Erecruit Holdings sued Willis Group Holdings for breach of a software license agreement, alleging Willis fabricated a pretext for termination and refused to pay amounts owed. Willis countered that Erecruit had misrepresented its capabilities and failed to deliver a functional software product despite receiving $93,500 in advance payment.
Erecruit moved for judgment on the pleadings to dismiss Willis’s counterclaim. The court denied the motion, applying the standard that a claim must contain factual allegations plausibly suggesting entitlement to relief. The court noted that plausibility differs from credibility and that improbable facts do not warrant dismissal if they raise a right to relief above the speculative level.
As to the fraud count in the counterclaim, the court found adequate particularity. Although the counterclaim did not identify individual speakers for each misrepresentation, this omission alone did not justify dismissal. Because the counterclaim arose from the same events underlying Erecruit’s main claims and would likely be relevant to Willis’s defenses regardless, dismissal at this early stage before discovery would be improper. The motion was denied.
The full text of the opinion follows below. Slip opinions are subject to formal revision; the official version is published in the official reports.
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
SUCV2016-0557-BLS2
ERECRUIT HOLDINGS, LLC
Plaintiff
and
SIXCEL, LLC
Plaintiff/Intervenor
vs.
WILLIS GROUP HOLDINGS, LLC
Defendant
MEMORANDUM OF DECISION AND ORDER
ON PLAINTIFF ERECRUIT HOLDINGS, LLC’S MOTION
FOR JUDGMENT ON THE PLEADINGS
This action arising from a business deal gone sour between the plaintiff Erecruit Holdings, LLC (Erecruit) and the defendant Willis Group Holdings, LLC. Erecruit alleges that Willis breached a written contract called the Non-Perpetual Software License Agreement (the Agreement) by fabricating a pretext for terminating the Agreement, then refusing to pay Erecruit for amounts owed. In response, Willis asserted a Counterclaim alleging that Erecruit misled it as to Erecruit’s capabilities and then after Willis had already paid Erecruit $ 93,500, failed to deliver on the promises it made to provide Willis with a fully functional software product – promises that Erecruit knew at the time that it made them that it could not keep. Erecruit now moves for a judgment on the pleadings as to Willis’s Counterclaim. This Court concludes that the Motion must be DENIED for the reasons set forth in Willis’s Opposition, and offers the following by way of brief explanation.
A motion pursuant to Rule 12(c), Mass.R.Civ.P., is governed by the same standard that apples to a motion made pursuant to Rule 12(b) (6). That is, it must be denied if the targeted claims contain factual allegations that are “adequately detailed so as to plausibly suggest an entitlement to relief.” Greenleaf Arms Realty Trust, LLC v. New Boston Fund, Inc., 81 Mass. App.Ct. 282, 288 (2012) (reversing lower court’s allowance of Rule 12(b) (6) motion); see also Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008). Plausibility is not the same as credibility. Thus, that the claim relies on facts that are improbable does not support dismissal as long as those allegations, “even if doubtful in fact,” “raise a right to relief above the speculative level.” Iannachino, supra, quoting Bell Atlantic Corp. v. Twombly, 550 U.S.544, 557 (2007).
In seeking judgment in its favor before any discovery in the case has been conducted, Erecruit misapplies this standard, parsing the wording of the Counterclaim in a way that ignores the requirement that the Court draw all reasonable inferences from its factual allegations in favor of Willis. Although it is true that the claim of fraud (Count II of the Counterclaim) does call for greater particularity in pleadings, this Court concludes that even as to that count, the Counterclaim satisfies what is required of a claimant at this early stage in the litigation. The Counterclaim goes into some detail about the various misrepresentations that Erecruit made to Willis, and alleges that Erecruit knew at the time it made these representations that they were false, all with the purpose of inducing Willis into entering into the Agreement. That the Counterclaim does not, for every single one of those misrepresentations, specifically identify the speaker (instead alleging simply that Erecruit made the misrepresentation) does not justify dismissal.
It is also important to note that the Counterclaim arises from the same set of events that give rise to the claims asserted by Erecruit. Indeed, many of the allegations in support of it would be relevant to Willis’s defense of the main action even if no Counterclaim had been asserted. That is significant in that disposition of this motion will not have any real impact on the scope of discovery. It may be that once that discovery is conducted, some parts of this case (whether those parts relate to Erecruit’s claims or Willis’s counterclaims) will not survive a motion for summary judgment. At this early stage, before any discovery is conducted, such a summary disposition would be improper.
SO ORDERED.
__________________________________
Janet L. Sanders
Justice of the Superior Court
Dated: January 3, 2017