Due Forni LLC v. Euro Restaurant Solutions, Inc. et al
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART 6 Motion to Dismiss for Lack of Jurisdiction; DENYING 12 Motion for Default Judgment; and DIRECTING Defendants to File an Answer on or before 7/17/2014. Signed by Judge Paul W. Grimm on 6/25/2014. (rss, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
DUE FORNI LLC,
Case No.: PWG-13-3861
SOLUTIONS, INC., et al.,
MEMORANDUM OPINION AND ORDER
Plaintiff Due Forni LLC, a Las Vegas pizza restaurant, purchased pizza ovens from
Defendants Euro Restaurant Solutions, Inc., d/b/a Marra Forni (“ERS”), and Francesco Marra.
After encountering various problems with the ovens and then learning that they were not
manufactured by the company that Defendants represented to be the manufacturer, Plaintiff
brought this lawsuit against Defendants for fraud in the inducement, fraud, breach of contract,
and conversion. Defendants moved to dismiss, and Plaintiff filed an Amended Complaint,
followed by a Motion for Default Judgment when Defendants neither answered the Amended
Complaint nor renewed their Motion to Dismiss.1 Because it is evident that Defendants intended
Currently pending are Defendants’ Motion to Dismiss for Lack of Jurisdiction for Failure to
Meet Amount in Controversy Requirement and supporting memorandum, ECF Nos. 6 & 6-1, and
Plaintiff’s Motion for Default Judgment, ECF No. 12, to which Defendants have filed an
Opposition and supporting memorandum, ECF Nos. 13 and 14. Plaintiff has not filed a response
to Defendants’ Motion or Defendants’ Opposition, and the time for doing so has passed. See
Loc. R. 105.2(a). A hearing is not necessary. See Loc. R. 105.6. For the reasons stated in this
Memorandum Opinion and Order, Defendants’ Motion IS GRANTED IN PART AND DENIED
IN PART, and Plaintiff’s Motion IS DENIED. The Memorandum Opinion and Order disposes
of ECF Nos. 6 & 12.
their Motion to Dismiss to apply to Plaintiff’s Amended Complaint, I will deny Plaintiff’s
Motion for Default Judgment. Plaintiff cannot meet the jurisdictional amount on its breach of
contract claim, and Plaintiff fails to state a claim for conversion.
Therefore, I will grant
Defendants’ Motion to Dismiss as to those claims. With regard to Plaintiff’s fraud claims,
Plaintiff has alleged damages sufficiently to survive Defendants’ Motion, and I will deny
Defendants’ Motion as to the fraud claims.
The parties’ business relationship began in October 2010, when Plaintiff contracted to
purchase from Defendants two “true Neapolitan pizza” ovens, “manufactured by an Italian
company called Cirigliano Forni.”2 Am. Compl. ¶¶ 12, 21, 32, ECF No. 10. Plaintiff designed
its kitchen and menu and drew “its name, identity, and concept” from these two Cirigliano
ovens.3 Id. ¶¶ 1–3. When the ovens arrived, with smaller oven rotators and larger external
dimensions than promised, Plaintiff redesigned its kitchen to accommodate the ovens. Id. ¶¶ 27–
28. Plaintiff used the ovens for months, while combatting electrical problems and an inability to
reach the high temperature necessary to make Neapolitan pizza correctly, despite Defendants’
representations regarding the ovens’ performance capabilities. Id. ¶¶ 32–35. Plaintiff reported
the problems to Defendants, who did not remedy the issues.4 Id. ¶¶ 38–39. Nonetheless,
For purposes of considering Defendants’ Motion, this Court accepts the facts that Plaintiff
alleged in its Complaint and Amended Complaint as true. See Aziz v. Alcolac, 658 F.3d 388, 390
(4th Cir. 2011).
“‘Due Forni’ means ‘two ovens’ in Italian.” Am. Compl. ¶ 6.
Ultimately, in December 2013, more than three years after its original purchase, Plaintiff
“replace[d] the oven stones [in its first two ovens] and retrofit[ted] the ovens so that they actually
could cook at 900 degrees.” Am. Compl. ¶ 37.
Plaintiff ordered two additional Cirigliano ovens from Defendants in December 2012, placing a
deposit of $25,900, or 50% of the purchase price. Id. ¶¶ 50–51.
In March 2013, Plaintiff’s Chief Executive Officer, Alex Taylor, and Executive Chef
Partner, Carlos Buscaglia, attended the 29th Annual International Pizza Expo and learned that
the ovens they purchased were manufactured by Morello Forni, not Cirigliano Forni, and “falsely
represented to be Cirigliano ovens.” Am. Compl. ¶¶ 53–54. After Plaintiff “attempt[ed] to
resolve their concerns with DEFENDANT MARRA” without success, “on April 13, 2013,
PLAINTIFF canceled the order for the two new ovens and demanded the return of its $25,900
deposit,” which Defendants refused. Id. ¶¶ 56–57. Thereafter, Plaintiff filed this action for the
return of the money it paid Defendants, as well as “all available compensatory and punitive
damages.” Compl. ¶¶ 4–5, ECF No. 1.
On February 18, 2014, Defendants moved to dismiss, arguing primarily that the amount
in controversy does not exceed $75,000 and therefore this Court lacks subject matter jurisdiction.
Defs.’ Mot. ¶ 1; see Defs.’ Mem. 1. Plaintiff had twenty-four days, or until March 14, 2014, to
amend its Complaint as a matter of course in response to Defendants’ motion. See Fed. R. Civ.
P. 15(a)(1)(B) (twenty-one days after service of motion to dismiss); Fed. R. Civ. P. 5(b)(2)(E) &
6(d) (three additional days after service by electronic means). Plaintiff filed a timely Amended
Complaint on March 12, 2014,5 to which Defendants did not respond. Plaintiff has moved for a
Plaintiff originally filed its Amended Complaint on March 11, 2014, twenty-one days after
service. ECF No. 8. On March 12, 2014, the docketing clerk disabled the link because Plaintiff
neglected to include the redlined version that Loc. R. 103.6(c) requires. ECF No. 9. But see
Fed. R. Civ. P. 5(d)(4) (“The clerk must not refuse to file a paper solely because it is not in the
form prescribed by these rules or by a local rule or practice.”). The same day, Plaintiff refiled
the Amended Complaint along with a redlined version. ECF Nos. 10 & 10-1.
default judgment on that basis. Pl.’s Mot. 2–3. Defendants argue that Plaintiff’s Amended
Complaint did not moot their original Motion to Dismiss, which, in their view, pertains to the
Amended Complaint. Defs.’ Opp’n ¶ 2; Defs.’ Mem. 1 & 4–5. Because Defendants make clear
in their Opposition that they intended to respond to the Amended Complaint via their original
Motion to Dismiss, I will construe it as such. See Fed. R. Civ. P. 1. Plaintiff’s Motion for
Default Judgment IS DENIED.
AMOUNT IN CONTROVERSY
Defendants’ Motion to Dismiss focuses on 28 U.S.C. § 1332(a), which requires that the
amount in controversy exceed $75,000 in a diversity action for this Court to have subject matter
Defs.’ Mem. 1; see 28 U.S.C. § 1332(a).
Of significance, a court generally
“‘determines the existence of diversity jurisdiction “at the time the action is filed,” regardless of
later changes in originally crucial facts such as the parties’ citizenship or the amount in
controversy.’” Mackin v. Variety Wholesalers, Inc., No. ELH-13-3849, 2014 WL 1320027, at *2
(D. Md. Mar. 31, 2014) (quoting Porsche Cars North America, Inc. v. Porsche.net, 302 F.3d
248, 255–56 (4th Cir. 2002) (quoting Freeport–McMoRan, Inc. v. K N Energy, Inc., 498 U.S.
426, 428 (1991))). Consequently, Plaintiff cannot meet the jurisdictional minimum by amending
its Complaint to increase the amount in controversy.
Nonetheless, insofar as Plaintiff filed its Amended Complaint in response to Defendants’
Motion to Dismiss, without separately filing an opposition, to ignore the factual allegations in the
Amended Complaint would be to exalt form over substance. See Fed. R. Civ. P. 1; Hall v.
Sullivan, 229 F.R.D. 501, 504 (D. Md. 2005). Further, a plaintiff can support its jurisdictional
allegations by affidavit in response to a motion to dismiss. See Momin v. Mag giemoo's Int’l,
LLC, 205 F. Supp. 2d 506, 509–10 (D. Md. 2002) (noting that “‘[w]here the amount in
controversy is contested, the proponent of federal jurisdiction must “support its assertion with
competent proof”’” (quoting Rexford Rand Corp. v. Ancel, 58 F.3d 1215, 1218 (7th Cir. 1995)
(quoting McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)))). The allegations
in an amended complaint, filed pursuant to Rule 11, should suffice. See Fed. R. Civ. P. 11(b)(3)
(an attorney presenting a pleading to the Court certifies that “the factual contentions have
evidentiary support or, if specifically so identified, will likely have evidentiary support after a
reasonable opportunity for further investigation or discovery”). Therefore, I will consider the
additional factual allegations of the Amended Complaint, to the extent that they substantiate the
amount in controversy pleaded in the original Complaint.
The required amount in controversy “is satisfied by reference to the allegations of the
complaint that are made in good faith, and the sums demanded in the complaint control.” Morris
v. Naugle, 722 F. Supp. 1285, 1286 (D. Md. 1989); see Choice Hotels Int’l, Inc. v. Shiv.
Hospitality, L.L.C., 491 F.3d 171, 176 (4th Cir. 2007). If a defendant “seek[s] to divest the court
of jurisdiction” when the plaintiff has specified an amount of damages greater than $75,000, that
defendant has the burden of “show[ing] ‘to a legal certainty’ that the claim is really for less than
the jurisdictional amount.” Morris, 722 F. Supp. at 1286 (citing St. Paul Mercury Indemnity Co.
v. Red Cab Co., 303 U.S. 283, 289 (1938)); see JTH Tax, Inc. v. Frashier, 624 F.3d 635, 638
(4th Cir. 2010). This is a “heavy burden” under which the defendant “must show ‘the legal
impossibility of recovery’ to be ‘so certain as virtually to negative the plaintiff’s good faith in
asserting the claim.’” JTH Tax, Inc., 624 F.3d at 638 (citation omitted); see Accuvant, Inc. v.
MEgadata Tech., LLC, No. AW-12-1647, 2012 WL 6563371, at *2–3 (D. Md. Dec. 13, 2012).
As originally filed, Plaintiff’s Complaint stated that Plaintiff purchased two ovens for
$58,320, Compl. ¶¶ 4, 15, 22, and paid a deposit of $25,900 for two additional ovens, id. ¶¶ 50–
51, based on the false representation that these were Cirigliano ovens, id. ¶¶ 48, 56–58. Plaintiff
sought in damages “the money paid under false pretenses.” Id. at 16. Also, Plaintiff alleged that
“the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs,”
and sought “all available compensatory and punitive damages,” including “damages in the form
of lost profits, contributions to fixed overhead, and other compensable injuries to be proven at
trial.” Id. ¶¶ 3–5, 9, 62, 69, 74, 77. Moreover, in Plaintiff’s Amended Complaint, Plaintiff
clarifies that its damages include the $84,220 that Plaintiff paid to Defendants: $58,320 for the
two original ovens and the deposit of $25,900 for the later two ovens.6 Am. Compl. 18. Unless
Defendants show that Plaintiff did not make these allegations in good faith or that, “‘to a legal
certainty,’” Plaintiff’s claim cannot exceed $75,000, Plaintiff has satisfied the pleading
requirements for this Court to have jurisdiction. See Morris, 722 F. Supp. at 1286 (citation
Defendants argue that they “can show with ‘legal certainty’ that Plaintiff is not entitled to
recovery of those damages” that Plaintiff has alleged. Defs.’ Mem. 10. In support, Defendants
attach the ERS/Marra Forni Terms and Conditions of Sale (“Contract”), which governed the sale
of the ovens. See id. at 11–12; Defs.’ Mot. Ex. 1, ECF No. 6-2. The Contract provides:
CUSTOMERS SHALL INSPECT ALL PRODUCTS IMMEDIATELY UPON
ALL CLAIMS, WHETHER FOR DEFECTIVE OR NONCONFORMING PRODUCTS, … OR FOR ANY OTHER CAUSE, SHALL BE
DEEMED FULLY WAIVED AND RELEASED BY CUSTOMER, UNLESS
MADE IN WRITING AND DELIVERED TO ERS WITHIN 24 HOURS AFTER
DELIVERY, STATING FULL PARTICULARS IN SUPPORT OF
CUSTOMER’S CLAIM …. THE PARTIES AGREE THAT CUSTOMER MAY
NOT RECOVER FROM ERS UNDER ANY LEGAL THEORY, AND UNDER
NO CIRCUMSTANCES SHALL ERS BE LIABLE TO THE CUSTOMER OR
TO ANY THIRD PARTY WITH WHOM CUSTOMER DEALS FOR ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
Plaintiff also seeks “compensatory and consequential damages of at least $250,000.” Am.
DAMAGES, LOSSES, OR EXPENSES, INCLUDING, BUT NOT LIMITED
TO, DAMAGES FOR INJURY TO PERSON, PROPERTY OR EQUIPMENT,
LOSS OF PROFITS OR REVENUE, COST OF CAPITAL, COST OF
PURCHASED OR REPLACEMENT PRODUCTS, OR CLAIMS OF
CUSTOMERS, NOR SHALL ERS BE LIABLE IN ANY CASE FOR ANY
AMOUNT IN EXCESS OF THE PRICE ACTUALLY PAID BY CUSTOMER
TO ERS FOR THE PRODUCTS IN QUESTION. EXCEPT AS EXPRESSLY
PROVIDED IN THE PRECEDING SENTENCE, ALL SALES ARE FINAL.
ANY ACTION BY CUSTOMER AGAINST ERS FOR BREACH, INCLUDING
WITHOUT LIMITATION BREACH OF CONTRACT OR WARRANTY,
EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF
MERCHANTABILITY MUST BE COMMENCED WITHIN ONE YEAR
AFTER THE DATE OF DELIVERY OF THE PROD[UC]TS INVOLVED.
CUSTOMER WAIVES TRIAL BY JURY AS TO ITS CLAIMS.
Contract ¶ 10. The Contract also states that purchasers relinquish their deposits for any order
cancelled after twenty-one days. Id. ¶ 12(c). Based on this contract language—which Plaintiff
does not dispute—, and given that Plaintiff filed its Complaint years after its first Contract with
ERS, Plaintiff clearly cannot recover in excess of $75,000 under its claim for breach of contract.
See id. ¶¶ 10, 12(c).
Further, Plaintiff has not responded to Defendants’ Motion to Dismiss beyond amending
its Complaint, and the Amended Complaint does not challenge the applicability of the Contract’s
clauses limiting Plaintiff’s ability to recover. On that basis alone, I have “the discretion to
dismiss the case without reaching the merits.” Knott v. Wedgwood, No. DKC-13-2486, 2014
WL 1573548, at *3 (D. Md. 2014); see White v. Wal Mart Stores, Inc., No. ELH-13-31, 2014
WL 1369609, at *2 (D. Md. Apr. 4, 2014) (dismissing plaintiff’s complaint when plaintiff did
not oppose defendant’s motion to dismiss). This is because a failure to oppose a motion to
dismiss is viewed as an abandonment of the claims at issue in the motion, Knott, 2014 WL
1573548, at *3 (quoting Ferdinand–Davenport v. Children’s Guild, 742 F. Supp. 2d 772, 777
(D. Md. 2010), and a concession that the “‘complaint is deficient for the reasons stated by
defendant,’” id. (quoting White, 2014 WL 1369609, at *2). Therefore, Defendants’ Motion to
Dismiss IS GRANTED as to Plaintiff’s claim for breach of contract.
However, the Contract does not limit Plaintiff’s fraud claims. See Bank of Montreal v.
Signet Bank, 193 F.3d 818, 829 (4th Cir. 1999) (noting that “the tort of fraud in the inducement
precedes the contract, so a contractual waiver of liability is ineffective”); Creamer v. Helferstay,
448 A.2d 332, 337 (Md. 1982) (fraud is ground for contractual rescission). Defendants contend
that Plaintiff’s fraud counts should be dismissed nonetheless because they do not “contain . . .
allegations of fact to what damages the plaintiff alleges actually occurred,” which “is critical to
establishing alleged damages in a fraud claim.”7 Defs.’ Mem. 4. It is true that a plaintiff must
show “that the plaintiff lost assets as a result of the false representation” to “satisf[y] fraudulent
inducement’s element of causation of actual damages.” Dynacorp Ltd. v. Aramtel Ltd., 56 A.3d
631, 668 (Md. Ct. Spec. App. 2012) (noting that, “[t]o establish fraudulent inducement, a
plaintiff must prove ‘that he [or she] actually suffered damage directly resulting from such
fraudulent misrepresentation’”) (quoting First Union Nat’l Bank v. Steele Software Sys. Corp.,
838 A.2d 404, 425–26 (2003) (citation omitted)). Here, Plaintiff claims that, because Plaintiff
designed its kitchen to accommodate the Cirigliano ovens it believed it was purchasing, not the
Morello kitchens it received, “PLAINTIFF was forced to … redesign their kitchen layout in the
Defendants also argue that the fraud claims “fail to identify whether [Plaintiff] seeks damages
under the ‘out of pocket’ rule of the ‘benefit of the bargain’ test,” and that “the complaint
contains no allegations regarding any alleged difference between the amount of the purchase
price the plaintiff paid and the actual value of the oven on the date it was sold” or “the difference
between the actual value of the oven at the time of making the contract and the value that it
would have possessed if the allegedly false representations had been true.” Defs.’ Mem. 5. Yet,
Defendants fail to cite authority that requires such factual allegations to appear in the complaint,
as opposed to being developed through discovery. In Defendants’ view, Plaintiff also cannot
rely on its assertion of punitive damages to meet the amount in controversy, because Plaintiff
“fails to allege facts indicating this serious and heightened standard [for punitive damages] to
such a high degree.” Id. at 7–8. Given that Plaintiff alleged other damages sufficiently to meet
the amount in controversy, I need not address the sufficiency of its punitive damages allegations.
midst of the final stages of construction, increasing its costs.” Am. Compl. ¶ 27. The Amended
Complaint specifies that Plaintiff “rectif[ied] the problem” of not being able to cook at a
sufficiently high temperature to achieve the desired pizza crust “by paying to replace the oven
stones and retrofit the ovens so that they actually could cook at 900 degrees.” Id. ¶ 37. Plaintiff
also claims that it “incur[red] increased costs associated with its efforts to fix or find a way
around the problems created by the non-conformance of the ovens to DEFENDANTS’
representations,” id. ¶ 48, and Plaintiff claims that its pizza production decreased because it had
“less cooking space” than promised, which “limit[ed] the size of PLAINTIFF’S menu and
reduc[ed] the speed at which PLAINTIFF could prepare food at peak dining times,” id. ¶ 49.
Thus, Plaintiff has alleged damages sufficiently for its fraud claims. See Dynacorp Ltd., 56 A.3d
at 668. With regard to the fraud claims, Defendants’ Motion to Dismiss Plaintiff’s claims for
failing to satisfy the jurisdictional requirement IS DENIED.
Defendants also contend that Plaintiff fails to state a claim for conversion8 based on “the
retention of the $25,900 deposit” for the purchase of two addition ovens, “because there can be
no conversion of money.” Defs.’ Mem. 6. Indeed, “‘[t]he general rule is that monies are
intangible and, therefore, not subject to a claim for conversion.’” John B. Parsons Home, LLC v.
Conversion is an intentional tort, consisting of two elements, a physical act
combined with a certain state of mind. It is ... any distinct act of ownership or
dominion exerted by one person [i.e. the defendant] over the personal property of
another [i.e. the plaintiff] in denial of his [or her] right or inconsistent with it. The
act of ownership for conversion can occur either by initially acquiring the
property or by retaining it longer than the rightful possessor [i.e. the plaintiff]
John B. Parsons Home, LLC v. John B. Parsons Found., No. 109, 2014 WL 1711236, at *9–10
(Md. Ct. Spec. App. Apr. 30, 2014) (quoting Lasater v. Guttmann, 5 A.3d 79, 88 (2010) (internal
citation and quotation marks omitted)).
John B. Parsons Found., No. 109, 2014 WL 1711236, at *9–10 (Md. Ct. Spec. App. Apr. 30,
2014) (quoting Allied Inv. Corp. v. Jasen, 731 A.2d 957, 966 (1999) (citations omitted)). The
exception is “‘when a plaintiff can allege that the defendant converted specific segregated or
identifiable funds.” Id. (quoting Allied Inv. Corp., 731 A.2d at 966 (citations omitted)). The
plaintiff must allege the separateness of the funds because “when funds are co-mingled, the
monies lose their ‘separateness’ and, therefore, are not subject to a claim of conversion.” Id.
Here, Plaintiff has not alleged the separateness of the funds so as to come under the exception.
Moreover, as noted, Plaintiff has not opposed Defendants’ Motion to Dismiss and thereby
concedes that the conversion claim is deficient. See Knott, 2014 WL 1573548, at *3; White,
2014 WL 1369609, at *2. Therefore, Plaintiff’s claim for conversion IS DISMISSED.
As amended, Plaintiff’s Complaint adds a claim for unjust enrichment, Am. Compl. ¶ 1,
which Defendants do not challenge. However, I note that when an express contract is present, as
is the case here, a plaintiff cannot recover under the quasi-contractual theory of unjust
enrichment. See Froelich v. Erickson, 96 F. Supp. 2d 507, 524 (D. Md. 2000), aff’d sub nom.
Froelich v. Senior Campus Living, LLC, 246 F.3d 664 (4th Cir. 2001). Because Defendants did
not seek dismissal on this point, I will not address and resolve it sua sponte.
In sum, Plaintiff’s Motion for Default Judgment, ECF No. 12, IS DENIED, and
Defendants’ Motion to Dismiss for Lack of Jurisdiction for Failure to Meet Amount in
Controversy Requirement, ECF No. 6, IS GRANTED IN PART AND DENIED IN PART.
Defendants’ Motion IS GRANTED as to Plaintiff’s claims for breach of contract and conversion,
which ARE DISMISSED, and IS DENIED as to Plaintiff’s fraud claims and unjust enrichment
claim. Thus Plaintiff’s Amended Complaint includes claims for fraud in the inducement, fraud,
and unjust enrichment. Defendants ARE DIRECTED to file an Answer on or before July 17,
June 25, 2014
Paul W. Grimm
United States District Judge
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