Simply Thick, LLC v. Thermo Pac, LLC et al

Filing 68

MEMORANDUM AND ORDER -...... IT IS HEREBY ORDERED that plaintiff Simply Thick, LLC's motion to dismiss defendant Thermo Pac, LLC's counterclaims or, in the alternative, for a more definite statement is GRANTED in part and DENIED in part.[Doc. 46] The motion is GRANTED as to Count III, and DENIED in all other respects. An Order of Partial Dismissal will accompany this Memorandum and Order.. Signed by District Judge Charles A. Shaw on 9/23/2014. (MRC)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

SIMPLY THICK, LLC,
Plaintiff,
v.
THERMO PAC, LLC, et al.,
Defendants.

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No. 4:13-CV-1036 CAS

MEMORANDUM AND ORDER
This matter is before the Court on plaintiff Simply Thick, LLC’s (“plaintiff”) motion to
dismiss defendant Thermo Pac, LLC’s (“Thermo Pac”) counterclaims or, in the alternative, for a
more definite statement.1 Defendant Thermo Pac opposes the motion. The matter is fully briefed
and ready for decision. For the following reasons, the Court will grant in part and deny in part
plaintiff’s motion.
Background
On June 4, 2011, plaintiff announced a voluntary recall of its Simply Thick thickening gel
products manufactured at a food processing plant located in Stone Mountain, Georgia. The plant
was owned and operated by defendant Thermo Pac.
On May 30, 2013, plaintiff filed a five-count complaint against defendants arising out of the
recall. Count I alleges a claim for breach of express warranty, Count II alleges breach of implied
warranty, Count III alleges breach of contract, Count IV alleges breach of fiduciary duty, and Count
V alleges negligent misrepresentation. In response, defendant Thermo Pac filed a four-count
counterclaim. The counterclaim alleges claims against plaintiff for negligence, breach of contract,

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For clarity, the Court will refer to plaintiff Simply Thick as “plaintiff” and to its product
as “Simply Thick.”

constructive fraud and unjust enrichment. Plaintiff moves to dismiss all counts of Thermo Pac’s
counterclaim for failure to state a claim.
Legal Standard
On a motion to dismiss, the Court accepts as true the factual allegations contained in the
complaint and grants the non-moving party the benefit of all reasonable inferences that can be drawn
from those allegations. See Lustgraaf v. Behrens, 619 F.3d 867, 872-73 (8th Cir. 2010). “To
survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to
‘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 has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Id.
Discussion
A.

Negligence (Count I)

In Count I of Thermo Pac’s counterclaim, it asserts a claim for common law negligence.
Plaintiff moves to dismiss this Count, stating Thermo Pac has not pled any facts that would establish
a legal duty owed to Thermo Pac by plaintiff, nor has it alleged that plaintiff breached any duty.
Thermo Pac responds that because plaintiff developed the formula and manufacturing method for
the Simply Thick product, and because Thermo Pac relied on plaintiff’s formulation and
manufacturing process, a duty arose “to timely and adequately disclose to Thermo Pac all material
information relating to the product, including any safety issues relative to the product.” (Def. Opp’n
at 5).
Under Missouri law, “the first essential element of a claim of negligence” is “the existence
of a duty.” Leeper v. Asmus, __ S.W.3d __, 2014 WL 2190966, at *3 (Mo. Ct. App. May 27, 2014).

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As Thermo Pac recognizes, a legal duty arises from one of three sources: (1) the legislative branch,
(2) a law imposing a duty based on a relationship in which one party must exercise due care to avoid
foreseeable injury, or (3) a party assumed a duty based on a contract. Hackmann v. Missouri Am.
Water Co., 308 S.W.3d 237, 239 (Mo. Ct. App. 2009). As to the duty it alleges plaintiff owed,
Thermo Pac states, “[Plaintiff] had a duty to timely and adequately inform Thermo Pac of all
material information concerning the formulation, manufacturing process, and processing hazards,
consumer related complaints, and the risks and hazards relating to the Simply Thick product and its
consumption.” (Counterclaim at ¶ 20). Thermo Pac alleges this duty arose from the fact that
plaintiff developed the formula and manufacturing method for the product, made the determination
whether it was safe for human consumption, and represented the safety of the product. (Def. Opp’n
at 4-5). Because Thermo Pac relied on plaintiff in these areas, Thermo Pac argues these allegations
give rise to a duty of plaintiff to timely and adequately disclose all material information relating to
the product, including any safety issues, to avoid foreseeable injury. (Id. at 5).
Accepting the allegations in the counterclaim as true, and drawing all reasonable inferences
in favor of Thermo Pac, the Court finds Thermo Pac’s claim of negligence plausible on its face. To
be cognizable, the duty alleged by Thermo Pac must arise because the law imposes the duty based
on the relationship of the parties or because, under the circumstances, plaintiff must exercise due
care to its product manufacturer to avoid foreseeable injury. Thermo Pac has alleged that it
manufactured plaintiff’s Simply Thick product based on plaintiff’s formulation and manufacturing
process. Thermo Pac states its reliance upon plaintiff’s formulation and manufacturing process
“give[s] rise to a duty of plaintiff to timely and adequately disclose to Thermo Pac all material
information relating to the product, including safety issues.” Allegedly, plaintiff had received
complaints and warnings from medical professionals regarding the safety of the product, and failed

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to notify its manufacturer, Simply Thick, thereby failing to exercise due care to avoid foreseeable
injury, i.e., the voluntary recall. (Counterclaim at ¶¶ 30-31).
Because the Court finds it plausible under the circumstances that the law would impose a
duty on plaintiff to use due care to inform its manufacturer, Thermo Pac, of material information
regarding the risks and hazards related to Simply Thick, it will deny plaintiff’s motion to dismiss
Count I.
B.

Breach of Contract (Count II)

Under Missouri law, the essential elements of a breach of contract action are: “(1) the
existence and terms of a contract; (2) that plaintiff performed or tendered performance pursuant to
the contract; (3) breach of the contract by the defendant; and (4) damages suffered by the plaintiff.”
Keveney v. Missouri Military Acad., 304 S.W.3d 98, 104 (Mo. 2010) (en banc). Plaintiff moves to
dismiss Thermo Pac’s breach of contract claim, stating that Thermo Pac has not pled the specific
obligations and rights contracted by the parties.
In its counterclaim, Thermo Pac states that it contracted with plaintiff for the manufacture
of the Simply Thick product. (Counterclaim at ¶ 2). It states that it performed all its obligations
under its contract with plaintiff for consideration, including manufacturing the product in accordance
with the formulation and methods that were provided or approved by plaintiff. (Id. at ¶ 35).
Plaintiff breached its contract by failing to timely disclose material information to Thermo Pac
concerning the formulation, manufacturing process, processing hazards, consumer related
complaints, and the risks and hazards relating to the product. (Id. at ¶ 36). As a result, Thermo Pac
was damaged. (Id. at ¶ 37).
The Court rejects plaintiff’s argument that Thermo Pac failed to plead the rights or
obligations of each party under the contract. Thermo Pac alleged it contracted with plaintiff to

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manufacture the Simply Thick product for consideration. (Counterclaim at ¶¶ 2; 34). It alleged
further that it “performed all of its obligations . . . including manufacturing the Simply Thick product
in accordance with the formulation and methods . . . provided or approved by [plaintiff].” (Id. at
¶ 35). Plaintiff breached its contract by failing to disclose material information regarding the risks
and hazards related to the product. (Id. at ¶ 36). As a result of this breach, Thermo Pac was
damaged. (Id. at ¶ 37). Accepting as true the factual allegations contained in the counterclaim, and
granting Thermo Pac the benefit of all reasonable inferences, the Court finds Thermo Pac has
pleaded a claim for breach of contract that is plausible on its face.
C.

Constructive Fraud (Count III)

Plaintiff moves to dismiss Thermo Pac’s claim for constructive fraud, stating that Thermo
Pac has failed to plead facts that show a relationship between the two entities that would support an
actionable claim for constructive fraud. Additionally, plaintiff states Thermo Pac has failed to state
with particularity the circumstances constituting fraud, materiality and reliance.
Constructive fraud is found when a breach of a fiduciary or confidential relationship has
occurred. Flowers v. Flowers, 284 S.W.3d 207, 214 n.7 (Mo. Ct. App. 2009) (citing Fix v. Fix, 847
S.W.2d 762, 765 (Mo. 1993) (en banc)). “Courts have equated constructive fraud with the breach
or violation of a fiduciary, or confidential, relationship.” Fix, 847 S.W.2d at 765. Missouri courts
have acknowledged that “the existence of a business relationship does not give rise to a fiduciary
relationship, nor a presumption of such a relationship.” Autry Morlan Chevrolet Cadillac, Inc. v.
RJF Agencies, Inc., 332 S.W.3d 184, 194 (Mo. Ct. App. 2010) (quoting Chmieleski v. City Prods.
Corp., 660 S.W.2d 275, 294 (Mo. Ct. App. 1983)); see also Kratky v. Musil, 969 S.W.2d 371, 377
(Mo. Ct. App. 1998) (noting the breach of any promise in a fiduciary or confidential relationship
“will be considered constructively fraudulent,” but “the existence of a business relationship does not

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give rise to a fiduciary relationship”). Moreover, a fiduciary duty is not created by the unilateral
decision of one party to repose trust and confidence in another. Rather, “it derives from the conduct
or undertaking of the purported fiduciary which is recognized by the law as justifying such reliance.”
Pool v. Farm Bureau Town & Country Ins. Co., 311 S.W.3d 895, 907 (Mo. Ct. App. 2010).
In its counterclaim, Thermo Pac alleges that plaintiff developed and formulated the Simply
Thick product and manufacturing method, and made all determinations regarding whether it was safe
for human consumption. (Counterclaim at ¶¶ 1, 5, 10, 12-13, 19-23). Thermo Pac alleges that
plaintiff had knowledge that the product was not safe for human consumption and failed to disclose
this information to Thermo Pac. (Id. at ¶¶ 21-22). Specifically, Thermo Pac states that plaintiff had
superior knowledge received from medical professionals that the SimplyThick product was allegedly
injuring and killing humans—knowledge not reasonably available to Thermo Pac. (Id. at ¶ 21; Def.
Opp’n at 6). Thermo Pac states that this establishes a legal duty on the part of plaintiff to disclose
the safety concerns. It states plaintiff’s superior knowledge and control of the relevant information
regarding the safety of the SimplyThick product, and its silence in the face of this information,
amounts to constructive fraud.
The Court finds that Thermo Pac has not alleged a plausible counterclaim for constructive
fraud. Constructive fraud would require a finding that the parties entered into a fiduciary or
confidential relationship.

Thermo Pac has alleged nothing more than a standard business

relationship with plaintiff. Existence of a business relationship does not give rise to a fiduciary or
confidential relationship. See Autry Morlan Chevrolet Cadillac, 332 S.W.3d at 194; Smith v.
Goodyear Tire & Rubber Co., Inc., 856 F. Supp. 1347, 1353 (W.D. Mo. 1994). Although the
counterclaim includes allegations that plaintiff developed the formula and manufacturing process
for Simply Thick, and knew of safety concerns from medical professionals, Thermo Pac has not

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alleged how its mere unilateral reliance on plaintiff created a confidential or fiduciary relationship.
The Court cannot find a confidential or fiduciary relationship between the parties at the time of the
allegedly fraudulent conduct, and in the absence of such a relationship, the constructive fraud claim
is not plausible.
Viewing the facts in the light most favorable to Thermo Pac, the Court finds that Thermo Pac
has not stated a claim for constructive fraud that is plausible on its face. The Court will grant
plaintiff’s motion to dismiss Count III of the counterclaim.
D.

Unjust Enrichment (Count IV)

Finally, plaintiff moves to dismiss Thermo Pac’s claim for unjust enrichment. Plaintiff states
that Thermo Pac failed to allege the factual basis for its claim. Additionally, plaintiff claims an
adequate remedy exists at law, and therefore the equitable remedy of unjust enrichment is not
available.
“An unjust enrichment has occurred where a benefit was conferred upon a person in
circumstances in which retention of the benefit, without paying its reasonable value, would be
unjust.” S & J, Inc. v. McLoud & Co., L.L.C., 108 S.W.3d 765, 768 (Mo. Ct. App. 2003). The
elements of unjust enrichment are (1) a benefit conferred on the defendant by the plaintiff; (2)
appreciation by the defendant of that benefit; and (3) acceptance and retention of the benefit under
such circumstances that it would be inequitable for defendant to retain the benefit without paying
for its value. US Bank Nat’l Ass’n v. Cox, 341 S.W.3d 846, 852 (Mo. Ct. App. 2011) (cited cases
omitted).
Unjust enrichment is “an equitable remedy based on the concept of a quasi-contract.”
Affordable Communities of Mo. v. Federal Nat’l Mort. Ass’n, 714 F.3d 1069, 1077 (8th Cir. 2013).
A judgment in favor of a party on both its contract and unjust enrichment claims would constitute

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a double recovery. See Meco Sys., Inc. v. Dancing Bear Entm’t, Inc., 42 S.W.3d 794, 810-11 (Mo.
Ct. App. 2001) (where court entered judgment for plaintiff on contract claims, it properly denied
plaintiff’s unjust enrichment claims to avoid a double recovery, where plaintiff did not elect its
remedy and submitted both claims). Generally, an unjust enrichment claim should be dismissed if
a “plaintiff has entered into an express contract for the very subject matter for which he seeks
recovery.” Affordable Communities, 714 F.3d at 1077. In such a case, a plaintiff’s rights are
limited to the express terms of the contract. Id.
Contrary to plaintiff’s position, Thermo Pac’s counterclaim for unjust enrichment is not
based on the very subject matter for which it seeks recovery under the express contract claim of
Count II. As pleaded by Thermo Pac, the unjust enrichment claim relates to certain recall
concessions it made to plaintiff following the June 4, 2011 recall. (Counterclaim at ¶ 46). Thermo
Pac alleges these recall concessions conferred benefits upon plaintiff, and plaintiff was unjustly
enriched by retaining these benefits. (Id. at ¶ 49). Thermo Pac alleges it has no adequate remedy
at law. (Id. at ¶ 50). Thermo Pac’s contract claim, on the other hand, relates to conduct occurring
prior to the June 4, 2011 recall. (Id. at ¶¶ 34-37).
The Court finds Thermo Pac sufficiently pleaded its cause of action for unjust enrichment,
and will deny plaintiff’s motion to dismiss Count IV of the counterclaim.
Accordingly,
IT IS HEREBY ORDERED that plaintiff Simply Thick, LLC’s motion to dismiss
defendant Thermo Pac, LLC’s counterclaims or, in the alternative, for a more definite statement is
GRANTED in part and DENIED in part. [Doc. 46] The motion is GRANTED as to Count III,
and DENIED in all other respects.

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An Order of Partial Dismissal will accompany this Memorandum and Order.

__________________________________
CHARLES A. SHAW
UNITED STATES DISTRICT JUDGE

Dated this 23rd day of September, 2014.

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