3d 1301, 1313 (11th
Cir. 2002) (“If Rule 9(b) is to carry any water, it must mean that an essential
allegation and circumstance of fraudulent conduct cannot be alleged in [] [a]
conclusory fashion . . . . [A] plaintiff is not expected to actually prove his
8
allegations,” but it must offer more than “mere conjecture.”).
The parties have assumed that the District Court was correct to apply Rule
9(b) to the eight claims the Court characterized as fraud-based claims, and
therefore we will do same. We need only note that the District Court was certainly
correct to apply Rule 9(b) to plaintiff’s RICO claim predicated on a pattern of mail
and wire fraud offenses. Brooks v. Blue Cross and Blue Shield of Florida, Inc.,
116 F.3d 1364, 1380-82 (11th Cir. 1997) (Rule 9(b) applies to a RICO action
predicated on a pattern of mail and wire fraud; requiring that plaintiff identify the
fraudulent representations with particularity and that, “at a minimum, the plaintiffs
[] allege sufficient facts with enough specificity to show probable cause that the
predicate acts were committed”) (citations omitted); Ambrosia Coal & Const.
Co.,
482 F.3d at 1316-17 (similar).
In a case with multiple defendants, the complaint should contain specific
allegations with respect to each defendant; generalized allegations “lumping”
multiple defendants together are insufficient. Ambrosia Coal & Const. Co., 482
F.3d at 1317;
Brooks, 116 F.3d at 1381.
In its appeal, plaintiff contends both that the District Court erred when it
ruled that the Second Amended Complaint failed adequately to plead a long term,
continuous course of fraudulent conduct and also that it, at a minimum, adequately
pled fraud with respect to the Riva Del Lago project.
9
Before addressing the various statements alleged to have been made by each
defendant, it is important to identify a defect in the Second Amended Complaint
common to all three defendants. Plaintiff’s Second Amended Complaint alleges
generally (1) that the three defendants have made fraudulent representations (upon
which plaintiff relied) for more than a decade; but that (2) plaintiff only
“discovered” that those statements were fraudulent in 2005, in the course of the
Riva project. Plaintiff identifies only one specific instance in which it allegedly
relied upon defendants’ representations to its detriment: the Riva project. Apart
from the Riva project, plaintiff fails to explain which particular statements it relied
upon, how it relied upon them, and what adverse consequences it suffered as a
result of doing so – the basic circumstances of fraud.4 The Complaint avers that
only one single roof, the Riva roof, failed at wind uplift levels lower than those
claimed by defendants, and plaintiff asks us to infer from one alleged roof failure
that all of defendants’ roofs are weaker than they were represented to be. We will
decline to do so; Rule 9(b) requires plaintiff to offer more than mere conjecture in
support of such a claim. With this common background, we will turn to the
allegations concerning the representations made by each defendant.
4
We find in the Complaint one single instance other than the Riva project – a project
called the Marina Del Sol project, identified in the Complaint’s Exhibit D – in which plaintiff
purchased a roof from defendants, but plaintiff pleads no facts remotely suggesting that any
statements it relied upon when doing so were fraudulent and no facts about how any statement
was relied upon or the effect of any such reliance. We discuss Exhibit D further infra.
10
1. Firestone
The Second Amended Complaint itself does not identify any specific
fraudulent statements by any of the three defendants other than statements
regarding the Riva project. However, plaintiff attached to the complaint seven
exhibits, totaling roughly 245 pages, which plaintiff avers are “examples” of
defendants’ ongoing fraudulent representations. Several of those exhibits are
pertinent to defendant Firestone. Exhibits A contains “[p]roduct approval guides
and/or uplift testing information sheets,” and Exhibit B contains “Notices of
Acceptance submitted to Miami-Dade County,” which defendants Firestone and
GAF allegedly published on the internet. Second Amended Complaint at 9 ¶ 24.A.
Plaintiff contends that defendants have continuously published documents similar
to these on the internet “from at least 1998 until present.” Id. These exhibits
consist of more than two hundred pages of product specifications and wind uplift
information, but the Second Amended Complaint fails to identify which
representations within the documents are false. That pleading’s generalized
allegations that these voluminous documents contain “examples” of false
statements somewhere within them fail to satisfy Rule 9(b). Rule 9(b) requires
plaintiff to identify the allegedly fraudulent representations with particularity; these
three Exhibits, alone, afford defendants no particularized notice of the allegations
against them.
11
Exhibits D-G consist of three emails and one fax that, plaintiff avers, are
further “examples” of defendants’ fraudulent representations. Three of those four
documents, Exhibits D and F-G, are pertinent to defendant Firestone. Exhibits F
and G are emails regarding the Riva project and are not indicative of a fraudulent
course of conduct extending beyond the Riva project. Exhibit D is an email from a
representative of Firestone regarding a different project, one called Marina Del Sol.
However, the complaint neither explains the circumstances of that project nor plead
facts suggesting that Exhibit D was in any way false; its conclusory allegation that
Exhibit D is an “example” of fraud does not satisfy Rule 9. For these reasons, the
Complaint fails to plead a fraudulent course of conduct by Firestone extending
beyond the Riva project.
Plaintiff contends that, at a minimum, it adequately pled fraud in connection
with the Riva project. We agree that plaintiff adequately pled common law fraud
against Firestone in connection with the Riva project. The complaint and its
exhibits specify the precise representations alleged to be false: that “[d]uring the
bidding and submittal phases of the project, West Coast and the general contractor,
BBL Florida, relied upon Firestone’s representation that the roofing system
complied with FM Class 1-240, and would accordingly withstand up to 120 pounds
per square foot of uplift pressure.” Second Amended Complaint at 12-13 ¶ 29.
The emails and faxes appended to the complaint offer some support to plaintiff’s
12
contentions. As the complaint explains, “on July 19, 2005, Scott Swink, an
authorized agent of West Coast, submitted a letter [Exhibit F] to BBL Florida in
which Mr Swink cited to and directly relied upon representations contained in
Firestone’s 2004 wind code approval guide. Mr. Swink relied upon these
representations to assure BBL Florida that the chosen roofing system would exceed
the applicable wind resistance requirements.” Second Amended Complaint at 13 ¶
29. The complaint further alleges that “on August 8, 2005, Mark Minteer, an
authorized agent of Firestone, submitted a letter [Exhibit G] to Scott Swink, in
which Mr. Minteer urged Mr. Swink to utilize the specific system eventually
installed on the Riva project....” Id. These averments identify the statements
alleged to be false with specificity.
Moreover, the Second Amended Complaint offers more than mere conjecture
about whether the above-cited statements were in fact false or fraudulent. Plaintiff
alleges that its client, the owner of the Riva project, conducted independent tests of
the Riva roof’s uplift capacity and the roof failed by “huge margins.” Second
Amended Complaint at 13 ¶ 30. Accepting that averment as true, a fair inference is
that defendant’s representations regarding the wind uplift capability of the Riva
roof were false, because the roof could not withstand the uplift pressures that
defendant claimed they could. While plaintiff provides only conclusory allegations
that defendant made those statements knowing they were false – less culpable
13
explanations are certainly possible – Rule 9(b) permits states of mind, including
knowledge, to be pled generally. Fed. R. Civ. P. 9(b). For these reasons, plaintiff’s
Second Amended Complaint states a claim for common law fraud against Firestone
for Firestone’s representations concerning the wind uplift capacity of the Riva roof,
and the District Court therefore erred when it dismissed all of plaintiff’s fraud
claims with prejudice.
While we agree with plaintiff that it has alleged common law fraud claims
against Firestone with respect to the Riva project, we reach a contrary conclusion
with respect to its RICO claim against Firestone. First, we note our agreement with
the District Court that Count 10 fails to allege mail and wire fraud with the
particularity required by Rule 9. Here, as with the other counts, with the exception
of the Riva project, the Second Amended Complaint does not sufficiently identify
the defendants’ misrepresentations, plaintiff’s reliance, or the consequences
thereof.5 Second, while count 10 incorporates by reference, inter alia, the
allegations we have quoted above in discussing the common law fraud claims
5
Count 10 itself alleges only two predicate offenses: (1) that defendants “published . . . at
least two documents, including product specification sheets, product approval guides, and
information sheets, that were subsequently distributed to [plaintiff] through the United States
interstate mail service,” Second Amended Complaint at 25 ¶ 99.A; and (2) that defendants’ made
ongoing fraudulent representations in the above-described internet documents, which “were
subsequently accessed by or sent to Plaintiffs, through the worldwide internet...” Second
Amended Complaint at 25-26 ¶ 99.B. The former is not further explained – the complaint does
not identify the two documents or describe their relevance – and is far too general to satisfy Rule
9(b). The latter fails to satisfy rule 9(b), for the reasons set forth above.
14
regarding the Riva project, those allegations do not appear to be a part of the wire
and mail fraud averments relied upon in Count 10. Moreover, those allegations
regarding representations during “the bidding and submittal phases” of a single
construction project to induce purchase of a single roofing system clearly do not
constitute the required pattern of criminal conduct of a continuing nature. Jackson
v. BellSouth Telecommunications, 372 F.3d 1250, 1264 (11th Cir. 2004)(to state a
RICO claim the alleged predicate acts must constitute “criminal conduct of a
continuing nature”) (emphasis in original).
Finally, we conclude that the District Court properly dismissed with
prejudice Count 8, which alleges violations of the unfair trade practices acts of
every State other than Florida. Because we have found that plaintiff’s fraud-based
claims adequately plead common law fraud only in connection with the Riva
project, a Florida project, those claims can not reasonably be read to state a claim
for violations of the unfair trade practices acts of States other than Florida.
2. Johns Manville
The Second Amended Complaint identifies only one specific “example” of
an allegedly false representation by Johns Manville: “[f]rom at least 1998 to
present, Defendant Johns Manville has continuously published, on the internet, FM
Approval Guides and FM Wind Uplift Summaries used and relied upon by West
Coast and the Class, which falsely state that its perlite product can achieve a
15
specific code-compliant wind uplift resistance...” Second Amended Complaint at 9
¶ 24.A. Plaintiff attached Exhibit C as an example of these allegedly false approval
guides and uplift summaries. However, Exhibit C contains several pages of wind
uplift information, and the Second Amended Complaint fails to identify which
particular representations therein were false; nor does it allege that plaintiff relied
on these statements to its detriment. That pleading’s remaining allegations against
Johns Manville are far too general to state a claim for a long term course of
fraudulent conduct under Rule 9(b).
Plaintiff also contends that Johns Manville defrauded it in the course of the
Riva project. The Second Amended Complaint avers that the roof Firestone
provided for the Riva project utilized Johns Manville’s tapered perlite, and it avers
that the Riva roof failed wind uplift tests by “huge margins” because “the tapered
perlite insulation literally tore apart, causing the roof systems to separate from the
buildings.” Second Amended Complaint at 13 ¶ 30. It does not, however, identify
any specific false statements by Johns Manville regarding the Riva roof. Further,
defendant does not allege that it ever relied on any representation by Johns
Manville when bidding on the Riva roof. In fact, the complaint expressly avers
that plaintiff relied on Firestone’s representations, rather than those of Johns
Manville, when bidding on the roof for the Riva project. Second Amended
16
Complaint at 12 ¶ 29.6 For these reasons, the District Court properly dismissed all
fraud-based claims against defendant Johns Manville for failure to state a claim.
3. GAF
Finally, the Second Amended Complaint alleges generally that defendant
GAF engaged in a long term course of fraud. Exhibits A and B, discussed above,
include “[p]roduct approval guides and/or uplift testing information sheets” and
“Notices of Acceptance,” which allegedly are “examples” of GAF’s fraudulent
statements. As with Firestone and Johns Manville, however, the Second Amended
Complaint fails to identify which particular statements within those lengthy
internet documents were false. Plaintiff includes only one further “example” of an
allegedly false representation by GAF – Exhibit E, which the Second Amended
Complaint describes as follows:
GAF[] submitted a facsimile to West Coast containing excerpts from
a GAF Factory Mutual Research Approval Guide . . . . This Approval
Guide represented that the GAF roofing systems complied with
specific FM testing protocols. West Coast relied upon the
representations contained in this document when it chose to purchase
GAF roofing systems for projects that took place in 2001 and
thereafter.
Second Amended Complaint at 11 ¶ 24. Again, the Second Amended Complaint
6
Similarly, the complaint avers more generally that “West Coast and the Class must and
do rely on specific factual representations by Firestone and GAF regrading the ability of their
roofing systems to achieve specific code-compliant levels of wind resistance.” Second Amended
Complaint at 7 ¶ 23 (emphasis added).
17
fails to identify which of the many “testing protocols” listed in Exhibit E were
false. Further, it does not allege that GAF had any involvement in the Riva project,
and it neither identifies with particularity any instances in which GAF’s roofs
failed to live up to their claimed uplift capacities nor offers any reason to believe
that they will not in the future. Therefore, the District Court properly dismissed all
fraud-based claims against GAF.
For these reasons, we hold that plaintiff’s Second Amended Complaint
adequately pleads a common law fraud against defendant Firestone for Firestone’s
representations to plaintiff regarding the wind uplift capacity of the Riva roof.
However, we conclude that that pleading fails to plead with particularity that
Firestone undertook a continuous course of fraudulent conduct extending beyond
the Riva project or that Firestone’s conduct with respect to that project states a
RICO claim. Finally, we conclude that the District Court properly dismissed all
fraud-based claims against defendants GAF and Johns Manville, including
plaintiff’s RICO claim.
B. Dismissal with Prejudice
Plaintiff contends that the Court erred when it dismissed the fraud based
claims of plaintiff’s Second Amended Complaint with prejudice, denying plaintiff
another opportunity to amend its pleading. Plaintiff first amended its pleading
voluntarily, and plaintiff again amended its complaint following the District
18
Court’s ruling on defendants’ motions to dismiss the First Amended Complaint.
Plaintiff now contends that, in its Second Amended Complaint, it made a good
faith effort to comply with the District Court’s directions by adding considerable
detail to its most recent pleading. It emphasizes that dismissal with prejudice is a
“severe sanction, its imposition is justified when a party chooses to disregard the
sound and proper directions of the District Court.” Plaintiff’s Br. at 36 (quoting
Friedlander, 755 F.2d at 813).
Plaintiff, however, failed to request leave to amend its complaint from the
District Court. We have held that, “[a] district court is not required to grant a
plaintiff leave to amend his complaint sua sponte when the plaintiff, who is
represented by counsel, never filed a motion to amend nor requested leave to
amend before the District Court.” Wagner v. Daewoo Heavy Industries America
Corp., 314 F.3d 541, 542 (11th Cir. 2002) (en banc). Plaintiff responds to Wagner
only by citing pre-Wagner cases and cases of other Courts of Appeals which have
adopted a rule different than ours. We find no reason to depart from our holding in
Wagner in this case, and we hold that the District Court did not abuse its discretion
when it failed to grant plaintiff another opportunity to amend its fraud-based
claims.7
7
The District Court’s consideration of the motions to dismiss the state law fraud based
counts came at a time when it still had the RICO claim before it and having resolved the merits
of those motions, it was of course, entitled to simultaneously dismiss with prejudice both to the
state fraud and RICO claims.
19
C. Jurisdiction of the Florida Building Code claims
Finally, we must address plaintiff’s two remaining counts: Counts 6 and 9,
which allege violations of the Florida Building Code, and conspiracy to violate the
Florida Building Code (jointly, “Building Code claims”). The District Court
denied defendants’ motions to dismiss the Building Code claims for failure to state
a claim, but it ruled that plaintiff had failed to establish the requirements for
diversity jurisdiction and that, having decided to dismiss plaintiff’s only federal
claim, it would not further exercise its supplemental jurisdiction over those claims.
Therefore, the Court declined to exercise jurisdiction over those claims but allowed
plaintiff to re-file them in State court.
Plaintiff argues that the District Court erred when it found that the Second
Amended Complaint fails to qualify for diversity jurisdiction. Defendants GAF
and Johns Manville cross appeal the District Court’s ruling that plaintiff adequately
pled a violation of the Florida Building Code, arguing that the District Court
should have dismissed the two counts with prejudice for failure to state a claim.
As we have explained, we conclude that the District Court properly
dismissed plaintiff’s only federal claims against Johns Manville, Firestone and
GAF. We further conclude that, having done so, it acted within its discretion in
deciding not to exercise jurisdiction over the Florida Building Code claims against
these defendants.
20
First, we agree that the Second Amended Complaint fails to allege facts
supporting diversity jurisdiction over these claims. As plaintiff acknowledges, it
does not allege diversity of citizenship between itself and these defendants, relying
instead on the class action allegations of the Second Amended Complaint and 28
U.S.C. § 1332(d), which confers diversity jurisdiction in a class action when a
member of the class has citizenship diverse from that of defendant and the amount
in controversy exceeds $5,000,000. The problem with this jurisdictional theory is
that the Second Amended Complaint, which defines a national class, cannot
reasonably be read as alleging a class claim based on Florida’s Building Code.
While Count VI purports to state a claim on behalf of the class, its allegations are
in irreconcilable conflict with the class action allegations of the Second Amended
Complaint.8
It follows that the only possible basis for jurisdiction to entertain the Florida
Building Code claims is supplemental federal jurisdiction. Having dismissed all of
the federal claims, it was well within the discretion of the District Court to decline
further to exercise supplemental jurisdiction over those claims and to dismiss them
without prejudice.
8
The Second Amended Complaint alleges claims on behalf of a putative class believed to
include in excess of 1,000 members “throughout the United States.” Second Amended
Complaint at 4 ¶¶ 11-12, which has suffered damages in excess of $5,000,000. Id. at 2 ¶ 1. A
substantial but indeterminable portion of this class obviously has no claim under Florida’s
Building Code. Similarly, the amount in controversy between Florida roofers and the defendants
is indeterminable from the Second Amended Complaint.
21
IV. Conclusion
As we have explained, the District Court dismissed the fraud based claims
against Johns Manville and GAF in Counts 1 through 5 and 7 through 10 with
prejudice and the Florida Building Code claims in counts 6 and 9 without
prejudice. We will affirm its disposition of all of these claims, thus terminating
these proceedings with respect to those parties. We will also affirm the dismissal
of Count 10's RICO claim and count 8's claims of violations of non-Florida unfair
trade practices acts against Firestone with prejudice, and its dismissal of the Florida
Building Code claims of counts 6 and 9 without prejudice. We will vacate and
remand the District Court’s judgment in Firestone’s favor with respect to Counts 1
through 5 and 7, and count 9 to the extent it may be predicated on those counts, for
further proceedings limited to the allegations regarding the Riva project. Those
proceedings may include consideration by the District Court of whether it should
decline to exercise its supplemental jurisdiction over those counts given the
absence of any federal claim in the proceeding that will be before it. If it should
choose that course, as may be suggested by its disposition of the Florida Building
Code claims, its dismissal of the Riva project fraud claims should be without
prejudice.
AFFIRMED in PART; VACATED and REMANDED in PART.
22
