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BALTIMORE & OHIO R.R. CO. v. CENTRAL RY. SERVS.

June 9, 1986

THE BALTIMORE & OHIO RAILROAD COMPANY and CHESAPEAKE & OHIO RAILWAY CO.,
v.
CENTRAL RAILWAY SERVICES, INC., EASTERN INDUSTRIAL CONTRACTORS, INC., COASTAL TRAILER SERVICE CO., D&S RAILWAY SERVICES, INC., WILLIAM F. STULL, M. C. HEILER and WILLIAM J. DUFFY and CENTRAL RAILWAY SERVICES, INC. and EASTERN INDUSTRIAL CONTRACTORS, INC., v. THE BALTIMORE & OHIO RAILROAD COMPANY and CHESAPEAKE & OHIO RAILWAY CO., and CENTRAL RAILWAY SERVICES, INC. and EASTERN INDUSTRIAL CONTRACTORS, INC., v. EDWARD LIND and WAYNE TAYLOR



The opinion of the court was delivered by: KATZ

 KATZ, J.

 This Memorandum deals with a litigant's efforts to refine the pleadings by motion practice. The exercise is more ceremonial than useful.

 This case arises from arrangements made between plaintiffs, the Baltimore & Ohio Railroad Company and the Chesapeake & Ohio Railway Company, and defendants, Central Railway Services, Inc., and Eastern Industrial Contractors, Inc., for defendants' performance of light maintenance services for railroad cars owned by plaintiffs. Plaintiffs allege that all of the defendants in this case utilized the arrangements as an opportunity for fraud, unjust enrichment, breach of fiduciary duty, and violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO").

 Defendants also have filed a third-party complaint against Edward Lind and Wayne Taylor. The third-party complaint alleges that Lind and Taylor, employees of plaintiffs, engaged in fraud, tortious interference with a contractual relationship, RICO violations, and conspiracy. According to the third-party complaint, these actions were directed towards defendants/third-party plaintiffs. The actions alleged in the third-party complaint closely mirror the actions alleged in the counterclaim.

 Plaintiffs have moved to dismiss Counts III-VIII of the counterclaim on the ground that they fail to state a claim upon which relief can be granted. Plaintiffs also have moved to strike the third-party complaint. *fn1"

 Rule 12(b)(6) of the Federal Rules of Civil Procedure governs the determination of the motion to dismiss Counts III -- VIII of defendants' counterclaim. See Fed. R. Civ. P. 12(b)(6). Under that rule, a counterclaim should not be dismissed "unless it appears beyond doubt that the [pleader] can prove no set of facts in support of his claim which would entitle him to relief." See Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). In evaluating the sufficiency of the counterclaim, its factual allegations will be accepted as true, and reasonable factual inferences will be drawn to aid the pleader. See D.P. Enterprises v. Bucks County Community College, 725 F.2d 943, 944 (3d Cir. 1984)(citations omitted). The complaint should be dismissed only if it appears to a certainty that no relief could be granted under any set of facts which could be proved. Id.

 Plaintiffs contend that Counts III and VII should be dismissed because they do not satisfy the pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure. According to Rule 9(b), "in all averments of fraud . . . the circumstances constituting fraud . . . shall be stated with particularity." See Fed. R. Civ. P. 9(b). Plaintiffs interpret Rule 9(b) to require a statement of the time, place, substance, and consequence of the fraud alleged.

 Plaintiffs give Rule 9(b) too strict a reading. The test of sufficiency under the Rule is whether there is notice of the precise misconduct charged. See Seville Industrial Machinery Corp. v. Southmost Machinery Corp., 742 F.2d 786, 791 (3d Cir. 1984), cert. denied, 469 U.S. 1211, 105 S. Ct. 1179, 84 L. Ed. 2d 327 (1985). Date, time, or place allegations can fulfill this function, but are not required. Id.

 Counts III and VII of the counterclaim comply with Rule 9(b). Plaintiffs are adequately notified of the fraud alleged. The counterclaim clearly avers that plaintiffs fraudulently induced defendants to perform railroad car maintenance services, reneged on their promise to pay defendants, and reneged on their promise to distribute to defendants the money paid by other railroad companies for similar maintenance services. Moreover, the counterclaim largely focuses upon the same transactions and arrangements involved in plaintiffs' complaint. Plaintiffs therefore must be aware of the nature, if not the "place, date, and time," of the alleged acts.

 Plaintiffs move to dismiss Counts IV and V of the counterclaim on the ground that defendants lack standing to assert claims for unjust enrichment and breach of fiduciary duty due to plaintiffs' continued possession of money owed defendants under the maintenance pool agreement. According to plaintiffs, their duties under the maintenance pool agreement run to the other railroads, rather than to the defendants.

 In this case, defendants aver that they performed work for plaintiffs, for which they have not been paid. Thus, defendants essentially claim that there is a quasi-contractual obligation running from plaintiffs to defendants. If proved, these facts would give defendants a cognizable claim ...


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