IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
December 26, 2006
CHERYL WOLFE AND LISA MAGAZINER, PLAINTIFFS,
NOBEL LEARNING COMMUNITIES, INC. D/B/A CHESTERBROOK ACADEMY, DEFENDANT.
The opinion of the court was delivered by: Simandle, District Judge
This matter came before Court on the motion of Defendant, Nobel Learning Communities ("Defendant" or "NLC") to dismiss the Complaint for failure to state a claim on which relief may be granted, pursuant to Fed. R. Civ. P. 12(b)(6). On December 22, 2006 the Court heard oral argument on the motion and finds as follows:
1. Plaintiffs Cheryl Wolfe and Lisa Magaziner ("Plaintiffs"), New Jersey residents, filed this action in the Law Division of Superior Court in Camden County on June 22, 2006, alleging that Defendant Chesterbrook Academy, by and through its parent company NLC, defrauded them out of $7,500 for each year of tuition they paid for their children's education at Chesterbrook Academy in Voorhees, New Jersey. Plaintiffs each sought treble damages pursuant to the New Jersey Consumer Fraud Act ("NJCFA"), N.J. Stat. Ann. § 56:8-1 to -166, as well as a refund pursuant to N.J. Stat. Ann. § 56:8-2.11, attorney's fees, costs, and punitive damages. Plaintiffs also alleged common law fraud, misrepresentation and negligent misrepresentation. Defendant removed the case to this Court on August 18, 2006.*fn1
2. Chesterbrook Academy is not a separate legal entity, but a trade name used by NLC. The Court has jurisdiction under 28 U.S.C. § 1332(a) and 28 U.S.C. § 1447 because Plaintiffs are New Jersey residents, NLC is a Delaware corporation with its principal place of business in Pennsylvania, and the Court cannot find to a legal certainty that the amount in controversy does not exceed $75,000.*fn2
3. Defendant filed a motion to dismiss for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6), arguing that Plaintiffs have failed to state a claim for violation of the New Jersey Consumer Fraud Act, common law fraud, misrepresentation, or punitive damages. Alternatively, Defendant argued that Plaintiffs have failed to plead fraud with the particularity that Fed. R. Civ. P. 9(b) requires. Plaintiffs opposed and the Court heard oral argument on the motion on December 22, 2006.
4. The purpose of Rule 9(b) is to "place the defendants on notice of the precise misconduct with which they are charged, and to safeguard defendants against spurious charges of immoral and fraudulent behavior." Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984), cert. denied, 469 U.S. 1211 (1985). The Court should not focus exclusively on the Rule's particularity language, Christidis v. First Penn. Mortgage Trust, 717 F.2d 96, 100 (3d Cir. 1983), and must consider whether the pleading provides adequate notice to an adverse party to enable it to prepare a response, Florian Greenhouse v. Cardinal IG Corp., 11 F. Supp. 2d 521, 526 (D.N.J. 1998) (citing 5A Wright and Miller, § 1298, at 648 (1990). "It is certainly true that allegations of 'date, place or time' fulfill these functions, but nothing in the rule requires them. Plaintiffs are free to use alternative means of injecting precision and some measure of substantiation into their allegations of fraud." Seville, 742 F.2d at 791.
5. Moreover, even when the claims are not subject to Rule 9(b)'s heightened pleading requirements, the claimant must set forth sufficient information to outline the elements of its claims or to permit inferences to be drawn that these elements exist. See Fed. R. Civ. P. 8(a)(2); Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
6. The Court agrees with Defendant that the Complaint is not as clear as it could be. For example, the Complaint does not specify what "ascertainable loss" Plaintiffs suffered. See N.J. Stat. Ann. § 56:8-19. Furthermore, it is unclear whether Plaintiffs are alleging fraudulent inducement or fraudulent performance; that is, whether they are complaining that any fraud occurred before Ms. Paolozzi was hired as Chesterbrook's principal. Similarly, Plaintiffs must more clearly refer to the allegedly fraudulent statements on which they relied to their detriment so that Defendant is on notice of the precise conduct at issue.
7. However, because these deficiencies could be cured by permitting Plaintiffs to amend their Complaint, the Court will deny the motion to dismiss without prejudice and will permit Plaintiff fourteen days from the entry of this Order to amend the Complaint to more particularly set forth their claims, as described above. An accompanying Order will be entered.
JEROME B. SIMANDLE U.S. District Judge