Masterbuilt Manufacturing Inc v. Bruce Foods Corporation

Filing 43

MEMORANDUM OPINION. Signed by Chief Judge Sharon Lovelace Blackburn on 9/20/2013. (KAM, )

FILED
2013 Sep-20 AM 11:09
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
MASTERBUILT
MANUFACTURING, INC.,
Plaintiff,
v.
BRUCE FOODS CORPORATION,
Defendant.

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CASE NO. 2:12-cv-3438-SLB

MEMORANDUM OPINION
This case is currently before the court on Masterbuilt Manufacturing, Inc.’s
(“Masterbuilt”) Motion to Dismiss Counts I-III of Bruce Foods Corporation’s (“Bruce
Foods”) Counterclaim, (doc. 21).1 Upon consideration of the record, the submissions of the
parties, the arguments of counsel, and the relevant law, the court is of the opinion that the
Motion to Dismiss is due to be denied.
I. STANDARD OF REVIEW
The purpose of a motion authorized by Rule 12(b)(6) of the Federal Rules of Civil
Procedure is to evaluate the facial sufficiency of a pleading – in this case, a counterclaim.
See Fabricant v. Sears Roebuck, 202 F.R.D. 306, 308 (S.D. Fla. 2001) (“A motion to dismiss
a counterclaim under Rule 12(b)(6) is treated the same as a motion to dismiss a complaint.”).

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Reference to a document number, [“Doc. ___”], refers to the number assigned to each
document as it is filed in the court’s record.

Rule 12(b)(6) must be read together with Rule 8(a)(2) of the Federal Rules of Civil
Procedure, which “requires that a pleading contain a short and plain statement of the claim
showing that the pleader is entitled to relief in order to give the defendant fair notice of what
the claim is and the grounds upon which it rests.” Am. Dental Ass’n v. Cigna Corp., 605
F.3d 1283, 1288 (11th Cir. 2010) (internal citations and quotation marks omitted). In
deciding a 12(b)(6) motion to dismiss, the court accepts the allegations in the pleading as true
and construes such allegations in the light most favorable to the pleader. Ironworkers Local
Union 68 v. AstraZeneca Pharm., LP, 634 F.3d 1352, 1359 (11th Cir. 2011) (quoting Am.
Dental Ass’n, 605 F.3d at 1288). The pleading “does not need detailed factual allegations”
to withstand a 12(b)(6) motion; however, “a formulaic recitation of the elements of a cause
of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[A]
[pleading] must contain sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,
550 U.S. at 570). A claim for relief has “facial plausibility” if it “allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing
Twombly, 550 U.S. at 556).
Res judicata, a doctrine under which Masterbuilt seeks dismissal, “is not a defense
under 12(b); it is an affirmative defense that should be raised under Rule 8(c).” Concordia
v. Bendekovic, 693 F.2d 1073, 1075 (11th Cir. 1982) (citations omitted). “Generally, the
existence of an affirmative defense will not support a motion to dismiss. Nevertheless, a

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[pleading] may be dismissed under Rule 12(b)(6) when its own allegations indicate the
existence of an affirmative defense, so long as the defense clearly appears on the face of the
[pleading].” Quiller v. Barclays Am./Credit, Inc., 727 F.2d 1067, 1069 (11th Cir. 1984)
(citations omitted), vacated on petition for reh’g, reinstated by 764 F.2d 1400 (11th Cir.
1985). If a district court considers matters outside the pleadings, the court must convert the
12(b)(6) motion to dismiss into a motion for summary judgment under Federal Rule of Civil
Procedure 56. Fed. R. Civ. P. 12(d). However, a district court may take judicial notice of
public records, such as filings in other judicial proceedings, without converting a 12(b)(6)
motion into a motion for summary judgment. Lozman v. City of Riviera Beach, 713 F.3d
1066, 1075 n.9 (11th Cir. 2013) (“Although this [res judicata defense] is before the court on
a motion to dismiss, we may take judicial notice of the court documents from the state
eviction action.”); Horne v. Potter, 392 F. App’x 800, 802 (11th Cir. 2010) (per curiam)
(finding that the district court properly took judicial notice of documents from a prior lawsuit
“which were public records that were ‘not subject to reasonable dispute’ . . . .” (quoting Fed.
R. Evid. 201(b))); Universal Express, Inc. v. U.S. S.E.C., 177 F. App’x 52, 54 (11th Cir.
2006) (per curiam) (finding that the district court’s consideration of a complaint filed in a
separate case did not require converting the motion to dismiss into a motion for summary
judgment).

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II. STATEMENT OF FACTS2
In April of 2010, Bruce Foods filed a lawsuit against Masterbuilt in Louisiana state
court wherein Bruce Foods asserted Louisiana state law claims for breach of contract, unfair
and deceptive trade practices, and unjust enrichment. (See generally doc. 21-2 at 5-11.)
These claims arose from Masterbuilt’s alleged failure to fulfill certain contractual obligations
under a 2005 cooperative marketing agreement between the parties, the terms of which “were
memorialized in writings.” (Id.) Masterbuilt subsequently removed the case to the United
States District Court for the Western District of Louisiana on diversity grounds. (Doc. 21-3
at 2-6.) The parties resolved the lawsuit by entering into a settlement agreement (the
“Settlement Agreement”), (see doc. 19 at 25 ¶ 7), and the Western District of Louisiana
granted the parties’ stipulated Motion for Dismissal with Prejudice on September 22, 2011,
(doc. 21-4 at 2).
Masterbuilt commenced this litigation against Bruce Foods on September 24, 2012,
asserting claims for breach of contract, design patent infringement, utility patent
infringement, and trade dress infringement. (See generally docs. 2 & 16.) Bruce Foods
responded to Masterbuilt’s First Amended Complaint by filing an Answer and Counterclaim.
(Doc. 19.) Counts I-III of the Counterclaim assert claims for breach of contract, unfair and
deceptive trade practices, and unjust enrichment under Louisiana state law based on

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The facts are taken from Bruce Foods’s Counterclaim, (doc. 19), and the attachments to
Masterbuilt’s Motion to Dismiss, (doc. 21), all of which the court may take judicial notice.
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Masterbuilt’s alleged misconduct in connection with the 2005 cooperative marketing
agreement. (Id. at 32-37.)
On December 21, 2012, Masterbuilt filed the instant Motion to Dismiss pursuant to
Rule 12(b)(6), relying primarily on the doctrine of res judicata. (Doc. 21.) As an alternative
argument, Masterbuilt contends that Bruce Foods has not supported Counts I-III with facts
complying with the pleading standard of Rule 8(a)(2). (Id.)
III. DISCUSSION
1.

Res Judicata

“Res judicata is a judicially crafted doctrine, created to provide finality and conserve
resources.” Maldonado v. U.S. Atty. Gen., 664 F.3d 1369, 1375 (11th Cir. 2011) (citations
omitted). Under the doctrine, once a court of competent jurisdiction enters final judgment
on the merits in a lawsuit, the parties are barred from subsequently relitigating causes of
action which were raised or could have been raised in that case. See O’Connor v. PCA
Family Health Plan, Inc., 200 F.3d 1349, 1355 (11th Cir. 2000).
Res judicata thus precludes claims which a plaintiff actually raised or could
have raised in a prior suit when (1) there is a final judgment in a prior suit on
the merits; (2) the decision in the prior suit is rendered by a court of competent
jurisdiction; (3) the parties in both suits are identical; and (4) both suits involve
the same cause of action.

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Id. (citing Citibank, N.A. v. Data Lease Fin. Corp., 904 F.2d 1498, 1501 (11th Cir. 1990)).3
A review of the documents from the Louisiana lawsuit attached to Masterbuilt’s
Motion to Dismiss, of which the court takes judicial notice, strongly suggests that Counts IIII of Bruce Foods’s Counterclaim are barred by res judicata. First, the parties stipulated to
the dismissal of the Louisiana lawsuit with prejudice, and “a stipulation of dismissal with
prejudice . . . normally constitutes a final judgment on the merits which bars a later suit on
the same cause of action.” Astron Indus. Assocs., Inc. v. Chrysler Motors Corp., 405 F.2d
958, 960 (5th Cir. 1968) (citations omitted).4 Second, neither party disputed that the Western
District of Louisiana properly exercised diversity jurisdiction over the prior lawsuit. Third,
it is evident on the face of the Louisiana pleadings that the prior lawsuit involved Masterbuilt
and Bruce Foods, the same parties named in the present lawsuit. Finally, a side-by-side
comparison of Bruce Foods’s Louisiana complaint and the Counterclaim demonstrates that
Counts I-III are identical to the causes of action that Bruce Foods asserted in the Louisiana
litigation.

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Because the Western District of Louisiana rendered final judgment in the Louisiana
lawsuit, federal law governs the preclusive effect of that action. CSX Transp., Inc. v. Bhd. of
Maint. of Way Employees, 327 F.3d 1309, 1316 (11th Cir. 2003) (“We now hold that federal
preclusion principles apply to prior federal decisions, whether previously decided in diversity or
federal question jurisdiction.”).
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Decisions of the former Fifth Circuit Court of Appeals rendered prior to October 1,
1981, constitute binding precedent in the Eleventh Circuit. Bonner v. City of Prichard, 661 F.2d
1206, 1209 (11th Cir. 1981) (en banc).
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However, “[w]here the parties consent to . . . dismissal based on a settlement
agreement,” as did the parties in the Louisiana lawsuit, “the principles of res judicata apply
(in a somewhat modified form) to the matters specified in the settlement agreement, rather
than the original complaint.” Norfolk S. Corp. v. Chevron, U.S.A., Inc., 371 F.3d 1285, 1288
(11th Cir. 2004). “In determining the res judicata effect of an order of dismissal based upon
a settlement agreement, [the court] should . . . attempt to effectuate the parties’ intent. The
best evidence of that intent is, of course, the settlement agreement itself.” Id. at 1989.
Consequently, the court should “look to the agreement itself to determine what claims the
parties intended to be finally and forever barred by the dismissal.” Ruple v. Hartford Life &
Accident Ins. Co., 340 F. App’x 604, 610 (11th Cir. 2009) (citing Norfolk S. Corp., 371 F.3d
at 1288) (finding that the appellant did not carry his burden of showing that res judicata was
applicable when he neither submitted the settlement agreement into evidence nor discussed
the contents of the agreement in argument).
Masterbuilt purposefully excluded the Settlement Agreement from the attachments
to its Motion to Dismiss in order to avoid having the Motion to Dismiss converted into a
motion for summary judgment. (Doc. 21-1 at 11.) However, pursuant to the aforementioned
Eleventh Circuit precedent, the Settlement Agreement must be placed into evidence before
the court can determine with absolute certainty what claims the Settlement Agreement covers
and what claims Bruce Foods is barred from litigating in subsequent lawsuits. See Ruple,

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340 F. App’x at 610. Accordingly, Counts I-III of the Counterclaim are not due to be
dismissed on res judicata grounds, at least at this stage of the proceedings.
2.

Rule 8(a)(2)

Alternatively, Masterbuilt argues that Bruce Foods has not supported Counts I-III
with sufficient factual matter satisfying the pleading standard of Rule 8(a)(2). The primary
defect, Masterbuilt contends, is Bruce Foods’s failure to identify with particularity the
writings which memorialized the cooperative marketing agreement. This defect purportedly
prevents Masterbuilt from challenging Bruce Foods’s allegation that Louisiana law and its
statute of limitations for contract claims govern the agreement. Additionally, Masterbuilt
contends that it cannot present a statute of limitations defense because the Counterclaim does
not specify when Masterbuilt allegedly breached the agreement.
A cursory review of the Counterclaim shows that Bruce Foods has complied with Rule
8(a)(2). The Counterclaim alleges that the parties entered into a cooperative marketing
agreement in 2005, it identifies the terms of the cooperative marketing agreement and the
parties’ contractual obligations thereunder, and it describes in detail how Masterbuilt
allegedly breached the agreement, engaged in unfair and deceptive trade practices, and
became unjustly enriched. (See doc. 19 at 24-37.) Although the Counterclaim does not
specifically identify the writings which memorialized the cooperative marketing agreement,
Masterbuilt unquestionably has fair notice of what Bruce Foods’s claims are and the grounds
upon which they rest. Furthermore, Masterbuilt’s contention that it cannot adequately raise

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a statute of limitations defense without more facts is of no consequence. Masterbuilt is free
to raise statute of limitations as an affirmative defense in its answer notwithstanding Bruce
Foods’s failure to specify the dates of Masterbuilt’s alleged misconduct. And, nothing
prevents Masterbuilt from pursuing a statute of limitations defense after it ascertains through
discovery the dates of its alleged misconduct, assuming such misconduct occurred.
IV. CONCLUSION
Based on the foregoing, the court is of the opinion that Masterbuilt’s Motion to
Dismiss Counts I-III of Bruce Foods’s Counterclaim, (doc. 21), is due to be denied. An
Order in accordance with this Memorandum Opinion will be entered contemporaneously
herewith.
DONE this 20th day of September, 2013.

SHARON LOVELACE BLACKBURN
CHIEF UNITED STATES DISTRICT JUDGE

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