Maryland Federal Court Judge Bennett, in refusing to dismiss a claim asserted by an individual arising out a business dispute, recently set forth what is required to plead a claim of fraud (intentional misrepresentation) under Maryland law. Judge Bennett stated:
To recover for a claim of fraud or intentional misrepresentation under Maryland law, a plaintiff must show: “(1) that the defendant made a false representation to the plaintiff, (2) that its falsity was either known to the defendant or that the representation was made with reckless indifference as to its truth, (3) that the misrepresentation was made for the purpose of defrauding the plaintiff, (4) that the plaintiff relied on the misrepresentation and had the right to rely on it, and (5) that the plaintiff suffered compensable injury resulting from the misrepresentation.” Nails v. S & R, Inc., 639 A.2d 660, 668 (Md. 1994). With respect to the knowledge or scienter elements of the cause of action, the United States Court of Appeals for the Fourth Circuit has noted that “Rule 9(b) allows conclusory allegations of defendant’s knowledge as to the true facts and of the defendant’s intent to deceive.” Harrison, 176 F.3d 10
In his Amended Complaint, Beck claims that during a teleconference that took place at 6:03 PM EST on June 21, 2011, Arbotek representatives specifically told Beck that Arbotek would not “work with Defendant Peiffer or Avtek on the ReSpin Sales deal or anything else.” FAC ¶ 37. Beck contends that that assurance was false insofar as “Defendants had already entered into the ReSpin Sales transaction or a similar transaction involving Defendant Peiffer and/or Avtek,” or, “[i]n the alternative, at the time Defendant Arbotek made those statements Defendant Arbotek knew that such a transaction would be pursued.” Id. ¶ 38.
Abotek argues that these claims are conclusory and not specific enough under Rule 9(b)’s heightened pleading standard. However, taking the alleged facts in the light most favorable to the Plaintiff, it is a plausible and specific allegation that at the time Arbotek’s representatives made their statements to Beck, they knew the statements were false or, at the very least, made those statements knowing they would not be honored. As the Fourth Circuit has noted, “[a] court should hesitate to dismiss a complaint under Rule 9(b) if the court is satisfied (1) that the defendant has been made aware of the particular circumstances for which she will have to prepare a defense at trial, and (2) that plaintiff has substantial prediscovery evidence of those facts.” Harrison, 176 F.3d at 784. In light of the applicable pleading standards, Beck has stated a plausible claim in Count Three. Accordingly, Arbotek’s motion to dismiss is denied with respect to Count Three of the Amended Complaint.
Beck v. Peiffer, et al., RDB-11-3075, see http://www.mdd.uscourts.gov/Opinions/Opinions/Beck%20v.%20Peiffer,%2011-3075,%20FINAL%20COMBINED%20Mem.%20Op.%20and%20Order%20Denying%20Defs.%20MTD%207.6.12.pdf Judge Bennett’s approach is welcomed and well-reasoned, and unlike a few recent courts that have raised the bar too high in stating what is necessary to maintain a claim for fraud.
