Horton Archery, LLC v. Farris Brothers, Inc.

Filing 40

ORDER granting in part and denying in part Plaintiff's 30 Motion to Dismiss Defendant's Counterclaim. The Court denies the motion as it pertains to Defendant's counterclaim for breach of contract, but the Court grants the motion as it pertains to Defendant's UCC counterclaims. Additionally, the Court denies as moot Plaintiff's 37 Motion to Strike Exhibits Attached to Defendant's Response. Signed by District Judge Keith Starrett on July 2, 2014 (dsl)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
EASTERN DIVISION
HORTON ARCHERY, LLC
V.

PLAINTIFF
CIVIL ACTION NO. 2:13-CV-260-KS-MTP

FARRIS BROTHERS, INC.

DEFENDANT

MEMORANDUM OPINION AND ORDER
For the reasons stated below, the Court grants in part and denies in part
Plaintiff’s Motion to Dismiss [30] Defendant’s counterclaim. The Court denies the
motion as it pertains to Defendant’s counterclaim for breach of contract, but the Court
grants the motion as it pertains to Defendant’s UCC counterclaims.
Defendant may file an amended counterclaim within fourteen days of the entry
of this opinion to correct the pleading errors noted below. If Defendant does not file an
amended counterclaim within fourteen days of the entry of this opinion, the UCC
claims will remain dismissed without prejudice.
The Court also denies as moot Plaintiff’s Motion to Strike [37] exhibits
attached to Defendant’s response.
I. BACKGROUND
This is a contract dispute. In February 2013, Plaintiff, a manufacturer, sold
Defendant, a distributor, $229,122.27 worth of hunting crossbows and related products.
In the summer of 2013, Defendant noticed that an unusually high number of its
retailers were experiencing customer returns on Plaintiff’s crossbows, allegedly

because they were defective. Defendant later learned that either Plaintiff or its secured
creditors had liquidated Plaintiff’s inventory at public auction. Accordingly, other
distributors and online retailers were selling Plaintiff’s crossbows for a substantially
lower price than Defendant.
Plaintiff filed its Complaint [1] on November 25, 2013. Plaintiff claims that
Defendant attempted to reject the entire order as defective in October 2013, and that
it refused to pay for the crossbows, in breach of the sales contract. On March 28, 2014,
Defendant filed its Counterclaim [26], asserting that Plaintiff breached certain terms
of the sales contract. Plaintiff filed a Motion to Dismiss [30] Defendant’s counterclaim,
which the Court now addresses.
II. DISCUSSION
A.

Standard of Review
To survive a motion to dismiss under Rule 12(b)(6), a counterclaim “must

contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face.” Great Lakes Dredge & Dock Co. LLC v. La. State, 624 F.3d 201,
210 (5th Cir. 2010) (punctuation omitted). “To be plausible, the [counterclaim’s] factual
allegations must be enough to raise a right to relief above the speculative level.” Id.
(punctuation omitted). The Court must “accept all well-pleaded facts as true and
construe the [counterclaim] in the light most favorable to the [defendant].” Id. But the
Court will not accept as true “conclusory allegations, unwarranted factual inferences,
or legal conclusions.” Id. Likewise, “a formulaic recitation of the elements of a cause
of action will not do.” PSKS, Inc. v. Leegin Creative Leather Prods., Inc., 615 F.3d 412,
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417 (5th Cir. 2010) (punctuation omitted). Legal conclusions may provide “the
[counterclaim’s] framework, [but] they must be supported by factual allegations.”
Ashcroft v. Iqbal, 556 U.S. 662, 664, 129 S. Ct. 1937, 1940, 173 L. Ed. 2d 868 (2009).
B.

Breach of Contract
In Mississippi, a party asserting a breach of contract must prove 1) the existence

of a valid and binding contract, and 2) that the opposing party has broken, or breached
it. Business Communs., Inc. v. Banks, 90 So. 3d 1221, 1224-25 (Miss. 2012). If a party
seeks monetary damages as a remedy for a breach of contract, they also “must put into
evidence, with as much accuracy as possible, proof of the damages being sought.” Id.
at 1225.
In its Counterclaim [26], Defendant alleged that Plaintiff offered it a “special
price package” on the crossbows “with a full warranty,” which allowed Defendant to
“pay ½ of the total invoice early and the other ½ in September of 2013.” Defendant
apparently alleges that Plaintiff breached the agreement by liquidating its inventory
pursuant to bankruptcy and flooding the market with cheaper crossbows, depriving
Defendant of the opportunity to sell its remaining stock. Defendant also alleges that
Plaintiff promised to give it a five percent rebate, but failed to do so.
Plaintiff denies that the parties’ agreement contained any “price protection,”
warranty, or rebate. In support of this argument, Plaintiff attached copies of the
invoices,1 which it contends comprise the total written contract between the parties.

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“Documents that a [party] attaches to a motion to dismiss are considered
part of the pleadings if they are referred to in the [counterclaim] and are central to
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Plaintiff argues that Defendant is foreclosed from arguing that any oral agreement
existed because Mississippi law requires that the contract at issue be in writing, and
that the invoices satisfy this requirement. See MISS. CODE ANN. § 75-2-201(1)-(2).
Plaintiff further argues that Mississippi law prevents Defendant from arguing that the
parties orally modified the invoices. See MISS. CODE ANN. § 75-2-202. Accordingly,
Plaintiff contends that the Court must dismiss Plaintiff’s counterclaim for breach of
contract.
Defendant alleged that there existed a contract between the parties with certain
terms, and that Plaintiff breached those terms. That is sufficient to state a claim for
breach of contract. It is not clear from the counterclaim whether Defendant alleges that
the breached terms were reduced to writing or were mere oral agreements, but
Plaintiff claims that the invoices comprise the total contract between the parties.
Therefore, there exists a factual dispute as to what constituted the parties’ contract –
an issue better presented in a motion for summary judgment accompanied by evidence
of the negotiation, agreement, and transaction process. The Court denies the motion
to dismiss as to Defendant’s counterclaim for breach of contract.
C.

UCC Claims
Defendant also requested “enforcement of all rights allowed under the Uniform

Commercial Code” and listed several sections of Mississippi’s UCC, but it failed to
provide any factual allegations in support of each purported UCC claim or even to

[his] claim.” Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir.
2004).
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explain what purported “rights” it wants enforced. Some of the listed statutes do not
even provide causes of action. In short: merely citing a statute is not sufficient to state
a claim for which relief may be granted. The Court can not determine what Defendant
intended to plead, and it declines to guess. Therefore, all of the claims listed in
Paragraph XV of the counterclaim are dismissed without prejudice.
With respect to Defendant’s apparent fraud claim, the Court further observes
that Defendant failed to allege sufficient facts. “Rule 9(b) states that ‘in alleging fraud
or mistake, a party must state with particularity the circumstances constituting fraud
or mistake.’” Flaherty & Crumrine Preferred Income Fund Inc. v. TXU Corp., 565 F.3d
200, 206-07 (5th Cir. 2009) (quoting FED. R. CIV. P. 9(b)). The Fifth Circuit interprets
this rule “strictly, requiring the [party] 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.” Id. at 207. Furthermore, in Mississippi
there are nine elements in a fraud claim: “(1) a representation, (2) its falsity, (3) its
materiality, (4) the speaker’s knowledge of its falsity or ignorance of its truth, (5) his
intent that it should be acted on by the hearer and in the manner reasonably
contemplated, (6) the hearer’s ignorance of its falsity, (7) his reliance on its truth, (8)
his right to rely thereon, and (9) his consequent and proximate injury.” Trim v. Trim,
33 So. 3d 471, 478 (Miss. 2010). Defendant did not plead sufficient facts to meet these
requirements.
III. CONCLUSION
For the reasons stated above, the Court grants in part and denies in part
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Plaintiff’s Motion to Dismiss [30] Defendant’s counterclaim. The Court denies the
motion as it pertains to Defendant’s counterclaim for breach of contract, but the Court
grants the motion as it pertains to Defendant’s purported UCC claims.
The Court frequently allows parties an opportunity to amend and correct a
pleading error. See, e.g., Hattiesburg v. Hercules, Inc., No. 2:13-CV-208-KS-MTP, 2014
U.S. Dist. LEXIS 40993, at *15 (S.D. Miss. Mar. 27, 2014); Sanford v. TIAA-CREF
Individual & Inst. Servs., LLC, No. 2:11-CV-122-KS-MTP, 2012 U.S. Dist. LEXIS
23600, at *10 (S.D. Miss. Feb. 24, 2012); Bryant v. Holder, No. 2:10-CV-76-KS-MTP,
2011 U.S. Dist. LEXIS 23975, at *39-*40 (S.D. Miss. Feb. 3, 2011). Therefore,
Defendant may file an amended counterclaim within fourteen days of the entry of this
opinion to correct the pleading errors noted above. Specifically, the Court expects
Defendant to provide substantially more support for the UCC claims which it
attempted to plead in its initial counterclaim. If the cited UCC provision concerns an
element of damages or a desired remedy, then Defendant should state as much and
explain what it wants. If Defendant does not file an amended counterclaim within
fourteen days of the entry of this opinion, the UCC claims will remain dismissed
without prejudice.
The Court also denies Plaintiff’s Motion to Strike [37] as moot. The Court did
not consider the contested exhibits.
SO ORDERED AND ADJUDGED this 2nd day of July, 2014.
s/Keith Starrett
UNITED STATES DISTRICT JUDGE
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