Rice v. Interfood, Inc. et al

Filing 38

MEMORANDUM AND ORDER re: 8 10 ORDERED that Defendants' Motion to Dismiss for Failure to State a Claim, [Doc. 8], is GRANTED. FURTHER ORDERED that Defendants' Motion for Sanctions, [Doc. No. 10], is DENIED. FURTHER ORDERED that Defendants' Counterclaim in this matter remains for further proceedings. Signed by District Judge Henry E. Autrey on 3/10/14. (CEL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

LARRY RICE,
Plaintiff,
vs.
INTERFOOD, INC, et al.,
Defendants.

)
)
)
)
)
)
)
)
)

Case No. 4:13CV1171 HEA

OPINION, MEMORANDUM AND ORDER
This matter is before the Court on Defendants’ Motion to Dismiss for
Failure to State a Claim, [Doc. No. 8] and Defendants’ Motion for Sanctions,
[Doc. No. 10]. Plaintiff has responded to the motions, and Defendant has filed a
reply. Plaintiff filed a “Reply in Opposition to Defendants’ Motion to Dismiss.”
For the reasons set forth below, the Motion to Dismiss is granted; the Motion for
Sanctions is denied.
Standard for Motion to Dismiss
When ruling on a Federal Rule of Civil Procedure 12(b)(6) motion to
dismiss for failure to state a claim, the Court must take as true the alleged facts and
determine whether they are sufficient to raise more than a speculative right to
relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). The Court does

not, however, accept as true any allegation that is a legal conclusion. Ashcroft v.
Iqbal, 129 S.Ct. 1937, 1949-50 (2009). The complaint must have “‘a short and
plain statement of the claim showing that the [plaintiff] is entitled to relief,’ in
order to ‘give the defendant fair notice of what the . . . claim is and the grounds
upon which it rests.’” Twombly, 550 U.S. at 555 (quoting Fed.R.Civ.P. 8(a)(2))
and then Conley v. Gibson, 355 U.S. 41, 47 (1957), abrogated by Twombly, supra);
see also Gregory v. Dillard’s Inc., 565 F.3d 464, 473 (8th Cir.) (en banc), cert.
denied, 130 S.Ct. 628 (2009). While detailed factual allegations are not necessary,
a complaint that contains “labels and conclusions,” and “a formulaic recitation of
the elements of a cause of action” is not sufficient. Twombly, 550 U.S. at 555;
accord Iqbal, 129 S.Ct. at 1949. The complaint must set forth “enough facts to
state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570;
accord Iqbal, 129 S.Ct. at 1949; Braden v. Wal-Mart Stores, Inc., 588 F.3d 585,
594 (8th Cir. 2009). “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.” Iqbal, 129 S.Ct. at 1949. If the
claims are only conceivable, not plausible, the complaint must be dismissed.
Twombly, 550 U.S. at 570; accord Iqbal, 129 S.Ct. at 1950. In considering a
motion to dismiss under Fed. R. Civ. P. 12(b)(6), “the complaint should be read as
-2-

a whole, not parsed piece by piece to determine whether each allegation, in
isolation, is plausible.” Braden, 588 F.3d at 594. The issue in considering such a
motion is not whether the plaintiff will ultimately prevail, but whether the plaintiff
is entitled to present evidence in support of the claim. See Neitzke v. Williams, 490
U.S. 319, 327 (1989). “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, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d
868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct.
1955, 167 L.Ed.2d 929 (2007)). Thus, “although a complaint need not include
detailed factual allegations, ‘a plaintiff's obligation to provide the grounds of his
entitlement to relief requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.’ ” C.N. v. Willmar Pub.
Sch., Indep. Sch. Dist. No. 347, 591 F.3d 624, 629-30 (8th Cir.2010) (quoting
Twombly, 550 U.S. at 555).
Facts and Background
Defendants move to dismiss this action on the grounds that Count I of
Plaintiff’s Complaint is barred by the applicable statute of limitations; neither
Defendant Neerhoff nor van Stipdonk were parties to the contract allegedly
breached in Count II; and Count III, based on an alleged conspiracy fails because
-3-

there can be no conspiracy if there is no underlaying viable cause of action.
Plaintiffs brought this action against Defendants Interfood, Inc., “and its
directors: Jason Medcalf, Dirk Neerhoff, Nick Sharp, and F.C.G.M. (Frank) van
Stipdonk, alleging, as relevant for this motion the following:
The Complaint alleges that Interfood, Inc. was incorporated in Delaware in
September 2006 by Steven E. Pozaric. Interfood is a wholly owned subsidiary of
Interfood Holding B.V. Holding was a foreign business entity formed and existing
under the laws of the Netherlands. Holding is the sole owner and sole Director of
Tepco, B.V. Tepco is a foreign business entity formed and existing under the laws
of the Netherlands.
Tepco and Plaintiff were shareholders in Waltepco Holding Company, an
Indiana corporation which owns 100% of an Indiana corporation formed in 1994
named Interfood, Inc. (Interfood-IN).
Since 1994, Interfood-IN has been in the business of the distribution,
marketing, sourcing, and sale of milk, milk powders, milk protein concentrates,
anhydrous milk fat and blends, buttermilk, butter, cheese, lactose, whey powders,
whey protein concentrates, whey protein isolates, casein, caseinate, and other dairy
goods, products, and ingredients. Since that time, Interfood-IN has provided a
number of services, including acting as a broker of the dairy goods, acting as a
-4-

trader of the dairy goods, purchasing the dairy goods, and entering into contracts
for the purchase of the dairy goods from suppliers and then sells the dairy goods at
a profit.
Interfood is also engaged in the dairy business.
Tepco and Plaintiff entered into a “Shareholders Agreement” dated June 1,
2003, which requires anyone in the “Group” (Holding owned companies similar to
Interfood around the world) who wishes to buy and/or sell something in the United
States or Canada, or to buy and/or sell U.S. or Canadian products anywhere, to do
so through Interfood-IN. The Shareholders Agreement gives Interfood-IN
exclusive rights for the entire Group . The contract was signed by van Stipdonk
representing Tepco and Jack Engels representing Holding.
After forming “Interfood, Inc.” in Delaware, Neerhoff and van Stipdonk
focused their efforts on establishing the business of the new company, Interfood
Inc. of Delaware, which was a competitor of Interfood-IN in the dairy business,
and diverted Interfood-IN’s opportunities to Interfood, Inc. of Delaware in breach
of their fiduciary duties as Directors of Interfood-IN, which they claimed to be.
Plaintiff alleges that he became aware of this alleged breach in early 2004
and tried to resolve them with van Stipdonk and Neerhoff.
The Complaint further alleges that in August 2006, the Interfood-IN board
-5-

removed van Stipdonk as a director leaving Rice and Husmann as the entire board
of Interfood-IN, which filed suit in Franklin County, Missouri in March 2006 to
stop alleged violations of the Shareholders Agreement.
Discussion
Motion to Dismiss
In assessing “plausibility,” as required under the Twombly and Iqbal
standard, the Eighth Circuit Court of Appeals has explained that courts “consider[
] only the materials that are ‘necessarily embraced by the pleadings and exhibits
attached to the complaint.’ “ Whitney v. Guys, Inc, 700 F.3d 1118, 1128 (8th Cir.
2012) (quoting Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n. 4 (8th
Cir.2003)). Thus, courts may consider “‘materials that are part of the public record
or do not contradict the complaint.’” Miller v. Redwood Toxicology Lab., Inc.,
688 F.3d 928, 931 (8th Cir.2012) (quoting Porous Media Corp. v. Pall Corp., 186
F.3d 1077, 1079 (8th Cir.1999), and citing Illig v. Union Elec. Co., 652 F.3d 971,
976 (8th Cir.2011)). A more complete list of the matters outside of the pleadings
that the court may consider, without converting a Rule 12(b)(6) motion to dismiss
into a Rule 56 motion for summary judgment, pursuant to Rule 12(d), includes
“‘matters incorporated by reference or integral to the claim, items subject to
judicial notice, matters of public record, orders, items appearing in the record of
-6-

the case, and exhibits attached to the complaint whose authenticity is
unquestioned.’” Miller, 688 F.3d at 931 n. 3 (quoting 5B CHARLES ALAN
WRIGHT & ARTHUR R. MILLER, Federal Practice and Procedure § 1357 (3d
ed.2004)).
Breach of Fiduciary Duties
Plaintiff’s breach of fiduciary duty claim is barred by the applicable
Missouri statutes of limitations, which is controlling in this diversity case. Zutz v.
Case Corp., 422 F.3d 764, 774 (8th Cir.2005). Under Missouri law, there is a
five-year statute of limitations for breach of fiduciary duty claims. Mo.Rev.Stat. §
516.120(4). This limitation begins to run when damage is sustained and capable
of being discovered and not simply when a plaintiff learns of the injury or
wrongful conduct. Klemme v. Best, 941 S.W.2d 493, 497 (Mo.1997). Creative
Marketing Associates, Inc. v. AT & T, 476 F.3d 536 (8th Cir. 2007). The
Complaint alleges that Plaintiff learned of the alleged breach in “early 2004” and
began taking action to stop the alleged breach in 2006. At the very latest
(although more accurately in 2004), Plaintiff’s suit for breach of any fiduciary
duty should have been brought within 5 years from 2006, i.e., in 2011. Because
this action was filed two years later in 2013, the claim is barred.
Plaintiff’s belated argument that this is actually a claim “arising out of
-7-

contract” which therefore carries a ten year statute of limitation time period fails.
The Complaint alleges a breach of fiduciary duty, a separate and distinct cause of
action. Merely claiming it is a different cause of action does not transform the
alleged claim into another viable claim. Wishing does not make it so.
Parties to the contract allegedly breached
Defendants argue that because they were not parties to the Shareholders
Agreement, the breach of contract claim of Count II fails. The Court agrees. The
Shareholders Agreement, which is attached as an exhibit to Plaintiff’s Complaint
establishes that the Contract is between Plaintiff and Tepco, B.V., the two
shareholders of Waltepco Holding Company in mid-2003. Defendants in an
action on a contract must be the parties obligated to perform under the Contract.
Nachbar v. Duncan, 114 S.W.3d 421, 242 (Mo.App. 2003); Calender v. City of
Pine Lawn, 2008 WL 276531 (E.D. Mo. 2008). Neither Defendant Neerhoff nor
van Stipdonk were parties to the June 1, 2003 Shareholders Agreement.
Although Plaintiff now argues, again belatedly, that these defendants are
sued as corporate representatives, such claim does not cure the Complaint’s
deficiencies. It is what it says, and Plaintiff’s argument notwithstanding, the
Complaint fails to state a cause of action against Defendants for breach of
contract.
-8-

Conspiracy
Defendants are correct. Failure to state an underlying cause of action is
fatal to Plaintiff’s conspiracy Count. “If the underlying wrongful act alleged as
part of a civil conspiracy fails to state a cause of action, the civil conspiracy claim
fails as well.” Envirotech, Inc. v. Thomas, 259 S.W.3d 577, 586 (Mo.App. 2008);
Lacy v. Gray, 2013 WL 3766567 (E.D. Mo. 2013). Count III must therefore be
dismissed.
Considering the above analysis, Plaintiff’s Complaint fails to set forth
sufficient allegations to state claims against Defendants. The Court, therefore,
concludes that the Motion to Dismiss is well taken.
Motion for Sanctions
Defendants seek sanctions against Plaintiff for his filing this action when
Defendants claim Plaintiff’s Complaint is not warranted by existing law and are
presented for the improper purpose of harassing Defendants and needlessly
increasing their costs of litigation. The Court is unpersuaded. A review of the
pleadings establish that Plaintiff, a pro se litigant has a firm and genuine belief
that Defendants committed the alleged wrongs contained in the Complaint.
Although Plaintiff’s Complaint cannot withstand Defendants’ challenges, such
fact does not also establish Defendants’ ulterior motive theory. Based upon the
-9-

pleadings before the Court, the Court cannot conclude that Plaintiff has run awry
of Rule 11. The Motion for Sanctions will be denied.
Conclusion
Based upon the foregoing analysis, Plaintiff’s Complaint fails to state a
cause of action and must be dismissed.
Accordingly,
IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss for
Failure to State a Claim, [Doc. 8], is GRANTED.
IT IS FURTHER ORDERED that Defendants’ Motion for Sanctions,
[Doc. No. 10], is DENIED.
IT IS FURTHER ORDERED that Defendants’ Counterclaim in this matter
remains for further proceedings.
Dated this 10th day of March 2014.

_______________________________
HENRY EDWARD AUTREY
UNITED STATES DISTRICT JUDGE

- 10 -