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Edmondson v. Thrifty Payless, Inc.

United States District Court, D. Oregon

September 19, 2018

MICHAEL S. EDMONDSON, Plaintiff,
v.
THRIFTY PAYLESS, INC., a foreign Corporation dba RITE AID, Defendant; MICHAEL S. EDMONDSON, Plaintiff,
v.
EDWARD P. FITCH, ATTORNEY, Defendant; THRIFTY PAYLESS, INC., a foreign Corporation dba RITE AID, Third-Party Plaintiff,
v.
LISA D. EDMONDSON, and REDMOND PHARMACY, LLC, an Oregon Limited Liability Company, Third-Party Defendants.

          OPINION AND ORDER

          MICHAEL MCSHANE UNITED STATES DISTRICT JUDGE

         Plaintiff Michael S. Edmondson brings this action for breach of contract, fraudulent misrepresentation, and negligent misrepresentation against Thrifty Payless, Inc., dba Rite Aid. Rite Aid moves under Federal Rule of Civil Procedure 12(b)(6) to dismiss Edmondson's fraudulent and negligent misrepresentation claims. The Court scheduled oral argument by telephone on the motion and mailed instructions to Edmondson. Edmondson did not appear.

         Under Edmondson's alleged facts, there can be no cognizable claim of fraudulent misrepresentation because: (1) Edmondson was not ignorant of the falsity of Rite Aid's alleged statement; (2) Edmondson could not reasonably rely on Rite Aid's alleged statement; and (3) Edmondson had no right to rely on the truth of Rite Aid's alleged statement. There can be no cognizable claim of negligent misrepresentation because there was no special relationship between Edmondson and Rite Aid; each party acted at arm's length in its own economic best-interests. Rite Aid's motion to dismiss is GRANTED, and Edmondson's fraudulent and negligent misrepresentation claims are dismissed with prejudice.

         BACKGROUND

         Michael and Lisa Edmondson owned Redmond Pharmacy & Compounding Center (RPCC), a pharmacy in Redmond, Oregon that they sold to Rite Aid on either October 20 or October 30, 2015.[1] SAC ¶¶ 10, 13. After previous preliminary negotiations between Rite Aid and the Edmondsons did not progress, Rite Aid expressed renewed interest in purchasing RPCC on June 15, 2015. SAC ¶¶ 6-7. The broker provided Rite Aid a self-audit of RPCC “indicating there was a current investigation into RPCC and Plaintiff by the [OBOP].” SAC ¶ 7. On June 26, “Rory Lambert, an employee of Thrifty conducted an in-person audit of RPCC. These discussions included information about the OBOP investigation of the plaintiff.” SAC ¶ 8. On August 24, 2015, Edmondson completed an application for employment with Rite Aid. SAC ¶ 22. “On this application plaintiff indicated that there was an investigation pending on his professional license.” SAC ¶ 22. Michael Edmondson was under investigation by the Oregon Board of Pharmacy (OBOP) throughout the sale and employment negotiations. SAC ¶¶ 7-8, 11-13, 15, 18, 20, 22, 27, 29-30, 33, 38, 48-50, 59, 64.

         On September 7, 2015, Rite Aid offered Edmondson a job as a pharmacist. SAC ¶ 23. On October 30, 2015, the Edmondsons and Rite Aid signed the RPCC purchase and sale agreement. SAC ¶ 13. On November 2, 2015, Lambert asked Edmondson to submit to a second background check. On November 16, 2015, Lambert told Edmondson the hire could proceed as Edmondson cleared the background check. SAC ¶ 32. On November 18, 2015, Edmondson's official employment as a pharmacist with Rite Aid began. SAC ¶ 16. Edmondson's employment with Rite Aid did not last long; Right Aid suspended Edmondson without pay on December 17, 2015, after “Lambert claimed that Rite Aid and he had no knowledge of the details of the OBOP investigation.” SAC ¶ 18. On December 21, 2015, Rite Aid terminated Edmondson. SAC ¶ 19.

         STANDARD OF REVIEW

         To survive a motion to dismiss under rule 12(b)(6), a complaint must contain sufficient factual matter that “state[s] a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face when the factual allegations allow the court to infer the defendant's liability based on the alleged conduct. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). The factual allegations must present more than “the mere possibility of misconduct.” Id. at 678.

         While considering a motion to dismiss, the court must accept all allegations of material fact as true and construe them in the light most favorable to the non-movant. Burget v. Lokelani Bernice Pauahi Bishop Trust, 200 F.3d 661, 663 (9th Cir. 2000). But the court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555. If the complaint is dismissed, leave to amend should be granted unless the court “determines that the pleading could not possibly be cured by the allegation of other facts.” Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995).

         DISCUSSION

         Edmondson's fraudulent and negligent misrepresentation claims are predicated on Rite Aid's statement to Edmondson that his background was clear. Edmondson argues that he was harmed when he detrimentally relied on the statement that his background was clear. Edmondson claims that Rite Aid's statement induced him to: (1) sell RPCC to Rite Aid without consideration of other possible buyers, and (2) seek employment only with Rite Aid to the exclusion of other possible job opportunities. Because the alleged facts in Edmondson's complaint viewed in the light most favorable to him do not support a fraudulent misrepresentation or negligent misrepresentation claim, Rite Aid's motion to dismiss is granted. I discuss each claim in turn.

         1. Fraudulent Misrepresentation

         Rule 9(b) of the Federal Rules of Civil Procedure requires a party alleging fraud to “state with particularity the circumstances constituting fraud.” Rite Aid argues that Edmondson does not allege the particular facts necessary for a fraudulent misrepresentation claim in his Second Amended Complaint. I agree.

         Edmondson's pleadings, as a pro se litigant, should be construed liberally and given the benefit of the doubt. King v. Atiyeh, 814 F.2d 565, 567 (9th Cir. 1987); Erickson v. Pardus, 551 U.S. 89, 94 (2007). However, the court cannot make out of whole cloth the facts necessary to support a claim when they are not pleaded and cannot be inferred from facts pled. See Gibson v. United States, 781 F.2d 1334, 1340 (9th Cir. 1986) (quoting Ivey v. Board of Regents, 673 F.2d 266, 268 (9th Cir. 1982) (Explaining that the court “may not supply essential elements of the claim that were not initially pled.'”)). Edmondson's admission in his Second Amended ...


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