UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

RANDALL S. MILLER & ASSOCIATES,

P.C., and RANDALL S. MILLER,

Plaintiffs,

Case No. 14-14447

v. Hon. Gerald E. Rosen

PITNEY BOWES INC. and

PITNEY BOWES GLOBAL

FINANCIAL SERVICES,

Defendants.

_________________________________/

OPINION AND ORDER GRANTING

DEFENDANTS’ MOTION TO DISMISS COUNTS II

AND III OF PLAINTIFFS’ FIRST AMENDED COMPLAINT

At a session of said Court, held in

the U.S. Courthouse, Detroit, Michigan

on March 30, 2016 

PRESENT: Honorable Gerald E. Rosen

United States District Judge

I. INTRODUCTION

In their first amended complaint, Plaintiffs Randall S. Miller & Associates,

P.C. and Randall S. Miller have asserted state-law claims of breach of contract,

fraudulent misrepresentation, and innocent misrepresentation against Defendants

Pitney Bowes Inc. and Pitney Bowes Global Financial Services, based on

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allegations that the software systems, associated hardware, and services provided

by Defendants to automate the mailing functions of the Plaintiff law firm have

failed to satisfy the terms of the parties’ contract or to conform with Defendants’

representations about how these products and services would perform. The

Court’s subject matter jurisdiction over these claims rests upon the diverse

citizenship of the parties. See 28 U.S.C. § 1332(a).

In addition to answering the complaint and filing a breach-of-contract

counterclaim against Plaintiffs, Defendants have filed a motion to dismiss the

fraudulent and innocent misrepresentation claims asserted in counts II and III of

Plaintiffs’ first amended complaint. In support of this motion, Defendants argue

(i) that Plaintiffs’ misrepresentation claims are insufficiently distinct from their

breach-of-contract claim to allow Plaintiffs to go forward with their tort claims

under Michigan law, and (ii) that, in any event, Plaintiffs have failed to plead

fraud with the particularity demanded under Fed. R. Civ. P. 9(b). In response,

Plaintiffs contend (i) that Michigan law, correctly construed, allows them to

pursue their misrepresentation claims so long as they have properly alleged the

elements of these claims, and without regard for any purported overlap between

some of these elements and the elements of their breach-of-contract claim, and (ii)

that Defendants’ appeal to the economic loss doctrine does not bar their claim of

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fraud in the inducement or the fraud claims asserted by the individual Plaintiff,

Randall S. Miller.1 Following this response, Defendants filed a reply brief in

further support of their motion.

Having reviewed the parties’ written submissions in support of and

opposition to Defendants’ motion, as well as the remainder of the record, the

Court finds that the pertinent facts, allegations, and legal issues are sufficiently

presented in these materials, and that oral argument would not assist in the

resolution of Defendants’ motion. Accordingly, the Court will decide this motion

“on the briefs.” See Local Rule 7.1(f)(2), U.S. District Court, Eastern District of

Michigan. This opinion and order sets forth the Court’s rulings on this motion.

II. FACTUAL BACKGROUND

The following account of the facts giving rise to this suit is derived solely

from the allegations of Plaintiffs’ first amended complaint, which are accepted as

true for present purposes. Plaintiff Randall S. Miller & Associates, P.C. is a “law

firm that represents banking and lending institutions in connection with various

foreclosure related services.” (First Amended Complaint at ¶ 8.) Plaintiff Randall

S. Miller is the sole shareholder of the Plaintiff law firm. Defendant Pitney Bowes

1Plaintiffs’ response is silent as to Defendants’ Rule 9(b) challenge to their claims

of fraudulent and innocent misrepresentation.

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Inc. (“Pitney Bowes”) is a provider of technology services, including the

automation of mail processes and associated training services, and Defendant

Pitney Bowes Global Financial Services (“PBGFS”) is an affiliated company that

leases the equipment necessary to implement Pitney Bowes’ technology services.

In January of 2011, the Plaintiff law firm “contracted with PBGFS for the

lease of mail equipment and to assist [the law firm] in automating various mail

processes.” (First Amended Complaint at ¶ 9.) The law firm “remitted $28,127.00

as a down payment” for this leasing arrangement, and individual Plaintiff Randall

S. Miller “personally guaranteed” the lease. (Id. at ¶¶ 10-11.) At around the same

time, the law firm “contracted with Pitney Bowes to[,] among other things, install

a PlanetPress system for creating mortgage notices,” and to provide training to the

law firm employees who would use this system. (Id. at ¶ 12.) This PlanetPress

system “consisted of various software and hardware packages to ensure the leased

equipment performed the functions necessary to assist” the Plaintiff law firm. (Id.

at ¶ 13.)

Although Defendants “represented that the leased equipment would fully

automate [the Plaintiff law firm’s] mailing functions,” this equipment “failed to

provide the services Defendants represented it was capable of providing.” (Id. at

¶¶ 16-17.) The law firm “contacted Defendants on numerous occasions from

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2011-2014 in an attempt to provide Defendants with an opportunity to remedy the

situation,” and also “continued paying for the leased equipment.” (Id. at ¶¶ 18-

19.) Despite these efforts, and “[d]espite numerous service calls and service

appointments, Defendants failed to remedy the situation,” and “the leased

equipment never properly performed the automated mail services” promised by

Defendants. (Id. at ¶ 20.) Accordingly, the Plaintiff law firm ceased making

payments to Defendants in 2014, and “advised Defendants to pick up the

equipment.” (Id. at ¶ 21.)

Plaintiffs commenced this suit against Defendants in late 2014, and

subsequently filed their first amended complaint on January 23, 2015. In this

three-count first amended complaint, Plaintiffs have asserted state-law claims of

breach of contract, fraudulent misrepresentation, and innocent misrepresentation.

Through the present motion, Defendants seek the dismissal of the latter two tort

claims, contending that they are legally insufficient in one or more respects.

III. ANALYSIS

A. The Standards Governing Defendants’ Motion

Defendants have brought the present motion under Fed. R. Civ. P. 12(b)(6),

maintaining that Plaintiffs have “fail[ed] to state a claim upon which relief can be

granted” as to the misrepresentation claims asserted in counts II and III of their

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first amended complaint. When considering a motion brought under Rule

12(b)(6), the Court must construe the complaint in a light most favorable to the

plaintiff and accept all well-pled factual allegations as true. League of United

Latin American Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007). Yet, “the

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

is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.

Ct. 1937, 1949 (2009).

Moreover, “[w]hile a complaint attacked by a Rule 12(b)(6) motion to

dismiss does not need detailed factual allegations, a plaintiff’s obligation to

provide the grounds of his entitlement to relief requires more than labels and

conclusions, and a formulaic recitation of the elements of a cause of action will

not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955,

1964-65 (2007) (internal quotation marks, alteration, and citations omitted). 

Rather, to withstand a motion to dismiss, the complaint’s factual allegations,

accepted as true, “must be enough to raise a right to relief above the speculative

level,” and to “state a claim to relief that is plausible on its face.” Twombly, 550

U.S. at 555, 570, 127 S. Ct. at 1965, 1974. “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.” Iqbal, 556 U.S.

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at 678, 129 S. Ct. at 1949.

B. Plaintiffs Have Failed to Allege the Violation of a Duty Owed

Separately from the Obligations Incurred by Defendants Under the

Parties’ Contract, as Necessary to Pursue Their Tort Claims of False

and Innocent Misrepresentation.

As the first of their two challenges to the claims of fraudulent and innocent

misrepresentation asserted in counts II and III of Plaintiffs’ first amended

complaint, Defendants appeal to a principle of Michigan law that is referred to, at

least in some contexts, as the “economic loss” doctrine.2 As this Court has

previously explained, this doctrine is a more specific application of the “general

principle that a mere failure to perform a contractual obligation cannot support an

action in tort, absent the violation of a legal duty separate and distinct from the

contractual obligation.” Metropolitan Alloys Corp. v. Considar Metal Marketing,

Inc., No. 06-12667, 2007 WL 2874005, at *5 (E.D. Mich. Sept. 25, 2007). In

Defendants’ view, Plaintiffs’ tort claims of fraudulent and innocent

misrepresentation are insufficiently distinct from their breach-of-contract claim to

withstand scrutiny under this principle. In response, Plaintiffs do not necessarily

take issue with Defendants’ characterization of their claims, but they nonetheless

2The parties assume without discussion that the issues raised in Defendants’

motion are governed by Michigan law, and the Court likewise proceeds under this

assumption in resolving Defendants’ motion.

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contend (i) that the Michigan Supreme Court has recently retreated from the rule

that a party cannot pursue overlapping breach-of-contract and tort claims, and (ii)

that, in any event, their claims fall within a “fraud in the inducement” exception to

this rule. As discussed below, the Court finds that Defendants have the better of

the argument on this question.

In Neibarger v. Universal Cooperatives, Inc., 439 Mich. 512, 486 N.W.2d

612 (1992), the Michigan Supreme Court expressly adopted the economic loss

doctrine in the context of a sale of goods governed by the Uniform Commercial

Code (“UCC”). The court explained the doctrine as follows:

The economic loss doctrine, simply stated, provides that where

a purchaser’s expectations in a sale are frustrated because the product

he bought is not working properly, his remedy is said to be in contract

alone, for he has suffered only ‘economic losses.’ This doctrine

hinges on a distinction drawn between transactions involving the sale

of goods for commercial purposes where economic expectations are

protected by commercial and contract law, and those involving the

sale of defective products to individual consumers who are injured in

a manner which has traditionally been remedied by resort to the law

of torts.

Neibarger, 486 N.W.2d at 615 (internal quotation marks and footnotes with

citations omitted). After discussing the reasoning behind the economic loss

doctrine and surveying the decisions of other courts that had applied this doctrine,

the Neibarger court held that “where a plaintiff seeks to recover for economic loss

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caused by a defective product purchased for commercial purposes, the exclusive

remedy is provided by the UCC.” 486 N.W.2d at 618; see also Huron Tool &

Engineering Co. v. Precision Consulting Services, Inc., 209 Mich. App. 365, 532

N.W.2d 541, 543-45 (1995) (considering whether the ruling in Neibarger extends

to intentional tort claims, and concluding that the economic loss doctrine applies

to fraud claims apart from those that allege fraud in the inducement).

In this case, the parties seemingly agree that the transaction giving rise to

Plaintiffs’ breach-of-contract claim is not properly characterized as a sale of goods

governed by the UCC. Nonetheless, the courts have applied a principle of

Michigan law closely related to the economic loss doctrine in cases involving

commercial transactions that fell outside the scope of the UCC. Most notably, in

Rinaldo’s Construction Corp. v. Michigan Bell Telephone Co., 454 Mich. 65, 559

N.W.2d 647, 651 (1997), the plaintiff construction company asserted a claim of

negligence against the defendant telephone carrier, Michigan Bell, alleging that

calls from its customers were not going through as a result of Michigan Bell’s

negligent installation and maintenance of the plaintiff’s telephone service. The

plaintiff acknowledged that its claim rested on the premise that Michigan Bell had

“negligently fail[ed] to properly and fully perform its contract,” and the Michigan

Supreme Court thus considered whether, and under what circumstances, “an action

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in tort may arise out of a contractual promise.” Rinaldo’s Construction, 559

N.W.2d at 657.

Upon surveying its earlier decision in Hart v. Ludwig, 347 Mich. 559, 79

N.W.2d 895 (1956), the court reasoned that “the threshold inquiry” in determining

whether the plaintiff could proceed with its claim of negligence was “whether the

plaintiff alleges [the] violation of a legal duty separate and distinct from the

[defendant’s] contractual obligation.” Rinaldo’s Construction, 559 N.W.2d at

658. The court found that the plaintiff in that case had failed to identify such an

alleged violation of a separate legal duty:

In this case, as in Hart, the defendant agreed to provide the

plaintiff with services under a contract. Like the defendant in Hart,

Michigan Bell allegedly failed to fully perform according to the terms

of its promise. While plaintiff’s allegations arguably make out a

claim for “negligent performance” of the contract, there is no

allegation that this conduct by the defendant constitutes tortious

activity in that it caused physical harm to persons or tangible

property; and plaintiff does not allege violation of an independent

legal duty distinct from the duties arising out of the contractual

relationship. Like the plaintiff in [a prior case], regardless of the

variety of names plaintiff gives the claim, plaintiff is basically

complaining of inadequate service and equipment. Thus, under the

principles outlined above, there is no cognizable cause of action in

tort.

559 N.W.2d at 658 (internal quotation marks, alterations, and citation omitted);

see also I-Fusion Technology, Inc. v. TRW Automotive U.S., L.L.C., No. 306466,

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2012 WL 6604701, at *3 (Mich. Ct. App. Dec. 18, 2012) (finding that “[b]ecause

[the plaintiff] has failed to identify a duty owed by [the defendant] separate and

distinct from its contractual obligations, no cognizable action in tort exists”); Mid

America Solutions, LLC v. Merchant Solutions International, Inc., No. 15-563,

2016 WL 96178, at *4 (W.D. Mich. Jan. 8, 2016) (explaining that “[r]egardless of

the label the Court applies,” Michigan law precludes “tort claims [that] arise solely

out of [a defendant’s] contractual duties”); Insight Teleservices, Inc. v. Zip Mail

Services, Inc., No. 14-11395, 2014 WL 7012653, at *11 (E.D. Mich. Dec. 11,

2014) (finding that “many of the tort claims” asserted by the plaintiff were

“indistinguishable from [its] breach of contract claims,” and thus were subject to

dismissal); Convergent Group Corp. v. County of Kent, 266 F. Supp.2d 647, 660

(W.D. Mich. 2003) (finding that it was “unnecessary for the Court to decide

whether the economic loss doctrine also applies to service contracts,” because the

defendant’s “fraud claim is based solely on [the plaintiff’s] contractual duties and,

therefore, is subject to dismissal” under the Michigan Supreme Court’s decision in

Hart).

This principle of Michigan law, if applicable here, plainly would bar

Plaintiffs’ claims of fraudulent and innocent misrepresentation, as Plaintiffs do not

allege, nor do they argue in response to Defendants’ present motion, that

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Defendants owed them a duty separate and distinct from the obligations imposed

upon Defendants under the parties’ contract. Nonetheless, in an effort to avoid

this result, Plaintiffs first contend that the Michigan Supreme Court’s decision in

Cooper v. Auto Club Insurance Association, 481 Mich. 399, 751 N.W.2d 443

(2008), worked a significant change in the Michigan law governing Plaintiffs’ tort

claims in this case. The plaintiffs in Cooper brought suit against their insurer,

asserting both (i) a claim under Michigan’s no-fault auto insurance statute for

benefits due under a policy issued by the defendant insurer, and (ii) a claim of

fraud. See Cooper, 751 N.W.2d at 445-46. Under a “one-year-back” provision in

Michigan’s no-fault act, a claimant cannot recover benefits for losses incurred

more than one year before a suit is filed. Cooper, 751 N.W.2d at 447. The

defendant insurer argued that this “one-year-back” rule applied equally to the

plaintiffs’ statutory no-fault and common-law tort-based theories of recovery, but

the Michigan Supreme Court rejected this contention, reasoning that “[a] fraud

claim is clearly distinct from a no-fault claim” in light of the additional elements

that must be proven, the different rule governing the accrual of a fraud claim, and

the wider range of damages that are available in a fraud action. 751 N.W.2d at

448-49.

In Plaintiffs’ view, Cooper effectively “overrule[d]” the decision of the

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Michigan Court of Appeals in Huron Tool, supra. (Plaintiffs’ 6/6/2015 Response

Br. at 8.)3 In particular, Plaintiffs read Cooper as broadly holding that a plaintiff

may pursue both breach-of-contract and fraud claims despite an “overlap” in these

claims, so long as the plaintiff pleads and proves the additional elements of the tort

3

It is not clear why Plaintiffs focus special attention on Huron Tool. That case,

after all, addressed a transaction governed by the UCC, and the court considered whether

the economic loss doctrine as adopted by the Michigan Supreme Court in Neibarger

should apply to intentional torts. See Huron Tool, 532 N.W.2d at 543-45. The Michigan

Supreme Court’s decision in Rinaldo’s Construction is more on point here, as it is not

narrowly focused on the economic loss doctrine as it applies to transactions governed by

the UCC, but instead stands for the more general principle, as invoked by Defendants in

the present motion, that a tort claim may co-exist with a breach-of-contract claim only if

the plaintiff alleges the “violation of an independent legal duty distinct from the duties

arising out of the [parties’] contractual relationship.” Rinaldo’s Construction, 559

N.W.2d at 658.

Consequently, unless Plaintiffs can demonstrate that Cooper undermines the

Michigan Supreme Court’s prior decision in Rinaldo’s Construction, as well as the larger

body of Michigan case law of which it is a part, their attack on Huron Tool would appear

to be wholly unavailing. Indeed, it is especially puzzling to the Court why Plaintiffs

would devote more than two pages of their brief in response to Defendants’ motion to a

federal district court’s discussion of the question whether the Wisconsin courts would

adopt a “fraud in the inducement” exception to the economic loss doctrine. (See

Plaintiffs’ 6/6/2015 Response Br. at 9-11 (discussing the decision in Budgetel Inns, Inc. v.

Micros Systems, Inc., 8 F. Supp.2d 1137, 1144-49 (E.D. Wis. 1998)).) While the court in

Budgetel Inns certainly is critical of certain aspects of the ruling in Huron Tools, see

Budgetel Inns, 8 F. Supp.2d at 1146-49, this Court fails to see how Budgetel Inns’ inquiry

into how the Wisconsin courts might resolve an open question of Wisconsin law could

possibly be of any assistance in this Court’s effort to ascertain the contours of the

Michigan law that governs Plaintiffs’ claims in this suit. Simply stated, even if the Court

were to accept Budgetel Inns’ critique of Huron Tool, it nonetheless would be obliged to

follow this ruling by the Michigan Court of Appeals, at least to the extent that it continues

to accurately reflect the state of the Michigan law that governs the issues raised in

Defendants’ motion. 

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claim. (See id. at 7-12.) Yet, this proposed reading of the Michigan Supreme

Court’s ruling is belied by the language and reasoning of Cooper itself. First, the

court did not purport to address the possible interaction and co-existence of fraud

and breach-of-contract claims. Rather, the court considered whether the tort claim

asserted by the plaintiffs in that case should properly be viewed as “brought

under” Michigan’s no-fault act, and therefore subject to the act’s “one-year-back”

rule. See Cooper, 751 N.W.2d at 447 (observing that “a fraud action is a distinct

and independent action brought under the common law,” and not an “action for

recovery of . . . benefits payable under the no-fault act” (internal quotation marks

and alteration omitted)).

More importantly, Cooper expressly adheres to and reaffirms the principle

invoked by Defendants here. Specifically, the court emphasized that “although

mere allegations of failure to discharge obligations under an insurance contract

would not be actionable in tort, where, as here, the breach of separate and

independent duties are alleged, the insured should be allowed an opportunity to

prove their cause of action.” 751 N.W.2d at 449 (emphasis added) (internal

quotation marks, alterations, and citations omitted). In Cooper, then, the plaintiffs

were able to allege the “violation of a legal duty separate and distinct from the

[defendant’s] contractual obligation,” Rinaldo’s Construction, 559 N.W.2d at 658,

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as required under prior Michigan case law to concurrently pursue breach-ofcontract and tort claims, because the defendant insurer owed a “separate and

independent duty not to deceive the [plaintiff] insureds, which duty is imposed by

law as a function of the relationship of the parties,” Cooper, 751 N.W.2d at 448

(footnote omitted).

Not surprisingly, then, the courts have continued to apply the principle of

Michigan law recognized in Rinaldo’s Construction and Huron Tool,

notwithstanding the Michigan Supreme Court’s intervening decision in Cooper.

In Bev Smith, Inc. v. Atwell, 301 Mich. App. 670, 836 N.W.2d 872, 882-83 (2013),

for example, the Michigan Court of Appeals cited Huron Tool in holding that the

plaintiff was “limited to its contractual remedies under the UCC,” where the

claims of fraudulent misrepresentation and silent fraud that the plaintiff also

sought to pursue “essentially reiterated the allegations set forth in plaintiff’s

breach-of-contract claim.” Similarly, a number of courts in this District have

looked to Huron Tool — as well as other above-cited Michigan court decisions

such as Hart and Rinaldo’s Construction — in determining that tort claims were

subject to dismissal for lack of allegations that the defendant had violated a legal

duty arising separately from the parties’ contractual relationship. See, e.g., Mid

America Solutions, 2016 WL 96178, at *2-4; Visteon Corp. v. VarrocCorp

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Holding B.V., No. 14-12418, 2015 WL 1530333, at *2-3 (E.D. Mich. March 31,

2015); Insight Teleservices, 2014 WL 7012653, at *9-11.

4

 Accordingly, the Court

agrees with Defendants that the decision in Huron Tool is “alive and well,”

(Defendants’ 6/30/2015 Reply Br. at 5), and that it continues to accurately state

the rule of Michigan law that a fraud claim is subject to dismissal if the plaintiff

“fails to allege any wrongdoing by [the] defendant[] independent of [the]

defendant[’s] breach of contract.” Huron Tool, 532 N.W.2d at 546.

In an abrupt about-face from its attack on the continued viability of Huron

Tool, Plaintiffs next points to the recognition of the Michigan courts, in Huron

Tool and more recent cases, that “the economic loss doctrine does not bar claims

of fraud in the inducement.” Bev Smith, 836 N.W.2d at 883; see also Huron Tool,

532 N.W.2d at 544-45. This Court readily acknowledges the distinction drawn

under Michigan law between an ordinary fraud claim and a claim of fraud in the

inducement — and, indeed, has expressly addressed this aspect of Huron Tool in a

prior decision. See Metropolitan Alloys, 2007 WL 2874005, at *6.

The salient question, however, is whether the allegations of Plaintiffs’

4Notably, the plaintiff in one of these cases pointed to the decision in Cooper as

“support for its position that its fraud claim implicates separate duties from [its] breach of

contract claim,” but the court found Cooper distinguishable on some of the same grounds

cited above by this Court. See Mid America Solutions, 2016 WL 96178, at *4.

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complaint support a plausible claim of fraud in the inducement. Plaintiffs make no

effort in their response to Defendants’ motion to explain how their allegations

might meet this standard, and the Court concludes upon independent examination

that they do not. As Defendants aptly observe, the alleged misrepresentations

identified in Plaintiffs’ complaint — i.e., that the equipment leased from

Defendants “would print and stuff mailings for all states,” that it would “sort and

stamp all mail,” that the accompanying software “would fully integrate with [the

Plaintiff law firm’s] software,” and that the law firm’s “employees would be

provided training specific to the machine,” (First Amended Complaint at ¶ 28) —

precisely track Plaintiffs’ allegations as to the performance promised by

Defendants under the parties’ contract, (see id. at ¶¶ 15-16, 23 (alleging that

Defendants agreed under the contract to provide equipment, software, and services

“that would fully automate [the Plaintiff law firm’s] mailing functions,” and to

“provid[e] training to [law firm] employees who would be . . . utilizing the leased

equipment”)).5 Under these circumstances, where the allegations in support of a

5The Court notes that Plaintiffs’ initial and first amended complaints are

unaccompanied by any written agreements executed by the parties, so these pleadings fail

to disclose anything beyond their bare allegations as to the nature of Defendants’

obligations under the parties’ contracts. While Defendants submitted a lease agreement

and guaranty as exhibits to their counterclaim, Plaintiffs have made no effort to identify

any purported distinctions between the promises made by Defendants in these (or any

other) agreements and the alleged representations giving rise to Plaintiffs’ tort claims.

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plaintiff’s breach-of-contract and fraud in the inducement claims are

“indistinguishable,” the courts have held that such allegations fail to state a viable

claim of fraud in the inducement under Michigan law. Visteon Corp., 2015 WL

1530333, at *3; see also Huron Tool, 532 N.W.2d at 546 (finding that the

plaintiff’s claim of fraud in the inducement was subject to dismissal where the

fraudulent representations alleged by the plaintiff were “indistinguishable from the

terms of the contract and warranty that plaintiff alleges were breached”); Uhl v.

Komatsu Forklift Co., 512 F.3d 294, 305 (6th Cir. 2008) (explaining that a

plaintiff cannot establish fraud in the inducement “where [the opposing] party

simply failed to uphold its side of the bargain” in a contractual relationship);

TIBCO Software, Inc. v. Gordon Food Service, Inc., No. 03-25, 2003 WL

21683850, at *5 (W.D. Mich. July 3, 2003) (finding that a fraud in the inducement

counterclaim asserted by the defendant was “interwoven with” its breach-ofTo be sure, one of the representations allegedly made by Defendants — i.e., that

the goods and services provided by Defendants “would save [the Plaintiff law firm]

money and . . . would ‘pay for itself’ as a result of the savings on postage alone,” (id. at ¶

28(d)) — presumably was not reflected in a contract executed by the parties. The

Michigan courts have held, however, that statements of this sort that do not “concern[] an

existing or past fact” cannot support a claim of fraud. Cummins v. Robinson Township,

283 Mich. App. 677, 770 N.W.2d 421, 436 (2009). Although there is a recognized

exception to this rule if such a statement is made in bad faith as “a device to perpetrate a

fraud,” Foreman v. Foreman, 266 Mich. App. 132, 701 N.W.2d 167, 177 (2005) (internal

quotation marks and citations omitted), the allegations of Plaintiffs’ complaint do not

support the application of this exception here.

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contract claim “rather than extraneous to the contractual dispute” between the

parties, and thus was “barred by the economic loss doctrine”).

To be sure, Plaintiffs expressly allege in their complaint that Defendants

made false representations concerning the capabilities of their equipment and

services in order “to induce [the Plaintiff law firm] to enter into a contract for the

lease of the equipment at issue and to further induce Plaintiff Miller to guarantee

the lease.” (First Amended Complaint at ¶ 29.) Such a “formulaic recitation of

the elements” of a claim of fraudulent inducement, however, cannot withstand a

challenge under Rule 12(b)(6), see Twombly, 550 U.S. at 555, 127 S. Ct. at 1965,

absent factual allegations indicating that Defendants promised something beyond

simply delivering on their contractual obligations. As the Sixth Circuit has

observed, to hold otherwise would “turn[] every breach-of-contract claim into a

claim for fraud in the inducement, because every party enters into an agreement

with the expectation that all parties will abide by the agreement’s terms.” Uhl,

512 F.3d at 305. Accordingly, the Court finds that Plaintiffs have failed to state a

viable claim of fraud in the inducement under Michigan law.

Finally, Plaintiffs argue that Defendants’ appeal to the economic loss

doctrine is unavailing as to the claim of fraud asserted by the individual Plaintiff,

Randall S. Miller. In support of this contention, Plaintiffs point solely to an

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unpublished decision from a court in this District, finding that the economic loss

doctrine was not applicable in that case “because [the plaintiff’s] claim is not

based upon a breach of a commercial contract for goods, [but] rather . . . is based

upon the alleged breach of a legally enforceable promise to repay a loan.” 

Dell’Orco v. Brandt, No. 03-71929, 2005 WL 1355088, at *5 (E.D. Mich. May 3,

2005). In Plaintiffs’ view, this same reasoning should apply to the tort claims

asserted by Mr. Miller, which rest upon his role as guarantor rather than a

transaction for goods or services.

The Court agrees — albeit not for the reason given by Plaintiffs — that the

principle of Michigan law set forth in such cases as Rinaldo’s Construction and

Huron Tool does not operate to bar the misrepresentation claims asserted by Mr.

Miller. As discussed earlier, these cases hold that a plaintiff cannot pursue

overlapping breach-of-contract and fraud claims absent allegations of the

“violation of a legal duty separate and distinct from the [defendant’s] contractual

obligation.” Rinaldo’s Construction, 559 N.W.2d at 658. Here, however, Mr.

Miller presumably is not a party to the contract between Defendants and the

Plaintiff law firm that gives rise to the breach-of-contract claim asserted in count I

of Plaintiffs’ complaint. (See First Amended Complaint at ¶¶ 9, 12, 23-24

(referring to contractual undertakings promised by Defendants to the Plaintiff law

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firm and money paid by the firm to Defendants under the parties’ contract).) It

follows that Mr. Miller’s claim of misrepresentation cannot possibly rest on

Defendants’ alleged breaches of their contractual obligations, which were owed

solely to the Plaintiff firm. Instead, if Mr. Miller is able to state a viable tort claim

against Defendants, any such claim must necessarily derive from a separate legal

duty allegedly owed by Defendants to him personally. 

Nonetheless, the Court readily concludes that any such claim of fraud

asserted by Mr. Miller in Plaintiffs’ complaint is subject to dismissal for failure to

plead this claim with the specificity required under Fed. R. Civ. P. 9(b).6 As this

Court has explained, Rule 9(b) dictates that a plaintiff must “describe specific

statements, identify the speaker, specify when and where the statements were

made, and explain why the statements were fraudulent,” such that the defendant is

placed on “sufficient notice of the [alleged] misrepresentation[s]” to allow the

plaintiff’s claim of fraud to be “address[ed] in an informed way.” Thill v. Ocwen

Loan Servicing, LLC, 8 F. Supp.3d 950, 956 (E.D. Mich. 2014) (internal quotation

marks and citations omitted). In this case, Plaintiffs have only broadly identified

various representations made by “Defendants” regarding their promised

6As noted earlier, Defendants raised this Rule 9(b) challenge in their summary

judgment motion, but Plaintiffs wholly failed to address this issue in their response to

Defendants’ motion.

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performance under their contract with the Plaintiff law firm, (First Amended

Complaint at ¶ 28), without specifying who made these statements or when they

were made.

More importantly, nothing in the complaint suggests that any such alleged

misrepresentations were made to Mr. Miller in particular. Rather, after broadly

describing the nature of the misrepresentations made by Defendants, Plaintiffs

offer only conclusory allegations that simply parrot the elements of a claim of

misrepresentation, asserting (i) that Defendants’ representations regarding the

capabilities of their equipment and services “were false when made,” (ii) that

Defendants either knew these representations were false or made them “recklessly,

without knowing whether or not they were true,” (iii) that Defendants “intended

that Plaintiffs rely on the representations,” and (iv) that Mr. Miller “relied upon

the representations when he agreed to personally guarantee the lease” entered into

by the Plaintiff law firm. (First Amended Complaint at ¶¶ 29-31, 33.) As

explained earlier, such a “formulaic recitation of the elements” of a claim of

misrepresentation does not suffice to avoid dismissal under Rule 12(b)(6), see

Twombly, 550 U.S. at 555, 127 S. Ct. at 1965, nor does it satisfy the requirement

under Rule 9(b) that claims of fraud be pled with particularity. Accordingly, the

fraudulent and innocent misrepresentation claims asserted by Mr. Miller

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individually are subject to dismissal on these grounds. 

IV. CONCLUSION

For the reasons set forth above, 

NOW, THEREFORE, IT IS HEREBY ORDERED that Defendants’

February 6, 2015 motion to dismiss counts II and III of Plaintiffs’ first amended

complaint (docket #21) is GRANTED.

s/Gerald E. Rosen 

United States District Judge

Dated: March 30, 2016

I hereby certify that a copy of the foregoing document was served upon the parties

and/or counsel of record on March 30, 2016, by electronic and/or ordinary mail.

s/Julie Owens 

Case Manager, (313) 234-5135

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