Stradford v. Zurich Ins. Co.

02 Civ. 3628 (NRB), 2002 U.S. Dist. LEXIS 16993 (S.D.N.Y. Sep. 9, 2002)

 

RULE:

The first sentence of Fed. R. Civ. P. 9(b) requires that the time, place, and nature of the alleged misrepresentations be disclosed to the party accused of fraud.

FACTS:

Plaintiff dentist filed an action for reimbursement of casualty losses under an insurance policy. Defendant insurer filed counterclaims alleging fraud.  The trial court held that the counterclaims did not satisfy the first sentence of Fed. R. Civ. P. 9(b), which required that the time, place, and nature of the alleged misrepresentations be disclosed. in a fraud allegation. Thus, it was unclear from the face of the counterclaims whether defendants asserted that the dentist's claimed losses were improperly inflated, that the dentist's office never even flooded, or that the offices flooded, but not during the term of the policy.  Nevertheless, defendants had already moved for leave to amend and submitted a proposed amended pleading. The pleading cured the defects in the counterclaims.

ISSUE:

Is the counterclaim of the defendant sufficient to allege fraud?

ANSWER:

No.

CONCLUSION:

Here, defendants' counterclaims simply fail to identify the statement made by plaintiff that they claim to be false. Thus, it is unclear from the face of the counterclaims whether defendants assert that the claimed losses are improperly inflated, that the office never even flooded, or that the offices flooded, but not during the term of the Policy. In essence, defendants claim that plaintiff lied, but fail to identify the lie. Moreover, The "primary purpose" of Rule 9(b) is to afford a litigant accused of fraud "fair notice of the [] claim and the factual ground upon which it is based." Id. Here, defendants' counterclaims fail to provide fair notice of precisely which statement, or which aspect of his claim on the Policy, they allege to be false. The counterclaims are therefore insufficient under Rule 9(b), and must be dismissed.

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