Rigby et al v. Philip Morris USA Inc. et al
Filing
32
ORDER granting in part as to Plaintiff's claims under Count I for promissory estoppel and Count III for price fixing; and denying in part as to Plaintiff's claims under Count II for Fraud, Count IV for promissory estoppel, Count V for attorney's fees, and Count VI for punitive damages re 23 Motion to Dismiss Plaintiff's amended complaint. Signed by Chief Judge Lisa G. Wood on 3/19/2015. (ca)
tie aniteb btafto lot' trkt Court
for the boutbern 39i0tritt of atorilia
ibiion
Waptro
311
JULIAN A. RIGBY,
GEORGIA/FLORIDA TOBACCO
EXCHANGE, INC., Itself and
d/b/a TENNESSEE VALLEY TOBACCO
SERVICES,
Plaintiffs,
V
CV 513-110
.
PHILIP MORRIS USA, INC. and
ALTRIA CLIENT SERVICES, INC.,
Defendants.
ORDER
Plaintiff Julian Rigby, a tobacco grower and owner of
Plaintiff Georgia/Florida Tobacco Exchange, brings claims of
breach of contract, fraud, price fixing, promissory estoppel,
attorney's fees, and punitive damages against Defendant Philip
Morris USA, Inc. and its affiliate, Altria Client Services, Inc.
Presently before the Court is Defendants' partial motion to
dismiss Plaintiffs' first amended complaint, excepting the
breach of contract claims. Dkt. no. 23. Because Plaintiffs'
claims for price fixing and promissory estoppel for the events
AO 72A
(Rev. 8/82)
occurring in Georgia were not adequately pleaded, the Court
GRANTS in part and DENIES in part Defendants' motion.
FACTUM.. BACKGROUND'
I. The Georgia Allegations
Plaintiff Julian Rigby owns and operates the
Georgia/Florida Tobacco Exchange ("Georgia/Florida") in Alma,
Georgia. Dkt. no. 22, 191 13-14. Plaintiff Rigby also grew
tobacco himself until 2011. Id. ¶ 15. Plaintiff Rigby and other
growers would enter into "Growers Contracts" with Defendant
Philip Morris, under which Philip Morris would agree to purchase
a certain amount of flue cured tobacco at certain prices for
particular grades. Id. ¶91 17-18. The growers would also enter
into such contracts with Altria Client Services, Inc.
("Altria"), an affiliate of Philip Morris. Id. ¶ 20. Plaintiff
Rigby entered into growers contracts with Philip Morris each
crop year from 2000 to 2012. Id. ¶ 18. He also operated
Georgia/Florida as a receiving station where he and other
growers would deliver their crop to be graded and delivered to
Philip Morris or Altria. Id. ¶ 19.
Customarily, Defendants Philip Morris or Altria would
publish "price sheets" each December or January, before the crop
1
For the purposes of ruling on Defendant's partial motion to dismiss, the
Court takes Plaintiffs' version of the facts as true. Am. United Life Ins.
Co. v. Martinez, 480 F.3d 1043, 1057 (11th Cir. 2007) ("when ruling on a
motion to dismiss, a court must view the complaint in the light most
favorable to the plaintiff and accept all of the plaintiff's well-pleaded
facts as true.")
A072A
(Rev. 8/82)
I
2
season, indicating what price they would pay for certain grades
of tobacco produced during the following crop season. Id. ¶ 21.
Also, before the growing season, Defendants would determine how
much tobacco they would purchase from Georgia/Florida, and this
"poundage" was allocated among the various growers based on
historical production. Id. 1291 23, 33. The growers would use this
information to determine how much tobacco they would grow the
following year, and they would prepare their fields accordingly.
Id. 191 25, 35. Particularly, these preparations would require
the growers to apply chemicals on their land that would prevent
anything except tobacco from growing. Id. 191 26, 36.
Each year after the growers had reaped their crop, they
would bring it to Georgia/Florida to be graded by individuals
employed by Defendants. Id. ¶ 27. These graders assigned grades
to the tobacco ranging from first quality (the best) down to
fourth quality. Id. Philip Morris or Altria would then pay the
allocated price for that quality of tobacco.
Plaintiffs allege that Philip Morris and/or Altria
published a price sheet reflecting the prices they would pay for
the various grades of tobacco for the 2009 crop in "early 2009."
Id. 91 28. However, "[s]ometime shortly thereafter, Defendants
Philip Morris and/or [Altria] lowered the prices it would pay
for tobacco, and transmitted new price sheets reflecting these
lower prices. Upon information and belief, these new 'lower'
AO 72A
(Rev. 8/82)
3
3
I
F!
price sheets were prepared after Phillip [sic] Morris and/or
[Altria] representatives spoke with representatives of a
competing tobacco company, Universal Leaf." Id. ¶ 29. Plaintiff
alleges that Defendants changed the price sheet twice, later
than the usual time for publishing price sheets, "due in part to
[their] negotiations with Universal Leaf regarding
pricing . . •" Id. 191 30-33.
Based on Defendants' initial indications of how much
tobacco they would purchase and how much they would pay,
Plaintiff Rigby and other growers prepared their fields for
those anticipated purchases. Id. ¶ 37. Plaintiffs allege that
Defendants knew that they would rely on these promises. Id.
However, after the price changes, Defendants allegedly only
purchased about half of the tobacco that they represented they
would buy before the crop season. Id. ¶ 38.
Additionally, after the crop was harvested in 2010,
Plaintiffs allege that Defendants instructed the graders to
"significantly reduce the amount of crops graded as Third
Quality and to grade such crops as Fourth Quality." Id. ¶ 39.
Plaintiffs allege that Defendants intentionally manipulated the
grading process to avoid contractual obligations to purchase the
tobacco. Id. ¶ 40.
AO 72A
(Rev. 8/82)
4
I
II. The Tennessee Allegations
Plaintiffs had to shut down the Georgia/Florida receiving
station in 2010. Id. ¶ 52. Plaintiffs allege that Defendants
then induced Plaintiffs to establish a receiving station in
Midway, Tennessee, to receive burley tobacco. Id. ¶ 43-44.
Specifically, Defendants allegedly promised that
Georgia/Florida's new receiving station would be Defendants'
exclusive source of burley tobacco in Tennessee. Id. ¶ 50.
Plaintiffs allege that Defendants, through their agent
Craig Shirrah, included two additional requirements for the
Midway receiving station outside of the written contract: first,
Plaintiff Rigby would have to buy a farm in Tennessee to
establish his presence within the Tennessee burley farming
community; second, either Plaintiff Rigby or Ben Swain (who is
otherwise not mentioned or identified in the complaint) would
have to be in Tennessee at all times, even when the receiving
station was not open. Id. ¶ 45. Additionally, the written
contract with Plaintiff Georgia/Florida required a duty of
absolute loyalty from Plaintiffs, including "(a) only dealing
with growers who had contracts with [Altria]; and (b) using the
receiving station as a single purpose entity, solely for
Defendants' benefit." Id. 91 46. Plaintiffs allege that this duty
"created a reciprocal duty of good faith owed by the Defendants
to the Plaintiffs." Id. If 47. However, in 2011, Defendants
AO 72A
(Rev. 8/82)
5
5
I
allegedly violated this duty by purchasing about six million
pounds of tobacco from the Tennessee Burley Cooperative. Id.
Plaintiffs allege that, as with the receiving station in
Georgia, Defendants improperly graded the tobacco at Plaintiffs'
receiving station in Tennessee. Id. ¶ 48. Additionally,
Defendants failed to give Plaintiffs 30 day's written notice
before terminating the contract, as the contract required. Id.
¶ 49.
Plaintiffs allege that Defendants promised that they would
deal exclusively with Georgia/Florida for all of their burley
tobacco purchases in Tennessee. Id. ¶ 50. Plaintiffs further
allege that they relied on this promise in expending the funds
necessary to establish a receiving station in Tennessee, but
Defendants failed to live up to their promise. Id. ¶T 50-51.
PROCEDURAL BACKGROUND
In September 2013, Plaintiffs filed suit in the State Court
of Bacon County, Georgia, against Defendants. Dkt. no. 1-1. The
next month, Defendants removed the case to federal court, whose
jurisdiction lies in diversity. Dkt. nos. 1; 1-9.
In October 2013, Defendants filed a motion to dismiss
pursuant to Rule 12(b) (6) of the Federal Rules of Civil
Procedure. Dkt. no. 5. In responding to Defendants' motion,
Plaintiffs asked the Court to afford them "the opportunity to
file an amended complaint to address" any deficiencies found by
AO 72A
(Rev. 8/82)
1
6
the Court, pursuant to Rule 15 of the Federal Rules of Civil
Procedure. Dkt. no. 10, at 9-10; see also Dkt. no. 18, at 9.
The Court denied Defendants' motion as to the breach of
contract claims, granted Plaintiffs' request to file an amended
complaint, and denied as moot Defendants' motion to dismiss the
remaining non-contract claims. Dkt. no. 19, pp. 9-10.
Plaintiffs have since filed an amended complaint. Dkt. no.
22. The amended complaint brings claims for breach of contract
(or promissory estoppel in the alternative) for the events
concerning the Georgia tobacco exchange, Dkt. no. 22, IT 52-60;
fraud, id. 191 61-69; price fixing in violation of the Sherman
Act, 15 U.S.C. § 1, id. 191 70-76; promissory estoppel (or fraud
in the alternative) for the events concerning the Tennessee
tobacco exchange, id. ¶91 77-83; attorney's fees, id. 191 84-85;
and punitive damages, id. 191 86-88.
Defendants have filed a partial motion to dismiss
Plaintiffs' amended complaint, Dkt. no. 23-1, which is presently
before the Court. Their motion is fully briefed. See Dkt. nos.
23-1; 24; 26.
[e+
ip p
When ruling on a motion to dismiss brought pursuant to Rule
12(b) (6), a district court must accept as true the facts as set
forth in the complaint and draw all reasonable inferences in the
plaintiff's favor. Randall v. Scott, 610 F.3d 701, 705 (11th
AO 72A
(Rev. 8182)
7
I
Cir. 2010). Although a complaint need not contain detailed
factual allegations, it must contain sufficient factual material
"to raise a right to relief above the speculative level." Bell
Ati. Corp. v. Twombly, 550 U.S. 544, 555 (2007). At a minimum, a
complaint should "contain either direct or inferential
allegations respecting all the material elements necessary to
sustain a recovery under some viable legal theory." Fin. Sec.
Assurance, Inc. v. Stephens, Inc., 500 F.3d 1276, 1282-83 (11th
Cir. 2007) (per curiam) (quoting Roe v. Aware Woman Ctr. for
Choice, Inc., 253 F.3d 678, 683 (11th Cir. 2001)).
DISCUSSION
Defendants' motion to dismiss Plaintiff's Count I breach of
contract claim has already been denied. See Dkt. no. 21. This
Order addresses the remaining claims as alleged in the amended
complaint: Count I, promissory estoppel (alternatively to breach
of contract); Count II, fraud; Count III, price fixing; Count
IV, promissory estoppel or fraud, in the alternative; Count V,
attorney's fees; and Count VI, punitive damages. For
convenience, the Court will address the fraud claims (under
Counts II and IV) and the promissory estoppel claims (under
Counts I and IV) in pairs.
I.
Fraud Claims (Counts II and IV)
Plaintiffs bring two independent fraud claims. First,
Plaintiffs allege that Defendants' intentional manipulation of
AO 72A
(Rev. 8/82)
8
8
I
the tobacco grading process at the Georgia receiving station
amounts to fraud (Count II). Second, Plaintiffs allege that
Defendants' promise to use Plaintiffs' Tennessee receiving
station as its exclusive source for burley tobacco in Tennessee
amounts to fraud (Count IV).
Plaintiffs alleging fraud under Georgia law must establish
five elements: "a false representation by a defendant, scienter,
intention to induce the plaintiff to act or refrain from acting,
justifiable reliance by plaintiff, and damage to plaintiff."
Baxter v. Fairfield Fin. Servs., Inc., 704 S.E.2d 423, 429 (Ga.
Ct. App. 2010).
Under Federal Rule of Civil Procedure 9(b), allegations of
fraud require heightened pleading to survive a motion to
dismiss. "In alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake.
Malice, intent, knowledge, and other conditions of a person's
mind may be alleged generally." Fed. R. Civ. P. 9(b) . "The
'particularity' requirement 'serves an important purpose in
fraud actions by alerting defendants to the precise misconduct
with which they are charged and protecting defendants against
spurious charges of immoral and fraudulent behavior.'" W. Coast
Roofing & Waterproofing, Inc. v. Johns Manville, Inc., 287 F.
App'x 81, 86 (11th Cir. 2008) (quoting Ziemba v. Cascade
Intern., Inc., 256 F.3d 1194, 1202 (11th Cir. 2001)).
AO 72A
(Rev. 8182)
1
9
To meet Rule 9(b)'s "particularity" standard, the Eleventh
Circuit generally requires that a complaint plead
(1) precisely what statements were made in what
documents or oral representations or what omissions
were made, and (2) the time and place of each such
statement and the person responsible for making (or,
in the case of omissions, not making) same, and (3)
the content of such statements and the manner in which
they misled the plaintiff, and (4) what the defendants
obtained as a consequence of the fraud.
Thomas v. Pentagon Fed. Credit Union, 393 F. App'x 635, 638
(11th Cir. 2010)
Here, both claims for fraud satisfy—just barely—Rule 9(b)Is
particularity requirement. For the Georgia allegations,
Plaintiff Rigby clearly alleges that he entered into a "grower's
contract" with Defendant Philip Morris. Dkt. no. 22, ¶91 17-18.
Furthermore, Plaintiff Georgia/Florida alleges that it entered
into a receiving station contract with Defendant Altria. Id.
¶ 20. Because Plaintiffs have identified that the statements
were made in their respective contracts, they have pleaded the
"precise" statements made—that the tobacco would be fairly
graded—and identified the particular documents where these
statements were made. That these statements were part of a
contract should also place Defendants on notice of the time and
location of the statements. Furthermore, Plaintiffs allege that
Defendants promised to pay a certain amount for Grade Three
tobacco, but intentionally misgraded the tobacco to avoid having
AO 72A
(Rev. 8/82)
I
10
to meet its contractual duties. Id. ¶91 66-69. This allegation
makes clear how Plaintiffs were misled from the statements and
what Defendants gained from the fraud.
Similarly, the Tennessee allegations also satisfy the
elements for pleading fraud. Even though the complaint does not
directly state that he made the exclusivity promise, it is clear
from the complaint that Defendants' agent, Craig Shirrah, was
the person forming extra-contractual promises and obligations
with Plaintiffs. Id. at ¶91 45. Furthermore, a false promise of
exclusivity would plainly mislead the plaintiffs, and violation
of that promise would benefit Defendants by providing multiple
burley suppliers in one region for Defendants to negotiate with.
Defendants argue that Plaintiffs' fraud pleadings do not
satisfy Rule 9(b)'s heightened pleading requirement because,
Defendants say, Plaintiffs have "lumped" both Defendants
together in their fraud allegations without alerting each
Defendant of its specific participation in the fraud. See Brooks
v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1381
(11th Cir. 1997) (quoting Viacom, Inc. v. Harbridge Merch.
Servs., Inc., 20 F.3d 771, 778 (7th Cir. 1994) ("[I]n a case
involving multiple defendants . . . the complaint should inform
each defendant of the nature of his alleged participation in the
fraud.")). However, while Plaintiffs do refer collectively to
"Defendants Philip Morris! [Altria]" throughout their Georgia
AO 72A
(Rev. 8/82)
I
I
11
fraud allegations, see, e.g., Dkt. no. 22,
1991 62-63, Plaintiffs'
Complaint earlier states that Defendant Philip Morris was under
contract with Plaintiff Rigby, whereas Defendant Altria was
under contract with Plaintiff Georgia/Florida. Id. 9191 17-18, 20.
Thus, the fraud allegations adequately plead with specificity
which Defendant allegedly defrauded which Plaintiff.
Because Plaintiffs have adequately pleaded the fraud
allegations against both Defendants, Defendants' motion to
dismiss these claims (Counts II and IV) is DENIED.
II. Price Fixing Claim (Count III)
Plaintiffs bring price fixing claims against both
Defendants in violation of the Sherman Act, 15 U.S.C. § 1. In
their motion to dismiss, Defendants argue that Plaintiffs failed
to adequately state a claim for price fixing and, alternatively,
that even a plausible claim would be barred by the statute of
limitations.
In a case brought under § 1 of the Sherman Act, a court
must determine "whether the complaint, in asserting a conspiracy
or agreement in restraint of trade, contains 'allegations
plausibly suggesting (not merely consistent with) [a conspiracy
or] agreement,' that is, whether the complaint 'possess[es]
enough heft to show that the pleader is entitled to relief.'"
Jacobs v. Tempur-Pedic Intern., Inc., 626 F.3d 1327 (11th Cir.
2010) (quoting Twombly, 550 U.S. at 557)). The court must accept
AO 72A
(Rev. 8182)
12
the plaintiff's allegations as true, but may disregard the
plaintiff's legal conclusions; "[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). Thus, a court's two-step approach to assessing the
sufficiency of an antitrust complaint includes (1) identifying
legal conclusions that are not entitled to the assumption of
truth; and (2) assuming the veracity of well-pleaded factual
allegations and then determining whether they plausibly give
rise to an entitlement to relief. See Jacobs, 626 F.3d at 1333
(quoting Iqbal, 556 U.S. at 679).
Defendants argue that Plaintiffs' price fixing claim does
not adequately allege that an agreement took place. To prove
that an agreement in restraint of trade exists between multiple
defendants, a plaintiff must "demonstrate a unity of purpose or
a common design and understanding, or a meeting of the minds in
an unlawful arrangement." City of Tuscaloosa v. Harcros Chems..,
158 F.3d 548, 569 (11th Cir. 1998)
[A]n allegation of parallel conduct and a bare
assertion of conspiracy will not suffice.
Without more, parallel conduct does not suggest
conspiracy, and a conclusory allegation of agreement
at some unidentified point does not supply facts
adequate to show illegality. . . . A statement of
parallel conduct, even conduct consciously undertaken,
needs some setting suggesting the agreement necessary
to make out a § 1 claim; without that further
circumstance pointing toward a meeting of the minds,
13
AO 72A
(Rev. 8/82)
I
an account of a defendant's commercial efforts stays
in neutral territory.
Twombly, 550 U.S. at 557. Of course, plaintiffs will often be
unable to prove the existence of an express agreement, and thus
may rely on inferences from the alleged conspirators' conduct.
Seagood Trading Corp. v. Jerrico, Inc., 924 F.2d 1555, 1573
(11th Cir. 1991). At the motion to dismiss stage, "[p]laintiffs
need not allege the existence of collusive communications in
'smoke filled rooms,'" no matter how befitting such an
allegation would be in the present case, in order to state a § 1
Sherman Act claim. See In re Delta/AirTran Baggage Fee Litig.,
733 F. Supp. 2d 1348, 1360 (N.D. Ga. 2010). However, an
antitrust plaintiff must plead enough facts to state a claim for
relief that is plausible on the face of the complaint. Twombly,
550 U.S. at 556.
Here, Plaintiffs allege that Defendants published a price
sheet reflecting the prices it would pay for tobacco in 2009,
and then conspired with Universal Leaf to lower prices before
re-issuing a price sheet "in line" with prices offered by
Universal Leaf. Stripped of its conclusory allegations, though,
the amended complaint only offers the following factual
allegations: Defendants published a price sheet in early 2009;
Defendants later re-issued a price sheet with lower prices; and
AO 72A
(Rev. E/82)
14
I
the new prices were "in line" with those offered by Defendants'
competitor, Universal Leaf.
These factual allegations do not support a plausible
showing of conspiracy for a § 1 claim. Having prices "in line"
with a competitor is nothing more than parallel conduct which
cannot, on its own, support a showing of conspiracy. See
Twombly, 550 U.S. at 557 ("Without more, parallel conduct does
not suggest conspiracy . . .") . True, the fact that Defendants
allegedly reneged on their original price quotes is something
"more" than the allegation of parallel conduct. However,
Plaintiffs have not pleaded enough attendant facts regarding the
second price sheet for the Court to determine whether that
switch suggests a plausible conspiracy or merely reflects
Defendants' rational reaction to market forces. Cf. Jacobs, 626
F.3d at 1343 (noting that plaintiffs failed "to provide further
allegations that, in addition to tacitly colluding," the
defendants had "somehow signaled each other on how and when to
maintain or adjust prices" through such examples as "dates on
which distributors moved prices together, or the amounts by
which the prices moved, if in fact they did."). Specifically,
without knowing when Defendants changed their prices relative to
when Universal Leaf issued its prices, the Court has no way of
determining the plausibility of collusion. If the tobacco
companies simultaneously published their final price sheets with
AO 72A
(Rev. 8/82)
15
I
the same prices, that would certainly raise suspicion. But if
Defendants issued their second price sheet either significantly
sooner or later than Universal Leaf published its prices, such
actions would likely reflect self-interested pricing strategies
on the part of the tobacco purchasers. Cf. Id. ("Here, like the
Twornbly court, we fail to find in the complaint facts that are
suggestive enough to render a § 1 conspiracy plausible when the
inference of conspiracy is juxtaposed with the inference of
economic self-interest."). Thus, Plaintiffs have failed to
allege facts in their amended complaint suggesting that
Defendants conspired to fix prices, and Defendants' motion to
dismiss the price fixing claim must be GRANTED.
III. Promissory Estoppel Claims (Counts I and IV)
Plaintiffs bring promissory estoppel claims as alternatives
to the Count I breach of contract claim and the Count IV fraud
claim. Dkt. no. 22, IT 60, 83. Under Count I, Plaintiffs claim
that they reasonably relied on the promises and representations
Defendants made regarding both the amount of flue cured tobacco
Defendants would purchase from Plaintiffs and the method of
grading Defendants would use for the tobacco in Georgia. Id.
IT 56-57. Under Count IV, Plaintiffs claim that they reasonably
relied on Defendants' promises and representations that, if
Plaintiffs established a receiving station in Tennessee,
A072A
(Rev. 8/82)
I
16
Defendants would use the station as their sole receiving station
for burley tobacco in Tennessee. Id. 191 78-79.
Under Georgia law,
A promise which the promisor should reasonably expect
to induce action or forbearance on the part of the
promisee or a third person and which does induce such
action or forbearance is binding if injustice can be
avoided only by enforcement of the promise. The remedy
granted for breach may be limited as justice requires.
Ga. Code Ann. § 13-3-44(a). To prove promissory estoppel, a
plaintiff must demonstrate that "(1) the defendant made certain
promises, (2) the defendant should have expected that the
plaintiff would rely on such promises, and (3) the plaintiff did
in fact rely on such promises to his detriment." Doll v. Grand
Union Co., 925 F.2d 1363, 1371 (11th Cir. 1991). Because
Plaintiffs' two promissory estoppel claims arise under different
factual circumstances, the Court will discuss each in turn.
a. Promissory Estoppel for Failure to Perform Under the
Georgia Contracts
Plaintiffs' Count I promissory estoppel claim (pleaded as
an alternative claim to breach of contract) concerns Defendants'
alleged failure to fairly grade and buy certain amounts of flue
cured tobacco from Plaintiffs, as it had agreed under the
growers contract and receiving station contract. However, under
Georgia law, promissory estoppel is not available as a remedy to
a plaintiff seeking to enforce an underlying contract that is
AO 72A
(Rev. 8182)
17
17
I
reduced to writing. Adkins v. Cagle Foods JV, LLC, 411 F.3d
1320, 1326 (11th Cir. 2005) (citing Bank of Dade v. Reeves, 354
S.E.2d 131 (Ga. 1987)).
In their Response, Plaintiffs attempt to sidestep Georgia's
rule precluding claims of promissory estoppel where the promise
is reduced to a contract by arguing that the promise Plaintiffs
detrimentally relied upon was the "promise" to pay a certain
price for flue cured tobacco, as reflected in Defendants (later
rescinded) price sheet. Dkt. no. 24, p. 18. However, Plaintiffs'
amended complaint clearly alleges that the promises they seek to
enforce under the promissory estoppel claim are those governed
by the growers contracts. See, e.g., Id. 91 54 ("[Defendants]
intentionally manipulated the grading of tobacco to avoid its
[sic] obligation to buy certain tobacco at a certain price from
Plaintiffs or through [the] buying station."); ¶ 56 ("Plaintiffs
relied upon Defendants' promises that Defendants would purchase
an agreed upon amount of crops from Plaintiffs • . •"); ¶ 57
("Plaintiffs further relied upon Defendants' promises that it
would fairly grade Plaintiffs' tobacco . . ."); ¶ 58
("Plaintiffs . . . have performed all of their obligations under
their agreement with [Defendants]."); see also 9191 17-20
(discussing Plaintiff Rigby's practice of entering into a
"growers contract" each crop year from 2000-2012 and Plaintiff
Georgia/Florida's practice of contracting with Defendants since
AO 72A
(Rev. 8/82)
18
18
I
2000) . Therefore, Plaintiffs' alternative claim for promissory
estoppel under Count I is barred by Georgia law, and Defendants'
motion to dismiss this claim must be GRANTED.
b. Promissory Estoppel under the Tennessee Exclusivity
Agreement
Plaintiffs' Count IV promissory estoppel claim (pleaded as
an alternative claim to fraud) concerns Defendants' alleged
promise that it would rely exclusively on Plaintiffs' Tennessee
receiving station for all of its burley tobacco purchases in
Tennessee. At the motion to dismiss stage, Plaintiffs have
sufficiently pleaded factual allegations to support a claim for
promissory estoppel under these circumstances. First, Plaintiffs
alleged that Defendants promised to deal exclusively with
Georgia/Florida as its receiving station for all burley tobacco
farmed in Tennessee. Dkt. no. 22, ¶ 50. Second, Plaintiffs
allege not merely that Defendants should have known that
Plaintiffs would rely on this promise, but that Defendants made
the promise specifically to induce Plaintiffs to establish a
receiving station in Tennessee. Id. ¶ 43. And finally,
Plaintiffs allege that they did, in fact, undertake considerable
expense in establishing a receiving station in Tennessee, in
reliance on Defendants' promise. Id. ¶ 51.
Defendants attack Count IV for promissory estoppel with
several arguments, none of which carries the day. First,
AO 72A
(Rev. 8/82)
19
19
I
Defendants argue that "promissory estoppel does not apply to
representations concerning the future, but to representations of
past or present facts." Adkins, 411 F.3d at 1327 (citing Voyles
v. Sasser, 472 S.E.2d 80, 82 (Ga. Ct. App. 1996)). However,
Voyles, the Georgia case on which Adkins relies, "involved a
situation in which the promises involved 'unforeseeably vague
future acts.' . . . [hf a promise comes within the terms of
OCGA § 13-3-44(a), the fact that it is performable in the future
does not preclude the application of promissory estoppel."
Hendon Props., LLC v. Cinema Dev., LLC, 620 S.E.2d 644, 650 (Ga.
Ct. App. 2005) . The promise of exclusivity here is not
unforeseeably vague, and thus can be the basis of a promissory
estoppel claim.
Next, Defendants argue that Plaintiffs failed to allege
sufficient facts demonstrating that their reliance on
Defendants' promise of exclusivity was reasonable. See Abdullahi
v. Bank of Am., NA, 549 F. App'x 864, 867-68 (11th Cir. 2013);
Miller v. Chase Home Fin., LLC, 677 F.3d 1113, 1117 (11th Cir.
2012) . The promises alleged in Abdullahi and Miller, though, are
significantly weaker than the promise Plaintiffs have alleged
here. In Abdullahi, the deficiency in the plaintiff's pleading
was that it was apparently clear from the complaint that the
defendants' agent who made the alleged promise had no authority
to do so, and the plaintiff's reliance on the promise was
AO 72A
(Rev. 8182)
I
20
therefore unreasonable. Abdullahi, 677 F.3d at 868. And in
Miller, the court simply held that it was unreasonable for the
plaintiff to expect a permanent loan modification when he was
only promised a temporary modification. Miller, 677 F.3d at
1117. Here, there is no similar defect in Defendants' alleged
promise that would render reliance on that promise unreasonable,
at least upon consideration of the amended complaint at the
motion to dismiss stage.
As a final matter, it is worth noting that Plaintiffs do
not allege in their amended complaint that the promise relied on
for Count IV's promissory estoppel claim was a term of the
contract between Plaintiffs and Defendants for the Tennessee
receiving station. Plaintiffs do allege that their contractual
"absolute duty of loyalty" "created a reciprocal duty of good
faith owed by Defendants to the Plaintiffs" which they violated
by purchasing burley tobacco from another receiving station.
Dkt. no. 22, ¶91 46-47. But these allegations, when read in a
light most favorable to the Plaintiffs, do not preclude the
possibility that Defendants' duty of exclusivity was based on a
promise not included in the contract. Plaintiffs' alternative
claim of promissory estoppel under Count IV, then, will survive
Defendants' motion to dismiss.
AO 72A
(Rev. 8182)
1
21
IV.
Claim for Attorney's Fees (Count V)
Georgia Code section 13-6-11 generally disallows the
expenses of litigation to be claimed as damages; "but where the
plaintiff has specially pleaded and has made prayer therefor and
where the defendant has acted in bad faith, has been stubbornly
litigious, or has caused the plaintiff unnecessary trouble and
expense, the jury may allow them." Ga. Code Ann. § 13-6-11.
Here, Plaintiffs have specifically requested attorney's fees in
their amended complaint. Plaintiffs' have alleged, in part, that
Defendants knew they would not properly grade the burley tobacco
in Georgia when they contracted to do so. Dkt. no. 22, ¶ 22.
"Evidence that [Defendant] entered into the agreements with no
present intention of keeping them [is] sufficient to authorize
the charge and the recovery of attorney fees for bad faith."
Gaines v. Crompton & Knowles Corp., 380 S.E.2d 498, 503 (Ga. Ct.
App. 1989) . Therefore, Defendants' motion to dismiss Plaintiffs'
claim for attorney's fees is DENIED.
V.
Claim for Punitive Damages (Count VI)
Under Georgia law, "Punitive damages may be awarded only in
such tort actions in which it is proven by clear and convincing
evidence that the defendant's actions showed willful misconduct,
malice, fraud, wantonness, oppression, or that entire want of
care which would raise the presumption of conscious indifference
to consequences." Ga. Code Ann. § 51-12-5.1(b). Because
22
22
AO 72A
(Rev. 8/82)
I
Plaintiffs' fraud claims will survive Defendants' motion to
dismiss, Defendants' motion to dismiss the punitive damages
claim is DENIED.
CONCLUSION
Defendants' motion to dismiss Plaintiffs' amended complaint
is GRANTED in part and DENIED in part; the motion to dismiss is
GRANTED as to Plaintiffs' claims under Count I for promissory
estoppel and Count III for price fixing. However, Defendants'
motion to dismiss is DENIED as to Plaintiffs' claims under Count
II for Fraud, Count IV for promissory estoppel, Count V for
attorney's fees, and Count VI for punitive damages.
SO ORDERED, this 19TH day of March, 2015.
LISA GODBEY OOD, CHIEF JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
AO 72A
(Rev. 8182)
I
23
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?