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McKee Foods Corp. v. Pitney Bowes

March 22, 2007

MCKEE FOODS CORPORATION, PLAINTIFF,
v.
PITNEY BOWES, INC. AND PITNEY BOWES CREDIT CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Judge Mattice

MEMORANDUM AND ORDER

This is a dispute over the performance, or lack thereof, of an automated mailing system which was manufactured by one of the Defendants and leased by the Plaintiff from the other Defendant. Before the Court is Defendants' Pitney Bowes, Inc. and Pitney Bowes Credit Corporation (PBCC) Motion to Dismiss (Court Doc. No. 11). Defendants have attached a copy of the written agreement at issue to their motion. (See Court Doc. No. 11-2, Lease Authorization & Document Describing Equipment.) In response, Plaintiff has filed affidavits in opposition to Defendants' motion. (See Aff. of Dee Ann Price,Court Doc. No. 17; Aff. of Odessa Owen, Court Doc. No. 18.) Plaintiff argues that, in light of this extrinsic evidence, the Court must treat Defendant's motion as one for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.

When one or both parties present matters outside the pleadings in conjunction with a Rule 12(b)(6) motion, the Court may, at its discretion, either consider these matters and convert the motion to one for summary judgment or exclude the extra-pleading materials and apply the standard set forth in Rule 12(b)(6). See Fed. R. Civ. P. 12(b); Shelby County Health Care Corp. v. S. Council of Indus. Workers Health & Welfare Trust Fund, 203 F.3d 926, 931 (6th Cir. 2000); Aamot v. Kassel, 1 F.3d 441, 443 (6th Cir. 1993); Batt v. United States, 976 F. Supp. 1095, 1096-97 (N.D. Ohio 1997) ("The decision to exclude material outside the pleadings is entirely within the discretion of the trial court.").

In this case, the Court will exclude the extra-pleading matters and treat the instant motion as one under Rule 12(b)(6) for two reasons. First, given the current status of the litigation, converting Defendant's Rule 12(b)(6) motion into a motion for summary judgment would be premature. Little or no discovery has taken place so as to allow the parties to argue, and the Court to determine, whether a genuine issue of material fact exists. See Equal Justice Found. v. Deutsche Bank Trust Co. Ams., 412 F. Supp. 2d 790, 799-800 (S.D. Ohio 2005); Black v. Franklin County, No. Civ.A. 3:05-18-JMH, 2005 WL 1993445, at *3 (E.D. Ky. Aug. 16, 2005). Second, it is Plaintiff who attempts to use materials outside of the pleadings to convert Defendants' motion to one for summary judgment. If Defendants had wished to file a motion for summary judgment under Rule 56 they would have done so. Instead, Defendants opted to proceed under Rule 12(b)(6), and have objected to Plaintiff's extra-pleading evidence. The Court will give effect to Defendants' decision to move under Rule 12(b)(6). Accordingly, the Court EXCLUDES the affidavits Plaintiff offers in opposition of Defendants' Motion to Dismiss (Court Doc. No. 17-18.).*fn1

The Court will not, however, exclude the copy of the document attached to Defendants' Motion to Dismiss. In its complaint, Plaintiff repeatedly refers to the "lease" between it and PBCC, but does not attach, or explicitly refer to, the Lease Authorization & Document Describing Equipment which the Defendants attach as Exhibit A to their Motion to Dismiss. The Court is persuaded, however, that this document was intended by the parties to govern the terms of their "lease." Under these circumstances, the Court will treat the Lease Authorization & Document Describing Equipment (this document will hereinafter sometimes be referred to as the "Lease Agreement") as having been incorporated into Plaintiff's complaint by reference, and will consider it as part of the pleadings pursuant to Rule 10(c). Accordingly, this document is appropriate for consideration for purpose of Defendants' instant Rule 12(b)(6) motion. See Weiner v. Klais & Co., 108 F.3d 86, 89 (6th Cir. 1997).

I. FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6) STANDARD

Rule 12(b)(6) provides for the dismissal of a complaint that fails to state a claim upon which relief can be granted. The purpose of Rule 12(b)(6) is to permit a defendant to test whether, as a matter of law, the plaintiff is entitled to relief even if everything alleged in the complaint is true. Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993). A complaint should not be dismissed for failure to state a claim 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." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Arrow v. Fed. Reserve Bank, 358 F.3d 392, 393 (6th Cir. 2004). The complaint must contain either "direct or inferential allegations respecting all the material elements to sustain a recovery . . . ." Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988) (internal quotations and citations omitted). The Court must determine not whether the plaintiff will ultimately prevail but whether the plaintiff is entitled to offer evidence to support his claims. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). In making this determination, the Court must construe the complaint in the light most favorable to plaintiff and accept as true all well-pleaded factual allegations. Arrow, 358 F.3d at 393; Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999). The Court need not accept as true mere legal conclusions or unwarranted factual inferences. Id.

II. ANALYSIS

Plaintiff concedes that some of its causes of action will not survive Defendants' Motion to Dismiss. Plaintiff offers to strike its claims of negligence and negligent misrepresentation against both Defendants and its claim for breach of (implied) warranty against Defendant PBCC. The Court will treat Plaintiff's offer as a motion pursuant to Rule 41(a)(2), and will GRANT the same. The remaining portions of Plaintiff's Complaint challenged by Defendants' Motion to Dismiss are as follows: Plaintiff's breach of contract claim against PBCC, Plaintiff's Tennessee Consumer Protection Act claims against both Defendants, and Plaintiff's fraudulent misrepresentation against both Defendants. The Court will address each in turn.

A. Breach of Contract

Plaintiff's breach of contract claim against PBCC turns on whether PBCC expressly warranted the performance of the equipment which is the subject of the Lease Agreement.

In cases such as this, which arise under the Court's diversity jurisdiction under 28 U.S.C. § 1332, the Court must apply the choice of law rules of the state in which the Court sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Andersons, Inc. v. Consol, Inc., 348 F.3d 496, 501 (6th Cir. 2003). In Tennessee, in the absence of a choice of law provision in a contract, the law of the place where a contract is made governs the construction and validity of the contract. Ohio Cas. Ins. Co. v. Travelers Indem. Co., 493 S.W.2d 465, 466 (Tenn. 1973). In a situation where the contract was negotiated by correspondence sent through the mail, as appears to be case with respect to the Lease Agreement, "the contract is consummated the moment the letter of acceptance is deposited in the mail . . . ." College Mill Co. v. Fidler, 58 S.W. 382, 384 (Tenn. Ct. Ch. App. 1899); see also 16 Am. Jur. 2d Conflict of Laws § 99 ("[T]he offer is accepted when the acceptance is properly placed in the mail . . . . Hence, . . . the place of contracting is where the letter of acceptance is mailed . . . ."). Because the Lease Agreement appears to have been executed by Plaintiff's representative in Tennessee, Tennessee contract law applies.

Under Tennessee law, "[t]he central tenet of contract construction is that the intent of the contracting parties at the time of executing the agreement should govern." Planters Gin Co. v. Fed. Compress & Warehouse Co., 78 S.W.3d 885, 890 (Tenn. 2002). The Court's role in resolving disputes regarding contract interpretation is to glean the intention of the parties based upon the usual, natural, and ordinary meaning of the language used in the written agreement. Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999). Where the language of the contract is clear and unambiguous, its literal meaning controls the outcome of contract disputes. Planters Gin Co., 78 S.W.3d at 890. In such a situation, contractual interpretation is a matter of law, Petty v. Sloan, 197 Tenn. 630, 277 S.W.2d 355 (1955), and may be addressed on a motion under Rule 12. When a contract's terms are ambiguous, however, interpretation is a question of fact, Hendrix v. City of Maryville, 431 S.W.2d 292 (Tenn. Ct. App. 1968), and is not appropriately decided in the context of Rule 12. A contract's terms are ambiguous only when they are susceptible to more than one reasonable interpretation. Planters Gin Co., 78 S.W.3d at 890.

Thus, the Court must first determine whether the Lease Agreement contains ambiguous terms. Plaintiff argues that certain representations PBCC made amount to an express warranty, that this express warranty contradicts the Lease Agreement's various provisions disclaiming a warranty of performance of the leased equipment, and that, therefore, the Lease Agreement is at least ambiguous as to whether PBCC warrants the performance of the leased equipment. In light of ...


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