COTAPAXI CUSTOM DESIGN AND MANUFACTURING, LLC v. CHASE BANK USA, N.A.
2:17-cv-04292
D.N.J.Nov 21, 2017Background
- Plaintiff Cotapaxi (NJ-based LLC) used a Chase United Mileage Plus business credit card from at least 2013 to May 2016 and alleges $643,998.99 in fraudulent charges by a third party (BP Promos) between May 2013 and May 2016.
- Complaint asserts six counts: (1) TILA (not challenged here), (2) breach of contract, (3) breach of covenant of good faith and fair dealing, (4) New Jersey Consumer Fraud Act (NJCFA), (5) unjust enrichment, and (6) fraud in the inducement.
- Defendant moved to dismiss Counts 2–6 under Fed. R. Civ. P. 12(b)(6), arguing: contract claims fail for lack of identified contract/provisions; fraud claims fail under Rule 9(b) for lack of particularity; unjust enrichment is conclusory.
- Plaintiff argued it lacked the contract in its possession and therefore needed discovery, claimed Rule 9(b) was satisfied by alleging a June 30, 2016 phone call with a Chase employee who made misrepresentations, and contended Chase failed to investigate charges in good faith.
- Court found the contract claims deficient because Plaintiff failed to identify the contract and specific contractual breaches and rejected Plaintiff’s contention that discovery was required to obtain the contract; fraud claims failed because the alleged misrepresentations occurred years after contracting and could not support reasonable reliance or inducement; unjust enrichment claim was abandoned in Plaintiff’s opposition and was conclusory.
- Result: Motion granted. Counts 2, 3, 4, and 6 dismissed without prejudice; Count 5 (unjust enrichment) dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether breach of contract and covenant claims were sufficiently pleaded | Plaintiff alleges Chase breached the parties' credit-card contract arising from account relationship; Plaintiff says it lacks the contract and needs discovery | Complaint fails to identify the contract or the specific provisions breached; plaintiff could obtain contract without discovery | Dismissed without prejudice for failure to identify contract and specific breaches |
| Whether NJCFA claim pleaded with requisite particularity under Rule 9(b) | Misrepresentations occurred in a June 30, 2016 phone call with a Chase employee — satisfies particularity | Rule 9(b) not satisfied; alleged misstatements postdate contract formation and cannot support reasonable reliance or inducement | Dismissed without prejudice for failure to meet Rule 9(b) and failure to allege reasonable reliance |
| Whether fraud in the inducement pleaded with particularity and reasonable reliance | The June 30, 2016 conversation induced reliance and supports fraud-in-the-inducement | Same Rule 9(b) and reliance deficiencies; statements after contract formation cannot have induced entry into contract | Dismissed without prejudice for failure to plead fraud with particularity and lack of reasonable reliance |
| Whether unjust enrichment claim survives | Plaintiff alleges Chase was unjustly enriched by retaining funds tied to fraudulent charges | Claim is conclusory and was not defended in opposition | Dismissed with prejudice as abandoned and inadequately pleaded |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state plausible claim, not mere labels and conclusions)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (facial plausibility standard for pleadings)
- Frederico v. Home Depot, 507 F.3d 188 (3d Cir. 2007) (Rule 9(b) requires date, time, place or other particularity for fraud allegations)
- Video Pipeline, Inc. v. Buena Vista Home Entm’t, Inc., 210 F. Supp. 2d 552 (D.N.J. 2002) (elements required to plead breach of contract)
- Skypala v. Mortgage Elec. Registration Sys., Inc., 655 F. Supp. 2d 451 (D.N.J. 2009) (failure to identify specific contract provisions supports dismissal)
- Hedges v. United States, 404 F.3d 744 (3d Cir. 2005) (moving party bears burden to show no claim stated under Rule 12(b)(6))