Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_13-cv-00545/USCOURTS-alsd-1_13-cv-00545-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

---

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

FRATELLI COSULICH :

UNIPESSOAL, S.A., 

f/k/a FRATELLI COSULICH :

CONSULTADORIA 

E PARTICIPACOES :

UNIPESSOAL, LDA, 

:

Plaintiff, CA 13-00545-KD-C

:

v.

:

SPECIALTY FUELS BTU, LLC;

F. JAVIER BRITO; and BUNKERS :

INTERNATIONAL CORP.,

:

Defendants.

REPORT AND RECOMMENDATION

This cause is before the Magistrate Judge for issuance of a report and 

recommendation, pursuant to 28 U.S.C. § 636(b), on the motions to dismiss filed by the 

Defendants, Specialty Fuels BTU, LLC, (“BTU”), F. Javier Brito (“Brito”), and Bunkers 

International Corp. (“BIC”) (docs. 65 and 67), the response filed by the Plaintiff, Fratelli 

Cosulich Unipessoal, S.A., (“Fratelli”) (doc. 73), and the replies filed by the Defendants 

(docs. 74 and 75). Upon consideration of the foregoing pleadings, the Magistrate Judge 

RECOMMENDS that BIC’s motion to dismiss (doc. 65) be DENIED and that BTU and 

Brito’s motion to dismiss (doc. 67) be GRANTED IN PART and DENIED IN PART, as 

discussed below.

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 1 of 39
2

I. Background and Relevant Allegations in the 

Third Amended Complaint (“TAC”)

As alleged by the Plaintiff in the TAC (doc. 64), this matter arises from a series of 

transactions involving the Plaintiff, the Defendants, and former Defendant Specialty 

Fuels Bunkering, LLC, (“Bunkering”).1 (Id.) 

A. The Parties.

The Plaintiff is a foreign corporation “engaged, in part, in the business of vessel 

bunkering and the trading of fuel oil and fuel oil by-products.” (Id., ¶ 1.) Bunkering

and BTU are domestic limited liability companies that “were engaged in the business of 

wholesale supply of fuel products.” (Id., ¶¶ 2-3, 8.) Brito allegedly was the controlling 

member of both Bunkering and BTU. (Id., ¶ 4.) According to the TAC, “Brito was the 

principal founder [and] investor . . . and . . . the disputed managing member of 

Bunkering,” as well as “the principal founder [and] investor . . . and . . . the managing 

and sole member of BTU.” (Id.) The Plaintiff alleges that Bunkering and BTU

operated, jointly and/or separately, by buying fuel components, blending 

them to make specific types of fuel, and then selling the finished fuel or 

fuel oil by-product to a buyer. This type of operation required enough 

capital or credit on the part of Bunkering and BTU to enable each entity to 

purchase the component parts of the fuel, store them, blend them, sell 

them, deliver the product and then await payment. Bunkering and BTU 

engaged in business in such a manner, and through representations by 

their representatives and [BIC], that [the Plaintiff] considered them to be 

essentially the same company, “Specialty”, 2 owned, managed and 

controlled by one person, Brito.

 1 Bunkering was named as a Defendant in the original Complaint (doc. 1). 

Subsequently, however, Bunkering filed for Chapter 7 bankruptcy protection, and the Plaintiff 

chose not to pursue this action against Bunkering in Plaintiff’s amended pleadings. (See doc. 30 

at 6 (“As the [proposed second amended complaint] deletes Bunkering as a defendant entirely 

in this action, Bunkering is no longer a party to this action.”); doc. 64, ¶ 2.)

2 In the TAC the Plaintiff refers to Bunkering and BTU collectively as “Specialty.” 

For ease of reference, the undersigned uses that designation herein.

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 2 of 39
3

(Id., ¶ 8.) BIC is a domestic corporation that served as the exclusive broker for the 

Plaintiff’s transactions with Bunkering and BTU from 2011 onward. (Id., ¶¶ 5, 10-11.)

B. BIC’s relationship with the Plaintiff and Specialty.

Prior to 2011, the Plaintiff transacted directly with Bunkering and BTU. (Id., ¶ 9.) 

Paul Pappaceno handled those transactions on behalf of the Plaintiff. (Id.) At the time,

he was employed by the Plaintiff’s agent, Asamar, Inc. (Id.) However, Pappaceno 

began working for BIC in late 2010. (Id., ¶ 10.)

Shortly thereafter at Pappaceno’s urging, he and [the Plaintiff’s] 

management orally agreed that [BIC] would act as [the Plaintiff’s] broker 

for all Bunkering and BTU transactions.

. . . From the time that Pappaceno began working for [BIC] through and 

including one or both of the transactions that are the subject of this 

lawsuit, all of [the Plaintiff’s] transactions and dealings with Bunkering 

and BTU were conducted solely through Pappaceno and his employer, 

[BIC], as broker for [the Plaintiff], and as the exclusive representative of 

Bunkering, BTU and Brito.

. . . In consideration for these services, [BIC] received monetary 

commissions from [the Plaintiff] on the transactions.

. . . 

. . . During this time frame, Pappaceno, on behalf of [BIC], demanded that 

[the Plaintiff] not directly contact anyone at Bunkering or BTU which 

resulted in Pappaceno and [BIC] becoming the sole intermediary and 

conduit for information between [the Plaintiff] and “Specialty” (Bunkering 

and BTU). Because of this insistence, [the Plaintiff] was placed into a 

position of having to trust that Pappaceno and [BIC] would provide it 

with timely and accurate information concerning “Specialty’s” financial 

ability to perform on the transactions, among other things.

. . . Over this same considerable time frame, Pappaceno and [BIC], for 

their own financial gain, cultivated a position of trust and confidence with 

[the Plaintiff] in its dealings with all of the Defendants . . . by reassuring 

[the Plaintiff] that they could be trusted and relied upon. 

(Id., ¶¶ 10-12, 14-15.) Specifically, in the course of the Plaintiff’s dealings with BIC on 

transactions with Bunkering and BTU, Pappaceno sent messages to the Plaintiff stating 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 3 of 39
4

“[y]ou can trust me” and “[d]on’t worry” to assure the Plaintiff that it would receive 

payment from Bunkering and BTU. (Id., ¶¶ 15(a)-15(b).)

BIC further established a position of trust and confidence by informing the 

Plaintiff of its extensive relationship with Bunkering and BTU. (Id., ¶ 15.) Specifically, 

BIC disclosed to the Plaintiff that it had participated in factoring arrangements with 

Bunkering and BTU, including instances where it paid Bunkering and/or BTU’s 

financial obligations to the Plaintiff. (Id., ¶ 15(c).) BIC also informed the Plaintiff that it 

participated in other independent transactions with Bunkering and BTU where it acted 

as a principal and bought and sold fuel oil on extended credit terms. (Id., ¶ 15(e).) 

Additionally, Pappaceno informed the Plaintiff that he invested his personal funds in 

Bunkering and/or BTU. (Id., ¶ 15(f).) Based on the aforesaid information conveyed by 

BIC, the Plaintiff reasonably inferred that BIC “was not engaged in typical broker 

conduct”; “was privy to detailed financial information about the business operations of 

Bunkering[,] BTU and Brito”; and “was by its own conduct vouching for Bunkering and 

BTU’s reliability as financially sound and responsible business entities . . . when it 

solicited [the Plaintiff] to do business with those entities.” (Id., ¶¶ 15(c)-15(f).)

Additionally, BIC conveyed the closeness of its relationship with Brito and 

“Specialty” by informing the Plaintiff of BIC’s direct conversations with Brito regarding 

the status of payments owed to the Plaintiff. (Id., ¶ 16.) Such conduct demonstrated 

BIC’s “apparent, if not actual, insider position with Bunkering and BTU.” (Id.)

Through this conduct and course of dealings over time, [BIC] created and 

assumed certain duties, including the duty to conduct its brokerage 

activities with reasonable skill and diligence, the duty to engage in due 

diligence, and the duty to inform [the Plaintiff], its principal, of material 

information it acquired through the exercise of reasonable diligence, as a 

result of its expansive, close individual dealings with Bunkering, BTU and 

Brito.

. . . 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 4 of 39
5

. . . All of this created a custom and practice over time between [BIC] and 

[the Plaintiff] and established a course of dealings upon which [the 

Plaintiff] reasonably relied and placed its trust as was intended by [BIC] 

and resulted in the creation of a “special” or fiduciary relationship 

between [the Plaintiff] and [BIC].

(Id., ¶¶ 18-19.)

C. The transactions at issue.

Central to this action are two agreements—“STEM 6277” and “STEM 6322”—

involving the sale and repurchase of oil. The Plaintiff describes these transactions “as a 

close-in-time purchase (by [the Plaintiff]) and sale (by Bunkering or BTU) of oil or fuel 

oil by-product on the promise that “Specialty” (i.e., Bunkering or BTU, depending on 

the transaction), would buy the product back at a higher price.” (Id., ¶ 13.) BIC 

brokered both agreements. (Id., ¶ 11, 29.) 

Pursuant to the STEM 6277 agreement, on January 11, 2013, the Plaintiff paid 

BTU $2,828,322.00 for the purchase of 22,447 barrels of cutterstock,

3 and BTU was 

obligated to purchase those barrels back in thirty days at the price of $2,857,503.10. (Id., 

¶ 29(a).) Subsequently, BTU requested, and the Plaintiff agreed, to roll over the 

agreement four times such that the due date for BTU’s payment for the repurchase of 

the fuel-oil was extended into August 2013 and interest was added to the outstanding 

payment. (Id.) On July 24, 2013, the Plaintiff received $1,500,000.00 in partial 

satisfaction of the outstanding debt. (Id.) However, the remainder has not been paid. 

Thus, the Plaintiff alleges that it is still owed $1,532,589.70, plus interest, under the 

STEM 6277 agreement. (Id.)

STEM 6322 involved two payments by the Plaintiff to Bunkering for the purchase 

of a total of 23,500 barrels of Number 2 diesel fuel, which Bunkering was required to 

 3 Cutterstock, apparently, is a fuel-oil product.

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 5 of 39
6

purchase back. (Id., ¶ 29(b).) Pursuant to the STEM 6322 agreement, on April 22, 2013, 

the Plaintiff paid Bunkering $1,600,000.00 for a portion of the diesel fuel, and Bunkering 

was obligated to purchase that portion back in thirty days at the price of $1,616,377.93. 

(Id.) On May 21, 2013, the Plaintiff paid Bunkering $1,384,500.00 for the remainder of 

the diesel fuel, and Bunkering was obligated to repurchase that amount in thirty days at 

the price of $1,398,671.94. (Id.) As with the STEM 6277 agreement, the STEM 6322 

agreement was rolled over multiple times such that the due date for Bunkering’s 

payment was extended to August 2013 and interest was added to the balance. (Id.) 

However, the Plaintiff received no payments from Bunkering and, therefore, Bunkering 

owes the Plaintiff $3,092,527.82, plus interest, under the STEM 6322 agreement. (Id.)

Accordingly, the Plaintiff alleges that the grand total that Bunkering and/or BTU 

owes the Plaintiff under the STEM agreements is $4,625,117.52, plus interest. (Id., ¶ 30.)

D. Warehouse Receipt and status of fuel-based product serving as collateral.

The Plaintiff alleges that, on April 8, 2013, Bunkering, BTU and Brito “issued a 

‘Warehouse Receipt’ to [the Plaintiff] to lead [the Plaintiff] to believe that [the Plaintiff] 

had and maintained a right to possess the product at issue as security for the debt 

evidenced by the invoices.” (Id., ¶ 49.) Additionally, three days later, BIC represented 

to the Plaintiff that the Plaintiff’s transactions with Specialty were secured by fuel oil. 

(Id., ¶ 57(k)-(l).)

The Plaintiff alleges that the Warehouse Receipt was false and misleading and 

that the Plaintiff’s accounts were not, in fact, secured by fuel-based product. (Id., ¶¶ 49, 

57(l), 61.)4 Thus, the Plaintiff alleges that the Defendants misrepresented that fuel oil 

 4 The undersigned notes that the Plaintiff also alleges elsewhere in the TAC that 

the transactions were secured by fuel-based collateral. (Doc. 64, ¶ 13.) The Plaintiff’s 

inconsistent pleading is permissible. See Fed. R. Civ. P. 8(d); Ocean’s 11 Bar & Grill, Inc. v. 

Indemnity Ins. Corp. of DC, No. 11-61577-CIV, 2011 WL 3843931, at *3 (S.D. Fla. Aug. 26, 2011).

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 6 of 39
7

secured the transactions at issue and failed to disclose the true status of that collateral. 

(Id., ¶¶ 64, 74.)

E. Specialty’s financial condition.

The Plaintiff alleges that Specialty’s financial condition began deteriorating in

May 2012. “On May 29, 2012, Bunkering commenced litigation against Brito in the 

Circuit Court of Baldwin County, Alabama, in which other members of Bunkering 

sought, among other things, to wrest control of Bunkering from Brito.” (Id., ¶ 23.) Due 

to the management dispute involved in that lawsuit, Bunkering could not meet its 

financial obligations. (Id., ¶ 24.) In June 2012, Brito filed pleadings in the Baldwin 

County matter representing that 

Bunkering’s financing sources, . . . including [BIC], were not being paid 

and that Bunkering’s customers’ ships or vessels were at risk of seizure by 

[BIC];

Bunkering was losing the trust and good will of its customers thereby 

damaging Bunkering’s ability to do business in the future;

Bunkering’s relationship with [BIC] (a finance source) was being 

“irreparably damaged”; [and]

Bunkering’s ability to conduct business in general was being “irreparably 

damaged[.]” 

(Id.) The Plaintiff alleges that BIC was aware of the Baldwin County litigation and the 

financial difficulties that had “irreparably damaged” its relationship with Bunkering. 

(Id., ¶ 25.) The Plaintiff further alleges that Bunkering’s financial difficulties “worsened 

over time such that the ability of Bunkering and BTU to do business as normal became 

materially impaired,” (id., ¶ 26), and that BIC knew that Bunkering’s and BTU’s 

financial condition was deteriorating, (id., ¶ 27). “On April 29, 2013, Brito filed a 

Motion for Judicial Dissolution as to Bunkering in the [Baldwin County] litigation based 

on allegations of financial misconduct, misappropriation and waste.” (Id., ¶ 32.) 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 7 of 39
8

On or about July 19, 2013, Brito filed an affidavit executed by him in 

support of his . . . Motion for Judicial Dissolution . . ., in which he testified 

that “Specialty [i.e., Bunkering] [was] operating at a negative equity 

position . . . its liabilities exceed[ed] its assets. . . . Specialty ha[d] no cash 

reserves, no available credit on terms that are viable to the continued 

operation of the business and thus ha[d] no way to operate as it ha[d]

operated in the past.”

(Id., ¶ 46.) 

The Plaintiff alleges that, despite the foregoing, the Defendants failed to disclose 

Specialty’s precarious financial condition and misrepresented that Specialty was 

financially sound. (Id., ¶¶ 64, 74.)

F. Claims asserted in the TAC.

The Plaintiff asserts thirteen counts in the TAC. (Doc. 64.) In Counts I and II, the 

Plaintiff asserts breach of contract claims against BTU, only. (Id. at 30-31.) In Count III, 

the Plaintiff asserts fraudulent misrepresentation claims against all the Defendants 

pursuant to sections 6-5-101 and 6-5-103 of the Code of Alabama. (Id. at 31-43.) In 

Count IV, the Plaintiff asserts fraudulent suppression claims against all the Defendants 

pursuant to section 6-5-102. (Id. at 43-49.) In Count V, the Plaintiff asserts fraudulent 

deceit claims against all the Defendants pursuant to section 6-5-104. (Id. at 49-55.) In

Count VI, the Plaintiff asserts fraud in the inducement claims against all the 

Defendants. (Id. at 55-58.) In Count VII, the Plaintiff asserts fraud in insolvency claims 

against BTU and Brito pursuant to section 13A-9-48 of the Code of Alabama. (Id. at 58-

65.) In Counts VIII-IX, the Plaintiff asserts negligence and wantonness claims against 

BIC. (Id. at 65-73.) In Counts X-XI, the Plaintiff asserts breach of fiduciary duty claims 

against BIC. (Id. at 73-81.) In Count XII, the Plaintiff asserts that the corporate veil 

should be pierced as to Bunkering and BTU so that the Plaintiff may recover against 

Brito personally. (Id. at 82-84.) In Count XIII, mislabeled as Count XI, the Plaintiff 

asserts a claim for injunctive relief against BTU and Brito. (Id. at 84-87.)

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 8 of 39
9

BTU and Brito moved to dismiss Counts IV and VII for failure to state a claim, 

and moved to strike Count VI as redundant.5 (Doc. 67.) BIC moved to dismiss all 

Counts asserted against BIC (Counts III-VI, VIII-XI) for failure to state a claim. (Doc. 

65.) Counts I, II, XII and XIII are not addressed in the motions to dismiss and, thus, they 

are not discussed herein. 

II. Motion to Dismiss Standard

Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant 

may move to dismiss a complaint on the basis that the plaintiff has failed to state a 

claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A Rule 12(b)(6) 

motion questions the legal sufficiency of a complaint (or portions of a complaint); 

therefore, in assessing the merits of a Rule 12(b)(6) motion, the court must assume that 

all the factual allegations set forth in the complaint are true. See, e.g., United States v. 

Gaubert, 499 U.S. 315, 327, 111 S. Ct. 1267, 1276, 113 L. Ed. 2d 335 (1991); Powell v. 

Lennon, 914 F.2d 1459, 1463 (11th Cir. 1990). Moreover, all factual allegations are to be 

construed in the light most favorable to the plaintiff. See, e.g., Brower v. County of Inyo, 

489 U.S. 593, 598, 109 S. Ct. 1378, 1382, 103 L. Ed. 2d 628 (1989).

Rule 8(a)(2) generally sets the benchmark for determining whether a complaint’s 

allegations are sufficient to survive a Rule 12(b)(6) motion. See Iqbal v. Ashcroft, 556 U.S. 

662, 677-678, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (“Under Federal Rule of Civil 

Procedure 8(a)(2), a pleading must contain a ‘short and plain statement of the claim 

showing that the pleader is entitled to relief.’ As the Court held in Twombly, . . . the 

 5 BTU and Brito indicate in one sentence on the first page of their motion to 

dismiss that Count VI should be dismissed for failure to state a claim. (Doc. 67, ¶ 1.) However, 

in their brief they provide no argument regarding the dismissal of Count VI for failure to state a 

claim and failed to even reassert the statement made on the face of their motion. (Doc. 67-1.) 

The only discussion of Count VI relates to their argument that it should be stricken as 

redundant of other claims. (Id. at 5.) Accordingly, with respect to Count VI, the undersigned 

construes BTU and Brito’s motion as asserting the redundancy argument, only. 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 9 of 39
10

pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but 

it demands more than an unadorned, the defendant-unlawfully-harmed-me 

accusation.”). Indeed, “[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic 

recitation of the elements of a cause of action will not do.’” Id. at 678, 129 S. Ct. at 1949 

(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1964-1965, 167 

L. Ed. 2d 929 (2007)). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ 

devoid of ‘further factual enhancement.’” Id. (quoting Twombly, 550 U.S. at 557, 127 S.

Ct. at 1955).

To survive a motion to dismiss, a complaint must contain sufficient 

factual matter, accepted as true, to state a claim to relief that is plausible 

on its face. A claim has facial plausibility when the plaintiff pleads factual

content that allows the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged. The plausibility standard is 

not akin to a probability requirement, but it asks for more than a sheer 

possibility that a defendant has acted unlawfully. Where a complaint 

pleads facts that are merely consistent with a defendant’s liability, it stops 

short of the line between possibility and plausibility of entitlement to 

relief.

Two working principles underlie our decision in Twombly. First, the 

tenet that a court must accept as true all of the allegations contained in a 

complaint is inapplicable to legal conclusions. Threadbare recitals of the 

elements of a cause of action, supported by mere conclusory statements, 

do not suffice. Rule 8 marks a notable and generous departure from the 

hyper-technical, code-pleading regime of a prior era, but it does not 

unlock the doors of discovery for a plaintiff armed with nothing more 

than conclusions. Second, only a complaint that states a plausible claim for 

relief survives a motion to dismiss. Determining whether a complaint 

states a plausible claim for relief will . . . be a context-specific task that 

requires the reviewing court to draw on its judicial experience and 

common sense. But where the well-pleaded facts do not permit the court 

to infer more than the mere possibility of misconduct, the complaint has 

alleged—but it has not show[n]—that the pleader is entitled to relief.

Id. at 678-679, 129 S. Ct. at 1949-1950 (internal citations and quotation marks omitted); 

see also id. at 680, 129 S. Ct. at 1950-1951 (a plaintiff must nudge his claims “‘across the 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 10 of 39
11

line from conceivable to plausible.’”); see Speaker v. United States Dep’t of Health & Human 

Services Centers for Disease Control & Prevention, 623 F.3d 1371, 1381 (11th Cir. 2010) 

(“[G]iven the pleading standards announced in Twombly and Iqbal, [plaintiff] must do 

more than recite [] statutory elements in conclusory fashion. Rather, his allegations 

must proffer enough factual content to ‘raise a right to relief above the speculative 

level.’”).

III. Discussion

A. The TAC meets basic pleading requirements.

BIC first argues that, as a general matter, the TAC does not contain enough 

factual allegations to meet the facial plausibility pleading standard explained in Iqbal 

and Twombly. (Doc. 65 at 2-3.) The undersigned disagrees. With respect to BIC, the 

Plaintiff asserts fraud, breach of fiduciary duty, negligence and wantonness claims. The 

87-page and 164-paragraph TAC, with 20 pages of attached exhibits, contains more than 

enough facts to show that those claims are plausible on their face. (See doc. 64.) The 

Plaintiff alleges numerous facts to explain (1) the transactions at issue in this case 

through which the Plaintiff lost millions of dollars; (2) BIC’s involvement in those 

transactions as the Plaintiff’s broker and agent; (3) the duties BIC owed to the Plaintiff 

arising from their working relationship and course of dealings; and (4) BIC’s breach of 

those duties through its alleged misrepresentations and suppression of material facts, 

among other things. (See id.) The Plaintiff’s claims are discussed in more detail below, 

but the TAC clearly contains plausible claims with much more than conclusory 

statements or threadbare recitals of the elements of a cause of action. 

BIC next argues that the TAC violates Rule 8(a)(2) and Rule 8(d)(1). (Doc. 65 at 3-

5.) Rule 8(a)(2) provides that a complaint must contain “a short and plain statement of 

the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Rule 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 11 of 39
12

8(d)(1) provides that “[e]ach allegation must be simple, concise, and direct.” Fed. R. 

Civ. P. 8(d)(1). While the TAC is somewhat sprawling, with some paragraphs 

appearing repetitive and unnecessary, the undersigned acknowledges that the length 

and repetition is due, in part, to the fact that the Plaintiff has restated certain allegations 

to cure shotgun pleading deficiencies in the Second Amended Complaint. (Compare 

doc. 64, with doc. 31.) In the Court’s Order granting the Plaintiff leave to file its 

Proposed Second Amended Complaint (“PSAC”), United States District Judge Kristi K. 

DuBose noted that 

the PSAC is a “shotgun pleading,” as it “incorporate[s] every antecedent 

allegation by reference into each subsequent claim for relief . . .” Wagner v. 

First Horizon Pharm. Corp., 464 F.3d 1273, 1279 (11th Cir. 2006). The 

Eleventh Circuit greatly disfavors such pleadings, see, e.g., id. . . . 

However, having reviewed the PSAC, the Court does not find it confusing 

on its face and will not sua sponte deny amendment on this basis.

(Doc. 30 at 7-8.) After the Plaintiff filed the Second Amended Complaint (doc. 31), the 

Defendants filed motions for a more definite statement (docs. 46 and 49), and the 

Plaintiff, subsequently, filed the TAC to clarify its claims. The undersigned agrees with 

the Plaintiff that, at this point, its claims are sufficiently clear. The TAC gives BIC fair 

notice of the Plaintiff’s claims “and the grounds upon which [they] rest,”6 such that it

allows BIC to frame a responsive pleading. Accordingly, the undersigned finds that the 

TAC complies with the pleading requirements of Rule 8.

B. The Plaintiff’s claims against BIC are properly asserted in tort.

BIC argues that all claims Plaintiff asserts against it—fraud, breach of fiduciary 

duty, negligence and wantonness—arose from their contract and, thus, those claims 

 6 See Twombly, 550 U.S. at 555, 127 S. Ct. at 1964-65 (observing that Rule 8(a)(2) 

requires that the pleading “’give the defendant fair notice of what the . . . claim is and the 

grounds upon which it rests” (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 

80 (1957))).

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 12 of 39
13

“must be dismissed insofar as the allegations therein assert a cause of action sounding 

in tort but based on a contract.” (Doc. 65 at 6.) The undersigned disagrees. 

It is well settled in Alabama that “a mere failure to perform a contractual 

obligation is not a tort.” Barber v. Business Products Center, Inc., 677 So. 2d 

223, 228 (Ala. 1996)[, overruled on other grounds by White Sands Group, L.L.C 

v. PRS II, LLC, 32 So. 3d 5, 14 (Ala. 2009)]. It is also true, however, that 

Alabama courts have recognized exceptions to this rule. See, e.g., Powers v. 

CSX Transp., Inc., 190 F. Supp. 2d 1284, 1295 (S.D. Ala. 2002) (collecting 

cases). The Eleventh Circuit has construed Alabama law on this point as 

providing that, while ordinary breach of contract does not constitute a 

tort, “[i]t is possible for a tort to arise in Alabama out of a breach of a duty 

implied by or arising out of a contract.” Brown-Marx Associates, Ltd. v. 

Emigrant Sav. Bank, 703 F.2d 1361, 1371 (11th Cir. 1983); see also Hamner v. 

Mutual of Omaha Ins. Co., 270 So. 2d 87, 90 (Ala. Civ. App. 1972) (similar). 

The Brown-Marx panel distinguished between claims for breach of an 

obligation expressly set forth in the contract (which are not actionable in 

tort under Alabama law) and claims for breach of a duty implied by or 

arising out of the contract (which may be actionable in tort). See BrownMarx, 703 F.2d at 1371.

Hardy v. Jim Walter Homes, Inc., Civil Action No. 06-0687-WS-B, 2008 WL 906455, at *14 

(S.D. Ala. April 1, 2008) (footnote omitted). See Eastern Shore Marine, Inc. v. M/V 

Mistress, 717 F. Supp. 790, 792 (S.D. Ala. 1989) (“If a cause of action arises from a breach 

of a promise, the action is ex contractu; if it arises from a breach of a duty which grows 

out of the relationship of the parties because of the contract, the action is in the form ex 

delicto. . . . Therefore, a contract for the performance of an act which contains no 

contractual provision that the act will be done in a proper manner or free from 

negligence, by law, creates a duty but does not imply a contract, that the act will be 

done in a proper manner when its performance is undertaken, and a breach of this 

legally created duty will give rise to an action ex delicto.” (citing C & C Products, Inc. v. 

Premier Indus. Corp., 275 So. 2d 124, 129-30 (Ala. 1972)); Brooks v. Hill, 717 So. 2d 759, 763

(Ala. 1998) (“[W]here the parties have entered into a contract, if the cause of action 

arises from a breach of duty arising out of the contract, rather than from a breach of a 

promise of the contract itself, the claim is ex delicto.” (citations omitted)); Sanford v. W. 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 13 of 39
14

Life Ins. Co., 368 So. 2d 260, 263 (Ala. 1979) (concluding that the plaintiff’s fraud claim 

sounded in tort even though it arose from a contract because “the contract merely 

establishes the relationship from which such a legally imposed duty could spring.” 

(citations omitted)); Great N. Land & Cattle Inc. v. Firestone Tire & Rubber Co., 337 So. 2d 

1323, 1327-28 (Ala. Civ. App. 1976) (“When the contract does not in terms require 

reasonable care in doing the act stipulated to be done, the law imposes a duty—But 

does not imply a contract—to exercise due care in doing the act; and, therefore, when 

negligence exists in doing that act an action in tort only is available because there is No 

express or implied contract which is breached.” (citations and internal quotation marks 

omitted)); see also Mechler v. John Hancock Life Ins. Co., Civil Action No. 07-0724-CB-M, 

2008 WL 4493230, at *4 (S.D. Ala. Sept. 30, 2008) (concluding that, under Alabama law, 

the plaintiff could pursue tort actions for fraud and fraudulent suppression against 

insurer, where the defendant argued that said tort claims were foreclosed because they 

arose from a breach of the terms of the insurance policy).

In Hardy this Court, applying Alabama law, considered whether plaintiffs could 

bring tort claims arising from a Purchase and Sale Agreement for the construction of a 

house. Hardy, 2008 WL 906455, at *1-2. The plaintiffs, the purchasers of the home, 

asserted negligence actions against the builder for its failure to apply for construction 

permits, failure to communicate with the plaintiffs regarding the construction status, 

and failure to begin construction in a timely manner. Id. at *13. The builder moved for 

summary judgment on the negligence claims arguing that the plaintiffs improperly 

transformed breach of contract claims into tort claims. Id. at *14. This Court rejected the 

builder’s argument, noting that the builder had not identified any provision in the 

contract requiring the builder to perform the acts at issue. Id. This Court concluded 

that, “[b]ecause [the plaintiffs’] negligence claims concern duties arising from the 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 14 of 39
15

Purchase and Sale Agreement rather than breach of express contractual obligations in 

that agreement, . . . [those] claims are cognizable in tort under Alabama law.” Id.

In this case, the Plaintiff asserts fraud, breach of fiduciary duty, negligence and 

wantonness claims against BIC. (Doc. 64 at 31-81.) The Plaintiff alleges, among other 

things, that BIC misrepresented and failed to disclose Specialty’s financial condition 

and that BIC acted negligently and recklessly when it vouched for Specialty and failed 

to advise the Plaintiff as to Specialty’s financial troubles. (Id.) The Plaintiff’s claims are 

firmly grounded in tort, even more so than in Hardy, because the claims here involve 

duties arising primarily from the circumstances of the working relationship between the 

parties. See infra § III.C.4.a. While the relationship between the Plaintiff and BIC arose, 

in part, from the oral agreement whereby BIC agreed to serve as the Plaintiff’s broker, it 

is clear from the TAC that the Plaintiff’s claims did not arise from a breach of a specific 

promise in a contract with BIC. The only reference in the TAC to the agreement 

between the Plaintiff and BIC is the allegation that “[Pappaceno] and [Plaintiff]’s 

management orally agreed that [BIC] would act as [Plaintiff]’s broker for all Bunkering 

and BTU transactions.” (Doc. 64, ¶ 10.) Like the defendant in Hardy, BIC has pointed to 

no provisions of the agreement with the Plaintiff imposing the duties alleged by the 

Plaintiff in the TAC. (Doc. 65 at 5-6.) 

Furthermore, in Ex parte Certain Underwriters at Lloyd’s of London, the Alabama 

Supreme Court analyzed this issue by considering the distinction between nonfeasance 

and misfeasance and looking to the gravamen of the complaint. See Ex parte Certain 

Underwriters at Lloyd’s of London, 815 So. 2d 558, 562-63 (Ala. 2001) (“The theory on 

which the cases have been decided is often difficult to discern, but basically [it] may be 

stated that if there is [a] failure or refusal to perform a promise the action is in contract; 

if there is a negligent performance of a contractual duty or the negligent breach of a 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 15 of 39
16

duty implied by law, such duty being not expressed in the contract, but arising by 

implication of law from the relation of the parties created by the contract, the action 

may be either in contract or [in] tort. In the latter instance, whether the action declared 

is in tort or [in] contract must be determined from the gist or gravamen of the 

complaint. Basically, the line of division between [an action in contract and an action in] tort in 

such instances is [the line between] nonfeasance and misfeasance.” (quoting Hamner, 270 So.

2d at 90-91)). Applying that analysis to this case, the undersigned has confirmed that 

the Plaintiff’s claims against BIC are properly asserted in tort. First, the allegations in 

the TAC present a case of misfeasance, as opposed to nonfeasance, because the Plaintiff 

alleges that, while BIC brokered numerous transactions with Specialty, as agreed by the 

parties, BIC handled those transactions in a wrongful manner. Second, the gravamen of 

the Plaintiff’s claims against BIC sounds in tort. As discussed above, the Plaintiff 

alleges that BIC violated duties imposed by law based on the relationship between the 

parties. (Doc. 64 at 31-81.) The only reference to an agreement between the parties is 

found in a single paragraph of the 164-paragraph TAC. (Id., ¶ 10.)

C. Misrepresentation, suppression, deceit and fraud in inducement claims 

(Counts III-VI).

1. With respect to Counts III-VI the Plaintiff has satisfied the heightened 

pleading requirements of Rule 9(b).

BIC argues that the fraud claims asserted against BIC do not meet the heightened 

pleading standard of Rule 9(b), which provides that “[i]n alleging fraud or mistake, a 

party must state with particularity the circumstances constituting fraud or mistake.

Malice, intent, knowledge, and other conditions of a person’s mind may be alleged 

generally.” Fed. R. Civ. P. 9(b). 7 

 7 BIC also argues that the Plaintiff’s fraud claims fail to meet the pleading 

requirements of Rule 9(f); however, BIC fails to clearly articulate this argument or distinguish it 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 16 of 39
17

Rule 9(b) is satisfied if the complaint sets forth “(1) precisely what 

statements were made in what documents or oral representations or what 

omissions were made, and (2) the time and place of each such statement 

and the person responsible for making (or, in the case of omissions, not 

making) same, and (3) the content of such statements and the manner in 

which they misled the plaintiff, and (4) what the defendants obtained as a 

consequence of the fraud.” Brooks v. Blue Cross and Blue Shield of Florida, 

Inc., 116 F.3d 1364, 1371 (11th Cir. 1997) (internal quotation omitted).

Ziemba v. Cascasde Int’l, Inc., 256 F.3d 1194, 1202 (11th Cir. 2001). However, the 

application of this rule “must not abrogate the concept of notice pleading.” Id. (citation 

and internal quotation marks omitted). Furthermore, “[t]here is no ‘one size fits all’ 

checklist for satisfying [the Rule 9 pleading] requirement. Claybar v. Huffman, 54 F. 

Supp. 3d 1284, 1288 (S.D. Ala. 2014) (citing Tello v. Dean Witter Reynolds, Inc., 494 F. 3d 

956, 972–73 (11th Cir. 2007) (“While allegations of date, time or place satisfy the Rule

9(b) requirement that the circumstances of the alleged fraud must be pleaded with 

particularity, we have acknowledged that alternative means are also available to satisfy 

the rule in substantiating fraud allegations.”); Mechler, 2008 WL 4493230, at *3 

(“Plaintiffs' fraud/fraudulent suppression claim could be better pled; however, the 

complaint, taken as a whole, sufficiently alerts the defendant to the misconduct with 

which it is charged.”)).

After reviewing Counts III-VI, the undersigned concludes that the Plaintiff has 

met the Rule 9 pleading requirements. With respect to the misrepresentation claim, the 

 from BIC’s argument under Rule 9(b). (Doc. 65 at 6-7.) Rule 9(f) provides that “[a]n allegation 

of time or place is material when testing the sufficiency of a pleading.” Fed. R. Civ. P. 9(f). The 

only case cited by BIC with regard to Rule 9(f) is Micor Indus., Inc. v. C2JS Holdings, Inc., in 

which the Northern District of Alabama briefly summarized the allegations in the complaint 

before it and found that it satisfied the requirements of Rules 9(b) and 9(f). Micor Indus., Civil 

Action No. 12-S-02654-NE, 2012 WL 5931707, at *7 (N.D. Ala. Nov. 26, 2012). The court in Micor 

Indus. did not conduct any discussion of Rule 9(f) or otherwise provide support for BIC’s 

assertion that the TAC does not comply with that Rule. In any event, “pleadings that are 

specific enough to satisfy Rule 9(b) are also specific enough to satisfy Rule 9(f).” Orix Real Estate 

Capital Markets, LLC v. Superior Bank, FSB, 127 F. Supp. 2d 981, 986 (N.D. Ill. 2000). Thus, 

because the undersigned finds below that the TAC complies with Rule 9(b), the undersigned 

also finds that the TAC does not run afoul of Rule 9(f).

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 17 of 39
18

Plaintiff alleges, in paragraph 57 of the TAC, that BIC misrepresented Specialty as being 

financially sound. (Doc. 64, ¶ 57.) Paragraph 57 contains numerous subparagraphs 

setting forth multiple representations with varying degrees of particularity. Although 

certain subparagraphs do not contain clear statements described with particularity, 

some statements are alleged with sufficient detail. For example, the Plaintiff alleges 

that, on February 6, 2013, Pappaceno sent the Plaintiff an instant message stating, with 

respect to Specialty, that “Business is good,” and that “[Specialty] should have [the 

Plaintiff’s] invoice paid within 10 business days.” (Id., ¶ 57(i) (emphasis omitted).)8 

Additionally, the Plaintiff alleges that BIC misrepresented the status of fuel oil securing 

the Plaintiff’s transactions with Specialty when, on April 11, 2013, Pappaceno sent the 

Plaintiff an instant message proposing that the Plaintiff enter into another purchase 

agreement with Specialty and stating that the purchase “gives [the Plaintiff] title to 

fuel.” (Id., ¶ 57(k) (emphasis omitted).) The Plaintiff alleges that it relied on those 

statements when it continued to transact business with Specialty, including rolling over 

Specialty’s debts, and that, as a result of those transactions, the Plaintiff lost millions of 

dollars. (Id., ¶ 65-66.) Furthermore, the Plaintiff alleges that, as a consequence of BIC’s 

fraud, “[BIC] was able to secure millions of dollars worth of extended credit from [the 

Plaintiff] for Bunkering and BTU and secure brokerage commissions for itself.” (Id., ¶ 

63.) The Plaintiff alleges that “[BIC] may have also lessened direct financial risk to itself 

for any credit which it may have extended to Bunkering and BTU during the same time 

period by securing for Bunkering and BTU the ability to perform debt service to [BIC] 

through the receipt of funds provided by [the Plaintiff].” (Id.) Based on these 

allegations, and considering the TAC as a whole, the undersigned finds that the Plaintiff 

 8 BIC also argues that these statements do not constitute misrepresentations of 

material facts. That issue is discussed below. See infra § III.C.2.

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 18 of 39
19

has satisfied the Rule 9 pleading standard. See Claybar, 54 F. Supp. 3d at 1288 

(“Examining the Second Amended Complaint in toto, the Court readily concludes that it 

adequately pleads the circumstances constituting the alleged fraud for Rule 9(b) 

purposes. . . . In light of those particularized factual allegations, no viable argument can 

be made that defendants have not been alerted to the ‘precise misconduct with which 

they are charged,’ . . . which is, after all, the purpose of the particularity rule.”). 

Although the Plaintiff failed to identify Pappaceno’s location when he made the 

aforementioned statements, (see doc. 64, ¶ 57), that detail is unnecessary given that 

Pappaceno’s statements were transmitted electronically and the Plaintiff alleged 

numerous other details that alert BIC to the misconduct charged. See Claybar, 54 F. 

Supp. 3d at 1288 n.4 (“That the pleading does not enumerate ‘where it was made’ is not 

fatal to the sufficiency of Count IV. Again, the Rule 9(b) requirement that fraud be 

pleaded with particularity is not a rigid, inflexible checklist.”).

The undersigned likewise finds that the Plaintiff has met the Rule 9 pleading

standard with respect to its suppression, deceit, and fraudulent inducement claims 

found in Counts IV, V and VI. Those fraud claims are essentially variations of the 

misrepresentation claim arising from the same events. (See doc. 64, ¶ 74 (alleging that

BIC “suppress[ed] material facts . . . as to (a) the true state of the financial condition of 

Bunkering and BTU and (b) the status of fuel based product serving as security or 

collateral”); id., ¶ 85 (alleging that BIC deceived the Plaintiff when it “intentionally 

misrepresented . . . (a) the true state of the financial condition of Bunkering and BTU 

and (b) the status of fuel based product serving as security or collateral”); id., ¶¶ 90-92

(alleging that BIC fraudulently induced the Plaintiff to continue to transact business 

with Specialty and roll over debts when BIC misrepresented (a) the true state of the 

financial condition of Bunkering and BTU and (b) the status of fuel based product 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 19 of 39
20

serving as security or collateral”).) BIC has failed to demonstrate how the TAC 

provides inadequate notice of those claims. 

2. Misrepresentation and deceit claims against BIC (Counts III and V).

The Plaintiff’s misrepresentation and deceit claims are brought pursuant to 

sections 6-5-101, 6-5-103, and 6-5-104 of the Code of Alabama. (Doc. 64 at 31-43, 49-55.) 

Section 6-5-101 provides that “[m]isrepresentations of a material fact made willfully to 

deceive, or recklessly without knowledge, and acted on by the opposite party, or if 

made by mistake and innocently and acted on by the opposite party, constitute legal 

fraud.” Ala. Code § 6-5-101 (1975). Sections 6-5-103 and 6-5-104 address actions for 

deceit. Pursuant to section 6-5-103,

[w]illful misrepresentation of a material fact made to induce another to 

act, and upon which he does act to his injury, will give a right of action. 

Mere concealment of such a fact, unless done in such a manner as to 

deceive and mislead, will not support an action. In all cases of deceit, 

knowledge of a falsehood constitutes an essential element. A fraudulent or 

reckless representation of facts as true, which the party may not know to 

be false, if intended to deceive, is equivalent to a knowledge of the 

falsehood.

§ 6-5-103.9 Furthermore, section 6-5-104 provides as follows: 

(a) One who willfully deceives another with intent to induce him to alter 

his position to his injury or risk is liable for any damage which he thereby 

suffers.

(b) A deceit within the meaning of this section is either:

(1) The suggestion as a fact of that which is not true by one who 

does not believe it to be true; 

(2) The assertion as a fact of that which is not true by one who has 

no reasonable ground for believing it to be true; 

 9 The undersigned notes that, although section 6-5-103 provides for an action for 

deceit, the Plaintiff refers to that section within Count III in which the Plaintiff asserts a claim 

for misrepresentation. (Doc. 64, ¶ 66.) As stated below, actions for misrepresentation and 

deceit are very similar.

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 20 of 39
21

(3) The suppression of a fact by one who is bound to disclose it or 

who gives information of other facts which are likely to mislead for 

want of communication of that fact; or 

(4) A promise made without any intention of performing it. 

§ 6-5-104.

“The elements of a misrepresentation claim are 1) a misrepresentation of material 

fact, 2) made willfully to deceive, recklessly, without knowledge, or mistakenly, 3) 

which was reasonably relied on by the plaintiff under the circumstances, and 4) which 

caused damage as a proximate consequence.” Bryant Bank v. Talmage Kirkland & 

Company, Inc., 155 So. 3d 231, 238 (Ala. 2014) (citations omitted). A claim for deceit 

is extremely similar to [a misrepresentation claim], except that “a[n] action 

for deceit, under . . . § 6-5-103 and § 6-5-104, results from either a willful or 

reckless misrepresentation or a suppression of material facts with an 

intent to mislead,” Whitlow v. Bruno’s Inc., 567 So. 2d 1235, 1241 (Ala. 

1990), while an action for misrepresentation of material fact can be based 

on an unintentional misrepresentation. [§ 6-5-101].

Montgomery Rubber & Gasket Co. v. Belmont Machinery Co., 308 F. Supp. 2d 1293, 1299 

(M.D. Ala. 2004).

With respect to the Plaintiff’s misrepresentation and deceit claims, BIC asserts 

the same argument—that the Plaintiff failed to allege a misrepresentation of a material 

fact. (See doc. 65 at 10, 15.) 

[A] misrepresentation requires an affirmative statement or 

misrepresentation. Mann v. Adams Realty Co., 556 F.2d 288, 296 (5th Cir. 

1977). . . . The representation normally must be of a present fact not a 

future fact, Sly v. First National Bank, 387 So. 2d 198 (Ala. 1980)[,] nor an 

opinion, promise, or prophesy, Fidelity & Casualty Co. v. J. D. Pittman 

Tractor Co., 244 Ala. 354, 358, 13 So. 2d 669 (1943), unless the statement 

was expressed such that the other person may reasonably treat it as a fact, 

id. at 358, 13 So. 2d at 672, or if “there are circumstances tending to show 

fraudulent intent at the time of the promise or representation,” Ringer v. 

First National Bank, 291 Ala. 364, 368, 281 So.2d 261, 265 (1973).

. . . 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 21 of 39
22

Whether a given representation is an opinion or a fact “depends upon all 

the circumstances of the particular case, such as the form and subject 

matter of the representation and the knowledge, intelligence and relation 

of the respective parties.” Fidelity & Casualty Co. [], 244 Ala. [at] 358, 13 So.

2d [at] 672 []. When parties deal at arm's length and the recipient of a 

statement is not fraudulently induced to forbear inquiries that a 

competent person would make for his own protection, “expressions of

opinion as to matters which lie in opinion merely—opinions as to current 

market values furnishing the most common example—” will not be 

grounds for a misrepresentation claim because the recipient, knowing the 

nature of such expressions, has no right to rely on them. Id. Even an 

opinion on value is actionable, however, if the recipient states his 

ignorance and invites the opinion, and the speaker understands the 

recipient relies on the speaker's opinion as a fact so that the onus of a 

confidential relation results: if the recipient forbears independent inquiry 

because of an opinion elicited under these circumstances of confidence, 

Alabama courts will treat the statement as a fact reasonably relied upon. 

Id.

Kaye v. Pawnee Const. Co., Inc., 680 F.2d 1360, 1367-68 (11th Cir. 1982) (footnote omitted); 

see Bryant Bank, 155 So. 3d at 239-40 (citing Kaye, 680 F.2d at 1368).

As discussed above, the Plaintiff alleges that BIC misrepresented that Specialty 

was financially sound and able to pay the Plaintiff when it stated that “[b]usiness is 

good” and that “[Specialty] should have [the Plaintiff’s] invoice paid within 10 business 

days.” (Id., ¶ 57(i) (emphasis omitted).) 10 The Plaintiff also alleges that BIC 

 10 “Under Alabama law a misrepresentation of financial condition can be 

actionable.” Ringer, 281 So. 2d at 264.

“An unbending rule can not be laid down for all cases, where, upon the 

representations of an uninterested person, one trusts another, and suffers loss. 

Much must depend on the circumstances of the particular case. But when, as in 

this case, the person recommending knows that the object of the party procuring 

the recommendation is to obtain credit at a distance; knows that the proposed 

seller is unacquained with the financial condition and credit of the proposed 

buyer, the law, in harmony with good morals and good neighborhood, requires 

that the same shall be faithfully and truthfully given. A representation, as fact, of 

that which the party knows to be false; or, of that, of the truth of which he has no 

knowledge or well-founded belief, falls below the standard of legal requirement. 

And if it turn out in fact that the representation is false, and the seller is deceived 

and suffers loss in consequence of the sale he made on the strength of it, the 

party recommending must make good the loss. . . .”

Id. (quoting Einstein, Hirsch & Co. v. Marshall & Conley, 58 Ala. 153 (1877)).

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 22 of 39
23

misrepresented that fuel oil served as collateral securing the Plaintiff’s accounts with 

Specialty when BIC stated that entering into the STEM agreements with Specialty 

“gives [the Plaintiff] title to fuel.” (Id., ¶ 57(k) (emphasis omitted).) Standing alone,

these statements appear that they could be mere opinions rather than representations of 

fact. However, when viewed in conjunction with all the circumstances of this case, the 

Court could ultimately determine that these statements should be treated as facts. See

Ringer, 281 So. 2d at 265 (“[A] representation of an opinion or a prediction of a future 

event can be an actionable fraud, but such opinions or predictions are not actionable 

unless ‘there are circumstances tending to show an actual fraudulent intent at the time 

of the promise or representation’ is made.” (quoting Scholz Homes, Inc. v. Hooper, 254 So. 

2d 328, 332-33 (Ala. 1971)); Scholz Homes, 254 So. 2d at 332 (“[I]t is often fallaciously 

assumed that a statement of opinion cannot involve the statement of a fact. . . . If the 

facts are not equally known to both sides, then a statement of opinion by the one who 

knows the facts best involves very often a statement of a material fact, for he impliedly 

states that he knows facts which justify his opinion.” (quoting Shepherd v. Kendrick, 181 

So. 782, 784 (Ala. 1938)); Fidelity & Casualty Co., 13 So. 2d at 672 (“Whenever a person 

states a matter which might otherwise be only an opinion, not as a mere expression of 

his own opinion but as an existing fact material to the transaction, so that the other 

party may reasonably treat it as a fact, the statement clearly becomes a statement of 

fact.”). 

Here, the Plaintiff alleges that BIC was in a position of superior knowledge 

regarding Specialty’s business operations and that BIC knew that the Plaintiff relied on 

its statements when making determinations as to whether to transact business with 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 23 of 39
24

Specialty. (Doc. 64, §§ 14-16, 57-59, 80-84.)11 Furthermore, the Plaintiff alleges that BIC 

knew the statements were untrue when it made them and that BIC made them with a 

fraudulent intent to induce the Plaintiff to continue transacting business with Specialty. 

(Doc. 64, §§ 23-25, 60-64, 85.) Therefore, when viewed within the context of the entire 

TAC, the undersigned cannot find that the Plaintiff has not sufficiently alleged 

misrepresentations of material12 facts. See Ringer, 281 So. 2d at 263-64 (finding that, 

within the context of all the circumstances alleged, the representation that a potential 

buyer is “better and more dependable” could be sufficient to be given to the jury, 

provided that the allegations were supported by the evidence); Mason & Dixon Lines, 

Inc. v. Byrd, 601 So. 2d 68, 72-73 (Ala. 1992) (concluding that the representations that one 

party would give “100 percent support” and that equipment would be available were

properly considered by the jury within the context of the other facts of the case).

The Plaintiff also alleges that BIC’s misrepresentations were willful, intentional 

and reckless,13 that the Plaintiff reasonably relied on BIC’s representations when it 

continued to transact business with Specialty and rolled over its agreements, and that it 

sustained significant financial losses as a result. (Doc. 64, ¶¶ 64-66, 85-87.) Therefore, 

 11 For example, the Plaintiff alleges that BIC had a close relationship with Specialty 

amounting to an “apparent, if not actual, insider position”; that BIC insisted that the Plaintiff 

trust and rely on BIC’s representations regarding Specialty; and that the Plaintiff not contact 

Specialty directly. (Doc. 64, §§ 14-16.)

12 As alleged, the facts at issue were clearly material. “A material fact is one which 

would induce the plaintiff to take action,” Lawson v. Cagle, 504 So. 2d 226, 227 (Ala. 1987) (citing 

Bank of Red Bay v. King, 482 So. 2d 274, 282 (Ala. 1985)), and the Plaintiff alleges that BIC’s 

misrepresentations “induced [the Plaintiff] to provide credit terms exceeding several millions of 

dollars and to roll over that indebtedness.” (Doc. 64, ¶ 60.)

13 BIC argues that the Plaintiff has not alleged any facts showing that BIC’s alleged 

misrepresentations were made willfully or recklessly. (Doc. 65 at 11.) The Plaintiff, however, 

need not allege additional facts to demonstrate knowledge, willfulness or recklessness on the 

part of BIC. Such allegations may be made generally. Fed. R. Civ. P. 9(b).

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 24 of 39
25

the undersigned finds that the Plaintiff has stated a plausible claim for 

misrepresentation. See Bryant Bank, 155 So. 3d at 238.14 Because the Plaintiff also alleges 

that BIC made the aforesaid misrepresentations with the intent to mislead and induce 

the Plaintiff to continue to transact business with Specialty, (doc. 64, §§ 80-81, 85), the 

Plaintiff has stated a plausible claim for deceit.15 See § 6-5-104(a); Whitlow, 567 So. 2d at 

1241. Accordingly, the undersigned RECOMMENDS that BIC’s motion to dismiss be 

denied with respect to Plaintiff’s misrepresentation and deceit claims. 

3. Fraud in the inducement claim against BIC, BTU and Brito (Count VI).

The Defendants all argue that the Plaintiff’s fraud in the inducement claim 

should be stricken or dismissed for being redundant of the Plaintiff’s misrepresentation 

and deceit claims. (Doc. 65 at 16; doc. 67-1 at 5.) First, the undersigned notes that the 

Defendants improperly seek the dismissal of Count VI on redundancy grounds. 

“[M]otions to dismiss made under Rule 12(b)(6) only test the validity of a claim, not its

redundancy; a redundant claim should not be dismissed as long as it is valid.” Wichael 

v. Wal-Mart Stores East, LP, No. 6:14-cv-579-Orl-40DAB, 2014 WL 5502442, at *2 (M.D. 

Fla. Oct. 30, 2014) (citing Bangkok Crafts Corp. v. Capitolo Di San Pietro in Vaticano, No. 03 

 14 BIC, relying on Dewitt Apparel, Inc. v. F.D.I.C., Civil Action No. 94-1009-AH-M, 

1996 U.S. Dist. LEXIS 8593, at *21 (S.D. Ala. June 7, 1996), argues that the Plaintiff has failed to 

make a sufficient showing of fraud. (Doc. 65 at 11.) However, in Dewitt Apparel the Court 

considered a motion for summary judgment and determined whether the plaintiff had 

produced substantial evidence supporting the elements of its fraud claim. Dewitt Apparel, 1996 

U.S. Dist. LEXIS 8593, at *21. Thus, the Court’s analysis in Dewitt Apparel is not applicable to the 

determination of whether the Plaintiff in this case has failed to state a claim.

15 The undersigned also notes that, even if the Plaintiff failed to sufficiently allege a 

material misrepresentation of fact, the Plaintiff’s deceit claim would still survive based on the 

allegations that BIC suppressed information regarding Specialty’s financial condition with the 

intent to mislead the Plaintiff, (doc. 64, ¶¶ 79-88). See § 6-5-103 (“Mere concealment of such a 

fact, unless done in such a manner as to deceive and mislead, will not support an action.”); § 6-

5-104 (“A deceit within the meaning of this section [includes] . . . [t]he suppression of a fact by 

one who is bound to disclose it.”); Whitlow, 567 So. 2d at 1241 (“An action for deceit . . . results 

from . . . a suppression of material facts with an intent to mislead.”).

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 25 of 39
26

Civ. 15(RWS), 2007 WL 1687044, at *10 (S.D.N.Y. June 11, 2007)); see id. (finding that a 

duplicative negligence claim cannot be dismissed for being redundant). Thus, the 

Defendants’ motions with respect to Count VI are properly understood as motions to 

strike pursuant to Fed. R. Civ. P. 12(f). Rule 12(f) provides that “[t]he court may16 strike 

from a pleading . . . any redundant, immaterial, impertinent, or scandalous matter.” 

Fed. R. Civ. P. 12(f) (emphasis added). 

The purpose of a motion to strike is to clean up the pleadings, streamline 

litigation, and avoid unnecessary forays into immaterial matter. A court 

will not exercise its discretion under the rule to strike a pleading unless 

the matter sought to be omitted has no possible relationship to the 

controversy, may confuse the issues, or otherwise prejudice a party. 

Because striking a portion of a pleading is a drastic remedy and because it 

often is sought by the movant simply as a dilatory tactic, motions under 

Rule 12(f) are viewed with disfavor and are infrequently granted. 

Principal Bank v. First American Mortgage, Inc., No. 2:10-cv-190-FtM-29DNF, 2014 WL 

1268546, at *1 (M.D. Fla. Mar. 27, 2014) (internal citations, quotation marks, and brackets 

omitted)); see also TracFone Wireless, Inc. v. Zip Wireless Products, Inc., 716 F. Supp. 2d 

1275, 1290 (N.D. Ga. 2010) (“Rule 12(f) reflects the inherent power of the Court to prune 

down pleadings so as to expedite the administration of justice and to prevent abuse of 

its process. Motions to strike are generally viewed with disfavor and are often 

considered time wasters. A motion to strike is a drastic remedy to be resorted to only 

when required for the purposes of justice . . . and should be granted only when the 

pleading to be stricken has no possible relation to the controversy.” (internal citations, 

quotation marks, and brackets omitted)). Indeed, stated more succinctly, “[i]n 

addressing a Motion to Strike, ‘a court will not exercise its discretion . . . unless the 

matter sought to be omitted has no possible relationship to the controversy, may 

 16 “The Court has broad discretion in considering a motion to strike under Federal 

Rule of Civil Procedure 12(f).” Tracfone Wireless, Inc. v. Access Telecom, Inc., 642 F. Supp. 2d 1354, 

1360 (S.D. Fla. 2009) (citations omitted).

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 26 of 39
27

confuse the issues, or otherwise prejudice a party.’” Hepp v. Paul Revere Life Ins. Co., No. 

8:13-CV-02836-EAK-TBM, 2014 WL 3865389, at *7 (M.D. Fla. Aug. 5, 2014) (emphasis 

supplied); see also Tracfone Wireless, Inc. v. Access Telecom, Inc., supra, 642 F. Supp. 2d at 

1361 (“”A motion to strike will usually be denied unless the allegations have no 

possible relation to the controversy and may cause prejudice to one of the parties.’” 

(citations omitted)).

In support of their motion to strike the Plaintiff’s fraud in the inducement claim, 

asserted in Count VI, the Defendants solely argue that the elements of that claim mirror 

the elements of the Plaintiff’s misrepresentation and deceit claims. (Doc. 65 at 16; doc. 

67-1 at 5.) The Defendants assert no argument that Count VI somehow prejudices the 

Defendants, that it confuses the issues, or that it has no relation to this controversy, 

(doc. 65 at 16; doc. 67-1 at 5), and the undersigned’s review of Count VI reveals that it 

does not suffer from those flaws. While the undersigned acknowledges that the fraud 

in the inducement claim is very similar to the Plaintiff’s misrepresentation and deceit 

claims,17 the similarity of claims in the TAC does not warrant the drastic remedy sought. 

Accordingly, the undersigned RECOMMENDS that the Defendants’ motions to 

dismiss or strike Plaintiff’s fraud in the inducement claim be denied.

18

 17 Indeed, “[a] claim of fraudulent inducement under Alabama law is similar to one 

of misrepresentation.” Whitney Bank v. Murphy, Civil Action No. 11-00614-KD-M, 2013 WL 

1191235, at *11 (S.D. Ala. Mar. 22, 2013).

18 The undersigned notes that BIC also argues in a single sentence that Plaintiff’s

fraud in the inducement claim fails for the same reasons that Plaintiff’s misrepresentation, 

suppression and deceit claims are due to be dismissed. (Doc. 65 at 16.) However, as discussed 

herein, the undersigned finds that Plaintiff’s misrepresentation, suppression and deceit claims 

are sufficiently stated and are not due to be dismissed. Therefore, the undersigned rejects this 

undeveloped argument from BIC. 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 27 of 39
28

4. Suppression claims against BIC, BTU and Brito (Count IV).

The Plaintiff alleges that BIC, BTU and Brito concealed and suppressed material 

facts in violation of section 6-5-102 when they failed to disclose facts “as to (a) the true 

state of the financial condition of Bunkering and BTU and (b) the status of fuel based 

product serving as security or collateral.” (Doc. 64, ¶ 74.) Section 6-5-102 provides as 

follows: “Suppression of a material fact which the party is under an obligation to 

communicate constitutes fraud. The obligation to communicate may arise from the 

confidential relations of the parties or from the particular circumstances of the case.” § 

6-5-102. “The elements of a suppression claim are ‘(1) a duty on the part of the 

defendant to disclose facts; (2) concealment or nondisclosure of material facts by the 

defendant; (3) inducement of the plaintiff to act; [and] (4) action by the plaintiff to his or 

her injury.’” Freightliner, L.L.C. v. Whatley Contract Carriers, L.L.C., 932 So. 2d 883, 891 

(Ala. 2005) (quoting Lambert v. Mail Handlers Benefit Plan, 682 So. 2d 61, 63 (Ala. 1996)).

BIC, BTU and Brito have all moved to dismiss the Plaintiff’s suppression claim 

on the grounds that there are no allegations supporting a duty to disclose. (Doc. 65 at 

12-14; doc. 67-1 at 1-3.) The undersigned first considers this argument with respect to 

BIC.

a. Suppression claim against BIC.

To adequately allege a duty to disclose, the Plaintiff must allege facts upon which 

that duty may arise. See Fowler v. Goodman Mfg. Co. LP, No. 2:14-CV-968-RDP, 2014 WL 

7048581, at *9-10 (N.D. Ala. Dec. 12, 2014); Shedd v. Wells Fargo Home Mortgage, Inc., Civil 

Action No. 14-00275-CB-M, 2014 WL 6451245, at *5 (S.D. Ala. Nov. 17, 2014).

A duty to disclose often arises when there is a confidential or fiduciary 

relationship between the parties. [Ellis v. Zuck, 409 F. Supp. 1151, 1157 

(N.D. Ala. 1976), aff’d, 546 F.2d 643 (5th Cir. 1977).] The Alabama courts do 

not seem to focus on the “designation of the relationship, such as vendorvendee, etc., but instead look to the relative bargaining positions of the 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 28 of 39
29

parties.” Id. (citing [Hall Motor Co. v.] Furman, 234 So. 2d [37,] 41 [(Ala. 

1970)], Metropolitan Life Ins. Co. v. James, 238 Ala. 337, 191 So. 352 (1939)) 

(cited with approval in Jim Walter Homes, Inc. v. Waldrop, 448 So. 2d 301, 305 

(Ala. 1983) (per curiam)); Jim Short Ford Sales[, Inc., v. Washington], 384 So.

2d [83,] 87 [(Ala. 1980)].

19 Even when a confidential relationship between 

the parties does not exist, the particular circumstances of a situation can 

give rise to an obligation to disclose. Mann [v. Adams Realty Co.], 556 F.2d 

[288,] 297 [(5th Cir. 1977)]; [§ 6–5–102]. When the accused has superior 

knowledge or expertise not shared by the plaintiff, the obligation to 

disclose is compelling. Mann, 556 F.2d at 297 (citing Chapman v. Rivers 

Constr. Co., 284 Ala. 633, 227 So. 2d 403, 410–13 (1969)); Ellis, 409 F. Supp. 

at 1157–58. In order to determine whether a duty to disclose exists, we 

must examine the facts of each individual case; “a rigid approach is 

impossible, and, indeed, the words of the statute itself counsel flexibility.” 

Jim Short Ford Sales, 384 So. 2d at 87. Finally, even if one is not under a 

duty to speak, if he decides to do so, “he must make a full and fair 

disclosure,” without concealing any facts within his knowledge. Ellis, 409 

F. Supp. at 1158 (citing Jackson Co. v. Faulkner, 55 Ala. App. 354, 315 So. 2d 

591 (1975)).

First Ala. Bank of Montgomery, N.A. v. First State Ins. Co., 899 F.2d 1045, 1059 (11th Cir. 

1990). 

After reviewing the TAC, the undersigned has concluded that the Plaintiff has 

alleged facts giving rise to a confidential and fiduciary relationship between the 

Plaintiff and BIC, triggering a duty to disclose. The Alabama Supreme Court has 

defined a confidential or fiduciary relationship as follows:

A confidential relationship is one in which one person occupies toward

another such a position of adviser or counselor as reasonably to inspire 

confidence that he will act in good faith for the other's interests, or when 

one person has gained the confidence of another and purports to act or 

advise with the other's interest in mind; where trust and confidence are 

reposed by one person in another who, as a result, gains an influence or 

superiority over the other; and it appears when the circumstances make it 

certain the parties do not deal on equal terms, but, on the one side, there is 

an overmastering influence, or, on the other, weakness, dependence, or 

trust, justifiably reposed; in both an unfair advantage is possible. It arises 

in cases in which confidence is reposed and accepted, or influence 

 19 Jim Walter Homes and Jim Short Ford Sales were overruled on other grounds by 

State Farm Fire and Casualty Co. v. Owen, 729 So. 2d 834, 838-42 (Ala. 1998), where the Alabama 

Supreme Court held that the duty to disclose is a question of law to be determined by the Court. 

Id. (“[W]e hereby overrule that line of cases that gives to the jury the responsibility of 

determining the existence of a duty on the defendant’s part.”).

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 29 of 39
30

acquired, and in all the variety of relations in which dominion may be 

exercised by one person over another.

DGB, LLC v. Hinds, 55 So. 3d 218, 231-32 (Ala. 2010) (quoting Bank of Red Bay, 482 So. 2d 

at 284) (internal quotation marks omitted).

The Plaintiff alleges that BIC was the Plaintiff’s exclusive broker and agent with 

respect to its dealings with Specialty, (doc. 64, §§ 15(c), 18, 71); that BIC “insisted that 

[the Plaintiff] not contact ‘Specialty’ directly and required [the Plaintiff] to use [BIC] as 

the sole intermediary between the parties,” (id., ¶72(g)); that, consequently, the Plaintiff 

bec[a]me dependent and reliant on [BIC] for all current and accurate information” as to 

whether Specialty was financially able to perform the transactions at issue, (id.); that 

BIC informed the Plaintiff of BIC’s independent dealings with Specialty, including 

transactions involving extended credit arrangements, which suggested to Plaintiff that 

Specialty was financially reliable, (id., ¶¶ 72(c)-(d)); that BIC communicated directly 

with Brito regarding Specialty’s transactions, further demonstrating BIC’s superior 

position of knowledge and leading the Plaintiff to place more confidence and trust in 

BIC, (id., ¶ 16); and that when the Plaintiff directed inquiries to BIC regarding 

Specialty’s ability to make payments, BIC advised the Plaintiff not to worry and 

reminded the Plaintiff that it could trust BIC, (id., ¶ 72(a)-(b)). Based upon this alleged 

course of dealings, the Plaintiff has sufficiently alleged a fiduciary or confidential 

relationship between the Plaintiff and BIC. See Express Oil Change, LLC v. ANB Ins. 

Services, Inc., 933 F. Supp. 2d 1313, 1351-52 (N.D. Ala. 2013) (finding that a confidential 

relationship existed between the plaintiff and its insurance broker when the broker 

“inspired confidence in [the plaintiff] that [it] would act in good faith for its interests”). 

Furthermore, the Plaintiff has adequately alleged that BIC owed a duty to disclose 

arising from their fiduciary or confidential relationship. See Hinds, 55 So. 3d at 231-34 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 30 of 39
31

(concluding that the plaintiffs sufficiently alleged that the defendants owed a duty to 

disclose arising from their confidential and fiduciary relationship with the defendants 

when they alleged, among other things, that they “entrusted [the defendants] with the 

negotiation of [the transaction] based on [the defendants’] superior experience and 

knowledge”); State Farm Mut. Auto. Ins. Co. v. Ling, 348 So. 2d 472, 474-76 (Ala. 1977)

(holding that an insurer owed a duty to disclose arising from its confidential 

relationship with the plaintiff where the plaintiff developed trust and confidence in his 

insurer through their course of dealings in which the insurer made assurances that it 

would take care of the plaintiff’s interests).

Moreover, even if a confidential relationship did not arise from the alleged facts, 

the undersigned finds that a duty to disclose on the part of BIC could arise from the 

particular circumstances of this case. When determining whether a duty arises under 

the particular circumstances of a case, the court shall consider the following factors: “(1) 

the relationship of the parties; (2) the relative knowledge of the parties; (3) the value of 

the particular fact; (4) the plaintiffs' opportunity to ascertain the fact; (5) the customs of 

the trade; and (6) other relevant circumstances.” Freightliner, 932 So. 2d at 891 (quoting 

Armstrong Bus. Services, Inc. v. AmSouth Bank, 817 So. 2d 665, 677 (Ala. 2001)) (internal 

quotation marks omitted).

The first four factors identified in Freightliner all weigh in favor of finding a duty, 

should the proof ultimately support the Plaintiff’s allegations.20 The relationship of the 

parties weighs in favor of finding a duty because the Plaintiff alleges that BIC is the 

Plaintiff’s exclusive broker and agent, that Pappaceno had handled the Plaintiff’s 

transactions with Specialty for several years and that Pappaceno and BIC fostered a 

 20 The parties have not provided the Court with any information regarding the 

customs of the trade with respect to this issue. Therefore, the undersigned cannot make a 

determination as to whether the fifth factor supports a duty in this case.

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 31 of 39
32

relationship whereby the Plaintiff trusted and relied on Pappaceno and BIC’s 

representations regarding Specialty. The knowledge of the parties supports the finding 

of a duty because the Plaintiff has alleged that BIC had far superior knowledge based 

on its direct access to Specialty’s business operations and BIC’s insistence that the 

Plaintiff not contact Specialty. Similarly, the Plaintiff was less likely to ascertain the 

facts at issue because BIC had established that the Plaintiff’s inquiries regarding 

Specialty should be directed to BIC. The value of the facts at issue—Specialty’s financial 

instability and the lack of collateral securing transactions with Specialty—supports the 

finding of a duty because the Plaintiff alleges that, had it known those facts, it would 

have ceased doing business with Specialty and immediately sought to collect the funds 

owed. Thus, the circumstances of this case could give rise to a duty to disclose the 

information at issue. See First Ala. Bank of Montgomery, 899 F.2d at 1059 (concluding 

that, despite the fact that the plaintiff was a sophisticated financial institution, its 

insurer owed a duty to disclose under the particular circumstances of the case, 

including the insurer’s superior knowledge regarding the dealings at issue); Independent 

Life & Accident Ins. Co. v. Harrington, 658 So. 2d 892, 896-97 (Ala. 1995) (concluding that, 

under the circumstances of the case, including the plaintiff’s reliance on the defendant’s 

superior knowledge, the defendant owed a duty to disclose).

Because the Plaintiff has alleged that BIC had a duty to disclose Specialty’s poor 

financial condition and the lack of fuel oil securing plaintiff’s transactions with 

Specialty, that BIC failed to disclose those facts, that BIC solicited the Plaintiff to enter 

into purchase agreements with Specialty, and that the Plaintiff sustained serious 

financial losses as a result of those transactions, the Plaintiff has stated a claim against 

BIC for suppression. Therefore, the undersigned RECOMMENDS that BIC’s motion to 

dismiss should be denied with respect to Plaintiff’s suppression claim.

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 32 of 39
33

b. Suppression claim against BTU and Brito.

With respect to BTU and Brito, the Plaintiff did not allege a confidential 

relationship or special circumstances giving rise to a duty on the part of BTU and Brito 

to disclose its poor financial condition or the status of fuel oil securing the purchase 

agreements with the Plaintiff. (Compare doc. 64, ¶ 72, with id., ¶¶ 68-77.) Furthermore, 

the Plaintiff asserts no argument in that regard.

21 (See doc. 73 at 22-23.) Instead, the 

Plaintiff argues that BTU’s and Brito’s duty to disclose arose from a criminal statute—

section 13A-9-48 of the Code of Alabama. (Doc. 73 at 23.) As discussed below, the 

Plaintiff’s reliance on a criminal statute is unconvincing. While the Plaintiff concedes 

that section 13A-9-48 does not give rise to a private right of action, it argues that the 

statute, nevertheless, imposes a duty satisfying a critical element in the Plaintiff’s 

fraudulent suppression claim brought pursuant to section 6-5-102. (Doc. 73 at 23.) The 

Plaintiff provides no authority supporting this argument, and the undersigned does not 

find it persuasive. See infra § III.D. 

Nevertheless, the undersigned finds that a duty for BTU and Brito to disclose the 

facts at issue could arise from BTU and Brito’s alleged misleading representations. See 

CNH Am., LLC v. Ligon Capital, LLC, --- So. 3d ----, 1111204, 2013 WL 5966782, at *5 (Ala. 

Nov. 8, 2013) (“’[O]nce a party elects to speak, he or she assumes a duty not to suppress 

or conceal those facts that materially qualify the facts already stated.’” (quoting 

Freightliner, 932 So. 2d at 895)). The Plaintiff alleges that, by May 2012, Specialty’s 

financial condition was deteriorating, (doc. 64, ¶¶ 23-24); that, in July 2012, while the 

Plaintiff was touring Specialty’s facilities in Mobile, Alabama, BTU and Brito 

 21 The undersigned notes that, “’[w]hen the parties to a transaction deal with each 

other at arm’s length, with no confidential relationship, no obligation to disclose information 

arises when the information is not requested.’” Freightliner, 932 So. 2d at 892 (citing Mason v. 

Chrysler Corp., 653 So. 2d 951, 954-55 (Ala. 1995)).

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 33 of 39
34

represented to the Plaintiff that their business was growing, (id., ¶ 22); that, on May 10, 

2013, during a meeting at BTU’s office in Mobile, BTU and Brito represented to the 

Plaintiff that they were financially sound and that business was proceeding as usual, 

(id., ¶¶ 41-42); and that, at that time, Specialty was in financial distress, (id., ¶¶ 32, 46).22 

Thus, based on the allegations in the TAC, the Court could determine that, by making 

the aforesaid representations, BTU and Brito assumed a duty to disclose facts regarding 

Specialty’s alleged deteriorating financial condition. 23 Similarly, the Court could 

determine that BTU and Brito assumed a duty to inform the Plaintiff as to the lack of 

fuel oil securing their transactions when they sent the Plaintiff the April 8, 2013 

Warehouse Receipt, which, allegedly, was false and misled the Plaintiff into believing 

that fuel oil served as collateral for their repurchase agreements, (id., ¶¶ 49, 57(l)). 

Accordingly, the allegations in the TAC support the duty to disclose element of the 

Plaintiff’s suppression claim with respect to BTU and Brito. BTU and Brito make no 

other argument with respect to Plaintiff’s suppression claim, (doc. 67-1 at 1-3), and the 

undersigned finds that said claim is sufficiently stated in the TAC. Thus, the 

 22 Specifically, the Plaintiff alleges that, “[o]n April 29, 2013, Brito filed a Motion for 

Judicial Dissolution as to Bunkering . . . based on allegations of financial misconduct” and, on 

July 19, 2013, Brito filed an affidavit in support of that motion in which he stated that 

“Specialty [i.e., Bunkering] [was] operating at a negative equity position . . . its 

liabilities exceed[ed] its assets. . . . Specialty ha[d] no cash reserves, no available 

credit on terms that are viable to the continued operation of the business and 

thus ha[d] no way to operate as it ha[d] operated in the past.”

(Doc. 64, ¶¶ 32, 46.) On November 14, 2013, Bunkering filed for bankruptcy protection. (Id., ¶ 

2.)

23 The undersigned notes that “[the Alabama Supreme Court] has recognized[] 

[that] the law generally allows a business to keep confidential its internal operating procedures 

and data unless that information is specifically requested.” Freightliner, 932 So. 2d at 892 (citing 

Ex parte Ford Motor Credit Co., 717 So. 2d 781, 787 (Ala. 1997)). However, as stated above, the 

moment a party speaks it “assumes a duty not to suppress or conceal those facts that materially 

qualify the facts already stated.” Id. at 895.

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 34 of 39
35

undersigned RECOMMENDS that BTU and Brito’s motion to dismiss be denied with 

respect to Plaintiff’s suppression claim.

D. Plaintiff’s “Fraud in Insolvency” Claim (Count VII) against BTU and Brito 

should be dismissed because there is no private right of action under the 

criminal statute that BTU and Brito allegedly violated.

In Count VII, the Plaintiff alleges that, by concealing their insolvency, BTU and 

Brito violated section 13A-9-48 of the Alabama Criminal Code. (Doc. 64 at 58-65.) 

Specifically, the Plaintiff states that it “claims a private right of action against BTU 

and/or Brito for violation of [that section].” (Id., ¶ 113.) However, “[o]ne claiming a 

private right of action within a statutory scheme must show clear and convincing 

evidence of legislative intent to impose civil liability for a violation of the statute.” 

Liberty Nat’l Life Ins. Co. v. Univ. of Ala. Health Serv. Found., P.C., 881 So. 2d 1013, 1025 

(Ala. 2003) (quoting Blockbuster, Inc. v. White, 819 So. 2d 43, 44 (Ala. 2001)) (internal 

quotation marks and other citations omitted); accord Woods Knoll, LLC v. City of Lincoln, 

Ala., 548 F. App’x 577, 581 (11th Cir. 2013). 

Section 13A-9-48 is a criminal statute that provides as follows:

§ 13A-9-48. Fraud in insolvency.

(a) A person commits the crime of fraud in insolvency if, with the intent to 

defraud a creditor and with knowledge or reason to believe either that 

proceedings have been or are about to be instituted for the 

appointment of a receiver or that a composition agreement or other 

arrangement for the benefit of creditors has been or is about to be 

made, he:

(1) Conveys, transfers, removes, conceals, destroys, encumbers or 

otherwise disposes of any part of or any interest in the debtor's 

estate; or

(2) Presents to any creditor or to the receiver any writing or record 

relating to the debtor's estate, not otherwise within the coverage 

of Sections 13A-10-101, 13A-10-102 or 13A-10-109, knowing or

having reason to believe that it contains a false material statement; 

or

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 35 of 39
36

(3) Misrepresents or refuses to disclose to the receiver, under 

circumstances not amounting to a violation of Section 13A-10-4, the 

existence, amount or location of any part of or an interest in 

debtor's estate, or any other information that he is legally required 

to furnish to the administrator.

(b) “Receiver” means an assignee or trustee for the benefit of creditors, a 

conservator, a liquidator or any other person legally entitled to administer 

property for the benefit of creditors.

(c) Fraud in insolvency is a Class B misdemeanor.

Ala. Code § 13A-9-48 (1975). The language of the statute provides no indication that the 

Legislature intended to create a private right of action, or otherwise impose civil 

liability, id., and the Plaintiff has made no showing regarding the Legislature’s intent, 

(see doc. 64 at 58-65; doc. 73 at 23).

In Dysart v. Trustmark Nat’l Bank, the Northern District of Alabama considered a 

motion to dismiss a claim for “deed forgery” asserted pursuant to a criminal forgery 

statute, section 13A-9-3, found within the same chapter of the Criminal Code—Chapter 

9 (Forgery and Fraudulent Practices)—that contains the fraud in insolvency statute. 

Dysart v. Trustmark Nat’l Bank, No. CV-13-BE-2092-S, 2014 WL 1765120, at *11-12 (N.D. 

Ala. Apr. 30, 2014). After reviewing the plaintiff’s deed forgery claim, the Northern 

District found that 

[the plaintiff] is attempting to assert a violation of a criminal statute, § 

13A–9–3(a)(1) in [a] civil case. . . . However, the Alabama statute upon 

which she relies appears to be designed for the protection of the public, 

and no language in it indicates that it creates a private right of action. [The 

plaintiff’s] reliance on the criminal statute to create a private right of 

action is misplaced. See Linda R.S. v. Richard [D]., 410 U.S. 614, 619, 93 S.

Ct. 1146, 35 L. Ed. 2d 536 (1973) (“[A] private citizen lacks a judicially 

cognizable interest in the prosecution or nonprosecution of another.”); see 

also Love v. Delta Air Lines, 310 F.3d 1347, 1352–53 (11th Cir. 2002) 

([concluding that ][c]riminal statutes generally do not provide a private 

cause of action[]); Gibson v. Gains, [No. 05-15997,] 2006 WL 858336[, at *3]

(11th Cir. [April 4,] 2006) (finding that “to the extent that [the plaintiff] 

raises criminal allegations against the defendants, [he] lacks standing to 

raise such claims and the district court properly dismissed them.”). 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 36 of 39
37

Accordingly, the motions to dismiss are due to be GRANTED WITH 

PREJUDICE as to [the deed forgery] claim against all Defendants.

Id. at 12.

Like the forgery statute in Dysart, the fraud in insolvency statute “appears to be 

designed for the protection of the public” without any imposition of civil liability 

through a private right of action. Compare § 13A–9–3, with § 13A-9-48. Furthermore, the 

Plaintiff has not provided the Court with any authority demonstrating that a fraud in 

insolvency claim is actionable in Alabama, (see doc. 73 at 23),24 and the undersigned has 

not found any support for such a claim. Accordingly, the undersigned finds that the 

Plaintiff has not stated a plausible claim for fraud in insolvency. See Liberty Nat’l, 881 

So. 2d at 1025 (concluding that the plaintiff could not bring a private action for an 

alleged breach of a statutory provision where the plaintiff failed to show that the 

statutory provision implied or created a private right of action); see also Chen ex. rel. V.D. 

v. Lester, 364 F. App’x 531, 536 (11th Cir. 2010) (“Criminal statutes generally do not 

provide a private cause of action. . . . Because these are all criminal statutes, the district 

court did not err in dismissing those claims.” (citation omitted)); Muhammad v. BethelMuhammad, Civil Action No. 11-0690-WS-B, 2012 WL 1854315, at *7 (S.D. Ala. May 21, 

2012) (“’We have been quite reluctant to infer a private right of action from a criminal 

prohibition alone. . . .’” (quoting Central Bank v. First Interstate Bank, N.A., 511 U.S. 164, 

190, 114 S. Ct. 1439, 128 L. Ed. 2d 119 (1994)). As such, the undersigned 

RECOMMENDS that BTU and Brito’s motion to dismiss be granted with respect to 

 24 The Plaintiff cites Rawlings v. Dovenmuehle Mort., Inc., 64 F. Supp. 2d 1156 (M.D. 

Ala. 1999), and Gowens v. Tys. S. ex rel. Davis, 948 So. 2d 513, 527-28 (Ala. 2006), for the general 

proposition that “a legal duty may arise from statute.” (Doc. 73 at 23.) However, the Plaintiff 

fails to discuss meaningfully the statute at issue or provide any authority relating to the claim 

Plaintiff seeks to assert. (Id.)

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 37 of 39
38

Plaintiff’s fraud in insolvency claim (Count VII) and that said claim be dismissed with 

prejudice. 

E. Negligence, wantonness and breach of fiduciary duty claims against BIC 

(Counts VIII-XI).

BIC argues that the Plaintiff’s negligence, wantonness and breach of fiduciary 

duty claims fail because they arise in contract, rather than tort. (Doc. 65 at 16-18.) This 

argument has already been rejected above. See supra § III.B. As previously discussed, 

the Plaintiff claims that BIC breached duties arising from its relationship with the

Plaintiff and course of dealings over multiple years. (See doc. 64, ¶¶ 14-20.) The 

Plaintiff does not allege that BIC violated a promise contained within a contract with 

the Plaintiff. (See doc. 64 at 65-81.) Accordingly, the Plaintiff’s negligence, wantonness 

and breach of fiduciary duty claims do not fail for being brought as tort claims. See, e.g.,

Hardy, 2008 WL 906455, at *14.

BIC also argues that the Plaintiff has not alleged sufficient facts to support a 

fiduciary relationship between BIC and the Plaintiff. (Doc. 65 at 17-18.) That argument 

was rejected above as well. See supra § III.C.4.a. (citing Express Oil Change, 933 F. Supp. 

2d at 1351-52; DGB, 55 So. 3d at 233-34; Hinds, 55 So. 3d at 231-34). Therefore, the 

undersigned RECOMMENDS that BIC’s motion to dismiss be denied with respect to 

Counts VIII-XI. 

IV. Conclusion

For the reasons stated above, it is hereby RECOMMENDED that BIC’s motion to 

dismiss (doc. 65) be DENIED and that BTU and Brito’s motion to dismiss (doc. 67) be 

GRANTED IN PART and DENIED IN PART. BTU and Brito’s motion should be 

granted with respect to Plaintiff’s fraud in insolvency claim (Count VII), which should 

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 38 of 39
39

be DISMISSED WITH PREJUDICE for failure to state a claim. Their motion should be 

DENIED in all other respects.

NOTICE OF RIGHT TO FILE OBJECTIONS

A copy of this report and recommendation shall be served on all parties in the 

manner provided by law. Any party who objects to this recommendation or anything in 

it must, within fourteen (14) days of the date of service of this document, file specific 

written objections with the Clerk of this Court. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 

72(b); S.D. Ala. L.R. 72.4. The parties should note that under Eleventh Circuit Rule 3-1, 

“[a] party failing to object to a magistrate judge’s findings or recommendations 

contained in a report and recommendation in accordance with the provisions of 28 

U.S.C. § 636(b)(1) waives the right to challenge on appeal the district court’s order based 

on unobjected-to factual and legal conclusions if the party was informed of the time 

period for objecting and the consequences on appeal for failing to object. In the absence 

of a proper objection, however, the court may review on appeal for plain error if 

necessary in the interests of justice.” 11th Cir. R. 3-1. In order to be specific, an objection 

must identify the specific finding or recommendation to which objection is made, state 

the basis for the objection, and specify the place in the Magistrate Judge’s report and 

recommendation where the disputed determination is found. An objection that merely 

incorporates by reference or refers to the briefing before the Magistrate Judge is not 

specific.

DONE this the 4th day of June 2015.

s/WILLIAM E. CASSADY

UNITED STATES MAGISTRATE JUDGE

Case 1:13-cv-00545-KD-C Document 76 Filed 06/04/15 Page 39 of 39