United States District Court, E.D. Virginia, Alexandria Division
MEMORANDUM OPINION & ORDER
LIAM O'GRADY UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendant Stephanie Russo
Kowalski's Second Motion to Dismiss (Dkt. 21). Having
reviewed the pleadings and the record, the Court finds that
oral argument would not assist its resolution of this matter.
Court previously granted a Motion to Dismiss by Defendant,
finding that Plaintiffs had failed to state a claim for
fraud. See Dkt. 19. Defendant filed the instant
motion in response to Plaintiffs' Amended Complaint,
seeking dismissal of Plaintiffs' claims for fraud (Count
Two) and constructive fraud (Count Three). See Dkt.
21; Dkt. 22 at 6. For the reasons explained below,
Defendant's motion is GRANTED and
Plaintiffs' fraud claims (Counts Two and Three) are
DISMISSED WITHOUT PREJUDICE.
survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a complaint must contain sufficient
factual information to "state a claim to relief that is
plausible on its face." Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 550 (2007). A motion to dismiss
pursuant to Rule 12(b)(6) must be considered in combination
with Rule 8(a)(2) which requires "a short and plain
statement of the claim showing that the pleader is entitled
to relief," Fed.R.Civ.P. 8(a)(2), so as to "give
the defendant fair notice of what the ... claim is and the
grounds upon which it rests." Twombly, 550 U.S.
"detailed factual allegations" are not required.
Rule 8 demands that a plaintiff provide more than mere labels
and conclusions stating that the plaintiff is entitled to
relief. Id. Because a Rule 12(b)(6) motion tests the
sufficiency of a complaint without resolving factual
disputes, a district court '"must accept as true all
of the factual allegations contained in the complaint'
and "draw all reasonable inferences in favor of the
plaintiff.'" Kensington Volunteer Fire
Dep't v. Montgomery County, 684
F.3d 462. 467 (4th Cir. 2012) (quoting E.I. du Pont de
Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435,
440 (4th Cir. 2011)).
Virginia, to state a claim for fraud, a plaintiff must
allege: (1) a false representation; (2) of a material fact;
(3) that was made knowingly and intentionally; (4) with
intent to mislead; (5) reliance by the party misled; and (6)
resulting damage to the party misled. See Nahigian v.
Juno Loudoun, LLC, 684 F.Supp.2d 731. 738 (F.D. Va.
2010). A party alleging fraud must state the circumstances
constituting fraud with particularity. Id.; Fed. R.
Civ. P. 9(b). The complaint must plead with particularity the
time and place the misrepresentations were made, the contents
of those misrepresentations, the identity of the individual
making the misrepresentations, what the individual making the
misrepresentation gained from making it, and that the
aggrieved party reasonably and detrimentally relied on those
misrepresentations. Sewraz v. Nguyen, No.
3:08-cv-90. 2011 WL 201487, at *8 (E.D. Va. Jan. 20, 2011).
Plaintiffs have alleged that Defendant (1) "regularly
and consistently caused large-sums [of more than $700, 000]
to be diverted from Mr. [Roy] Russo's IRA account... to
her own account and control," and that Defendant did so
when she "knew or should have known" that Mr. Russo
lacked the capacity to make important financial decisions,
and (2) forged Mr. Roy Russo's signature after his death
in order to open a line of credit and take money from his
estate's accounts. Dkt. 20 at ¶¶ 28, 31-32. The
Amended Complaint fails to state a claim as to both
components of the fraud claim.
to the diversion of assets from Mr. Roy Russo's IRA
account, the Amended Complaint does not identify any specific
false representation by Defendant that caused the diversion.
Instead, the Amended Complaint identifies actions by the law
firm of Cohn and Marks and actions by Marc Lippman. See,
e.g., Dkt. 20 at ¶ 16 ("On February 19, 2015,
the law firm of Cohn and Marks caused the decedent's IRA
in the amount of $811.000.00 to be rolled over.");
¶ 18 ("Marc Lippman caused to be transferred $50,
000.00 of the IRA funds of Mr. Russo to the account of
Stephanie Kowalski."). The Amended Complaint describes
Mr. Lippman as Defendant's "agent" and in a
single paragraph claims that Defendant "regularly and
consistently caused large sums totaling cumulatively sums
[sic] in excess of $700, 000.00 to be diverted from Mr.
Russo's IRA account... to her own account and
control." Id. at ¶¶ 20, 28.
Plaintiffs reassert this exact claim in their Opposition,
stating "the defendant regularly and consistently caused
large sums totaling cumulatively in excess of $700, 000 to be
diverted from Mr. Russo's IRA account... to her own
account and control." Dkt. 25 at 4. This sentence
appears to be Plaintiffs' only allegation of an action
taken by Defendant.
do not identify a single specific misrepresentation or
omission by Defendant. Instead, they vaguely assert that
Defendant "through de facto statements, omissions, and
opportunistic endeavors did ... make dc facto
misrepresentations through statements, omissions, and
opportunistic endeavors." Dkt. 20 at ¶ 20. To
justify the lack of specificity in their allegations,
Plaintiffs include a disclaimer asserting that pleading with
particularity is "a challenge" because Mr. Roy
Russo is deceased, and arguing that Plaintiffs will sharpen
their fraud allegations after discovery. Id. at 3,
not sufficient to state a claim. As explained above, the
Amended Complaint must plead fraud with particularity. It is
insufficient to make bare assertions without identifying a
specific misrepresentation or omission by Defendant, let
alone without providing the time, place, and contents of any
misrepresentation. Plaintiffs do not plead any facts related
to how or when Defendant caused Mr. Lippman to make the money
transfers, nor do they explain why Mr. Lippman should be
considered Defendant's "agent" such that his
actions should be attributed to Defendant. Nor do Plaintiffs
allege that they or Mr. Roy Russo relied to their detriment
on any specific misrepresentations or omissions Defendant may
suggest that Defendant had a confidential relationship with
the decedent giving rise to a "presumption to
fraud" and shifting the burden to prove the legitimacy
of the transaction to Defendant. See Id. at ¶ 3
("Stephanie Kowalski... had a confidential and fiduciary
relationship with the decent [sic], Roy Russo."); Dkt.
25 at 9 (citing Econompoloulos v. Kolaitis, 528 S.E.
714, 718 (Va. 2000)). Although it is true that a confidential
relationship gives rise to a presumption of fraud and shifts
the burden of proof, a plaintiff must first establish the
existence of a confidential relationship. See
Econompoloulos, 528 S.E. at 718-19 (declining to find a
confidential relationship based on a long-standing business
relationship between a father and son). A confidential
relationship may exist in a familial relationship that is
accompanied by an attorney-client relationship or by a
principal-agent relationship, or where one family member
provides financial advice or handles the finances of another
family member. Id. at 718. But here, Plaintiffs do
not offer the Court any facts to support their claim that
Defendant and the decedent had a confidential relationship,
Plaintiffs' allegations of a confidential relationship
are just as conclusory and unsupported as their claims of
misrepresentation and omission, and should he rejected on
Plaintiffs also fail to stale a claim for fraud arising from
allegedly forged checks. Although the Amended Complaint meets
most of the elements of fraud with regard to the forged
cheeks (alleging the identity of the person making the
alleged misrepresentations as the Defendant, alleging what
site gained from the misrepresentations as money from Mr. Roy
Russo's bank accounts, and alleging when the
misrepresentations occurred ("alter the death" of
Mr. Roy Russo)), the ...