1 – OPINION AND ORDER 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

PORTLAND DIVISION 

TIMBERLINE HILLS INVESTORS, LLC, 

an Oregon limited liability corporation, 

 

 Plaintiff, 

No. 3:15-cv-02170-MO 

v. OPINON AND ORDER 

HOVISS DEVELOPMENT GROUP, LLC, 

a Washington limited liability corporation; and 

PETER C. MANN, an individual, 

 Defendants. 

MOSMAN, J., 

This is the second motion to dismiss brought by Defendants. I dismissed the earlier 

complaint for failure to meet the heightened pleading standards of FRCP 9 for fraud and failure 

to plead reliance on the fraudulent statements. See [25]. For the reasons stated below, I DENY 

the current Motion to Dismiss [28] with certain limitations to specific theories. Defendants also 

move to strike certain factual allegations. I GRANT the motion to strike and allow Plaintiff 

leave to amend. 

BACKGROUND 

Plaintiff Timberline Hills Investors, LLC, entered into a contract with Defendant Hoviss 

Development Group, LLC, for a construction project in Lane County, Eugene, Oregon. 

Defendant Peter Mann was a principle of Defendant Hoviss. Plaintiff now brings claims against 

Defendants for negligence, breach of contract, breach of express warranty, fraud and negligent 

misrepresentations. The fifth and sixth claims, fraud and negligent misrepresentation, are the 

Case 3:15-cv-02170-MO Document 34 Filed 07/07/16 Page 1 of 7
2 – OPINION AND ORDER 

subject of this motion to dismiss. In those claims, Plaintiff alleges Defendants misrepresented 

the budget, time frame, amount of work, movement of escrow accounts, soil quality, and other 

aspects of the construction project. 

LEGAL STANDARD 

To survive a motion to dismiss for failure to state a claim under Federal Rule of Civil 

Procedure 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to 

‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A pleading that offers only 

“labels and conclusions” or “‘naked assertion[s]’ devoid of ‘further factual enhancement’” will 

not suffice. Id. (quoting Twombly, 550 U.S. at 555, 557) (alteration in original). While the 

plaintiff does not need to make “detailed factual allegations” at the pleading stage, the 

allegations must be sufficiently specific to give the defendant “fair notice” of the claim and the 

grounds on which it rests. See Erickson v. Pardus, 551 U.S. 89, 93–94 (2007) (per curiam) 

(citing Twombly, 550 U.S. at 555). 

“In alleging fraud or mistake, a party must state with particularity the circumstances 

constituting fraud or mistake.” FED. R. CIV. P. 9(b). A plaintiff must “state the time, place, and 

specific content of the false representations as well as the identities of the parties to the 

misrepresentation.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th 

Cir. 1986); Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (citing Edwards v. Marin 

Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004)). The Rule 9(b) particularity requirement is 

designed “to assure that the charge of fraud is responsible and supported, rather than defamatory 

and extortionate.” Ackerman v. Nw. Mut. Life Ins. Co., 172 F.3d 467, 469 (7th Cir. 1999). 

Case 3:15-cv-02170-MO Document 34 Filed 07/07/16 Page 2 of 7
3 – OPINION AND ORDER 

DISCUSSION 

Defendants make three arguments in their motion to dismiss: 1) Plaintiff has failed to 

plead the fraud and negligent misrepresentation claims with adequate particularity as required by 

FRCP 9(b); 2) Plaintiff has failed to state a claim for relief because it cannot satisfy the elements 

of fraud or negligent misrepresentation; and 3) fraud allegations in paragraph 5 should be 

stricken pursuant to FRCP 12(f). 

A. Motion to Dismiss 

Undergirding the fifth and sixth claims are five allegations of fraudulent conduct 

regarding budget, time frame, escrow placement, charges for service, and soil fills. Each is 

excerpted below. 

1. Budget

“Defendants . . . by and through Mann, . . . intentionally misrepresent[ed] to 

George Simons and Geoff Walsh the necessary budget for Phase 3 beginning in 

July 2013 and continuing through the project on a monthly basis.” 

2. Time Frame 

“Defendants . . . by and through Mann, . . . intentionally misrepresent[ed] to 

George Simons and Geoff Walsh the time frame required to complete Phase 3 of 

the project and the reasons for the delays . . . . [I]n October and November of 

2013 [they] represented . . . that they were only waiting on weather and the 

Eugene Water and Electric Board to complete the project.”

3. Escrow 

“Defendants . . . by and through Mann, . . . represente[ed] to Simons and Walsh 

that $1,00,000 was placed in escrow with the City of Eugene in lieu of a bond in 

August of 2013, Defendants then intentionally withdrew from that amount on a 

monthly basis with the knowledge or consent of Plaintiff beginning in September 

of 2013 and continuing monthly through the project.”

4. Charges 

“Defendants . . . by and through Mann, . . .fraudulently charg[ed] Plaintiff for 

subcontractors, consultants and materials that never performed any work or were 

not used at the project or in Phase 3 . . . .[Defendants] represented to Simons and 

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4 – OPINION AND ORDER 

Walsh that they were utilizing and billed for job trailers and architects on this 

project when in fact they were not . . . [and represented] rental charges for a party 

were for the project . . . [but] had nothing to do with the project.” 

5. Soils 

“Intentionally representing to Simons and Walsh in September and October of 

2013 that soils being utilized as fill were appropriate for the project when 

[Defendants] knew the soils to be bad and improper fill.” 

(Pl. Sec. Am. Compl. at 7-8) 

The budget, time frame, and soil allegations, explain the “who, what, and when” of the 

alleged misrepresentations and allow Defendants to adequately prepare their defense. Plaintiff’s 

temporal allegations are scant on detail, but offer parameters that are sufficient to limit the 

allegations. I DENY the Motion as to the budge, time frame, and soil allegations supporting 

claims 5 and 6. 

The third and fourth allegations are a closer question. The fourth claim, which alleges 

false charges, lends itself to two readings, one significantly broader than the other. The first 

sentence of the fourth allegation, which states Defendants “fraudulently charg[ed] . . . for 

subcontractors, consultants, and materials,” lacks the specificity required to satisfy FRCP 9(b). 

Most notably, it lacks the requisite “when” and “what”—at issue in this litigation is a large 

project, and to allege “materials” were fraudulently billed would encompass almost everything 

touching that construction project. However, to the extent the fourth claim is limited to the 

second part of the allegation where Plaintiff claims “[Defendants] represented to Simons and 

Walsh that they were utilizing and billed for job trailers and architects on this project” as well as 

rental charges for a party, the claim adequately alleges the “what” and “who.” The time frame 

alleged is beginning with the monthly billing in “July of 2013 and continuing through the billing 

for the project.” As above, I find Plaintiff has provided adequate parameters to overcome the 

vagueness inherent in the temporal allegations. I therefore DENY the Motion to Dismiss as to the 

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5 – OPINION AND ORDER 

fourth claim but will only allow Plaintiff to proceed on the limited instances articulated after the 

first sentence. 

For Plaintiff’s third allegation regarding escrow, while Defendants nestle their arguments 

under their Rule 9(b) section, in reality, they are arguing the third allegation fails to state a claim 

of fraud since the representation is not false. Plaintiff alleges Defendants represented 

“$1,000,000 was placed in escrow.” As Plaintiff appears to concede this was technically a true 

statement when Defendants made it, Defendants argue Plaintiff cannot satisfy the element of 

“falsity” of a representation to prevail on its fraud claim. Wieber v. FedEx Ground Package Sys., 

Inc., 231 Or. App. 469, 480 (2009). However, under Oregon law, representations “that are 

‘literally true’ may be actionable if the representation ‘creates a false impression under the 

circumstances.’” Bixby v. KBR, Inc., 893 F. Supp. 2d 1067, 1074 (D. Or. 2012) (quoting 

Arboireau v. Adidas–Salomon AG, 347 F.3d 1158, 1168 n.12 (9th Cir. 2003)); see also Sheets v. 

B & B Pers. Sys., 257 Or. 135, 145 (1970) (“Fraud may be predicated upon an equivocal, evasive 

or misleading answer calculated to convey a false impression even though it may be literally true 

as far as it goes.”). Because at this stage of the litigation Plaintiff may succeed under the theory 

that, while literally true, the representations created a false impression under the circumstances, I 

DENY the motion to dismiss as to the third allegation in claims five and six. Overall, I DENY 

the Motion to Dismiss with the caveat that allegation four is limited, as discussed above. 

Defendants argue more generally that Plaintiff fails to state a claim because Plaintiff has 

not provided “specific false statements” and merely offers “labels and conclusory assertions” in 

the Complaint. This appears to be a general regurgitation of Defendants’ Rule 9(b) argument 

and I DENY it for the same reasons. 

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6 – OPINION AND ORDER 

B. Motion to Strike 

Defendants move to strike Plaintiff’s allegations in paragraph 5.a to 5.e, 5.j, and 5.m to 

5.p because, Defendants argue, they are fraud allegations and not pled according to FRCP 9(b). 

Paragraph 5 is titled “Factual Allegations” and outlines the facts that support all of Plaintiff’s 

claims. Some of the factual allegations in paragraph 5, specifically “misappropriating funds,” 

“running up and submitting bills and expenses with no actual basis,” “failing to secure bonding 

. . . and misrepresenting they had done so,” “misrepresenting the status of the project,” and 

“misrepresenting the financial condition of the project” are unquestionably fraud allegations. 

Federal Civil Procedure Rule 12 provides that the district courts “may strike from a 

pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous 

matter.” FED. R. CIV. P. 12(f). “[T]he function of a 12(f) motion to strike is to avoid the 

expenditure of time and money that must arise from litigating spurious issues by dispensing with 

those issues prior to trial.” Sidney–Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 

1983). 

I must determine whether the factual fraud allegations corrupt the non-fraud claims (i.e. 

claim 1 for negligence) and whether they corrupt the actual fraud claims. 

First, I address whether the factual allegations relating to fraud corrupt the non-fraud 

claims. Defendants do not fully develop their argument, but seem to be arguing the fraud 

allegations make it so all non-fraud claims are “grounded in fraud” and thus subject to Rule 

9(b)’s requirements. The Ninth Circuit has found if a plaintiff alleges some fraudulent and some 

non-fraudulent conduct, “only the allegations of fraud are subject to Rule 9(b)’s heightened 

pleading requirements.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1104 (9th Cir. 2003). 

Thus, Plaintiff’s non-fraud claims based on non-fraud related factual allegations survive. 

Case 3:15-cv-02170-MO Document 34 Filed 07/07/16 Page 6 of 7
7 – OPINION AND ORDER 

However, Plaintiff incorporates all of the allegations in paragraph 5 into its negligence claim 

thereby incorporating allegations of the alleged fraudulent conduct. The problem is the 

fraudulent allegations are clearly insufficient under Rule 9(b), as they do not include a time or 

content of the alleged misrepresentations. I therefore GRANT the Motion to Strike. However, 

because Plaintiff has shown it can state the facts with more specificity, as it did in claims 5 and 

6, I will allow Plaintiff leave to amend. 

Next, I turn to whether the fraud factual allegations corrupt the otherwise sufficiently 

pleaded fraud claims. That is, if a litigant pleaded fraud sufficiently under the “claims for relief” 

section, but in a separate section provide less detail, what result? I find the less detailed “Factual 

Allegation” has no effect on the validity of Plaintiff’s fifth and sixth claims. The purpose of 

FRCP 9(b) is satisfied when sufficient factual allegations are provided in the complaint, 

regardless of where those facts are provided. Defendants are protected from illegitimate 

complaints of fraud and are well-positioned to respond to the allegations.1

CONCLUSION 

For the reasons stated above, I DENY Defendants’ Motion to Dismiss [28] and GRANT 

Defendants’ Motion to Strike. Plaintiff has leave to amend the factual allegations in paragraph 5 

of the complaint. 

DATED this 7th day of July, 2016. 

/s/ Michael W. Mosman________

MICHAEL W. MOSMAN 

Chief United States District Judge 

 

1

 The same argument cannot be made of the non-fraud claims because they incorporates only paragraph 5, not the 

more detailed allegations of paragraph 34. 

Case 3:15-cv-02170-MO Document 34 Filed 07/07/16 Page 7 of 7