Your Best Foot Forward: How a Strong Complaint Is a Necessary Initial STEP Toward Success in Your Georgia Commercial Dispute

On courtroom TV shows, success or failure often occurs in one very sudden “a-ha!” moment at or near the end of a trial. In reality, though, the crucial seeds of success (or failure) are often sowed much earlier. Success in your commercial dispute requires many skillfully executed pretrial steps, including drafting and timely submitting a well-written complaint. Whether you’re in need of trial advocacy or pre-trial help, an experienced Atlanta commercial contracts lawyer can be essential to your success. Last month, we looked at a case between a Georgia-based sports agent (and his agency) and his North Carolina-based financial and tax advisor (and others) in a dispute over unpaid debts. To briefly recap, the latter group sued the former, alleging breach of contract, and in our previous post, we focused upon one of the key issues in the case: precisely when commercial parties do — or do not — have a binding agreement. That case, however, has an additional lesson for the unwary litigant — one unrelated to the rules of contract formation. In that case, the advisor’s claims weren’t the only ones at issue. The agent and his affiliated parties countersued, alleging “fraudulent inducement, fraud, negligent misrepresentation, breach of fiduciary duty, constructive fraud, and civil conspiracy.” Those counterclaims failed, however, and that failure highlights the importance of proper pleading of civil claims in your commercial case. Four of the agent’s six counterclaims were fraud-based: fraudulent inducement, fraud, constructive fraud, and civil conspiracy. That matters because the Federal Rules of Civil Procedure place extra requirements on federal court litigants who pled fraud-based claims. Specifically, the rules demand that the party “state with particularity the circumstances constituting fraud.” The Importance of Pleading Fraud with Particularity… So, what must your pleadings include to meet this “particularity” requirement? In 2011, the 11th Circuit addressed this and said that your complaint (or counter-complaint) must state: ”

1. precisely what statements or omissions were made in which documents or oral representations;
2. the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) them;
3. the content of such statements and the manner in which they misled the plaintiff; and
4. what the defendant obtained as a consequence of the fraud.”

In short, the pleading must answer the “who, what, when, where, and how” questions regarding the fraud. …and Properly Pleading Damages In addition to pleading with particularity, you also have to demonstrate that you suffered actual damages, not just nominal damages, as a result of the other side’s fraud. When doing this, you have to give the court “more than labels and conclusions, and a formulaic recitation of the elements” of your fraud-based cause(s) of action. In the agent’s lawsuit, the crux of the countersuit was that the plaintiffs “fraudulently induced [them] to enter into loans—and even fabricated loans—with exorbitant interest rates and late penalties.” The problem for the counter-plaintiffs, however, was that they had never paid anything on these loans. The harm they alleged — things like “fraudulent inflation of their debt” — constituted hypothetical damages, not actual damages, which did not satisfy the rules’ requirements on pleading damages. Because the agent did not have proper pleadings asserting actual economic loss, the court dismissed its counterclaims. Whatever commercial challenges you’re facing, chances are that the experienced Atlanta commercial contracts attorneys at Poole Huffman, LLC have encountered it (or something very much like it) before. Our experience allows us to customize a solution that works best for your unique situation. Contact us online or by calling 404-373-4008 to schedule your confidential consultation today.