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Mixing and Mass Transfer Technologies, LLC. v. Lightnin

January 18, 2006

MIXING AND MASS TRANSFER TECHNOLOGIES, LLC., PLAINTIFF
v.
LIGHTNIN, INC, DEFENDANT



The opinion of the court was delivered by: Judge Jones

MEMORANDUM AND ORDER

THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:

Pending before the Court is a Motion to Dismiss Plaintiff's Fraud Claim pursuant to Federal Rule of Civil Procedure ("Fed.R.Civ.P.") 12(b)(6) ("the Motion") (doc. 15) filed by Defendant Lightnin, Inc. ("Defendant" or "Lightnin")*fn1 on November 14, 2005. For the reasons that follow, the Motion will denied.

FACTUAL BACKGROUND/PROCEDURAL HISTORY:

On June 27, 2005, Mixing and Mass Transfer Technologies, LLC ("Plaintiff" or "m2 t")commenced this action by filing a Praecipe for Writ of Summons in the Court of Common Pleas of Centre County, Pennsylvania.

Lightnin filed a Notice of Removal on July 29, 2005 and, upon the parties' agreement regarding the removal, Plaintiff withdrew its objection to removal and filed its complaint with this Court on October 24, 2005. In its complaint, Plaintiff alleges five causes of action: (1) breach of contract, (2) intentional interference with prospective contractual relations, (3) misappropriation of trade secrets, (4) fraudulent misrepresentation, and (5) conversion.

The parties are competitors in the impeller development and manufacturing industry.*fn2 Impellers are the rotating component of pumps which are often similar in appearance to propellers. They are generally used to mix fluids or slurry in large agitation tanks, such as treating wastewater. Plaintiff has represented to Defendant in the past that it does not have sufficient resources or facilities to perform certain tests on impeller technology so Plaintiff has sought access to and use of Lightnin's testing resources. This action arises from Plaintiff's allegations that Defendant violated two confidentiality agreements the parties executed when Lightnin allowed Plaintiff use of its impeller-testing facility in the summer of 2002.

Plaintiff alleges that it and Lightnin entered into an agreement to protect Plaintiff's confidential proprietary information before Plaintiff commenced testing its surface aerator in Lightnin's aeration tank and that the confidentiality agreement imposes non-use and non-disclosure obligations on Lightnin. (Compl. ¶¶ 25-26). Plaintiff asserts that Lightnin represented to it that Lightnin intended to abide by its contractual obligations to protect Plaintiff's proprietary rights and trade secrets, that the facts Lightnin misrepresented were material, that Plaintiff believes Lightnin submitted a proposal to Detroit that was based on Plaintiff's proprietary technology, that Lightnin knew its representations were false and knew that Plaintiff would justifiably and reasonably rely on such representations, that Lightnin induced Plaintiff to rely on its representations, and that Plaintiff suffered money damages as a direct and proximate result of its reliance on Lightnin's misrepresentations. Id. at ¶¶ 38, 71-73, 74-75. Such allegations are offered by Plaintiff as support for its fraudulent misrepresentation claim.

STANDARD OF REVIEW:

In considering a motion to dismiss, a court must accept the veracity of a plaintiff's allegations. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see also White v. Napoleon, 897 F.2d 103, 106 (3d Cir. 1990). In Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996), our Court of Appeals for the Third Circuit added that in considering a motion to dismiss based on a failure to state a claim argument, a court should "not inquire whether the plaintiffs will ultimately prevail, only whether they are entitled to offer evidence to support their claims." Furthermore, "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also District Council 47 v. Bradley, 795 F.2d 310 (3d Cir. 1986).

DISCUSSION:

In the Motion, Defendant argues that the Court should dismiss Plaintiff's claim for fraudulent misrepresentation pursuant to Fed.R.Civ.P. 12(b)(6) because Plaintiff failed to plead the claim with the particularity required under applicable rules and precedent. Specifically, Defendant contends that Plaintiff fails to specify what its alleged misrepresentations were, when the alleged misrepresentations were made, who made the alleged misrepresentations, and how Plaintiff relied upon such misrepresentations. Finally, Defendant asserts that Plaintiff's allegations are insufficient if it is attempting to claim that Defendant's alleged failure to comply with contractual obligations was itself a fraudulent representation.

In response, Plaintiff argues that its complaint puts Defendant on fair notice of the factual basis for its fraudulent inducement claim by alleging the specific contracts at issue and the timeframes those contracts were negotiated and entered into. Plaintiff maintains that Defendant is able to prepare a defense to the fraud allegations set forth by it. Moreover, Plaintiff asserts that in the event the Court determines that further specificity is required as to any element, Plaintiff requests that the Court construe Defendant's Motion as a Rule 12(e) motion for a more definite statement, as opposed to a Rule 12(b)(6) motion to dismiss.

We initially note that Plaintiff has brought a fraudulent misrepresentation claim in Count IV of its complaint. Under Pennsylvania law, a plaintiff must plead the following elements to ...


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