Warren v. Preti,Flaherty,Beliveau & Pachios

 / STATE OF MAINE BUSINESS AND CONSUMER COURT Cumberland, ss Location: Portland Docket No.: BCD-CV-11-28 j f) f'l\ H- - Cv f\1 ,_ /Oj;;t 5; :l.o 11 ) KAILE R. WARREN, JR., ) RENT-A-HUSBAND LLC, ) RENT-A-HUSBAND ENTERPRISES, ) LLC, and KW ENTERPRISES, INC., ) ) Plaintiffs, ) ) v. ) ) PRETI, FLAHERTY, BELIVEAU & ) PACHIOS, LLC, MARCUS, CREGG & ) MISTRETTA, P.A., and ACE ) HARDWARE CORP., ) ) Defendants ) ) ORDER ON PLAINTIFFS' MOTION TO AMEND COMPLAINT AND DEFENDANT ACE HARDWARE CORP.'S MOTION TO DISMISS This Order addresses Defendant Ace Hardware Corp.'s motion to dismiss the amended complaint pursuant to Rule 12(b)(6) ofthe Maine Rules of Civil Procedure, and the subsequent motion of Plaintiffs Kaile R. Warren, Jr., Rent-A-Husband LLC, Rent-A-Husband Enterprises, LLC, and KW Enterprises, Inc. to amend their complaint for a second time. Defendant Ace's motion to sever the claims against it from those against the other two defendants, citing M.R. Civ. P. 20 and 21 is addressed in a separate order. The court held oral argument on all pending motions in this case on October 12, 2011. Ordinarily Ace's motion to dismiss would be addressed before the Plaintiffs' subsequent motion to amend, but that motion was directed to Plaintiffs' first amended complaint, which would be superseded if Plaintiffs' motion to amend were granted. Accordingly, the court focuses initially on the motion to amend, solely to determine whether leave to amend would be 1 granted, without reference to the substantive sufficiency of the claims in the proposed second amended complaint. Then the court addresses the motion to dismiss, the question being whether any of the counts relating to Ace in either the first amended complaint or the proposed second amended complaint should be dismissed for failing to state a viable claim for relief against Ace. 1. The Standard for Granting Leave to Amend After a responsive pleading is served, a plaintiff may amend its complaint "only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." M.R. Civ. P. 15(a); see also Ejstathiou v. Aspinquid, Inc., 2008 ME 145, ~ 21, 956 A.2d 110, 118. 1 "Whether to allow a pleading amendment rests with the court's sound discretion." Holden v. Weinschenk, 1998 ME 185, ~ 6, 715 A.2d 915, 917 (quoting Diversifi'ed Foods, Inc. v. First Nat'l Bank cifBoston, 605 A.2d 609, 616 (Me. 1992)). Courts should freely allow an amendment to a complaint except for bad faith, dilatory tactics, or undue delay resulting in prejudice to the opponent. Longley v. Knapp, 1998 ME 142, ~ 19, 713 A.2d 939, 945. However, where "a proposed amended complaint would be subject to a motion to dismiss, the court is well within its discretion in denying leave to amend." See Glynn v. City cif S. Portland, 640 A.2d 1065, 1067 (Me. 1994). Plaintiffs assert that Ace is not entitled to object to their motion to amend because its motion to dismiss is not a "responsive pleading" for purposes of Rule 15(a). The court is inclined to agree with Ace's contrary position that a response of either an answer or a Rule 12 motion cuts offthe complaining party's right to amend without leave of court, especially when the complaining party has already amended once as of right. The court assumes therefore that leave to amend is required, albeit under the "freely given" standard ofRule 15. 2 Counts IX to XIII are against all Defendants. 3 Maine Rule of Civil Procedure 8 mirrors its federal counterpart, but Maine has yet to adopt federal pleading requirements for civil cases, contrary to Ace's argument under Ashcrrift v. Iqbal, 129 S. Ct 1937, 17S L. Ed 2d 868, (2009). Indeed, as the Supreme Judicial Court of Maine, sitting as the Law Court, has noted on occasion, Maine rules of procedure are not necessarily to be given the same interpretation as identically worded federal rules of procedure. See e.g. State qf Maine v. Dumond, 2000 ME 95, ~ 10, 7 51 A.2d 1014, 1017 (stating that although Maine Rule of Criminal Procedure SO(b) tracks the counterpart 2 The proposed amended complaint does not add any claims against any of the defendants; it purports instead to clarify what the Plaintiffs claim to be the connections between the asserted actions of the several defendants. Only Defendant Ace opposes the Plaintiffs' proposed amendment, on the ground that granting the motion to amend would be futile in light of its motion to dismiss pursuant to M.R. Civ. P. 12(b)(6). But for that contention, the court would grant the motion to amend, because it has been timely made and does not cause any cognizable prejudice to any party. Therefore, the analysis turns to Ace's motion to dismiss to determine whether any of the counts against Ace should be dismissed. 2. Ace's Motion to Dismiss The counts pertaining to Ace are as follows: Count V: Defamation Count VI: False Light Count VII: Negligent Misrepresentation Count VIII: Intentional Misrepresentation Count IX: Intentional Infliction of Emotional Distress as to Plaintiff Warren 2 Count X: Negligent Infliction of Emotional Distress as to Plaintiff Warren Count XI: Vicarious Liability Count XII: Punitive Damages Count XIII: Economic Damages for Restitution Count XIV: Promissory Estoppel "In reviewing O a motion to dismiss, [the court] consider[s] the facts in the complaint as if they were admitted." Bonney v. Stephens Mem. Hosp., 2011 ME 46, ~ 16, 17 A.3d 123, 127. The court will "'examine the complaint in the light most favorable to the plaintiff to determine whether it sets forth elements of a cause of action or alleges facts that would entitle the plaintiff to reliefpursuant to some legal theory."' Id. (quoting Saunders v. Tisher, 2006 ME 94, ~ 8, 902 A.2d 830, 832). "'Dismissal is warranted when it appears beyond a doubt that the plaintiff is not entitled to relief under any set offacts that he might prove in support of his claim."' !d. 2 Counts IX to XIII are against all Defendants. 3 The Maine Rules of Civil Procedure incorporate principles of notice pleading. See e.g., Burns v.-Architectural Doors & Windows, 20 II ME 61, ~ 21, 19 A. 3d 823, 829. Rule 8 calls for "I) a short and plain statement of the claim showing that the pleader is entitled to relief and (2) a demand for judgment for the relief which the pleader seeks." M.R. Civ. P. 8; see also Bean v. Cummings, 2008 ME 18, ~ 8, 939 A.2d 676, 679 (discussing pleading requirements in light of recent United States Supreme Court decisions, and noting that Rule 9(b) identifies certain claims that require a heightened pleading standard such as fraud or mistake). Notice pleading requires the plaintiff to provide the opposing party with "fair notice of the claim." Polk v. Town ofLubec, 2000 ME 152, ~ 18, 756 A.2d 510,514 (quoting E.N. Nason, Inc. v. Land-Ho Dev. Corp., 403 A.2d 1173, 1177 (Me. 1979)). 3 With that framework in mind, the analysis turns to the specific counts of the complaint. Count V: Defamation The Plaintiffs allege that Ace made defamatory statements to the investigators in State of Maine Office of Securities and the Maine Attorney General's Office during the pendency of the criminal investigation against them. They allege that the statements were related to the "scope and extent of the relationship between [the parties]; the success of the Rent-A-Husband tested partnerships; and O Ace's interest in obtaining an ownership stake in Rent-A-Husband including, but not limited to, statements claiming Ace O did not have a longstanding working partnership with Rent-A-Husband; that the Rent-A-Husband testing was not that successful; 3 Maine Rule of Civil Procedure 8 mirrors its federal counterpart, but Maine has yet to adopt federal pleading requirements for civil cases, contrary to Ace's argument under Ashcrrft v. Iqbal, 129 S. Ct 1937, 173 L. Ed 2d 868, (2009). Indeed, as the Supreme Judicial Court of Maine, sitting as the Law Court, has noted on occasion, Maine rules of procedure are not necessarily to be given the same interpretation as identically worded federal rules of procedure. See e.g. State rif Maine v. Dumond, 2000 ME 95, 1[ 10, 751 A.2d 1014, 1017 (stating that although Maine Rule of Criminal Procedure 30(b) tracks the counterpart federal rule, Maine does not follow the federal rule's same strict requirements); Mondello v. General Elec. Co., 650 A.2d 941, 944 (Me. 1994) (stating that federal court interpretations of federal rules provide guidance, but are not binding, on Maine courts' interpretation of counterpart Maine rules). 4 and that Defendant Ace was not seriously interested in a buy-in or buy-out of Rent-A-Husband and did not represent to Plaintiffs that it was." (Compl. ~ 16.3.) Ace claims that the statements were not defamatory, and further argues that they were absolutely privileged as they were made during a judicial proceeding. In order to survive a motion to dismiss, a complaint for defamation must allege the following elements: a false and defamatory statement concerning another; an unprivileged publication to a third party; fault amounting at least to negligence on the part of the publisher; and actionability irrespective of special harm or the existence of special harm caused by the publication. Cole v. Chandler, 2000 ME 104, ~ 5, 7 52 A.2d 1189, 119.3; Vahlsing Christina Corp. v. Stanley, 487 A.2d 264, 267 (Me. 1985). The Law Court has stated: Any person has a qualified privilege to make statements to law enforcement or regulatory agencies regarding the conduct of others, where the person making the statement believes in good faith that the statement is true and indicates that a statutory standard administered by the agency may have been violated. Truman v. Browne, 2001 ME 182, ~ 15, 788 A.2d 168, 172. This conditional privilege, however, is lost where the defendant abuses the privilege. Lester, 596 A.2d at 69; see also Cole, 2000 ME 104, ~ 7, 7 52 A.2d at 1194 (noting that "[w]hether the defendant abused his privilege is a question of fact"[; and o]nce it is determined that the defendant is entitled to the privilege, the burden shifts to the plaintiff "to come forward with evidence that could go to a jury that [the defendant] abused the privilege") (citing Rippett v. Bemis, 672 A.2d 82, 87 (Me. 1996) and Gautschi v. Maisel, 565 A.2d 1009, 1011 (Me. 1989)). As "[a] motion to dismiss a complaint for failure to state a claim should not be granted if the pleading alleges facts which would entitle the plaintiff to relief upon some theory, or ifit avers every essential element of a claim," see Vahlsing Christina Corp. v. Stanley, 487 A.2d 264, 267 (Me. 1985). Whether Ace's allegedly defamatory statements were privileged is a question 5 offact. Because the Plaintiffs have alleged the elements of a defamation claim, Ace's motion must be denied as to Count V. Count VI: False Light Plaintiffs also allege that Ace made statements that portrayed them in a false light with the public. One who gives publicity to a matter concerning another that places the other before the public in a false light is subject to liability to the other for invasion ofhis privacy, if(a) the false light in which the other was placed would be highly offensive to a reasonable person, and (b) the actor had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the other would be placed. Restatement (Second) ofTorts § 652E (1977). Cole v. Chandler, supra, 2000 ME 104, ~ 17,752 A.2d at 1197. Plaintiffs allege that Ace made false statements to the media concerning the scope and extent ofits business relationship with Plaintiffs; Ace's interest in obtaining an ownership stake in Rent-A-Husband; and Ace's knowledge of Rent-A-Husband investors, and allege further that these statements placed Plaintiffs in a light that would be highly offensive to a reasonable person. Further, Plaintiffs assert that Ace made the statements knowing they were false, or in reckless disregard of their falsity, and that the Plaintiffs suffered various forms of harm and damages as a result. Ace argues that the only alleged offensive statement that Plaintiffs could possibly be referring to is its Media Statement issued in response to news reports in 2009 in which Plaintiffs made unfavorable statements about Ace. Ace asserts that its Media Statement was issued in order to protect its business reputation from these unfavorable statements, and requests that the court consider the attached documentation of these statements in making its decision. The general rule is that only the facts alleged in the complaint may be considered on a 6 motion to dismiss. Moody v. State Liquor and Lottery Comm. 'n, 2004 ME 20, ~ 8, 843 A.2d 43, 47. However, Rule 12(b) states that "[i]f, on a motion asserting the defense numbered (6) to dismiss for failure ofthe pleading to state a claim upon which relief can be granted, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment." M.R. Civ. P. 12(b) (emphasis added). Whether the court accepts documents, additional factual claims, and other evidence is a discretionary determination. In this case, for the court to accept and consider Ace's additional materials or its characterization of the basis of Count VI as necessarily being limited to those statements would require Plaintiffs to be given leave to provide more material, and would in effect convert a Rule 12(b )( 6) motion into a Rule 56 summary judgment procedure, without the benefit of the filings required by Rule 56 to help narrow or eliminate factual issues. Thus, the court declines to consider the extrinsic material tendered by Ace and limits review to the face of Plaintiffs' pleading. Assessing Count VI under the Rule 12(b)(6) standard, the court concludes that the Plaintiffs have adequately alleged a claim for false light. See Burns, 2011 ME 61, ~ 21, 19 A.3d at 829 (noting Maine's "forgiving" notice pleading standard, and recognizing that "an initial pleading may be presented in general terms," however, "by the time the parties are addressing a motion for summary judgment, a plaintiff must be prepared to clearly identify the asserted cause or causes of action and the elements of each claim," ... [as w]ithout such definition, the parties may waste time and money litigating extraneous issues not generated by the pleadings"). Accordingly, Ace's motion to dismiss must be denied as to Count VI. Counts VII and VIII: Negligent and Intentional Misrepresentation In Rand v. Bath Iron Works Corp., 2003 ME 122, ~ 13, 832 A.2d 771, the Law Court addressed both claims for intentional misrepresentation and negligent misrepresentation. 7 To prevail on a claim for intentional misrepresentation, the plaintiff must prove by clear and convincing evidence: (1) that the defendant made a false representation, (2) of a material fact, (S) with knowledge ofits falsity or in reckless disregard of whether it is true or false, (4) for the purpose of inducing the plaintiff to act in reliance upon it, and, (5) the plaintiff justifiably relied upon the representation as true and acted upon it to the plaintiffs damage. Rand v. Bath Iron Works Corp., 2003 ME 122, ~ 9, 832 A.2d 771, 773. "When a plaintiff alleges a failure to disclose rising to the level of a misrepresentation, the plaintiffmust prove either (1) active concealment of the truth, or (2) a specific relationship imposing on the defendant an affirmative duty to disclose." Fitzgerald v. Gamester, 658 A.2d 1065, 1069 (Me. 1995). The Law Court has adopted the following definition of negligent misrepresentation: One who, in the course ofhis business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, ifhe fails to exercise reasonable care or competence in obtaining or communicating the information. Rand v. Bath Iron Works Corp., 2003 ME 122, ~ IS, 832 A.2d 771, 774 (emphasis omitted) (quoting Restatement (Second) Torts§ 552(a)(l)). Plaintiffs allege that Ace performed a successful corporate test of the pilot model partnership that resulted in further purchases of Rent-A-Husband franchises by Ace franchises. They also allege that Ace "repeatedly expressed to plaintiffs its interest and then its intention of purchasing Rent-A-Husband outright, or alternatively, of obtaining a controlling financial interest in Rent-A-Husband;" that at least two meetings were held between Ace and Warren on the subject; that Ace knew of Plaintiffs' efforts in raising business capital through a private offering, and that Ace met with investors as well as the SBA for purposes of securing funding to facilitate the proposed buy-in or buy-out. Plaintiffs allege that Ace made false representations to them for the purpose of inducing them to act or refrain from acting. 8 Plaintiffs also claim that once Ace stopped the buy-in and buy-out negotiations, it continued to communicate with the Plaintiffs through funding, advice, counsel, and research and advertising assistance. Plaintiffs claim that these representations caused them to take "innumerable steps and/ or measures in its business to facilitate the Ace buy-in or buy-out," and that when Ace decided not to pursue an ownership interest it caused a material change to the business and affected potential investors' interest, resulting in the Plaintiffs' loss of income and business opportunities. Ace argues that the Plaintiffs' claim is barred because it is based on an alleged promise of future performance. Although claims for intentional and negligent misrepresentation both generally require that the defendant's misrepresentation be based on a past or existing fact, not merely a statement of opinion or a promise of future performance, in certain circumstances '"the relationship of the parties ... may transform into an averment offact that which under ordinary circumstances would be merely an expression of opinion.'" Wildes v. Pens Unlimited Co., 389 A.2d 837,840 (Me. 1978) (citing Shine v. Dodge, ISO Me. 440,444, 157 A. 318,319 (193 I)). No such relationship is alleged here. 4 Therefore, were the Plaintiffs alleging only misrepresentation of future performance, Ace's motion would likely be granted. However, Plaintiffs allege that Ace intentionally or with reckless disregard or negligently supplied false information as to existing facts for Plaintiffs' guidance in their +"In order to survive a motion to dismiss a claim for breach of fiduciary duty, the plaintiff must set forth specific facts constituting the alleged relationship with sufficient particularity to enable the court to determine whether, if true, such facts could give rise to a fiduciary relationship." Fortin v. Roman Catholic Bishop of Portland, 2005 ME 57, ~ 26, 871 A.2d 1208, 1218. A fiduciary duty is created when "one standing in a fiduciary relation with another is subject to liability to the other for harm resulting from a breach of duty imposed by the relation." Bryan R. v. Watchtower Bible and Tract Soc'y of New York, Inc., 1999 ME 144, ~ 15,738 A.2d 839, 845 (quoting RESTATEMENT(SECOND) OF TORTS 874 ( 1965)). The Plaintiffs have not established sufficient facts supporting the allegation that a fiduciary relationship existed between Plaintiffs and Ace simply because there were ongoing business discussions. See e.g., Clappison v. Foley, 148 Me. 492, 497-99, 96 A.2d 325, 327-28 (1953) (noting that where the complaint does not demonstrate evidence of a fiduciary relationship, but instead only conventional business dealings, the motion to dismiss must be granted). 9 business transactions, for the purpose of inducing the Plaintiffs to act and/ or refrain from acting, and which did induce such reliance. Accordingly, Ace's motion must be denied as to Counts VII and VliJ.5 Count IX: Intentional Infliction ofEmotional Distress as to PlaintiffWarren To prevail in an action for intentional infliction of emotional distress (liED), a plaintiff must establish that: ( 1) the defendant intentionally or recklessly inflicted severe emotional distress or was certain or substantially certain that such distress would result from [its] conduct; (2) the conduct was so extreme and outrageous as to exceed all possible bounds of decency and must be regarded as atrocious, utterly intolerable in a civilized community; (3) the actions of the defendant caused the plaintiffs emotional distress; and (4) the emotional distress suffered by the plaintiffwas so severe that no reasonable [person] could be expected to endure it. Curtis v. Porter, 200 1 ME 15 8, ~ 10, 7 84 A.2d 18, 22-23. "A person acts reckless! y if [heJ knows or should know that [his] conduct creates an unreasonable risk of harm to another person and the unreasonableness of [his] actions exceeds negligence." Id. Moreover, severe emotional distress "means emotional distress, created by the circumstances ofthe event, that is so severe that no reasonable person could be expected to endure it." Botka v. S.C. Noyes & Co., 2003 ME 128, ~ 17, 834 A.2d 947, 952. Finally, in an liED claim, the court determines "in the first instance whether the defendant's conduct may reasonably be regarded as so extreme and outrageous to permit recovery." Champagne v. Mid- Maine Med. Ctr., 1998 ME 87, ~ 16, 711 A.2d 842, 847 (internal quotations omitted) (citations omitted). PlaintiffKaile Warren's liED claim is based on the allegations ofmisrepresentations regarding the purchasing of an ownership interest in Rent-A-Husband and the alleged 5 Ace's memorandum does not specifically assert that Plaintiffs' claim for intentional misrepresentation is insufficiently pleaded for purposes ofM.R. Civ. P. 9(b). See e.g., Diversified Foods, Inc. v. First Nat'! Bank, 605 A.2d 609, 615 (Me. 1992). 10 defamatory and false light statements Ace made about Rent-A-Husband. Ace's characterization of the circumstances as being insufficient may well prevail on a more fully developed factual record-after all, PlaintiffWarren's claim arises out of a business transaction or series of transactions rather than a situation that is by definition emotionally charged, such as a bereavement or a family conflict. See Latremore v. Latremore, 584 A.2d 626, 631 (Me. 1990) (finding that where the son was aware of the plaintiff parents' age and poor health, yet still made cruel remarks to them and sought to have his father committed, his conduct was extreme and outrageous); Rubin v. Matthews International Corp., 503 A.2d 694, 699-700 (Me. 1986) (concluding that whether defendant's repeated misrepresentations to the plaintiff that the headstone she purchased would be delivered in time for the funeral of a loved one was extreme and outrageous conduct was an issue of fact for the jury). On the other hand, PlaintiffWarren alleges much more than just the failure of a business plan-he asserts that Ace's actions contributed to his criminal prosecution and the destruction ofhis business. Viewed in a light most favorable to PlaintiffWarren, as it must be at this stage, Count IX states a cognizable claim for liED. Champagne, 1998 ME 87, ~ 16, 711 A.2d at 847 (citing Loe v. Town cifThomaston, 600 A.2d 1090, 1093 (Me. 1998)). Accordingly, Ace's motion is denied as to Count IX. Count X: Negligent Infliction of Emotional Distress as to PlaintiffWarren In Count X Warren alleges a claim ofnegligent infliction of emotional distress (NIED). 6 There is no general duty to avoid negligently causing emotional harm to others. Curtis v. Porter, 2001 ME 158, ~ 18, 784 A.2d 18, 25. In Maine, independent claims for NIED has been recognized only in so-called bystander situations or when a special relationship exists between the actor and the person emotionally harmed. !d. ~ 19, 784 A.2d at 25-26. PlaintiffWarren 6 This claim also may well amount to surplusage in light of the liED and defamation claims as there can only be one recovery for the same loss or damage. See Theriault v. Swan, 558 A.2d 369, 372 (Me. 1989). 11 has not alleged bystander status nor has he sufficiently alleged the existence of a special relationship on which to base an independent claim for NIED. Ace's motion is granted as to Count X. Count XI: Vicarious Liability Ace seeks to dismiss Count XI on the grounds that vicarious liability is not a separate and distinct cause of action, "but a theory ofimputation by which an employer may be held responsible for the tortious acts of its employees." Frank v. L.L. Bean, Inc., 352 F. Supp. 2d 8, 14 (D. Me. 2005) (citations omitted). "Since vicarious liability is only meaningful insofar as it is asserted in support of a valid cause of action," id., Count XI fails to state a cognizable independent and freestanding claim, and must be dismissed under Rule 12(b)(6). Plaintiffs can still seek to hold Ace vicariously liable for acts or omissions of its employees and agents on those claims against Ace that survive dismissal. Count XII: Punitive Damages Ace also seeks to dismiss Count XII on the grounds that punitive damages constitute a remedy, not a separate cause of action, and that even when viewing the facts ofthe complaint in a light most favorable to the plaintiff, they would not support an award of punitive damages. Ace "is correct that punitive damages is not a separate and distinct cause of action under Maine law. Rather, it is a type of remedy." Frank v. L.L. Bean, Inc., 352 F. Supp. 2d 8, 14 (D. Me. 2005) (citing Southport Marine, LLC v. Gulf Oil Limited Partnership, 234 F.3d 58, 64 (1st Cir. 2000); Connors v. Town cifBrunswick, Civil No. 99-331-P-C, 2000 U.S. Dist. LEXIS 12253, *40 (D. Me. Aug. 16, 2000)). Accordingly, Count XII must be dismissed. Plaintiffs have sought punitive damages in their prayers for relief, and may pursue an award of such damages on their liED and intentional misrepresentation claims ifthe predicate showing of malice-express or implied-is made. Tuttle v. Raymond, 494 A.2d 1353 (Me. 1985); 12 see also Morgan v. Kooistra, 2008 ME 26, ~ 29, 941 A.2d 447, 455. 7 Count XIII: Economic Damages For Restitution The Plaintiffs claim that the defendants "directly and/ or proximately caused the actual damages to Plaintiffs of a Consent Judgment requiring Plaintiffs to pay a maximum of $1,994,657.08 in restitution to the State ofMaine." Under Maine law, a restitution claim is premised on the equitable doctrine of unjust enrichment. Count XIII fails to allege that the alleged restitutionary payment to the State benefited or unjustly enriched Ace. Thus, what purports to be an independent, freestanding claim in Count XIII is more properly characterized as an element of Plaintiffs' alleged damages under some oftheir other counts against Ace. Ace's motion is granted as to Count XIII, but Plaintiffs remain able to pursue recovery of the alleged restitution payment under at least some of their remaining theories ofliability. Count XIV: Promissory Estoppel Ace has also moved to dismiss the Plaintiffs' promissory estoppel claim against it, alleging that it made no promises to the Plaintiffs, and even if it did, the promises alleged are barred by the Statute of Frauds because they could not have been performed in one year and they were not in writing. The Law Court, in Harvey v. Dow, clarified that Maine has Malice may be proven through evidence showing either that the party acted with ill will toward the claimant or that the party's conduct was so outrageous that malice can be implied. Id. at 1361. Thus, any lesser state of mind, such as gross negligence or recklessness, is insufficient to allow a punitive damages award. Id. at 1361-62 (noting that a gross negligence or reckless requirement "covers too broad and too vague an area ofbehavior, resulting in an unfair and inefficient use of the doctrine of punitive damages" that would "allow virtually limitless imposition ofpunitive damages," and would dull "the potentially keen edge of the doctrine as an effective deterrent of truly reprehensible conduct"). Accordingly, punitive damages are only available if a defendant acts with actual or implied malice. I d. Implied malice is defined as more than a "mere reckless disregard of the circumstances." I d. at 1361. The clear and convincing standard of proof aids in ensuring that punitive damages are not inappropriately awarded. Batchelder v. Realty Res. Hospitality, LLC, 2007 ME 22, 1[ 13, 914 A.2d 1116, 1124. 13 adopted the definition ofpromissory estoppel set out in the Restatement (Second) of Contracts, which states: A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. Restatement (Second) of Contracts§ 90(1) (1981); Bracale v. Gibbs, 2007 ME 7, ~ 14, 914 A.2d 1112, 1115. 2008 ME 192, ~ 11, 962 A.2d 322, 325. Although "promissory estoppel applies to promises that are otherwise unenforceable, [it] cannot be applied to avoid the statute offrauds requirement ... " Daigle Cammer. Group, Inc. v. St. Laurent, 1999 ME 107, ~ 14, 734 A.2d 667, 672 (noting that promissory estoppel cannot be used to avoid the statute of frauds in employment contracts exceeding one year) (internal citations and quotations omitted); see also Wells Fargo Home Mortg., Inc. v. Spaulding, 2007 ME 116, ~ 23, 930 A.2d 1025, 1030. Plaintiffs assert that Ace's alleged promises are not subject to the Statute of Frauds by alleging the doctrine of partial performance, specifically that Rent-A-Husband, in reliance on the promises made by Ace, gave up other business opportunities. Part performance in reliance on an otherwise unenforceable contract can remove the contract from the ambit of the Statute of Frauds "ifit is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement." Gage v. Stevens, 1997 ME 88, ~ 14, 696 A.2d 411, 416, quoting RESTATEMENT (SECOND) OF CoNTRACTS § 129 ( 1981 ); see Busque v. Marcou, 147 Me. 289, 294-95, 86 A.2d 873 (1952). It is doubtful that the Plaintiffs can recover damages against Ace, because their remedy is likely limited to the benefit of the bargain or their expenditures incurred in reliance, as opposed to the value of alleged lost opportunities elsewhere. However, because Plaintiffs have alleged reasonably specific promises by Ace and detrimental reliance by them, the allegations of 14 Count XIV could, if proved, entitle the Plaintiffs to relief of some kind. For that reason, Ace's motion is denied as to Count XIV. For the reasons stated it is ORDERED AS FOLLOWS: Plaintiffs' Motion to Amend is granted except as to Count X for negligent inflection of emotional distress, Count XI for vicarious liability, Count XII for punitive damages, and Count XIII for economic damages for restitution. Defendant Ace Hardware Corp.'s Motion to Dismiss is granted as to Counts X, XI, XII and XIII and is otherwise denied. Pursuant to M.R. Civ. P. 79, the clerk shall incorporate this order into the docket by reference. ~ Dated: October 25, 2011 l. 1\.. M. Horton Justice, Business and Consumer Court Entered on the Docket: I 0 .?.5 · I \ Copies sent via Mail_ Electronically_::::- 15 BUSINESS AND CONSUMER COURT Kaile R. Warren, Jr. et al v. Preti, Flaherty, Beliveau & Pachios, LLC et al BCD-CV-2011-28 Counsel ofRecord Attorney Name Party Name Daniel Lilley, Esq. Kaile Warren, Jr. et al (Plaintiffs) Tina Nadeau, Esq. Kaile Warren, Jr. et al (Plaintiffs) John Aromando, Esq. Preti, Flaherty, Beliveau & Pachios (Defendant) Mark Porada, Esq. Preti, Flaherty, Beliveau & Pachios (Defendant) Peter DeTroy, Esq. Marcus, Clegg & Mistretta (Defendant) Russel Pierce, Esq. Marcus, Clegg & Mistretta (Defendant) Thimi Mina, Esq. Ace Hardware Corp (Defendant) Samuel Moulthrop, Esq. Ace Hardware Corp (Defendant) / STATE OF MAINE BUSINESS AND CONSUMER COURT Cumberland, ss Location: Portland Docket No.: BCD-CV-11-28 1 A 1-4M . . . Cu.M- Jo j • '5 ;;;..'0 1 1 1 ) I . ,,,_, . . -3 ;2~"/ £lt )I / .:(Of_J ) !~AILE R. vVARREN, JR., ) RENT-A-HUSBAND LLC, ) RENT-A-HUSBAND ENTERPRISES, ) LLC, and KW ENTERPRISES, INC., ) ) Plaintiffs, ) ) v. ) ) PRETI, FLAHERTY, BELIVEAU & ) PACHIOS, LLC, MARCUS, CLEGG & ) MISTRETTA, P.A., and ACE ) HARDWARE CORP., ) ) Defendants ) ) ORDER ON PLAINTIFFS MOTION TO AMEND COMPLAINT Plaintiffs Kaile R. Warren, Jr., Rent-A-Husband LLC, Rent-A-Husband Enterprises, LLC, and KW Enterprises, Inc. move to amend their complaint for a third time to add two counts against Ace Hardware Corp. (Ace): breach of fiduciary duty (Count V), and violation of the Uniform Trade Secrets Act, 11• M.R.S. §§ 1541-1•8 (2012), (Count VI). 1 Plaintiffs assert that the facts to suppm·t these cmmts have been previously pleaded in their Second Amended Complaint or generated during the course of discovery. Plaintiff.<; further asse1·t that their motion is not sought in bad faith or for a dilatory reason, and that Ace will suffer 1 Plaintiffs' First Amended Complaint was filed on April 20, 2011, as of right. See M.R. Civ. P. 15(a). The Court granted Plaintiffs' motion to amend on October 25, 2012, resulting in Plaintiffs' Second Amended Complaint. no undue prejudice from the amendment. The Court held oral argument on the motion on Mat·ch 20, 2012. After a responsive pleading is served, a plaintiff may amend its complaint "only by leave of court o1· by written consent of the adverse party; and leave shall be fi·eely given when justice so requires." M.R. Civ. P. I6(a); see al.so E.fstatltiou v. Aspinquid, Inc., 2008 ME 146, ~ 21, 956 A.2d 110. "Whether to allow a pleading amendment rests with the court's sound discretion." Holden v. Tf7eimchenk, 1998 ME 185, ~ 6, 715 A.2d 915 (quoting Diversified Foods, Inc. v. First Nat'l Bank of Boston, 605 A.2d 609, 616 (Me. 1992)). Courts should freely allow an amendment to a complaint except for bad faith, dilatory tactics, or undue delay resulting in prejudice to the opponent. Longley v. Knapp, 1998 ME 14<2, ~ 19, 713 A.2d 939. Nevertheless, a moving party must make a timely request to amend a pleading, particularly when the deadline for amendment of pleadings has passed. See El- Hajj v. Fortis Benifits Im. Co., 156 F. Supp. 2d 27, ~H< (D. Me. 2001), quoted in Davis v. G1'0ver, 2002 Me. Super. LEXIS 69, at *9 (Apr. 3, 2002) (Mead, J.). Further, where "a proposed amended complaint would be subject to a motion to dismiss, the court is well within its discretion in denying leave to amend." Glynn v. City of S. Portland, 640 A.2d 1066, 1067 (Me. 199'1•). In the present case, Plaintiffs announced their intention to seek leave to amend during an argument on a discovery issue on November 1, 2012. Plaintiffs again stated their intention to file the motion to amend at a hearing on December 17, 2012. At that time, the Com·t observed that the success of a motion to amend was inversely related to the closeness of the trial date. Plaintiffs filed the motion to amend on January 9, 2013. 2 As Ace has noted, the proposed amendment is more than a year past the deadline of January 1, 2012, for amendment of pleadings. Plaintiffs attempt to justify that delay by arguing that the facts to support each of the proposed new claims were developed dm·ing ongoing discovery. As to their proposed breach of fiduciary duty claim, Plaintiffs assert that as facts regarding the partnership relationship between them and Ace developed during discovery, the breach of fiduciary duties attendant in such a relationship became clear, but the Court is not persuaded. Plaintiffs have consistently asserted that they had a partnership relationship with Ace.~ Thus, if there is indeed any basis for a breach of fiduciary claim against Ace, it was known to Plaintiff.~ when they filed their initial complaint in March 2011. 3 See lvlclut;yre v. Nice, 2001 ME 174, ~ 10, 786 A.2d 620. In October 2011, the Court noted that the Plaintiffs' Second Amended Complaint does not sufficiently allege a fiduciary relationship, much less a breach claim. (Oct. 25, 2011, Order at 9 n.4 ("The Plaintiffs have not established sufficient facts supporting the allegation that a fiduciary relationship existed between Plaintiffs and Ace simply because there were ongoing business discussions.").) The delay in bringing the breach of tlduciary claim forward has simply not been explained or justified. Finally, the Plaintiffs' proposed amendments ru·e mere recitations of the elements of the cause of action and offer no further specifics about the alleged fiduciary relationship. See America v. Stmspray Condo. Ass'u, 2013 ME 19, ~ 13, -- A.sd ---; Btyan R. v. lVatchtower Bible & Tract Soc'y ofN.Y., Inc., 1999 ME 1•H, ~ 21, 738 A.2d 839. The gravamen of Plaintiffs' ~ (See Compl. ~HI 79-80, 82-84,92, 95-97, 163; Amend. Compl. ~~ 79-80, 82-84, 92,95-97, 16.'3, 219; 2d Amend. Compl. ~~ •1<5, 79-80, 82-84, 86, 90, 9•1·-97, 108, 210.) ~ The stay of this case for several months, during which Ace pursued an interlocutory appeal, does not affect this analysis as the amendment of pleadings deadline had already passed at that point. dispute with and against Ace is an arms-length business deal gone south. See America, 2013 ME ~ 15, -- A.sd ---(analyzing the substance of the overall complaint). See also Clappison v. Foley, 148 Me. •1·92, '1·97-99, 96 A.2d .!325, 327-28 (1953) (noting that where the complaint does not demonstrate evidence of a fiduciary relationship, but instead only conventional business dealings, the motion to dismiss must be granted). With respect to the trade secret claim, Plaintiffs' assertion that it was revealed only in the cotu·se of discovery that "Ace misappropriated the Plaintiffs' 'hub-and-spoke' model for Rent-a-Husband's placement in stores for itself' (M. Amend. S) is more plausible. Nevertheless, as Plaintiffs admit, the UTSA claim is not contemplated by the previous complaints. In fact, it is a vast depm·ture from the theories presently asserted against Ace and would open up a completely new and different set of issues between the Plaintiffs and Ace. As the Law Court has explained, factors relevant to determin[ing] whether the information "derives independent economic value ... from not being g·enerally !mown [or] readily asc~rtainable," 10 M.R.S.Q § 154·2( 4 )(A), include: (I) the value of the information to the plaintiff and to its competitors; (2) the amount of effort or money the plaintiff expended in developing the information; (3) the extent of measures the plaintiff tool< to guard the sec1·ecy of the information; (4·) the ease or difficulty with which others could properly acquire or duplicate the information; and (5) the degree to which third parties have placed the information in the public domain or rendered the information "readily ascertainable" through patent applications or unrestricted product marketing. Spottiswoode v. Levine, 1999 ME 79, ~ 27 n.6, 730 A.2d 166. Similarly, factors relevant to determin[ing] whether the information "is the subject of efforts that are reasonable under the circumstances to maintain its secrecy," 10 M.R.S. § 1542(4)(B), include: ( 1) the extent to which the information is known outside the plaintiffs business; (2) the extent to which employees and others involved in the plaintiffs business know the information; (3) the nature and extent of measures the plaintiff took to guard the secrecy of the information; (•!•) the existence or absence of an express agreement restricting disclosure; and (5) the circumstances under which the information was disclosed to any employee, to the extent that the circumstances give rise to a reasonable inference that further disclosm·e without the plaintiff's consent is prohibited. !d.~ 27 n.7. Trial of this case was originally set fm· June 2013, and it is now set for January- February 2014. The court is in the process of resetting deadlines to enable discovery, expert witness activity and dispositive motion bl'iefing to be completed sufficiently ahead of trial to enable the parties to know what claims will be going to trial. Because the Plaintiffs' proposed UTSA claim would likely entail discovery well beyond the discovery already taken in connection with the present claims against Ace, allowing the amendment would almost certainly require further delays in this two-year-old litigation. As an aside, the UTSA claim as pleaded in the amendment is arguably facially deficient. See Glynn, 640 A.2d at 1067. The complaint fails to state how the hub-and-spoke model "[d]erives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use," as required by 10 M.R.S. § 15'1·2(-l•)(A) (2012). The Cotu't is cognizant that leave to amend should be fi·eely granted: The philosophy of the rules is that pleadings are not an end in themselves but only a means of bringing into focus the area of actual controversy. Leave to amend should be fi·eely granted when justice so requil·es. A party should not be precluded by the technicalities of pleading from presenting his claim or defense on its merits unless the pleadings have misled the opposing party to his prejudice. Bangor kfotor Co. v. Chapman, 452 A.2d 389, 392 (Me. 1982) (quoting I Field, McKusick & \iVroth, !vfaine Civil Practice § 15.1 ( 1970)). "[PJrejudice means something more than an 5 increased likelihood of defeat in the litigation if the amendment is granted." Id. (quoting 1 Field, Md\usick & Wroth, Maine Civil Practice§ 15.4 ( 1970)). Undue prejudice to the opponent can occur when the newly asserted claim inserts a new issue into the case that has not been previously raised or litigated. See id. at 393. Similarly, the Law Court has affirmed the denial of a motion to amend to add permissive counterclaims when the request was made more than a year after the litigation between the parties began and no reasonable excuse for the delay was provided. See Efstatlliou v. The Aspinquid, Inc., 2008 ME 14·5, ~ ~ 21-22, 956 A.2d I 10; if Kelley v. !vlichaud's Ins. Agency, 651 A.2d 345, 347 (Me. 1994) (a delay of six weeks after a party's responsive pleading is not undue delay to justify denying a motion to amend). "Although passage of time, alone, is not grounds for denying a motion to amend, 'undue delay' removes any presumption in favor of allowing amendment." See Diversified Foods, Inc. v. First Nat'l Bank, 605 A.2d 609, 616 (Me. 1992) (citation omitted) (concluding an intentional delay of seven months to add claims supported denial of the motion to amend). In this case, allowing the Plaintiffs to amend again, would almost certainly cause further substantial delay, and also work undue prejudice to Ace, g·iven the posture of the case and the lad< of justification for the amendment. Accordingly, Plaintiffs' Motion to Amend Complaint is DENIED. Pursuant to M.R. Civ. P. 79, the clerk shall incorporate this order into the docket by ., reference. ~·· Dated: March 26, 201.'3 A.M. Horton Justice, Business and Consumer Court Entered on the Docket: ~La::Ll~. copies sent via Mall_•. Electronically V 6 BCD-CV-11-28 Warren, et al v. Preti Flaherty, et al Dan Lilley, Esq John Aromando, Esq Daniel G. Lilley Law Office Pierce Atwood, Merrills Wharf 39 Portland Pier 254 Commercial Street P.O. Box 4803 Portland, Maine Portland, ME Peter DeTroy, Esq. Norman Hanson & Detroy 415 Congress Street P.O. Box 4600 Portland, ME Thimi Mina, Esq. McCloskey Mina & Cunniff 12 City Center Portland, ME