Scowcroft Group, Inc. v. Toreador Resources Corp.

Citation: Not availableDocket: Civil Action No. 2009-1107

Court: District Court, District of Columbia; October 26, 2009; Federal District Court

Original Court Document: View Document

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The Scowcroft Group, Inc. (Plaintiff), a Maryland corporation based in Washington, D.C., filed a lawsuit against Toreador Resources Corp. (Defendant), a Delaware corporation with its principal place of business in Dallas, Texas, for breach of contract, unjust enrichment, and fraud. The dispute arises from a Retainer and Consulting Agreement entered on December 7, 2007, wherein Plaintiff was to assist Defendant with business operations and facilitate the sale of an offshore natural gas concession, the South Akcakoca Sub-Basin (SASB). 

Plaintiff alleges that Defendant failed to pay a success fee of 1.5% of the transaction's value upon completion of services, despite performing additional work beyond the initial contract scope, including structuring the sale and obtaining necessary government approvals. Defendant was specifically exempt from paying a success fee for investments made by Petrol Ofisi but agreed to pay the fee on investments made by the Dogan Group. 

After the SASB Transaction closed on March 9, 2008, for $55 million, Plaintiff claimed entitlement to $825,000 based on the success fee. Defendant allegedly acknowledged this obligation in representations made on multiple occasions, including November 6, 2008, December 15, 2008, and January 22, 2009. Despite requests for payment made by Plaintiff in March and April 2009, Defendant refused payment on May 11, 2009, prompting the lawsuit.

Defendant's motion to dismiss asserts three primary arguments: 1) Plaintiff is not entitled to any fee under the terms of the Contract; 2) unjust enrichment claims are inadmissible due to the existence of an express contract; and 3) Plaintiff's fraud claim lacks the requisite specificity. The motion is ultimately denied. 

Legal standards under Federal Rule of Civil Procedure 12(b)(6) focus on the sufficiency of the complaint, requiring a "short and plain statement" that provides the defendant fair notice of the claims and their grounds. While detailed factual allegations are not mandatory, the complaint must assert more than mere labels or conclusions, demonstrating a plausible entitlement to relief. The court considers the complaint's allegations as true, alongside any documents attached or judicially noticeable facts, and must not accept legal conclusions without factual support.

Additionally, under Rule 9(b), claims of fraud must be stated with particularity, detailing the circumstances including time, place, content of misrepresentations, and the consequences of the fraud, although intent and knowledge can be alleged generally. The rules of pleading under 8(a) and 9(b) are complementary, necessitating that complaints meet both standards for claims of fraud.

The rule aims to prevent lawsuits solely intended for nuisance and protects defendants from baseless claims of moral wrongdoing. Rule 9(b) requires plaintiffs to provide specific details about alleged fraudulent activities, including identifying individuals involved. Although malice and intent can be generally alleged, this generality is relative to the specificity required in fraud cases. 

In analyzing Count I for breach of contract, the plaintiff claims the defendant is obligated to pay a 1.5% success fee related to investments from the Dogan Group. The contract states that Toreador would not owe a success fee if Petrol Ofisi, which has significant Dogan Group ownership, is involved as an investor. The defendant argues that the transaction is a sale to Petrol Ofisi, not the Dogan Group, and thus no fee is owed under the contract's terms, which the plaintiff acknowledges. However, the court finds the contract's language ambiguous and must accept the plaintiff's allegations as true for the motion to dismiss. The plaintiff asserts it played a critical role in the transaction and that the Dogan Group remains a key investor. 

Despite defining the transaction as a sale to Petrol Ofisi, it is unclear whether the Dogan Group was involved as an investor, given its substantial ownership stake in Petrol Ofisi. The court cannot dismiss the claim at this stage. The plaintiff also contends that the contract was modified based on written representations from the defendant regarding the success fee, but does not assert that these modifications were intended to change the original contract terms defined in the complaint.

Allegations in the Complaint are controlling, and the Court will not consider unpleaded theories. Under D.C. law, a claim for unjust enrichment cannot coexist with an express contract between parties; however, plaintiffs may plead alternative theories of recovery, including both breach of contract and unjust enrichment, at the pleading stage. This approach is supported by Federal Rules of Civil Procedure, which advocate for justice in pleadings. 

Regarding the fraud claim, Defendant contends that Plaintiff has not met the particularity requirement set by Federal Rule 9(b). To establish fraud, a plaintiff must demonstrate (1) a false representation, (2) regarding a material fact, (3) known to be false, (4) made with intent to deceive, and (5) relied upon by the victim. Plaintiff alleges that Defendant agreed to pay a success fee on specific dates and asserts that these representations were false and made with intent to deceive. Despite not identifying the individual who committed the fraud, Plaintiff provides specific dates and details about the misrepresentations, which are adequate to inform the Defendant of the alleged fraudulent conduct.

Consequently, the Court will deny Defendant's motion to dismiss the Complaint. An order will follow this memorandum opinion dated October 26, 2009, signed by Judge Rosemary M. Collyer.