MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS AND FOR A MORE DEFINITE STATEMENT

DAVID NUFFER, District Judge.

Defendants assert seven counterclaims against Plaintiff's grounded in federal and state securities fraud; breach of contract; unjust enrichment; common law fraud; breach of fiduciary duty; and negligent misrepresentation.1 Plaintiff's seek dismissal of each counterclaim for failure to state a claim,2 and request a more definite statement on any counterclaim that survives dismissal.3

Because Defendants' Counterclaim asserts factual allegations and causes of action that are without distinction as to their applicability to each Defendant and each Plaintiff, the Counterclaim is unintelligible. A more definite statement is necessary to allow Plaintiff's to reasonably prepare a response, and to allow proper consideration of whether the allegations are sufficient to state plausible claims for relief. Therefore, Plaintiffs' Motion4 is GRANTED in part and DENIED without prejudice in part.

DISCUSSION

Dismissal is appropriate under Fed. R. Civ. P. 12(b)(6) when a defendant's counterclaim, standing alone, is legally insufficient to state a claim on which relief may be granted.5 When considering a motion to dismiss for failure to state a claim, the thrust of all well-pleaded facts is presumed, but conclusory allegations need not be considered.6 "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."7 And legal conclusions and opinions will not be accepted, even if couched as facts.8 Therefore, "[t]o survive a motion to dismiss, a [counterclaim] must contain sufficient factual matter, accepted as true, to `state a claim for relief that is plausible on its face.'"9 That is, the defendant must "plead[] factual content that allows the court to draw the reasonable inference that the [plaintiff] is liable for the misconduct alleged."10

When a counterclaim generally sets out a cognizable claim for relief, but the allegations are "so vague or ambiguous that the [plaintiff] cannot reasonably prepare a response[,]"11 a more definite statement may be required under Fed. R. Civ. P. 12(e). This rule "is designed to correct pleadings that are unintelligible rather than pleadings that lack detail."12

Defendants' Counterclaim asserts seven causes of action against Plaintiff's.13 These causes of action arise from a transaction involving four contracts which resulted in a publicly traded "shell" company being merged with a mining company, thereby allowing the mining company to be publicly traded.14 The Counterclaim includes factual allegations regarding the transaction, the contracts, and the alleged misconduct.15 But many of these allegations lump together all Defendants, Plaintiff's, and contracts without regard to the allegations' applicability to each Defendant and each Plaintiff.16 The allegations set a general framework for Defendants' causes of action which could be sufficient to state plausible claims for relief in a straightforward case involving a single defendant, a single plaintiff, and a single contract. But in this factually complex case—involving three defendants, three plaintiff's, and four contracts—the allegations are vague and ambiguous.

The vague and ambiguous nature of the Counterclaim's allegations is particularly apparent when each of the causes of action is examined. For example, the Counterclaim asserts a single cause of action for breach of contract which is brought by all Defendants against all Plaintiff's and relates to all four contracts.17 Plaintiff's cannot reasonably prepare a response to such a claim. Not all Defendants were party to each contract; nor were all Plaintiff's party to each contract.18 Indeed, Plaintiff's Michael Ahlin and Trent D'Ambrosio are not named parties to any of the contracts.19 The applicable state law may also vary among the four contracts—the Asset Purchase Agreement and the Foxcroft Agreement state that Utah law governs,20 but the Debt Exchange Agreement and the Danzig Agreement are silent as to a governing state law. For Plaintiff's to reasonably prepare a response, Defendants must assert a separate breach of contract claim for each contract. At a minimum, these claims would have to identify the applicable contract; the Defendant(s) asserting the claim; the Plaintiff(s) against whom the claim is asserted; the act(s) of each specified Plaintiff that constitutes a breach of the contract; and the damages each specified Defendant suffered as a result of the breach.21

Defendants must also take similar measures for each of the other six causes of action asserted in their Counterclaim. These causes of action and the allegations supporting them are pleaded without distinction as to their applicability to each Defendant and each Plaintiff.22 But to permit Plaintiff's to reasonably prepare a response, distinction is necessary. The factual circumstances of this case demand that Defendants not assert generalized allegations that "Defendants" were harmed by the misconduct of "Plaintiff's." Rather, the allegations must specify the misconduct of each Plaintiff and how that misconduct harmed each Defendant. Discrete causes of action are necessary. And the factual allegations must be sufficient to show that a plausible claim for relief is being brought by each applicable Defendant against each applicable Plaintiff.

Moreover, Defendants' causes of action for federal and state securities fraud, common law fraud, and negligent misrepresentation must be pleaded with particularity.23 That is, the allegations must specifying the content of each statement alleged to have been false or misleading; who made the statement and to whom; when and where the statement was made; the reasons why the statement was false or misleading; how the statement was relied upon; and the consequences of such reliance.24 And for federal securities fraud, if a particular state of mind is required for the claim, the allegations must give rise to a strong inference that the party acted with that state of mind.25

Defendants' attempt to clarify their Counterclaim in responding to Plaintiffs' Motion does not rectify the vague and ambiguous nature of their allegations and causes of action. Defendants state:

In its current form, Defendants' Counterclaim is unintelligible due to the vague and ambiguous grouping of Defendants and Plaintiff's in its allegations and causes of action. Plaintiff's cannot reasonably prepare a response, and proper consideration of whether plausible claims for relief have been stated against each Plaintiff is impeded. Therefore, a more definite statement is necessary.

Additionally, while Plaintiff's raise a viable statute of limitations defense to Defendants' securities fraud and common law fraud counterclaims,29 Defendants have not had the opportunity to allege facts to support their argument for equitable estoppel of that defense.30 Therefore, fairness dictates that Defendants be permitted that opportunity through amendment of their Counterclaim.31

ORDER

IT IS HEREBY ORDERED that Plaintiffs' Motion32 is GRANTED as to its request for a more definite statement, but DENIED without prejudice as to its request for dismissal of Defendants' counterclaims. By no later than December 14, 2018, Defendants shall file an amended counterclaim which is consistent with this Memorandum Decision and Order.