Galeana Telecomms. Invs., Inc. v. Amerifone Corp.

GALEANA TELECOMMUNICATIONS INVESTMENTS, INC., Plaintiff/Counter-Defendant, v. AMERIFONE CORP., Defendant/Counter-Plaintiff,and FIRST INTERNATIONAL EXCHANGE GROUP, INC., et al. Defendants.

Case No. 15-cv-14095

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

November 30, 2016

HON. MARK A. GOLDSMITH

OPINION AND ORDER DENYING PLAINTIFF/COUNTER-DEFENDANT'S MOTION TO DISMISS (Dkt. 52)

This matter is before the Court on Plaintiff/Counter-Defendant Galeana Telecommunications Investments, Inc.'s motion to dismiss Defendant/Counter-Plaintiff Amerifone Corporation's counterclaim of fraud in the inducement (Dkt. 52). The issues have been fully briefed. Because oral argument will not aid the decisional process, the motion will be decided based on the parties' briefing. See E.D. Mich. LR 7.1(f)(2). For the reasons stated below, the Court denies the motion.

I. BACKGROUND

The Court addressed the factual and procedural background of this case in an opinion and order granting in part and denying in part Amerifone and Defendant Issam Beydoun's motion to dismiss (Dkt. 30) and Defendant Harold Oseff's motion to dismiss (Dkt. 31). See Galeana Telecomms. Invs., Inc. v. Amerifone Corp., ___ F. Supp. 3d ___, 2016 WL 4205997, at *1-3 (E.D. Mich. Aug. 10, 2016). To avoid needless repetition, the Court sets forth a brief statement of the necessary facts to provide context for this opinion.

This case involves an agreement between Galeana and Amerifone, under which Amerifone was to purchase Metrobeam Wireless Telecommunications Co. LLC, one of Galeana's subsidiary telecommunication companies, if Galeana was able to secure a 3G spectrum license to provide cellular services in the Kingdom of Jordan. Acquiring the license required Amerifone to submit a bid for the license to the Jordanian Telecommunications Regulatory Commission ("TRC"). That bid was ultimately rejected and Galeana brought the present action alleging breach of contract and various claims of fraud.

Amerifone, Beydoun, and Oseff filed motions to dismiss, which the Court granted in part and denied in part. Amerifone and Beydoun thereafter filed an answer to Galeana's second amended complaint (Dkt. 47), as did Oseff (Dkt. 48). Amerifone also asserted a counterclaim against Galeana for fraud in the inducement.

In the counterclaim, Amerifone alleges that Fouad Alaeddin (Galeana's chairman) approached Beydoun (Amerifone's chairman) in 2011 and proposed that Galeana and Amerifone work together to pursue the 3G and 4G spectrum licenses in Jordan on behalf of Metrobeam. Answer at 25, ¶ 8. Amerifone claims that Galeana's principals made a number of misrepresentations to induce Amerifone to work with Galeana in the pursuit of the 3G and 4G licenses. Id. at 25, ¶ 11; see also id. at 28, ¶ 23. Specifically, Amerifone alleges that Fouad Alaeddin misrepresented to Beydoun and Amerifone that (i) "[Galeana] and Metrobeam were in good financial condition and had minimal debt," and (ii) "[Galeana] and Metrobeam were in good standing with the Jordanian Government." Id. at 25-26, ¶¶ 12(a)-(b). According toAmerifone, Metrobeam was actually "experiencing severe financial distress, and was under investigation by the Jordanian government, since at least 2011," id. at 25, ¶ 10; see also id. at 27, ¶¶ 18, 21 — matters about which Amerifone allegedly had no knowledge, id. at 25, ¶ 10.

Amerifone alleges that these misrepresentations were made at the following in-person meetings:

(1) multiple meetings at the Hyatt Hotel in Amman, Jordan between late 2011 and late 2013; (2) multiple meetings at Fouad Alaeddin's office in Amman Jordan between late 2011 and late 2013; (3) a meeting at Amerifone's office [ ] located in Southfield, Michigan during January 2013; (4) a meeting at the Skyline Club in Southfield, Michigan during August 2013; (5) a meeting in Cyprus held during late 2013; and (6) a meeting in Istanbul in late 2013.

Id. at 26, ¶ 13. Amerifone also claims that Fouad Alaeddin made these misrepresentations to Beydoun "during numerous telephone conversations between late 2011 and late 2013." Id. at 26, ¶ 14. Amerifone further alleges that Fouad's son, Hazem Alaeddin, who is an officer and director of Galeana, "attended many of the in-person meetings with Issam Beydoun and Amerifone in Amman, Jordan between late 2011 and late 2013," id. at 26 ¶ 15, and made the same misrepresentations as his father, id. at 26-27, ¶¶ 16(a)-(b).

Galeana has filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), claiming that Amerifone has failed to sufficiently allege a counterclaim for fraudulent inducement.

II. STANDARD OF DECISION

In evaluating a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), "[c]ourts must construe the complaint in the light most favorable to plaintiff, accept all well-pled factual allegations as true, and determine whether the complaint states a plausible claim for relief." Albrecht v. Treon, 617 F.3d 890, 893 (6th Cir. 2010). To survive a motion to dismiss, acomplaint must plead specific factual allegations, and not just legal conclusions, in support of each claim. Ashcroft v. Iqbal, 556 U.S. 662, 678-679 (2009).

III. ANALYSIS

In its motion to dismiss, Galeana raises several arguments that Amerifone's fraudulent inducement counterclaim must fail. The Court considers each in turn.

A. Separate and Distinct Duty

Galeana argues that the counterclaim should be dismissed because Amerifone "did not claim a breach of duty that is separate and distinct from [a] breach of contract." Pl. Br. at 11. However, as Amerifone correctly points out in its response, see Def. Br. at 10 (Dkt. 56), the Court addressed this precise "separate and distinct duty" issue when ruling on Amerifone's motion to dismiss Galeana's fraud claim. In that opinion, the Court held that a fraud claim, unlike other tort claims, does not require a party to plead a breach of a duty that is separate and distinct from a breach of contract because the elements of a fraud claim "do not include a legal duty owed or breach of any duty." Galeana, 2016 WL 4205997, at *7. Therefore, the Court denies this portion of Galeana's motion to dismiss.

B. Reliance Regarding Financial Condition

An essential element of a fraud claim is that the plaintiff acted in reliance on the defendant's false representation. Bennett v. MIS Corp., 607 F.3d 1076, 1100-1101 (6th Cir.2010).¹ In its motion to dismiss, Galeana argues that Amerifone's counterclaim fails becauseAmerifone contracted "a third party company, Fruit Mobile, to conduct an independent evaluation of [Galeana]/Metrobeam," and "any sort of reliance that occurred could not have been based on statements by [Galeana], but clearly would have been based upon [Amerifone's] contracted third party's evaluation." Pl. Br. at 11-12; see also Pl. Br. at 12 ("[I]t is clear that Defendant relied on its own hired third party as to the value of MetroBeam, and any statement by the Plaintiff on the subject would have been irrelevant."). This argument is unavailing.

Galeana does not provide any support for its contention that Amerifone contracted Fruit Mobile to perform an independent evaluation of Metrobeam. Upon its own review of the allegations in the counterclaim and other record evidence in this case, the Court is unable to find any reference to Fruit Mobile. Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) ("When a court is presented with a Rule 12(b)(6) motion, it may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to the defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein."). It appears that any relationship between Amerifone and Fruit Mobile would have be established by way of extrinsic evidence, which this Court to prohibited from considering at this stage. Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 487 (6th Cir. 2009) ("Rule 12(b)(6), besides some minor exceptions, does not permit courts to consider evidence extrinsic to the pleadings.").

More importantly, Rule 12(b)(6) requires the Court to construe the counterclaim in the light most favorable to Amerifone and "accept all well-pled factual allegations as true."Albrecht, 617 F.3d 893. Amerifone clearly alleges that it "relied upon the misrepresentations set forth above in agreeing to work with [Galeana] in order to pursue 3G and 4G telecommunications licenses in the Kingdom of Jordan on behalf of [Galeana's] subsidiary, Metrobeam, entering into the Agreement and the Amendment." Answer at 28, ¶ 25. Accepting this allegation as true, Amerifone has sufficiently pleaded the element of reliance in support of its fraudulent inducement claim against Galeana to survive a Rule 12(b)(6) motion to dismiss.

Therefore, the Court denies this portion of Galeana's motion.

C. "False Accusation" Regarding Investigation by Jordanian Government

Next, Galeana argues that the allegation that it was under investigation by the Jordanian government was a "false accusation" that Amerifone has made "out of thin air." Pl. Br. at 12. Without any citation, Galeana intimates that, if it was under investigation, this fact would have been discovered when Amerifone visited Jordan and "met with several companies, banks, and government institutions." Id. Galeana also claims that "Fruit Mobile would have relayed any sort of information regarding a supposed investigation to" Amerifone. Id. at 12-13. Galeana further states that an investigation would have been revealed during a meeting that took place between Amerifone's principal and the TRC in December 2012. Id. at 13 (citing 12/11/2012 Email, Ex. A to Pl. Br. (Dkt. 52-1)). The Court disagrees with these contentions for several reasons.

First, whether or not the alleged investigation could have been discovered during any purported meetings with "companies, banks, and government...