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Sheppard v. Liberty Mutual Insurance Co.

United States District Court, E.D. Louisiana

January 24, 2017

JESSE FRANK SHEPPARD
v.
LIBERTY MUTUAL INSURANCE COMPANY, ET AL.

         SECTION “R” (3)

          ORDER AND REASONS

          SARAH S. VANCE UNITED STATES DISTRICT JUDGE.

         Mosaic Global Holdings Inc. moves to dismiss Plaintiff Jesse Frank Sheppard's fraud claims under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Because the Court finds that Sheppard has failed to plead with adequate specificity what information was withheld, Mosaic's motion is granted.

         I. BACKGROUND

         This suit was originally filed in the Civil District Court for the Parish of Orleans.[1]Defendant Mosaic Global Holdings Inc. removed the action to this Court on March 22, 2016.[2] In his complaint, Sheppard alleges that he was exposed to asbestos “[o]n a daily basis” as an employee of Mosaic's predecessor company, Freeport Sulphur Company.[3]This exposure allegedly caused Sheppard to develop asbestos-related cancer, lung cancer, and/or mesothelioma.[4] Although Sheppard stopped working for Freeport in the early- to mid-1990s, [5] Sheppard's asbestos-related ailments were first diagnosed in October 2015.[6]

         In addition to Freeport/Mosaic, Sheppard sues several defendants involved in the manufacture, distribution, and sale of asbestos-containing products that Sheppard allegedly encountered in the course of his work.[7] Sheppard also brings claims against insurance companies that allegedly provided coverage to defendants for asbestos-related claims and withheld information from Sheppard about the danger of asbestos.[8]

         Sheppard brings claims for “negligence, intentional tort, fraud, and strict liability, ” and alleges that all defendants are “jointly, severally, and in solidio liable.”[9] He seeks damages for, among other things, physical and mental pain, loss of life, loss of income, and medical expenses.[10]

         On November 17, 2016, the Court granted Mosaic's first motion to dismiss Sheppard's fraud claim against Mosaic under the heightened pleading standards of Federal Rule of Civil Procedure 9(b).[11] In doing so, the Court found that Sheppard had failed to individually plead what Mosaic gained by allegedly withholding information from Sheppard.[12] In its order, the Court granted Sheppard leave to amend his claim.[13]

         On December 8, 2016, Sheppard moved to amend his complaint and reallege his fraud claim against Mosaic.[14] Mosaic now moves to dismiss Sheppard's amended fraud claim, and argues that Sheppard's allegations remain inadequate to state a claim under the heightened pleading standards of Federal Rule of Civil Procedure 9(b).[15]

         II. LEGAL STANDARD

         To survive a Rule 12(b)(6) motion to dismiss, plaintiffs must plead enough facts “to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547 (2007)). A claim is facially plausible when the plaintiff pleads facts that allow the court to “draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. A court must accept all well-pleaded facts as true and must draw all reasonable inferences in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232-33 (5th Cir. 2009); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). But the Court is not bound to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.

         Generally, a court ruling on a motion to dismiss may rely on only the complaint and its proper attachments. Fin. Acquisition Partners LP v. Blackwell, 440 F.3d 278, 286 (5th Cir. 2006). A court is permitted, however, to rely on “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). The court may not consider new factual allegations made outside the complaint. See Fin. Acquisition Partners, LP, 440 F.3d at 289.

         Federal Rule of Civil Procedure 9(b) imposes a heightened pleading requirement for fraud claims. The purpose of Rule 9(b) is to “ensur[e] the complaint ‘provides defendants with fair notice of the plaintiffs' claims, protects defendants from harm to their reputation and goodwill, reduces the number of strike suits, and prevents plaintiffs from filing baseless claims then attempting to discover unknown wrongs.'” United States ex. rel. Grubbs v. Kanneganti, 565 F.3d 180, 190 (5th Cir. 2009) (quoting Melder v. Morris, 27 F.3d 1097, 1100 (5th Cir. 1994)). Under Rule 9(b), a party alleging fraud or mistake “must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). The required conditions of a person's mind, however, may be alleged generally. Id. The Fifth Circuit “interprets Rule 9(b) strictly, requiring the plaintiff to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.” Flaherty & Crumrine Preferred Income Fund, Inc. v. TXU Corp., 565 F.3d 200, 207 (5th Cir. 2009), cert. denied, 588 U.S. 873 (2009). In other words, “Rule 9(b) requires ‘the who, what, when, where, and how' to be laid out.” Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 723 (5th Cir. 2003) (quoting Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 1134, 1139 (5th Cir. 1992)). The requirements of Rule 9(b) are “supplemental to the Supreme Court's recent interpretation of Rule 8(a) requiring enough facts [taken as true] to state a claim to relief that is plausible on its face.” Lentz v. Trinchard, 730 F.Supp.2d 567, 579 (E.D. La. 2010) (citing Grubbs, 565 F.3d at 185) (quoting Twombly, 550 U.S. at 570). State-law fraud claims, such as those alleged by plaintiff here, are subject to the pleading requirements of Federal Rule of Civil Procedure 9(b). Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir. 2008). Louisiana law defines fraud as “a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other.” La. Civ. Code art. 1953. “Fraud may also result from silence or inaction.” Id. The elements of a Louisiana fraud or intentional misrepresentation claim are: 1) a misrepresentation of a material fact; 2) made with intent to deceive; and 3) causing justifiable reliance with resultant injury. Kadlec Medical Center v. Lakeview Anesthesia Assoc., 527 F.3d 412, 418 (5th Cir. 2008), cert. denied, 555 U.S. 1046 (2008); see also Gonzalez v. Gonzalez, 20 So.3d 557, 563 (La. Ct. App. 2009), writ denied, 27 So.3d 305 (La. 2010).

         In cases concerning “omission of facts, Rule 9(b) typically requires the claimant to plead the type of facts omitted, the place in which the omissions should have appeared, and the way in which the omitted facts made the misrepresentations misleading.” Carroll v. Fort St. James Corp., 470 F.3d 1171, 1174 (5th Cir. 2006). To state a claim for fraud by silence or inaction, plaintiffs also must show that the there was a duty to disclose the information. Kadlec Medical Center, 527 F.3d at 418 (“To establish a claim for intentional misrepresentation when it is by silence or inaction, plaintiffs also must show that the defendant owed a duty to the plaintiff to disclose the information.”); see ...


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