Case 4:15-cv ALM-CAN Document 13 Filed 09/17/15 Page 1 of 8 PageID #: 58 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

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1 Case 4:15-cv ALM-CAN Document 13 Filed 09/17/15 Page 1 of 8 PageID #: 58 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION PRUVIT VENTURES, LLC, Plaintiff, vs. AXCESS GLOBAL SCIENCES, LLC, and FOREVERGREEN INTERNATIONAL, LLC, Defendants. Civil Action No. 4:15-cv ALM-CAN DEFENDANT AXCESS GLOBAL SCIENCES, LLC S MOTION TO DISMISS UNDER RULES 9(b), 12(b)(6), AND 12(b)(1) Honorable Judge Amos L. Mazzant MOTION Defendant Axcess Global Sciences, LLC ( AGS ) hereby moves the Court for an order dismissing the three claims filed against it by plaintiff Pruvit Ventures, LLC ( Pruvit ) pursuant to Rules 9(b), 12(b)(6), and 12(b)(1) of the Federal Rules of Civil Procedure. As discussed in greater detail below, AGS submits this Motion on the grounds that: (1) Pruvit Ventures, LLC is a nonexistent entity; and (2) Pruvit failed to plead its fraud claim with sufficient particularity to satisfy the heightened pleading standard required under Rule 9(b). A proposed order granting AGS s motion is submitted herewith. MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Pruvit s Complaint alleges causes of action against AGS for: (1) breach of contract; (2) fraud; and (3) promissory estoppel. Pruvit s claims against AGS should all be dismissed because

2 Case 4:15-cv ALM-CAN Document 13 Filed 09/17/15 Page 2 of 8 PageID #: 59 they are asserted by an entity that does not exist (Pruvit Ventures, LLC) and because Pruvit failed to plead its fraud claim with sufficient particularity under the heightened pleading standard required by Rule 9(b). II. STATEMENT OF ISSUES 1. Whether Pruvit Ventures, LLC, a nonexistent entity, can maintain an action against AGS. 2. Whether Pruvit s claim against AGS alleging fraud should be dismissed because it does not meet the heightened pleading requirements of Rule 9(b). III. LEGAL STANDARDS GOVERNING THIS MOTION A. Motion to Dismiss under Rule 12(b)(6) To survive a motion to dismiss pursuant to Rule 12(b)(6), a plaintiff must plead facts that, when assumed to be true, state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The plaintiff must then plead factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). Under this standard, [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id.; see also Twombly, 550 U.S. at 555 ( [w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff s obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do (citation omitted)). 2

3 Case 4:15-cv ALM-CAN Document 13 Filed 09/17/15 Page 3 of 8 PageID #: 60 A complaint must do more than simply state that the plaintiff is entitled to relief it must show such an entitlement through its facts. S. Christian Leadership Conference v. Supreme Ct., 252 F.3d 781, 756 (5th Cir. 2001) ( [C]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss. (citation omitted)). [W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged but it has not shown that the pleader is entitled to relief. Iqbal, 556 U.S. at 679; Hole v. Texas A & M Univ., 360 Fed. Appx 571, 873 (5th Cir. 2010). B. Fraud Must be Pled with Particularity under Rule 9(b) In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Fed. R. Civ. P. 9(b). In the Fifth Circuit, courts apply Rule 9(b) to fraud complaints with bite and without apology. United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 185 (5th Cir. 2009). At a minimum, the complaint must allege the who, what, when, where, and how of the alleged fraud. Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029, 1032 (5th Cir. 2010); Bazan v. White, 275 Fed. Appx. 312, 313 (5th Cir. 2008); Tuchman v. DSC Commc ns Corp., 14 F.3d 1061, 1068 (5th Cir. 1994) (pleading fraud with particularity in this circuit requires the plaintiff to allege the particulars of time, place and contents of the false representations, as well as the identity of the person making the misrepresentation and what [that person] obtained thereby. ) (quoting Tel-Phonic Servs., Inc. v. TBS Int l, Inc., 975 F.2d 1134,1139 (5th Cir. 1992)). Failure to plead fraud with particularity under Rule 9(b) is treated as a dismissal for failure to state a claim under Rule 12(b)(6). United States ex rel. Grubbs, 565 F.3d at

4 Case 4:15-cv ALM-CAN Document 13 Filed 09/17/15 Page 4 of 8 PageID #: 61 IV. ARGUMENT A. Because Pruvit Ventures, LLC is a non-existent entity, it cannot maintain a cause of action. The complaint contains no allegation that Pruvit Ventures, LLC is a legal entity. A suit brought in a name which is not that of a natural person, a corporation, or of partnership is a mere nullity. Alton Evening Tel. v. Doak, 11 Ill. App. 3d 381, 382 (Ill. App. Ct. 1973) (noting that a lawyer should know his client when he files his suit ). The caption of the Complaint and its introductory paragraph lists Pruvit Ventures, LLC as the named plaintiff. The opening page of the Complaint goes on to define PruvIt Ventures, LLC as Plaintiff or Pruvit. 1 Upon information and belief, Pruvit Ventures, LLC has not been formed in any state and, under the above-applicable authority, it cannot maintain this action. At a minimum, the Court should require Plaintiff to provide a more definite statement as to the correct identity of the party-in-suit. B. Pruvit s Claim against AGS for Fraud Does Not Meet the Heightened Pleading Requirements of Rule 9(b). To establish a claim for fraud under Texas law, the plaintiff must show that (1) the defendant made a material representation; (2) that representation was false; (3) the defendant knew the representation was false when it was made or the defendant made the statement recklessly without any knowledge of the truth and as a positive assertion; (4) the defendant intended for the plaintiff to act upon the representation; (5) the plaintiff acted in reliance upon the representation; and (6) the plaintiff suffered injury as a result. Wells v. United States Bank Nat'l Ass n, 587 Fed. Appx. 158, 161 (5th Cir. 2014) (citing Anderton v. Cawley, 378 S.W.3d 38, 1 At one point, the Complaint identifies PruvIt Ventures, Inc., a privately held Texas Corporation as the Plaintiff. (Complaint at 2.) Every other reference to PruvIt, including the defined names PruvIt and Plaintiff used throughout the Complaint, refers to PruvIt Ventures, LLC. 4

5 Case 4:15-cv ALM-CAN Document 13 Filed 09/17/15 Page 5 of 8 PageID #: (Tex. App. 2012)). Fraud claims brought in federal court under Texas law are subject to Rule 9(b) s heightened pleading requirement, which requires that a plaintiff state with particularity the who, what, when, where, and how, of the alleged fraud. Id; Fankhauser v. Fannie Mae, 2011 U.S. Dist. LEXIS 46286, *17 (E.D. Tex. Mar. 30, 2011). Nothing in Pruvit s claim for fraud against AGS meets this heightened pleading standard. The totality of Pruvit s pleadings related to alleged fraud by AGS are the following: 20. After the agreement was signed and Axcess Global represented that it was agreed to by the University of South Florida, PruvIt in reliance thereon undertook to develop products utilizing the Licensed Patents * * * 29. Axcess Global committed Fraud by misrepresenting the status of negotiations with ForeverGreen, and the nature of its relationship with ForeverGreen. 30. Axcess, through its agent Rob Rogers misrepresented in a meeting between he and Brian Underwood of PruvIt in Dallas that all negotiations with ForeverGreen had ceased, and Axcess had the authority to License the Products and Processes in the Licensed Territory. 31. Axcess in s from Gary Millet to Brian Underwood and others also falsely represented the nature of the Licensed Patents included the right associate nutritional ketosis with the possibility of weight loss. These statements recite nothing more than a couple of alleged misrepresentations. Nothing is pled about when the statements took place, whether the speakers knew the statements were false at the time they were made, whether the statements were made with the intent that Pruvit would rely on them, whether Pruvit did in fact rely on the statements, and how Pruvit was damaged thereby. Coincidentally, Pruvit recites the elements of fraud in paragraph 28 of its complaint, yet then fails to plead facts to support many of those elements. 5

6 Case 4:15-cv ALM-CAN Document 13 Filed 09/17/15 Page 6 of 8 PageID #: 63 In short, Pruvit alleges some misrepresentations, but fails to allege that the misrepresentations were fraudulent. Because there is no explanation of why the statements were fraudulent, Pruvit has failed to sufficiently meet Rule 9(b) s requirements and plausibly plead fraud. See Legendary Lighting Group, Inc. v. Optigenix, Inc., (Civil Action No. 4:15cv53-LG-CMC, slip op. (E. D. Tex. June 26, 2015, Dkt # 25) 2 (citing Plotkin v. IP Axess, Inc., 407 F.3d 690, 696 (5th Cir. 2005)). The pleading deficiencies in Pruvit s claims for fraud against AGS are fatal. Pruvit s fraud claims must be dismissed. V. CONCLUSION Plaintiff s complaint falls woefully short of that required by the federal rules on multiple fronts. Pruvit, LLC is a non-existent entity. Even the most cursory pre-filing investigation would have revealed this. And, although the complaint recites the elements of fraud, it does not even purport to allege threadbare recitals of those elements, much less the recitation of wellpleaded facts to support each of those elements as is required by Twombly. As such, it should be dismissed. AGS should not have to be burdened with responding to such faulty and scant pleadings. 2 Ironically, Legendary Lighting is represented by the same counsel as Pruvit. Despite having multiple fraud claims dismissed in the Legendary Lighting case for failure to plead with particularity, the same conduct is repeated here. 6

7 Case 4:15-cv ALM-CAN Document 13 Filed 09/17/15 Page 7 of 8 PageID #: 64 DATED: September 17, 2015 By: /s/ Charles L. Roberts Charles L. Roberts (pro hac vice admission) WASATCH-IP, A PROFESSIONAL CORP E. Cottonwood Parkway, Suite 500 Salt Lake City, Utah croberts@wasatch-ip.com Attorneys for Defendant Axcess Global Sciences, LLC 7

8 Case 4:15-cv ALM-CAN Document 13 Filed 09/17/15 Page 8 of 8 PageID #: 65 CERTIFICATE OF SERVICE I hereby certify that on September 17, 2015, I caused a true and correct copy of the foregoing document to be filed with the Clerk of Court and served on all counsel of record via CM/ECF pursuant to Local Rule CV-5(a). /s/ Charles L. Roberts 8