879 F. Supp. 2d 1228
D.N.M.2012Background
- Tan-O-On Marketing, Inc. seeks to amend its Third Party Complaint for fraud, theft of trade secrets, unjust enrichment, and unfair trade practices against Hi-Land Potato Co., Inc., and RPE, Inc., among others.
- Hi-Land Potato and Casey defendants allegedly diverted Tan-O-On’s PACA trust assets and customer relationships to Hi-Land/RPE after Tan-O-On’s ownership transition, causing insolvency and unpaid PACA creditors.
- In late 2009 to 2010, Casey individuals relocated to Monte Vista, Colorado, opened new Tan-O-On accounts, and redirected approximately $1.8 million to Hi-Land Potato, bypassing PACA creditors.
- Tan-O-On alleged that Hi-Land, Casey-associated entities, and RPE conspired to defraud Tan-O-On by transferring assets and funds without consideration, harming Skyline Potato and other Intervening Plaintiffs.
- The Intervening Plaintiffs asserted PACA-related and related claims; the court later dismissed some fraud claims against RPE/Wysocki but preserved others as to unjust enrichment and theft of trade secrets.
- At a hearing, the court allowed amendments on certain unjust enrichment and theft-of-trade-secrets claims against RPE, Inc. and Hi-Land Potato, but denied amendments seeking common-law fraud, fraudulent-conveyance, and UFTA/UPA claims against certain parties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rule 9(b) sufficiency for common-law fraud | Tan-O-On contends Amended Third-Party Complaint alleges fraud with particularity. | Hi-Land argues the complaint lacks the specificity required by Rule 9(b). | Amended pleading insufficient under Rule 9(b); common-law fraud dismissed against Hi-Land. |
| Fraudulent-conveyance sufficiency | Tan-O-On contends a stated fraudulent-conveyance claim is adequately pled. | Hi-Land asserts inadequate pleading under Rule 9(b) and lack of consideration. | Fraudulent-conveyance claim adequately pled; leave to amend granted to flesh out specifics against Hi-Land. |
| New Mexico UFTA claim viability | Tan-O-On asserts UFTA claim with badges of fraud against Hi-Land. | Hi-Land challenges UFTA pleading and creditor status under the statute. | UFTA claim survives Rule 12(b)(6) and Rule 9(b) scrutiny; pleadings adequate. |
| Leave to amend against RPE, Inc. Parties | Tan-O-On seeks to amend to include unjust enrichment and theft of trade secrets against RPE, Inc. | RPE requests limits to those claims and argues futility for others. | Leave to amend granted for unjust enrichment and theft-of-trade-secrets against RPE, Inc.; other claims denied. |
| UPA claim against Hi-Land Potato Parties | Tan-O-On seeks UPA remedy for alleged deceptive/trade practices by Hi-Land. | Hi-Land contends UPA claim is unfounded and unduly prejudicial; misrepresentations not shown. | Leave to amend regarding UPA claim denied as futile, untimely, and prejudicial. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state plausible claim, not mere speculation)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard applies to pleadings; threadbare recitals fail)
- Robbins v. Oklahoma, 519 F.3d 1242 (10th Cir. 2008) (plausibility standard requires more than sheer possibility)
- Las Vegas Ice & Cold Storage Co. v. Far West Bank, 893 F.2d 1182 (10th Cir. 1990) (untimeliness alone can justify denial of leave to amend)
- In re Sharp Int’l Corp., 403 F.3d 43 (2d Cir. 2005) (badges-of-fraud approach for actual intent in fraudulent transfers)
- Bylin v. Billings, 568 F.3d 1224 (10th Cir. 2009) (good-cause standard interacts with scheduling-order amendments)