TAYLOR v. CRYE-LEIKE, INC., (N.D.Miss. 2000)

PEPPER, W. ALLEN, Judge

This cause is before the Court on the defendant's Motion to Dismiss. The Court, having reviewed the motion and being otherwise fully advised in the premises, finds as follows, to-wit:

This action by John and Rose Ann Taylor arises out of a contractual listing agreement for the sale of their home. The Taylors listed their home for sale with Pyramid Realtors. During the listing period, another real estate broker, Crye-Leike, Inc., acquired certain assets of Pyramid, including the listing agreement for the Taylors' home. The Taylors, who had listed with Pyramid as a result of the special confidence they reposed in one of Pyramid's agents, did not want Crye-Leike to handle the sale of their home and sought to terminate the listing agreement. Crye-Leike allegedly declined to do so. Relations between the parties deteriorated from there, although there is a dispute concerning whether Crye-Leike made any effort to sell the Taylors' home thereafter, or whether the problem was more likely the result of a lack of cooperation on the part of the Taylors. In any event, the Taylors took it upon themselves to advertise for the sale of the house and to show it on their own. They ultimately found a willing buyer, although at a price lower than they would have liked. They closed the sale and conveyed the property to the new owners, setting aside an amount representing the commission payable pursuant to the listing agreement.

Thereafter, the Taylors brought the instant suit, seeking a declaratory judgment that they had successfully canceled the listing agreement and that Crye-Leike was not due any commission on the sale of the home. They also sought to recover damages under theories of breach of contract and claims based on certain statutory provisions of the Mississippi Code. Defendants answered and filed a counterclaim, asserting a right to the commission amount withheld by the plaintiffs. Defendants now seek dismissal of certain claims, asserting the plaintiffs' failure to plead fraud with the requisite specificity called for in Federal Rule of Civil Procedure 9(b).

Dismissal pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is appropriate if a party fails to state a claim under which relief can be granted. The allegations of the Complaint must be accepted as true when the Court considers whether the plaintiffs have stated a cause of action. See Cramer v. Skinner, 931 F.2d 1020 (5th Cir. 1991); cert. denied, 112 S.Ct. 298, 116 L.Ed.2d 242, 60 U.S.L.W. 3057 (1991). Only the complaint and the allegations contained therein are to be considered in reaching a decision on a defendant's Rule 12(b)(6) motion to dismiss. The complaint should not be dismissed unless it appears beyond doubt that the plaintiffs can prove no set of facts in support of her/her claims which would entitle him/her to relief.

A. Failure to Plead Fraud With Specificity

Plaintiff asserts a right to recover against defendants based on the statutory penalties established in Mississippi Code Annotated § 73-35-31 for those who violate the provisions of § 73-35-21. That section of the Code enumerates various grounds upon which the Real Estate Commission may refuse, suspend or revoke a license to engage in the real estate business. Subections (a), (c) and (m) list the following as sanctionable conduct:

(a) Making any substantial misrepresentation in connection with a real estate transaction;

. . .

(c) Pursuing a continued and flagrant course of misrepresentation or making false promises through agents or salespersons or any medium of advertising or otherwise;

. . .

(m) Any act or conduct, whether of the same or a different character than hereinabove specified, which constitutes or demonstrates bad faith, incompetency or untrustworthiness, or dishonest, fraudulent or improper dealing.

Miss. Code Ann. § 73-35-21. The latter provision of the Act, § 73-35-31, subsection (2) provides a damages remedy to those persons damaged by a real estate broker's violation of the foregoing provisions. It states:

In case any person, partnership, association or corporation shall have received any sum of money, or the equivalent thereto, as commission, compensation or profit by or in consequence of his violation of any provision of this chapter, such person, partnership, association or corporation shall also be liable to a penalty of not less than the amount of the sum of money so received and not more than four (4) times the sum so received, as may be determined by the court, which penalty may be sued for and recovered by any person aggrieved and for his use and benefit, in any court of competent jurisdiction.

Miss. Code Ann. § 73-35-31(2).

As defendants point out, nowhere in plaintiffs' complaint is it alleged that the defendants ever received "any sum of money" in conjunction with the sale of plaintiffs' home. Furthermore, in their reply to the counterclaim plaintiffs acknowledge "[t]he [p]laintiffs have not paid the [d]efendant Crye-Leike, Inc. the contractual fee to which it is entitled from the sale of the [p]laintiffs' property." At the very least, a complaint must allege every element essential to a right of recovery in order to be deemed sufficient under a Rule 12(b)(6) analysis. Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995); Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1067 (5th Cir. 1994). Plaintiffs' assertion that they have set aside the money earmarked as the defendants' commission cannot be equated with a sum "received" by defendants for purposes of alleging this element necessary to recovery. Nor will the plaintiffs' efforts to uncover other instances in which the defendants might have violated the provisions of § 73-35-21 for pecuniary gain. Defendants are entitled to a dismissal of this count of the complaint against them.

B. Failure to Plead Fraud With Specificity

Even had plaintiff's statutory claim not failed under the above analysis, it is also deficient and subject to dismissal for failure to comply with Federal Rule of Civil Procedure 9(b)'s requirement that claims of fraud be plead with specificity. Plaintiffs' contention that they seek to enforce a statutory remedy rather than a recovery predicated on common law fraud is unavailing. The requirement of Rule 9(b) is not limited to those actions founded on the common law. They extend to claims having their foundation in a statutory right of action. See U.S. ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997) (False Claim Act); Williams v. WMX Technologies, Inc., 112 F.3d 175, 177 (5th Cir. 1997) (RICO claims); Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1068 (5th Cir. 1994)) (Securities Exchange Act of 1934). Inasmuch as the violations of which plaintiffs complain clearly fall into the category of fraud/misrepresentation, Rule 9(b) unequivocally requires that the complaint include the particulars of "who, what, when, where, why, and how the false statements were made and to whom they were made." This, plaintiffs have failed to do. Defendants are thus entitled to a dismissal of plaintiffs' statutory claims on this ground as well. So, too, are they entitled to a dismissal of the plaintiffs' claim for tortious breach of contract — but only insofar as the plaintiffs' right to recovery may rest on asserted misrepresentations.

For the above and foregoing reasons, the Court finds that the defendant's Motion to Dismiss should be granted. An order will issue accordingly.