JOHN A. GIBNEY, JR., District Judge.
This matter is before the Court on the defendants' motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). The plaintiff's complaint (the "Complaint") alleges six counts: (1) Breach of Implied Contract, (2) Veterinary Malpractice, (3) Negligent Misrepresentation, (4) violation of the Virginia Consumer Protection Act ("VCPA"), (5) Breach of Bailment Duty, and (6) Constructive Fraud. The plaintiff also requests statutory attorneys' fees under Va. Code § 59.1-204(B), as well as punitive damages.
In the instant motions, the defendants move to dismiss the plaintiff's claims for negligent misrepresentation, violation of the VCPA, constructive fraud, attorneys' fees, and punitive damages. They are now ripe for review. The Court finds that the facts and legal contentions are adequately presented in the materials before the Court, and oral argument would not aid in the decisional process. As shown below, the plaintiff's claim under the VCPA will be dismissed because the transactions at hand are not consumer transactions. Consequently, the plaintiff's request for statutory attorneys' fees must also be dismissed. The constructive fraud claim will be dismissed for failure to state sufficient
This case arises out of the alleged breach of an agreement to collect, store, and preserve 550 straws of semen ("samples") from two champion, prize-winning Labrador Retrievers: Grady and Louie.
In June of 2008, Baker contacted the defendants — Dr. Carlton N. Elam and his business, the Elam Animal Hospital and Reproductive Center ("EAH") — regarding the possibility of collecting, freezing, and storing semen from Grady for breeding purposes. Baker and the defendants contracted to collect, freeze, and store semen from both Labradors.
Ultimately, the plaintiff claims that the straws were ruined due to a mechanical failure at the defendants' lab on or about April 11, 2011. (Compl. ¶ 2.) The defendants apparently failed to report the loss to Baker for many months. Baker claims that prior to reporting the loss the "Defendants attempted to conceal the loss by encouraging Baker to transport Grady for extraction of additional straws because the original samples were `bad,' e.g., the semen was not potent enough for breeding." (Id. ¶ 3.) Only when Baker ordered Elam to make further shipments to breeders did Elam confess that the vast majority had been destroyed due to his neglect. (Id. ¶ 4.)
In his Complaint, Baker alleges that "Elam, EAH and their agents utilized methods not used by reasonably prudent veterinarians to freeze dog semen for breeding purposes."
The plaintiff alleges in Count IV that the defendants willfully concealed their negligent destruction of the samples with the intent to deceive, in violation of the VCPA, Va. Code § 59.1-200, et seq. The Court finds, however, that the plaintiff is ineligible for relief under the VCPA because the transaction at issue was not a "consumer transaction" as defined by the statute.
The Virginia General Assembly intended that the VCPA "be applied as remedial legislation to promote fair and ethical standards of dealings between suppliers and the consuming public." Va. Code § 59.1-197 (emphasis added). As such, only consumer transactions qualify for coverage under the VCPA. Va. Code § 59.1-200. A "consumer transaction" is defined as:
Va. Code § 59.1-198. Here, the transaction at issue does not qualify under any subsection of Va. Code § 59.1-198, therefore, a claim for relief under the VCPA is not cognizable.
According to the Complaint, the "Plaintiff intended to sell 100% of both dog's semen for breeding, as he is not a breeder and Grady is in high demand as a sire." (Compl. ¶ 17.)
Except possibly a dog, no one would create 550 samples of canine semen for "personal enjoyment." It is apparent that the plaintiff was going to sell the samples. The sale of 550 straws of dog semen is clearly not a consumer transaction, nor is its use within the intended scope of the Act. See Va. Code § 59.1-197. Essentially, Baker cannot be considered a member of the consuming public as he is a supplier.
Consequently, Baker's claim for statutory attorneys' fees under the VCPA must also be dismissed. Under the "American Rule," when not tied to a statute or contractual provision, attorneys' fees are not recoverable. See Parkman v. Elam, No. 3:08-cv-690, 2009 WL 736067 at *3, 2009 U.S. Dist. LEXIS 21578 at *11 (E.D.Va. Mar. 17, 2009). As the Virginia Supreme Court has stated: "Generally absent a specific contractual or statutory
The Court finds that the plaintiff's constructive fraud claim must also be dismissed for failure to allege sufficient facts to state a plausible claim.
"[T]he elements of a cause of action for constructive fraud are a showing by clear and convincing evidence that a false representation of a material fact was made innocently or negligently, and the injured party was damaged as a result of his reliance upon the misrepresentation." See Parkman v. Elam, 2009 WL 736067, at *3, 2009 U.S. Dist. LEXIS 21578, at *7; Mortarino v. Consultant Eng'g Servs., 251 Va. 289, 295, 467 S.E.2d 778 (1996) (citing Evaluation Research Corp. v. Alequin, 247 Va. 143, 148, 439 S.E.2d 387 (1994) (citations omitted)). "A finding of ... constructive fraud requires clear and convincing evidence that one has represented as true what is really false, in such a way as to induce a reasonable person to believe it, with the intent that the person will act upon this representation." See id.; Mortarino 251 Va. at 295, 467 S.E.2d 778 (quoting Alequin, 247 Va. at 148, 439 S.E.2d 387).
The plaintiff has failed to satisfy the pleading requirements of Federal Rule of Civil Procedure 9(b). When alleging a constructive fraud claim, the plaintiff must "plead, with the requisite degree of particularity, facts which support all the elements of a cause of action for constructive fraud." Mortarino, 251 Va. at 295, 467 S.E.2d 778. Rule 9(b) requires a party to "state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b) (emphasis added). The "`circumstances' required to be pled with particularity under Rule 9(b) are `the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.'" Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir.1999) (citing 5 Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure: Civil § 1297, at 590 (2d ed. 1990) (citations omitted)). "`Mere allegations of `fraud by hindsight' will not satisfy the requirements of Rule 9(b).'" Id. (citing Hillson Partners Ltd. Partnership v. Adage, Inc., 42 F.3d 204, 209 (4th Cir.1994)).
In this case, Baker has simply pled bare contentions that do not meet Rule 9(b)'s requirements. For instance, the Complaint fails to adequately state the times and places that the alleged misrepresentations took place. See id. Baker claims Elam admitted that 320 of the plaintiff's straws were lost or destroyed. (Compl. ¶ 2). Yet, he provides no time, place, or any specifics as to this supposed admission, which in any event is not fraudulent. The crux of the plaintiff's constructive fraud claim is that the defendants' concealed their destruction of the samples and that he relied on the misrepresentation to his detriment. Without particular details as to the dates and substance of the misrepresentations, this Court is bound to dismiss the plaintiff's claim for failure to satisfy the pleading requirements of Fed. R.Civ.P. 9(b). The Complaint's bald assertions are the type intended to be guarded against by the heightened pleading standard.
Furthermore, the Court must dismiss the plaintiff's negligent misrepresentation claim in Count III. "[T]he essence of constructive fraud is negligent misrepresentation." Richmond Metropolitan Auth. v. McDevitt Street Bovis, Inc., 256 Va. 553, 559, 507 S.E.2d 344 (1998). Virginia courts, therefore, do not recognize negligent misrepresentation as a separate cause of action from that of constructive fraud. Haigh v. Matsushita Elec. Corp., 676 F.Supp. 1332, 1349-50 (E.D.Va.1987); Bentley v. Legent Corp., 849 F.Supp. 429, 434 (E.D.Va.1994). As the plaintiff's constructive fraud claim must be dismissed for failure to allege a plausible claim, the negligent misrepresentation claim in Count III shall also be dismissed.
To successfully plead punitive damages, the plaintiff must demonstrate "the most egregious conduct." See Bowers v. Westvaco Corp., 244 Va. 139, 150, 419 S.E.2d 661 (1992) (citing Owens-Corning Fiberglas Corp. v. Watson, 243 Va. 128, 144, 413 S.E.2d 630 (1992)). Punitive damages are recoverable "only where there is misconduct or malice, or such recklessness or negligence as evinces a conscious disregard of the rights of others." Baker v. Marcus, 201 Va. 905, 909, 114 S.E.2d 617 (Va.1960). To survive a motion to dismiss, a complaint must contain a sufficient factual matter which, accepted as true, "state[s] a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). If the facts alleged in the Complaint are true, Baker has stated a plausible claim for reckless activity in this case. Dismissal would be improper at this time. The question of punitive damages will survive the defendants' motions because it should be reserved for summary judgment.
For these reasons, the Court will grant the defendants' motions to dismiss with respect to Counts III, IV, and VI, as well as the plaintiffs' claims for attorneys' fees under the VCPA. The Court denies the motions for dismissal of Baker's claim for punitive damages, as it is properly reserved for summary judgment.
An appropriate order shall issue.
Let the Clerk send a copy of this Memorandum Opinion to all counsel of record.