Sabre International Security v. Torres Advanced Enterprise Solutions, LLC ( 2014 )

UNITED STATES DISTRICT COURT
. FOR THE DISTRICT OF COLUMBIA
SABRE INTERNATIONAL SECURITY,
Plaintiff,
v. Civil Action No. 11-806 (GK)
TORRES ADVANCED ENTERPRISE
SOLUTIONS, LLC, et al.,
Defendants.
MEMORANDUM OPINION
Sabre International Security ("Sabre") brings this case
against its former business partner, Torres Advanced Enterprise
Solutions, LLC ( "TAES") and several current and former TAES
officers, for breach of contract, tortious interference with
prospective economic advantage, fraud, and related torts.
This matter is before the Court on TAES's Motion to Dismiss
Counts 15-18 and 20-22 of the First Amended Complaint [Dkt. No.
253] . Upon consideration of the Motion, Opposition [Dkt. No.
262], and Reply _[Dkt. No. 269], and the entire record herein,
and for the reasons set forth below, the Motion to Dismiss shall
be granted in part and denied in part.
I . BACKGROUND
A. Factual Background1
Sabre is an Iraqi limited liability company with its
principal place of business in Baghdad, Iraq. TAES is a limited
liability company organized under the laws of Virginia. Both
companies provide security services internationally to private
and governmental entities.
Between approximately 2007 and 2010, Sabre and TAES worked
together to perform security contracts at United States military
installations in Iraq. They did so pursuant to two Multiple
Award Task Order Contracts ("MATOCs") issued by the United
States Government: the Theater-Wide Internal Security Services
("TWISS") MATOC, number W91GDW-07-D-4026 ("TWISS I MATOC"), and
its successor, TWISS MATOC number W91DGW-09-D-4030 ("TWISS II
MATOC").
Sabre was awarded the TWISS I MATOC on September 27, 2007,
and thereby became eligible to compete for specific TWISS I
"task orders," which covered specific projects put out for bid
by the Government. To aid it in competing for such task orders,
on November 8, 2007, Sabre entered into a subcontractor
agreement with TAES, under which TAES agreed to provide
1
The facts set forth herein are taken from the First Amended
Complaint ( "FAC") [Dkt. No. 242] and the undisputed facts set
forth in the parties' briefs.
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personnel holding valid United States Government security
clearances to work on task orders awarded to Sabre under the
TWISS I MATOC. The Sctbre-TAES team bid for and was awarded
several TWISS I Task Orders, which it performed with Sabre
acting as prime contractor and TAES acting as subcontractor.
In 2009, the United States amended its policies to require
that prime contractors, like Sabre, possess a valid Defense
Department Industrial Security Program Facility Security
Clearance ("FCL"). Sabre, as a foreign company, was not
eligible to obtain an FCL. Conversely, TAES was not eligible to
perform TWISS I work without Sabre, because only Sabre, and not
TAES, possessed a Private Security Company ("PSC") license
issued by the Ministry of the Interior of the Republic of Iraq,
which was required to perform private security services in Iraq.
Consequently, on December 30, 2009, the parties entered into an
Asset Purchase Agreement ( "APA") and novation of their
subcontractor agreement by which TAES became the prime
contractor and Sabre became the subcontractor for TWISS I work.
This modification allowed the Team to avoid termination of the
TWISS I MATOC.
Under .the APA, TAES became responsible for submitting
invoices to the Government and for compensating Sabre once it
received payment from the Government. The APA also included a
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form lease agreement, pursuant to which Sabre would lease to
TAES equipment necessary to perform TWISS I work. The APA
otherwise adopted the parties' original obligations under the
TWISS I subcontractor agreement, including its compensation
scheme.
On August 6, 2009, Sabre and TAES entered into a separate
Teaming Agreement to govern work under the TWISS II MATOC. As
with the APA, the Teaming Agreement designated TAES as the prime
contractor and Sabre as the subcontractor. It required, inter
alia, that: (1) Sabre and TAES compete exclusively as a team for
any TWISS II proposal submitted; (2) both parties approve any
such proposal; ( 3) TAES offer Sabre any TWISS II work awarded
within Sabre's Scope of Work, as defined under the Agreement;
(4) TAES manage the team's affairs and protect Sabre's rights
with respect to the Government; and (5) TAES pay Sabre's
invoices within 15 working days after receiving payment from the
Government.
Sabre alleges that TAES breached the Teaming Agreement, and
committed fraud and various other torts, by, inter alia, (1)
unilaterally reducing Sabre's prices in TWISS II proposals and
refusing to pay Sabre in accordance with previously agreed-upon
pricing schemes; (2) bidding on TWISS II task orders without
Sabre's consent or knowledge, and thereafter performing such
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work without Sabre's participation; (3) failing to make timely
payment of Sabre's TWISS II invoices; ( 4) failing to return
leased equipment to Sabre and, instead, selling it to one or
more third parties; and ( 5) failing to protect Sabre's legal
rights in relation to certain disputes with the Government.
Sabre also alleges that TAES breached the APA by failing to
fully compensate Sabre for work performed on TWISS I task
orders. Sabre further alleges that TAES made a secret internal
decision in the spring of 2010 to cease honoring the Teaming
Agreement and the APA and instead enter to into direct
competition with Sabre.
B. Procedural Background
Sabre filed its original Complaint on April 29, 2011. On
July 5, 2013, approximately three and a half months after the
close of fact discovery, Sabre moved to amend its Complaint to
add claims of fraud against TAES and several of its officers in
light of information obtained during discovery. The Court
granted Sabre's Motion to Amend on October 3, 2013, and Sabre
filed its FAC on October 10, 2013 [Dkt. No. 242]
On November 14, 2013, TAES filed the instant Motion to
Dismiss Counts 15-18 and 2 0-22 of the FAC [Dkt. No. 2 53] . On
December 6, 2013, Sabre filed its Opposition [Dkt. No. 262]. On
December 20, 2013, TAES filed its Reply [Dkt. No. 269].
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II. STANDARD OF REVIEW
To survive a motion to dismips under Rule 12(b) (6), a
plaintiff need only plead "enough facts to state a claim to
relief that is plausible on its face" and to "nudge [ [his or
her] claims across the line from conceivable to plausible."
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).
"[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." Id. at 563.
Under the Twombly standard, a "court deciding a motion to
dismiss must not make any judgment about the probability of the
plaintiffs' success . [,] must assume all the allegations in
the complaint are true (even if doubtful in fact) [, and]
must give the plaintiff the benefit of all reasonable inferences
derived from the facts alleged." Aktieselskabet AF 21. November
2001 v. Fame Jeans Inc., 525 F.3d 8, 17 (D.C. Cir. 2008)
(internal quotation marks and citations omitted) . A complaint
will not suffice, however, if it "tenders 'naked assertion[s]'
devoid of 'further factual enhancement. '" Ashcroft v. Iqbal,
129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 557)
(alteration in Iqbal) .
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III. ANALYSIS
A. Count 15 Fails to State a Claim for Fraud
In Count 15, Sabre brings a claim for "Fraud with Respect
to TAES Pricing of and Payment to Sabre for Sabre TWISS II Scope
of Work." FAC `` 265-438. The crux of this cl~im is that TAES
officers Rebekah Dyer, Kathy Jones, Scott Torres, and Jerry
Torres pretended, through a series of affirmative
representations and misleading omissions, to accept Sabre's
price terms for several TWISS II task orders, while secretly
reducing these price terms in proposals to the Government and
intending not to honor them once Sabre had performed the work.
Sabre alleges that TAES' apparent acceptance of its pricing
induced it to perform several TWISS II task orders that it would
not have performed had it known of TAES' true intent to reduce
its prices.
To make out a claim for fraud under District of Columbia
law, a plaintiff must allege that: ( 1) the defendant made a
false representation, (2) the representation was in reference to
a material fact, (3) the defendant had knowledge of its falsity,
( 4) the defendant intended to deceive, ( 5) the plaintiff acted
in reliance on the misrepresentation, and (6) the reliance was
reasonable. See, e.g., In re U.S. Office Prods. Co. Sec.
Litig., 251 F. Supp. 2d 77, 100 (D.D.C. 2003) (citing R · & A,
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Inc. v. Kozy Korner, Inc., 672 A.2d 1062, 1066 (D.C. 1996);
Hercules & Co. v. Shama Rest. Corp., 613 A.2d 916, 923 (D.C.
1992)). 2
Because disputes relating to contractual obligations
"should generally be addressed within the principles of law
relating to contracts," the D.C. Court of Appeals has held that
"conduct occurring during the course of a contract dispute may
be the subject of a fraud[] [claim]" only if (1) "there are
facts separable from the terms of the contract upon which the
tort may independently rest," and (2) "there is a duty
independent of that arising out of the contract itself, so that
an action for breach of contract would reach none of the damages
suffered by the tort." Choharis v. State Farm and Casualty Co.,
961 A.2d 1080, 1089 (D.C. 2008); see also Ulliman Schutte
Const., LLC v. Emerson Process Mgmt. Power & Water Solutions,
No. 02 Civ. 1987 (RMC), 2006 WL 1102838, at *14 (D.D.C. Mar. 31,
2006) (emphasizing "the conceptual distinction between breach of
contract claims and tort claims [which] preclud [es] plaintiffs
from recasting ordinary breach of contract claims into tort
claims") (citation and punctuation omitted).
2
Both parties cite District of Columbia law and thus appear to
agree that such law applies.
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TAES argues that Count 15 must be dismissed because it
"impermissibly seeks to transform Sabre's breach of contract
claims into claims for 'fraud in the performance of a
contract.'" Def.'s Mem. at 1. The Court agrees.
The allegations in Count 15 basically claim that TAES
falsely assured Sabre it would pay Sabre's invoices (at specific
prices) for subcontracting work performed under the Teaming
Agreement, thereby inducing Sabre to perform such subcontracting
work. Such a claim is entirely intertwined, if not wholly
duplicative, of Sabre's claim that TAES breached the Teaming
Agreement by reducing Sabre's prices in Government proposals and
failing to pay Sabre's invoices in full. See FAC `` 105, 108,
111-116. Count 15 thus falls squarely within the D.C. Court of
Appeals' admonition that "even a 'willful, wanton or malicious'
breach of a contract to pay money cannot support a claim of
fraud." Choharis, 961 A.2d at 1089 (citing Bragdon v. 2512
Assocs. Ltd. P'ship, 856 A.2d 1165, 1173 (D.C. 2004)).
Sabre now argues, in its Opposition brief, that it has
stated a claim for fraud in the inducement, rather than fraud in
the execution of a contract, such that Count 15 is not barred by
the rule stated in Choharis. There are two problems with this
argument. First, as TAES correctly points out, the term "fraud
in the inducement" barely appears in the 113-page FAC, and
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certainly not in the lengthy title of this Count. Def. 's Reply
at 4. Although this fact is not dispositive of whether Sabre
states such a claim, it does indicate that Sabre's reference to
a fraudulent inducement theory in its Opposition brief is merely
a last-minute effort to avoid the rule of Choharis.
More importantly, in the single instance in which Sabre
does recite the phrase "fraudulently induced" in Count 15, it
claims to have been "fraudulently induced" to perform its
obligations under the Teaming Agreement, rather than to do
something it was not contractually required to do. See FAC ~
436 ("As a result [of TAES' representations regarding prices]
Sabre was fraudulently deprived of the right to refuse to
perform and was fraudulently induced into spending millions of
dollars [to perform] . ") . 3 Further, Sabre purports to have been
injured solely by virtue of TAES' failure to perform an
obligation it was contractually obligated to perform under the
Teaming Agreement.
3
Sabre now argues that TAES' representations fraudulently
induced it to enter specific task orders. This attempt to
recast the parties' relationship as a series of small contracts
rather than the overarching Teaming Agreement is contradicted by
the allegations of the FAC. As Sabre points out numerous times,
the Teaming Agreement required Sabre to perform TWISS II subtask
orders. See FAC ~ 77 ("'[Sabre] shall provide the Team with all
personnel and provide all services required by . any TWISS
TOR awarded to the Team, excepting Leading Members Scope of
Work.'") (emphasis added) (quoting Teaming Agreement§ 1.2.C).
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As such, the allegations of fraud in Count 15 are
completely intertwined with TAES' performance of its obligations
under the Teaming Agreement, and Sabre's remedy is a contract,
not a fraud, remedy. See Choharis, 961 A.2d at 1089
(independent claim for fraud is cognizable only if "there are
facts separable from the terms of the contract upon which the
tort may independently rest," and "there is a duty independent
of that arising out of the contract itself so that an action for
breach of contract would reach none of the damages suffered by
the tort.") (emphasis added).
For the foregoing reasons, Count 15 shall be dismissed. 4
B. Count 16 Fails to State a Claim for Fraud
In Count 16, Sabre alleges that on September 5, and October
18, 2010, it notified the Government that TAES had "breached the
Teaming Agreement and owed Sabre millions of dollars on unpaid
[] invoices." FAC ~ 440. The Government, in turn, issued a
Letter of Concern to TAES threatening to take administrative
and/or remedial action against TAES if its subcontractors had
not been paid. In response, on October 24, 2010, TAES
represented to the Government that it had paid all amounts due
4
Having concluded that Sabre is limited to a contract remedy,
the Court does not reach TAES' alternative argument that the
economic loss doctrine independently bars Sabre's Count 15.
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to Sabre. Sabre contends this response was knowingly false and
was intended "to deceive the U.S. Government into believing"
TAES was current on its payments, so as to "prevent the U.S.
Government from requiring [TAES] to pay Sabre's invoices [.]"
FAC ~ 442-44. Sabre claims that these circumstances amount to
fraud.
As set forth above, the element of reliance is a
prerequisite to recovery in fraud. It is not enough to show
that the Government relied on TAES' representations; Sabre must
show that it justifiably relied on such representations and
suffered loss as a result. See Va. Acad. of Clinical
Psychologists v. Grp. Hosp. & Med. Servs., Inc., 878 A:2d 1226,
1238 (D.C. 2005) ("[T]he maker of a fraudulent misrepresentation
is subject to liability for pecuniary loss suffered by one who
justifiably relies upon the truth of the matter misrepresented,
if his [or her] reliance is a substantial factor in determining
the course of conduct that results in his [or her] loss.")
(citing Restatement (Second) of Torts§ 546 (1977)).
Sabre does not purport to have relied on TAES'
representations to the Government. In fact, it clearly states
that it believed its invoices had not been paid and continued to
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believe as much notwithstanding TAES' representations otherwise.
See FAC ~440. 5
Sabre argues that it nevertheless satisfies the reliance
requirement because it was entitled to assume that TAES would
fulfill its "duty" not to make inaccurate statements to the
Government, which purportedly induced it (Sabre) into "not
taking further" action in its communications with the
Government. P 1 . ' s Opp' n at 13 . This argument shows only that
Sabre relied on its own assumptions regarding what TAES would do
or say 1 not on what TAES actually did or said. Because Sabre
has not alleged that it relied on TAES' representations to the
6
Government, Sabre does not state a claim for fraud.
5
Sabre. cites Nader v. Allegheny Airlines, Inc., 512 F.2d 527,
547-49 (D.C. Cir. 1975) rev'd on other grounds, 426 U.S. 290
(1976), apparently for the proposition that it may recover in
fraud based on the Government's reliance on TAES' statements.
Nader does not support such a proposition. The Court of Appeals
in Nader held merely that a party who relies on a
misrepresentation can sometimes recover against its maker even
if that party, referred to in the decision as a "third party,"
is not. the intended or direct recipient of the misstatement.
See id. at 548; accord Armstrong v. Accrediting Council for
Continuing Educ. & Training, Inc., 961 F. Supp. 305, 309 (D.D.C.
1997) . The Court of Appeals did not suggest that a plaintiff,
such as Sabre,· who has not relied on a misrepresentation, can
recover for fraud.
6
Sabre also does not identify any independent harm flowing from
TAES' .statements. It asserts vaguely that the statements
prevented the Government from taking remedial action to cure the
underlying breach of contract. FAC ~ 442-44; see also Pl. 's
Opp' n at 12. Sabre cannot spin a fraud claim out of conduct
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Having failed to state a claim for fraud in the first
instance, Sabre also does not state a claim for aiding and
abetting fraud. Pl.'s Opp'n at 11, 14. See, e.g., Burnett v.
Al Baraka Inv. & Dev. Corp., 274 F. Supp. 2d 86, 105 (D.D.C.
2003) ("Liability for aiding and abetting . must be tied to
a substantive cause of action[.]"). Consequently, Count 16
shall be dismissed.
C. Count 17 Fails to State a Claim for Misappropriation
In Count 17, Sabre alleges that TAES secretly used its PSC
license in a proposal to the Government for work at First
Operating Base ("FOB") Cruz Morris, and never informed Sabre
that it was submitting such a proposal. Sabre further asserts
that, after TAES was awarded the Cruz Morris task order, TAES
concealed the award from Sabre and declined to allocate Sabre
its rightful share of the work. Such conduct, Sabre maintains,
amounts to "fraudulent misappropriation and use of Sabre's PSC
license" and entitles it to "lost profits for its scope of the
work" at FOB Cruz Morris. FAC `` 450-51.
that merely caused a known contract dispute to remain
unresolved. See Choharis, 961 A.2d at 1089 (observing that "the
mere disappointment of plaintiff's hope to receive his
contracted-for benefit" would not support fraud claim even in
the presence of bad faith) .
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As TAES rightly points out, Sabre identifies no authority
in the District of Columbia recognizing a claim for "fraudulent
misappropriation" of a license. Def.'s Mot. at 16. In response,
Sabre maintains that it has stated a claim either for fraud or
unfair competition. See Pl.'s Opp'n at 14-16.
The fraud theory is easily disposed of. Sabre reasons that
TAES, by including a photocopy of Sabre's PSC license in the
Cruz Morris proposal, defrauded the Government into believing
its use of the permit was authorized when it was not. FAC ~
450; Pl.'s Opp'n at 14. As explained above, Sabre cannot
recover for fraudulent representations directed at the
Government unless it demonstrates that it was aware of such
representations and relied on them, which Sabre does not allege.
As a result, Count 17 does not state a claim for fraud.
The unfair competition theory also fails. "Unfair
competition is not defined in terms of specific elements, but by
various acts that would constitute the tort if they resulted in
damages." Hanley-Wood LLC v. Hanley Wood LLC, 783 F. Supp. 2d
147, 153 (D.D.C. 2011) (emphasis added) (citing Furash & Co. v.
McClave, 130 F. Supp. 2d 48, 57 (D.D.C. 2001)) . 7
7
Activities that may give rise to a claim for unfair competition
include "defamation, disparagement of a competitor's goods or
business methods, intimidation of customers or employees,
interference with access to the business, threats of groundless
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Sabre has not described any way in which its business was
damaged by TAES' use of the PSC license in the Cruz Morris
proposal. There is no indication, for example, that TAES'
conduct injured Sabre's business reputation, impaired its
ability to compete for any opportunity, resulted in any loss of
good will between Sabre and the Government, or caused any other
competitive injury. Sabre alleges only that TAES' use of the
license without Sabre's participation violated the exclusivity
provisions of the Teaming Agreement and allowed TAES to
"unlawfully reap[] profits that could not have been
obtained without Sabre." FAC `` 446, 451. While these
allegations may support a claim for breach of contract or unjust
enrichment, they do not identify any competitive injury, and
therefore do not support a cause of action for unfair
competition.
In its Opposition brief, Sabre argues that it did suffer a
competitive injury because TAES' conduct deprived it of the
"time, labor and talent expended to obtain and
successfully use the PSC license in Iraq." p1 . ' s Opp' n at 16 ,
This argument finds no support in the FAC. There are no facts
suits, commercial bribery, inducing employees to sabotage, [and]
false advertising or deceptive packaging likely to mislead
customers into believing goods are those of a competitor."
Hanley-Wood LLC, 783 F. Supp. 2d at 153 (citing B & W Mgmt.,
Inc. v. Tasea Inv. Co., 451 A.2d 879, 881 n.3 (D.C. 1982)).
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suggesting that TAES' use of the license in the Cruz Morris
proposal hindered Sabre's ability to use the license in other
contexts, threatened its ability to maintain the license, or in
any way deprived Sabre of the general benefits of the license.
Because Sabre has not identified any competitive injury
resulting fror(l the Cruz Morris incident, it does not state a
claim for unfair competition. See Pac. Grp. v. First State Ins.
Co., 70 F.3d 524, 529 (9th Cir. 1995) (finding unfair
competition theory deficient because, inter alia, plaintiff "did
not allege that the false advertising caused its injury")
(emphasis added); Yantha v. Omni Childhood Ctr., Inc., No. 13-
CV-1948 ARR JMA, 2013 WL 5327516, at *7 (E.D.N.Y. Sept. 20,
2013) (dismissing unfair competition claim because complaint
failed to "stat [e] a competitive injury as a result of any
unfair competition by defendants").
For the foregoing reasons, Count 17 shall be dismissed.
D. Count 18 States a Claim for Conversion of Equipment
In Count 18, Sabre brings a claim for "conversion of
Sabre's property and unjust enrichment." Although styled as a
single claim, Count 18 is based on two separate incidents, which
require independent analysis.
First, Sabre alleges that it temporarily loaned or leased
to TAES more than $1 million worth of equipment so TAES could
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perform the Team's work at Joint Security Station ("JSS")
Shield. According to Sabre, at the conclusion of the JSS Shield
job, TAES failed to return the equipment, and instead, sold the
property to one or more third parties without Sabre's knowledge
or consent. FAC ~ 455. Sabre contends that these circumstances
constitute conversion. The Court agrees.
"The essence of a conversion is a wrongful taking or a
wrongful retention of property after a rightful possession."
Shehyn v. Dist. of Columbia, 392 A.2d 1008, 1012 (D.C. 1978).
To state a claim for conversion under District of Columbia law,
the plaintiff must allege "(1) an unlawful exercise, (2) of
ownership, dominion, or control, (3) over the personal property
of another, (4) in denial or repudiation of that person's rights
thereto." Xereas v. Heiss, 933 F. Supp. 2d 1, 6 (D.D.C. 2013)
(citing cases); see also Baltimore v. Dist. of Columbia, 10 A.3d
1141, 1155 (D.C. 2011). Each of these elements is met by
Sabre's allegations that TAES sold equipment belonging to Sabre
to third parties without Sabre's consent.
TAES argues that where, as in this case, a defendant's
initial possession of property was lawful, a plaintiff may not
recover under a conversion theory unless it establishes that it
first made a demand for the property, which Sabre has not done.
See Def. 's Mem. at 17. (citing Poullard v. Smithkline Beecham
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Corp., No. 02 Civ. 1590 (CKK), 2005 WL 3244192, at *12 (D.D.C.
Nov. 30, 2005)). However, the D.C. Court of Appeals has
observed that "[a] demand for the return of property 'is
necessary only when there are no other facts and circumstances
independently establishing a conversion.'" Washington Gas Light
Co. v. Pub. Serv. Comm'n of D.C., 61 A.3d 662, 678 (D.C. 2013)
(emphasis added) (citing Bowler v. Joyner, 562 A.2d 1210, 1212
(D.C. 1989)). TAES' purported sale of Sabre's equipment to one
or more third parties without Sabre's consent would
"independently establish" its repudiation of Sabre's property
rights. Therefore, no demand was required. 8
Sabre's second theory is that TAES' use of its PSC license
in the Cruz Morris proposal constituted conversion. As
discussed, there are no facts indicating that Sabre lost any of
the benefits of its license because of TAES' inclusion of the
PSC license in the Cruz Morris proposal. Consequently, Sabre
has not stated a claim for conversion of its PSC license. See
8
TAES also claims that it had a lease agreement with Sabre,
which limits Sabre to a contract remedy because a plaintiff "may
not cloak a breach of contract claim in the dress of
conversion." Def. 's Mem. at 17. Sabre is not recasting a
contract claim as one for conversion; its allegations give rise
to a claim for conversion independent of any contract remedies
it may also have. See Sloan ex rel. Juergens v. Urban Title
Servs., Inc., No. 06 Civ. 1524 (CKK), 2011 WL 1137297, at *7
(D.D.C. Mar. 27, 2011).
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Kaempe v. Myers, 367 F.3d 958, 964 (D.C. Cir. 2004) ("Where
there has been no dispossession of property rights, there can be
no action for conversion.") . 9
For the foregoing reasons, Count 18 shall be dismissed
insofar as it alleges conversion of Sabre's PSC license, but not
insofar as it alleges conversion of Sabre's equipment.
E. TAES' Motion to Dismiss Count 20 is Moot
Count 20 is styled as a claim for "Misappropriation of
Sabre's Past Performance." However, in Sabre's Reply brief in
support of its Motion to Amend the Complaint, Sabre voluntarily
withdrew this count. See Pl.'s Reply ISO Mot. to Amend at 2 n.l
[Dkt . No. 2 3 9] ("On further reflection, Sabre is voluntarily
withdrawing Count 20, lAC `` 470-77[.]"). TAES' Motion to
Dismiss Count 2 0 is therefore moot. 10
F. Count 21 Is Duplicative of Count 3
In Count 21, Sabre brings a claim for "lost [] revenues and
delay damages" resulting from TAES' inability to timely perform
the task order at JSS Shield in early 2010. Sabre acknowledges
9
Sabre argues, in the alternative, that TAES was unjustly
enriched by virtue of having used the PSC license to win the
task order at FOB Cruz Morris. Because Count 8 of the FAC
already alleges unjust enrichment with respect to the Cruz
Morris job, any assertion of such theory in Count 17 is merely
duplicative. See FAC ~ 222(B).
10
It is unclear why Sabre did not remove this claim from its FAC
prior to filing it.
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that this count is based on the same facts and the same legal
theory as the breach of contract claim alleged at Count 3. Pl's
Opp' n at 21. At best, . Counts 3 and 21 articulate a slightly
different theory of harm resulting from the same breach of
contract. Consequently, Count 21 shall be dismissed as
duplicative of Count 3. Cf. Fed. R. Civ. P. 10(b) (~[E]ach
claim founded on a separate transaction or occurrence . . must
be stated in a separate count[.]").
G. Count 22 Fails to State a Claim for Fraud
Finally, in Count 22, Sabre brings another claim of
~fraud," which relates, not to the ~arties' performance of TWISS
work under the relevant agreements, but to TAES' conduct in this
litigation. In particular, Sabre contends that TAES, with the
assistance of its prior counsel, defrauded Sabre in this action
by concealing material evidence, filing knowingly false
declarations, fabricating evidence, and mounting defenses it
knew were not supported by the evidence: See FAC `` 499, 501,
506. Sabre claims it was damaged ~by virtue of having
devoted substantial resources, time and money (including payment
of attorneys fees) to defend against" TAES' assertedly
fraudulent claims and defenses. FAC ~ 505.
At the outset, the Court emphasizes that the misconduct
alleged in Count 22 is extremely serious, and the Court's
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disposition of this count is not intended to suggest that Sabre
is without recourse in other venues for such misconduct should
it be proven. The narrow question presented, however, is
whether Sabre's allegations state a claim for fraud or any other
cause of action. The Court concludes that they do not.
First, as with the fraud claims in Counts 16 and 17, there
is no allegation that Sabre relied, to its detriment, on any of
the allegedly false representations and omissions made by TAES
in this lawsuit. To the contrary, Sabre has vigorously
contested the factual underpinnings of TAES' defenses and
steadfastly adhered to its version of the facts throughout.
Sabre also persisted in its attempts to obtain discovery from
TAES when documents were. not immediately forthcoming, and
appears now to have obtained the documents that were not
previously produced. Thus, it is clear Sabre did not rely on
the truth of any of the alleged misrepresentations, and without
such reliance, Sabre does not state a claim for fraud. Cf.
Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 71 (2d Cir. 1990)
(justifiable reliance is essential element of an "ordinary
common-law fraud action" even where plaintiff alleges bad faith
litigation)
Second, and more broadly, Sabre cites no authority
suggesting that it may maintain any independent cause of action
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for the misconduct alleged in Count 22. Sabre relies on Jemison
v. Nat'l Baptist Convention, USA, Inc., 720 A.2d 275 (D.C. 1998)
and Chambers v. NASCO, Inc., 501 U.S. 32, 50 (1991)). These
cases merely affirm a court's inherent power to sanction a party
for misconduct during the course of the litigation; they do not
hold, or even intimate, that such behavior supports an
independent cause of action for damages. See Chambers, 501 U.S.
at 43-55; Jemison, 72 0 A.2d at 2 82 (a court "may safe~y rely on
its inherent power to sanction those who engage in bad faith
conduct in the course of litigation") (citing Chambers, 501 U.S.
at 50).
Nor has the Court discovered any case holding that bad
faith conduct in litigation gives rise to an independent cause
of action for damages. The weight of the authority is contrary.
See Russell v. Principi, 257 F.3d 815, 821 (D.C. Cir. 2001)
("Plaintiff's] effort to pursue an independent cause of action
for bad faith litigation abuse against [defendant] fails.
[T] o date no circuit court has held that a federal cause of
action exists"); Interstate Fire & Cas. Co., Inc. v. 1218
Wisconsin, Inc., 136 F.3d 830, 836 (D.C. Cir. 1998) (rejecting a
tort claim for "fraud on the court" because "[a]lthough the act
complained of is styled a 'fraud,' the remedy lies within the
court's equitable discretion") (citations omitted) ; see also
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Ortega v. City of New York, 9 N.Y.3d 69, 83 (2007) (declining to
recognize independent tort for spoliation of evidence because
such conduct is adequately addressed through range of remedial
options available to court) .
Given that Sabre may seek relief for the misconduct alleged
in Count 22 pursuant to Rule 37 of the Federal Rules of Civil
Procedure and the Court's inherent powers, Count 22 shall be
dismissed.
IV. CONCLUSION
For the foregoing reasons, TAES' Motion to Dismiss shall be
gran ted in part and denied in part. An Order shall accompany
this Memorandum Opinion.
January 30, 2014
Copies to: attorneys on record via ECF
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