Robinson Mechanical Contractors, Inc. d/b/a Robinson Construction Company v. PTC Group Holdings Corp.
Filing
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MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that defendant's motion to dismiss plaintiff's complaint (ECF #12) is DENIED as moot due to the filing of the amended complaint. IT IS FURTHER ORDERED that defendant's motion to dismiss plain tiffs amended complaint (ECF #20) is GRANTED in part and DENIED in part. Specifically, plaintiff's claims for breach of contract, breach of duty of good faith and fair dealing, and quantum meruit are dismissed. The motion is denied as to plaintiff's claims for fraudulent misrepresentation, negligent misrepresentation, and promissory estoppel. Signed by District Judge Stephen N. Limbaugh, Jr on 3/31/2016. (JMC)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION
ROBINSON MECHANICAL CONTRACTORS
INC. d/b/a ROBINSON CONSTRUCTION
COMPANY,
Plaintiff,
v.
PTC GROUP HOLDING CORP.,
Defendant.
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Case No. 1:15CV77 SNLJ
MEMORANDUM AND ORDER
This matter is before the court on defendant’s motion to dismiss plaintiff’s
amended complaint. The motion has been fully briefed and the matter is ripe for
disposition. For the following reasons, the motion will be granted in part and denied in
part.
I.
Motion to Dismiss Standard
The purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim is to
test the legal sufficiency of a complaint so as to eliminate those actions “which are fatally
flawed in their legal premises and deigned to fail, thereby sparing litigants the burden of
unnecessary pretrial and trial activity.” Young v. City of St. Charles, 244 F.3d 623, 627
(8th Cir. 2001) (citing Neitzke v. Williams, 490 U.S. 319, 326-27 (1989)). A complaint
must be dismissed for failure to state a claim if it does not plead enough facts to state a
claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
560 (2007). A petitioner need not provide specific facts to support his allegations,
Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam), but “must include sufficient
factual information to provide the grounds on which the claim rests, and to raise a right to
relief above a speculative level.” Schaaf v. Residential Funding Corp., 517 F .3d 544,
549 (8th Cir. 2008), cert. denied, 129 S.Ct. 222 (2008) (quoting Twombly, 550 U.S. at
555–56 & n. 3).
In ruling on a motion to dismiss, a court must view the allegations of the
complaint in the light most favorable to the petitioner. Scheuer v. Rhodes, 416 U.S. 232
(1974); Kottschade v. City of Rochester, 319 F.3d 1038, 1040 (8th Cir. 2003). “To
survive a motion to dismiss, a claim must be facially plausible, meaning that the factual
content . . . allows the court to draw the reasonable inference that the respondent is liable
for the misconduct alleged.” Cole v. Homier Dist. Co., Inc., 599 F.3d 856, 861 (8th Cir.
2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). When determining the
facial plausibility of a claim, the Court must “accept the allegations contained in the
complaint as true and draw all reasonable inferences in favor of the nonmoving party.”
Id. (quoting Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005)).
“In alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). To meet Rule 9(b)
requirements, a pleading must include “such matters as the time, place and contents of the
false representations, as well as the identity of the person making the misrepresentations
and what was obtained or given up thereby.” Abels v. Farmers Commodities Corp., 259
F.3d 910, 920 (8th Cir. 2001). “The special nature of fraud does not necessitate anything
other than notice of the claim; it simply necessitates a higher degree of notice, enabling
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the defendant to respond specifically, at an early stage of the case, to potentially
damaging allegations of immoral and criminal conduct.” Id. Furthermore, the
overarching principles of notice pleading dictate that a plaintiff does not need to plead
fraud “with complete insight before discovery is complete.” Gunderson v. ADM Investor
Servs., Inc., 230 F.3d 1363 (table), 2000 WL 1154423, at *3 (8th Cir. 2000) (quoting
Maldonado v. Dominguez, 137 F.3d 1, 9 (1st Cir. 1998)). As a result, Rule 9(b) does not
require a plaintiff to set out specific facts concerning matters that are likely solely known
by the defendant. See, e.g., Abels, 259 F.3d at 921. “Malice, intent, knowledge, and
other conditions of a person’s mind may be alleged generally.” Id. at 920.
II.
Background and Facts
Plaintiff filed this action alleging claims for breach of contract, breach of duty of
good faith and fair dealing, fraudulent misrepresentation, negligent misrepresentation,
promissory estoppel, and quantum meruit. In response, defendant filed a motion to
dismiss the complaint for failure to join a required party under Federal Rule of Civil
Procedure 19 and failure to state a claim. The motion was rendered moot by the filing of
the first amended complaint. Defendant filed another motion to dismiss plaintiff’s
amended complaint alleging the same grounds.
The following facts pled in plaintiff’s amended complaint are accepted as true for
purposes of this motion. Plaintiff Robinson Mechanical Contractors Inc. d/b/a Robinson
Construction Company (“plaintiff” or “Robinson”) is a Missouri corporation with its
principal place of business in Perryville, Missouri. Defendant PTC Group Holdings
Corp. (“defendant” or “PTC Group”) is a Delaware corporation with its principal place of
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business located in Wexford, Pennsylvania. PTC Group wholly owns, directs, and
controls PTC Seamless Tube Corporation, f/k/a PTC Alliance Pipe Acquisition LLC
(“Seamless”), also a Delaware corporation, and PTC Alliance Corp. At all relevant
times, PTC Group’s CEO, Peter Whiting, and CFO, Thomas Crowley, are listed as and
represent themselves to be the CEO and CFO, respectively, of Seamless.
In 2013, Robinson entered into a Professional Services Agreement (“PSA”) with
Seamless for construction work on Seamless’s pipe plant in Hopkinsville, Kentucky.
Under the agreement, Robinson would be compensated for its work on a time and
material basis. Due to the lack of information about the scope of work, both parties
agreed that it was not possible to determine a maximum price. Robinson invoiced
Seamless every two weeks for its work. By the middle of November 2014, Seamless
owed Robinson more than $7 million on outstanding invoices.
On November 19, 2014, Doug Wilkins, PTC Group’s Vice President of Global
Manufacturing & Operational Excellence, came to Robinson’s main office in Perryville,
Missouri and met with Robinson’s representatives, including its president Frank
Robinson, vice-president Paul Findlay, and construction manager David Monier. Wilkins
stated that PTC Group was happy with Robinson’s work and that PTC Group’s CEO
Peter Whiting wanted Robinson to know that he also was very happy with Robinson’s
work and that they wanted Robinson, which had been working on Phase I of the
Hopkinsville plant, to also be the contractor for Phase II. Wilkins noted in the meeting
that the project was over PTC Group’s budget and that PTC Group had funding and cash
flow issues. He requested that Robinson agree to defer a payment then due until after
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January 1 and agree to extend the terms for payment from 30 days to 60 days. After the
meeting, Wilkins called back and stated that he had been mistaken and that Peter Whiting
requested that Robinson extend the payment terms to 90 days rather than 60 days for
Phase I.
Subsequently, during the remainder of November and the first two weeks of
December 2014, PTC Group made telephone calls to Robinson at its office in Perryville
and sent emails to Robinson in Perryville in which the parties discussed PTC Group’s
request to defer the payment due to January and to extend the payment terms from 30
days to 90 days. Initially, the emails and phone conversations were by Wilkins, and later
during the above-referenced period PTC Group’s CFO Tom Crowley also engaged in
negotiations and email communications with Robinson in Perryville, Missouri. During
these discussions, Robinson expressed concern that stretching out the payments from 30
days to 90 days would require a substantial use of Robinson’s line of credit and Robinson
would be tying up several million dollars of its working capital in the project without
being paid. Robinson told PTC Group that a failure to pay could be disastrous to
Robinson, expressed concern about Seamless’s ability to pay, and requested assurances
from PTC Group that funds were available to pay Robinson for its work.
According to Robinson, PTC Group represented, promised, and assured Robinson
that it had funds available to pay Robinson and that it would pay Robinson for its work
on the Seamless construction project. In connection with these representations, PTC
Group sent to Robinson in Perryville a PTC Group organizational chart and a PTC Group
financial statement dated September 2014 as evidence that PTC Group had funds
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available with which to pay Robinson for its work. PTC Group also sent to Robinson in
Perryville a document entitled “Summary Borrowing Base Certificate” which showed an
amount of $23,552,735 available under PTC Group’s credit facilities and which PTC
Group represented to Robinson was available to pay Robinson for its work. Crowley and
Wilkins of PTC Group sent these documents to Robinson. Robinson made the decision
to continue working pursuant to the PSA with Seamless and extend the payment terms to
90 days based on and in reliance on PTC Group’s representations.
In reliance on PTC Group’s representations and promises that it had funds
available to pay Robinson for its work and that it would pay Robinson for its work on the
Hopkinsville plant, Robinson entered into a letter agreement with PTC Group (though
Seamless was not a signatory) on December 16, 2014, in which Robinson, among other
things, agreed to defer a payment then due until January 2 and to extend payment terms
for all invoices sent after December 1, 2014 from 30 days to 90 days. The letter includes
the following provision:
Payments made on behalf of PTC Group Holdings Corp. and its subsidiaries,
including PTC Seamless Tube Corp, are paid by PTC Group Holdings through its
central cash management system. It is our intention that the payment of the
remaining amount of $6,190,472.42 will be paid to Robinson Construction by wire
transfer on January 2, 2015.
The letter agreement further provided that if there is any delay in payment beyond the
terms agreed to in the letter agreement, Robinson shall have the right to cease work
immediately until the payments are brought back to terms. The letter agreement
acknowledged receipt of a payment of approximately $1.7 million made by PTC Group
on December 12, 1014 and provided that a payment of approximately $6 million would
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be made to Robinson on January 2, 2015. That payment was made by PTC Group and
was electronically deposited by PTC Group in Robinson’s bank account at the Bank of
Missouri in Perryville on or about January 2, 2015.
Robinson continued its work on the construction project during December 2014
and January, February and the first part of March 2015, at staffing levels as directed by
Wilkins, relying upon PTC Group’s representations, promises, and the letter agreement.
Wilkins directed the activities, priorities, and sequence of Robinson’s work after the letter
agreement. Under that letter agreement, the next payment on an invoice older than 90
days was due on March 12, 2015. When Robinson learned that Seamless was laying off
most of its employees at the jobsite, Robinson sent an email message to Wilkins on
February 24, 2015. In that e-mail, Robinson reminded PTC Group that in December
Robinson had provided PTC Group a significant extension of credit for 90 day terms on
invoices sent after December 1, 2014, and that Robinson continued to incur costs based
upon PTC Group’s assurance that payments will be made per terms of the agreement.
Robinson requested assurance that the invoices would be paid on the due dates pursuant
to the agreement. Robinson received no response to its e-mail.
On March 11, 2015, Seamless advised Robinson that it had a dispute regarding
Robinson’s invoices and would not be making the payment. Thereafter, PTC Group and
Seamless have not made any payments to Robinson. Based upon PTC Group’s
representations and discussions with Robinson regarding deferring payment and
extension of payment terms from 30 days to 90 days and the December 16, 2014 letter
agreement, Robinson continued to work until March 12, 2015.
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The payment due Robinson on March 12, 2015 was for Robinson’s invoices dated
December 12, 2014 covering work and materials for work furnished during the period of
November 23, 2014 through December 6, 2014. This work was done during the time
when PTC Group was telling Robinson that it was happy with Robinson’s work,
representing to Robinson that PTC Group wanted Robinson to perform Phase II work on
the project, and assuring Robinson that PTC Group had money available and would make
it available to pay Robinson for its work. In addition, Seamless and PTC Group received
the invoices for that work prior to the December 16, 2014 letter agreement.
During the course of the project, Robinson submitted invoices for its work and
materials (including work and materials furnished by Robinson subcontractors) every two
weeks. PTC Group received and had knowledge of the bi-weekly invoices and other
reports submitted by Robinson. PTC Group and Seamless were aware on a daily basis of
the activities on the jobsite. Wilkins, as an officer of PTC Group, was present on the
jobsite on most days, including from November 2014 to March 12, 2015, and had access
to the invoices, billing reports, and other reports submitted by Robinson.
PTC Group controlled and directed the decisions and activities of Seamless in
connection with the Hopkinsville project. PTC Group was the entity that made the
decision not to pay Robinson’s December 12, 2014 invoices and to assert a purported
dispute to avoid the payment due on March 12, 2015. Seamless and PTC Group had
Robinson’s December 12, 2014 invoices for three months before Seamless first informed
Robinson on March 11, 2015 that it had a purported dispute regarding Robinson’s
invoices and would not be making the payment due. Robinson has not been paid by PTC
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Group or Seamless for any work and materials furnished after November 22, 2014.
Robinson is owed more than $14.8 million for the labor and materials that it and its
subcontractors have furnished on the construction project.
The March 11, 2015 letter from Seamless did not identify any particular items in
the December 2014 invoices that Seamless or PTC Group disputed. Subsequently, later
in March 2015 Robinson’s representatives met with officers of Seamless and PTC Group
in St. Louis County, Missouri, in an attempt to have Seamless and PTC Group identify
any particular items in the invoices that Seamless or PTC Group disputed. However, the
representatives of Seamless and PTC Group declined to identify any particular items and
any particular invoices. Until March 11, 2015, neither PTC Group nor Seamless told
Robinson it would not pay Robinson for the work and materials that Robinson was
furnishing or for any of the invoices that Seamless and PTC Group was receiving every
two weeks.
PTC Group, which wholly owns and controls Seamless, left Seamless wholly
dependent on PTC Group for funding its activities. During the construction of the
Hopkinsville plant, Seamless had no income (other than approximately $3 million from
sale of “scrap”). Seamless was wholly dependent upon PTC Group to provide funds for
its ongoing costs and expenses. PTC Group controlled and determined the amount of
funding it would provide Seamless for payment of its costs and expenses for construction
of the Hopkinsville plant and other incurred costs and expenses. Seamless filed for
Chapter 11 bankruptcy on April 26, 2015.
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III.
Discussion
Defendant PTC Group argues that plaintiff’s claims must be dismissed under
Federal Rule of Civil Procedure 12(b)(7) for failure to join a necessary and indispensable
party. In the alternative, defendant argues that each of plaintiff’s claims must be
dismissed under Rule 12(b)(6) for failure to state a claim.
A.
Necessary and Indispensable Party
Defendant argues that dismissal is required for failure to join Seamless, who it
contends is a necessary and indispensable party. Rule 12(b)(7) authorizes dismissal of a
cause of action for failure to join a required party under Rule 19. “Rule 19 governs when
joinder of a particular person is compulsory.” Gwartz v. Jefferson Memorial Hosp.
Ass’n, 23 F.3d 1426, 1428 (8th Cir. 1994) (internal citation omitted). “A court must first
determine whether a [person] should be joined if ‘feasible’ under Rule 19(a), i.e., whether
a person is ‘necessary.’” Id. (internal quotation marks and citation omitted). “If the
person is not necessary, then the case must go forward without him and there is no need
to make a Rule 19(b) inquiry.” Id.
Pursuant to Rule 19(a):
(1) Required Party. A person who is subject to service of process and whose
joinder will not deprive the court of subject-matter jurisdiction must be joined as a
party if:
(A) in that person’s absence, the court cannot accord complete relief among
existing parties; or
(B) that person claims an interest relating to the subject of the action and is so
situated that disposing of the action in the person’s absence may:
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(i) as a practical matter impair or impede the person’s ability to protect the
interest; or
(ii) leave an existing party subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations because of the interest.
Fed.R.Civ.P. 19(a). “The focus is on relief between the parties and not on the speculative
possibility of further litigation between a party and an absent person.” Gwartz, 23 F.3d at
1428.
Defendant argues that Seamless is a necessary and indispensable party because
any alleged liability under the letter agreement depends on the outcome of Seamless’s
payment dispute. Defendant maintains that resolution of this suit in Seamless’s absence
would cause prejudice by deciding matters weighing upon Seamless’s liability without its
participation and result in costly, duplicative litigation with potentially conflicting
outcomes. In response, plaintiff argues Seamless is not a required party because the
claims in this matter are distinct contract, tort, and equitable claims against defendant for
the separate actions of defendant, not Seamless.
Defendant’s argument that adjudication without Seamless will impair its ability to
protect its interest by exposing it to indemnity claims if PTC Group is held liable
misconstrues plaintiff’s claims. Plaintiff is not making a claim against PTC Group based
on vicarious liability for Seamless, which could potentially expose Seamless to an
indemnity claim by PTC Group. There is no allegation or claim in the amended
complaint that defendant is liable for the $14.8 million owed to plaintiff simply because
of Seamless’s affiliation as a subsidiary of defendant. Instead, plaintiff’s claims are
directed at defendant’s own actions, separate and apart from any action by, or contract
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with, Seamless. Plaintiff’s contract claim is limited to the letter agreement between
plaintiff and defendant. Seamless is not a party to that agreement. Further, plaintiff’s tort
and other claims are based on the actions of defendant, not Seamless. A judgment on
plaintiff’s claims against defendant would not give rise to an indemnity claim by
defendant against Seamless.
B.
Failure to State a Claim
1.
Breach of Contract
At the outset, the parties disagree as to which state’s law governs plaintiff’s
claims. Defendant contends Pennsylvania law applies and plaintiff argues Missouri law
applies. However, plaintiff’s breach of contract claim, under either Missouri or
Pennsylvania law, fails to state a claim.
Plaintiff is clear, in its complaint and in its response to defendant’s motion, that its
claims against defendant arise from the letter agreement that is independent of and “does
not incorporate the terms . . . of the [PSA] with Seamless.” Plaintiff argues that
defendant agreed to pay for the future debts of Seamless, its wholly owned and controlled
subsidiary, to Robinson through its own cash management system. Plaintiff relies
primarily on the following statements in the letter agreement:
As we agreed, you released payment of $1,749,974.00 on Friday 12-12-14, receipt
of which is hereby acknowledged and we will accept payment of the balance of
$6,190,472.42 on January 2, 2015 by wire transfer in return for the concessions
below. As a part of this agreement we would also be willing to extend you
payment terms for all invoices sent after December 1, 2014 to 90 days.
...
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Payments made on behalf of PTC Group Holdings Corp. and its subsidiaries,
including PTC Seamless Tube Corp, are paid by PTC Group Holdings through its
central cash management system.
Under these provisions, the only payment defendant agreed to make was for the
outstanding balance owed by Seamless to plaintiff for work billed in October and
November by January 2, 2015. Although the foregoing provisions also state the method
of payment for the outstanding balance that defendant agreed to pay, it does not
constitute a promise by defendant to guarantee or make future payments owed by
Seamless.
The letter agreement, standing alone, is a contractual agreement for defendant to
pay the balance Seamless owed for work billed in October and November 2014 by
January 2, 2015. The parties agree that occurred. Plaintiff’s breach of contract claim
alleging defendant was required to make future payments owed by Seamless is not
supported by the plain language of the letter agreement. In the letter agreement
defendant agreed to pay $7,940,446.42 owed by Seamless to plaintiff as of December 30,
2014. The amount due was to be paid in two payments. Defendant agreed to make the
payments to plaintiff from its central cash management system. Plaintiff agreed to extend
payment terms for all invoices sent after December 1, 2014 from 30 days to 90 days. But
nowhere in the letter agreement does defendant commit to pay, or guarantee payment of,
those invoices for Seamless. Plaintiff’s breach of contract claim, therefore, fails to state a
claim and defendant’s motion to dismiss this claim will be granted.
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2.
Breach of Duty of Good Faith and Fair Dealing
“Missouri law implies a covenant of good faith and fair dealing in every contract.”
Kmak v. American Century Companies, Inc., 754 F.3d 513 (8th Cir. 2014) (quoting
Farmers’ Elec. Co-op., Inc. v. Mo. Dep’t of Corrs., 977 S.W.2d 266, 271 (Mo. banc
1998)). As stated above, the letter agreement, standing alone, is a contractual agreement
for defendant to pay the balance Seamless owed for work billed in October and
November 2014 by January 2, 2015. The parties agree that occurred. Having determined
that no contract existed requiring defendant to make future payments, plaintiff’s claim for
breach of duty of good faith and fair dealing is moot. Defendant’s motion to dismiss this
claim will be granted.
3.
Fraudulent and Negligent Misrepresentation
The parties disagree as to which state’s law governs plaintiff’s tort claims.
Defendant contends Pennsylvania law applies and plaintiff argues Missouri law applies.
To determine which state’s law governs the claims, this Court, sitting in diversity, must
apply the choice-of-law rules of the forum state. Prudential Ins. Co. of Am. v. Kamrath,
475 F.3d 920, 924 (8th Cir. 2007). “Before applying the forum state’s choice-of-law
rules, however, a trial court must first determine whether a conflict exists.” Id.
Defendant argues that Pennsylvania law governs plaintiff’s claims because the
PSA between plaintiff and Seamless includes a choice-of-law provision. Defendant
contends that the letter agreement should be viewed as an agreement that was drafted
with the intent that it would be between plaintiff and Seamless and would modify the
terms of the PSA. It argues, therefore, that the Pennsylvania choice-of-law provision in
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the PSA controls. Missouri honors choice-of-law provisions in contracts where
application of the selected forum’s law is not contrary to a fundamental policy of
Missouri. Kagan v. Master Home Prods., Ltd., 193 S.W.3d 401, 407 (Mo.App. E.D.
2006). But it is indisputable that the letter agreement does not contain a choice-of-law
provision. Plaintiff is clear that its claims against defendant arise from the letter
agreement, which plaintiff declares “does not incorporate the terms (let alone choice-oflaw provision) of the [PSA] with Seamless.” Plaintiff’s claims do not arise from the PSA
with Seamless but instead, are based on the letter agreement with defendant and
defendant’s own actions. As a result, there is no applicable choice-of-law provision.
Without a choice-of-law provision, Missouri choice-of-law rules require courts to
apply the “most significant relationship” test under the Restatement (Second) Conflict of
Laws. Crater Corp. v. Lucent Technologies, Inc., 625 F.Supp.2d 90, 800-801 (E.D. Mo.
2007) (citing Dillard v. Shaughnessy, Fickel and Scott Architects, Inc., 943 S.W.2d 711,
715 (Mo.App. W.D. 1997 and Highwoods Props, Inc. v. Executive Risk Indem., Inc., 407
F.3d 917, 920 (8th Cir. 2005). “Depending on whether the claim sounds in contract or
tort law, different factors will be utilized to determine the most significant relationship.”
Id. at 801.
When determining the most significant relationship test for a tort claim involving
fraud or misrepresentation, the Restatement (Second) Conflict of Law § 148(1) instructs
that:
When the plaintiff has suffered pecuniary harm on account of his reliance on the
defendant’s false representations and when the plaintiff’s action in reliance took
place in the state where the false representations were made and received, the local
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law of this state determines the rights and liabilities of the parties unless, with
respect to the particular issue, some other state has a more significant relationship
under the principles stated in § 6 to the occurrence and the parties, in which event
the local law of the other state will be applied.
Restatement (Second) Conflict of Law § 148(1).
However, “[w]hen the plaintiff’s action in reliance took place in whole or in part
in a state other than that where the false representations were made,” § 148(2) instructs
that :
[T]he forum will consider such of the following contacts, among others, as may be
present in the particular case in determining the state which, with respect to the
particular issue, has the most significant relationship to the occurrence and the
parties:
(a)
the place, or places, where the plaintiff acted in reliance upon the
defendant’s representations,
(b)
the place where the plaintiff received the representations,
(c)
the place where the defendant made the representations,
(d)
the domicil, residence, nationality, place of incorporation and place of
business of the parties,
(e)
the place where a tangible thing which is the subject of the transaction
between the parties was situated at the time, and
(f)
the place where the plaintiff is to render performance under a contract
which he has been induced to enter by the false representations of the
defendant.
Restatement (Second) Conflict of Law § 148(2). In certain tort cases, courts have
“focused on the plaintiff's location as the place where an economic injury occurs because
it is where ‘the economic impact’ is ‘felt.’” American Guarantee and Liability Ins. Co. v.
U.S. Fidelity & Guar. Co., 668 F.3d 991 (8th Cir. 2012).
Based on the facts pled in the amended complaint, Missouri law is applicable to
plaintiff’s tort claims for fraudulent and negligent misrepresentation. Plaintiff suffered
pecuniary harm in Missouri on account of its reliance on defendant’s false
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representations. Plaintiff’s decision to extend credit terms for Seamless from 30 days 90
days and to continue work in reliance took place in Missouri where defendant made the
false representations to plaintiff. Defendant’s officers traveled to Missouri to make the
request for additional credit and to make these false representations and promises.
Plaintiff is a Missouri corporation, has its principal place of business in Missouri, and
Missouri is the place where plaintiff received the representations and where it acted in
reliance upon the defendant’s representations.
Defendant further contends that even under Missouri law plaintiff fails to state a
claim for fraudulent or negligent misrepresentation. “The elements of fraudulent
misrepresentation are: (1) a representation; (2) its falsity; (3) its materiality; (4) the
speaker’s knowledge of its falsity or ignorance of its truth; (5) the speaker’s intent that it
should be acted on by the person in the manner reasonably contemplated; (6) the hearer’s
ignorance of the falsity of the representation; (7) the hearer’s reliance on the
representation being true; (8) the hearer’s right to rely thereon; and (9) the hearer’s
consequent and proximately caused injury.” Renaissance Leasing, LLC v. Vermeer Mfg.
Co., 322 S.W.3d 112, 134 (Mo. banc 2010). “The elements of negligent
misrepresentation are: (1) the speaker supplied information in the course of his business;
(2) because of the speaker’s failure to exercise reasonable care, the information was false;
(3) the information was intentionally provided by the speaker for the guidance of limited
persons in a particular business transaction; (4) the hearer justifiably relied on the
information; and (5) due to the hearer’s reliance on the information, the hearer suffered a
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pecuniary loss.” Renaissance Leasing, LLC v. Vermeer Mfg. Co., 322 S.W.3d 112, 134
(Mo. banc 2010).
Here, the Court finds that plaintiff has pled sufficient facts to state fraudulent and
negligent misrepresentation claims for relief that are facially plausible. Additionally,
plaintiff has pled sufficient facts to meet Rule 9(b) requirements that a pleading must
include “such matters as the time, place and contents of the false representations, as well
as the identity of the person making the misrepresentations and what was obtained or
given up thereby.”
The amended complaint alleges that in November and December 2014, defendant
represented, promised, and assured plaintiff that it had funds available to pay plaintiff and
that it would pay plaintiff for its work. Plaintiff told defendant that a failure to pay could
be disastrous to plaintiff, expressed concern about Seamless’s ability to pay, and
requested assurances from defendant that funds were available to pay plaintiff for its
work. In connection with these representations, defendant sent to plaintiff in Perryville a
PTC Group organizational chart and a PTC Group financial statement dated September
2014 as evidence that it had funds available with which to pay plaintiff for its work.
Defendant also sent to plaintiff in Perryville a document entitled “Summary Borrowing
Base Certificate” which showed an amount of $23,552,735 available under PTC Group’s
credit facilities and which defendant represented to plaintiff was available to pay for its
work. Crowley and Wilkins of PTC Group sent these documents to plaintiff. Plaintiff
made the decision to continue working on the Seamless construction project and extend
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the payment terms on invoices to 90 days based on and in reliance on defendant’s
representations.
Defendant, which wholly owns and controls Seamless, left Seamless wholly
dependent on defendant for funding its activities. During the construction of the
Hopkinsville plant, Seamless had no income (other than approximately $3 million from
sale of “scrap”). Seamless was wholly dependent upon defendant to provide funds for its
ongoing costs and expenses. Defendant controlled and determined the amount of funding
it would provide Seamless for payment of its costs and expenses for construction of the
Hopkinsville plant and other incurred costs and expenses. Plaintiff continued its work on
the construction project during December 2014 and January, February and the first part of
March 2015relying upon defendant’s representations and promises. Plaintiff has not been
paid by defendant or Seamless for any work and materials furnished after November 22,
2014. Plaintiff is owed more than $14.8 million for the labor and materials that it and its
subcontractors have furnished on the construction project.
Under these circumstances, plaintiff states a claim for fraudulent misrepresentation
and negligent misrepresentation. Defendant’s motion to dismiss these claims will be
denied.
4.
Promissory Estoppel
“A claim of promissory estoppel has four elements: (1) a promise; (2) on which a
party relies to his or her detriment; (3) in a way the promisor expected or should have
expected; and (4) resulting in an injustice that only enforcement of the promise could
cure.” Clevenger v. Oliver Ins. Agency, Inc., 237 S.W.3d 588, 590 (Mo. banc 2009)
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(citing Zipper v. Health Midwest, 978 S.W.2d 398, 411 (Mo.App.1998); see In re
Jamison’s Estate, 202 S.W.2d 879, 886 (Mo. 1947)). “The promise giving rise to the
cause of action must be definite, and the promise must be made in a contractual sense.”
Id. (citing Zipper, 978 S.W.2d at 411).
The facts that support plaintiff’s claims for fraudulent and negligent
misrepresentation also support plaintiff’s claim for promissory estoppel. Plaintiff alleges
in the amended complaint that defendant promised to pay plaintiff for its future work on
the Seamless construction project. Based on this promise, plaintiff agreed to keep
working and extends the payment terms for the invoices from 30 days to 90 days. During
the discussions in which defendant made its promises, plaintiff expressed concern about
payment because failure to pay could be disastrous to its business. Plaintiff continued to
work and incurred more than $14.8 million for the labor and materials that it and its
subcontractors furnished on the Seamless construction project that has not been paid by
defendant. Relying on a promise to pay, incurring $14.8 million dollars, and then not
being paid certainly qualifies as an injustice. Defendant argues the remedy of promissory
estoppel is not available when a contract exists that covers the issues for which damages
are sought. This Court has found that the letter agreement was not a contract for
defendant to pay plaintiff’s future work. Further, plaintiffs are permitted under Missouri
law to plead alternative claims. At this motion to dismiss stage, based on the facts pled in
the amended complaint, plaintiff states a claim for promissory estoppel that is facially
plausible. Defendant’s motion to dismiss this claim will be denied.
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5.
Quantum Meruit
“Where there is no formal contract, a promise to pay for services or materials may
be implied by the law. This is referred to as quasi-contract or quantum meruit.” City of
Cape Girardeau ex rel. Kluesner Concreters v. Jokerst, Inc., 402 S.W.3d 115, 122 (Mo.
App. E.D. 2013) (citing Green Quarries, Inc. v. Raasch, 676 S.W.2d 261, 264 (Mo.App.
W.D. 1984) (citing Donovan v. Kansas City, 352 Mo. 430, 175 S.W.2d 874, 884
(1943))). “The essential elements of such a claim are (1) that the plaintiff provided to the
defendant materials or services at the defendant’s request or with the acquiescence of the
defendant, (2) that the materials or services had reasonable value, and (3) that the
defendant has failed and refused to pay the reasonable value of such materials or services
despite the demands of plaintiff.” Id. (citing County Asphalt Paving, Co. v. Mosley
Constr., Inc., 239 S.W.3d 704, 710 (Mo.App. E.D. 2007)). “The principal function of
this type of implied contract is the prevention of unjust enrichment.” Id. (quoting Bellon
Wrecking & Salvage Co. v. Rohlfing, 81 S.W.3d 703, 711 (Mo.App. E.D.2002)). “In
quantum meruit, there is no requirement of an express agreement between the parties or a
promise on the part of the party to be bound.” Id. at 122-23 (citation omitted).
On this claim, the Court finds that plaintiff fails to state a claim for relief that is
facially plausible. Plaintiff provided materials and services to Seamless pursuant to the
contract plaintiff had with Seamless for the construction of Seamless’s pipe plant.
Although plaintiff argues that defendant sought and received benefits from plaintiff’s
work, no facts are alleged that the materials and services were provided to defendant, as
opposed to Seamless. Defendant’s motion to dismiss this claim will be granted.
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Accordingly,
IT IS HEREBY ORDERED that defendant’s motion to dismiss plaintiff’s
complaint (ECF #12) is DENIED as moot due to the filing of the amended complaint.
IT IS FURTHER ORDERED that defendant’s motion to dismiss plaintiff’s
amended complaint (ECF #20) is GRANTED in part and DENIED in part.
Specifically, plaintiff’s claims for breach of contract, breach of duty of good faith and fair
dealing, and quantum meruit are dismissed. The motion is denied as to plaintiff’s claims
for fraudulent misrepresentation, negligent misrepresentation, and promissory estoppel.
Dated this 31st day of March, 2016.
___________________________________
STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE
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