Ambassador Press, Inc. v. Durst Image Technology U.S., LLC

Background

Ambassador Press, Inc. alleged that Durst Image Technology U.S., LLC made fraudulent statements during negotiations for a commercial printer, service plan, and two-year warranty. The alleged statements concerned the printer’s replacement print-head costs, reliability, and speed. Ambassador purchased the printer on July 12, 2013, and alleged that it performed poorly, required 54 replacement print heads, and caused other operational problems and business losses.

Ambassador originally sued in Minnesota state court for common-law fraud and consumer fraud. After Durst removed the case to federal court, the court dismissed the consumer-fraud claim. Ambassador later amended its complaint and reasserted the common-law fraud claim. Durst moved to dismiss the amended complaint for failure to state a claim under Rule 12(b)(6), which allows dismissal when a complaint does not adequately plead a legally sufficient claim.

Legal Standard

The court explained that Minnesota fraud requires a false representation of a material past or existing fact, knowledge of or disregard for its falsity, an intent to induce reliance, actual reliance, and resulting financial damages. Fraud claims must also satisfy Rule 9(b), which requires the plaintiff to plead the time, place, content, and details of the alleged fraudulent acts with particularity.

Court’s Analysis

The court identified two deficiencies in Ambassador’s fraud claim.

First, the court held that Ambassador had not plausibly alleged that Durst’s representations were false. Ambassador relied on information and belief and argued that Durst’s statements must have been false because Ambassador’s own printer performed poorly. The court concluded that Ambassador’s experience could show that its printer fell short of expectations, but did not by itself show that Durst’s statements about the normal performance of its printers were false. The court therefore found the allegations insufficient under the heightened pleading requirements for fraud.

Second, the court held that Ambassador had not pleaded detrimental reliance with sufficient particularity. Ambassador alleged only that it would not have purchased the printer, service plan, or warranty but for Durst’s representations. The court said Ambassador did not explain how it relied on each alleged misrepresentation or provide factual allegations showing how that reliance caused harm.

Disposition

The court granted Durst’s motion to dismiss and dismissed Ambassador’s amended complaint. The order directed that judgment be entered accordingly. It did not state whether the dismissal was with or without prejudice.