Mr. Mudbug, Inc. v. Bloomin' Brands, Inc.
Filing
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ORDER AND REASONS GRANTING IN PART 10 Motion to Dismiss for Failure to State a Claim. Plaintiff's bad faith allegations are DISMISSED WITHOUT PREJUDICE, and Plaintiff may amend its Complaint within 20 days of this Order to the extent that it can plausibly state a claim for bad faith.Signed by Judge Jane Triche Milazzo on 3/23/2016. (my)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MR. MUDBUG, INC. d/b/a
MMI CULINARY SERVICES
CIVIL ACTION
VERSUS
NO: 15-5265
BLOOMIN BRANDS, INC.
SECTION: "H"(3)
ORDER AND REASONS
Before the Court is Defendant Bloomin’ Brands, Inc.’s Motion to Dismiss
(Doc. 10). For the following reasons, the Motion is GRANTED IN PART, and
Plaintiff’s bad faith allegations are DISMISSED WITHOUT PREJUDICE.
BACKGROUND
Plaintiff Mr. Mudbug, Inc. d/b/a MMI Culinary Services manufactures
products such as prepared soups, sauces, and salad dressings. Defendant
Bloomin’ Brands, Inc. is a dining company with several national and
international restaurant chains. According to Plaintiffs’ Complaint, Plaintiff
and Defendant formed a business relationship in late 2007 and early 2008
when Plaintiff began producing pre-prepared soups and salad dressings for
Defendant. In response to an increase in demand and Defendant’s quality
standards, Plaintiff expanded its manufacturing facilities in 2008. Thereafter,
Plaintiff alleges that Defendant awarded it with a contract to provide 28
million pounds of salad dressings (the “Dressing Contract”). In 2011, Plaintiff
began a second expansion of its facilities costing $16.8 million. Plaintiff alleges
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that Defendant inspected the expansion to ensure that it was compatible with
its needs and operations.
In 2012, however, Defendant converted from a
private company to a public company and began diverting its food orders from
Plaintiff to other food producers and suppliers. Defendant reduced the amount
of the Dressing Contract award and by early 2013 withdrew it entirely. By
December 2014, Defendant had ceased ordering food products from Plaintiff.
On September 25, 2015, Plaintiff filed a state court petition on open
account against Defendant for the payment of two invoices totaling
$242,668.83. Defendant removed the suit to this Court. Defendant thereafter
asserted a counterclaim against Plaintiff for breach of contract to supply
quality products and ingredients. Plaintiff then amended its complaint to add
claims for breach of contract, detrimental reliance, and bad faith against
Defendant. Defendant filed the instant motion alleging that Plaintiff has
failed to state a claim upon which relief can be granted with regards to its
breach of contract, detrimental reliance, and bad faith claims.
LEGAL STANDARD
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead
enough facts "to state a claim for relief that is plausible on its face." 1 A claim
is "plausible on its face" when the pleaded facts allow the court to "draw
reasonable inference that the defendant is liable for the misconduct alleged." 2
A court must accept the complaint's factual allegations as true and must "draw
all reasonable inferences in the plaintiff's favor." 3 The court need not, however,
1Ashcroft
v. Iqbal, 556 U.S. 662 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 547 (2007)).
2 Id.
3 Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).
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accept as true legal conclusions couched as factual allegations. 4 To be legally
sufficient, a complaint must establish more than a "sheer possibility" that the
plaintiff's claims are true. 5 If it is apparent from the face of the complaint that
an insurmountable bar to relief exists and the plaintiff is not entitled to relief,
the court must dismiss the claim. 6
The court's review "is limited to the
complaint, and any documents attached to the motion to dismiss that are
central to the claim and referenced by the complaint." 7
LAW AND ANALYSIS
Defendant moves this Court to dismiss Plaintiff’s breach of contract,
detrimental reliance, and bad faith claims for failure to state a claim upon
which relief can be granted. This Court will address each of its arguments in
turn.
A. Breach of Contract Claim
Plaintiff alleges that Defendant breached the Dressing Contract and
other contracts when it withdrew its orders from Defendant and failed to pay
two invoices. In order to state a valid claim for breach of contract under
Louisiana law, Plaintiff must allege:
“(1) the obligor's undertaking an
obligation to perform, (2) the obligor failed to perform the obligation (the
breach), and (3) the failure to perform resulted in damages to the obligee.” 8
Iqbal, 556 U.S. at 678.
Id.
6 Lormand, 565 F.3d at 255–57.
7 Jones v. Bock, 549 U.S. 199, 215 (2007).
8 Favrot v. Favrot, 68 So.3d 1099, 1109–10 (La. App. 4 Cir. 2011) (citing Jackson
Joint Venture v. World Constr. Co., Inc., 499 So.2d 426, 427 (La. App. 4 Cir. 1986)); see also
Smoothie King Franchises, Inc. v. Southside Smoothie & Nutrition Center, Inc., No. 11–
2002, 2012 WL 630010, at *4 (E.D. La. 2012).
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Here, Plaintiff’s allegations successfully meet the three elements for a
breach of contract claim in Louisiana. First, Plaintiff claims that it entered
into several contracts with Defendant for food orders, such as the Dressing
Contract. Second, Plaintiff alleges that Defendant breached those contracts by
withdrawing them and failing to pay the invoices for two orders.
Third,
Plaintiff states that it has suffered a total of $35,042,668.83 in direct and
consequential damages resulting from Defendant’s breach of contract.
Defendant argues, however, that Plaintiff’s breach of contract claim fails
under Louisiana law because Plaintiff has failed to cite to a specific contract
provision that was allegedly breached. 9 It states that Plaintiff cannot point to
a provision that prevented it from reducing and eventually withdrawing the
Dressing Contract. This Court disagrees. Plaintiff’s Complaint clearly alleges
that the Dressing Contract required Defendant to purchase 28 million pounds
of salad dressing from Plaintiff and that Defendant withdrew this contract
from Plaintiff and awarded it to other manufacturers. Drawing all reasonable
inferences in the plaintiff's favor, 10 this Court holds that Plaintiff’s Complaint
is sufficient to allege a breach of contract.
B. Detrimental Reliance
Next, Defendant alleges that Plaintiff’s Complaint fails to state a claim
for detrimental reliance.
To state a claim for detrimental reliance under
Louisiana law, a Plaintiff must allege: “(1) a representation by conduct or word;
(2) justifiable reliance; and (3) a change in position to one's detriment because
of the reliance.” 11 The detrimental reliance claim is intended to “prevent
See Smoothie King Franchises, Inc., 2012 WL 630010 at *4; Blackstone v. Chase
Manhattan Mortg. Corp., 802 F.Supp.2d 732, 738 (E.D. La. 2011) (citing Louque v. Allstate
Ins. Co., 314 F.3d 776, 782 (5th Cir.2003)).
10 Lormand, 565 F.3d at 232.
11 Blackstone, 802 F.Supp.2d at 739 (quoting Suire v. Lafayette City–Parish Consol.
Gov't, 907 So.2d 37, 59 (La. 2005)) (internal quotations omitted).
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injustice by barring a party from taking a position contrary to his prior acts,
admissions, representations, or silence.” 12
Because detrimental reliance
claims are not favored in Louisiana, they “must be examined carefully and
strictly.” 13
Plaintiff’s Complaint alleges that it relied on Defendant’s promises
under the Dressing Contract and other food product manufacturing
agreements in deciding to expand its plant. It alleges that the expansion would
allow it to manufacture and supply products in the quantities and within the
parameters required under those agreements. Plaintiff alleges that “had BBI
lived up to its promise to MMI under the Dressing Contract alone, the cost of
the Large Expansion would have been retired within six years.” 14 Plaintiff
alleges that its reliance was justified and caused it to incur indebtedness that
it would not otherwise have incurred.
This Court holds that the allegations in Plaintiff’s Complaint are
sufficient to state a claim for detrimental reliance.
Plaintiff alleges that
pursuant to the Dressing Contract, Defendant agreed to purchase 28 million
pounds of salad dressing. In reliance on this promise, Plaintiff expanded its
facility in order to meet Defendant’s needs. Plaintiff alleges that this reliance
was justified in light of Defendant’s participation in the expansion. Defendant
allegedly provided Plaintiff with information to obtain financing and inspected
the progress of the expansion to ensure that the new facility would meet its
needs. When Defendant breached the Dressing Contract by withdrawing the
contract and diverting its business to other suppliers, Plaintiff was unable to
pay for the expansion that it had initiated in reliance on Defendant’s promise.
Id. (internal quotations omitted).
Id. (quoting In re Ark–La–Tex Timber Co., 482 F.3d 319, 334 (5th Cir. 2007))
(internal quotations omitted).
14 Doc. 6, p. 7.
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Plaintiff has sufficiently plead the elements required to state a claim of
detrimental reliance.
C. Bad Faith Obligor
In both its breach of contract claim and detrimental reliance claim,
Plaintiff alleges that Defendant acted in bad faith in failing to perform its
obligations under the contracts between the parties. Pursuant to Louisiana
Civil Code article 1997, “[a]n obligor in bad faith is liable for all the damages,
foreseeable or not, that are a direct consequence of his failure to perform.” “An
obligor is in bad faith if he intentionally and maliciously fails to perform his
obligation.” 15 Defendant argues that Plaintiff’s Complaint fails to allege any
facts suggesting that Defendant acted with fraudulent or malicious intent and
therefore its bad faith claims should be dismissed.
This Court agrees.
Plaintiff’s Complaint is devoid of any mention of Defendant’s motivations or
intentions. The Complaint contains no facts that would support a finding that
the Defendant’s breach of contract was malicious or fraudulent. Plaintiff
merely alleges that Defendant ceased purchasing food products from it.
Accordingly, Plaintiff’s bad faith allegations are dismissed.
15
La. Civ. Code art. 1997, cmt. b.
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CONCLUSION
For the foregoing reasons, Defendant’s Motion to Dismiss is GRANTED
IN PART.
Plaintiff’s bad faith allegations are DISMISSED WITHOUT
PREJUDICE, and Plaintiff may amend its Complaint within 20 days of this
Order to the extent that it can plausibly state a claim for bad faith.
New Orleans, Louisiana, this 23rd day of March, 2016.
____________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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