Yinerson, LLC v. Farmers Rice Milling Company, LLC et al
RULING AND ORDER granting in part 24 Motion to Dismiss for Failure to State a Claim. Plaintiff's fraud claim is DISMISSED, subject to Plaintiff's right to file an amended complaint within 21 days of the date of this Order. Defendant's Motion is DENIED in all other respects. Signed by Judge Brian A. Jackson on 9/14/2020. (EDC)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
FARMERS RICE MILLING COMPANY,
LLC, ET AL.
RULING AND ORDER
Before the Court is Defendant Farmers Rice Milling Company, LLC’s Motion
to Dismiss (Doc. 24). Plaintiff opposes Defendant’s Motion. (Doc. 30). For the
reasons stated herein, Defendant’s Motion is GRANTED IN PART and Plaintiff’s
fraud claim is DISMISSED, subject to Plaintiff’s right to file an amended complaint
within 21 days from the date of this Order. Defendant’s Motion is DENIED in all
A. Alleged Facts
This action seeks damages from Defendant (and others) related to a shipment
of rice allegedly lost somewhere between its origin in Houston, Texas and its intended
delivery in China. (Doc. 1-2 at ¶¶ 19-22). For present purposes, the following
allegations are accepted as true:
Plaintiff is a commodities broker doing business under various names,
including Yinerson, LLC, American Yinerson Trading Co., Ltd., and Yangpu Yinerson
Trading Co., Ltd. (Doc. 1-2 at ¶ 3). Defendant operates a rice mill in Lake Charles,
Louisiana. (Doc. 24-1 at 2). Plaintiff contracted with Defendant to supply 20 tons of
rice for delivery to Plaintiff’s customers in China based on Defendant’s assurances
that Defendant possessed the experience and “necessary expertise” to ship rice to
China. (Doc. 1 at ¶ 6). Specifically, Defendant’s employee, co-Defendant Ana Lefort,
“assured [Plaintiff] repeatedly that there would be no issues with shipping rice to
China,” and “that she had been shipping rice to China for more than ten years.”
(Id. at ¶¶ 7-8). Plaintiff contends that each of these statements was “inaccurate,” and
that Defendant made these “false statements” in order to secure Plaintiff’s business.
(Id. at ¶¶ 9-12).
Plaintiff executed its supply contract with Defendant and placed its first order
for rice on October 30, 2017. (Id. at ¶ 16). In December 2017, Defendant delivered
Plaintiff’s order to the Port of Houston, where Defendant tendered the rice to its
overseas carrier, co-Defendant CMA CGM (America), LLC (“CGM CMA”).
(Id. at ¶ 20). In January 2018, Defendant informed Plaintiff that “the rice had arrived
in China and would soon be transferred to its destination port for final delivery.”
(Id. at ¶ 21). Soon thereafter, however, “the shipment went missing.” (Id. at ¶ 22).
Plaintiff contends that Defendant initially deflected blame for the missing
shipment, attributing it to a “miscommunication.” (Id. at ¶¶ 23-24). In reality, the
rice was seized by Chinese Customs, allegedly because Defendant mishandled
paperwork and employed “unlicensed shippers.” (Id. at ¶ 29). Defendant allegedly
“concealed” these errors for months, “and even represented that there was a mistake
and [these] errors had not occurred.” (Id. at ¶ 30). Plaintiff discovered the truth
sometime in May 2018, when Defendant “finally admitted that there had been an
error but blamed CMA [the carrier].” (Id. at 31). Despite Plaintiff’s efforts to
“procure replacement rice” and save its sales contracts, Plaintiff’s customers
ultimately cancelled their orders and Plaintiff lost business due to Defendant’s acts
and omissions. (Id. at 33-35).
B. Procedural History
Plaintiff filed its original action in Louisiana state court on May 10, 2019,
alleging breach of contract, fraud, and negligence against Defendant, Lefort, CGM
CMA, and a fourth co-Defendant, Navis GPS, Inc. (Doc. 1-2 ¶¶ 36-38). Defendant
removed to this Court on June 20, 2019. (Doc. 1). Thereafter, Plaintiff voluntarily
dismissed its claims against Mrs. Lefort and Navis GPS. (See Docs. 21, 22, 27, 32).
More recently, the Court dismissed Plaintiff’s claims against CMA CGM, determining
that any such claims must be pursued in France under the operative Bill of Lading.
Defendant now seeks dismissal of Plaintiff’s action, contending that Plaintiff’s
claims fail as a matter of law. (Doc. 24). Specifically, Defendant argues (1) Plaintiff’s
contract claim fails because Plaintiff is not a party to the underlying sales contract;
(2) Plaintiff’s fraud claim fails for lack of specificity; and (3) Plaintiff’s fraud and
negligence claims are prescribed on their face. (See id.). Plaintiff opposes Defendant’s
Motion. (Doc. 30). Defendant has filed a reply. (Doc. 34). For reasons that follow,
Defendant’s Motion will be granted in part, and Plaintiff’s fraud claim will be
dismissed, subject to Plaintiff’s right to file an amended complaint.
A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint against
the legal standard set forth in Rule 8, which requires “a short and plain statement of
the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “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.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
“Determining whether a complaint states a plausible claim for relief [is] . . . a
context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679. “[F]acial plausibility” exists “when the
plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. at 678 (citing Twombly,
550 U.S. at 556). Hence, the complaint need not set out “detailed factual allegations,”
but something “more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action” is required.
Twombly, 550 U.S. at 555.
conducting its inquiry, the Court must “accept all well-pleaded facts as true and
view those facts in the light most favorable to the plaintiff.” Bustos v. Martini Club
Inc., 599 F.3d 458, 461 (5th Cir. 2010) (quotation marks omitted).
Breach of Contract
Plaintiff alleges breach of contract based on Defendant’s failure “to deliver the
goods, as promised, when promised.” (Doc. 1-2 at ¶ 37). In Louisiana, the essential
elements of a breach of contract claim are (1) the obligor undertook 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. Denham Homes, L.L.C. v. Teche
Fed. Bank, 2014-1576 (La. App. 1 Cir. 9/18/15), 182 So. 3d 108, 119 (citing La. C.C.
Defendant does not dispute that Plaintiff’s Complaint pleads the basic
elements of breach of contract. After all, Plaintiff alleges (1) Plaintiff contracted with
Defendant for a shipment of rice to be delivered to Plaintiff’s customers in China;
(2) Defendant mishandled paperwork and employed “unlicensed shippers,” which
(3) consequently, Plaintiff lost profits and customers. Instead, Defendant seeks
dismissal because Plaintiff fails to disclose which entity among its various alleged
trade names—Yinerson, LLC, American Yinerson Trading Co., Ltd., and/or Yangpu
Yinerson Trading Co., Ltd.—executed the sales contract with Defendant. (Doc. 24-1
at 5). To support its position, Defendant reaches outside the four corners of the
Complaint, suggesting that Plaintiff has failed to properly register its trade names
and may be operating under assumed names in violation of Louisiana law, and
asserting in a footnote that “the evidence will show that [Defendant] entered into an
agreement with Yangpu, not Yinerson.” (Id. at n.3).
The Court is not persuaded. What the evidence may ultimately show regarding
Plaintiff’s business practices and the contract relationship among the parties, and
what significance that evidence may bear on the instant dispute, is for a later date.
At this stage, the Court is limited to the allegations of the Complaint. The Complaint
alleges a plausible breach of contract, which Defendant does not contest. Defendant’s
request to dismiss Plaintiff’s breach of contract claim is denied.
Plaintiff alleges fraud based on Defendant’s alleged misrepresentations
regarding its experience and expertise shipping rice to China, and its initial
assurances “that there was no problem” when the shipment disappeared.
(Doc. 1-2 at ¶ 36). Defendant contends that these allegations are too vague to support
a plausible fraud claim. The Court agrees.
In Louisiana, “[f]raud is a misrepresentation or a suppression of the truth
made with the intention either to obtain an unjust advantage for one party or to cause
a loss or inconvenience to the other. Fraud may also result from silence or inaction.”
La. C.C. art. 1953. In addition to the requirements of Rule 12(b)(6), a plaintiff alleging
fraud must satisfy Rule 9(b), and plead “with particularity the circumstances
constituting fraud.” Fed. R. Civ. Pro. 9(b). The Fifth Circuit “interprets Rule 9(b)
strictly, requiring the plaintiff to specify the statements contended to be fraudulent,
identify the speaker, state when and where the statements were made, and explain
why the statements were fraudulent.” Flaherty & Crumrine Preferred Income Fund,
Inc. v. TXU Corp., 565 F.3d 200, 207 (5th Cir. 2009) (quotation marks omitted). In
other words, a plaintiff must “set forth the who, what, when, where, and how of the
alleged fraud.” U.S. ex rel. Williams v. Bell Helicopter Textron Inc., 417 F.3d 450, 453
(5th Cir. 2005) (quotation marks omitted).
Here, Plaintiff hardly sets forth the who, what, when, where, and how, let alone
with the specificity required by Rule 9(b). Rather, Plaintiff’s allegations merely
suggest that at some point between June and October 2017, Mrs. Lefort (and possibly
others) misrepresented Defendant’s experience and expertise shipping goods to
China, and that at various times between January and May 2018, Mrs. Lefort (and
possibly others) misrepresented the cause of the missing shipment, claiming it was
the result of a miscommunication, not intervention by Chinese Customs. These
allegations altogether lack the requisite “where” and “how,” and are seriously
deficient regarding the requisite “who,” “what,” and “when.” Accordingly, Defendant’s
request to dismiss Plaintiff’s fraud claim is granted. E.g., Trinity Med. Servs., L.L.C.,
et al., v. Merge Healthcare Sols., Inc., No. 17-cv-592, 2018 WL 3748399, at *4 (M.D.
La. Aug. 7, 2018) (dismissing plaintiffs’ fraud claim for lack of specificity).
Finally, Defendant asserts that Plaintiff’s fraud and negligence claims must be
dismissed because they are time-barred under La. C.C. art. 3492, Louisiana’s
one-year prescriptive period for delictual actions. (Doc. 24-1 at 8-9).
Here, again, the Court is not persuaded. Plaintiff alleges that Defendant
concealed and misrepresented the true cause of the missing shipment “into May of
2018, until [Defendant] finally admitted that there had been an error but blamed
CMA.” (Doc. 1-2 at ¶ 31). At this early stage, Defendant’s alleged concealment and
misrepresentation triggers contra non valentum, rendering Plaintiff’s claims timely
if pursued within one year of discovery. Our Lady of the Lake Hosp., Inc. v. Carboline
Co., 632 So. 2d 339, 343 (La. Ct. App. 1993), writ denied 635 So. 2d 228 (La. 1994)
(“Thus, if the debtor's conduct constitutes concealment, misrepresentation, fraud, or
other ill practices that prevents plaintiff from availing itself of its cause of action or
lulls plaintiff into a false sense of security, the doctrine of contra non valentem is
triggered.”). Plaintiff filed its original state court action on May 10, 2019, apparently
within one year of discovering Defendant’s concealment. Thus, these claims are not
prescribed on their face.
Defendant’s request for dismissal on the basis of prescription is denied, subject
to Defendant’s right to re-raise the defense if the evidence shows that Plaintiff knew
or should have known of its claims prior to May 10, 2018.
“When a complaint fails to state a claim, the court should generally give the
plaintiff at least one chance to amend before dismissing the action with prejudice
unless it is clear that the defects in the complaint are incurable.” Tow v. Amegy Bank
N.A., 498 B.R. 757, 765 (S.D. Tex. 2013) (citing authorities); see also 5B
Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed.
2016) (“As the numerous case[s] ... make clear, dismissal under Rule 12(b)(6)
generally is not immediately final or on the merits because the district court normally
will give the plaintiff leave to file an amended complaint to see if the shortcomings of
the original document can be corrected.”). Here, Plaintiff’s fraud claim is not
conclusively foreclosed, provided Plaintiff establishes the requisite who, what, when,
where, and how. Accordingly, the Court will afford Plaintiff the opportunity to amend.
E.g., Trinity Med. Servs., 2018 WL 3748399, at *12-13 (allowing plaintiffs to amend
their fraud claim to add the requisite “who, what, when, and where”).
IT IS ORDERED that Defendant’s Motion to Dismiss is GRANTED IN
PART. Plaintiff’s fraud claim is DISMISSED, subject to Plaintiff’s right to file an
amended complaint within 21 days of the date of this Order.
IT IS FURTHER ORDERED that Defendant’s Motion is DENIED in all
Baton Rouge, Louisiana, this 14th day of September, 2020
JUDGE BRIAN A. JACKSON
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
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