Opinion ID: 723747
Heading Depth: 3
Heading Rank: 4

Heading: Claim Relating to Conduct During Due Diligence

Text: 65 There is one other factual strain of fraud that fails pursuant to Fed.R.Civ.P. 9(b), notwithstanding any of the above analyses. Rule 9(b) requires that allegations of fraud be pleaded with particularity. Thus we have explained that when a complaint charges fraud, it must (1) detail the statements (or omissions) that the plaintiff contends are fraudulent, (2) identify the speaker, (3) state where and when the statements (or omissions) were made, and (4) explain why the statements (or omissions) are fraudulent. Shields v. Citytrust Bancorp., Inc., 25 F.3d 1124, 1128 (2d Cir.1994); Ouaknine v. MacFarlane, 897 F.2d 75, 79 (2d Cir.1990). The policy behind Rule 9(b) is (1) to provide a defendant with fair notice of plaintiff's claim, (2) to safeguard a defendant's reputation from improvident charges of wrongdoing and (3) to protect against the institution of a strike suit. Acito v. IMCERA Group, Inc., 47 F.3d 47, 52 (2d Cir.1995). 66 Harsco's allegations relating to due diligence consist of the following: During the confirmatory due diligence, MultiServ's CEO (Bowden), took an extended vacation. p 44. Harsco did not know Bowden was going to go away during this time. p 44. Also, other key employees, including MultiServ's Comptroller, were absent for substantial parts of the Due Diligence period. p 44. Harsco's requests to speak with MultiServ's internal auditor during due diligence were met with a response that the auditor was unavailable. p 45. MultiServ denied Harsco's requests to see and/or copy certain documents during this period as well. p 46. Lastly, Harsco asked for access to MultiServ's books seven days a week during the due diligence period; MultiServ gave access for only six days a week. p 47. 67 The only representation mentioned in this portion of the Complaint is that the auditor was unavailable. There is no explanation regarding why that representation may be fraudulent. Furthermore it cannot be said that denial of a request to see documents could constitute fraud, unless that denial suggested falsely and deceitfully that those documents did not exist (of which there is no suggestion here). In short, the complaint's recitation of particulars relating to due diligence fall far short of the requirements of Rule 9(b). 68 In sum, all of the fraud and negligent misrepresentation claims were properly dismissed.