Aura Light US Inc. v. LTF International LLC et al
MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 6/8/2017. (bas, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
AURA LIGHT US INC.,
LTF INTERNATIONAL LLC, et al.,
Civil Action Nos. GLR-15-3198,
Defendants LTF Lighting LLC (“LTF Lighting”) and Paul V. Palitti, Jr.’s
Motion for Judgement on the Pleadings, (ECF No. 31),1 and Plaintiff Aura
Light US Inc.’s (“Aura”) Motion for Leave to File Amended Complaints,
(ECF No. 38).2
No hearing is necessary.
See Local Rule 105.6 (D.Md.
For the reasons outlined below, the Court will deny LTF
Lighting and Palitti’s Motion as moot without prejudice and grant
The Court discussed the background facts of this case in its
September 15, 2016 Opinion (ECF No. 20).
For context, the Court
repeats some of those facts here.
International”), LTF Lighting, and Palitti (collectively, “Defendants”)
Unless otherwise indicated, all references to the Court’s
electronic filing system are to GLR-15-3198.
Also pending before the Court is Aura’s Motion for Summary
Judgment (ECF No. 46). As of the date of this Opinion, Aura’s Motion
corporation that manufactures lighting products.
(Compl. ¶ 11).
parties then engaged in negotiations to create a new business venture
products to commercial customers throughout North America.
Ultimately, the negotiations broke down, and in May 2015, the parties
elected not to proceed with the proposed new business venture.
Defendants “entered into an agreement pursuant to which Aura would
manufacture and deliver to [Defendants] certain lighting products.”
(Id. ¶ 13).
In accordance with this “agreement,” during the period of
purchase orders (the “Purchase Orders”) to Aura for the manufacture and
delivery of specific lighting products.
(Id. ¶ 14; Compl. ¶ 14, ECF
No. 1, GLR-15-3200).
After Aura either manufactured, or manufactured and delivered, the
lighting products that Defendants ordered, Aura sent Defendants thirtyfour invoices (the “Invoices”) -- one for each Purchase Order. (Compl.
¶ 15, GLR-15-3198; Compl. ¶ 15, GLR-15-3200).
to pay the Invoices.
Defendants have failed
(Compl. ¶ 17, GLR-15-3198; Compl. ¶ 17, GLR-15-
The Purchase Orders and Invoices provide that the total price
to Defendants for the products that Aura manufactured is approximately
(See ECF Nos. 1-1, 1-2, GLR-15-3198; ECF Nos. 1-1, 1-2,
is not ripe for disposition.
On October 20, 2015, Aura initiated two breach-of-contract actions
against Defendants (the “Actions”).
See Aura Light US Inc. v. LTF
Int’l LLC, No. GLR-15-3198 (D.Md. filed Oct. 20, 2015); Aura Light US
Inc. v. LTF Int’l LLC, No. GLR-15-3200 (D.Md. filed Oct. 20, 2015).
November 20, 2015, Defendants filed Motions to Consolidate the Actions
(ECF Nos. 4, 5, GLR-15-3198; ECF Nos. 4, 5, JFM-15-
On December 28, 2015, Aura filed a Motion for Summary Judgment
(ECF No. 11, JFM-15-3200).
On March 28, 2016, Defendants filed
Supplemental Motions to Dismiss Complaint for Lack of Subject-Matter
Jurisdiction (ECF No. 10, GLR-15-3198; ECF No. 20, JFM-15-3200).
April 25, 2016, the Court granted Defendants’ Motions to Consolidate
(ECF No. 17, GLR-15-3198; ECF No. 32, JFM-15-3200).
September 15, 2016, the Court denied Defendants’ Motions to Dismiss
Complaint for Lack of Subject-Matter Jurisdiction and Supplemental
Motions to Dismiss Complaint for Lack of Subject-Matter Jurisdiction.
(ECF No. 21).
That same day, the Court also denied without prejudice
Aura’s Motion for Summary Judgment.
counterclaimed on October 4, 2016.
Defendants answered and
(ECF No. 25).
Less than two weeks later, on October 13, 2016, LTF Lighting and
Palitti filed the present Motion for Judgment on the Pleadings. (ECF
It was fully briefed as of November 17, 2016.
On January 6, 2017, Aura filed the instant Motion for Leave
to File Amended Complaints.
(ECF No. 38).
(See ECF Nos.
Palitti responded in
opposition on January 27, 2017.
(ECF No. 42). To date, the Court has
no record that Aura replied.
LTF Lighting and Palitti’s Motion for Judgment on the
Standard of Review
Procedure 12(c) for judgment on the pleadings.
“Under Rule 12(c), a
party may move for judgment on the pleadings any time after the
pleadings are closed, as long as it is early enough not to delay
Prosperity Mortg. Co. v. Certain Underwriters At Lloyd’s,
London, No. GLR-12-2004, 2013 WL 3713690, at *2 (D.Md. July 15, 2013).
The pleadings are closed when the defendant files an answer.
Burbach Broad. Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 405
(4th Cir. 2002).
A Rule 12(c) motion is governed by the same standard as Rule
12(b)(6) motions to dismiss.
Id. at 406.
“The purpose of a Rule
12(b)(6) motion is to test the sufficiency of a complaint,” not to
“resolve contests surrounding the facts, the merits of a claim, or the
applicability of defenses.”
Edwards v. City of Goldsboro, 178 F.3d
231, 243–44 (4th Cir. 1999) (quoting Republican Party v. Martin, 980
F.2d 943, 952 (4th Cir. 1992)).
A complaint fails to state a claim if
it does not contain “a short and plain statement of the claim showing
that the pleader is entitled to relief,” Fed.R.Civ.P. 8(a)(2), or does
not “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 (2007)).
A claim is facially plausible “when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
550 U.S. at 556).
Id. (citing Twombly,
“Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice” to
state a plausible claim for relief.
Id. (citing Twombly, 550 U.S. at
Though the plaintiff is not required to forecast evidence to
prove the elements of the claim, to state a plausible claim, the
complaint must allege sufficient facts to establish each element of the
Goss v. Bank of Am., N.A., 917 F.Supp.2d 445, 449 (D.Md. 2013)
(quoting Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012)), aff’d
sub nom., Goss v. Bank of Am., NA, 546 F.App’x 165 (4th Cir. 2013).
In considering a Rule 12(b)(6) motion, a court must examine the
complaint as a whole, consider the factual allegations in the complaint
as true, and construe the factual allegations in the light most
favorable to the plaintiff.
Albright v. Oliver, 510 U.S. 266, 268
(1994); Lambeth v. Bd. of Comm’rs of Davidson Cty., 407 F.3d 266, 268
(4th Cir. 2005).
But the court need not accept unsupported or
conclusory factual allegations devoid of any reference to actual
events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir.
1979), or legal conclusions couched as factual allegations, Iqbal, 556
U.S. at 678.
In resolving a Rule 12(b)(6) motion, the Court proceeds in two
First, the Court determines “which allegations in the Complaint
are factual allegations entitled to deference, and which are mere legal
conclusions that receive no deference.”
Harden v. Montgomery Cty., No.
8:09-CV-03166-AW, 2010 WL 3938326, at *1–2 (D.Md. Oct. 6, 2010) (citing
Iqbal, 556 U.S. at 678–79).
Second, the Court focuses on the well-
pleaded allegations, assumes their veracity, and determines “whether
they plausibly give rise to an entitlement to relief.”
Iqbal, 556 U.S. at 679).
The general rule is that a court may not consider extrinsic
evidence when resolving a Rule 12(b)(6) motion.
See Chesapeake Bay
Found., Inc. v. Severstal Sparrows Point, LLC, 794 F.Supp.2d 602, 611
But a court may consider documents attached to the
See Fed.R.Civ.P. 10(c).
In the event that any properly
considered extra-pleading materials conflict with the “bare allegations
of the complaint,” the extra-pleading materials “prevail.”
Ltd. v. World Choice Travel.com, Inc., 180 F.Supp.2d 678, 683 (D.Md.
2001) (citing Fayetteville Inv’rs v. Commercial Builders, Inc., 936
F.2d 1462, 1465 (4th Cir. 1991)).
breach of contract
Under Maryland law,3 a plaintiff alleging a
“must of necessity allege with certainty and
The parties agree that Maryland law applies to this diversity
definiteness facts showing  a contractual obligation owed by the
defendant to the plaintiff and a  breach of that obligation by
Polek v. J.P. Morgan Chase Bank, N.A., 36 A.3d 399, 416
(Md. 2012) (quoting Cont’l Masonry Co. v. Verdel Constr. Co., 369 A.2d
566, 569 (Md. 1977)) (internal quotation marks omitted).
For there to
be a contractual obligation, the parties must have formed a contract.
Because this case involves purported contracts for the sale of goods,
the Uniform Commercial Code (“UCC”) governs whether the parties formed
See Md.Code Ann., Com. Law § 2-201 (West 2017).
The UCC provides that a “contract for sale of goods may be made in
any manner sufficient to show agreement, including conduct by both
parties which recognizes the existence of such a contract.”
Id. § 2–
This provision affirms that a manifestation of mutual assent
Contractors, LLC v. Synalloy Fabrication, LLC, No. CCB-14-3031, 2016 WL
930965, at *6 (D.Md. Mar. 11, 2016).
Not just any manifestation of
mutual assent will do -- the UCC “requires ‘an objective manifestation
of mutual assent by the parties.’”
Id. (quoting Audio Visual Assocs.,
Inc. v. Sharp Elecs. Corp., 210 F.3d 254, 258 (4th Cir. 2000)).
manifestation “ordinarily takes the form of an offer by one party
followed by an acceptance by the other party.”
Id. (quoting Audio
Visual Assocs., 210 F.3d at 258–59) (internal quotation marks omitted).
“In the case of contracts for the sale of goods, the offer usually
takes the form of a purchase order.”
Id. (quoting Audio Visual
Assocs., 210 F.3d at 259).
Aura asserts that the Purchase Orders that it attaches to the
Complaints are the contracts that LTF Lighting and Palitti breached.
LTF Lighting and Palitti contend that they are entitled to judgment
because Aura does not plausibly allege that LTF Lighting or Palitti
issued the Purchase Orders.
In other words, LTF Lighting and Palitti
maintain that Aura fails to plausibly allege that LTF Lighting or
Palitti offered to purchase goods from Aura.
For its part, Aura argues
that LTF Lighting and Palitti are not entitled to judgment because the
Complaints’ allegations, as well as the Purchase Orders, establish that
all Defendants issued the Purchase Orders.
The Court disagrees with
Aura alleges that “as a result of the discussion surrounding a
proposed business venture, Aura and LTF entered into an agreement
pursuant to which Aura would manufacture and deliver to LTF certain
(Compl. ¶ 13, GLR-15-3198; Compl. ¶ 13, GLR-15-
Aura then alleges that pursuant to this “agreement,” “LTF”
issued the Purchase Orders to Aura.
¶ 15, GLR-15-3200).
(Compl. ¶ 15, GLR-15-3198; Compl.
Aura defines “LTF” as encompassing all three
(Compl. at 2–3, GLR-15-3198; Compl. at 2, GLR-15-3200).
Aura explains that it crafted its allegations to refer collectively to
Defendants because throughout their dealings with Aura, “Defendants
acted collectively without differentiating among themselves.”
34 at 4).
If the Purchase Orders do not show that all Defendants issued them
-- as Aura alleges -- then the Purchase Orders trump Aura’s contrary
See Fare Deals, 180 F.Supp.2d at 683.
The Court finds
that the Purchase Orders, indeed, belie Aura’s allegations.
the Purchase Orders show that only LTF International issued them.
In all thirty-four Purchase Orders, LTF International
appears in the upper left hand corner as the issuing party.
The Invoices further confirm that only LTF International issued the
Purchase Orders because only LTF International appears in the “bill to”
section of the Invoices.
(See ECF No. 1-2, GLR-15-3198; ECF No. 1-2,
To be sure, LTF Lighting’s name appears on all the
Purchase Orders and Palitti signed some of them.
But LTF Lighting appears only in the “ship to” section of the
Purchase Orders, and when Palitti signed the purchase orders, he did so
in his capacity as “Manager” -- not in his personal capacity.
Because the Purchase Orders show that only LTF International
issued them, the Court concludes that Aura does not plausibly allege
that LTF Lighting or Palitti offered to purchase goods from Aura.
without any offers from LTF Lighting or Palitti, of course, there can
be no contracts between Aura and these Defendants.
Contractors, 2016 WL 930965, at *6.
See Archer W.
Aura also contends that it sufficiently states a claim for breach
of contract against Palitti because Aura alleges that it “understood
that [Palitti] would be liable for all debts of LTF Lighting and LTF
International through the Purchase Orders.”
is not persuaded for at least two reasons.
(Compl. ¶ 14).
First, as LTF Lighting and
Palitti argue, the Court need not accept this factual allegation
because it is conclusory and devoid of any reference to specific events
See United Black Firefighters, 604 F.2d at 847.
Second, even assuming, without finding, that the Purchase Orders
principle of objective contract interpretation would apply.
Cochran v. Norkunas, 919 A.2d 700, 709 (Md. 2007).
principle, the Court “look[s] at what a reasonably prudent person in
the same position would have understood as to the meaning of the
Having reviewed all the Purchase Orders, the Court
finds no language that would lead a reasonable person in the position
of the parties to conclude that Palitti agreed to be liable for any
debts that LTF Lighting or LTF International incurred
allegations and attachments, Aura fails to sufficiently state a claim
for breach of contract against LTF Lighting or Palitti.
requests leave to amend.
(See ECF No. 34 at 9 n. 7) (“To the extent
that the Court is not satisfied that the Complaints as currently
formulated state claims for breach against LTF Lighting and [Palitti],
then [Aura] respectfully requests leave to Amend its Complaints.”).
Rule 15(a)(2) provides that “[t]he court should freely give leave [to
amend a complaint] when justice so requires.”
Justice does not require
permitting leave to amend when amendment would prejudice the opposing
party, the moving party has exhibited bad faith, or amendment would be
See Edell & Assocs., P.C. v. Law Offices of Peter G. Angelos,
264 F.3d 424, 446 (4th Cir. 2001) (citing Edwards v. City of Goldsboro,
178 F.3d 231, 242 (4th Cir. 1999)).
Leave to amend “should only be
denied on the ground of futility when the proposed amendment is clearly
insufficient or frivolous on its face.”
Johnson v. Oroweat Foods Co.,
785 F.2d 503, 510 (4th Cir. 1986) (citing Davis v. Piper Aircraft
Corp., 615 F.2d 606, 613 (4th Cir. 1980)).
LTF Lighting and Palitti do not oppose the request expressly, and
based on the new allegations that Aura proposes, the Court finds no
prejudice, bad faith, or futility.
Accordingly, the Court will grant
the request and deny LTF Lighting and Palitti’s Motion as moot without
Aura’s Motion for Leave to File Amended Complaints
In its Motion for Leave to File Amended Complaints, Aura seeks to
amend the Complaints for reasons different than those in its request
After Aura further amends the Complaints, LTF Lighting and
discovery, Aura realized that prior to entering into any business
(ECF No. 38-1 at 2).
According to Aura, the Guaranty
Agreement “expressly states that Defendants have agreed to acts as
sureties for the payments due to Aura and further states that the
payment obligation is unconditional and irrevocable, joint and several,
from each of the guarantors, including LTF Lighting, LTF International
and WIS Lighting LLC (“WIS Lighting”).”
Based upon the legal
obligations outlined in the Guaranty Agreement, Aura moves for leave to
file First Amended Complaints that add a claim for breach of the
Guaranty Agreement and add WIS as a Defendant.
proposed First Amended Complaints.
Aura attaches the
(See ECF Nos 38-2, 38-4).
In his two-paragraph opposition, Palitti contends that granting
Aura leave to amend would be futile for the reasons set forth in LTF
Lighting and Palitti’s Motion for Judgment on the Pleadings.
In that Motion, as discussed above, LTF Lighting and Palitti
argue that the Complaints fail to pass muster under Rule 12(b)(6).
(See ECF No. 31).
There is no question, to be sure, that leave to
amend would be futile when an amended complaint could not survive a
Rule 12(b)(6) motion.
See U.S. ex rel. Wilson v. Kellogg Brown & Root,
Inc., 525 F.3d 370, 376 (4th Cir. 2008).
Yet the Court need not apply
the Rule 12(b)(6) standard when determining whether leave to amend
Palitti may, if they so choose, refile their Motion.
would be futile.
The Court applies a much less demanding standard:
whether “the proposed amendment is clearly insufficient or frivolous on
Johnson, 785 F.2d at 510.
After reviewing the proposed
amended pleadings, the Court concludes that they are not clearly
insufficient or frivolous on their face.
The Court, thus, will grant
For the foregoing reasons, the Court will DENY AS MOOT WITHOUT
LTF Lighting and Palitti’s Motion for Judgment on the
Pleadings (ECF No. 31) and GRANT Aura’s request for leave to amend (ECF
No. 34 at 9 n.7).
The Court will also GRANT Aura’s Motion for Leave to
File Amended Complaints (ECF No. 38) and DIRECT the Clerk to ACCEPT
Aura’s First Amended Complaints (ECF Nos. 38-2, 38-4).
Entered this 8th day of June, 2017
George L. Russell, III
United States District Judge
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