Opinion
NO. 218-2010-CV-1473
12-19-2011
General Warranty Services, Inc. v. Warranty Administration Services, Inc., AMT Warranty Corp., AmTrust, Markel Service, Inc. and Brice P. Saulnier
MERRIMACK, SS
ORDER
This case arises out of a failed business relationship between Defendant Warranty Administrative Services, Incorporated ("WAS") and the Plaintiff, General Warranty Services, Incorporated ("GWS") whereby Plaintiff sold consumers products and related warranties provided by WAS. As a consequence of that unsuccessful business relationship, Plaintiff alleges that it experienced adverse financial and regulatory outcomes, including hundreds of thousands of consumer complaints and charge-backs due to warranty cancellations. The Plaintiff has brought a sprawling complaint against several different Defendants, alleging fraud, breach of contract, damage to business reputation, unfair and deceptive practice, unjust enrichment, and promissory fraud. AMT Warranty Corporation, AmTrust, and Brice P. Saulnier (together the "AMT Defendants") move to dismiss counts two, three, four, six, seven, eight, and nine of the Plaintiff's writ. Markel moves to dismiss the entire writ. For the reasons stated in this order, both the AMT Defendants' and Markel's Motions to Dismiss are GRANTED WITHOUT PREJUDICE. "When faced with an excessively burdensome and muddled pleading, the trial court may require the submitting party to file a more orderly and concise pleading." Snierson v. Scruton. 145 N.H. 73, 76 (2000). Thus, the Plaintiff shall have thirty (30) days to amend the writ to conform to the requirements of New Hampshire procedure after which the dismissals will become final.
I
According to the writ, in late 2007 Plaintiff and WAS began negotiating a business relationship by which GWS would sell automotive products that included warranties provided by WAS. Plaintiff alleges that WAS made numerous representations including that WAS's products were "exempt from insurance laws," "backed by an A-rated carrier," and "tested and proven to provide superior protection to the motor vehicle." The Plaintiff cut ties with its existing vendors and entered an exclusive relationship with WAS. However, problems began to surface regarding WAS's treatment of consumer warranty claims brought by numerous dissatisfied customers. Based on the number of complaints received, the Plaintiff came to believe that products were not performing as represented and were contributing to the failure of other motor vehicle components. The Plaintiff alleges WAS was not providing the backup protection provided by the warranty protection and was denying claims on the basis of technical breaches, flaws in the claims process, and other improper foundations.
In February, 2009, the Plaintiff met with Bruce P. Saulnier, the President of AMT Warranty Corporation ("AMT Warranty"), to engage in business discussions. Before Plaintiff's representative spoke with Saulnier, Saulnier entered into a Nondisclosure and Nonuse agreement ("NDA") in his capacity as AMT Warranty's president. The two representatives then met, and later met again on February 26, 2009 and had further discussions in which co-defendant AmTrust was included. No ongoing business agreement ever materialized between AMT Warranty or AmTrust and Plaintiff. The Plaintiff now alleges that the AMT Warranty and AmTrust have entered into agreements with other businesses to offer services that are similar to those outlined in the business plan the Plaintiff discussed with AMT Warranty Corporation and AmTrust on February 26, 2009.
II
Plaintiff has included each and every conceivable party in its writ and makes allegations of agency relationships without any supporting facts. The Plaintiff's approach to pleading is best illustrated by its claims against Markel. Although the Plaintiff has included Markel as a defendant, Markel is barely mentioned in the writ. In count one, for example, Plaintiff alleges breach of contract by WAS but then also references Markel and the AMT Defendants:
As a result of WAS's practices of refusing to adjudicate claims backed by Markel and AmTrust, over six thousand (6,000) of the over eight thousand (8,000) warranty and product protection agreement purchasers whom GWS has obtained for WAS, Markel and AmTrust under the various Direct Marketer Seller Agreements cancelled their vehicle warranty agreements with GWS, causing great financial loss and damage to GWS.Writ ¶ 81.
Count one mentions Markel but does not allege any facts from which a court could reasonably infer a connection between Markel's acts and GWS's harm. Counts two, three, four, six, and eight do not even mention Markel. Count five states, "GWS was a consumer of products manufactured, sold and backed by defendants WAS, Markel and AmTrust... in that the products were wholesaled to GWS. . . . GWS was a consumer of these products within the meaning of [RSA] 358-A." Writ ¶ 114. However, in the very next paragraph, the count alleges:
Counts four, six, and eight reference "defendants" generally but does not specify a single act by a single defendant and certainly none by Markel.
The actions of the Defendant WAS in failing to adjudicate in accordance with standards of good faith and fair dealing the claims of purchasers of warrant and product protection services whom GWS has produced and in demanding that GWS disband its consumer Service Department and stop servicing and assisting its customers constitute unfair and deceptive methods, acts, and practices in the conduct of trade and commerce within the State of New Hampshire within the meaning of [RSA] 358-A: 2. . . .Writ ¶ 115.
Count seven alleges that Markel "represented that their product warranty was backed by an A rated insurer" but failed to provide coverage to consumers. Writ ¶ 128-31. As with Plaintiff's other allegations, there are no facts to support the conclusion that Markel—who, based on the rest of the writ, never dealt with the Plaintiff—ever had any relationship with the Plaintiff or made the alleged representations.
Count eight, in addition to not directly mentioning Markel, alleges a cause of action for unjust enrichment. Because it does not mention Markel, and for or the reasons detailed below, with respect to the AMT Defendants, count eight must also be dismissed as to Markel.
Count nine claims promissory fraud and alleges, "Defendants never intended to honor their agreement various executed Confidentiality, Non-Use and Non-Disclosure Agreements and other agreements to include the Agreement." (sic) Writ ¶ 141. Despite the unintelligible nature of this count, it seems Plaintiff alleges all the defendants were part of a NDA and all of them never intended to be bound by it. Because this count can only apply to the parties that actually entered into NDAs with Plaintiff, count nine cannot be deemed to apply to Markel.
For the reasons detailed above, none of the counts Plaintiff brought state specific acts engaged in by Markel which would provide a basis for relief, and under the facts alleged, Markel cannot be found liable. Mt. Springs Water Co. v. Mt. Lakes Vill. Dist, 126 N.H. 199, 201 (1985). Plaintiff's writ must be dismissed as to Markel.
III
The claims against the AMT Defendants stand only a slightly better footing. Plaintiff's pleading lumps the AMT defendants into causes of action stemming from alleged misrepresentations by WAS which are not factually tied by the pleading to the AMT Defendants.
Count two alleges that on January 23, 2009 Plaintiff and Defendant WAS entered into a nondisclosure agreement whereby WAS agreed that information relating to Plaintiff's business would be kept confidential. Writ ¶¶ 84-87. The only allegation relating to any of the AMT Defendants in count two states "AmTrust and WAS, by and through the willful knowing actions of their officers, employees, directors, agents and representatives, have each individually, and acting in concert, colluded to violate the terms of their respective [NDAs] with GWS and have caused substantial and material harm. . . ." Writ ¶94. Although this statement does not allege AMT Warranty or Saulnier in his official capacity, caused harm to Plaintiff in any way, it does properly name AmTrust and its agents. However, AmTrust nor any of its agents ever signed a NDA and count two does not allege it did. AMT Warranty and Saulnier, acting as president of AMT Warranty, signed a NDA with Plaintiff in February 2009, and apparently WAS also signed a NDA in January, 2009. AmTrust is not alleged to have ever signed an agreement.
It is axiomatic that a contract cannot bind a nonparty to the agreement. See. EEOC v. Waffle House. Inc., 534 U.S. 279, 294 (2002); Paradis v. Bancroft. 97 N.H. 477, 479-80 (1952) (contract for sale of real estate cannot bind other parties, even those who may have an interest, where they are not parties to the contract). AmTrust, which was not a party to either the January or the February 2009 NDA with Plaintiff, cannot be liable for breach. The AMT Defendants' Motion to Dismiss as to AmTrust must be granted. Further, because count two does not allege that AMT Warranty or Saulnier breached their NDA with Plaintiff, this count cannot be deemed to apply to them. As such, count two must be dismissed as to all AMT Defendants.
Counts three and nine of the writ, alleging breach of contract and promissory fraud in connection with the NDA between Plaintiff and AMT Defendants, must also be dismissed because the agreement only required the Plaintiff to keep business information confidential. The February 2009 NDA, to which Plaintiffs refer, was attached as an exhibit to the AMT Defendants' Motion to Dismiss. AMT Def.'s Mot. Dismiss Ex. A. Upon a motion to dismiss, a court may consider documents attached, such as contracts. Delaney v. State, 146 N.H. 173,175 (2001); Ass'n Alumni Dartmouth Coll. v. Tr. Dartmouth Coll.. Grafton County Superior Ct, No. 07-E-289, 2008 WL 693586 (Feb. 1, 2008) (Order, Vaughan, J.). In reviewing the provisions of the NDA, it is clear the contract only obligated Plaintiff, as the recipient of information, to refrain from disclosing confidential information, disclosing the substance of the parties' discussions and confidential information, and from using confidential information for purposes other than the business purposes indentified in the NDA. AMT Def.s' Mot. Dismiss Ex. A. The agreement did not impose any obligation on the AMT Defendants to refrain from disclosing information that was shared by Plaintiff. Thus, count three must thus be dismissed as to all the AMT Defendants.
Moreover, Count nine asserts a claim of promissory fraud alleging that, "Defendants never intended to honor their agreement, various confidentiality nonuse and nondisclosure agreements and other agreements to include the agreement" (sic). Even giving the Plaintiff the benefit of the doubt regarding what it seeks to allege, it cannot succeed. Even if count nine could overcome the contract designation of Plaintiff as the information receiver—as discussed above—it still suffers severe deficiencies. In the first place, it is not even clear that a promissory fraud cause of action exists in New Hampshire. In other jurisdictions the action is referred to as "a subspecies of the action for fraud and deceit." Behnke v. State Farm Gen. Ins. Co., 196 Cal. App. 4th 1443,1452 (2011). Promissory fraud is essentially "fraud or deceit based on a promise without any intention of performing it." Id.; see also. Lazar v. Superior Ct„ 12 Cal. 4th 631, 638 (1996). Even assuming that New Hampshire recognizes this doctrine, Plaintiff's claim runs afoul of the common law rule that fraud must be alleged with particularity. Jay Edwards. Inc. v. Baker. 130 N.H. 41, 46-47 (1987). A plaintiff who alleges fraud must "specify the essential details of the fraud, and specifically allege the facts of the defendant's fraudulent actions." Id.; see also, Brzica v. Tr. of Dartmouth Coll., 147 N.H. 443, 449 (2002). It is obvious that the language of count nine does not meet this standard. As such, it must also be dismissed as to all AMT Defendants.
For similar reasons, counts six and seven, fraud as to products and product warranties, must also be dismissed. In simplest terms, the conclusory allegations set forth by the Plaintiff do not state a cause of action for fraud. Mt. Springs Water Co., 126 N.H at 201. "[I]n order to withstand a motion to dismiss, the plaintiff must specify the essential details of the fraud. . . . . It is not sufficient for the plaintiff merely to allege fraud in general terms. . . ." Jay Edwards, 130 N.H. at 47. "The elements of that cause of action are a negligent misrepresentation of a material fact by the defendant and justifiable reliance by the plaintiff." Snierson. 145 N.H. at 77. Not only do Plaintiff's claims fail to single out which defendant is accused of perpetrating a fraud—because count six simply refers to "defendants" generally—but also Plaintiff's fraud claims offer no factual detail as to how, where, to whom, or in what context the AMT Defendants made misrepresentations. In addition, count seven asserts that "AMT represented that their product warranty was backed by an A rated insurer." Writ ¶ 128. Then, Plaintiff asserts that AmTrust made certain representations and thereafter failed to perform. . Writ ¶ 130-31. These claims indicate the Plaintiff is unclear about who made what misrepresentations. These claims must be dismissed as to all the AMT Defendants.
This Court understands "AMT" to refer to AMT Warranty Corporation.
--------
Count four alleges a claim for damage to business reputation. The writ does not expressly establish the AMT Defendants involvement in the alleged reputational harm. Instead, it states that the Plaintiff's business "has suffered substantial and irreparable damage" due to the high amount of complaints received by the various State Attorneys General, Better Business Bureaus and other rating agencies as a result of the alleged improper adjudication of warranty claims by WAS. Writ ¶ 109. It is not clear that such a claim even exists in New Hampshire, although theoretically there would appear to be no reason why a jural as opposed to a natural person could not bring a claim for defamation. See e.g., Thompson v. Cash. 119 N.H. 371, 376-77 (1979); Chagnon v. Union Leader Corp., 103 N.H. 426,441 (1961). However, it does not appear that Plaintiff has alleged a claim for defamation. Rather, it appears Plaintiff is alleging that as a result of the AMT Defendants' actions, consumers have truthfully reported their complaints, and as a result, Plaintiff s reputation has suffered. Regardless of the allegation the Plaintiff seems to be making, it is unclear to this court exactly what theory or case law Plaintiff has based this claim on. And the factual allegations made by the Plaintiff do not help clarify the claim. Mt. Springs Water Co., 126 N.H. at 201. Thus, count four must be dismissed as to all the AMT Defendants.
Similarly, count eight cannot succeed. In count eight, the Plaintiff seeks recovery under a theory of unjust enrichment. This count does not state a cause of action. For an unjust enrichment claim, "[t]he party seeking restitution must establish not only unjust enrichment, but that the person sought to be charged had wrongfully secured a benefit or passively received one which it would be unconscionable to retain, and unjust enrichment generally does not form an independent basis for a cause of action." Gen. Insul. Co. v. Eckman Constr., 159 N.H. 601, 612 (2010) (emphasis added). Although this statement is accurate, it is somewhat misleading:
Unjust enrichment is a common-law theory of recovery or restitution that arises when the defendant is retaining a benefit to the plaintiff s detriment, and this retention is unjust. What makes the retention of the benefit unjust is often due to some improper conduct by the defendant. And usually this improper conduct will form the basis of another claim against the defendant in tort, contract, or statute. So, if an unjust enrichment claim rests on the same improper conduct alleged in another claim, then the unjust enrichment claim will be tied to this related claim—and, of course, unjust enrichment will stand or fall with the related claim.Cleary v. Philip Morris Inc., 656 F.3d 511, 517 (7th Cir. 2011).
Thus here, although unjust enrichment could theoretically form an independent cause of action, Plaintiff has tied its unjust enrichment count with its damage to business reputation count. The writ states, "Plaintiff has had its reputation tarnished with consumers and various state regulators . .. Plaintiff also seeks to recover its damages arising from the harm to its reputation, the costs of handling and adjudicating all [the warranty] claims. . . ." Writ ¶ 135,137. For the same reasons detailed above as to why the damage to business reputation count is unavailing, the unjust enrichment count must also be dismissed. In addition, there is an independent basis for dismissing count eight.
Plaintiff has not alleged how the AMT Defendants, who did not contract with or engage in any financial relationship with the Plaintiff, have been unjustly enriched. Alleging a party has been unjustly enriched is a legal conclusion which the court need not accept without more. Mt. Springs Water Co.. 126 N.H. at 201. Under these circumstances, count eight must be dismissed as to all the AMT Defendants.
III
For these reasons, all counts as to Markel and counts two, three, four, six, seven, eight, and nine as to the AMT Defendants are all dismissed. These dismissals are without prejudice, and Plaintiff has thirty (30) days from the date this Order is received to amend, after which the dismissals shall become final.
SO ORDERED.
_________________
Richard B. McNamara,
Presiding Justice