Opinion ID: 32132
Heading Depth: 2
Heading Rank: 1

Heading: Sufficiency of Benchmark's Pleadings

Text: 8 As a preliminary matter, we turn to the district court's decision that Benchmark failed to plead its fraud and negligent misrepresentation claims with the particularity required by Federal Rule of Civil Procedure 9(b). Although Rule 9(b) by its terms does not apply to negligent misrepresentation claims, this court has applied the heightened pleading requirements when the parties have not urged a separate focus on the negligent misrepresentation claims. Williams v. WMX Techs., Inc., 112 F.3d 175, 177 (5th Cir.1997). That is the case here, as Benchmark's fraud and negligent misrepresentation claims are based on the same set of alleged facts. 9 What constitutes `particularity' will necessarily differ with the facts of each case.... Guidry v. Bank of LaPlace, 954 F.2d 278, 288 (5th Cir.1992). At a minimum, Rule 9(b) requires allegations of the particulars of time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby. Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 1134, 1139 (5th Cir.1992) (internal quotation marks and citation omitted). Put simply, Rule 9(b) requires the who, what, when, where, and how to be laid out. Williams, 112 F.3d at 179. Review of a dismissal for failure to comply with Rule 9(b) is de novo. United States ex rel. Russell v. Epic Healthcare Mgmt. Group, 193 F.3d 304, 308 (5th Cir. 1999). 10 Benchmark's final complaint satisfies the pleading requirements of Rule 9(b). It alleges that a Huber representative 1 made false representations regarding AVEX's operations, financial results, and customer relations in April 1999 in Angleton, Texas. It also alleges false or misleading statements regarding favorable past financial results and the strength of its customer relations with Lucent, Compaq, General Instruments, and Ericsson in the Confidential Descriptive Memorandum sent on behalf of Huber to Benchmark in May 1999, in the information provided to Benchmark in the data rooms at the offices of Huber's investment bankers in June and July 1999, and in personal discussions between Huber representatives and Benchmark in June, July, and August 1999. Specifically, Timothy D. Boates, Gregor J. Smith, and Jeffrey Nesbitt allegedly were involved in the oral misrepresentations. The complaint also alleges fraud and negligent misrepresentation based on representations and warranties made in the Original Stock Purchase Agreement in July and in the Amended Stock Purchase Agreement in August that AVEX had encountered no material adverse change prior to closing, that AVEX had not received notice of default or termination under any significant contract, and that AVEX's proffered financial statements were accurate under generally accepted accounting principles. 11 In addition to setting forth the who, what, when, and where, Benchmark's complaint also explains why the various assertions are fraudulent or misleading. The complaint alleges, for example, that AVEX lost as customers General Instruments and Compaq, and that Ericsson, Lucent, and Phillips planned to dramatically reduce their purchases from AVEX. It also alleges that AVEX's financial statements materially overstated the company's financial condition and that, due to the misrepresentations, Huber was able to sell its stock to Benchmark, and Boates, Smith, and Nesbitt became entitled to substantial transaction incentive bonuses. Based on the foregoing, Benchmark's final complaint satisfies Rule 9(b)'s pleading requirements and sufficiently puts Huber on notice as to the challenged assertions.