Servicios Azucareros de Venezuela, C.A. et al v. John Deere Thibodeaux, Inc.

Filing 79

ORDER & REASONS granting 73 Motion to Dismiss for Failure to State a Claim. Signed by Judge Martin L.C. Feldman on 4/11/2013. (caa, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SERVICIOS AZUCAREROS
DE VENEZUELA, C.A. ET AL.

CIVIL ACTION

VERSUS

NO. 10-4443

JOHN DEERE THIBODAUX, INC.

SECTION “F”

ORDER AND REASONS
Before the Court is John Deere's motion to dismiss under
Rule 12(b)(6) for failure to state a claim upon which relief can
be granted.

For the reasons that follow, the motion is GRANTED.
Background

This dispute arises out of an alleged breach of an oral
contract.
Servicios Azucareros de Venezuela, C.A., a Venezuela
corporation, and its president, Zvonimir Tolj, Sr., a citizen of
Venezuela (collectively, “Servicios”), assert that Servicios had
an oral contract with Cameco Industries, Inc., making Servicios
the exclusive distributor of John Deere products in Venezuela.
In 1996, Cameco changed its name to John Deere Thibodaux, Inc.
Although the contract was oral, Servicios contends that it
was substantiated with various written instruments over the
years.

Specifically, Servicios asserts that John Deere confirmed

in writing to customers in Venezuela that its products were sold
exclusively though Servicios, and that it informed other
companies to cease representing themselves as John Deere dealers
1

based on Servicios’s exclusive distributorship.

Servicios

submits that through its efforts over the years, it successfully
developed the Venezuelan market for John Deere products.
Under the contract, Servicios alleges that it was entitled
to receive, and did for many years, a 20% commission on all John
Deere harvesters and tractors, and a 25% commission on spare
parts, sold in Venezuela.

In 2006, Servicios contends that John

Deere, using “economic duress”, wrongfully reduced Servicios’s
commission from 20% to 10%; however, Servicios continued to sell
and distribute John Deere products under the reduced commission
rate.

Then in 2008, Servicios asserts, John Deere wrongfully

terminated its contract.
Servicios sued John Deere in this Court on December 1, 2010,
invoking the Court’s diversity jurisdiction, and asserting claims
under Louisiana and, alternatively Venezuela, law.

Under

Louisiana law, Servicios seeks recovery of damages for breach of
contract under Louisiana Civil Code articles 1983, 1966-67, 201314, and 2024, and, for commissions wrongfully withheld under
Louisiana Revised Statutes sections 51:481-90; alternatively,
Servicios claims unjust enrichment under article 2298.

Under

Venezuelan law, Servicios asserts contract remedies pursuant to
Venezuela Civil Code articles 1159, 1212, and 1264, unjust
enrichment under article 1184, and moral damages under article
1196.

In sum, Servicios seeks over $1.5 million in damages.

2

On March 14, 2011, John Deere filed a motion to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6), alleging
that Servicios did not have standing to sue, and, even assuming
that the standing requirement was met, Servicios’s claims under
Louisiana Revised Statute 51:481, the Louisiana Dealer Agreement
Act, fail because the statute applies solely to Louisiana
dealers.

The Court ordered supplemental briefing on (1) whether

the plaintiffs have prudential standing, and (2) whether
Louisiana or Venezuela law governs plaintiffs' claims.

On July

29, 2011, the Court granted John Deere’s motion to dismiss,
finding that plaintiffs did not have standing.

Servicios moved

to reopen the case, which the Court denied on September 1, 2011.
Servicios appealed this Court’s decision to the U.S. Court of
Appeals for the Fifth Circuit.

On December 13, 2012, the Fifth

Circuit, finding that Servicios had standing, vacated this
Court’s decision dismissing the complaint and remanded the case
for further proceedings.
John Deere filed another motion to dismiss under Rule
12(b)(6) on January 18, 2013, which this Court granted in part
and denied in part on February 6, 2013.

The Court also granted

Servicios leave to provide a more definite statement under Rule
12(e) as to its claim for an accounting, and, in response,
Servicios filed an amended complaint on February 19, 2013.
Servicios moved the Court to reconsider its February 6, 2013

3

Order and Reasons, which this Court denied on March 27, 2013.
John Deere now moves to dismiss under Rule 12(b)(6) plaintiffs'
claim in its amended complaint, which requests damages on the
basis that defendant attempted to block access to the U.S.
Courts.
I.

Legal Standard

Rule 12(b)(6) of the Federal Rules of Civil Procedure allows
a party to move for dismissal of a complaint for failure to state
a claim upon which relief can be granted.

Such a motion is

rarely granted because it is viewed with disfavor.

See Lowrey v.

Tex. A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997) (quoting
Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc.,
677 F.2d 1045, 1050 (5th Cir. 1982)).

In considering a Rule

12(b)(6) motion, the Court “accepts ‘all well-pleaded facts as
true, viewing them in the light most favorable to the
plaintiff.’”

See Martin K. Eby Constr. Co. v. Dall. Area Rapid

Transit, 369 F.3d 464 (5th Cir. 2004) (quoting Jones v.
Greninger, 188 F.3d 322, 324 (5th Cir. 1999)).

But, in deciding

whether dismissal is warranted, the Court will not accept
conclusory allegations in the complaint as true.
F.2d at 1050.

Kaiser, 677

Indeed, the Court must first identify allegations

that are conclusory and, thus, not entitled to the assumption of
truth.

Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

A

corollary: legal conclusions “must be supported by factual

4

allegations.” Id. at 678.

Assuming the veracity of the well-

pleaded factual allegations, the Court must then determine
“whether they plausibly give rise to an entitlement to relief.”
Id. at 679.
“‘To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.’” Gonzalez v. Kay, 577 F.3d
600, 603 (5th Cir. 2009) (quoting Iqbal, 556 U.S. at 678)
(internal quotation marks omitted).

“Factual allegations must be

enough to raise a right to relief above the speculative level, on
the assumption that all the allegations in the complaint are true
(even if doubtful in fact).”

Bell Atl. Corp. v. Twombly, 550

U.S. 544, 555 (2007) (citations and footnote omitted). “A claim
has facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”

Iqbal, 556 U.S.

at 678 (“The plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that
a defendant has acted unlawfully.”).

This is a “context-specific

task that requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679.

“Where a complaint

pleads facts that are merely consistent with a defendant’s
liability, it stops short of the line between possibility and
plausibility of entitlement to relief.”

5

Id. at 678 (internal

quotations omitted) (citing Twombly, 550 U.S. at 557).

“[A]

plaintiff’s obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’”, thus, “requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.”

Twombly, 550 U.S. at 555

(alteration in original) (citation omitted).
In deciding a motion to dismiss, the Court may consider
documents that are essentially “part of the pleadings.”

That is,

any documents attached to or incorporated in the plaintiff’s
complaint that are central to the plaintiff’s claim for relief.
Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th
Cir. 2004) (citing Collins v. Morgan Stanley Dean Witter, 224
F.3d 496, 498-99 (5th Cir. 2000)).

Also, the Court is permitted

to consider matters of public record and other matters subject to
judicial notice without converting a motion to dismiss into one
for summary judgment.

See United States ex rel. Willard v.

Humana Health Plan of Tex. Inc.,

336 F.3d 375, 379 (5th Cir.

2003).
II.

Discussion

The Court agrees that Servicios fails to state a claim for
damages on the basis that John Deere “attempt[ed] to block access
to the United States Courts.”
In its February 6, 2013 Order and Reasons, this Court
granted Servicios leave to provide a more definite statement

6

under Rule 12(e) as to its claim for an accounting.

Servicios

filed an amended complaint and included, among other things, the
following claim:
Plaintiffs are entitled to damages under Article 34,
paragraph 2 of the U.S. Venezuela Friendship Treaty
(annexed hereto) because Defendant infringed the Treaty
by attempting to block access to the United States Courts
for years on the basis of a specious standing issue which
did not apply to the facts of this case per the decisions
of the United States Courts of Appeals for the D.C. and
5th Circuit.1
In making this claim, Servicios relies on Article 34, paragraph 2
of the Treaty of Peace, Friendship, Navigation and Commerce,
Between the United States of America and the Republic of
Venezuela, which states:
If any one or more of the citizens of either party shall
infringe any of the articles of this treaty, such citizen
shall be held personally responsible for the same, and
harmony and good correspondence between the two nations
shall not be interrupted thereby, each party engaging in
no way to protect the offender, or sanction such
violation.
Treaty of Peace, Friendship, Navigation and Commerce, U.S.Venez., Jan. 20, 1836, art. 34, para. 2, 8 Stat. 466 (emphasis
added), available at 1836 WL 3643.

Specifically, Servicios is

alleging that John Deere “infringed” Article 13 of the Treaty,
which provides:
Both

the

contracting

parties

1

promise

and

engage,

The Court notes that this is unrelated to Servicios' claim for
an accounting, which is the reason the Court granted leave to
amend in the first place. In addition, Servicios failed to
"annex" any document to the amended complaint.
7

formally, to give their special protection to the persons
and property of the citizens of each other, of all
occupations, who may be in the territories subject to the
jurisdiction of the one or the other, transient or
dwelling therein, leaving open and free to them the
tribunals of justice, for their judicial recourse, on the
same terms which are usual and customary with the natives
or citizens of the country in which they may be . . . .
Id. art. 13 (emphasis added).

Therefore, Servicios contends that

because John Deere challenged Servicios’ standing, and was
ultimately unsuccessful on the argument, John Deere was blocking
access to the Courts and Servicios is owed damages.
In response, John Deere first asserts that the Treaty is no
longer in effect and, therefore, Servicios’ claim fails as a
matter of law.2

The Court notes that the Treaty at issue was

2

Servicios submits that arguing that the Treaty has been
revoked is not a 12(b)(6) issue: "The complicated framework of
current treaties raises obvious factual issues to be resolved by
a Rule 56 motion." Servicios explains at length how there are
numerous other treaties in place between the United States and
Venezuela and, therefore, a "12b6 motion is not the vehicle to
explore those issues without any substantial discovery." This
argument is wholly without merit.
First, Servicios pleads that it is owed damages under the
Treaty of Peace, Friendship, Navigation and Commerce, Between the
United States of America and the Republic of Venezuela. Whether
or not the United States has other treaties in place with
Venezuela does not affect whether Servicios can state a claim
upon which relief can be granted under the treaty expressly
alleged in the complaint. The only claim at issue for purposes
of this motion is whether Servicios has stated a claim that John
Deere "infringed" the Treaty of Peace, Friendship, Navigation and
Commerce. The "modern web" of treaties does not make a 12(b)(6)
improper here.
Second, in considering whether a party has stated a claim
upon which relief can be granted, the Court obviously must
consider whether the law on which plaintiff relies is in effect.
If not, on its face, relief cannot be granted. Servicios appears
to be confused by the outcome of this motion: if this one claim
8

terminated on January 3, 1851, but only as to portions relating
to commerce and navigation.
OTHER INTERNATIONAL AGREEMENTS
1038 (1974).

12 U.S. DEP'T

OF THE

UNITED STATES

OF
OF

STATE, TREATIES

AND

AMERICA 1776-1949 at

Although certain Articles of the Treaty are easily

classifiable as “commerce and navigation,” it is unclear whether
Articles 13 and 34 fall under this category--a point John Deere
somewhat acknowledges in its submission papers to the Court.

In

fact, numerous courts have analyzed Article 13 in recent years,3
and Article 34 covers logistical issues, none of which are
specific to commerce and navigation.

They implicate duration and

termination of the treaty; infringement of the treaty; acts a
party cannot take; and coverage of the treaty.

As a result, the

Court is not persuaded that the two Articles on which Servicios

(paragraph 26 of the amended complaint) is dismissed, Servicios
is not precluded from conducting discovery relevant to its other
claims.
Third, this case has not been "singled out for special
treatment" or deemed "frivolous" by the Court. The text of 28
U.S.C. § 1927 provides: "Any attorney or other person admitted
to conduct cases in any court in the United States or any
Territory thereof who so multiples the proceedings in any case
unreasonably and vexatiously may be required by the court to
satisfy personally the excess costs, expenses, and attorneys'
fees reasonably incurred because of such conduct." 28 U.S.C §
1927. Noticeably missing from the statutory text is the word
frivolous. The Court's reference to this statute in previous
Order and Reasons was to remind counsel, for both sides, to be
cautious of conducting this case in a vexatious manner.
3

See, e.g., In re Air Crash Near Peixoto De Azeveda, Brazil
Sept. 29, 2006, 574 F. Supp. 2d 272 (S.D.N.Y. 2008); Morales
Ford Motor Co., 313 F. Supp. 2d 672 (S.D. Tex. 2004); Rivas
rel. Estate of Gutierrez v. Ford Motor Co., No. 02-676, 2004
1247018 (M.D. Fla. Apr. 19, 2004).
9

on
v.
ex
WL

rely are no longer in effect as John Deere contends.
John Deere also submits that assuming the Treaty is in
effect, it is inapplicable as to Servicios because it requires
Venezuelan citizens to be physically present in the United
States, either "transiently" or "dwelling" here.

To reiterate,

Article 13 states:
Both the contracting parties promise . . . to give
their special protection to the persons and property of
the citizens of each other . . .
who may be in the
territories subject to the jurisdiction of the one or the
other, transient or dwelling therein, leaving open and
free to them the tribunals of justice, for their judicial
recourse . . . .
Treaty of Peace, Friendship, Navigation and Commerce, U.S.Venez., Jan. 20, 1836, art. 13, 8 Stat. 466 (emphasis added),
available at 1836 WL 3643.

John Deere asserts that the Treaty,

by its express terms, requires that the signatories' courts be
open to citizens who happen to be physically within the territory
of the other, which can occur either transiently or because the
citizen is dwelling in the territory.

The Court notes that the

Fifth Circuit has not directly addressed whether a citizen of a
signatory nation must be physically present in the nation to
avail itself of the Treaty, and the case literature on the matter
is divided.4

Ultimately, the Court need not decide this issue,

4

In the context of forum non conveniens, the Fifth Circuit has
addressed a similar provision in a treaty between the United
States and Honduras. See James v. Gulf Int'l Marine Corp., 777
F.2d 193, 194 & n.2 (5th Cir. 1985), overruled on other grounds
by In re Air Crash Disaster Near New Orleans, La. on July 9,
10

as Servicios' claim fails regardless;

even construing the facts

in a light most favorable to the plaintiff, Servicios fails to
state a claim that is plausible on its face.
In its amended complaint, Servicios states:
Plaintiffs are entitled to damages . . . because
Defendant infringed the Treaty by attempting to block
access to the United States Courts for years on the
basis of a specious standing issue which did not apply
to the facts of this case per the decisions of the
United States Courts of Appeals for the D.C. and 5th
Circuit.
The Court does not accept conclusory allegations in the complaint
as true for purposes of deciding whether dismissal is warranted,
and the only factual allegation asserted here is that John
Deere's prudential standing challenge was "specious" because of
two cases decided after John Deere raised the issue.

See Kaiser,

1982, 821 F.2d 1147, 1163 (5th Cir. 1987). In James, the
appellant argued for the first time that the Treaty of
Friendship, Commerce, and Consular Rights between the United
States and Honduras guarantees Honduran nationals access to
American forums and, therefore, the district court should have
considered her an American citizen for purposes of the choice of
The Fifth
law and forum non conveniens balancing. Id. at 194.
Circuit did not decide the issue because it was not raised at the
trial level but noted that other circuit courts have partially
accepted the appellant's interpretation of the provision. Id. at
194 n.2; see also Morales, 313 F. Supp. 2d at 686-88 (noting that
the Fifth Circuit has not decided whether a plaintiff must be
physically present in the United States, and disregarding the
argument because the private interest factors of the forum non
conveniens test clearly point toward trial in Venezuela). Cf.
Rivas, 2004 WL 1247018, at *8 (M.D. Fla. Apr. 19, 2004) ("The
language appears to given Venezuelan citizens who are physically
in the U.S. the same rights to justice as U.S. citizens. It does
not appear to address what rights foreign plaintiffs have if they
are suing outside of their convenient local forum.").
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677 F.2d at 1050.

Under this logic, every argument that was

later discredited by a circuit court would be in law specious and
block access to the courts.

Servicios pleads no other factual

allegations to support its claim.

Further, the complaint

contains no indication that John Deere had an intent to harass or
an improper motive that might lend credence to the proposition
that John Deere was "blocking" access to the Court as opposed to
asserting a good faith defense to a lawsuit, a right every
litigant has.

John Deere was merely defending its case by

arguing the application of existing law based on precedent that
had not been overturned at the time.

Drawing on its common sense

and judicial experience, the Court finds that Servicios patently
fails to plead any factual allegations that raise a right to
relief above a speculative level, and the claim must be dismissed
with prejudice.

See, e.g., Iqbal, 556 U.S. at 678-79 (concluding

that whether a complaint states a claim that asks for more than a
"sheer possibility" that the defendant has acted unlawfully is a
"context-specific task" and the "requires the reviewing court to
draw on its judicial experience and common sense").
Further, because the essence of Servicios' claim is similar
to that of a request for Rule 11 sanctions, the Court notes the
Fifth Circuit's instruction:
[C]ourts should not impose sanctions simply because one
party ultimately lost on the merits of the litigation;
nor should courts [or parties in this matter] use the
12

wisdom of hindsight in ruling on a motion for sanctions
. . . . Instead, the task for the district court . . . is
only to decide whether an attorney has failed to conduct
a reasonable inquiry into the law and the facts and
comply with an objective standard of reasonableness under
the circumstances.
Trinity Gas Corp. v. City Bank & Trust Co. of Natchitoches, 54 F.
App'x 591 (5th Cir. 2002) (internal quotation marks omitted).
Accordingly, the defendant's motion to dismiss is GRANTED.5

New Orleans, Louisiana, April 11, 2013

____________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

5

The Court's previous Order and Reasons dismissing claims in
this case are unaffected by the filing of the amended complaint.
Claims in the amended complaint that were previously dismissed
remain dismissed. In addition, the Court notes that contrary to
Servicios' assertion, John Deere did not challenge the timeliness
of Servicios' amended complaint in this motion.
13