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Wakley v. Sustainable Local Foods LLC

United States District Court, S.D. Indiana, Indianapolis Division

May 9, 2017

VICTOR WAKLEY, et al., Plaintiffs,


          Denise K. LaRue United States Magistrate Judge

         In April 2016, Plaintiffs Victor Wakley and Julie Wakley commenced this action against numerous defendants, including Local Initiatives Support Corporation (LISC), alleging a conspiracy to violate Plaintiffs' civil rights along with numerous state law claims.

         On September 21, 2016, Plaintiffs moved for leave to amend their complaint, seeking to add factual allegations of developments that had occurred since the filing of the original complaint. The motion was not opposed. The motion was granted and the Amended Complaint was filed November 4, 2016. Subsequently, LISC filed a Motion to Dismiss for Failure to State a Claim Upon Which Relief May Be Granted [doc. 60]. Plaintiffs and LISC have stipulated to the referral of the motion to the undersigned, and the District Judge referred the motion to the undersigned for ruling.

         The Amended Complaint alleges that Victor Wakley is the President of Save Our Veterans, Inc. and that Julie Wakley, his spouse, is an investor in Save Our Veterans. [Am. Compl., doc. 54, ¶¶ 14-16.] It alleges that Save Our Veterans entered into a lease agreement with Southeast Neighborhood Development, Inc. (SEND) to rent the real property at 101 South Parker Avenue in Indianapolis, Indiana. [Id. ¶ 1 & Ex. B.] The complaint alleges that Save Our Veterans had an option to purchase the property and that SEND breached the agreement by selling the property to the City of Indianapolis. [Id. ¶¶ 50-51, 73.] The Amended Complaint further alleges that the City conspired with the other Defendants to steal the property from Save Our Veterans and steal the Wakleys' investment in their business. [Id. ¶¶ 5 & 46.]

         The Amended Complaint alleges that LISC and the other defendants have “engaged in a pattern and practice of using fraudulent practices to commit fraud, [and] make negligent misrepresentations ….” [Id. ¶ 1.] LISC allegedly knew of the existence of the lease Save Our Veterans had with Send and conspired to induce SEND to breach its contractual obligations. [Id. ¶¶ 90, 100.] The Wakleys claim that “[LISC] is a funding company who has offered money to the co-conspirators and [has] provided the necessary funding for the co-conspirators to commit a forceful wrongful eviction of Plaintiff(s) and force Save Our Veterans out of business.” [Id. ¶ 23.] They allege that Defendant Mike Bowling “offered to borrow $200, 000 … via [LISC] then ‘relend' [it] to Save Our Veterans ….” [Id. ¶ 42.]

         The Amended Complaint contains ten counts. The first nine allege state law claims of fraud, negligent misrepresentation, breach of contract, breach of implied-in-fact contract, tortious interference with a third-party contract, breach of implied covenant of good faith and fair dealing, unfair business competition, conversion, and trespass to land. The tenth count alleges that the City and other Defendants have conspired to deprive Plaintiffs' of their due process, civil, and constitutional rights “by taking control of Plaintiffs (sic) business and property without notice.” [Id. ¶ 153.]


         Federal Rule of Civil Procedure 12(b)(6) authorizes the dismissal of claims for “failure to state a claim upon which relief may be granted.” Fed.R.Civ.P. 12(b)(6). A motion to dismiss tests the legal sufficiency of the complaint. Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 675 (7th Cir. 2001). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “Plausibility” is not equated with “probability”; instead, it is “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.

         A complaint need not contain “detailed factual allegations, ” but “more than labels and conclusions” and “a formulaic recitation of the elements of a cause of action” are required. Twombly, 550 U.S. at 555. When deciding a motion to dismiss, the court “accept[s] all well-pleaded factual allegations as true and view[s] them in the light most favorable to the plaintiff.” Lavalais v. Vill. of Melrose Park, 734 F.3d 629, 632 (7th Cir. 2013). The court may consider documents attached to the complaint. Bible v. United Student Aid Funds, Inc., 799 F.3d 633, 639-40 (7th Cir. 2015); Fed.R.Civ.P. 10(c).

         LISC has moved for dismissal of all claims against it, arguing that none of the counts state a claim against it upon which relief may be granted. LISC notes that Plaintiffs have already amended their complaint once. Plaintiffs have filed a lengthy response, but for the most part, they fail to challenge LISC's arguments for dismissal. The only claims they attempt to argue are sufficient are the fraud and conspiracy claims. Thus, they do not appear to challenge LISC's motion with respect to any of the other claims. Nonetheless, all the claims against LISC should be dismissed for failure to state a claim.


         The elements of fraud are “(1) a material misrepresentation of past or existing fact which (2) was untrue, (3) was made with knowledge of or in reckless ignorance of its falsity, (4) was made with the intent to deceive, (5) was rightfully relied upon by the complaining party, and (6) which proximately caused the injury or damage complained of.” Kesling v. Hubler Nissan, Inc., 997 N.E.2d 327, 335 (Ind. 2013) (quoting Lawyers Title Ins. Corp. v. Pokraka, 595 N.E.2d 244, 249 (Ind. 1992)). “[A] party must state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). In the Seventh Circuit, parties “must plead the ‘who, what, when, where, and how: the first paragraph of any newspaper story' of the alleged fraud.” Rocha v. Rudd, 826 F.3d 905, 911 (7th Cir. 2016) (quoting United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 853 (7th Cir. 2009)). This includes “‘the identity of the person making the misrepresentation, the time, place, and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff[s].'” Id. (quoting Uni*Quality Inc. v. Infotronx, Inc., 974 F.2d 918, 923 (7th Cir. 1992)). “[I]n a case involving multiple defendants, ‘the complaint should inform each defendant of the nature of his alleged participation in the fraud.'” Id. (quoting Vicom, Inc. v. Harbridge Merch. Servs., 20 F.3d 771, 777-78 (7th Cir. 1994)).

         Plaintiffs argue that courts have recognized that it is impractical to require specific citation to each instance of fraudulent conduct when such conduct is repeated frequently and over a lengthy period of time. But they cite out-of-circuit case law, none of which are binding on this Court. Plaintiffs also suggest that the heightened pleading standards are relaxed where factual information is peculiarly within the defendant's knowledge or control, but again they cite only out-of-circuit case law. Plaintiffs' authorities are not in line with the binding Seventh Circuit case law cited above, which this Court must follow.

         Measured against the appropriate, heightened pleading standards, the Amended Complaint fails to state a fraud claim against LISC. The allegations do not satisfy Rule 9(b)'s particularity standards. Plaintiffs do not provide specific names, dates, times, places, or content of the misrepresentations giving rise to alleged fraud. Even though there are multiple defendants in this case, Plaintiffs have not informed each ...

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