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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND SOUTHERN DIVISION

MY NATIONAL TAX & INSURANCE SERVICES, INC., Plaintiff, v. H&R BLOCK TAX SERVICES, INC., Defendant. Civil Action No. 8:10-cv-02411-AW

MEMORANDUM OPINION My National Tax & Insurance Services, Inc. brings this action against Defendant H&R Block Tax Services, Inc. Plaintiff asserts claims for (1) fraud and misrepresentation and (2) breach of contract. Pending before the Court is Defendant's Motion to Dismiss Plaintiff's Fraud Claim ("Motion to Dismiss"). The Parties have fully briefed the matter and the Court deems no hearing necessary. For the reasons that follow, the Court GRANTS Defendant's Motion to Dismiss. I. FACTUAL AND PROCEDURAL BACKGROUND This case arises from a series of business negotiations that culminated in Plaintiff My National Tax & Insurance Services, Inc. ("My National") becoming a franchisee of Defendant H&R Block Tax Services, Inc. ("HR Block"). The Court takes the following facts from My National's Amended Complaint and assumes their truth for the purpose of ruling on the instant Motion.

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In June 2006, HR Block representative Carroll Koon ("Koon") approached My National regarding converting its business into an H&R Block franchise. Shortly thereafter, My National and HR Block started negotiating the terms of the conversion. On July 6, 2007, the Parties entered into a Franchise License Agreement and Conversion Agreement ("Agreement") for the conversion of My National into an H&R Block franchise. The Agreement provided that HR Block was to pay My National an amount of $450,000.00 in two installments. Specifically, the Agreement provided that HR Block owed the initial payment of $225,000 upon its execution and the final payment of $225,000 no later than sixty days following its first anniversary. My National executed the Agreement without noticing that the Agreement conditioned payment of the second installment of $225,000 on the number of returns My National prepared during the first year following the execution of the Agreement. Specifically, My National had to prepare 4,105 returns as a condition of receiving the full $225,000 payment. My National alleges that, in the prelude to the Parties' consummation of the Agreement, Koon conducted a "due diligence review." Allegedly, "[i]t was apparent from the due diligence [review] that the most tax returns [that can be] prepared within the same demographic area within a year is 2,600." In other words, My National alleges that Koon knew that My National could not reach the performance target. In October 2007, My National discovered that the Agreement conditioned receipt of the $225,000 on completion of the performance target. My National protested, whereupon the Parties engaged in a series of discussions regarding the performance target. Allegedly, My National "contacted the Director of [the] Franchise Department at Defendant's headquarters in Kansa[s] City and was advised that they [sic] will look into the discrepancy and rectify it." My National also alleges that HR Block eventually advised it that it was entitled to receive only

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$72,241.17 of the disputed $225,000 sum. According to My National, the Agreement obligated HR Block to make the final payment--irrespective of amount--on September 4, 2008. My National asserts, however, that HR Block failed to make even the $72,241.17 payment until February 6, 2009. On July 6, 2010, My National sued HR Block in the Circuit Court for Prince George's County, Maryland, asserting claims for fraud and misrepresentation and breach of contract. Shortly after it removed the case, HR Block moved for a more definitive statement. Doc. 12. The Court granted HR Block's motion in an Order issued on July 8, 2011. Doc. 20. In its Order, the Court ruled that, in contravention of Rule 9 of the Federal Rules of Civil Procedure, My National failed to plead its fraud and misrepresentation claim with particularity. A couple of weeks later, My National filed an Amended Complaint. Doc. 23. On August 4, 2011, HR Block filed the instant Motion to Dismiss. Doc. 24. II. STANDARD OF REVIEW The purpose of a motion to dismiss is to test the sufficiency of the plaintiff's complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). In two recent cases, the U.S. Supreme Court has clarified the standard applicable to Rule 12(b)(6) motions. Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). These cases make clear that Rule 8 "requires a `showing,' rather than a blanket assertion, of entitlement to relief." Twombly, 550 U.S. at 556 n.3 (quoting Fed. R. Civ. P. 8(a)(2)). This showing must consist of at least "enough facts to state a claim to relief that is plausible on its face." Id. at 570. In deciding a motion to dismiss, the court should first review the complaint to determine which pleadings are entitled to the assumption of truth. See Iqbal, 129 S. Ct. at 1949

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Maryland Law