Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

USC Enterprise, LLC v. Shah

United States District Court, E.D. Arkansas, Eastern Division

August 4, 2016

USC ENTERPRISE, LLC PLAINTIFF/ COUNTER-DEFENDANT
v.
SALAMAT SHAH; and ROOZIMAN SHAH DEFENDANTS/ COUNTERCLAIMANTS/ THIRD-PARTY PLAINTIFFS
v.
CHOUDHRY AHMED THIRD-PARTY DEFENDANT

          OPINION AND ORDER

          J. LEON HOLMES UNITED STATES DISTRICT JUDGE

         USC Enterprise, LLC brings this action against Salamat Shah and Rooziman Shah alleging claims for fraud[1] and breach of implied warranty. Salamat and Rooziman have filed a counterclaim against USC Enterprise for breach of contract and for a violation of Ark. Code Ann. § 4-60-103, and have filed a third-party complaint against Choudhry Ahmed-the sole member of USC Enterprise-for a violation of Ark. Code Ann. § 4-60-103. The dispute between the parties arose out of USC’s purchase of a convenience store and gas station business from Salamat and Rooziman. The complaint alleges that the defendants made several misrepresentations to Ahmed about the business and that the defendants sold goods to Ahmed that were not fit for ordinary use. The defendants allege in return that USC failed to pay the full, agreed-upon purchase price for the business. Salamat and Rooziman have filed a motion to dismiss USC’s claims pursuant to Federal Rule of Civil Procedure 12(b)(6), or in the alternative, a motion for summary judgment pursuant to Rule 56.[2]Document #17. In the same filing, Salamat and Rooziman moved for summary judgment pursuant to Rule 56 on their counterclaim and third-party complaint.

         For the following reasons, the motion to dismiss the claims for fraud and breach of implied warranty of merchantability is granted. Because the complaint is insufficient, the motion for summary judgment on these claims is denied as moot. Salamat and Rooziman also argue they are entitled to judgment as a matter of law on the counterclaim and third-party claim. Because USC and Ahmed have shown that there are genuine disputes of material fact as to whether there was a breach of contract and whether Salamat and Rooziman are entitled to relief under Ark. Code Ann. § 4-60-103, the motion is denied.

         The complaint does not provide many background facts. USC is an Arkansas limited liability company. Ahmed is its sole member, but his brother-Muhammed Zameer-helped him prepare the filing documents. Ahmed formed USC in order to operate the business at the core of this dispute. The business is located at 3300 North Washington Street in Forrest City, Arkansas. Ahmed learned that the business was for sale through an advertisement on the internet. USC purchased[3] the business from Salamat and Rooziman. The purchase included goodwill, all unexpired store inventory, and other assets. USC gave Salamat Shah a check for $50, 000, a check for $8, 120, $20, 000 cash, and earnest money in the amount of $5, 000. The bank returned the check for $8, 120, stating that it was unable to locate the account.

         I.

         To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Although detailed factual allegations are not required, the complaint must set forth “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). The court must accept as true all of the factual allegations contained in the complaint and must draw all reasonable inferences in favor of the nonmoving party. Gorog v. Best Buy Co., Inc., 760 F.3d 787, 792 (8th Cir. 2014). The complaint must contain more than labels, conclusions, or a formulaic recitation of the elements of a cause of action, which means that the court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555, 127 S.Ct. at 1965.

         A. Fraud.

         To state a cause of action for fraud, a plaintiff must allege (1) a false representation of material fact; (2) knowledge that the representation is false or that there is insufficient evidence upon which to make the representation; (3) intent to induce action or inaction in reliance on the representation; (4) justifiable reliance on the representation; and (5) damage suffered as a result of the reliance. Born v. Hosto & Buchan, PLLC, 2010 Ark. 292, 13, 372 S.W.3d 324, 333. In addition to meeting the pleading requirements of Rule 8(a), parties alleging fraud must comply with Rule 9(b). Under Rule 9(b), a party must “state with particularity the circumstances constituting fraud . . . .” The Eighth Circuit has interpreted Rule 9(b) to require plaintiffs to plead the who, what, when, where, and how of alleged fraudulent actions. Summerhill v. Terminix, Inc., 637 F.3d 877, 880 (8th Cir. 2011). “[T]he complaint must plead such facts as the time, place, and content of the defendant’s false representations, as well as the details of the defendant’s fraudulent acts, including when the acts occurred, who engaged in them, and what was obtained as a result.” United States ex rel. Joshi v. St. Luke’s Hosp., Inc., 441 F.3d 552, 556 (8th Cir. 2006).

         USC has failed to allege its fraud claim with sufficient particularity. First, the complaint ambiguously refers to the “Defendant(s)” and fails to identify who made the alleged misrepresentations of material fact. Document #2 at 3, 5 ¶¶12, 23. Though the complaint alleges that the “Defendant(s)” made several misrepresentations about various subjects, one cannot ascertain whether Salamat and Rooziman, Salamat, or Rooziman, made each misrepresentation. Id. This fact is required to satisfy Rule 9(b). Parnes v. Gateway 2000, Inc., 122 F.3d 539, 550 (8th Cir. 1997). Second, while the complaint alleges the general subject-matter of each misrepresentation, no facts are alleged as to the actual content of several misrepresentations. It is the content of those representations that either makes them true or false.

         For example, paragraph 12 alleges:

12. That on information and belief, [4] the false representations concerning the business included but are not limited to the following:
(a) the condition, quality and age of the gasoline inventory sold at the time of closing.
* * *
(c) the profits of the business, including but not limited to, the amount of sales, the number of gallons of gasoline sold and ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.