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Chesapeake Insurance Advisors, Inc. v. Desola

Superior Court of Delaware

January 24, 2018

CHESAPEAKE INSURANCE ADVISORS, INC., a Delaware Corporation, and ROBERT HOUSER, Plaintiffs,
v.
STEPHANIE DESOLA, JOSEPH DESOLA, and PRIME SERVICES LLC, a de facto Partnership of Stephanie DeSola and Joseph DeSola, Defendants.

          MEMORANDUM OPINION GRANTING PLAINTIFFS'/COUNTERCLAIM DEFENDANTS' MOTION TO DISMISS DEFENDANTS'/COUNTERCLAIM PLAINTIFFS' COUNTS I AND II OF THE AMENDED COUNTERCLAIM COMPLAINT

          Eric M. Davis, Judge.

         I. INTRODUCTION

         The Court previously allowed Defendants Stephanie DeSola, Joseph DeSola, and Prime Services (collectively, the "Defendants") to file amended counterclaims. The Court instructed Defendants that any future filings needed to conform to the Delaware Superior Court Rules of Civil Procedure. Defendants failed to comply with the rules when filing their amended counterclaims. After a hearing, the Court permitted Defendants to file a second amended counterclaim by December 1, 2017.

         Defendants filed the Defendants' Amended Answer and Amended Counterclaim on December 1, 2017 (the "Second Amended Counterclaim"). On December 14, 2017, Plaintiffs Chesapeake Insurance Advisors, Inc. and Robert Houser (collectively, the "Plaintiffs") filed the PlaintiffsCounterclaim Defendants' Motion to Dismiss Defendants'/Counterclaim Plaintiffs' Counts I and II of the Amended Counterclaim Complaint (the "Motion").

         For the reasons set forth below, the Court GRANTS the Motion.

         II. RELEVANT FACTS

         Defendants filed their initial counterclaims in response to Plaintiffs' complaint. On September 5, 2017, the Court dismissed Defendants' Answer and Counterclaim in Response to Second Amended Complaint. The Court allowed Defendants to file amended counterclaims. On October 5, 2017, Defendants filed their amended counterclaims.

         On November 27, 2017, the Court held a hearing on Plaintiffs' Motion to Strike Defendants' Amended Answering Brief in Response to Plaintiffs' Motion to Dismiss Defendants' Amended Counterclaim Complaint. At the conclusion of the hearing, the Court allowed Defendants to file an amended counterclaim by December 1, 2017. The Court required the parties to remove any adjectives and adverbs not part of a legal standard. The Court advised Defendants to state facts in order to properly plead a counterclaim. The Court further advised the parties that the Court would rule on the papers.

         On December 1, 2017, Defendants filed the Second Amended Counterclaim. In the Second Amended Counterclaim, Defendants allege: (1) fraud; (2) fraudulent concealment; and (3) unjust enrichment.

         Specifically for fraud, Defendants allege "Plaintiffs' verbal and written representations and pretenses caused the Defendant to make payments on Plaintiffs behalf"[1] Further, "Plaintiffs made guarantees of shared profits. . . ."[2] Defendants further argue that Plaintiffs removed Ms. DeSola as secretary and treasurer on August 27, 2013, but Plaintiffs never informed Ms. DeSola that she had been removed from these executive positions.[3] Ms. DeSola continued to act as secretary and treasurer of the business based on Plaintiffs' failure to inform Ms. DeSola.

         After Plaintiffs removed Ms. DeSola as Secretary and Treasurer, Mr. Houser communicated with Ms. DeSola via text message and told Ms. DeSola "[y]ou are really an incredible employee, associate, and friend."[4] In another text message, Mr. Houser states: "You know that anything you might have to put in you will get back with interest. There will be no other way. You guys will be whole."[5]

         Specifically relating to fraudulent concealment, Defendants allege that Plaintiffs did not disclose "any of the evidence or transactions reviewed during the course of the State's Criminal investigation."[6] Defendants argue that "Plaintiffs concealed numerous transactions during the investigation . . . which misled the State in their investigation."[7] Defendants content that if the concealed transactions were brought to light, then the complaint would have no basis.

         In the Motion, Plaintiffs argue that Count I and Count II of the Second Amended Complaint must be dismissed. First, Plaintiffs contend that Defendants failed to articulate elements one, two, three, and five for Fraud. Additionally, Plaintiffs argue that Defendants failed to plead fraud and fraudulent concealment with particularity as required under Delaware Superior Court Civil Rule 9(b) ("Rule 9(b)"). Further, Plaintiffs claim that fraudulent concealment cannot survive without an underlying fraud.

         III. STANDARD OF REVIEW

         Upon a motion to dismiss, the Court (i) accepts all well-pleaded factual allegations as true, (ii) accepts even vague allegations as well-pleaded if they give the opposing party notice of the claim, (iii) draws all reasonable inferences in favor of the non-moving party, and (iv) only dismisses a case where the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances.[8] However, the court must "ignore conclusory allegations that lack specific supporting factual allegations."[9]

         Rule 9(b) requires all allegations of fraud to be pleaded with particularity.[10] In order to meet the particularity requirement, a complaint "must state the time, place, and contents of the alleged fraud, as well as the individual accused of committing the fraud."[11] "[A]verments of time and place are material. . ., "[12] "The purpose of [Rule 9(b)] is to appraise the adversary of the acts or omissions by which it is alleged that a duty has been violated."[13]

         IV. DISCUSSION

         A. Fraud

         A party must plead the following elements to ...


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