Porter Capital Corporation v. Johns Manville Inc
MEMORANDUM OPINION. Signed by Judge R David Proctor on 6/14/13. (ASL)
2013 Jun-14 PM 03:41
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
JOHNS MANVILLE, INC.,
Case No.: 2:12-CV-00925-RDP
Before the court is Defendant’s Motion for Judgment on the Pleadings (Doc. #28), filed
under seal on March 22, 2013. The Motion (Doc. #28) has been full briefed (See Docs. #28, #30,
#31) and is properly under submission. For the reasons outlined below, Defendant’s Motion (Doc.
#28) is due to be denied.
BACKGROUND AND RELEVANT FACTS
Plaintiff initiated this action by filing a Complaint (Doc. #1) on March 22, 2012. Plaintiff
alleges that it entered into a Commercial Financing Agreement (“Financing Agreement”) with HB
Logistics, LLC d/b/a McGriff Transportation (“HB Logistics”) on February 25, 2011. (Doc. #1 at
¶ 8). HB Logistics provides transportation carrier services to various companies. (Doc. #1 at ¶ 6).
During 2011, HB Logistics provided transportation carrier services to Defendant for which it issued
invoices to Defendant. (Doc. #1 at ¶ 7). Under the terms of the Financing Agreement entered into
between Plaintiff and HB Logistics, Plaintiff extended a line of credit to HB Logistics in the amount
of $3,500,000.00. (Doc. #1 at ¶ 8). Pursuant to the Financing Agreement, HB Logistics sold,
assigned, transferred, and delivered to Plaintiff certain accounts receivable generated by HB
Logistics. (Doc. #1 at ¶ 9). The accounts receivable that Plaintiff purchased and received from HB
Logistics included accounts receivable on which Defendant is the account debtor. (Doc. #1 at ¶ 10).
Plaintiff claims that “all right, title, and interest HB Logistics” had in these accounts receivable have
been transferred to Plaintiff. (Doc. #1 at ¶ 11). Upon this assignment, Plaintiff asserts that it is
entitled to all amounts due and owing on the invoices. (Doc. #1 at ¶ 12).
Plaintiff also maintains that on or before April 13, 2011, Plaintiff and HB Logistics provided
an authenticated notification of the assignment to Defendant, Defendant received the notification,
and thereafter Defendant was to make all payments to Plaintiff. (Doc. #1 at ¶ 13). Plaintiff’s
“records indicate that [Defendant] made payment on certain [invoices] to HB Logistics and/or other
third parties on or after” receiving notification of the assignment. (Doc. #1 at ¶ 14). Plaintiff claims
that Defendant failed to make payment on certain other invoices. (Doc. #1 at ¶ 14). Plaintiff
maintains that Defendant has refused to pay Plaintiff amounts that are due on the invoices that
Defendant either paid to HB Logistics or another third party and on those that remain unpaid. (Doc.
#1 at ¶ 15). Plaintiff’s Complaint presents six claims for relief: breach of contract (Count I); unjust
enrichment (Count II); account stated (Count III); open account (Count IV); quantum meruit (Count
V); and wrongful payment (Count VI);
Defendant argues that Plaintiff’s breach of contract claim (Count I) fails a matter of law
because: (1) the right Plaintiff seeks to vindicate (the right to receive direct payment from Defendant)
is one that neither HB or Plaintiff ever possessed; (2) even if Defendant had an obligation to pay
Plaintiff, the notice of assignment Plaintiff provided to Defendant was insufficient to trigger any
obligation because the notice did not comport with the requirements established in the contract
between Defendant and HB; and (3) the Federal Aviation Administration Authorization Act of 1994,
49 U.S.C. § 14501(c)(1) (“FAAAA”), preempts the enactment or enforcement of state laws in a
manner related to the prices, routes, and services of a motor carrier. Defendant further asserts that
Plaintiff’s equitable claims (Counts II-VI) fail as a matter of law because: (1) Plaintiff’s own
allegations demonstrate that it is not entitled to recovery on some of these counts and/or that these
counts are incompatible with the alleged contract that is the subject of the Complaint; and (2) they
are preempted by the FAAAA.
STANDARD OF REVIEW
The Federal Rules of Civil Procedure provide that “[a]fter the pleadings are closed–but early
enough not to delay trial–a party may move for judgment on the pleadings.” Fed. R. Civ. P. 12(c).
When reviewing a motion for judgment on the pleadings, the court accepts the facts in the complaint
as true and construes them in the light most favorable to the nonmoving party. See e.g., Horsley v.
Feldt, 304 F.3d 1125, 1131 (11th Cir. 2002); Ortega v. Christian, 85 F.3d 1521, 1524-25 (11th Cir.
1996). The court may enter a judgment on the pleadings “only when the plaintiff can prove no set
of facts in support of his claim which would entitle him to relief.” Moore v. Liberty Nat’l Life Ins.,
267 F.3d 1209, 1213 (11th Cir. 2001). Furthermore, a judgment on the pleadings is appropriate
when “no issues of material fact exist, and the movant is entitled to judgment as a matter of law.”
Ortega, 85 F. 3d at 1524.
A judgment on the pleadings is limited to consideration of “the substance of the pleadings
and any judicially noticed facts.” Bankers Ins. Co. v. Fla. Residential Prop. & Cas. Underwriting
Ass’n, 137 F.3d 1293, 1295 (11th Cir. 1998). If, on a motion for judgment on the pleadings, the
court considers matters outside the pleadings, “the motion must be treated as one for summary
judgment under Rule 56.” Fed. R. Civ. P. 12(d). However, the court has discretion to consider
documents outside the pleadings without converting a motion for judgment on the pleadings into a
motion for summary judgment when the court finds that two conditions are satisfied: (1) the
document must be central to the plaintiff’s claims, and (2) the authenticity of the document must not
be in dispute. E.g., Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005); Horsley 304 F. 3d at 1134;
see also 5C Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1371, at 273
(3d ed. 2004) (“It is within the district court’s discretion whether to accept extra-pleading matter on
a motion for judgment on the pleadings and treat it as one for summary judgment or to reject it and
maintain the character of the motion as one under Rule 12(c).”).
The Penultimate Issue of Extraneous Documents
Initially, the court must determine whether to exercise its discretion and consider four
documents proffered by Defendant, all of which are not part of the pleadings. This threshold
determination affects the court’s ultimate holding. Defendant submits that the court should consider
the following items in considering its Motion for Judgment on the Pleadings: (1) the Contract Carrier
Agreement between Defendant and HB Logistics; (2) a Powertrak Freight Payment Service for
Sellers Agreement entered into between U.S. National Bank Association (“U.S. Bank”) and HB
Logistics; (3) a Powertrak Global Services Agreement entered into between U.S. Bank and
Defendant; and (4) the notice of assignment sent by Plaintiff and HB Logistics to Defendant.
Regarding the first three documents, Defendant maintains that they are central to Plaintiff’s
claims because these contracts establish the “right, title, and interest” to which Plaintiff asserts it is
entitled. Defendant maintains that HB (and ultimately Plaintiff’s) right to be paid on the accounts
was established through a combination of these three contracts. (Doc. #28 at pg. 4). According to
Defendant, HB was only entitled to payment from a third party, U.S. Bank, upon submission of
certain shipment and delivery information. (Doc. #28 at pgs. 4-6). Therefore, Defendant argues that
HB could not assign (and Plaintiff could not receive) the right to direct payment from Defendant.
In order to determine whether the court will exercise its discretion and consider these documents as
part of Defendant’s Motion for Judgment on the Pleadings, the court must first examine whether the
documents are central to Plaintiff’s claims.
To determine whether these documents are central to Plaintiff’s claims, the court refers to
the elements of a breach of contract claim under Alabama law, which are: “(1) a valid contract
binding the parties; (2) the plaintiff’s performance under the contract; (3) the defendant’s
nonperformance; and (4) resulting damages.” Shaffer v. Regions Fin. Corp., 29 So. 3d 872, 880
Thus, in order to prove its breach of contract claim, Plaintiff must establish that
Defendant was under an initial obligation to pay HB, and by assignment to pay Plaintiff, the amounts
owed. As Defendant correctly notes, HB could only assign rights to Plaintiff that HB actually
possessed. See e.g., Singer Asset Fin. Co., L.L.C. v. Conn. Gen. Life Ins. Co., 975 So. 2d 375, 380
(Ala. Civ. App. 2007) (“When a party assigns its rights under a contract to an assignee, the assignee
steps into the shoes of the assignor and possesses all the rights the assignor originally possessed, but
nothing more.”). The contracts Defendant urges the court to consider very well may be central to
Plaintiff’s breach of contract claim in this regard. However, not only must these documents be
central to Plaintiff’s claims, but also their authenticity must not be disputed. Here, the second
condition is not satisfied.
In its Response, Plaintiff asserts that these “alleged contracts...are not undisputed” and that
because discovery has not been completed “the authenticity and/or effectiveness of the documents
has not been determined.” (Doc. #30 at pgs. 14-15). Because Plaintiff disputes the authenticity of
these contracts, the court may not consider them on Defendant’s Motion for Judgment on the
Pleadings. See e.g., Day, 400 F.3d at 1276; Horsley 304 F. 3d at 1134.
Next, the court finds that it may consider the notice of assignment. Whether Defendant
received notice of the assignment of the right to be paid under the accounts receivable is central to
Plaintiff’s breach of contract claim. Further, Plaintiff referred to the notice in its Complaint. (See
Doc. #1 at ¶¶13, 18, 28, 42). Although referred to, the actual notice is not attached to Plaintiff’s
Complaint. However, a sample notice is attached as part of the Financing Agreement. (Doc. #1, Ex.
A at pg. 11). Because (1) Plaintiff alleges Defendant received proper notice and (2) this notice is
referred to in Plaintiff’s Complaint, the court finds it is central to Plaintiff’s breach of contract claim.
The next question is whether the authenticity of the actual notice attached to Defendant’s Motion is
disputed. Certainly, Defendant does not question the authenticity of this document. And, although
Plaintiff disputes the authenticity of the three contracts discussed above, it does not explicitly
challenge the authenticity of the notice. Therefore, because the notice is central to Plaintiff’s claims
and because neither party has disputed the authenticity of the attached notice of assignment, the court
may consider the notice of assignment attached as Exhibit 4 to Defendant’s Motion.1 See e.g., Day,
400 F.3d at 1276; Horsley 304 F. 3d at 1134.
Although the court may consider the Notice of Assignment, as explained in greater detail below, Defendant’s
allegations regarding insufficient notice are dependent upon terms contained in the Contract Carrier Agreement between
Defendant and HB Logistics (See Doc. #28 at pgs. 14-15), which the court has already concluded it will not consider.
Accordingly, although the court may consider the Notice of Assignment, it will not do so to the extent Defendant
maintains it does not comport with the Contract Carrier Agreement.
The Question of the Parties’ Arguments on the Merits
Breach of Contract (Count I)
As outlined above, the court will not consider the three contracts attached to Defendant’s
Motion. Thus, at this stage, the court cannot rule upon the merits of Defendant’s first two arguments
regarding Plaintiff’s breach of contract claim. First, Defendant’s initial argument that Plaintiff’s
breach of contract claim fails because HB did not possess a right to be paid directly by Defendant,
and thus could not assign this right to Plaintiff, requires that court to examine the three contracts.
Because the authenticity of the documents is disputed, the court cannot consider these contracts.2
As it currently stands, the court finds that Plaintiff’s allegations, taken as true, state a prima facie
case for breach of contract.
Second, the court cannot determine whether the alleged notice of
assignment was effective under the Contract Carriers Agreement between Defendant and HB without
considering the contract itself. Because the court will not consider the Contract Carriers Agreement
at this stage, it is impossible to determine: (1) whether the notice of assignment must comply with
the notice provision of that document; and, if so, (2) whether the notice in this case was indeed
effective. Accordingly, Defendant’s Motion on Plaintiff’s breach of contract claim is due to be
granted, if at all, on the FAAAA preemption issue, which the court considers below.
The FAAAA’s preemption clause provides that “a State...may not enact or enforce a law,
regulation, or other provision having the force and effect of law related to a price, route, or service
of any motor carrier.” 49. U.S.C. § 14501(c)(1). Congress borrowed this language from the
preemptive provision of the Airline Deregulation Act (“ADA”), and courts interpreting the
Additionally, given its discretion to consider these documents outside the pleadings, the court prefers that the
parties brief the issue of what right, title, or interest HB could assign to Plaintiff, if it remains, at the summary judgment
stage, when the court considers the merits of Plaintiff’s claims.
preemptive scope of the FAAAA have relied upon authority addressing the preemptive scope of the
ADA. See e.g., Rowe v. N.H. Motor Transport Ass’n, 552 U.S. 364, 368 (2008); Barber Auto Sales
v. United Parcel Servs., Inc., 494 F. Supp. 2d 1290, 1293-94 (N.D. Ala. 2007); Deerskin Trading
Post, Inc. v. United Parcel Serv. of Am., Inc., 972 F. Supp. 665, 668 (N.D. Ga. 1997).
The “related to” language of both the ADA and FAAAA has been interpreted broadly, and
the Supreme Court has concluded that these words have an expansive sweep. See Morales v. Trans
World Airlines, Inc., 504 U.S. 374, 384 (1992) (stating that the ADA preemption clause is not
limited to state action actually prescribing rates, routes or services, but that it applies to any action
“having a connection with or reference to...rates, routes, or services”). See also DiFiore v. Am.
Airlines, Inc., 646 F.3d 81, 86 (1st Cir. 2011) (“Congress’ language in the preemption section –
always the first resort in construing a federal statute – is broad but vague.”). Although interpreted
broadly, the Supreme Court recently commented that “the breadth of the words ‘related to’ does not
mean the sky is the limit.” Dan’s City Used Cars, Inc. v. Pelkey, - - - S.Ct. - - - (2013), 2013 WL
1942398, at *6. Additionally, as indicated by the Morales court, federal law may not pre-empt state
laws that affect rates in only a “tenuous, remote, or peripheral...manner.” Morales, 504 U.S. at 390
(internal citations omitted). Further, the FAAAA does not preempt all state-law claims related to
the prices, routes, and services of motor carriers. In American Airlines, Inc. v. Wolens, 513 U.S. 219,
232 (1995), the Supreme Court carved out an exception to the scope of preemption for “routine
breach of contract claims.” The court commented that “[m]arket efficiency requires effective means
to enforce private agreements.” Id. at 230. And, according to the Court, this exception for breach
of contract actions distinguishes between “what the State dictates and what the [carrier] itself
undertakes. . . .” Id. at 233.
It follows that the court’s first order of business is to determine whether the FAAAA
preemption provision applies at all. This task requires the court to decide whether Plaintiff’s breach
of contract claim relates to a rate, route, or service of HB Logistics. The court finds that it does not.
Initially, the court notes that Defendant has not cited to (and the court is unaware of) any authority
applying the FAAAA where the motor carrier itself was not a party to the action. Therefore, the
cases relied upon by Defendant supporting its argument that Plaintiff’s breach of contract claim is
related to HB Logistics’ rates, routes, or services are not persuasive. Further, the court is not
convinced that Plaintiff’s breach of contract action has the “significant” impact related to Congress’s
deregulation and preemption related objectives as contemplated by the Supreme Court. See Rowe,
552 U.S. at 370-371. Plaintiff’s breach of contract action alleges that it has been assigned the right
to payment from Defendant on various invoices. The court fails to see how enforcement of the
contract assignment impacts HB Logistic’s rates, routes, or services. Plaintiff only seeks to recover
payment it alleges it is due. Such an action has at best a tenuous, remote, or peripheral effect on HB
Logistics’ rates, routes, and services.3 See Morales, 504 U.S. at 390. Accordingly, the court
concludes that the FAAAA’s preemption clause has no application to this action.4 Therefore, the
The court recognizes that little, if any, authority speaks directly to specifically what constitutes a state action
having such a tenuous, remote, or peripheral effect on a carrier’s rates, routes, or services as to avoid preemption under
the FAAAA. See DiFiore, 646 F.3d at 86 (noting that the “related to” language is highly elastic, and “of limited help,
given that countless state laws have some relation to the operations of [carriers] and thus some potential effect on the
prices charged or services provided” and that “[e]qually general is the is the gloss supplied by the cases of a ‘significant
impact’ related to Congress’ deregulatory and pre-emption related objectives,’ rather than one merely ‘tenous ,remote,
or peripheral”) (internal citations omitted). The ambiguity on this point combined with the lack of case law factually
analogous to the action here applying the FAAAA preemption clause persuades this court to conclude that this common
law breach of contract claim is not preempted.
Even if the FAAAA’s preemption provision applied (which it does not), the court would find that Plaintiff’s
breach of contract action is saved by the Wolen’s exception. Based upon the pleadings alone, Plaintiff’s breach of
contract claim is not “enlarged or enhanced by state laws or policies.” Wolens, 513 U.S. at 233. Instead, it is an action
to recover payment based upon an assignment of rights under a private contract. Notably, in every potentially relevant
case cited by Defendant, the court either permitted common law breach of contract claims to proceed. See Data Mfg.,
court will not dismiss Plaintiff’s breach of contract claim.
Equitable Claims (Counts II-VI)
Having concluded that the FAAAA preemption provision does not apply to this action, the
court rejects Defendant’s argument that Plaintiff’s equitable claims are due to be dismissed as
preempted.5 To the extent Defendant maintains that these claims should be dismissed for failing to
state a claim or because they are incompatible with the express contract that forms the basis of the
breach of contract claim, the court simply is not persuaded by these arguments. First, the court has
carefully reviewed the pleadings, and at this juncture, is satisfied that Plaintiff has plead sufficient
facts to support each equitable claim.6 Moreover, the court understands that Plaintiff would be
entitled to equitable relief only if no adequate legal remedy existed. See Di Giovanni v. Camden Fire
Ins. Ass’n, 296 U.S. 64, 69 (1935). However, the Federal Rules of Civil Procedure contemplate and
Inc. v. United Parcel Serv., Inc., 557 F.3d 849 (8 th Cir. 2009); Barber Auto Sales, 494 F. Supp. 2d 1290; Deerskin
Trading Post, 972 F. Supp. 665; Cerdant, Inc. v. DHL Express (USA), Inc., 2009 WL 723149 (S.D. Ohio Mar. 30, 2009).
If courts have refused to apply the FAAAA preemption provision to breach of contract claims in actions where the
carriers themselves have been a party, this court can see no reason to depart from that reasoning where, as here, the
carrier is not a party to the lawsuit.
The court understands that many courts have dismissed equitable claims as preempted by the FAAAA when
permitting routine breach of contract claims to proceed. See All World Prof’l Travel Servs., Inc. v. Am. Airlines, Inc.,
282 F. Supp. 2d 1161, 1169 (C.D. Cal. 2003) (holding that claim for unjust enrichment would be preempted if it related
to prices, routes, or services because it is “derive[d] from the enforcement of state law”); Dugan v. FedEx Corp., No.
CV 02-1234, 2002 WL 31305208, at *3 (C.D. Cal. Sept. 27, 2002) (holding claim for unjust enrichment preempted
under the ADA); Cerdant, 2009 WL 723149, at *4 (holding claims for unjust enrichment and constructive trust
preempted by the FAAAA as going beyond a “routine breach of contract claim,” which would result in an enlargement
or enhancement of the parties’ bargain); Deerskin Trading Post, 972 F. Supp. at 672-73 (holding claim for constructive
trust preempted by the FAAAA); SVT Corp. v. Fed. Express Corp., No. C-94-3057, 1997 WL 285051, at *3-*4 (N.D.
Cal. May 19, 1997) (holding remedy of restitution preempted because it constitutes “a state-imposed remedy external
to any agreement between the parties”); Osband v. United Airlines, Inc., 981 P.2d 616, 621 (Colo. Ct. App. 1998)
(observing that “a contract implied in law is based on equitable policies and, therefore, will be preempted by the
FAAAA”). These cases are distinguishable because these courts found that FAAAA preemption applied but that the
breach of contract claims were saved by the Wolens exception. Therefore, because the equitable claims in these cases
went beyond the parties bargain, the courts found that the FAAAA preempted these causes of action. Here, the court
has found the FAAAA preemption provision inapplicable. Therefore, the same rationale does not apply.
Whether Plaintiff can produce sufficient evidence sufficient to survive summary judgment on these claims is
a different question that is not before the court.
expressly authorize alternative pleading. See Fed. R. Civ. P. 8(d) (permitting a party to “set out 2
or more statements of claim...alternatively or hypothetically”). Thus, rather than dismiss Plaintiff’s
equitable claims on the pleadings, the court finds the better course is to permit Plaintiff to choose
between its legal and equitable relief at the close of discovery and upon the conduct of a pre-trial
conference. Accordingly, the court will not dismiss Plaintiff’s claims for equitable relief at this stage
of the case.
For the reasons stated above, Defendant’s Motion for Judgment on the Pleadings (Doc. #28)
is due to be denied. A separate order consistent with this Memorandum Opinion will be entered.
DONE and ORDERED this
day of June, 2013.
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE
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