The opinion
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
TRUSTED TRANSPORTATION 1:16-cv-7094-NLH-JS
SOLUTIONS, LLC,
Plaintiff, MEMORANDUM OPINION
v.
GUARANTEE INSURANCE COMPANY,
et al.,
Defendants.
APPEARANCES:
WILLIAM B. IGOE
CASEY GENE WATKINS
BALLARD SPAHR LLP
210 LAKE DRIVE EAST
SUITE 200
CHERRY HILL, NJ 08002
On behalf of Plaintiff
CHRISTINA M. RIEKER
LARRY C. GREEN, JR.
ANDREW N. JANOF
WINGET, SPADAFORA & SCHWARTZENBERG LLP
2500 PLAZA 5
HARBORSIDE FINANCIAL CENTER
JERSEY CITY, NEW JERSEY 07311
On behalf of Defendants
Hillman, District Judge,
This matter comes before the Court on Plaintiff Trusted
Transportation Solutions, Inc.’s Appeal (Docket Item 137) of
Magistrate Judge Joel Schneider’s September 12, 2018 Order
(Docket Item 109) denying Plaintiff’s Motion for Leave to File a
Second Amended Complaint (Docket Item 88). The Court will
affirm Judge Schneider’s Order because it was neither clearly
erroneous nor contrary to law.
BACKGROUND
This action arises from the alleged misrepresentation by
Defendants Guarantee Insurance Company (“Guarantee”), Patriot
Underwriters, Inc. (“Patriot”), Douglas Cook (“Cook”), Brown &
Brown of New Jersey, LLC (“Brown & Brown”), and John F. Corbett
(“Corbett”) of the terms of a workers’ compensation insurance
policy that Plaintiff purchased from them. (See generally
Docket Item 38.)
Plaintiff originally filed a Complaint in New Jersey
Superior Court in Camden County against Guarantee, Patriot, and
Cook (collectively, the “Insurer Defendants”), who shortly
thereafter removed the Complaint to this Court. (Docket Item
1.) Plaintiff later filed, with the Court’s permission, an
Amended Complaint, which added Defendants Brown & Brown and
Corbett (collectively, the “Brown & Brown Defendants”), along
with four new claims. (Docket Item 38.) The new claims
included Counts IX and X, which alleged breach of a special
relationship and common law fraud, respectively. (Id.) The
Brown & Brown Defendants then filed a Motion to Dismiss Counts I
through VI and VIII through X of the Amended Complaint for
failure to state a claim upon which relief can be granted.
(Docket Item 46.)
In a June 11, 2018 Memorandum Opinion, the late Honorable
Jerome B. Simandle dismissed Counts I through VI and VII against
the Brown & Brown Defendants with prejudice. (Docket Item 85,
¶¶ 13, 17.) Judge Simandle also dismissed Counts IX and X
without prejudice. (Id. ¶¶ 22, 27.) In his Memorandum Opinion,
Judge Simandle pointed out several deficiencies relating to
Counts IX and X of the Amended Complaint. (See id. ¶¶ 18-27.)
On July 11, 2018, Plaintiff filed a Motion for Leave to
File a Second Amended Complaint. (Docket Item 88.) On
September 7, 2018, Judge Schneider held oral argument and ruled
against the motion on the record. (Docket Item 110 at 35.) On
September 12, 2018, Judge Schneider memorialized that ruling in
a written Order. (Docket Item 109.) On September 21, 2018,
Plaintiff filed a Motion for Reconsideration solely as to its
request to amend Count X. (Docket Item 111.) On January 14,
2019, Judge Schneider issued an Order denying Plaintiff’s Motion
for Reconsideration. (Docket Item 134.)
In his January 14, 2019 Order, Judge Schneider found that
Plaintiff’s Proposed Second Amended Complaint “did not cure the
deficiencies noted in Judge Simandle’s Memorandum Opinion” of
June 11, 2018, and that “[P]laintiff’s conclusory allegations
[were] not supported by pleaded facts that plausibly show fraud
was committed.” (Id. at 4 (quoting transcript).) Judge
Schneider found that “Plaintiff’s proposed fraud claim [was]
replete with conclusory allegations that are not supported by
well pleaded facts.” (Id. at 5.) Judge Schneider noted that,
“[e]ven after the completion of all fact discovery, [P]laintiff
did not plead sufficient facts, as opposed to conclusory
allegations, to plausibly show that fraud was committed.” (Id.
at 7.) Therefore, Judge Schneider denied Plaintiff’s Motion for
Reconsideration. (Id.)
On January 28, 2019, Plaintiff filed the present Appeal
pursuant to FED. R. CIV. P. 72(a) and L. CIV. R. 72. (Docket Item
137.) Plaintiff argues that its Proposed Second Amended
Complaint met Rule 9(b)’s pleading requirements for an alleged
fraud. (Docket Item 137-2 at 10.) Plaintiff asserts that its
Proposed Second Amended Complaint “identified with specificity
each misrepresentation or omission made by Mr. Corbett; when he
made each of them; whether he made them verbally or in writing;
and what they induced [Plaintiff] to do.” (Id. (footnote
omitted).) Plaintiff further argues that the Proposed Second
Amended Complaint specifically identified both the damages
suffered by Plaintiff as a result of the alleged fraud and the
motivation for the alleged fraud. (Id. at 11.) Resultingly,
Plaintiff asserts that Judge Schneider erred in denying
Plaintiff’s Motion for Leave to File a Second Amended Complaint
on the basis that the Proposed Second Amended Complaint did not
satisfy FED. R. CIV. P. 9(b). (Id.)
Brown & Brown Defendants oppose this appeal. (Docket Item
141.) They argue that Judge Schneider properly applied the
relevant legal standards and that his conclusion that the
Proposed Second Amended Complaint contained mere conclusory
allegations was accurate. (Id.) Plaintiff timely filed a reply
brief. (Docket Item 143.)
STANDARD OF REVIEW
When a magistrate judge decides a non-dispositive motion,
the “district court may modify the magistrate’s order only if
the district court finds that the magistrate’s ruling was
clearly erroneous or contrary to law.” Cipollone v. Liggett
Group, Inc., 785 F.2d 1108, 1120 (3d Cir. 1986); see also L.
Civ. R. 72.1(c)(A)(1) (“A Judge shall consider the appeal . . .
and set aside any portion of the Magistrate Judge’s order found
to be clearly erroneous or contrary to law.”).
A magistrate judge’s ruling is clearly erroneous when
“although there may be some evidence to support it, the
reviewing court, after considering the entirety of the evidence,
is ‘left with the definite and firm conviction that a mistake
has been committed.’” Kounelis v. Sherrer, 529 F. Supp. 2d 503,
518 (D.N.J. 2008) (quoting Dome Petroleum Ltd. v. Emp’rs Mut.
Liab. Ins. Co., 131 F.R.D. 63, 65 (D.N.J. 1990); United States
v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). A ruling is
contrary to law if “the magistrate judge has misinterpreted or
misapplied applicable law.” Id. The mere fact that the
reviewing court “might have decided the matter differently” is
insufficient to justify the reversal of the magistrate judge’s
decision. Mendez v. Avis Budget Grp., Inc., No. 11-6537, 2018
WL 4676039, at *2 (D.N.J. Sept. 28, 2018) (quoting Wortman v.
Beglin, No. 03-495, 2007 WL 2375057, at *2 (D.N.J. Aug. 16,
2007)).
DISCUSSION
Judge Schneider correctly identified and applied the
relevant legal rules. Rule 15(a)(2) states that a “court should
freely give leave [to amend] when justice so requires.” FED. R.
CIV. P. 15(a)(2). However, that is not the only rule that the
Court in this case had to consider. Rule 9(b) requires a
plaintiff to “state with particularity the circumstances
constituting fraud.” FED. R. CIV. P. 9(b). Particularity requires
that the plaintiff plead sufficient details such that the
defendants are on notice of the “precise misconduct with which
they are charged.” Seville Indus. Machinery Corp. v. Southmost
Machinery Corp., 742 F.2d 786, 791 (3d Cir. 1984). Under this
standard, a plaintiff must “plead the date, time, and place of
the alleged fraud, or otherwise inject precision into the
allegations by some alternative means.” Grant v. Turner, 505
Fed. App’x 107, 111 (3d Cir. 2012). Mere possibility of the
allegations is insufficient; they must be plausible. Phillips
v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). “A
claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Making this
determination is “a context-specific task that requires the
reviewing court to draw on its judicial experience and common
sense.” Id. at 679.
Judge Schneider heard oral arguments in addition to
considering the parties’ briefs about the Proposed Second
Amended Complaint. His detailed knowledge of the issue between
the parties warrants high deference from the Court, which
reviews the decision solely on the cold record. In the present
case, Judge Schneider’s denial of Plaintiff’s Motion for Leave
to Amend was neither clearly erroneous nor contrary to law.
In both his decision on the record and his written Order,
Judge Schneider reasonably concluded that Count X of the
Proposed Second Amended Complaint did not satisfy Rule 9(b).
Judge Schneider specifically pointed to paragraphs 106, 124,
128, 132, 133, 134, and 137 of the Proposed Second Amended
Complaint as examples of Plaintiff’s “deficient allegations.”
(Docket Item 110 at 36-37.) Judge Schneider “dr[e]w on [his]
judicial experience and common sense” to analyze those
paragraphs as part of the “context-specific task” of determining
plausibility. See Iqbal, 556 U.S. at 679. As a result, Judge
Schneider reasonably concluded that “[P]laintiff’s conclusory
allegations are not supported by pleaded facts that plausibly
show fraud was committed.” (Docket Item 110 at 36.)
Plaintiff argues that Judge Schneider failed to adequately
address certain allegations made in the Proposed Second Amended
Complaint. The Court is unconvinced by Plaintiff’s argument.
Judge Schneider listed the above paragraphs as examples of
deficiencies with the Proposed Second Amended Complaint, but not
as the sole basis for denying the motion for reconsideration.
Judge Schneider also referred to Plaintiff’s allegations
surrounding the Brown & Brown Defendants’ “motive and
opportunity to commit fraud.” (See id. at 37.) Judge Schneider
found it “noteworthy that there is not a citation to one line of
deposition testimony in [P]laintiff’s proposed amended
complaint,” despite discovery already having been completed at
the time of its filing. (Id.) This, as noted above, was all
part of Judge Schneider’s “context-specific task” of determining
plausibility, which also included hearing oral argument.
Therefore, the Court holds that Judge Schneider’s denial of
Plaintiff’s Motion for Leave to File a Second Amended Complaint
was neither clearly erroneous nor contrary to law.
CONCLUSION
In light of the foregoing, the Court will affirm Judge
Schneider’s September 12, 2018 Order denying Plaintiff’s Motion
for Leave to File a Second Amended Complaint.
September 25, 2019______ s/Noel L. Hillman____________
Date NOEL L. HILLMAN
At Camden, New Jersey United States District Judge