United States District Court, D. New Jersey
ALAN BERKOWITZ BERKOWITZ & ASSOCIATES, PC On behalf of
STEPHEN ZIMOLONG ZIMOLONG LLC On behalf of Defendants
L. HILLMAN, U.S.D.J.
action concerns alleged problems with a well drilling project
in Livingston, New Jersey. Pending before the Court is the
motion of Defendants to dismiss Plaintiff's fraud claims.
Also pending is Plaintiff's motion for leave to file a
Third Amended Complaint. For the reasons expressed below,
Plaintiff's motion will be granted, and Defendants'
motion will be denied.
According to Plaintiff KBWB Construction Company, LLC's
proposed Third Amended Complaint,  on October 12, 2016,
Plaintiff entered into two subcontracts with Defendant Allied
Environmental Services, Inc. d/b/a Allied Well Drilling
(“Allied Well”) to perform specifically described
geothermal well drilling and headers work at a site in
Livingston, New Jersey. Prior to entering into the
subcontracts, Plaintiff met with Allied Well to ensure that
Allied Well would comply with New Jersey State law when it
performed the drilling work. See N.J.S.A. 58:4A-1 et
seq., the Subsurface and Percolating Waters Act, and N.J.A.C.
7:9D-1, et seq., the implementing regulations.
claims that Allied Well and its two certified well drillers,
Defendants John Hess and Ronald Cook, did not use a tremie
pipe to completely fill the annular space from the bottom to
the top as the subcontracts and the regulations required.
Plaintiff claims that Defendants instead grouted the 500-foot
wells from the top down (putting grout in at the top of the
well), which would not insure that the wells were fully
enlisted the services of Sound Geothermal Corporation
(“SGC”) to inspect and report on the propriety of
Defendants' work. On March 10, 2017, Plaintiff sent
SCG's report to Allied Well and demanded corrective
action. Plaintiff claims that it did not receive a
satisfactory response to its demand. On March 14, 2017,
Plaintiff terminated the two subcontracts.
response, Plaintiff claims that Allied Well affirmatively
represented that it would work with SGC to remediate the work
to comply with the contracts and the state regulations.
Plaintiff also claims that Allied Well stated that it would
obtain a letter of approval from the New Jersey Department of
Environmental Protection (“NJDEP”).
claims that Allied Well precluded Plaintiff and its experts
from participating in an investigation conducted once the
NJDEP was alerted by Plaintiff of the improper well drilling
techniques. Ultimately, Plaintiff claims that Allied
Well's efforts to correct the improper grouting
techniques were unsuccessful.
result, Plaintiff instituted this action against Defendants,
asserting claims for breach of contract against Allied Well,
and fraud against Allied Well, Cook and Hess. Defendants
moved to dismiss Plaintiff's fraud claim in its amended
complaint, arguing that Plaintiff's allegations of fraud
did not meet the heightened pleading requirements to assert a
viable fraud claim. Defendants also argue that the gist of
Plaintiff's case is for breach of contract, and Plaintiff
cannot transform Defendants' alleged breach of contract
into a fraud case.
Defendants' motion was pending, Plaintiff filed a second
amended complaint pursuant to the Court's order regarding
insufficient pleading as to subject matter jurisdiction.
See, supra, note 1. Shortly thereafter,
Plaintiff filed its instant motion for leave to file a Third
Amended Complaint. Plaintiff's proposed Third Amended
Complaint reasserts its claim against Allied Well for breach
of contract (Count I), but it has re-cast its original fraud
claim against all three Defendants into a fraud in the
inducement claim against Allied Well only (Count II).
Plaintiff has added a claim against Cook and Hess for
negligence (Count III).
well settled that a pleading is sufficient if it contains
“a short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed.R.Civ.P.
8(a)(2). Following the Twombly/Iqbal standard, the
Third Circuit has instructed a two-part analysis in reviewing
a complaint under Rule 12(b)(6). First, the factual and legal
elements of a claim should be separated; a district court
must accept all of the complaint's well-pleaded facts as
true, but may disregard any legal conclusions. Fowler v.
UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (citing
Iqbal, 129 S.Ct. at 1950). Second, a district court
must then determine whether the facts alleged in the
complaint are sufficient to show that the plaintiff has a
“‘plausible claim for relief.'”
Id. (quoting Iqbal, 129 S.Ct. at 1950). A
complaint must do more than allege the plaintiff's
entitlement to relief. Id.; see also Phillips v.
Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008).
claims of fraud, Fed.R.Civ.P. 9(b) provides, “In
alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake.” This heightened pleading standard applies to
fraud in the inducement claims. Cotapaxi Custom Design
and Manufacturing, LLC v. Chase Bank USA, N.A., 2017 WL
5598215, at *3 (D.N.J. 2017) (citing Ceruzzi Holdings,
LLC v. Inland Real Estate Acquisitions, Inc., 2010 WL
1752184, at *4 (D.N.J. 2010) (applying Rule 9(b) to fraud in
the inducement claim)). “To satisfy this standard, the
plaintiff must plead or allege the date, time and place of