Corpus: 543,223 opinions ·
3,177 judges ·
newest 2026-06-23 · expanding
Coverage ↗
Opinion
govinfo:USCOURTS-tnwd-2_18-cv-02104-11
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
RAYMOND JAMES & ASSOCS., INC., )
)
Plaintiff, )
)
v. ) Case No. 2:18-cv-02104-JTF-tmp
)
50 NORTH FRONT ST. TN, LLC, )
)
Defendant. )
ORDER ADOPTING IN PART AND REJECTING IN PART
THE CHIEF MAGISTRATE JUDGE’S REPORT AND RECOMMENDATION
AND DENYING 50 NORTH’S MOTION TO DISMISS
Before the Court is the Chief Magistrate Judge’s Report and Recommendation (“R & R”)
recommending that the Court grant 50 North’s Motion to Dismiss Raymond James’ Second
Amended Complaint (“SAC”), entered on July 24, 2023. (ECF No. 455.) Raymond James filed
Objections on August 7, 2023. (ECF No. 457.) 50 North filed a Response on August 21, 2023.
(ECF No. 459.) For the reasons below, the Court ADOPTS IN PART and REJECTS IN PART
the Chief Magistrate Judge’s Report and Recommendation and DENIES 50 North’s Motion to
Dismiss.
I. FINDINGS OF FACT
In the Report and Recommendation, the Chief Magistrate Judge provides, and this Court
adopts and incorporates, proposed findings of fact in this case. (ECF No. 455, 3–6.) The Parties
did not file any specific factual objections.
Case 2:18-cv-02104-JDB-tmp Document 491 Filed 04/22/24 Page 1 of 8
PageID <pageID>
2
II. LEGAL STANDARD
A. Standard for District Court Judge’s Review of a Report and Recommendation
Congress passed 28 U.S.C. § 636(b) “to relieve some of the burden on the federal courts
by permitting the assignment of certain district court duties to magistrates.” United States v. Curtis,
237 F.3d 598, 602 (6th Cir. 2001). Pursuant to the provision, magistrate judges may hear and
determine any pretrial matter pending before the Court, except various dispositive motions. 28
U.S.C. § 636(b)(1)(A). Regarding those excepted dispositive motions, magistrate judges may still
hear and submit to the district court proposed findings of fact and recommendations for disposition.
28 U.S.C. § 636(b)(1)(B). Upon hearing a pending matter, “the magistrate judge must enter a
recommended disposition, including, if appropriate, proposed findings of fact.” Fed. R. Civ. P.
72(b)(1); see also Baker v. Peterson , 67 F. App’x 308, 310 (6th Cir. 2003). Any party who
disagrees with a magistrate judge’s proposed findings and recommendation may file w ritten
objections to the report and recommendation. Fed. R. Civ. P. 72(b)(2).
The standard of review that is applied by the district court depends on the nature of the matter
considered by the magistrate judge. See Baker, 67 F. App’x at 310 (citations omitted) (“A district
court normally applies a ‘clearly erroneous or contrary to law’ standard of review for
nondispositive preliminary measures. A district court must review dispositive motions under the
de novo standard.”). Upon review of the evidence, the district court may accept, reject, or modify
the proposed findings or recommendations of the magistrate judge. Brown v. Bd. of Educ., 47 F.
Supp. 3d 665, 674 (W.D. Tenn. 2014); see also 28 U.S.C. § 636(b)(1). Those portions of a Report
and Recommendation to which a party has not specifically objected will be adopted by the Court
as long as those sections are not clearly erroneous. See Fed. R. Civ. P. 72(b); Thomas v. Arn, 474
U.S. 140, 150-52 (1985).
Case 2:18-cv-02104-JDB-tmp Document 491 Filed 04/22/24 Page 2 of 8
PageID <pageID>
3
B. Standard of Review for Failure to State a Claim
When ruling on a Motion to Dismiss, courts must “construe the complaint in the light most
favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor
of the plaintiff.” Royal Truck & Trailer Sales and Service, Inc. v. Kraft , 974 F.3d 756, 758 (6th
Cir. 2020) (quoting Jones v. City of Cincinnati, 521 F.3d 555, 559 (6th Cir. 2008)). Although the
complaint need not contain detailed facts, its “[f]actual allegations must be enough to raise a right
to relief above a speculative level.” Ass’n of Cleveland Fire Fighters v. City of Cleveland , 502
F.3d 545, 548 (6th Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
A complaint is insufficient where it t enders only “naked assertions” ‘devoid of further’ factual
enhancement.” 16630 Southfield Ltd. P’ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 506 (6th Cir.
2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Also, plaintiff must plead ‘sufficient
matter’ to render the legal claims plausible, i.e., more than merely possible.” Fritz v. Charter Twp.
of Comstock, 592 F.3d 718, 722 (6th Cir. 2010) (quoting Iqbal, 556 U.S. at 677). To satisfy this
plausibility standard, a plaintiff must plead more than “labels and conclusions,” “formulaic
recitation of the elements of a cause of action,” or “naked assertions devoid of further factual
enhancement” because such recitations are not subject to the presumption of truth. Id. (alteration
omitted) (quoting Twombly, 550 U.S. at 557). Thus, the ultimate question when considering a
Motion to Dismiss is whether the complaint “contain[s] sufficient factual matter . . . to ‘state a
claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at
570).
III. ANALYSIS
On February 10, 2022, Raymond James filed a Second Amended Complaint alleging a
claim for fraud against 50 North, (ECF No. 393), pursuant to this Court’s order entered on January
Case 2:18-cv-02104-JDB-tmp Document 491 Filed 04/22/24 Page 3 of 8
PageID <pageID>
4
28, 2022 . (ECF No. 391.) On March 7, 202 2, 50 North filed a Motion to Dismiss or, in the
Alternative, Motion to Strike Allegations and Attached Exhibits from Plaintiff’s Second Amended
Complaint. (ECF No. 396.) The Chief Magistrate Judge found that Raymond James’ SAC
plausibly alleged a claim for fraud but found that Raymond James could not bring its fraud claim
under Tennessee law concluding that the claim was barred by the economic loss doctrine. (ECF
No. 455, 10 & 17.) Raymond James filed objections to the R & R taking issue with the Chief
Magistrate Judge’s conclusions of law. (See ECF No. 457, 5-6.)
After a de novo review of the R & R, the Court partially adopts and partially rejects the
conclusions of law. The Court ADOPTS the Chief Magistrate Judge’s finding that Raymond
James plausibly alleged a fraud claim against 50 North and that Tennessee law does not recognize
the independent duty doctrine. For the reasons provided herein, Raymond James’ objection as to
the Chief Magistrate’s findings on whether the economic loss doctrine is applicable in the case is
SUSTAINED.
A. The Independent Duty Rule
Raymond James objects to the R & R’s finding that the independent duty rule is not satisfied
in this case. (ECF No. 457, 8.) The Tennessee Supreme Court “has not adopted the independent
duty doctrine.” Com. Painting Co. Inc. v. Weitz Co. LLC, 676 S.W.3d 527, 541–42 (Tenn. 2023).
Accordingly, Raymond James’ objection the Chief Magistrate Judge’s findings on this issue is
DENIED.
B. Economic Loss Doctrine
Next, Raymond James objects to the R & R’s finding that the economic loss doctrine
precluded its fraud claim under Tennessee law . (ECF No. 457, 8.) The Chief Magistrate Judge
recommended granting 50 North’s Motion to Dismiss based on a finding that the economic loss
Case 2:18-cv-02104-JDB-tmp Document 491 Filed 04/22/24 Page 4 of 8
PageID <pageID>
5
doctrine bars Raymond James’ fraud claim asserted in the SAC because “[t]he alleged
misrepresentations underlying the fraud claim are r elated to 50 North’s duties under the contract
and Raymond James is exclusively seeking economic damages.” (ECF No. 455, 17.) This finding
was based on an interpretation that under Tennessee law, the doctrine applies in cases involving
fraud in the performance of the contract relying on Milan Supply Chain Solutions, Inc. v. Navistar,
Inc., 627 S.W.3d 125 (Tenn. 2021) and Commercial Painting Co., Inc. v. Weitz Co. LLC. , 2022
WL 737468 (Tenn. Ct. App. Mar. 11, 2022).
The economic loss doctrine is a judicially created rule developed in response to products
liability law stemming from a “concern that products liability and tort law would erode or consume
contract law.” Milan, 627 S.W.3d at 142. In Milan, the Tennessee Supreme Court examined the
fraud exception to the economic loss doctrine and held that the economic loss doctrine applies in
products liability cases concerning the quality or character of goods sold. (Id. at 153 –54.) In
Commercial Painting, the Tennessee Court of Appeals extended the economic loss doctrine to
apply to non -product liability cases involving sophisticated commercial entities applying the
Tennessee Supreme Court’s holding in Milan. Com. Painting, 2022 WL 737468, at *24. Recently,
the Tennessee Supreme Court reversed the Tennessee Court of Appeals’ decision and declined to
extend the economic doctrine to services contracts and held that the doctrine applies only in
products liability cases. Com. Painting, 676 S.W.3d at 538.
Therefore, the Court REJECTS the Chief Magistrate Judge’s finding that the economic
loss doctrine bars Raymond James’ fraud claim against 50 North.
C. Raymond James’ Fraud Claim
The Court now considers whether Raymond James’s fraud claim may proceed. As noted
above, the Chief Magistrate Judge concluded that Raymond James otherwise sufficiently alleged
Case 2:18-cv-02104-JDB-tmp Document 491 Filed 04/22/24 Page 5 of 8
PageID <pageID>
6
a fraud claim. ( ECF No. 455, 10.) In response to Raymond James’ objections, 50 North argues
the claim fails to state a fraud claim. (ECF No. 459, 11.) Stating a fraud claim under Tennessee
law requires four elements: (1) intentional misrepresentation of a material fact ; (2) the
representation is made with knowledge of falsity; (3) fraudulent intent to an existing material fact;
and (4) reasonable reliance resulting in damages. Finley v. Kondaur Capital Corp., 909 F.Supp.2d
969, 977 (W.D. Tenn. 2012). Additionally, the claim must satisfy the heightened specificity
requirements under Federal Rule of Civil Procedure 9(b) which provides that “[i]n alleging fraud
or mistake, a party must state with particularity the circumstances constituting fraud or mistake.”
50 North takes issue with the factual allegations upon whi ch the Chief Magistrate Judge
relied upon to arrive at his legal conclusion. 50 North argues that Raymond James was not
defrauded in billing matters and that Raymond James was not due the credit it believes it did not
receive. (ECF No. 459, 11.) 50 North further argues that “[i]n the event [50 North was] successful
in reducing Operating Expenses or Taxes to an amount less than it was during the Base Year, the
Lease does not provide Raymond James with any right to a credit for those savings.” (Id. at. 12.)
Further, 50 North contends that “the Lease only provides Raymond James with a credit in the event
that (i) Raymond James has paid ‘Additional Rent’ for estimated ‘Taxes’ in excess of the ‘Base
Taxes’ and (ii) the actual Taxes in excess of the Base Taxes turn out to be less than the estimate.”
(Id.) Finally, 50 North argues that Raymond James erroneously relies on an unused 2017 form it
found in discovery to base its claim. (Id. at 13.)
Upon review of the record, the Chief Magistrate Judge did not rely solely on the “unused
2017 statement.” He considered other allegations alongside those of the 2017 statement including
“two expense statements with hidden charges and omitted deductions.” (ECF No. 455, 10.) As
Case 2:18-cv-02104-JDB-tmp Document 491 Filed 04/22/24 Page 6 of 8
PageID <pageID>
7
such, nothing in the 50 North’s obj ection to the Chief Magistrate Judge’s finding on the viability
of Raymond James’ fraud claim warrants rejecting the Chief Magistrate Judge’s conclusion.
Accordingly, t he Court agrees with the Chief Magistrate Judge that Raymond James
sufficiently pled a claim for fraud against 50 North and ADOPTS the R & R’s finding.
D. 50 North’s Motion to Strike
In addition to its Motion to Dismiss, 50 North also moved to strike certain allegations in
the SAC that were immaterial to Raymond James’ fraud claim. (ECF No. 396 -1, 1 & 7.) The
Chief Magistrate Judge found that the SAC contained factual allegations that did not pertain to
Raymond James’ fraud claim. (ECF No. 455, 3.) Additionally, the Chief Magistrate Judge found
that the majority of the exhibits attached to the SAC were also irrelevant to Raymond James’ fraud
claim. (Id.) Raymond James did not object to the Chief Magistrate Judge’s finding.
Federal Rule of Civil Procedure 12(f) states “[t]he court may strike fro m a pleading an
insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Courts
should use motions to strike sparingly. Parlak v. U.S. Immigr. & Customs Enf’t , 2006 WL
3634385, at *1 (6th Cir. Apr. 27, 2006). Moreover, a “moti on to strike should be granted only
when the pleading to be striken [sic] has no possible relation to the controversy.” Id. Pleadings
are a complaint, an answer to a complaint, an answer to a counterclaim designated as a
counterclaim, an answer to a cross claim, a third -party complaint, an answer to a third -party
complaint, and if the court orders one, a reply to an answer. Id.; see also Fed. R. Civ. P. 7(a)(1) -
(7). “Exhibits attached to a dispositive motion are not ‘pleadings’ . . . and are therefore not subject
to a motion to strike under Rule 12(f).” Fox v. Michigan State Police Dep’t, 173 Fed. Appx. 372,
375 (6th Cir. 2006). This Court’s order entered on January 28, 2022, (ECF No. 391), only
Case 2:18-cv-02104-JDB-tmp Document 491 Filed 04/22/24 Page 7 of 8
PageID <pageID>
8
permitted Raymond James to file its SAC to the extent that the SAC alleged a claim for fraud. The
allegations and exhibits filed exceed those parameters.
The Court ADOPTS the Chief Magistrate Judge’s finding regarding allegations that
remain in the SAC that are immaterial to Raymond James’ fraud claim. Accordingly, 50 North’s
Motion to Strike is GRANTED IN PART and DENIED IN PART. Any allegations that do not
pertain to Raymond James’ SAC are STRICKEN from the SAC. However, the Motion to Strike
is DENIED with respect to the exhibits filed as they are not pleadings.
IV. CONCLUSION
Accordingly, the Court ADOPTS IN PART and REJECTS IN PART the Chief
Magistrate Judge’s Report and Recommendation and DENIES 50 North’s Motion to Dismiss.
IT IS SO ORDERED this 22nd day of April 2024.
s/John T. Fowlkes, Jr.
JOHN T. FOWLKES, JR.
UNITED STATES DISTRICT JUDGE
Case 2:18-cv-02104-JDB-tmp Document 491 Filed 04/22/24 Page 8 of 8
PageID <pageID>