Opinion
Civil No. 04-1023 (PAM/JSM).
July 20, 2004
MEMORANDUM AND ORDER
This matter is before the Court on Cross-Motions to Dismiss. For the following reasons, Plaintiff's Motion is granted in part and denied in part, and Defendants' Motion is granted.
BACKGROUND
In February 2004, Plaintiff D.B. Indy LLC, d/b/a Harold Pener, Man of Fashion ("D.B. Indy") filed this lawsuit against Defendants Talisman Brookdale, LLC, Brookdale Realty Corp., BZA Brookdale Mall Corp., James Schlesinger, and Ann Ackerman (collectively, "Brookdale"). D.B. Indy originally brought claims for breach of the lease agreement and violations of 42 U.S.C. § 1981, 1982 and the Minnesota Human Rights Act, Minn. Stat. § 363A.17. In March 2004, D.B. Indy amended its complaint and added claims for tortious interference with contract and defamation and contends that two employees of Brookdale, James Schlesginer and Ann Ackerman, are personally liable. Brookdale asserted four counterclaims: (1) breach of contract and the applied covenant of good faith and fair dealing; (2) misrepresentation and inducement to contract; (3) promissory and equitable estoppel; and (4) mistake. D.B. Indy brings this Motion to Dismiss the four counterclaims. Brookdale brings its Motion to Dismiss all of D.B. Indy's claims but the breach of the lease agreement.
DISCUSSION
A. Standard of Review
For the purposes of the Motion to Dismiss, the Court takes all facts alleged in the Complaint as true. See Westcott v. Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). The Court must construe the allegations in the Complaint and reasonable inferences arising from the Complaint favorably to plaintiffs.See Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). A motion to dismiss will be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him to relief." Id.; see also Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
B.D.B. Indy's Motion to Dismiss or for More Definite Statement
1. Motion to Dismiss
D.B. Indy submits that all four counterclaims are premised on the theory that D.B. Indy orally misrepresented to Brookdale the type of clothing that it would sell in its store. In its counterclaim, Brookdale maintains that D.B. Indy represented that the "[s]tore would be devoted almost exclusively to the sale of fine men's suits, fine men's casual clothing, business shirts, business ties, with a small area devoted to casual wear and Nike shoes." (Martin Aff. Ex. 2 ¶ 1.) D.B. Indy argues that because Brookdale cannot prove that it justifiably relied on these alleged representations, all of Brookdale's counterclaims fail as a matter of law. D.B. Indy contends that Brookdale cannot prove justifiable reliance, because the alleged oral misrepresentations by D.B. Indy directly contradict the language of the written lease agreement.
The language of the lease agreement provides for "the retail sale of clothing for men, women and children, including, without limitation, the sale of suits, slacks, sport coats, shirts, casual wear and related accessories, including without limitation, ties, belts, socks and other accessories only, together with shoes. . . ." (Martin Aff. Ex. 1.) The law in Minnesota states that reliance on an oral representation is unjustifiable as a matter of law "only if the written contract explicitly stated a fact completely contradictory to the claimed representation." Johnson Bldg. Co. v. River Bluff Dev., 374 N.W.2d 187, 194 (Minn.Ct.App. 1985); see also Clements Auto Co. v. Serv. Bureau Corp., 444 F.2d 169, 179 (8th Cir. 1971) (citing Vint v. Nelson, 127 N.W.2d 177, 178 (Minn. 1974)). If the oral representation and written contract do not directly contradict one another, the question of justifiable reliance is for the trier of fact. Johnson, 374 N.W.2d at 194. Following this standard, the issue in this case is whether the oral representation directly contradicts the written lease agreement. Thus, it is an issue for the trier of fact, and inappropriate on a Motion to Dismiss.
D.B. Indy alternatively contends that Brookdale cannot prove justifiable reliance because the lease agreement contains this merger/integration clause:
This lease and the Exhibits attached hereto and forming a part hereof, set forth all the covenants, promises, agreements, conditions and understandings between Landlord and Tenant concerning the demised Premises and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between them other than are herein set forth. Except as herein otherwise provided, no subsequent alteration, amendment, changes or addition to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by them.
(Martin Aff. Ex. 1 at Art. 43.) D.B. Indy submits that the parol evidence rule prohibits the introduction of the alleged oral representation, because the contract was fully integrated. The mere existence of a merger or integration clause does not preclude the admission of an oral representation, particularly when a claim for fraud in the inducement is made. See Gopher Oil Co., Inc. v. Union Oil Co. of California, 955 F.2d 519, 526 (8th Cir. 1992) (citing Ganley Bros. v. Butler Bros. Bldg. Co., 212 N.W. 602 (Minn. 1927)). To avoid the parol evidence rule, Brookdale must show that the oral representations allegedly made by D.B. Indy are admissible as evidence of fraud. At this stage in the litigation, Brookdale has not had the opportunity to provide such evidence. Brookdale has alleged that D.B. Indy made an oral representation, that it relied on that representation and entered the lease agreement to its detriment. Thus, D.B. Indy's argument on this point fails.
D.B. Indy finally asserts that all four counterclaims must fail because they are premised on fraudulent misrepresentation, which Brookdale "can never prove." As noted above, D.B. Indy's arguments are premature. Taking all of the allegations as true, the Court finds that Brookdale's counterclaims survive D.B. Indy's Motion to Dismiss.
2. More Definite Statement
D.B. Indy also argues that Brookdale's claims for fraudulent misrepresentation and mistake are not pled with particularity as required by Fed.R.Civ.P. 9(b). Brookdale must at least allege the "who, what, when, where and how" of the alleged fraud or mistake. Helleloid v. Indep. Sch. Dist. No. 361, 149 F. Supp.2d 863, 878 (D. Minn. 2001) (Erickson, Mag. J.).
Brookdale generally alleges that D.B. Indy's misrepresentations began "in May 2003 and contin[ued] into December and [in] particular December 19, 2003." (Countercl. ¶ 1.) It further alleges that Brookdale entered into the lease agreement based on these representations to its detriment. (Id. ¶¶ 2-6, 12-19, 24-26.) However, Brookdale fails to specifically identify who made the alleged misrepresentation, to whom such alleged misrepresentations were made, where these alleged misrepresentations were made, and precisely when such alleged misrepresentations were made. However, even without these specific allegations, the Court cannot say with certainty that there are no set of facts, if properly pled and proven at trial, that would entitle Brookdale to the relief sought. Thus, Brookdale must plead a more definite statement on Counts II and IV of its Counterclaim.
C. Brookdale's Motion to Dismiss
Brookdale seeks to dismiss all of D.B. Indy's claims except for the claim for breach of the lease agreement. D.B. Indy asserts claims for violation of 42 U.S.C. § 1981 and 1982, violation of Minn. Stat. § 363A.17, tortious interference and defamation.
1. Civil Rights Claims
D.B. Indy asserts three civil rights claims against Brookdale: 42 U.S.C. § 1981, 1982, and Minn. Stat. 363A.17. D.B. Indy argues that it has suffered injury because Brookdale has discriminated against D.B. Indy's primary customers, who are African American. Brookdale submits that these claims must be dismissed because D.B. Indy lacks standing.
D.B. Indy must demonstrate that it has standing to bring these civil rights claims. The Court must examine both constitutional and prudential standing limitations. See Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. ___, 124 S.Ct. 2301, 2308 (June 14, 2004). Constitutional standing requires D.B. Indy to demonstrate an injury in fact, traceable to Brookdale, that a favorable judgment will redress. See Robinson Rubber Prods. Co., Inc. v. Hennepin County, 12 F. Supp.2d 975, 979 (D. Minn. 1998) (Doty, J.). Prudential standing requires D.B. Indy to assert its own legal interests rather than the interests of third parties, to not assert a generalized grievance, and to demonstrate that its interests are within the zone of interests intended to be protected by the statute. See id.
D.B. Indy's state law civil rights discrimination claim is nearly identicalto its federal claims, and therefore this analysis applies to both D.B. Indy's federal claims and state law claims.
Brookdale submits that D.B. Indy lacks standing because corporations have "no racial identity and cannot be the direct target of the alleged discrimination." Vill. of Arlington Heights v. Metro. Hous., 429 U.S. 252, 263 (1977). However, Brookdale mischaracterizes D.B. Indy's claims. D.B. Indy does not assert that it was the target of the alleged discrimination, but rather that it was directly injured by Brookdale's alleged racial prejudice towards African-Americans. The rationale of Arlington does not apply.
Prudential limitations challenge D.B. Indy's standing. Whether a corporate plaintiff may specifically bring civil rights claims as a result of a defendant's racial prejudice against unnamed third parties is an issue of first impression in this Circuit. InOti Kaga Inc. v. South Dakota Housing Development Authority, the Eighth Circuit determined that a non-profit housing corporation had prudential standing to pursue Fair Housing Act claims that were premised on discrimination directed towards unspecified third parties. 342 F.3d 871, 881-882 (8th Cir. 2003). Oti Kaga followed the Second Circuit's decision in Hudson Valley Freedom Theater v. Heimbach, 671 F.2d 702 (2d Cir. 1982). In Hudson Valley, the not-for-profit corporate plaintiff had prudential standing because it was in a "better position than anyone else to challenge discriminatory practices," and it had a "far more solid claim of injury in fact." 671 F.2d at 706.
Using the same analysis as Hudson Valley, the Eighth Circuit determined in Oti Kaga that the non-profit housing corporate plaintiff was the "logical and more effective adversary to combat the alleged discrimination than an individual plaintiff alleging an inchoate interest in [rental housing]," and that "permitting [the plaintiff] to prosecute the discrimination claims [would] effectuate the purpose of the Fair Housing Act's anti-discrimination provisions." Oti Kaga, 342 F.3d at 882. The Court noted that the plaintiff corporation "was created to acquire, construct, and operate rental housing and related facilities on the . . . Indian Reservation" and that "[t]he alleged discrimination directly affected [plaintiff's] economic interests and its ability to recognize its corporate purpose." Id.
Unlike the corporate plaintiff in Oti Kaga, D.B. Indy is a corporation that sells men's clothing, that was organized to provide a financial return to its shareholders. D.B. Indy is not an entity that was specifically created to benefit minority interests. This distinction is fatal to D.B. Indy's claims. Moreover, the Court is unpersuaded that D.B. Indy is in the best position to challenge Brookdale's alleged discrimination. Thus, the Court finds that D.B. Indy lacks prudential standing to pursue its discrimination claims.
2. Tortious Interference
A plaintiff must allege that the defendant intentionally committed a wrongful act which improperly interfered with a prospective relationship. See United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628, 633 (Minn. 1981). D.B. Indy contends that Brookdale's wrongful actions prevented it from opening its store on time, as provided for in the lease agreement. (See Am. Compl. ¶¶ 81-82.) It further alleges that Brookdale's wrongful conduct improperly interfered with D.B. Indy's prospective contractual relationships "with consumers who would have entered into sales transactions" with D.B. Indy. (Id.) Brookdale contends that D.B. Indy's allegations are insufficient as a matter of law.
"The mere loss of unspecified business does not establish the tort of intentional interference with prospective business relationship under Minnesota law. Rather, wrongful interference with prospective relations requires intentional conduct affecting specific relationships." H. Enter. Int'l, Inc. v. Gen. Elec. Capital Corp., 833 F. Supp. 1405, 1417 (D. Minn. 1993) (Doty, J.) (citing Witte Transp. Co. v. Murphy Motor Freight Lines, Inc., 193 N.W.2d 148, 151 (Minn. 1971)). D.B. Indy generally avers an interference with unspecified consumers. Under Minnesota law, the loss of "possible unspecified customers does not establish the tort of intentional interference with prospective economic relations." Int'l Travel Arrangers v. NWA, Inc., 991 F.2d 1389, 1405 (8th Cir. 1993) (citing cases). D.B. Indy's claim for tortious interference is thus dismissed.
3. Defamation
Defamation requires D.B. Indy to plead that (1) a statement was made to someone other than the plaintiff; (2) the statement is false; and (3) the statement tends to harm the plaintiff's reputation. See Lewis v. Equitable Life Assurance Soc'y, 389 N.W.2d 876, 886 (Minn. 1986). Generally, expressions of opinion are not considered defamatory. Milkovich v. Lorain Journal Co., 497 U.S. 1, 13-14 (1990) (discussing "fair comment" privilege). However, expressions of opinion often embrace "an assertion of objective fact," and may thus be actionable. Id. at 18. Whether a statement is an objective assertion of fact is a question of law for the Court. See Johnson v. Columbia Broad. Sys., Inc., 10 F. Supp.2d 1071, 1074 (D. Minn. 1998) (Alsop, J.). A statement is not defamatory if it does not contain a "provably false factual connotation." Milkovich, 497 U.S. at 19.
Following the Court's Order in February, Ann Ackerman, Vice President of Marketing for Brookdale stated to the Minneapolis Star Tribune: "We feel the way the store was presented to us was sort of like a bait-and-switch." (Am. Compl. ¶ 87.) As a matter of law, this statement is not a provably false factual connotation, but rather a statement of "rhetorical hyperbole."Milkovich, 497 U.S. at 20. Therefore, D.B. Indy's defamation claim is likewise dismissed.
D.B. Indy's defamation claim is the only claim asserted against Defendant Ann Ackerman. Because this claim is dismissed, Defendant Ackerman is likewise dismissed from this action.
CONCLUSION
Accordingly, based on all the files, records and proceedings herein, IT IS HEREBY ORDERED that:
1. Plaintiff's Motion to Dismiss, or Alternatively for a More Definite Statement (Clerk Doc. No. 34) is GRANTED in part and DENIED in part;
a. Defendants' must file a more definite statement as to Counts II and IV of its Counterclaim within 30 days of this Order;
2. Defendants' Motion to Dismiss (Clerk Doc. No. 38) is GRANTED;;
a. Counts II, III, IV, V, and VI of the Amended Complaint (Clerk Doc. No. 30) are DISMISSED with prejudice; and
b. Defendant Ann Ackerman is DISMISSED from this action.