Gregory Packaging, Inc. v. Sodexo Operations, LLC

Filing 28

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 9/26/2024. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:

GREGORY PACKAGING, INC.

:

v.

:

Civil Action No. DKC 24-187

:

SODEXO OPERATIONS, LLC

:
MEMORANDUM OPINION

Presently pending and ready for resolution in this breach of
contract action is the motion to dismiss Count II of Plaintiff’s
Amended Complaint.

(ECF No. 25).

The issues have been briefed,

and the court now rules, no hearing being deemed necessary.
Rule 105.6.

Local

For the following reasons, the motion for partial

dismissal will be granted.
I.

Background
The facts outlined here are alleged in the Amended Complaint

(and the exhibit). Gregory Packaging, Inc. (“GPI”), a New Jersey
corporation with a principal place of business in Pennsylvania,
sells juice cups under the name Suncup Juice.

Defendant Sodexo

Operations, LLC (“Sodexo”) has one member, Sodexo, Inc., a Delaware
corporation with a principal place of business in Maryland. Sodexo
organizes

purchasers

of

food

products

discounts from sellers such as GPI.

to

negotiate

volume

The parties entered into a

Supply Agreement on October 1, 2006, whereby GPI agreed to sell

its products to designated contract distributors designated by
Sodexo at agreed-upon prices. 1
as Exhibit A.
preferred

The Supply Agreement is attached

In consideration of Sodexo designating GPI as a

supplier,

GPI

agreed

to

pay

to

Sodexo

a

quarterly

preferred supplier allowance based on the number of cases purchased
by the designated contract distributors pursuant to the Supply
Agreement.

Sodexo was to provide a report showing the total

volume, itemized by product, by each designated distributor and an
overall volume report reflecting the cumulative total volume.
Section 8 of the Agreement provided:
Reports.
a.
during the Term, Vendor shall confirm,
within thirty (30) days following receipt
thereof, the accuracy of the following reports
which Vendor will receive from Sodexho:
(i) Distributor Report.
The “Distributor
Report” shall show for each of Sodexho’s
fiscal quarters the total Volume, itemized by
Product,
by
each
Designated
Contract
Distributor;
(ii) Overall Volume Report.
The “Overall
Volume Report” shall show for the quarter, the
cumulative total Volume.
b.
If Vendor determines that either of the
above referenced reports is not accurate,
Vendor shall send Sodexho on or before the
thirtieth (30th) day of receipt written notice
setting forth the reasons it believes that
such Report is not accurate.
The Parties
Sodexho Operations, LLC was the signator to the Supply
Agreement.
Sodexho Operations, LLC changed its name to Sodexo
Operations, LLC on April 4, 2008.
2
1

shall meet within thirty (30) days from the
date on which Sodexho receives the notice and
negotiate in good faith to reconcile their
differences.
Nothing herein shall limit
Sodexho’s
right
to
invoice
Vendor
for
Allowances owed from previous quarters, but
not yet paid by Vendor.
Any disputes under the parties’ Supply Agreement were be
determined pursuant to the laws of the State of Maryland.
GPI contends that the form of reporting concealed the volume
of product that was sold that would have been subject to the
allowance.

It also alleges that it had not an available means by

which to verify the information that Sodexo was reporting without
access to complete records of both Sodexo and the Designated
contract distributors, which records were not generally available
to it.

GPI noted a discrepancy in June 2023 between a report from

Sodexo and the amounts that Sodexo was claiming had been purchased
under the Supply Agreement.

GPI requested copies of invoices from

the designated contract distributors to compare with the Sodexo
invoices.

Because the requested records were not received, the

parties ended their contractual relationship in September 2023.
GPI filed a Complaint on January 19, 2024, which initiated this
case and an Amended Complaint on July 5, 2024, alleging three
causes of action against Sodexo: 1) breach of contract, 2) breach
of contract (implied covenant of good faith and fair dealing), and
3

3) unjust enrichment.

(ECF No.18).

Sodexo filed a partial motion

to dismiss on July 19, 2024, asserting that Count II of the Amended
Complaint for breach of the implied covenant of good faith and
fair dealing is not recognized as an independent cause of action
under Maryland law.

(ECF No. 25).

GPI filed a response in

opposition on August 2, 2024, and Sodexo filed a reply on August
16, 2024.
II.

(ECF Nos. 26, 27).

Standard of Review
A motion to dismiss under Fed.R.Civ.P. 12(b)(6) tests the

sufficiency of the complaint.

Presley v. City of Charlottesville,

464 F.3d 480, 483 (4th Cir. 2006).

In evaluating the complaint,

unsupported legal allegations need not be accepted.

Revene v.

Charles Cty. Comm’rs, 882 F.2d 870, 873 (4th Cir. 1989).
conclusions

couched

as

factual

allegations

are

Legal

insufficient,

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), as are conclusory
factual allegations devoid of any reference to actual events.
United Black Firefighters of Norfolk v. Hirst, 604 F.2d 844, 847
(4th Cir. 1979); see also Francis v. Giacomelli, 588 F.3d 186, 193
(4th Cir. 2009).

“[W]here the well-pleaded facts do not permit the

court to infer more than the mere possibility of misconduct, the
complaint has alleged - but it has not ‘show[n]’ – ‘that the
pleader is entitled to relief.’”

Iqbal, 556 U.S. at 679 (quoting
4

Fed.R.Civ.P. 8(a)(2)).

Thus, “[d]etermining whether a complaint

states a plausible claim for relief will . . . be a contextspecific task that requires the reviewing court to draw on its
judicial experience and common sense.”

Id.

III. Analysis
Sodexo contends that the breach of contract claim for breach
of the implied covenant of good faith and fair dealing in Count II
of the Amended Complaint is not a recognized independent cause of
action under Maryland law, and is duplicative of Count I.

GPI

argues that Count II is not a standalone breach of the implied
covenant of good faith and fair dealing claim.

Rather, the theory

of breach of the implied covenant of good faith and fair dealing
is pleaded as an element to a breach of contract claim.

GPI also

contends that Fed.R.Civ.P. 8(d)(2) permits the pleading of an
alternative breach of contract claim without being duplicative
because the Supply Agreement was breached in two different ways.
First, Sodexo concealed what transactions should be subject to the
Allowance and second, refused to supply GPI with the data needed
to verify Sodexo’s invoices thereby hindering its ability to comply
with the Supply Agreement.

In its reply, Sodexo observes that GPI

only pleads breach of implied covenant and does not plead the
elements of a breach of contract claim.
5

Further, because both

Counts

I

and

II

claim

Sodexo

overcharged

GPI,

Count

II

is

duplicative and should be dismissed.
Sodexo also states that GPI’s argument that its ability to
comply with the Supply Agreement was frustrated by Sodexo’s alleged
failure to provide documentation to support its invoices is not
included in the Amended Complaint and that it is GPI’s burden under
the Supply Agreement to maintain sales records.
“Under Maryland law, the elements of a claim for breach of
contract

are

“‘contractual

obligation,

breach,

and

damages.’”

Kantsevoy v. LumenR LLC, 301 F.Supp.3d 577, 596 (D.Md. 2018)
(quoting Tucker v. Specialized Loan Servicing, LLC, 83 F.Supp.3d
635, 655 (D.Md. 2015)).

“To prevail in an action for breach of

contract, a plaintiff must prove that the defendant owed the
plaintiff a contractual obligation and that the defendant breached
that obligation.”

Jaguar Land Rover N. Am., LLC v. Manhattan

Imported Cars, Inc., 738 F.Supp.2d 640, 649 (D.Md. 2010) (citing
Taylor v. NationsBank, N.A., 365 Md. 166, 175 (2001)).

Maryland

law requires that a plaintiff “alleging a breach of contract ‘must
of necessity allege with certainty and definiteness’ facts showing
a contractual obligation owed by the defendant to the plaintiff
and a breach of that obligation by defendant.”
Bank,

NA,

No. 18-cv-1776-DKC,

2019
6

WL

Jaigobin v. U.S.

4598000,

at

*7

(D.Md.

Sept. 23, 2019), aff’d, 797 F.App’x 776 (4th Cir. 2020) (quoting
RRC Northeast, LLC v. BAA Maryland, Inc., 412 Md. 638, 655 (2010))
(emphasis in original).

A plaintiff must also show that it itself

is not in material breach of the contract.

See Va. Elec. & Power

Co. v. Bransen Energy, Inc., 850 F.3d 645, 655 (4th Cir. 2017)
(“‘[A]

party

who

commits

the

first

breach

of

contract,’

if

material, ‘is not entitled to enforce the contract.’”) (quoting
Horton v. Horton, 254 Va. 111, 115 (1997)).
“Maryland recognizes that every contract imposes a duty of
good faith and fair dealing in its performance.”

Doe v. Maryland,

No. 20-cv-1227-ELH, 2021 WL 1174707, at *37 (D.Md. Mar. 29, 2021)
(citing Food Fair Stores, Inc. v. Blumberg, 234 Md. 521, 534
(1964)).
a

“However, Maryland courts have not explicitly recognized

separate

cause

of

action

for

breach

of

this

duty.”

Md.

Physician’s Edge, LLC v. Behram, No. 17-cv-2756-DKC, 2019 WL
4573417, at *8 (D.Md. Sept. 20, 2019) (quoting Abt Associates,
Inc. v. JHPIEGO Corp., 104 F.Supp.2d 523, 534 (D.Md. 2000)).

“A

breach of the covenant of good faith and fair dealing supports
another cause of action, such as breach of contract” and is thus
“merely part of an action for breach of contract.”

Zos v. Wells

Fargo Bank, N.A., No. 16-cv-00466-GJH, 2017 WL 221787, at *3 (D.Md.
7

Jan. 18, 2017) (citing Mount Vernon v. Branch, 170 Md.App. 457,
471-72 (2006)).
Counts I and II allege breach of the same contract.

Count I

alleges overcharges by Sodexo claiming Allowances for sales that
were not subject to the Supply Agreement.

Count II alleges a

breach of the contract provisions governing reports and GPI’s
ability to question their accuracy.

The bottom line is the same:

GPI claims that Sodexo overcharged by providing reports of sales
that overstated the sales subject to the Supply Agreement in a way
that prevented GPI from checking (or disputing) their accuracy.
In short, Sodexo claimed Allowances by the reports, which, by
definition, were supposed to be accurate.

There really is only

one breach of contract claim and count II will be dismissed.
IV.

Conclusion
For the foregoing reasons, Sodexo’s motion to dismiss Count

II of GPI’s Amended Complaint will be granted.

A separate order

will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

8