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Bibb County School District v. Dallemand

United States District Court, M.D. Georgia, Macon Division

July 21, 2017

BIBB COUNTY SCHOOL DISTRICT, Plaintiff,
v.
ROMAIN DALLEMAND, et al., Defendants.

          ORDER

          MARC T. TREADWELL, JUDGE UNITED STATES DISTRICT COURT.

         Isaac Culver, III and Progressive Consulting Technologies Inc. (the “Progressive Defendants”) jointly move to dismiss Counts I, III, V, VIII, and XI of Plaintiff's Amended Complaint (Doc. 59) for failure to state a claim. Doc. 70. Alternatively, the Progressive Defendants move the Court to compel arbitration of their claims. The motion to dismiss is DENIED. The motion to compel arbitration remains under advisement.

         A. The Progressive Defendants have not shown that Counts I, III, and VIII are time-barred

         The Progressive Defendants argue that Counts I (federal RICO), III (fraud), and VIII (negligence) are barred by the applicable four-year statutes of limitation. Doc. 70-1 at 5-9. “[A] Rule 12(b)(6) dismissal on statute of limitations grounds is appropriate only if it is ‘apparent from the face of the complaint' that the claim is time-barred.” La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004).

         The parties' briefs focus on when the applicable statutes of limitations began to accrue, the Progressive Defendants contending that the accrual for all claims began no later than October 11, 2012 (two months outside of the limitations period), when Progressive submitted, and the Plaintiff paid, Progressive's first invoice for $500, 000. Doc. 70-1 at 7-9. Recognizing that the discovery rule is applicable to the RICO and fraud claims, the Progressive Defendants further argue that fellow-Defendant Dallemand's knowledge of a “potential RICO violation” and “the alleged fraud” can be imputed to the Plaintiff. See Id. at 8 (“Plaintiff clearly discovered the alleged fraud on September 24, 2012 at the very latest when the Superintendent of BCSD was presented with a Services Agreement that, according to Plaintiff, contained significantly higher rates.”); see also id. at 7-8 (relying on Dallemand's removal of Ron Collier as Chief Financial Officer and investigation of Collier's department as reason to discover “a potential RICO violation”). The Plaintiff's allegations place Dallemand squarely in the middle of the scheme; accordingly, any argument that the Plaintiff knew or should have known something simply because Dallemand knew it is, to be charitable, surprising.[1]Clearly, the Court cannot say as a matter of law that a fraudster's knowledge of his employer's injury can be imputed to his employer when the employer is the victim of the fraud.

         Moreover, as to the state-law claims, the Plaintiff has alleged acts of actual fraud involving moral turpitude by the Progressive Defendants that concealed the Plaintiff's injury well into the limitations period. Cf. Shipman v. Horizon Corp., 245 Ga. 808, 809, 267 S.E.2d 244, 246 (1980). (“[W]here the gravamen of the action is other than actual fraud, such as constructive fraud, negligence, breach of contract, etc., . . . separate independent actual fraud involving moral turpitude which debars and deters the plaintiff from bringing his action [will toll the statute of limitations] until the fraud is discovered or should have been discovered . . .”).[2] And, as to the federal RICO claim, whether the Plaintiff knew or should have known of the October 11, 2012 injury is also not dispositive. While recovery for the October 11, 2012 injury under RICO may be time-barred, the Plaintiff does not seek recovery for this injury, but rather the more substantial injuries (which are alleged as separate predicate acts), occurring later, within the limitations period. Cf. Lehman v. Lucom, 727 F.3d 1326, 1331 (11th Cir. 2013) (“[I]f a new RICO predicate act gives rise to a new and independent injury, the statute of limitations clock will start over for the damages caused by the new act.”).

         Because it is not “apparent from the face of the complaint” that Counts I, III, and VIII are time-barred, these claims may not be dismissed on statute of limitations grounds.

         B. Progressive's merger defense does not warrant dismissal of Counts III and V

         Progressive argues that Count V, Progressive's breach of contract-the September 24, 2012, “Services Agreement” and the representations in the previous, September 17, 2012, “Contract Administration Plan”-must be dismissed because the merger clause in the Services Agreement prevents consideration of the Contract Administration Plan.[3] But Progressive is not entitled to raise this defense because it failed to raise it in its motion to dismiss the Plaintiff's initial Complaint (Doc. 25).

         Under Federal Rule of Civil Procedure 12(g)(2), a defendant, subject to a few exceptions, may not raise a defense in a Rule 12 motion that was “available” to it, “but omitted from [an] earlier motion.” Count V of the Plaintiff's initial Complaint contained a breach of contract claim against Progressive that was, for all relevant purposes, identical to Count V of the Amended Complaint. The substance of the alleged contract, including the incorporation of the representations contained in the Contract Administration Plan, is the same, word-for-word, in the two complaints. Compare Doc. 1 ¶ 191 (“Defendant Progressive was bound by the Services Agreement and the representations contained in the Contract Administration Plan, which served as the basis for the award of the Services Agreement, in its role as Project Manager for BCSD's Technology Project.”) (emphasis added) with Doc. 59 ¶ 244 (same). The difference between the breach of contract claims alleged in the two complaints is that in the Amended Complaint the breach of contract claim is made in the alternative to the Plaintiff's separate claim, not made in the initial Complaint, that the Services Agreement is void for lack of authority.[4] See Docs. 1 ¶¶ 185-95; 59 ¶ 239. But the Plaintiff's contention that Progressive is bound by “the representations contained in the Contract Administration Plan, ” which is what arguably runs afoul of the merger clause in the Services Agreement, has not changed an iota. Accordingly, the merger defense to Count V was available to Progressive when it filed its previous motion; Progressive may not raise it now.[5]

         It appears, though this is not at all clear from their briefs, that the Progressive Defendants also raise merger as a bar to any of the Plaintiff's claims for fraud in Count III arising out of acts prior to the execution of the Services Agreement. See Doc. 70-1 at 11 (seeking dismissal of breach of contract claim alone); see also id. at 9 (referring to fraud in caption); Doc. 89 at 2 (making one, isolated reference to fraud). Again, this defense was available to the Progressive Defendants when they filed their first motion to dismiss, and they cannot raise it now. Moreover, the Progressive Defendants miss the import of the Plaintiff's lack-of-authority allegation. They somehow construe it as implicating the doctrine of fraudulent inducement and from there, rescission, in support of their merger defense to the Plaintiff's allegations of preformation fraud. Docs. 70-1 at 10; 89 at 2-4. But the allegation is that Dallemand had no authority to bind the Plaintiff and, accordingly, no contract was formed with Progressive regardless of any fraud by the Progressive Defendants.

         Ironically, when the Plaintiffs did not claim that the Services Agreement was void for lack of authority and the Plaintiff's breach of contract claim was not made in the alternative to this claim, the Defendants may have had a merger defense to any fraud preceding the execution of the Services Agreement. But the allegation that the Plaintiff never agreed to the Services Agreement, rather than making the merger defense “available, ” undermines its premise-Plaintiff being bound by the merger clause in the Services Agreement.

         In sum, to the extent that the Progressive Defendants assert a merger defense to Count III, the defense was available to them when they filed their previous motion, so Rule 12(g)(2) bars them from asserting it here. But, in any event, the merger defense does not warrant dismissal of Count III in light of the Plaintiff's allegation that the Services Agreement containing the merger clause is void for lack of authority.

         C. A claim for inducing and aiding breach of fiduciary duty is ...


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