North Carolina Business Litigation Report

Fraud In The Inducement Claim Dismissed Due To "Patent Inconsistency" In Complaint

Warren v. Eli Research, Inc., April 28, 2008 (Diaz)(unpublished)

Inconsistent allegations in the Complaint doomed the claim for fraudulent inducement by one of the Plaintiffs in this case. 

That Plaintiff, Hittle, alleged that the Defendant had promised her an annual salary of $150,000, guaranteed for 12 months, but that it had no intention of fulfilling this promise when made.  The Defendant booted Hittle only a few months after she began employment.

What led to the granting of Defendant's Motion to Dismiss were Hittle's allegations in the Complaint that she had begun her employment, worked for three months, been paid for that work, and that she was terminated for "financial reasons."

The Court held "it is patently inconsistent for Hittle to allege, on the one hand, that Defendant never intended to pay the wages promised, and on the other, that Defendant in fact performed in part and that it failed to complete performance for reasons unrelated to its intent."  The Court held that partial performance of a contract demonstrates a party's intention to fulfill the promise at the time it was made, undermining Hittle's claim on its face.

The fraudulent inducement claim of another Plaintiff (Warren), was allowed to go forward, however.  Warren's claim was that he had been promised substantial severance pay if he was terminated for reasons other than those specified in his written employment agreement.  Although Warren, like Hittle, had begun employment, the Court found that "the fact that Defendant employed Warren for a period of time before terminating him for financial reasons does not negate Warren’s allegation that Defendant never intended (at the time it made the promise) to pay Warren severance upon his discharge."

The Court denied the Motions to Dismiss the Wage and Hour Act claims made by both Warren and Hittle.  According to her allegations, Hittle was entitled to a guaranteed payment of one year of compensation at the time she began employment, and the Court held that she therefore stated a claim for recovery of wages under the Act.  Warren had a claim under the Act because severance pay is included in the definition of wages.

Brief in Support of Motion to Dismiss

Brief in Opposition to Motion to Dismiss

Reply Brief in Support of Motion to Dismiss

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Mack Sperling
Brooks Pierce, LLP
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