Applying the pleading standards established under Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949-52 (2009) to a UDTPA claim, the Magistrate Judge in Davis v. Beazer Homes, U.S.A., Inc., 1:08CV247 (Nov. 17, 2009, MDNC) recommended finding the plaintiff’s claim sufficient to withstand a motion to dismiss. In that case, the plaintiff alleged, among other things, that the defendants engaged in unfair trade practices under North Carolina law through their alleged sales practices involving certain incentive programs. The defendants moved to dismiss on several grounds, including that the plaintiff failed to plead a proper UDTPA claim.

In considering the motion, the court noted that under the standard set by the Supreme Court in Twombly, if the “allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should be exposed at the point of minimum expenditure of time and money by the parties and the court.” Bell Atlantic Corp. v. Twombly, 550 U.S. at 558 (internal quotation marks, punctuation and citations omitted). After citing to Judge Posner in the Asahi Glass Co. v. Pentech Pharms, Inc., 289 F. Supp.2d 986, 995 (N.D.Ill. 2003) case, the court then analyzed the pleading from a “plausibility” standard.

The court noted that the plaintiff maintained that the “deceptive or misleading” act was the alleged incorporation of the cost of her financial incentives into the total purchase price without disclosing that information to her. The court found “this bedrock allegation” an “adequate assertion in this case and ‘plausibility’ was sufficiently shown under all the circumstances of the case.” It is with respect to this latter point that the court refers to the existence of a deferred prosecution agreement (”DPA”), entered into by Beazer Homes and the U.S. Attorney’s Office, and a criminal information. The court, having reviewed the DPA and a related criminal information, found that “it appears that Beazer Homes has admitted some level of misconduct relating to ‘certain’ of its home sales, as least insofar as federal law is concerned.” The court considered this information “a significant factor in assessing ‘plausibility’ of Plaintiff’s UDTPA claim”, even though the DPA was not part of the amended complaint in the matter (or even in existence at the time). While a court is generally limited to the four corners of the complaint when reviewing the sufficiency of the allegations on a motion to dismiss, here the court apparently stepped outside of the complaint to consider this extraneous information, which had been submitted to the court by the plaintiff as part of another filing in that case. The court referred to other allegations of the complaint as well, but from the court’s opinion, the impact of the DPA is clear.

The Defendants have filed objections to the recommendation of the Magistrate Judge.