Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-1_12-cv-03777/USCOURTS-alnd-1_12-cv-03777-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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IN THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF ALABAMA

EASTERN DIVISION

 )

 )

BOBBY JOE STONE; )

TINA STONE BALLENTINE; )

and PEGGY E. STONE )

 )

Plaintiffs, )

 )

v. ) CV 1:12-3777-RBP

 )

KOCH FARMS OF GADSDEN LLC )

 )

Defendant. )

MEMORANDUM OPINION

This cause comes on to be heard on the Motion to Dismiss filed by Koch Farms of

Gadsden, LLC (Koch) on November 8, 2012.

The motion is directed at Counts Two, Three and Four of the plaintiffs' complaint and

generally opposes any claim(s) for punitive damages.

Discussion1

The court does not consider claim(s) purportedly against fictitious parties. The

allegations in plaintiffs' complaint include:

(1) The plaintiffs own or have owned real estate in Cherokee County, Alabama which (is)

(was) operated as a farm, including raising poultry.

(2) The plaintiffs entered into a "Poultry Production Agreement" with Koch.2

(3) The agreement provided that Koch would provide poultry flocks, feed, medication

1 The court considers only the factual allegations in plaintiffs' complaint filed in the Circuit Court of

Cherokee County, Alabama on September 28, 2012.

2

No date of said agreement is alleged. 

FILED

 2013 Jan-08 PM 03:11

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 1:12-cv-03777-RBP Document 9 Filed 01/08/13 Page 1 of 5
and other supplies to the plaintiffs, further, that plaintiffs would care, maintain and grow the

flocks until Koch obtained them for processing.

(4) Koch stopped sending plaintiffs flocks to be raised and cared for and specifically

refused to do so "on or about September 28, 2010."

(5) That if the plaintiffs had known that Koch would not honor its "promises," and

agreement (no mention of "representations" here), they would have explored alternate avenues to

maintain and fully operate the farm.

(6) Because plaintiffs relied on the "representations" (appearing again) "once plaintiffs

discovered that Koch would not honor its "agreement and promises" (note "agreement" and

"promises" only), plaintiffs were not in a position to obtain flocks from other sources." (There

are no allegations of the efforts made).3

Counts

Count One is clearly a breach of contract claim only. Its claim for punitive damages will

be struck. Count One alleges that the contract was in full force and effect. Further that the

contract was breached when Koch failed to provide additional flocks, inter alia, on or about

September 28, 2010.

Counts Two and Three state purported fraud claims. The purported fraud claims are

stated in a conclusory fashion without factual detail. No dates are stated; no specific statements

are stated; there are no allegations of any persons making promises or "representations" other

than those stated in the contract as earlier alleged. The motion will be granted as to Counts Two

and Three. See Target Media Partners Operating Co, LLC v Specialty Marketing Corp. (Ala.

3

 At some points in the complaint the plaintiffs combine references to "promises" and "representations." 

Presumably they felt that the conclusory term "representations" was more appropriate for fraud claims than promises.

2

Case 1:12-cv-03777-RBP Document 9 Filed 01/08/13 Page 2 of 5
Dec. 21, 2012) and its favorable reference to Justice Gorman Houston's concurrence in Hunt

Petroleum Corp. v. State of Alabama, 901 So.2d 1 (Ala. 2004). Justice Houston stated: 

“I recently discussed the difference between breach-ofcontract and fraud claims in my special concurrence in Dickinson v.

Land Developers Construction Co., 882 So.2d 291 (Ala. 2003):

 I write specially to address a particular problem:

the confusion surrounding the difference between a

claim alleging breach of contract and a claim alleging

fraud. There is a distinct difference between the two

claims but I fear that that distinction is all too often

lost in Alabama. Simply put, a plaintiff cannot

convert the mere failure to perform or to fulfill a

contractual promise into a fraud claim, and that

appears to be happening in this case.

 "Under Alabama law, a plaintiff can, in some

instances, maintain a cause of action for fraud and

breach of contract arising from the same general

factual circumstances. See Duepree v. Gulner, 522

So.2d 242 (Ala. 1988). In Deupree, we held that the

plaintiffs, who had signed a contract to purchase a

Florida townhome from the defendant developer but

had not yet closed on the townhome, could recover for

both fraud and breach of contract based on the

developer's representations to the plaintiffs that there

would be no problems in acquiring the necessary

governmental approval for a boat slip appurtenant to

the property, when in fact there were substantial

problems. 522 So.2d at 243-45. We held that there

was evidence indicating that the plaintiffs would not

have closed on the townhome had the defendant

disclosed the truth about the governmental approval

process, and we held that the plaintiff could recover

for fraudulent suppression. 522 So.3d at 245. In

reaching this holding we also noted that a plaintiff can

recover for both breach of contract and fraud when

the plaintiff has been fraudulently induced (through

false statements about specific facts) into making a

contract:

 

3

Case 1:12-cv-03777-RBP Document 9 Filed 01/08/13 Page 3 of 5
 "'"There are a number of situations in our law

whereby a plaintiff may derive benefits from a

contract and yet still recover for tortious action

concerning the contract, such as misrepresentation

and deceit. There is a line of cases wherein the facts

show misrepresentations concerning the goods that

the buyer purchases; e.g., a buyer purchases a horse

that the seller maintains has to good eyes, and the

buying later discovers that one the eyes is blind. In

the type of situation [fraudulent inducement], the

buyer need not forego the benefit received under the

contract in order to sue for the misrepresentations. 

See Mutual Sav. Life Ins. Co. v. Osborne, 245 Ala. 15,

15 So.2d 713 (1943); Moore v. Oneonta Motor

Company, 223 Ala. 510, 137 So. 301 (1931);

Fairbanks, Morse and Co. v. Dees, 220 Ala. 41, 126

So. 624 (1929)."'

"Deupree, 522 So.2d at 244 (quoting Nationol Sec. Fire &

Cas. So. v. Vinson, 414 So.2d 49, 50-51 (Ala. 1982)). While the

Deupree decision characterized the alleged fraud at issue in that case

as fraudulent suppression, 522 So.2d at 244 ('[w]e hold that the fraud

alleged in this case was not fraud in the inception of the contract, but

in fraudulent concealments after the contract was made'), given the

fact that the plaintiffs had not yet closed on their townhome and the

fact that they alleged that they would not have closed on the

townhome if they had not been lied to, the fraud alleged in Deupree

appears to favor a claim for fraudulent inducement (to close on the

townhome and 'complete' the contract). Regardless, it is clear that to

assert a fraud claim that stems from the same general facts as one's

breach-of-contract claim, the fraud claim must be based on

representations independent from the promises in the contract and

must independently satisfy the elements of fraud. Deupree, 522 So.2d

at 245.

"However, it is a universally held principle that the 'mere

failure to perform a [contractual] promise does not constitute fraud.' 

Joun Brown Automation, Inc. v Nobles, 537 So.2d 614, 618 (Fla.

Dist. Ct. App. 1989). In fact a party to a contract may intentionally,

and even in bad faith (except in the insurance context), see American

Cast Iron Pipe Co. v. Williams, 591 So.2d 854, 857 (Ala. 1991),

break a contractual promise without that action becoming a fraud or

other tort.” 

4

Case 1:12-cv-03777-RBP Document 9 Filed 01/08/13 Page 4 of 5
Also see U.S.F&G v. McKinnon, 356 So.2d 600 (Ala. 1978). See also various cases cited by the

defendant. 

Count Four is also subject to the Target case. Counts Two, Three and Four will be

dismissed. All punitive damage claims will also be dismissed.

This the 8th day of January, 2013. 

 

 ROBERT B. PROPST

 SENIOR UNITED STATES DISTRICT JUDGE

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