Mitchell v. Curtin-Hebert Co. CV-96-310-B 07/09/97

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Bryan and Susan Mitchell

v. C-96-310-B

Curtin-Hebert Co.

MEMORANDUM AND ORDER

Bryan and Susan Mitchell seek damages from Curtin-Hebert Co

("Curtin-Hebert") for injuries suffered by Mr. Mitchell while he

was cleaning a metal buffing machine that his employer purchased

from Curtin-Hebert. The Mitchells assert claims for strict

liability in tort (Count I); negligence (Count II); breach of

implied warranties of merchantability and fitness (Count III);

breach of express warranty (Count IV); misrepresentation (Count

V ) ; violation of New Hampshire's consumer protection statute,

-A (1995) (Count VI); enhanced damages

(Count VII); and loss of consortium (Count VIII).

Curtin-Hebert moves to dismiss the Consumer Protection Act

count (Count VI) and the breach of warranty counts (Counts III

and IV) based on the applicable statutes of limitations. It als

argues that the misrepresentation count (Count V) should be

dismissed pursuant to Fed. R. Civ. P. 9(b) because the Mitchells

have failed to plead fraud with particularity. For the reasons that follow, I dismiss the Consumer Protection Act count but

grant the Mitchells additional time to correct deficiencies in

the remaining counts through an amended complaint.

I. The Complaint

According to the Mitchells' complaint,1 Mr. Mitchell was

injured at his place of employment on September 5, 1995 while he

was cleaning a buffing machine which his employer. Polyclad

Laminates, Inc., had purchased from Curtin-Hebert. In addition

to strict liability and negligence counts, the Mitchells claim

that Curtin-Hebert broke its implied and express warranties of

merchantability and fitness, and the express warranty arising

from advertisements claiming that the buffing machine was safe to

use in its purchased condition. The complaint also alleges that

Curtin-Hebert made misrepresentations upon which Mr. Mitchell

relied, including misleading claims that the machine was safe,

fully tested, and suited for a particular use. The Mitchells

also assert that Curtin-Hebert violated

-A, New Hampshire's Consumer Protection Act, by asserting that

the machine was of a particular standard, guality or grade, when,

in fact, it was not. Finally, the Mitchells ask for enhanced

Reviewing the Mitchells' complaint under Fed. R. Civ. P. 12(b)(6), I construe it in the light most favorable to them, accepting all material allegations as true, with dismissal granted only if no set of facts entitles the Mitchells to relief. See, e.g., Scheuer v. Rhodes,

(1974); Berniqer v. Meadow Green-Wildcat Corp.,

(1st Cir. 1991); Dartmouth Review v. Dartmouth College,

(1st Cir. 1989) .

- 2 - damages based on Curtin-Hebert's alleged wanton, malicious,

reckless, and grossly negligent conduct.

II. DISCUSSION

A. Count VI — Consumer Protection Act

Curtin-Hebert argues that Count VI, alleging a violation of

New Hampshire's Consumer Protection Act,

-A, should be dismissed because the act exempts transactions

which occurred more than two years prior to the filing of a

lawsuit. The Mitchells' complaint does not allege the date that

Polyclad Laminates purchased Curtin-Hebert's machine, but Curtin-

Hebert has attached a packing slip to its motion to dismiss which

indicates that the machine was shipped to Polyclad Laminates on

March 19, 1981.

Ordinarily, "any consideration of documents not attached to

the complaint, or not expressly incorporated therein, is

forbidden, unless the proceeding is properly converted into one

for summary judgment under Rule 56." Watterson v. Page,

(1st Cir. 1993). The First Circuit, however, has made

narrow exceptions for documents whose authenticity is not in

dispute, for public records, for documents central to plaintiffs'

claim, or for documents sufficiently referred to in the

complaint. Id.; Romani v. Shearson Lehman Hutton,

,

879 n.3 (1st Cir. 1991). This case falls under the first

exception, for the Mitchells do not dispute that the buffing

machine in this case was sold by Curtin-Hebert to Polyclad

- 3 - Laminates in 1981.

Instead, the Mitchells argue that they are entitled to

discovery in order to develop a fraudulent concealment theory, an

equitable doctrine which can toll a statute of limitations. Even

if I treated Curtin-Hebert's motion as one for summary judgment,

however, discovery would not be warranted under Fed. R. Civ. P.

56(f), for the Mitchells' Consumer Protection Act claim would be

time barred even if they could show that Curtin-Hebert

fraudulently concealed the Consumer Protection Act claim.

Prior to 1997, the Consumer Protection Act provided that a

claim based upon the Act must be brought within two years of the

underlying transaction.

-A:3, IV-a

(1995). Because this provision has been construed as an

exemption rather than a statute of limitations, the provision

"forecloses application of the usual rules for tolling of

statutes of limitations, i.e., the discovery and fraudulent

concealment rules." Zee-Bar, Inc. N.H. v. Kaplan, 7

(D.N.H. 1992) (expressly adopted by Catucci v. Lewis,

(1995)).

The Consumer Protection Act was recently amended to allow

claims for "[t ]ransactions entered into more than 3 years prior

to the time the plaintiff knew, or reasonably should have known,

of the conduct alleged to be in violation of this chapter."

-A:3, IV-a (effective January 1, 1997). The

Mitchells argue that this amendment applies to their claim, which

they did not discover until Mr. Mitchell's accident. I reject

- 4 - their argument. Absent clear evidence to the contrary. New

Hampshire law presumes that statutes are intended to operate

prospectively. Harris v. Adams,

(1983). This

presumption is especially strong in cases such as this one, where

retroactive application of the new statute would potentially

expose all past consumer transactions to lawsuits. C f . Gould v.

Concord Hosp.,

(1985) (claim barred by statute

of limitations cannot be revived by a new law extending the

limitations period); Woart v. Winnick,

(1826)

(Pt. 1 Art. 23 of New Hampshire Constitution prohibits

enforcement of any new law that "creates a new obligation,

imposes a new duty, or attaches a new disability, in respect to

transactions or considerations already past."). Here, the

Mitchells' right to assert a consumer protection claim expired in

1983. The 1997 amendment to the Consumer Protection Act cannot

now bring it back to life. For these reasons, I grant Curtin-

Hebert' s motion to dismiss Count VI of the Mitchells' complaint.

B. Count V — Misrepresentation

In cases alleging fraud or mistake, "heightened pleading" is

reguired whereby the plaintiff must state the circumstances of

fraud or mistake with particularity. Fed. R. Civ. P. 9(b). The

First Circuit has held that "in a general fraud case. Rule 9

'reguires specification of the time, place, and content of an

alleged false representation, but not the circumstances or

evidence from which fraudulent intent could be inferred.'" New

England Data Services, Inc. v. Becher,

(1st

- 5 - Cir. 1987) (quoting McGintv v. Beranger Volkswagen, Inc.,

(1st Cir. 1980)). A complaint that merely sets

forth a general averment of a defendant's "knowledge" of material

falsity will be insufficient, unless accompanied by specific

factual allegations leading to a reasonable belief that the

defendant knew that a statement was materially false or

misleading. Shaw v. Digital Equip. Corp.,

(1st Cir. 1996); Greenstone v. Cambex Corp.,

(1st

Cir. 1992). Furthermore, allegations based upon "information and

belief" do not satisfy the requirements of Rule 9 (b) unless they

also set forth the facts upon which that belief is founded.

Wayne Inv., Inc. v. Gulf Oil Corp.,

(1st Cir.

1984). This is true even when the supporting facts are

"peculiarly within the knowledge of the opposing party," for Rule

9 (b) "does not permit a complainant to file suit first, and

subsequently to search for a cause of action." Havduk v. Lanna,

(1st Cir. 1985) (citations and quotations

omitted) .

Under the standard described above, the Mitchells' complaint

clearly fails to allege Count V with the requisite

particularity.2 It neither specifies the time nor the place or

manner of alleged misrepresentations and describes their content

in only the most general terms. In addition, the Mitchells'

complaint only generally avers that Curtin-Hebert knew the

2 Because Count VII (Enhanced Damages) is based on the Misrepresentation count, it rises and falls with it as well.

- 6 - material falsity of its statements, and never attempts to allege

specific facts that could give rise to a reasonable belief that

Curtin-Hebert knew that statements it made were, at the time,

materially false or misleading. However, I will give the

Mitchells an opportunity to correct the deficiency through

amendment before dismissing their claim.

C. Counts III & IV — Breaches of Warranties

Counts III and IV allege that Curtin-Hebert broke implied

and express warranties of merchantability, fitness, and safety.

Curtin-Hebert has responded with a motion to dismiss based on the

statute of limitations, again relying on the packing slip

attached to its motion.3 The Mitchells respond that the doctrine

of fraudulent concealment eguitably tolls the statute of

limitations and that they are entitled to further discovery to

determine whether Curtin-Hebert fraudulently concealed their

causes of action. Unlike for Count VI, alleging a violation of

New Hampshire's Consumer Protection Act, fraudulent concealment

will serve to toll the statute of limitations in an action for

breach of contract for sale.

-A:2-725

(4) (1994); Cheshire Med. Ctr. v. W. R. Grace & Co.,

(D.N.H.), vacated in part on other grounds,

(D.N.H. 1991). However, facts giving rise to a claim of

fraudulent concealment, once raised, must be pled with

3 A breach of warranty contract claim must be brought "within four years after the cause of action has accrued," which occurs "when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach."

-A:2-72 5(1) and (2) (1994).

- 7 - particularity under Rule 9 (b). J. Geils Band Employee Benefit

Plan v. Smith Barney Shearson, Inc.,

(1st

Cir.),. cert, denied, 117 S. C t . 81 (1996).

The Mitchells have not attempted to plead fraudulent

concealment with the requisite particularity. Instead, they have

merely asserted in their objection to Curtin-Hebert's motion to

dismiss that Curtin-Hebert knew or should have known its product

was unsafe and that Curtin-Hebert kept this information from

potential consumers. Nevertheless, I will give the Mitchells an

opportunity to amend their complaint to correct this deficiency.

See Havduk,

(citing Foman v. Davis,

(1962)); Luce v. Edelstein,

(2d Cir. 1986)

(finding trial court abused its discretion in dismissing claim

under Rule 9 (b) without granting leave to amend).

D. The Appropriateness of Further Discovery

Having determined that Counts III, IV, and V fail to satisfy

the requirements of Rule 9 (b) , I must now decide whether further

discovery is appropriate before the Mitchells are required to

amend their complaint. New England Data, 82 9 F.2d at 2 90; Boyle

v. Merrimack Bancorp, Inc.,

(D. Mass. 1991).

Two competing interests inform any analysis of the

appropriateness of allowing discovery after a litigant fails to

meet the specificity requirements of Rule 9 (b). On the one hand,

allowing a plaintiff "to proceed with discovery on the basis of

. . . purely speculative allegations of fraud would be to issue a

license for a 'fishing expedition' in uncharted waters." Wayne Inv.,

. Rule 9(b) requires more, impelling the

conclusion that a complaint alleging fraud "should only be filed

after a wrong is reasonably believed to have occurred . . . [and]

should be a vehicle to right a wrong, not to find one." Banco de

Desarrollo Aqropecuario, S.A. v. Gibbs,

(S.D. Fla. 1986) (as quoted in New England Data,

) .

On the other hand, "when the opposing party is the only

practical source for discovering the specific facts supporting a

pleader's conclusions, less specificity of pleading may be

required pending discovery." Boston & Maine Corp. v. Town of

Hampton,

(1st Cir. 1993). For example, in RICO

cases, courts must permit a plaintiff a meaningful opportunity

for discovery before dismissing a complaint for a failure to

plead predicate acts of mail or wire fraud with particularity.

New England Data,

.

In this case, the plaintiffs have not presented enough

information to demonstrate that further discovery would be

fruitful. The Mitchells claim that the relevant information they

need to specifically plead misrepresentation is solely within

Curtin-Hebert's control. This assertion, however, is wholly

conclusory, and I am unable to determine if it is based on a

reasonable belief or upon any factual basis. See Craftmatic Sec.

Litig. v. Kraftsow,

(3d Cir. 1989) ("[E]ven

under a non-restrictive application of [Rule 9 (b)], pleaders must

allege that the necessary information lies within defendants' control, and their allegations must be accompanied by a statement

of the facts upon which the allegations are based."); Greenstone,

. The Mitchells have also not presented any detail

as to precisely what discovery is sought, from whom, and the

"good faith basis for believing that such. . . discovery will

uncover probative evidence." Boyle,

. Until

they do so, I cannot determine the efficacy of allowing

additional discovery before granting or denying a motion to

amend.

III. CONCLUSION

For the forgoing reasons, Curtin-Hebert's motion to dismiss

(document no. 5) is granted with respect to Count VI, and denied

without prejudice as to Counts III, IV, V, and VII. The

Mitchells have 30 days to file a detailed discovery plan

demonstrating their good faith basis for believing that further

discovery will uncover probative evidence necessary for them to

amend their complaint. After reviewing this plan, I will

determine whether the Mitchells will be permitted to engage in

discovery before being reguired to amend their complaint.

SO ORDERED.

Paul Barbadoro United States District Court

July 9, 1997

cc: Edward B. Mulligan, IV, Esg. Nicholas K. Holmes, Esg.

- 10 -