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Cape Fox Corp. v. Jackson

October 7, 2010

CAPE FOX CORPORATION, AN ALASKA CORPORATION; APM, LLC, AN ALASKA LIMITED LIABILITY COMPANY; AND 1CI, A DELAWARE CORPORATION, PLAINTIFFS,
v.
CRAIG JACKSON; ADVANCE BUSINESS MANAGEMENT SERVICES INC., A NEVADA CORPORATION; SANDERS ENGINEERING CO., INC., A CALIFORNIA CORPORATION; AND BUTLER MARKETING & CONSULTING GROUP, INC., A VIRGINIA CORPORATION; DEFENDANTS.



The opinion of the court was delivered by: Ralph R. Beistline United States District Judge

ORDER REGARDING MOTION TO DISMISS AT DOCKET 34

I. INTRODUCTION

Before the Court are Defendants Craig Jackson ("Jackson"), Sanders Engineering, Co., Inc. ("SEC"), and Advanced Business Management Services, Inc. ("ABMS") (collectively "Defendants") with a Motion to Dismiss at Docket 34. Defendants move to dismiss

Counts I, II, III, V, VI, VIII, XII, and XIII of the First Amended Complaint under Federal Rules of Civil Procedure Rule 12(b)(6), arguing that the Counts fail to state a claim upon which relief can be granted.*fn1 Plaintiffs Cape Fox Corp. ("CFC"), APM, L.L.C. ("APM"), and 1CI Corp. ("1CI") (collectively "Plaintiffs") oppose at Docket 36 and contend that there are valid factual allegations that support each of the eight counts sought to be dismissed and all eight counts should be heard by the trier of fact.*fn2

Because Plaintiffs' fraudulent misrepresentation claim was not pled with particularity; because Plaintiffs' economic damages must be pursued in accordance with the economic loss doctrine; and because business destruction is not a separate claim, but a factor in calculating consequential damages; the Court concludes that a partial dismissal is appropriate. Defendants' Motion to Dismiss, therefore, at Docket 34 is hereby GRANTED IN PART as to Counts III, VI, VIII, and XII of the First Amended Complaint and DENIED IN PART as to Counts I, II, V, and XIII. Additionally, Defendants' Motion to Dismiss at Docket 24 is rendered moot by Plaintiffs' First Amended Complaint and is, therefore, DENIED.*fn3

II. FACTS

This action arises out of a contractual business dispute. CFC is an Alaska Native Corporation ("ANC") based in Ketchikan, Alaska.*fn4 As an ANC, CFC is entitled to participate in Federal Government contracting programs both directly and through its subsidiaries.*fn5

APM's and 1CI's business each consisted primarily of government contracts awarded under the Small Business Administration ("SBA") 8(a) program.*fn6 CFC had acquired a majority interest in APM and was interested in using APM to expand into 8(a) contracting.*fn7 The representatives of CFC and APM met Jackson, who was active in 8(a) contracting.*fn8 Jackson acquired an interest in APM and 1CI and took over management of both companies.*fn9

Through his management position at APM and 1CI, from 2004 through 2006, Jackson caused both companies to enter into agreements with ABMS (which Jackson owned), SEC (Jackson's wife being the president), Butler Marketing & Consulting Group, Inc. ("Butler") (Jackson's sister being the president), and Chung & Associates.*fn10 In addition, in December 2004, Townsend Jackson, Jackson's brother, executed, on behalf of APM, a promissory note in favor of ABMS for a loan of $1.9 million to APM.*fn11

In late 2008, the United States Government began an investigation into the actions of Jackson, ABMS, APM, and 1CI under the SBA 8(a) program, which led to the suspension of APM from contracting under the program.*fn12

In March 2010, Plaintiffs filed a complaint in the Superior Court for the State of Alaska alleging, inter alia, breach of contract, breach of fiduciary duties, and professional negligence on the part of Defendants.*fn13 The matter was then removed to this Court on April 22, 2010.*fn14 The current dispute stems from the actions taken by Jackson as manager of APM and 1CI and the consequences of such actions to Plaintiffs.

III. RULE OF DECISION

Rule 12(b)(6) allows a party to assert by motion that all or part of the opposing party's claims, as stated in the complaint, fail to state a claim upon which relief can be granted. Dismissal can be based on a lack of a cognizable legal theory or the absence of facts to support a valid legal theory.*fn15 A complaint, however, should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief[,]" with the court treating as true all facts alleged in the complaint.*fn16 Furthermore, all reasonable inferences must be drawn in favor of the non-moving ...


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