Summary
This memorandum decision and order from the U.S. District Court for the District of Utah addresses a plaintiff's motions to dismiss counterclaims and to amend its complaint. The court denies the motion to dismiss, finding that the defendants adequately pleaded claims for breach of contract, negligent misrepresentation, and fraudulent nondisclosure, and that the economic loss doctrine does not bar the tort claims at this stage. Regarding the motion to amend, the court grants leave to clarify the deposit amount but denies leave to add an alter ego theory against an individual defendant due to futility, as the proposed factual allegations are insufficient to pierce the corporate veil under Utah law.
Topics
Practice areas
Questions Presented
- Whether the counterclaims should be dismissed under Rule 12(b)(6).
- Whether the economic loss doctrine bars the negligent misrepresentation and fraudulent nondisclosure counterclaims.
- Whether the plaintiff may amend the complaint to add alter ego, detrimental reliance, constructive trust, conversion, unjust enrichment, and fraudulent misrepresentation claims against Clark.
Holdings
- The court DENIES Plaintiff's motion to dismiss the counterclaims, finding that each counterclaim is sufficiently pleaded.
- The court finds the economic loss doctrine does not bar those counterclaims at this stage because it cannot determine whether the contract covers the tort claims.
- The court PARTIALLY GRANTS and PARTIALLY DENIES Plaintiff's motion to amend: it grants leave to amend to clarify the deposit amount, but denies amendment to add alter ego, detrimental reliance, constructive trust, conversion, unjust enrichment, and fraudulent misrepresentation claims against Clark as futile.
Key quotations
“The court may dismiss any action that fails “to state a claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6).”
“Because the court denies the motion for leave to amend to add alter ego, detrimental reliance, constructive trust, conversion, unjust enrichment, and fraudulent misrepresentation claims, those amendments are deemed futile.”
Factual background
Mudbots, a Utah LLC that manufactures concrete 3D printers, negotiated with Ascend Construction Solutions, an Illinois corporation, to sell a printer. Ascend attended a two‑day Mudbots University training and paid $4,000 under a training contract. Mudbots later issued an invoice stating the purchase would be governed by undisclosed Universal Terms of Purchase. Ascend stopped payment on its $328,364 down‑payment check, alleging Mudbots failed to disclose material terms and misrepresented that the printer was in stock.
Procedural history
Plaintiff filed suit in state court alleging breach of contract and tort claims. Defendants removed the action to federal court and filed counterclaims for breach of contract, breach of the covenant of good faith and fair dealing, negligent misrepresentation, and fraudulent nondisclosure. Plaintiff moved to dismiss the counterclaims and to amend the complaint. The district court considered both motions.