United States District Court, E.D. Tennessee, Knoxville
MEMORANDUM AND ORDER
PAMELA L. REVEES, District Judge.
This matter is before the court on the defendants' motions to dismiss certain claims contained in plaintiff's First Amended Complaint. Because the allegations of the First Amended Complaint contain sufficient factual matter that is plausible on its face to state a claim for relief on each cause of action, defendants' motions will be denied.
I. Factual Background
Plaintiff Monaco Industries is a limited liability company with its principal place of business in Knoxville, Tennessee. Defendant Market Tech is a Delaware corporation with its principal place of business in California. Market Tech's sole shareholder is defendant Shopper Local, a North Carolina limited liability company. Shopper Local's sole member and manager is defendant Greg Lindberg, a resident of North Carolina.
Monaco is in the business of manufacturing and distributing custom paper rolls for use in on-demand printers. Market Tech and Shopper Local are in the business of printing coupons on the back of receipt paper rolls and distributing those printed paper rolls to their clients.
In 2010, Brian Greenberg, a representative of Market Tech, contacted Monaco. Greenberg said that Lindberg had recently purchased Market Tech, and using Lindberg's finances as assurance, Market Tech wanted to purchase paper products from Monaco. Thereafter, Monaco received purchase orders from Market Tech at the rate of approximately one per week, with instructions to invoice Market Tech at its California address and fax number. On February 13, 2013, Market Tech directed Monaco to invoice Shopper Local at Market Tech's address and fax number; then on April 19, 2013, an order with a fax header reading "From: Shopper Local" directed invoicing back to Market Tech. Some checks for payment were on an account in the name of Market Tech. Then checks began coming from an account in the name of Shopper Local. Based on the manner in which business was conducted, Monaco believed that Market Tech and Shopper Local were one and the same entity utilizing the same address and fax number.
After the purchase orders starting becoming subject to credit holds, Lindberg directly contacted Monaco's Chief Manager, Richard Jansen, by email regarding payments to Monaco and that status of purchase orders. Lindberg requested that Monaco release orders being held for payment and would notify Jansen of payments he was directing to be made to Monaco so as to procure release of orders. Lindberg threatened to terminate business with Monaco if Monaco did not release the hold.
In November, 2012, Jansen met with Lindberg in North Carolina. Lindberg reiterated that he was the sole person with decision making authority as to whether the contract with Monaco would continue and as to all payments, including who the product would be ordered from, how much product would be ordered, how the product would be paid for, and when payment would be made. Lindberg stated that if Monaco wanted to keep the business, it would do so only on Lindberg's certain payment terms, including weekly payments on the receivables, and that any outstanding balance with Monaco would be paid at the end of each month, i.e. , there would be a "sweep" of the receivables accounts. Lindberg further stated that he would personally be involved with the sweep payments and would control such payments. Based on Lindberg's assurances that payments would be timely made, Monaco continued filling Market Tech's and Shopper Local's purchase orders. After the November meeting, several of defendants' checks bounced. Each time, Greenberg told Jansen that he would have to talk with Lindberg, and indicated Lindberg would have to move funds around or somehow get the money to cover the bounced checks. Monaco's invoices were paid, and sweeps of the defendants' accounts occurred monthly from October 2012 to April 2013.
Starting in April 2013, several of defendants' purchase orders were filled by Monaco, but never paid by the defendants. The unpaid invoices included 23 purchase orders totaling $318, 657.22. In early June 2013, Monaco contacted defendants regarding the non-payment. Monaco was told that a check for the May sweep was in process and would arrive on June 11, 2013, and Monaco was asked to continue processing the orders from May as well as new June orders. Relying on this assurance that the May sweep payment was being processed, Monaco shipped three orders totaling $41, 049.00 to defendants in May 2013. In June, Monaco filled two purchase orders from defendants totaling $25, 085.50, and later that month Monaco shipped goods on two more purchase orders totaling $32, 839.20.
On June 18, 2013, a Shopper Local check was returned for in-sufficient funds. Monaco then ceased any further shipments to defendants. On June 21, 2013, Lindberg notified Monaco that he was terminating the business relationship of the defendants with Monaco. Monaco states that Lindberg again offered to pay the outstanding balance of $417, 000 in installments, which he would personally guarantee. No payments were received by Monaco from any of the defendants on this outstanding balance.
Monaco filed suit on November 1, 2013 against Lindberg, Market Tech, and Shopper Local, alleging (1) suit on sworn account; (2) breach of contract; (3) fraud; (4) promissory fraud; (5) negligent misrepresentation; (6) liability on dishonored check; (7) contract interference; (8) civil conspiracy; (9) corporate veil piercing as between Market Tech and Shopper Local; (10) corporate veil piercing as between Lindberg and Market Tech and Shopper Local; and (11) unjust enrichment.
Defendant Lindberg moves to dismiss all claims against him on the following grounds: (1) lack of personal jurisdiction; (2) failure to sufficiently plead the elements of fraud; (3) failure to allege facts that would support piercing the corporate veil so as to predicate personal liability over Lindberg; (4) failure to sufficiently plead claims for interference with contract and civil conspiracy; (5) Monaco's unjust enrichment claim regards the same subject matter as its breach of contract claim and as such, should be dismissed; and last, (6) Monaco's allegation that Lindberg, "regularly engages in a pattern of behavior where products are purchased on credit and delivered and then Lindberg and his entities refuse to pay on the terms previously agreed, " should be stricken as redundant, immaterial, impertinent, or scandalous.
Defendant Shopper Local moves to dismiss all claims against it on the following grounds: (1) lack of personal jurisdiction; (2) failure to sufficiently plead a claim for breach of contract against Shopper Local; (3) failure to sufficiently plead the elements of fraud, negligent misrepresentation, and civil conspiracy; and (4) failure to show a benefit conferred on Shopper Local so as to support a claim for unjust enrichment.
Defendant Market Tech moves to dismiss certain claims against it on the following grounds: (1) Monaco's claim for breach of contract should be dismissed for failure to state a claim upon which relief can be granted; and (2) failure to sufficiently plead claims for fraud, negligent misrepresentation, and civil conspiracy.
Monaco has responded to defendants' motions to dismiss [R. 22, 23, 24, 35, 36]. In addition, Monaco filed its First Amended Complaint on March 25, 2014 [R. 28]. Following the filing of the First Amended Complaint by Monaco, defendant Lindberg filed a motion to dismiss and strike portions of the First Amended Complaint, on the same grounds as previously asserted - lack of personal jurisdiction; failure to plead fraud with particularity; insufficient allegations to support piercing of the corporate veil; insufficient facts to support a claim for interference with contract, civil conspiracy, or unjust enrichment; and to strike Monaco's allegation that Lindberg, "regularly engages in a pattern of behavior where products are purchased on credit and delivered and then Lindberg and his entities refuse to pay on the terms previously agreed, " as redundant, immaterial, impertinent, or scandalous.
Defendant Shopper Local has also filed a motion to dismiss all claims of the First Amended Complaint on the same grounds previously asserted - lack of personal jurisdiction; and insufficient allegations to support piercing the corporate veil as regards to Shopper Local. The court will consider the defendants' various motions to dismiss in light of the First Amended Complaint.
II. Standard of Review
Federal Rule of Civil Procedure 8(a)(2) sets out a liberal pleading standard. Smith v. City of Salem , 378 F.3d 566, 576 n.1 (6th Cir. 2004). Rule 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to give the [opposing party] fair notice of what the... claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson , 355 U.S. 41, 47 (1957)). Detailed factual allegations are not required, but a party's "obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions." Twombly , 550 U.S. at 555. A formulaic recitation of the elements of a cause of action will not do. Id. Nor will an "unadorned, the-defendant-unlawfully harmed me accusation." Ashcroft v. Iqbal , 129 S.Ct. 1937, 1949 (2009). A pleading must instead "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. (quoting Twombly , 550 U.S. at 570). "Determining whether a complaint states a plausible claim for relief will [ultimately]... be a context-specific task that requires the reviewing Court to draw on its judicial experience and common sense." A court considering a motion to dismiss may begin by identifying allegations that, because they are mere conclusions, ...