United States District Court, N.D. Alabama, Northeastern Division
DOUG KILLOUGH and TECHNICAL CONSULTING SOLUTIONS, INC., Plaintiffs,
PHIL MONKRESS and ALL POINTS LOGISTICS, LLC, Defendants.
MEMORANDUM OPINION AND ORDER
K. KALLON UNITED STATES DISTRICT JUDGE.
action arises from the alleged breach of a purported oral
agreement between Doug Killough, the owner of Technical
Consulting Solutions, Inc. (“TCS”), and Phil
Monkress, the owner and CEO of All Points Logistics, LLC
(“APL”). Doc. 41. The court previously dismissed
the fraud claims and gave Killough and TCS leave to amend
those claims. Doc. 39. Killough and TCS have complied. Doc.
41. Monkress and APL have now moved to dismiss the repleaded
fraud claims, doc. 42, contending that the plaintiffs fail to
allege fraud with particularity and that the promissory fraud
claim is not sufficiently distinct from the breach of
contract claim. See doc. 42. For the reasons
explained below, the motion is due to be granted solely as to
the promissory fraud claim.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 8(a)(2), a pleading must
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
“[T]he pleading standard Rule 8 announces does not
require ‘detailed factual allegations,' but it
demands more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). Mere “‘labels and
conclusions'” or “‘a formulaic
recitation of the elements of a cause of action'”
are insufficient. Id. at 678 (quoting
Twombly, 550 U.S. at 555). “Nor does a
complaint suffice if it tenders ‘naked
assertion[s]' devoid of ‘further factual
enhancement.'” Id. (quoting
Twombly, 550 U.S. at 557). Additionally, fraud
claims are subject to the heightened pleading standard
imposed by Rule 9(b) of the Federal Rules of Civil Procedure.
Under Rule 9(b), a plaintiff must allege “(1) precisely
what statements or omissions were made in which documents . .
.; (2) the time and place of each such statement and the
person responsible for making . . . them; (3) the content of
such statements and the manner in which they misled the
plaintiff; and (4) what the defendant obtained as a
consequence of the fraud.” FindWhat Inv'r Grp.
v. FindWhat.com, 658 F.3d 1282, 1296 (11th Cir. 2011).
Rule of Civil Procedure 12(b)(6) permits dismissal when a
complaint fails to state a claim upon which relief can be
granted. When evaluating a motion brought under Rule
12(b)(6), the court accepts “the allegations in the
complaint as true and construe[s] them in the light most
favorable to the plaintiff.” Hunt v. Aimco Props.,
L.P., 814 F.3d 1213, 1221 (11th Cir. 2016). However,
“[t]o survive a motion to dismiss, a complaint must . .
. ‘state a claim to relief that is plausible on its
face.'” Iqbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 570). A complaint states a
facially plausible claim for relief “when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. In other words, the
complaint must establish “more than a sheer possibility
that a defendant has acted unlawfully.” Id.;
see also Twombly, 550 U.S. at 555 (explaining that
“[f]actual allegations [included in the complaint] must
be enough to raise a right to relief above the speculative
FACTUAL AND PROCEDURAL BACKGROUND 
worked at Booz Allen Hamilton and led a team that provided
engineering services to Boeing and Northrop Grumman for their
missile defense contracts. Doc. 41 at 3-4. When Booz Allen
pulled out of that market, Killough started TCS and began
discussions with Boeing and Northrup Grummon about having TCS
service their missile defense contracts. Id. at 4.
An employee at Boeing suggested that Killough and TCS partner
with a larger company, and suggested that Killough contact
Monkress to discuss partnering with APL. See Id. at
4-5. Killough and Monkress then negotiated an agreement under
which Killough would work for APL to service the Boeing and
Northrup Grummon contracts and other contracts brought to APL
by Killough (the “TCS-related contracts”).
Id. at 5. In addition, the parties reached an oral
agreement “under which Killough would receive 50% of
the profits from the TCS-related contracts, [and] APL also
agreed that it would eventually subcontract the work to TCS
once TCS was ready to service the TCS-related contracts by
itself.” Id. at 6. When the parties learned
that APL could not subcontract the work, Killough and APL
agreed that APL would transfer the contracts to TCS when TCS
was ready. Id. at 7.
to TCS, Killough received profit-sharing payments each
quarter that APL and Monkress represented were equal to half
of the profit from the TCS-related contracts. Id. at
8. Although it was not required by the parties'
agreement, APL and Monkress also provided Killough with
profit statements that outlined the income and costs
associated with the contracts. Id. at 8. According
to TCS and Killough, the APL-generated profit statements
overstated the fringe benefits, overhead costs, and general
and administrative costs associated with the TCS- related
contracts. Id. at 12. The statements also reflected
a higher “WRAP rate” than the “rate
provided to contracts to procure the TCS-related
contracts.” Id. Killough and TCS allege that they
learned of the purported misrepresentations in the profit
statements after learning that APL kept a second set of books
“that more accurately detailed the costs and income for
the TCS-related contracts” and after talking with
APL's office manager about the costs associated with the
contracts. Id. at 10-11. By overstating the costs,
Monkress and APL kept more than their share of the profits
they were entitled to under the parties' Agreement.
Id. at 13.
and TCS also allege that when Killough decided to exercise
his right to have the TCS-related contracts transferred to
TCS, Monkress discharged Killough. Id. at 14.
However, after employees and customers expressed anger about
the termination, Monkress offered to rehire Killough and
“on behalf of APL, and reoffered to pay Killough 50% of
the profits from the TCS-related contracts . . . .”
See Id. at 15. Killough accepted the offer to
return, but Monkress and APL did not make the allegedly
agreed-upon profit sharing payments to Killough. Id.
at 16. In addition, Monkress discharged Killough again in
September 2015 without transferring the contracts to TCS.
Id. at 17. This action followed.
Third Amended Complaint, Killough asserts claims against APL
and Monkress for fraudulent misrepresentation and fraudulent
suppression, and Killough and TCS assert a promissory fraud
claim against the defendants. See doc. 41 at 19, 22,
25, n. 3-7. The defendants contend that these claims do not
satisfy Rule 9, and have moved to dismiss them. Doc. 42 at
3-4. Rule 9(b) requires a party “alleging fraud . . .
[to] state with particularity the circumstances constituting
fraud.” Fed.R.Civ.P. 9(b). This entails alleging
“(1) precisely what statements were made in what
documents or oral representations or what omissions were
made, (2) the time and place of each such statement and the
person responsible for making (or, in the case of omissions,
not making) same, (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.”
Ziemba v. Cascade Int'l, Inc., 256 F.3d 1194,
1202 (11th Cir. 2001) (quoting Brooks v. Blue Cross &
Blue Shield of Fla., Inc., 116 F.3d 1364, 1371 (11th
Fraudulent Misrepresentation and Suppression
state a claim for fraudulent misrepresentation, Killough must
allege facts showing that (1) APL and Monkress made a false
representation (2) about a material fact, (3) Killough relied
on the false representation, and (4) Killough suffered actual
damage as a result of his reliance. Spooner v. State Farm
Mut. Auto. Ins. Co., 709 So.2d 1157, 1160 (Ala. 1997)
(quotation omitted). And, to state a claim for fraudulent
suppression, Killough must allege that (1) the defendants
suppressed an existing, material fact, (2) the defendants had
a duty to disclose, (3) the defendants had knowledge of the
fact, (4) Killough's lack of knowledge induced him to
act, and (5) Killough suffered actual damages as a result.
Hardy v. Blue Cross & Blue Shield of Alabama,
585 So.2d 29, 32 (Ala. 1991) (citations omitted). The
defendants contend that Killough failed to allege a false
representation or suppression of a material fact, detrimental
reliance, or that he suffered an actual injury from the
alleged misrepresentation or suppression apart from the
damages caused by the breach of the alleged oral contract.
Doc. 42 at 4-12. The court addresses these contentions in
Whether Killough has pleaded a false representation or