United States District Court, N.D. Alabama, Southern Division
MEMORANDUM OPINION AND ORDER
VIRGINIA EMERSON HOPKINS UNITED STATES DISTRICT JUDGE
Hardie-Tynes, Co., Inc. (“Hardie-Tynes) initiated this
commercial action against SKF USA, Inc. (“SKF”)
on August 29, 2016. (Doc. 1). Invoking diversity jurisdiction
pursuant to 28 U.S.C. § 1332, Hardie-Tynes has alleged
that SKF supplied deficient bearings for the Matlacha Bridge
Replacement Project in Lee County, Florida (the
“Project”). (Doc. 1 at 1; id. ¶ 1).
On March 16, 2017, Hardie-Tynes sought leave to amend its
complaint to include a fraudulent suppression count. (Doc.
28). After reviewing a round of briefing by the parties, the
Court denied Hardie-Tynes's Motion for Leave To Amend
Complaint (the “Amend Motion”) on the grounds of
futility on June 5, 2017. (See generally Doc. 39).
compliance with the Court's 10-day deadline set out in
Appendix III to the Uniform Initial Order (doc. 11 at 26
§ F), on June 15, 2017, Hardie-Tynes filed a Motion for
Reconsideration (the “Reconsideration Motion”).
(Doc. 40). Hardie-Tynes also requested oral argument. (Doc.
23, 2017, SKF opposed the Reconsideration Motion on the basis
that Hardie-Tynes did not meet the discretionary standard on
reconsideration. (Doc. 42). The Court then set the
Reconsideration Motion for a hearing and a deadline for SKF
to respond to the merits of Hardie-Tynes's arguments.
filed its merits-based opposition on July 17, 2017. (Doc.
44). Hardie-Tynes followed with its reply on July 31, 2017.
(Doc. 45). On August 4, 2017, Hardie-Tynes filed a Notice of
Corrected Proposed Amended Complaint. (Doc. 46).
Court held a hearing on the Reconsideration Motion on August
17, 2017. (Doc. 48 at 1); (see also Doc. 49
(transcript of proceedings held on August 17, 2017)).
Consistent with that hearing, the Court granted the
Reconsideration Motion in that Hardie-Tynes was given the
opportunity to file an amended verified fraud count with
“factual allegations consistent both with the pleading
requirements arising under Rules 8 and 9 of the Federal Rules
of Civil Procedure and the substantive elements arising under
APJI 18.05 and 18.08.” (Doc. 9 at 2-3).
filed an amended complaint with verified fraudulent
suppression allegations on August 31, 2017. (Doc. 50). SKF
followed with a Motion To Dismiss Plaintiff's Amended
Complaint (Verified as to Count Four) (doc. 53) (the
“Dismissal Motion”) on September 25, 2107. The
parties have briefed the Dismissal Motion.(Docs. 54, 55). As
analyzed below, the Dismissal Motion is GRANTED IN
PART and otherwise is
12(b)(6) motion attacks the legal sufficiency of the
complaint. See Fed. R. Civ. P. 12(b)(6) (“[A]
party may assert the following defenses by motion: (6)
failure to state a claim upon which relief can be
granted[.]”). The Federal Rules of Civil Procedure
require only that the complaint provide “‘a short
and plain statement of the claim' that will give the
defendant fair notice of what the plaintiff's claim is
and the grounds upon which it rests.” Conley v.
Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80
(1957) (footnote omitted) (quoting Fed.R.Civ.P. 8(a)(2)),
abrogated by Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 556, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007);
see also Fed. R. Civ. P. 8(a) (setting forth general
pleading requirements for a complaint including providing
“a short and plain statement of the claim showing that
the pleader is entitled to relief”).
plaintiff must provide the grounds of his entitlement to
relief, Rule 8 does not mandate the inclusion of
“detailed factual allegations” within a
complaint. Twombly, 550 U.S. at 555, 127 S.Ct. at
1964 (quoting Conley, 355 U.S. at 47, 78 S.Ct. at
103). However, at the same time, “it demands more than
an unadorned, the-defendant-unlawfully-harmed-me
accusation.” Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).
“[O]nce a claim has been stated adequately, it may be
supported by showing any set of facts consistent with the
allegations in the complaint.” Twombly, 550
U.S. at 563, 127 S.Ct. at 1969.
court considering a motion to dismiss can choose to begin by
identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of
truth.” Iqbal, 556 U.S. at 679, 129 S.Ct. at
1950. “While legal conclusions can provide the
framework of a complaint, they must be supported by factual
allegations.” Id. “When there are
well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give
rise to an entitlement to relief.” Id.
(emphasis added). “Under Twombly's
construction of Rule 8 . . . [a plaintiff's] complaint
[must] ‘nudge [any] claims' . . . ‘across
the line from conceivable to plausible.'
Ibid.” Iqbal, 556 U.S. at 680, 129
S.Ct. at 1950-51.
is plausible on its face “when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. at
1949. “The plausibility standard is not akin to a
‘probability requirement, ' but it asks for more
than a sheer possibility that a defendant has acted
unlawfully.” Id. (quoting Twombly,
550 U.S. at 556, 127 S.Ct. at 1965).
Civ. P. 9(b) states:
(b) Fraud or Mistake; Conditions of Mind. In
alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake. Malice, intent, knowledge, and other conditions of a
person's mind may be alleged generally.
Id.; see also Ala. R. Civ. P. 9(b)
Eleventh Circuit has synthesized the following framework for
applying the Rule 9(b) standard:
“The particularity rule serves an important purpose in
fraud actions by alerting defendants to the ‘precise
misconduct with which they are charged' and protecting
defendants ‘against spurious charges of immoral and
fraudulent behavior.'” Durham v. Bus.
Management Assocs., 847 F.2d 1505, 1511 (11th Cir. 1988)
(quoting Seville Indus. Mach. Corp. v. Southmost Mach.
Corp., 742 F.2d 786, 791 (3d Cir. 1984)). The
application of Rule 9(b), however, “must not abrogate
the concept of notice pleading.” Id. Rule 9(b)
is satisfied if the complaint sets forth “(1) precisely
what statements were made in what documents or oral
representations or what omissions were made, and (2) the time
and place of each such statement and the person responsible
for making (or, in the case of omissions, not making) same,
and (3) the content of such statements and the manner in
which they misled the plaintiff, and (4) what the defendants
obtained as a consequence of the fraud.” Brooks v.
Blue Cross and Blue Shield of Florida, Inc., 116 F.3d
1364, 1371 (11th Cir. 1997) (internal quotation omitted).
Ziemba v. Cascade Int'l, Inc., 256 F.3d 1194,
1202 (11th Cir. 2001).
upon pre-Bonner Fifth Circuit precedent,  the Supreme
Court of Alabama has explained how a litigant pleads fraud
with sufficient particularity:
Rule 9(b), ARCP, provides that when fraud is alleged the
circumstances constituting the fraud shall be stated with
particularity. This does not require every element to be
stated with particularity, but the pleader must use more than
generalized or conclusionary statements setting out the
fraud. The pleader must state the time, the place, the
contents or substance of the false representations, the fact
misrepresented, and an identification of what has been
obtained. See Committee Comments to Rule 9(b),
Robinson v. Allstate Ins. Co., 399 So.2d 288,
289-290 (Ala. 1981) (emphasis added) (citing Rubens v.
Ellis, 202 F.2d 415 (5th Cir. 1953)); see also
Rubens, 202 F.2d at 417 (“The form of these
allegations is wholly insufficient under Civil Rule 9(b),
which requires that in all averments of fraud or mistake, the
circumstances constituting such fraud or mistake shall be
stated with particularity.”) (emphasis added);
id. (describing plaintiff's collateral attack of
a prior judgment on the ground of fraud as “only a
categorical assertion” that inadequately “amounts
only to a conclusion”).
amended complaint adds a fourth claim against SKF-one for
fraudulent suppression. (Doc. 50 at 9-27 ¶¶ 31-90).
As previously recognized by this Court, the elements of
fraudulent suppression under Alabama law are “(1) that
[SKF] had a duty to disclose the existing material fact; (2)
that [SKF] suppressed this material fact; (3) that
[SKF]'s suppression of this fact induced [Hardie-Tynes]
to act or to refrain from acting; and (4) that [Hardie-Tynes]
suffered actual damage as a proximate result.” State
Farm Fire & Cas. Co. v. Owen, 729 So.2d 834, 837
(Ala.1998) (citing Booker v. United American Ins.
Co., 700 So.2d 1333, 1339 (Ala. 1997)). Additionally,
the Code of Alabama clarifies that:
Suppression of a material fact which the party is under an
obligation to communicate constitutes fraud. The obligation
to communicate may arise from the confidential relations of
the parties or from the particular circumstances of the case.
Ala. Code § 6-5-102.
“[t]he question whether a party had a duty to disclose
is a question of law to be determined by the trial
court.” Barnett v. Funding Plus of Am., Inc.,
740 So.2d 1069, 1074 (Ala. 1999) (citing Owen, 729
So.2d at 838). In deciding this threshold issue, this Court
(1) the relationship of the parties; (2) the relative
knowledge of the parties; (3) the value of the particular
fact; (4) the plaintiff's opportunity to ascertain the
fact; (5) the customs of the trade; and (6) other relevant
Owen, 729 So.2d at 842-43; see also Sirmon v.
Wyndham Vacation Resorts, Inc., 922 F.Supp.2d 1261, 1285
& n.19 (N.D. Ala. 2013) (same) (citing Owen, 729
So.2d at 842-43).
previously determining that Hardie-Tynes's prior
fraudulent suppression count was futile, the Court's
ruling was based entirely upon Bama Budweiser of
Montgomery, Inc. v. Anheuser-Busch, Inc., 611 So.2d 238
(Ala. 1992) (relied upon by SKF). As the Supreme Court of
Alabama stated in Bama, “[w]hen the parties to
a transaction deal with each other at arm's length [and]
with no confidential relationship, no obligation to disclose
arises when information is not requested.” 611 So.2d at
246. This Court then found that the allegations of
Hardie-Tynes's formerly proposed amended complaint
reflected an arm's length relationship between it and SKF
and no plausible confidential relationship. (Doc. 39 at 6-7).
The Court further concluded that Hardie-Tynes's
fraudulent suppression claim lacked an allegation that
amounted to a question and, as a result, no plausible duty to
disclose existed under the fraudulent suppression framework
utilized in Bama. (Doc. 39 at 7). As a result, the
Court denied Hardie-Tynes's Amend Motion as futile.
in Aliant Bank v. Four Star Investments, Inc., No.
1150822, 2017 WL 1787935 (Ala. May 5, 2017), the Alabama
Supreme Court more recently clarified that Bama is
not the exclusive way in which a fraudulent
suppression claim can plausibly arise between two commercial
entities. In finding a triable fraudulent suppression claim
in the commercial setting presented there, the
Aliant court explained:
Aliant has alleged that Smith represented to it that the bond
proceeds would be used to develop 270 additional lots in
Twelve Oaks while allegedly knowing that he and/or his
companies would actually receive the majority of the bond
proceeds for work that had already been performed in
association with the development of the first 80 lots. In
CNH America, LLC v. Ligon Capital, LLC, 160 So.3d
1195, 1202-03 (Ala. 2013), we explained that “
‘once a party elects to speak, he or she assumes a
duty not to suppress or conceal those facts that materially
qualify the facts already stated' ” (quoting
Freightliner, 932 So.2d at 895). See also First
Alabama Bank of Montgomery, N.A. v. First State Ins.
Co., 899 F.2d 1045, 1056 (11th Cir. 1990)
(“Finally, even if one is not under a duty to speak, if
he decides to do so, ‘he must make a full and fair
disclosure, ' without concealing any facts within his
knowledge.” (quoting Ellis v. Zuck, 409
F.Supp. 1151, 1158 (N.D. Ala. 1976), and citing Jackson
Co. v. Faulkner, 55 Ala.App. 354, 315 So.2d 591
(1975))). Thus, once Smith represented how the bond
proceeds would be used, he had a duty to make a full
disclosure as to how those proceeds would be used.
Aliant has submitted evidence indicating that Smith failed to
fulfill that duty and instead concealed the truth about how
the bond proceeds would be used, thus inducing Aliant to
execute the mortgagee-special-assessment acknowledgment and
resulting in subsequent injury to Aliant. Accordingly, the
summary judgment entered on the fraudulent-suppression claims
asserted against Smith and Twelve Oaks Properties is due to
Aliant, 2017 WL 1787935, at *25.
light of Aliant, the Court agrees with Hardie-Tynes
that “Alabama law clearly recognizes the plausibility
of a fraudulent suppression claim in the context of
commercial transactions when[, ] after a party elects to
speak, that party conceals facts that would materially
qualify the prior statement.” (Doc. 40 at 7); see
also Pennsylvania Nat. Mut. Cas. Ins. Co. v. St. Catherine of
Siena Par., 790 F.3d 1173, 1182 (11th Cir. 2015)
(“As a federal court sitting in diversity, we are bound
to follow ‘the latest statement of state law by the
state supreme court.'” (quoting World Harvest
Church, Inc. v. Guideone Mut. Ins. Co., 586 F.3d 950,
957 (11th Cir. 2009))). Importantly, one of the primary
authorities that causes this Court to reach this conclusion
is a case which was not only mentioned by Aliant,
but which SKF has relied upon to support its position-CNH
Am., LLC v. Ligon Capital, LLC, 160 So.3d 1195 (Ala.
2013). (Doc. 44 at 7).
involved a commercial dispute between a parent company and
its subsidiary hydraulic-cylinder supplier and a purchaser.
160 So.3d at 1198. The plaintiffs brought suit against the
purchaser asserting claims of breach of contract, fraudulent
misrepresentation, and fraudulent suppression. Id.
The jury returned a verdict for the plaintiffs on fraudulent
suppression and the purchaser appealed. Id.
“gravamen of [the plaintiffs']
fraudulent-suppression claims [wa]s that [the purchaser]
decided in approximately September 2007 to replace [the
subsidiary supplier] of cylinders and then fraudulently
suppressed that fact from [the supplier] for approximately
eight months, inducing [the plaintiffs] to take actions and
expend funds in an impossible attempt to foster an ongoing
relationship between [the subsidiary supplier] and [the
purchaser].” 160 So.3d at 1201. On appeal, the
purchaser denied both that it had decided to end its
relationship with the subsidiary supplier in 2007 “and
that it had any duty to disclose to [the plaintiffs] that it
was terminating its relationship with [the subsidiary
supplier] before it did so in May 2008.” Id.
The Supreme Court of Alabama ultimately rejected the
purchaser's duty-to-disclose contention, as discussed in
more detail below. See CNH, 160 So.3d at 1201-03
(analyzing duty-to-disclose element).
previously argued in pertinent part concerning the import of
[T]he Aliant court relied upon a prior decision in
CNH America, LLC v. Ligon Capital, LLC, 160 So.3d
1195, 1201-1202 (Ala. 2013), wherein the Alabama Supreme
Court held that “in a commercial transaction involving
arm's length negotiations, the parties have no general
obligation to disclose any specific information to the other,
but each has an affirmative duty to respond truthfully and
accurately to direct questions from the other.” In that
case, in response to a question from the plaintiff, the
defendant provided information that was materially
inaccurate. Id. at 1202. Given that the Aliant
Court did not recede from the rulings in Bama Budweiser and
Norman, and given that the Aliant Court relied upon CNH
America, it must be presumed that the Aliant borrower's
alleged statement was made in response to a request/direct
question from the lender.
Unlike Aliant and CNH America, there is no allegation in
the proposed amended complaint that the allegedly misleading
language within the February 2011 email was provided by SKF
in response to and as a specific answer to a question posed
by Plaintiff. In fact, Plaintiff makes no allegation
about the circumstances under which the information was
provided by SKF.
(Doc. 44 at 7 (emphasis added)).
SKF suggested that CNH reaffirms the Court's
previous Bama-based ruling that, in the absence of a
direct inquiry from a commercial plaintiff, no cognizable
duty for a commercial defendant to disclose information
arises. SKF's position, however, is directly undermined
by CNH's complete analysis, in which
the court upheld the jury verdict in favor of the plaintiff
on the challenged fraudulent suppression claims. More
particularly, while the CNH court did discuss how a
sufficiently specific question can create a duty to disclose
in a commercial dispute, 160 So.3d at 1202, importantly, its
analysis of that element did not end there.
Moreover, even if we were to conclude that Campbell's
questions were not reasonably specific and direct, this Court
also stated in Freightliner that “once a party elects
to speak, he or she assumes a duty not to suppress or conceal
those facts that materially qualify the facts already
stated.” 932 So.2d at 895. Ligon and HTI argue
that once Selvan told Campbell that “CNH needed [HTI]
in the short term and long term, we are committed, ” he
and CNH assumed the duty to make a full and fair disclosure
without concealing other relevant facts within his knowledge.
See First Alabama Bank of Montgomery, N.A. v. First State
Ins. Co., 899 F.2d 1045, 1056 (11th Cir. 1990)
(“Finally, even if one is not under a duty to
speak, if he decides to do so, ‘he must make a full and
fair disclosure, ' without concealing any facts within
his knowledge.” (quoting Ellis v. Zuck,
409 F.Supp. 1151, 1158 (N.D. Ala. 1976), and citing
Jackson Co. v. Faulkner, 55 Ala.App. 354, 315 So.2d
591 (1975))). There can be no dispute but that the fact that
CNH had already decided to replace HTI materially
qualified Selvan's statement that CNH was
“committed” to HTI. “The duty imposed
on the speaking party is to disclose those facts that are
material to the ones already stated so as to make them
truthful.” Freightliner, 932 So.2d at
895. See also Ellis, 409 F.Supp. at 1158
(“So it is that if a franchisee raises a question the
franchisor must avoid half-truths.”). Thus, even if
a duty to disclose was not otherwise created by
Campbell's questions, that duty was certainly assumed by
CNH when Selvan and Canali voluntarily spoke of CNH's
long-term commitment to HTI.
CNH, 160 So.2d at 1202-03 (emphasis added).
CNH makes it clear what Bama does not,
that a duty to disclose can arise between two commercial
parties under Alabama law even in the absence of a
specific question when a commercial defendant
affirmatively speaks, but fails to disclose facts that
materially qualify that statement. Id.; see also
Aliant, 2017 WL 1787935, at *25 (citing to CNH
as well as other authorities and determining in a commercial
bond setting that “once [the defendant] represented how
the bond proceeds would be used, he had a duty to make a full
disclosure as to how those proceeds would be used”);
cf. also Freightliner, L.L.C. v. Whatley Contract
Carriers, L.L.C., 932 So.2d 883, 895 (Ala.
2005) (recognizing in a commercial case that “once a
party elects to speak, he or she assumes a duty not to
suppress or conceal those facts that materially qualify the
facts already stated”); id. (clarifying that
such “party does not assume a duty to divulge all
information that may be or may become
relevant to the other party” but rather that “the
speaking party is to disclose those facts that are material
to the ones already stated so as to make them
truthful”) (emphasis in original); First Alabama
Bank of Montgomery, N.A. v. First State Ins. Co., 899
F.2d 1045, 1056 (11th Cir. 1990) (“Finally, even if one
is not under a duty to speak, if he decides to do so,
‘he must make a full and fair disclosure, ' without
concealing any facts within his knowledge.” (quoting
Ellis v. Zuck, 409 F.Supp. 1151, 1158 (N.D. Ala.
1976)), declined to follow on other grounds as stated in
U.S. Fid. & Guar. Co. v. Bass, 619 F.2d 1057, 1060
n.7 (5th Cir. 1980)).
prior efforts to discount the meaning of Aliant (by
reading into that opinion a predicate question as triggering
the duty to disclose even though no prior inquiry was
ever mentioned in the opinion, 2017 WL 1787935, at *25)
and to persuade this Court that only a question can plausibly
create a duty to disclose under the circumstances of this
commercial case are unavailing in light of the full scope of
CNH upon which Aliant relies. Additionally,
SKF made no attempt to distinguish Freightliner, an
Alabama Supreme Court decision which predates Aliant
by over a decade and CNH by nine years and which
similarly indicates that a duty to disclose can arise when a
commercial party elects to speak,  even though Hardie- Tynes
cited to Freightliner for that proposition in its
Reconsideration Motion. (Doc. 40 at 6 n.1).
recently, SKF concedes that a duty to disclose can arise when
a commercial party elects to speak, but withholds material
information concerning the topic of discussion:
It is also not disputed that, under Alabama law, a duty
to disclose information may arise when an entity elects to
speak on a certain subject. However, as set forth above,
the instances of SKF electing to speak identified within the
Amended Complaint are not different at all from the instances
identified in the prior proposed Amended Complaint which this
Court found to not state a cause of action for fraudulent
(Doc. 53 at 9-10 (emphasis added)). In reply, SKF mentions
the election-to-speak theory in the introductory section.
(Doc. 55 at 2). However, SKF offers no substantive analysis
of that theory's viability in light of Hardie-Tynes's
amended complaint. (See id. at 2-6
(limiting analysis to fraudulent suppression premised upon a
request for information)).
in sharp contrast to SKF's prior assertion that
“the only avenue by which [Hardie-Tynes] could
even endeavor to establish a ‘duty to disclose'
would be if the allegedly suppressed information was
‘requested'” (Doc. 54 at 6 (emphasis added)
(some internal quotation marks omitted) (quoting Doc. 44 at
4)), SKF has reversed its position. SKF now agrees with
Hardie-Tynes that Alabama law recognizes that a duty to
disclose may arise when a commercial party elects to speak.
Nonetheless, without pointing to any analysis, SKF contends
that Hardie-Tynes has no plausible fraudulent suppression
claim because of the Court's denial of the Amend Motion.
More specifically, SKF urges that this Court has already
found Hardie-Tynes's electing-to-speak allegations to be
inadequate and that nothing contained in the amended
complaint is meaningfully different from what this Court
previously analyzed. The problem with SKF's position is
that this Court has not yet assessed the plausibility of
SKF's allegations under an election-to-speak theory.
after studying the parties' arguments made and
authorities cited in their various briefs, the Court
concludes that its prior Bama-based futility ruling
in denying the Amend Motion was incomplete. More
specifically, the Court did not account for Alabama's
recognition that a plausible duty to disclose can arise
between two commercial parties (even in the absence of a
direct question) when one elects to speak without disclosing
facts that would materially alter the meaning of that prior