STRASBURGER et al.
MARS, Inc. Civ. A. 236.
Action by Henry W. Strasburger, and others, for attorneys fees against Mars, Incorporated, which filed a counterclaim for recovery of alleged payments made by defendant to plaintiffs. The plaintiffs filed a motion to dismiss defendant's counterclaim on the ground that rule 9(b) of the Superior Court had not been complied with in that circumstances constituting alleged fraud had not been alleged with particularity. The Superior Court, New Castle County, Terry, J., held that under rule providing that the circumstances constituting fraud shall be stated with particularity, allegations of counterclaim from which it was clear that action was based on fraud, and which alleged payments of sums of money to plaintiffs by reason of misrepresentations and concealments contained in invoices as rendered to defendant during certain years, contained sufficient ultimate facts to afford fair notice to the plaintiffs of the particular nature and basis of the claim asserted.
Edwin D. Steel, Jr., of the firm of Morris, Steel, Nichols & Arsht, of Wilmington, for the plaintiffs.
[46 Del. 275] William S. Potter and James L. Latchum, of the firm of Berl, Potter & Anderson, of Wilmington, for the defendant.
This is an action brought by Harry W. Strasburger, et al., plaintiffs, against Mars, Incorporated, defendant, for attorneys fees in the amount of $64,500, alleged to be due the plaintiffs from the defendant for services rendered by plaintiffs during the period 1943-1949 in the collection for defendant, under Section 722 of the Internal Revenue Code, 26 U.S.C.A. § 722, of a tax refund in the approximate amount of $200,000.
The complaint contains two counts: The first count is based upon a special contract to pay the amount sued for; the second count is based upon an implied promise to pay for services rendered.
The defendant in its answer has generally denied all of the essential allegations of the complaint, and, in addition thereto, has set forth a counterclaim in which the defendant alleges that plaintiffs are liable to it in the amount of $151,304.75 representing legal fees paid by defendant to plaintiffs during the year 1946 and the first six months of 1947. It is alleged that these payments were made by defendant as a result of deception which plaintiffs practiced upon defendant, the details of which are hereinafter set forth.
The plaintiffs have moved to dismiss the counterclaim for noncompliance with Rule 9(b) of this Court, which requires a cause of action based upon fraud to be alleged with particularity.
[46 Del. 276] The question to be determined is: Do the allegations of misrepresentation and concealment as contained in defendant's counterclaim meet the requirements of Rule 9(b).
‘ Rule 9(b) Fraud * * *. In all averments of fraud * * * the circumstances constituting fraud * * * shall be stated with particularity. * * *’
The pertinent allegations of the counterclaim are as follows:
‘ Prior to March 10, 1943 upon the recommendation of one of its then employees who was a client of the plaintiff, Claude R. Miller, the said plaintiffs became and were the attorneys for the defendant and the relationship of attorney and client existed between the said plaintiffs and the defendant during all of the time hereafter referred to.
‘ The said employee of the defendant upon whose recommendations plaintiffs had become the attorneys for the defendant continued in the employ of the defendant until September of 1949 and shortly thereafter the ...