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Rauhaus Freedenfeld & Associates, LLP v. Prince

Superior Court of Massachusetts, Suffolk, Business Litigation Session

June 14, 2017

Rauhaus Freedenfeld & Associates, LLP
v.
Todd Prince

          MEMORANDUM AND ORDER ON PLAINTIFFS' MOTION TO DISMISS COUNTERCLAIMS

          Kenneth W. Salinger, Justice.

         Rauhaus Freedenfeld & Associates, LLP is an architectural firm based in Boston, Massachusetts, that specializes in designing animal hospitals. It is suing Todd Prince for not paying Plaintiff in full for designing renovations for an animal hospital owned by Prince in Deerfield, Illinois. Prince asserts various counterclaims.

         Plaintiff has moved to dismiss four of the five counterclaims; it does not seek dismissal of the counterclaim for breach of contract (Count I). The Court will allow the motion in part and deny it in part. Specifically, it will dismiss the claim for negligent misrepresentation but otherwise deny the motion to dismiss.

         1. Fraud Claim

         Plaintiff argues that the counterclaim for fraud (Count II) is not pleaded with the particularity required by Mass.R.Civ.P. 9(b). Under this rule, a claimant must " at a minimum" support their claim for fraud by specifically alleging " the identity of the person(s) making the" allegedly fraudulent " representation, the contents of the misrepresentation, and where and when it took place, " and must also " specify the materiality of the misrepresentation, [his] reliance thereon, and resulting harm." Equipment & Systems for Industry, Inc. v. North Meadows Constr. Co., Inc., 59 Mass.App.Ct. 931, 931-32, 798 N.E.2d 571 (2003) (rescript).

         Prince has stated his fraud claim with sufficient particularity. The allegations in the counterclaim plausibly suggest that Plaintiff's agent made specific and false statements of fact to Prince at a meeting in September 2015. Plaintiff made specific and false promises in the parties' contract that Plaintiff never intended to perform, Plaintiff made these false statements and promises to induce Prince to sign the contract, Prince did so to his detriment, and as a result Prince was damaged in that he paid $126, 098.56 for draft drawings that he cannot use. These allegations state a claim for fraud. See Masingill v. EMC Corp., 449 Mass. 532, 540, 870 N.E.2d 81 (2007) (elements of fraud); McCarthy v. Brockton Natl. Bank, 314 Mass. 318, 325, 50 N.E.2d 196 (1943) (" A principal is liable for the fraud committed by his agent or servant acting within the scope of his employment"); Cumis Ins. Society v. BJ's Wholesale Club, Inc., 455 Mass. 458, 474, 918 N.E.2d 36 (2009) (fraud claim may be based on false promise if " the promisor had no intention to perform the promise at the time it was made") (quoting Yerid v. Mason, 341 Mass. 527, 530, 170 N.E.2d 718 (1960)).

         The Court reminds the parties, however, that an " intention not to perform a promise" cannot be inferred merely from later " nonperformance of the promise." Galotti v. United States Trust Co., 335 Mass. 496, 501, 140 N.E.2d 449 (1957); accord McCartin v. Westlake, 36 Mass.App.Ct. 221, 230 n.11, 630 N.E.2d 283 (1990), see also Backman v. Smirnov, 751 F.Supp.2d 304, 316 n.13 (D.Mass. 2010) (" Changing one's mind is not proof that an earlier statement was false") (Stearns, J.) (applying Massachusetts law).

         2. Chapter 93A Claim

         Plaintiffs' arguments for dismissing the counterclaim under G.L.c. 93A, § 11 (in Count III) are also without merit.

         The plausible allegations of intentional fraud suffice to state a claim that Plaintiff engaged in deceptive conduct that violates c. 93A. See, e.g., Brewster Wallcovering Co. v. Blue Mountain Wallcoverings, Inc., 68 Mass.App.Ct. 582, 605, 864 N.E.2d 518 (2007) (" the finding of intentional misrepresentation (or common-law fraud or deceit) . . . is sufficient foundation for a finding of a c. 93A violation in a business context"); The Community Builders, Inc. v. Indian Motorcycle Assocs., Inc., 44 Mass.App.Ct. 537, 557, 692 N.E.2d 964 (1998) (false promise with no intention to perform would violate c. 93A).

         And the allegation that Plaintiff is located in Boston, and presumably did most of its work for Prince in its own offices, is sufficient at this stage to suggest that Plaintiffs' alleged misconduct occurred " primarily and substantially" within Massachusetts, as required by G.L.c. 93A, § 11. Whether the center of gravity of the parties' interactions and Plaintiff's alleged fraud is in Illinois rather than Massachusetts is not an issue that can be resolved on a motion to dismiss, at least not in light of the facts alleged by Prince in his counterclaim. See Resolute Management, Inc v. Transatlantic Reins. Co., 87 Mass.App.Ct. 296, 300-01, 29 N.E.3d 197 (2015).

         3. Negligent Misrepresentation Claim

         In contrast, the Court is convinced that Prince has not stated a viable claim for negligent misrepresentation in Count IV.

         Prince alleges (in paragraph 38) that Plaintiff failed to do everything it had promised in its contract. Those allegations support the counterclaim for breach of contract in Count I. But a promise is not a tortious misrepresentation unless the promising party never intended to perform, in which case the injured party has a claim for intentional misrepresentation. " [P]romises to perform an ...


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