Sheppard v. Liberty Mutual Insurance Company et al, No. 2:2016cv02401 - Document 143 (E.D. La. 2016)

Court Description: ORDER & REASONS granting 12 Motion to Dismiss for Failure to State a Claim. Party Mosaic Global Holdings, Inc. dismissed. This dismissal is WITHOUT PREJUDICE and with leave to file an amended complaint within twenty-one days of this order. Signed by Judge Sarah S. Vance on 11/17/2016. (mmm)

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Sheppard v. Liberty Mutual Insurance Company et al Doc. 143 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA J ESSE FRANK SHEPPARD VERSUS CIVIL ACTION NO. 16-240 1 LIBERTY MUTUAL INSURANCE COMPANY, ET AL. SECTION “R” (3) ORD ER AN D REASON S Mosaic Global Holdings Inc. m oves to dism iss Plaintiff J esse Frank Sheppard’s fraud claim s under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Because the Court finds that Sheppard has failed to individually plead what Mosaic gained by allegedly withholding inform ation from Sheppard, Mosaic’s m otion is granted. I. BACKGROU N D This suit was originally filed in the Civil District Court for the Parish of Orleans. 1 Defendant Mosaic Global Holdings Inc. rem oved the action to this Court on March 22, 20 16. 2 In his complaint, Sheppard alleges that he was exposed to asbestos “[o]n a daily basis” as an em ployee of Mosaic’s 1 2 R. Doc. 1 at 1. Id. Dockets.Justia.com predecessor com pany, Freeport Sulphur Com pany. 3 This exposure allegedly caused Sheppard to develop asbestos-related cancer, lung cancer, and/ or m esotheliom a. 4 Although Sheppard stopped working for Freeport in the early- to m id-1990 s, 5 Sheppard’s asbestos-related ailm ents were first diagnosed in October 20 15. 6 In addition to Freeport/ Mosaic, Sheppard sues several defendants involved in the m anufacture, 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 claim s and withheld inform ation from Sheppard about the danger of asbestos. 8 Sheppard brings claim s for “negligence, intentional tort, fraud, and strict liability,” and alleges that all defendants are “jointly, severally, and in 3 R. Doc. 1-1 at 5. Id. at 6. 5 Sheppard’s com plaint is inconsistent on this point. Sheppard alleges variously that his tenure at Freeport, and exposure to asbestos, ran from “approximately 1967 through 1992,” from “approxim ately 1967 through 1994,” and “from 1967 through 1976.” R. Doc. 1-1 at 5, 6. 6 R. Doc. 1-1 at 6. 7 Id. at 6, 7. 8 Id. at 3, 4, 8. 2 4 solidio liable.”9 He seeks damages for, am ong other things, physical and m ental pain, loss of life, loss of income, and m edical expenses. 10 Mosaic now m oves to dism iss Sheppard’s fraud claim s for failure to state a claim under the heightened pleading standards of Federal Rule of Civil Procedure 9(b). 11 II. LEGAL STAN D ARD To survive a Rule 12(b)(6) m otion to dism iss, plaintiffs m ust plead enough facts “to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Bell Atlantic Corp. v. Tw om bly , 550 U.S. 544, 547 (20 0 7)). 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 m isconduct alleged.” Iqbal, 556 U.S. at 678. A court m ust accept all well-pleaded facts as true and m ust draw all reasonable inferences in favor of the plaintiff. Lorm and v. U.S. Unw ired, Inc., 565 F.3d 228, 232-33 (5th Cir. 20 0 9); 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. 9 10 11 Id. at 29. Id. R. Doc. 12. 3 Generally, a court ruling on a m otion to dism iss m ay rely on only the com plaint and its proper attachments. Fin. Acquisition Partners LP v. Blackw ell, 440 F.3d 278, 286 (5th Cir. 20 0 6). A court is perm itted, however, to rely on “docum ents incorporated into the com plaint by reference, and m atters of which a court m ay take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 30 8, 322 (20 0 7). The court m ay not consider new factual allegations m ade outside the com plaint. See Fin. Acquisition Partners, LP, 440 F.3d at 289. Federal Rule of Civil Procedure 9(b) im poses a heightened pleading requirement for fraud claim s. The purpose of Rule 9(b) is to “ensur[e] the com plaint ‘provides defendants with fair notice of the plaintiffs’ claim s, protects defendants from harm to their reputation and goodwill, reduces the num ber 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. 20 0 9) (quoting Melder v. Morris, 27 F.3d 10 97, 110 0 (5th Cir. 1994)). Under Rule 9(b), a party alleging fraud or m istake “m ust state with particularity the circumstances constituting fraud or m istake.” Fed. R. Civ. P. 9(b). The required conditions of a person’s m ind, however, m ay be alleged generally. Id. The Fifth Circuit “interprets Rule 9(b) strictly, requiring the plaintiff to specify the statements 4 contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statem ents were fraudulent.” Flaherty & Crum rine Preferred Incom e Fund, Inc. v. TXU Corp., 565 F.3d 20 0 , 20 7 (5th Cir. 20 0 9), cert. denied, 588 U.S. 873 (20 0 9). In other words, “Rule 9(b) requires ‘the who, what, when, where, and how’ to be laid out.” Benchm ark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 723 (5th Cir. 20 0 3) (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 “supplem ental to the Suprem e 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. 20 10 ) (citing Grubbs, 565 F.3d at 185) (quoting Tw om bly , 550 U.S. at 570 ). State-law fraud claim s, 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. 20 0 8). Louisiana law defines fraud as “a m isrepresentation or a suppression of the truth m ade 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 m ay also result from silence or inaction.” Id. The elem ents of a Louisiana fraud or intentional m isrepresentation claim are: 1) a m isrepresentation of a m aterial 5 fact; 2) m ade 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. 20 0 8), cert. denied, 555 U.S. 10 46 (20 0 8); see also Gonzalez v. Gonzalez, 20 So.3d 557, 563 (La. Ct. App. 20 0 9), w rit denied, 27 So.3d 30 5 (La. 20 10 ). In cases concerning “om ission of facts, Rule 9(b) typically requires the claim ant to plead the type of facts om itted, the place in which the om issions should have appeared, and the way in which the om itted facts m ade the m isrepresentations m isleading.” Carroll v. Fort St. Jam es Corp., 470 F.3d 1171, 1174 (5th Cir. 20 0 6). To state a claim for fraud by silence or inaction, plaintiffs also m ust show that the there was a duty to disclose the inform ation. Kadlec Medical Center, 527 F.3d at 418 (“To establish a claim for intentional m isrepresentation when it is by silence or inaction, plaintiffs also m ust show that the defendant owed a duty to the plaintiff to disclose the inform ation.”); see also Greene v. Gulf Coast Bank, 593 So.2d 630 , 632 (La. 1992) (“To find fraud from silence or suppression of the truth, there m ust exist a duty to speak or to disclose inform ation.”). 6 III. D ISCU SSION Courts in this district recognize that “[f]raud by silence . . . ‘is, by its very nature, difficult to plead with particularity.’” In re Ford Motor Co. Vehicle Paint Litig., No. 10 63, 1997 WL 539665, at *3 (E.D. La. Aug. 27, 1997) (quoting Chry sler Credit Corp. v. W hitney N at’l Bank, 824 F. Supp. 587, 598 (E.D.La. 1993)). This does not, however, excuse plaintiffs alleging such fraud from the requirem ents of Rule 9(b). Therefore, to plead a claim for fraudulent concealm ent, the plaintiff m ust specifically allege: “(1) the inform ation that was withheld, (2) the general tim e period during which the fraudulent conduct occurred, (3) the relationship giving rise to the duty to speak, and (4) what the person or entity engaged in the fraudulent conduct gained by withholding the inform ation.” First Am . Bankcard, Inc. v. Sm art Bus. Tech., Inc., No. 15-638, 20 16 WL 5869787, at *9 (E.D. La. Oct. 7, 20 16); see also Sarrat v. Univar U.S.A., Inc., No. 14-10 17, 20 14 WL 3588849, at *2 (E.D. La. J uly 18, 20 14) (applying test); In re Ford Motor Co. Vehicle Paint Litig., 1997 WL 539665, at *3 (same). Furtherm ore, “group pleading is imperm issible under Rule 9(b).” Boutain v. Radiator Specialty Co., No. 11-190 7, 20 11 WL 6130 754, at *2 (E.D. La. Dec. 8, 20 11); see also Quintero Cm ty . Ass’n Inc. v. F.D.I.C., 792 F.3d 10 0 2, 10 10 (8th Cir. 20 15) (“Appellants’ shotgun-style allegations of 7 wrongdoing by all the Director Defendants generally, in a group pleading fashion does not satisfy Rule 9(b).” (internal quotations and m odifications om itted). Claim s for fraudulent concealm ent will therefore be dism issed if any one of the four required elements is pled generally as to all defendants, rather than specifically as to a single defendant. See id. (com plaint alleging fraud m ay not group the defendants together; plaintiffs must plead “specific facts as to each defendant for each of the Rule 9(b) requirem ents.”); see also Lang v. DirecTV, 735 F.Supp.2d 421, 437 (E.D. La. 20 10 ) (“[A] complaint alleging fraud m ay not group the defendants together.”). Here, Sheppard has failed to plead what Freeport gained by withholding inform ation about the danger of asbestos. His com plaint therefore fails to m eet the fourth requirement for specifically alleging fraud under Rule 9(b). Sheppard’s allegations concerning defendants’ gains from withholding inform ation are contained in two nearly identical paragraphs. Sheppard alleges: The m isrepresentations and suppressions of the truth of occupational health hazards were m ade by all defendants with the intent of obtaining an unjust advantage over Mr. Sheppard and other em ployees who rem ained uninform ed and ignorant of the risks of contracting occupational lung diseases form their work environment. These m isrepresentations and suppressions were calculated to produce the effect of m isleading the em ployees so that they would not associate any lung disease with occupational exposure on the job. As a result of these m isrepresentations and suppressions, all defendants sought to 8 prevent or lim it occupational disease claim s by injured em ployees and claim s from fam ily mem bers who also contracted disease. 12 This allegation is plainly aim ed at “defendants” as a whole, rather than Mosaic or any other specific defendant. It therefore constitutes im perm issible group pleading under Rule 9(b). Although Sheppard has failed to m eet the requirements of Rule 9(b), this error “m ay reflect m ere pleading defect, rather than a m ore fundamental problem with his claim s.” Sartin v. EKF Diagnostics, Inc., No. 16-1816, 20 16 WL 3598297, at *4 (E.D. La. J uly 5, 20 16). Accordingly, the Court dism isses Sheppard’s claim without prejudice and with leave to am end within twentyone days of entry of this order. See id.; see also Fom an v. Davis, 371 U.S. 178, 182 (1962) (“If the underlying facts or circumstances relied upon by a plaintiff m ay be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the m erits.”). 12 R. Doc. 10 1 at 9; see also id. at 24-25 (m aking nearly identical allegations). 9 IV. CON CLU SION For the foregoing reasons, the Court GRANTS Mosaic’s m otion to dism iss Sheppard’s fraud claim against Mosaic for failure to state a claim . This dism issal is WITHOUT PREJ UDICE and with leave to file an amended com plaint within twenty-one days of this order. New Orleans, Louisiana, this _17th _ day of November, 20 16. ___ _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 10

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