Pat & Larry Investments, LLC v. Master Wholesale & Vending Supply, Inc.
Filing
16
MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that Plaintiffs Motion to Remand is DENIED. (Doc. No. 8 ). IT IS FURTHER ORDERED that Defendants Motion to Dismiss is GRANTED. (Doc. No. 5 ). This case is DISMISSED without prejudice.. Signed by District Judge Audrey G. Fleissig on 5/10/22. (KJS)
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 1 of 11 PageID #: 249
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
PAT & LARRY
INVESTMENTS, LLC,
)
)
)
Plaintiff,
)
)
v.
)
)
MASTER WHOLESALE & VENDING )
SUPPLY, INC., et al.,
)
)
Defendants.
)
Case No. 4:22-cv-00200-AGF
MEMORANDUM AND ORDER
This matter is before the Court on Defendants Master Wholesale & Vending
Supply, Inc. (“Master Wholesale”), Randall Groth, and Hope Groth’s Motion to Dismiss
Plaintiff’s Complaint (Doc. No. 5), and Plaintiff Pat & Larry Investments, LLC’s Motion
to Remand. (Doc. No. 8). Pat & Larry, Investments LLC (“P&L”) initially filed this
matter in the Circuit Court of St. Louis County, Missouri, alleging Defendants breached
their obligations to cover the costs of property damage and cleaning pursuant to a
commercial lease (the “Lease”) and a guaranty agreement (the “Guaranty”).
Defendants removed the matter to this Court on the basis of diversity jurisdiction 1
and moved to dismiss for failure to state a claim, arguing a subsequent sublease
P&L is a citizen of Missouri and Hope and Randall Groth are citizens of
Wisconsin. (Doc. No. 1 at 2-3). Master Wholesale is no longer a legally incorporated
entity. It was previously incorporated in Wisconsin and articles of dissolution were filed
on December 23, 2020. Id. at 2.
A federal court must consider the citizenship of a dissolved corporation for
purposes of diversity jurisdiction. When a state statute renders a dissolved corporation
1
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 2 of 11 PageID #: 250
eliminated their duty to pay for property damage and cleaning costs. P&L then moved to
remand. P&L claims the Circuit Court of the City or County of St. Louis Missouri are
the exclusive venues for claims related to the Lease pursuant to a mandatory forum
selection clause. The motions are fully briefed 2 and ready for disposition. For the
reasons set forth below, the Court will deny P&L’s Motion to Remand and grant
Defendants’ Motion to Dismiss.
Facts
As alleged in the Complaint, Master Wholesale entered into a commercial lease
with P&L. (Compl., Doc. No. 1-2 at pp. 3-8, ¶ 9). The parties executed a lease renewal
agreement, which extended the Lease through January 31, 2019. Id. at ¶ 12. In
paragraph 7(b) of the Lease, Master Wholesale agreed to keep the property in good
condition and pay for repairs if it neglected to maintain the property:
[Master Wholesale] shall at its expense and risk maintain all other parts of
the Premises in good repair and condition, including but not limited to
repairs [to certain listed items]…[I]n the event [Master Wholesale] should
neglect to maintain the Premises, [P&L] shall have the right (but not the
“sufficiently alive to sue,” the corporation also retains its citizenship for purposes of
diversity jurisdiction. Johnson v. SmithKline Beecham Corp., 724 F.3d 337, 358–59 (3d
Cir. 2013). See also Ratermann v. Cellco P'ship, No. 4:09CV126 DDN, 2009 WL
1139232, at *4 (E.D. Mo. Apr. 28, 2009). Pursuant to Wisconsin law, “the dissolution of
a corporation does not take away or impair any remedy available to or against the
corporation, its directors, officers or members, for any right or claim existing or any
liability incurred, prior to such dissolution if action or other proceeding thereon is
commenced within 2 years after the date of such dissolution.” Wis. Stat. Ann. §
181.1407 (West 2022). This action was commenced within two years after the date of
Master Wholesale’s dissolution. As such, for the purposes of jurisdiction, Master
Wholesale is a citizen of Wisconsin.
P&L has not filed a reply brief in support of their motion for remand and the time
to do so has passed.
2
2
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 3 of 11 PageID #: 251
obligation) to cause repairs or corrections to be made and any reasonable
costs therefore shall be payable by [Master Wholesale] to [P&L]. . . .
Id. at ¶ 10. Additionally, if Master Wholesale “vacates the property without cleaning,
repairs and maintenance or necessary replacements as contained in this lease, [it] shall
reimburse [P&L] for all associated costs such as cleaning, repairs and maintenance or
replacements….” Id. at ¶ 11.
Defendants Randall and Hope Groth executed a guaranty (the “Guaranty”) in
favor of P&L guaranteeing payment of rent and other charges pursuant to the Lease and
performance of Master Wholesale’s obligations. Id. at ¶ 21. The Lease contains a forum
selection clause, which states: “The laws of the State of Missouri shall govern this Lease
and exclusive venue for the enforcement of any action hereunder shall be in the City or
County of St. Louis, Missouri.” (Doc. No. 8-2 at ¶ 45).
On July 13, 2018, Master Wholesale entered into a sublease (the “Sublease,” Doc.
No. 5-2) with Performance Food Group, Inc. (“PFG”). P&L consented to the Sublease.
For the purposes of clarifying the record, the Court notes that although the
Complaint states that copies of the Lease, Renewal and Guaranty are attached as Exhibits
A, B, and C to the Complaint, no exhibits appear to have been attached to the complaint
as filed in state court and Defendants represent that no copies of the agreement were
attached to the complaint. Defendants attached as exhibits to their Motion to Dismiss a
copy of the Guaranty, the Sublease, the Lease, and the Renewal. (Doc. No. 5-2). P&L
attached copies of the Lease, Guaranty, and Renewal to its Motion to Enforce Forum
Selection Clause. (Doc. Nos. 8-1, 8-2 and 8-3). No party disputes the authenticity of any
3
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 4 of 11 PageID #: 252
such documents. Although the Sublease was not attached to or referenced by the
Complaint, the Court may consider it, as it is “embraced by the pleadings.” See Zean v.
Fairview Health Servs., 858 F.3d 520, 527 (8th Cir. 2017) (finding documents refuting
plaintiff’s allegation that he did not give express consent to defendant were embraced by
the complaint); Enervations, Inc. v. Minnesota Mining and Mfg. Co., 380 F.3d 1066,
1069 (8th Cir. 2004) (document construed as amending the contract embraced by
complaint for breach of contract).
Plaintiff claims Master Wholesale breached the Lease “by failing to abide by the
terms and conditions as required by the Lease and Renewal in failing to pay P&L for
property damage and cleaning costs.” (Compl. at ¶ 14). P&L further states it sustained
$406,058.00 in property damage and $261,605.05 in cleaning costs. Id. at ¶ 16. Plaintiff
claims Randall and Hope Groth are also liable for damages because they failed to fulfill
their obligations pursuant to the Guaranty.
I.
Motion to Remand
The Court will first determine whether Defendants waived their right to remove
this matter to federal court through a forum selection clause in the Lease. The forum
selection clause states: “The laws of the State of Missouri shall govern this Lease and
exclusive venue for the enforcement of any action hereunder shall be in the City or
County of St. Louis, Missouri.” (Doc. No. 8-2 at ¶ 45). Defendants respond that they did
not waive their right to remove to federal court, as the forum selection clause does not
specify that the venue must be in state court, only that it must be in St. Louis City or
County.
4
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 5 of 11 PageID #: 253
“A forum selection clause can act as a waiver of a defendant’s right to remove an
action to federal court.” Magness Oil Co. v. Piedmont Fields, LLC, No. 3:11–CV–03104,
2012 WL 1884902 at *3 (W.D. Ark. May 23, 2012) (citing iNet Directories, LLC v.
Developershed, Inc., 394 F.3d 1081 (8th Cir. 2005) (finding that a “contract’s forum
selection clause unambiguously prohibited [Defendant] from objecting to venue by
removing the case to federal court”)). There is a strong presumption in favor of finding
forum selection clauses valid and enforceable. See Atl. Marine Constr. Co. v. U.S. Dist.
Court, 571 U.S. 49, 65 (2013) (“When parties have contracted in advance to litigate
disputes in a particular forum, courts should not unnecessarily disrupt the parties’ settled
expectations.”); Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 589 (1991); M/S
Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 15 (1972). Where, as here, there is no
allegation of fraud or overreaching in procurement of the forum selection clause, the only
issue the Court need consider is whether the language of the clause acts as a waiver of the
right to remove the case to federal court. See Babe Winkelman Prods., Inc. v. Sports
Design and Dev., Inc., No. Civ. 05–2971 DWF/RLE, 2006 WL 980821, at *2 (D. Minn.
Apr. 7, 2006). Any contractual waiver of the right to remove must be “clear and
unequivocal.” See Weltman v. Silna, 879 F.2d 425, 427 (8th Cir. 1989).
The Court finds the forum selection clause does not include a clear and
unequivocal waiver of the right to remove. P&L misreads the clause, arguing it
“specifies that the Circuit Courts for St. Louis City or County” are the exclusive venue.
(Doc. No. 9 at 3) (emphasis added). However, the clause does not specify that venue
must be in the Circuit Courts. Instead, it states that the exclusive venue “shall be in the
5
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 6 of 11 PageID #: 254
City or County of St. Louis, Missouri.” (Doc. No. 8-2 at ¶ 45). Courts have recognized
that in this context, “the word ‘in’ imposes a geographic limitation.” City of Albany v.
CH2M Hill, Inc., 924 F.3d 1306, 1308 (9th Cir. 2019). “[W]hen a federal court sits in a
particular county, the district court is undoubtedly ‘in’ that county.” Smirnoff v. Expedia,
Inc., 643 F.3d 1202, 1206 (9th Cir. 2011). Thus, “a forum selection clause that vests
‘exclusive jurisdiction and venue’ in the courts ‘in’ a county provides venue in the state
and federal courts located in that county.” Id. at 1207; accord, Alliance Health Group,
LLC v. Bridging Health Options, LLC, 553 F.3d 397, 400 (5th Cir. 2008); Global
Satellite Communication Co. v. Starmill U.K. Ltd., 378 F.3d 1269, 1272 (11th Cir. 2004).
See also Freedom Smokeless, Inc. v. Rapid Dev. Servs., Inc., No. 4:15-cv-00771 AGF,
2015 WL 5735201, at *5 (E.D. Mo. Sept. 29, 2015). Here the federal court sits in St.
Louis City. 28 U.S.C. §105(a)(1).
The cases cited by P&L do not suggest otherwise. The clauses in those cases each
referenced a particular court. See, e.g., OHM Hotel Grp., LLC v. Dewberry Consultants,
LLC, No. 4:15-CV-1705 CAS, 2016 WL 427959, at *2 (E.D. Mo. Feb. 4, 2016) (forum
selection clause designated “the Circuit Court for St. Louis County, Missouri as the ‘sole
and exclusive venue’ for any litigation arising out of or relating to the agreement”); Push
Pedal Pull, Inc. v. Casperson, 971 F. Supp. 2d 918, 928 (D.S.D. 2013) (forum selection
clause stated “the state court situated in Minnehaha County, South Dakota, shall be the
exclusive jurisdiction of any dispute relating to this Agreement”); Magness Oil Co., 2012
WL 1884902, at *2 (forum selection clause stated: “[a]ny action shall be adjudicated in
the Circuit Court of Baxter County, Arkansas” (alteration in original)). As such, the
6
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 7 of 11 PageID #: 255
Lease does not clearly and unequivocally waive Defendants’ right to remove this action,
and this Court has subject matter jurisdiction over P&L’s claims.
II.
Defendants’ Motion to Dismiss
Defendants move to dismiss P&L’s complaint for failure to state a claim. P&L
raised two counts: a claim for breach of contract against Master Wholesale (Count I) and
a claim for breach of the Guaranty against Randall and Hope Groth (Count II).
Defendants claim P&L failed to state a claim for breach of contract against Master
Wholesale for two reasons. First, Defendants claim that, pursuant to the Sublease,
Master Wholesale is not liable for any cleaning costs or property damage that occurred
after July 13, 2018. P&L did not allege the cleaning costs or property damage were
incurred prior to July 13, 2018. As such, Defendants argue P&L failed to adequately
state a claim against it for breach of the Lease. In the alternative, Defendants contend
P&L failed to allege specific facts showing Master Wholesale is liable for any damages.
Defendants further claim P&L failed to state a claim against Randall and Hope Groth for
breach of the Guaranty because it did not allege Master Wholesale is in breach. P&L
contends that it was not required to specify when the damages were incurred and its
allegations are sufficient to state a claim against Master Wholesale, Randall Groth, and
Hope Groth. For the reasons set forth below, the Court concludes that P&L has failed to
state a claim.
a. Legal Standard
To survive a motion to dismiss, a plaintiff’s claims must contain sufficient factual
matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atl.
7
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 8 of 11 PageID #: 256
Corp. v. Twombly, 550 U.S. 544, 570 (2007). The reviewing court accepts the plaintiff’s
factual allegations as true and draws all reasonable inferences in favor of the nonmoving
party. Torti v. Hoag, 868 F.3d 666, 671 (8th Cir. 2017). But “[c]ourts are not bound to
accept as true a legal conclusion couched as a factual allegation, and factual allegations
must be enough to raise a right to relief above the speculative level.” Id.
b. Discussion
Defendants first argue that P&L has failed to state a claim because it did not allege
its damages were sustained prior to July 13, 2018. Defendants claim that, pursuant to the
Sublease, P&L agreed that Master Wholesale was liable for repair and maintenance prior
to July 13, 2018 and “PFG was responsible thereafter.” (Doc. No. 6 at 4) (citing the
Sublease, Doc. No. 5-2, at 1-3, 6-7, 10). Defendants reference the Landlord Consent to
Sublease, which states:
[P&L] does hereby consent to the sublease of the Premises . . . upon the
terms and conditions of said Sublease, including without limitation, the
repair, maintenance, and surrender obligations of the Subtenant [PFG] and
Landlord [P&L] shall look solely to Sublandlord [Master Wholesale] as to
(i) the maintenance, repair, or replacement of any item or condition that
exists as of the Effective Date [7/13/18], (ii) the removal of any alterations,
additions or improvements made in or upon the Premises prior to the
Effective Date [7/13/18], and (iii) the liability for any act or omission made
by Sublandlord [Master Wholesale] under this Prime Lease.
(Doc. No. 5-2 at 9) (emphasis added).
Defendants argue this language limits Master Wholesale’s obligations for cleaning
or repair costs to conditions that existed prior to July 13, 2018. However, the language
states only that P&L shall look to Master Wholesale, and not PFG, for conditions that
8
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 9 of 11 PageID #: 257
existed as of July 13, 2018. The Landlord Consent to Sublease is silent on Master
Wholesale’s liability for conditions after July 13, 2018.
Defendants do not identify any other language in the Sublease that would render
PFG solely liable for property damage or cleaning costs after July 13, 2018, nor can the
Court identify any such language. Other language in the Sublease suggests that Master
Wholesale’s obligations pursuant to the Lease continue under the Sublease. See Sublease
at 2. (“all of the terms and conditions contained in the Prime Lease are incorporated
herein as terms and conditions of the Sublease ”). Defendants have not shown that the
Sublease unambiguously eliminates Master Wholesale’s liability for property damage or
cleaning costs incurred after July 13, 2018, so dismissal is not warranted based on their
first argument. See Olympus Ins. Co. v. AON Benfield, Inc., 711 F.3d 894, 898 (8th Cir.
2013).
In the alternative, Defendants argue P&L has failed to state a claim because it has
not alleged specific facts to show it breached the Lease. To plead a claim for breach of
contract under Missouri law, a plaintiff must allege sufficient facts to establish breach of
the contract by the defendant. See Keveney v. Missouri Mil. Acad., 304 S.W.3d 98, 104
(Mo. 2010). Although the Court must accept factual allegations as true when considering
a motion to dismiss, it may ignore legal conclusions, unsupported conclusions, and
unwarranted inferences. See Wiles v. Capitol Indem. Corp., 280 F.3d 868, 870 (8th Cir.
2002).
P&L alleged Master Wholesale breached the Lease “by failing to abide by the
terms and conditions as required by the [Lease] in failing to pay P&L for property
9
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 10 of 11 PageID #: 258
damage and cleaning costs.” (Compl. at ¶ 14). P&L further alleges that it sustained
$406,058.00 in property damage and $261,605.05 in cleaning costs. Id. at ¶ 16. P&L
does not identify which “terms and conditions” of the Lease Master Wholesale allegedly
breached, rather, the complaint merely references several clauses in the Lease—one
which obligates Master Wholesale to pay for certain “repairs or corrections,” and one
which requires Master Wholesale to pay for certain cleaning costs. Id. at ¶¶ 10, 11.
These allegations are nothing more than legal conclusions. P&L has failed to
allege sufficient facts to establish a breach of contract by Master Wholesale. The Lease
does not require Master Wholesale to pay for all property damage and cleaning costs.
Instead, Master Wholesale is liable for the costs of “repairs or corrections” if it
“neglect[s] to maintain the Premises.” Id. at ¶ 10. Similarly, Master Wholesale is liable
for cleaning costs if it vacates the property without cleaning, maintenance, or necessary
replacements. Id. at ¶ 11. P&L alleges Master Wholesale did not pay for property
damage or cleaning costs but has not alleged any specific facts showing Master
Wholesale was liable for those costs. See Affordable Communities of Missouri v. Fed.
Nat. Mortg. Ass’n, 714 F.3d 1069, 1077 (8th Cir. 2013) (finding allegations that
Defendant “materially breached the covenant of good faith and fair dealing in the Note
and Security Instrument” without more are insufficient to survive a motion to dismiss).
As such, P&L has failed to state a claim for breach of contract, and its claim against
Master Wholesale must be dismissed.
P&L’s claim against Randall and Hope Groth for breach of the Guaranty likewise
fails to state a claim. “A guarantor agrees to become secondarily liable for the obligation
10
Case: 4:22-cv-00200-AGF Doc. #: 16 Filed: 05/10/22 Page: 11 of 11 PageID #: 259
of a debtor in the event the debtor does not perform the primary obligation.” JamiesonChippewa Inv. Co. v. McClintock, 996 S.W.2d 84, 87 (Mo. Ct. App. 1999). P&L has not
adequately alleged that Master Wholesale failed to perform under the Lease, and as such
it has not stated a claim for breach of the Guaranty.
Accordingly,
IT IS HEREBY ORDERED that Plaintiff’s Motion to Remand is DENIED.
(Doc. No. 8).
IT IS FURTHER ORDERED that Defendants’ Motion to Dismiss is
GRANTED. (Doc. No. 5). This case is DISMISSED without prejudice.
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 10th day of May, 2022.
11
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?