Chartis Specialty Insurance Company, Inc. v. Vaughan Foods, Inc. et al

Filing 50

MEMORANDUM AND ORDER... IT IS HEREBY ORDERED that Defendant Vaughan Foods, Inc.'s Motion to Dismiss Count III and Count XI of Plaintiffs First Amended Complaint (ECF No. 41 ) is GRANTED. IT IS FURTHER ORDERED that Defendant Vaughan Foods, Inc.'s prior Motion to Dismiss (ECF No. 18 ) is DENIED as MOOT. Signed by District Judge Ronnie L. White on 2/1/2017. (NEB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
CHARTIS SPECIALTY INSURANCE
COMPANY,
Plaintiff,
V.

VAUGHAN FOODS, INC., et al.,
Defendants.

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No. 4:16CV280 RLW

MEMORANDUM AND ORDER
This matter is before the Court on Defendant Vaughan Food, Inc.' s Motion to Dismiss
Count III and Count XI of Plaintiffs First Amended Complaint (ECF No. 41). The motion is
fully briefed and ready for disposition.

Background
This action arises from romaine lettuce allegedly contaminated with E.coli 0157:H7.
Defendant Vaughan Foods, Inc. ("Vaughan") supplied romaine lettuce to Schnuck Markets, Inc.
("Schnucks") for use in Schnucks salad bars. Plaintiff Chartis Specialty Insurance Company
("Chartis") is the insurer and assignee of Schnucks. The parties understood that the lettuce
would be used in Schnucks salad bar locations and sold for human consumption to the general
public. In late 2011 or early 2012, Vaughan delivered romaine lettuce to Shnucks, and Schnucks
placed the lettuce in its salad bars at various locations. According to Plaintiff, the lettuce was
contaminated with E.coli 0157 :H7, resulting in illnesses to people residing in several states.
Plaintiff filed a Complaint in in the Circuit Court of St. Louis County, Missouri against
Defendant Vaughan and Defendant C&E Farms, Inc., which supplied Vaughan with romaine
lettuce directly from its farms. Defendants removed the case to federal court on the basis of

diversity jurisdiction. On June 22, 2016, Plaintiff Chartis filed a First Amended Complaint,
alleging 12 counts against the Defendants, including various breaches of warranties, negligence,
strict liability, breach of contract, and breach of indemnity. (First Amended Compl., ECF No.
39) Specific to the present motion, Plaintiff brought claims for breach of implied warranty of
fitness for a particular purpose (Count III) and breach of contract (Count XI) against Defendant
Vaughan.
Legal Standards
With regard to motions to dismiss for failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6), a complaint must be dismissed if it fails to plead "enough facts to state a
claim to relief that is plausible on its face. " Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007) (abrogating the "no set of facts" standard set forth in Conley v. Gibson, 355 U.S. 41 , 4546 (1957)). While the Court cautioned that the holding does not require a heightened fact
pleading of specifics, "a plaintiffs obligation to provide the ' grounds ' of his ' entitle[ment] to
relief requires more than labels and conclusions, and a formulaic recitation of the elements of a
cause of action will not do." Id. at 555. In other words, " [f]actual allegations must be enough to
raise a right to relief above the speculative level . ... " Id. This standard simply calls for enough
facts to raise a reasonable expectation that discovery will reveal evidence of the claim. Id. at
556.
Courts must liberally construe the complaint in the light most favorable to the plaintiff
and accept the factual allegations as true. See Id. at 555 ; see also Schaaf v. Residential Funding
Corp., 517 F .3d 544, 549 (8th Cir. 2008) (stating that in a motion to dismiss, courts accept as
true all factual allegations in the complaint); Eckert v. Titan Tire Corp. , 514 F .3d 801 , 806 (8th
Cir. 2008) (explaining that courts should liberally construe the complaint in the light most

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favorable to the plaintiff). Further a court should not dismiss the complaint simply because the
court is doubtful that the plaintiff will be able to prove all of the necessary factual allegations.

Twombly, 550 U .S. at 556. However, " [w]here the allegations show on the face of the complaint
there is some insuperable bar to relief, dismissal under Rule 12(b)( 6) is appropriate." Benton v.

Merrill Lynch & Co., 524 F.3d 866, 870 (8th Cir. 2008) (citation omitted). Courts '" are not
bound to accept as true a legal conclusion couched as a factual allegation."' Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). When considering a motion to
dismiss, a court can "begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth." Id. at 679. Legal conclusions must be
supported by factual allegations to survive a motion to dismiss. Id.

Discussion
In its motion to dismiss, Defendant Vaughan argues that Plaintiffs claim for breach of
implied warranty for a particular purpose should be dismissed because the lettuce was used for
its normal and ordinary purpose, human consumption for salads, and not for any particular
purpose. Plaintiff, on the other hand, contends that the lettuce was used for the particular
purpose of being sold in a raw, unprepared state in Schnucks salad bars. A claim for breach of
implied warranty of fitness for a particular purpose exists:
[w ]here the seller at the time of contracting has reason to know any particular
purpose for which the goods are required and that the buyer is relying on the
seller's skill or judgment to select or furnish suitable goods there is unless
excluded or modified under section 400 .2-316 an implied warranty that the goods
shall be fit for such purpose.
Mo. Rev. Stat. § 400.2-315. As described in comment 2 of the statute, a " 'particular purpose' is
different from the ordinary purpose for which the goods are used in that it envisages a specific
use by the buyer which is peculiar to the nature of his business." Mo . Rev. Stat. § 400.2-315 at
comment 2. When determining whether a product is used for a unique, as opposed to ordinary,
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purpose, "the key inquiry is not whether anyone else can be found who puts the goods to the
same use, but whether the buyer' s use is sufficiently different from the customary use of the
goods to make it not an ordinary use of the goods." Ingram River Equip. , Inc. v. Pott Indus. ,

Inc., 816 F.2d 1231, 1233-34 (8th Cir. 1987); see also Howard Constr. Co. v. Bentley Trucking,
Inc., 186 S.W.3d 837, 843 (Mo. Ct. App. 2006) (stating that a claim for breach of implied
warranty of fitness for a particular purpose requires sufficient evidence to create a question of
fact whether the purchaser intended to use concrete sand for any particular purpose outside the
ordinary use, which was to make concrete).
In the instant case, the Court finds that Plaintiff is unable to state a claim for breach of
implied warranty of fitness for a particular purpose. As Defendant Vaughan notes, lettuce is
ordinarily sold in its raw form and consumed in salads. Nothing in Plaintiffs First Amended
Complaint or in its response in opposition to the motion to dismiss disputes this notion. While
Plaintiff attempts to convert the use of lettuce to something unique by virtue of its sale in
Schnucks salad bars, the Court finds that the location does not alter the ordinary use of the
lettuce, which is sold in its raw state and consumed in salads. Indeed, the First Amended
Complaint states on its face that Vaughan should have known "that the produce was intended for
a particular purpose, including commercial resale and consumption by end consumers." (F AC

if 42) (emphasis supplied)

Because Plaintiff has failed to demonstrate that the lettuce was

purchased for a special purpose, the Court will grant Defendant' s motion to dismiss Count III of
Plaintiffs First Amended Complaint. See Doe v. Miles, Inc., No. ED75100, 2000 WL 667383,
at* 7 (Mo. Ct. App. May 23 , 2000) ("a breach of the implied warranty of fitness for a particular
purpose may not be established without substantial evidence that the article or product was

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bought for a purpose that was special or 'particular' to the buyer and distinct from the article' s or
product' s ordinary purpose.").
With regard to Plaintiffs breach of contract claim, Defendant argues that the claim
should be dismissed because the complaint does not state any facts that could present a plausible
claim for breach of contract under the UCC. Plaintiff asserts that discovery is required to
determine whether Schnucks justifiably revoked its acceptance pursuant to delivery and that
Plaintiff suffered more than economic loss, as Plaintiff was forced to dispose of the lettuce
because of Vaughan' s alleged breach.
"Under Missouri law, remedies for economic loss sustained by reason of damage to or
defects in products sold are limited to those under the warranty provisions of the UCC."
Renaissance Leasing, LLC v. Vermeer Mfg. Co., 322 S.W.3d 112, 130-31 (Mo. 2010) (citation
omitted). The remedies for a breach of contract under the UCC are available to a buyer "[w]here
the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes
acceptance then with respect to any goods involved." Mo. Rev. Stat. § 400.2-711. With respect
to breach of warranty claims, remedies "are available to a buyer who has finally accepted goods,
but discovers that the goods are defective in some manner." Renaissance Leasing, 322 S.W.3d
at 131 (citing Mo. Rev. Stat.§ 400.2-714).
Defendant asserts that Plaintiff received and accepted the delivery of the romaine lettuce
and that Plaintiff does not allege that Vaughan failed to make a delivery or repudiated its
obligation under the purchase order. Further, Defendant contends that Plaintiff fails to allege
that Schnucks properly rejected a delivery or revoked acceptance of the delivery. Plaintiff
maintains that the face of the complaint sufficiently indicates revocation of acceptance.

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The Court finds that Plaintiff is unable to state a claim for breach of warranty. While the
First Amended Complaint states that Defendant Vaughan failed to supply produce, it refers to the
condition of the produce and not a failure to deliver. (FAC if lOO(a)) Further, nothing in the
complaint states that Schnucks justifiably revoked acceptance of the goods. To the contrary,
Plaintiffs suit stems from the fact that it accepted the lettuce and later learned that the lettuce
was defective due to the alleged contamination. Plaintiffs "contract claims are subsumed by
their breach of warranty claims for damages under section 400.2-714," which are set forth in
Counts I, II, and IV of the First Amended Complaint. Id. at 131. Thus, Plaintiffs claim for
breach of contract fails as a matter of law. 1 Id. "Where the allegations show on the face of the
complaint there is some insuperable bar to relief, dismissal under Rule 12(b)( 6) is appropriate. "
Benton v._Merrill Ly nch & Co., 524 F.3d 866, 870 (8th Cir. 2008) (citation omitted). Therefore,

the Court will dismiss Plaintiff's breach of contract claim set forth in Count XL
Accordingly,

IT IS HEREBY ORDERED that Defendant Vaughan Foods, Inc. ' s Motion to Dismiss
Count III and Count XI of Plaintiffs First Amended Complaint (ECF No. 41) is GRANTED.

IT IS FURTHER ORDERED that Defendant Vaughan Foods, Inc.' s prior Motion to
Dismiss (ECF No. 18) is DENIED as MOOT.
Dated this 1st day of February, 2017.

~Jk
UNITED STATES DISTRICT JUDGE

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Plaintiff attempts to argue, with no support, that the breach of contract claim survives the
motion to dismiss because Plaintiff suffered more than economic losses due to the disposing of
the lettuce. However, the Court looks to the face of the complaint to determine whether a
plaintiff has pled "enough facts to state a claim to relief that is plausible on its face. " Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The First Amended Complaint fails to
contain any allegations of non-economic losses based on damage to the lettuce.
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