The Court held that plaintiff, an insurance agent who had given up two profitable territories based upon the representations of defendants that he would be given two new territories, stated a claim for fraud. The Court noted that allegations based upon information and belief do not satisfy Rule 9(b), but said there were sufficient facts pled without that qualification for plaintiff to survive the motion.

The Court was clearly troubled, however, by the quality of the facts specified in the complaint to support the allegation that the defendants never intended to fulfill their promise. It stated that "Plaintiffs’ skeletal factual predicate as to the Defendants’ fraudulent intent treads dangerously close to the outer limit of legal sufficiency." It held, however, the Rule 9(b) allows such an allegation "to be averred generally."

The allegations were also sufficient for plaintiff to state a claim against another defendant based on allegations of conspiracy.

Plaintiff also made a claim of unjust enrichment, since he had lost the valuable sales organization he had given up when he surrendered his existing territories. Defendants argued that there had not been a direct transfer of benefits to them, but the Court held that it was sufficient that the defendants had gotten some benefit from the transfer.

Full Opinion