Royal Pacific Limited v. Faith Electric Manufacture Company, Ltd.
Filing
36
MEMORANDUM OPINION AND ORDER by District Judge M. Christina Armijo. The Court GRANTS Faith Electric leave to amend its complaint no later than June 29, 2018. In addition, the Court GRANTS in PART and DENIES in PART 13 MOTION to Dismiss Defendant's Counterclaims as further described herein. (kg)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
ROYAL PACIFIC LIMITED, a New
Mexico corporation,
Plaintiff,
v.
FAITH ELECTRIC MANUFACTURE
COMPANY, LTD, a Chinese corporation,
Defendant.
17cv357 MCA/KBM
MEMORANDUM OPINION AND ORDER
THIS MATTER is before the Court on Plaintiff Royal Pacific Limited’s Motion
to Dismiss Defendant’s Counterclaims [Doc. 13]. The Court has considered the parties’
submissions and the relevant law, and is otherwise fully informed. For the following
reasons, the Court GRANTS in part and DENIES in part Royal Pacific’s Motion.
I.
Background
Royal Pacific Limited (Royal Pacific) and Faith Electric Manufacture Company,
Ltd. (Faith Electric) entered into a distribution agreement through which Royal Pacific
became the exclusive distributor of Faith Electric’s products, including ground fault
circuit interrupter (GFCI) receptacles, to certain companies. [Doc. 1, ¶¶ 6, 7; Doc. 10,
Counterclaim ¶¶ 1, 8] One of these companies was Menard.1 [Doc. 1, ¶ 10; Doc. 10,
Counterclaim ¶ 9]
The present matter was initiated by filing of Royal Pacific’s
Complaint for Declaratory Judgment and Other Relief [Doc. 1], in which Royal Pacific
1
The parties refer to this company variously as “Menard,” “Menard, Inc.,” and
“Menards.” [See, e.g., Doc. 1, ¶ 7; Doc. 10, ¶ 2; Doc. 14, pg. 4] In discussing their
arguments, the Court will use the nomenclature used by each party.
Page 1 of 17
alleges that, in 2016, problems arose with the quality of several of Faith Electric’s
products, including GFCI receptacles. [Doc. 1, ¶¶ 13-14] Royal Pacific further alleges
that it notified Faith Electric, but that Faith Electric failed to remedy the problems and
that, because the quality problems “damaged Royal Pacific’s reputation and harmed
Royal Pacific’s business relationship with Menards,” Royal Pacific terminated the
distribution agreement in March 2017. [Doc. 1, ¶¶ 29, 36] Royal Pacific seeks a
declaratory judgment that Faith Electric breached the contract between them and
breached the implied warranty of merchantability. [Doc. 1] Faith Electric denies that
any of its products were defective and alleges in counterclaims that Royal Pacific
breached the agreement, defamed Faith Electric, violated the New Mexico Unfair
Practices Act (NMUPA), interfered with Faith Electric’s prospective business advantage,
and committed prima facie tort. [Doc. 10]
After inviting the parties to clarify the facts supporting jurisdiction, this Court
found that the parties are diverse and the amount in controversy is greater than $75,000.
[Doc. 33] Hence, this Court has jurisdiction under 28 U.S.C. § 1332.
II.
Discussion
Royal Pacific filed an Answer to Faith Electric’s Counterclaim I and now moves
for dismissal of Counterclaims II through V for failure to state a claim. [Doc. 13, pg. 3;
Doc. 14] In its Response to Royal Pacific’s Motion, Faith Electric states in a footnote
that it “does not oppose dismissal of [the counterclaims for violation of the NMUPA
(Count III) and prima facie tort (Count V)] without prejudice to later refiling them—as
and if warranted.”
[Doc. 21, n.1]
It opposes dismissal of its counterclaims for
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defamation and interference with prospective business advantage.
[Doc. 21] After
setting out the standard of review, the Court will address the effect of Faith Electric’s
agreement that counts III and V should be dismissed, then turn to Faith Electric’s
defamation and interference claims.
A. 12(b)(6) Standard of review
Royal Pacific brings its Motion to Dismiss under Federal Rule of Civil Procedure
12(b)(6) and argues that Faith Electric has failed to state a claim. [Doc. 13] Federal Rule
of Civil Procedure 8(a)(2) requires a complaint to set out “a short and plain statement of
the claim showing that the pleader is entitled to relief.” In Bell Atlantic Corporation v.
Twombly, 550 U.S. 544 (2007), the Supreme Court held that “to withstand a motion to
dismiss, a complaint must have enough allegations of fact, taken as true, ‘to state a claim
to relief that is plausible on its face.’” Kansas Penn Gaming, LLC v. Collins, 656 F.3d
1210, 1214 (10th Cir. 2011) (quoting Twombly, 550 U.S. at 570). In applying this test, a
court accepts as true all “plausible, non-conclusory, and non-speculative” facts alleged in
the plaintiff’s complaint, Shrader v. Biddinger, 633 F.3d 1235, 1242 (10th Cir. 2011), but
does not accept as true any legal conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (stating that “the tenet that a court must accept as true all of the allegations
contained in a complaint is inapplicable to legal conclusions”). In short, in ruling on a
Rule 12(b)(6) motion, “a court should disregard all conclusory statements of law and
consider whether the remaining specific factual allegations, if assumed to be true,
plausibly suggest the defendant is liable.” Collins, 656 F.3d at 1214.
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B. NMUPA Unfair Practices Act (Count III) and Prima Facie Tort (Count V)
Faith Electric does not oppose dismissal of its claims for violation of the NMUPA2
and prima facie tort. [Doc. 21, pg. 4, n.1] However, it asks that the Court dismiss these
counts “without prejudice” so that it can later refile them “as and if warranted.” [Doc.
21, pg. 4, n.1] Royal Pacific opposes dismissal without prejudice and argues in its Reply
that, instead, dismissal should be “with prejudice” because Faith Electric is unable to
rectify the failings inherent in these counts in any subsequent pleading. [Doc. 27, pg. 12]
Faith Electric’s statement could be construed as a voluntary dismissal of Counts
III and V under Federal Rule of Civil Procedure 41(a)(1), which provides that “the
plaintiff may dismiss an action without a court order by filing . . . a notice of dismissal
before the opposing party serves either an answer or a motion for summary judgment.”
Here, so long as the Court does not consider evidence outside of Faith Electric’s
counterclaims, Royal Pacific’s Motion to Dismiss would not be converted to a motion for
summary judgment, and thus would not prevent a voluntary dismissal under Rule 41(a).
When a claim is dismissed pursuant to this rule, “the dismissal is [generally] without
prejudice.” Fed. R. Civ. P. 41(a).
However, our Tenth Circuit has stated that there is “no authority . . . to support the
contention that Rule 41(a) applies to dismissal of less than all claims in an action.”
Gobbo Farms & Orchard v. Poole Chem. Co., 81 F.3d 122, 123 (10th Cir. 1996). Here,
Faith Electric agrees to the dismissal of only two of its five claims. Hence, Rule 41(a)
2
NMSA 1978, §§ 52-12-1 to -26.
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does not apply. “Instead, a [p]laintiff who wishes to dismiss some claims, but not others,
should do so by amending the complaint pursuant to Rule 15.” Carskadon v. Diva Int’l,
Inc., No. 12-CV-01886-RM-KMT, 2013 WL 1876784, at *2 (D. Colo. May 3, 2013); see
9 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2362 (3d ed.
2008).
The Court will therefore construe Faith Electric’s statement in the Response as a
request for leave to amend its complaint. See Southcrest, L.L.C. v. Bovis Lend Lease,
Inc., No. 10-CV-0362-CVE-FHM, 2011 WL 1793388, at *4 (N.D. Okla. May 11, 2011)
(stating that “[i]n cases where a plaintiff has attempted to use the Rule 41 mechanism to
dismiss fewer than all claims against a defendant, courts convert the faulty Rule 41
motion into a Rule 15 motion to amend”). Under Rule 15(a)(2), leave to amend a
complaint should be “freely given.” Fed. R. Civ. P. 15(a)(2). It is within the Court’s
discretion, however, to deny leave to amend a pleading based upon “undue delay, bad
faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, [and] futility of amendment.” Foman v. Davis, 371 U.S.
178, 182 (1962).
A motion to amend a complaint is futile if, notwithstanding the
amendment, the complaint “would be subject to dismissal.” Jefferson County Sch. Dist.
No. R-1 v. Moody’s Investor’s Servs., Inc., 175 F.3d 848, 859 (10th Cir. 1999). Royal
Pacific argues that amendment of the counterclaims would be futile, and hence, the Court
should dismiss them with prejudice. [Doc. 27] Because Faith Electric stated its assent to
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dismissal of the claims in its Response, it did not address Royal Pacific’s arguments as to
whether dismissal should be with or without prejudice. [Doc. 21]
The Court will grant Faith Electric leave to amend its complaint. Royal Pacific’s
motion to dismiss will thus be denied as moot as to the prima facie tort and NMUPA
claims. Should Faith Electric move for leave to reassert such claims in the future, the
Court will consider the parties’ arguments as to prejudice and futility of such an
amendment upon full briefing at that time.
C. Defamation (Count II)
Royal Pacific argues that Faith Electric’s defamation claim should be dismissed
because Faith Electric “does not identify any defamatory statements and [therefore] does
not allege the prima facie elements of a claim for defamation under New Mexico law.”
[Doc. 13, pg. 3] Faith Electric counters that it, “consistent with the notice pleading
standard of Rule (8)(a)(2), alleges more than sufficient facts to support its defamation
claim.” [Doc. 21, pg. 4]
“Generally, the elements of a defamation action include: a defamatory
communication, published by the defendant, to a third person, of an asserted fact, of and
concerning the plaintiff, and proximately causing actual injury to the plaintiff.”
Newberry v. Allied Stores, Inc., 1989-NMSC-024, ¶ 16, 773 P.2d 1231; see UJI 131002(B).
In addition, the plaintiff must show that “the defendant knew the
communication was false or negligently failed to recognize that it was false.” Young v.
Wilham, 2017-NMCA-087, ¶ 55, 406 P.3d 988. In its counterclaim, Faith Electric alleges
that Royal Pacific, “commencing in or around March 2016 and continuing thereafter,
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represented to third parties that Faith [Electric’s] products were defective and presented
safety hazards to persons purchasing and/or using Faith [Electric’s] products. [Royal
Pacific’s] statements were conveyed as statements of fact concerning Faith [Electric] and
its products.” [Doc. 10, ¶ 23] Faith Electric also alleges that Royal Pacific’s “statements
were materially false” and that “the true facts were that Faith [Electric’s] products were
not defective and/or did not pose a safety hazard.” [Doc. 10, ¶ 24] In its Response, Faith
Electric argues that “it is reasonable to infer that included among the ‘third parties’
identified as recipients of the communications are, at minimum, some of or all of the
third parties specifically identified by [Royal Pacific’s distribution agreement], namely
Home Depot, Lowe’s, Menard, HD Supply, Thomas & Betts, Hubbell, Orgill, Jasco,
and/or Orbit.” [Doc. 21, pg. 5]
As a preliminary matter, the Court notes that Royal Pacific’s reliance on two New
Mexico Court of Appeals cases, Weise v. Washington Tru Solutions, L.L.C., 2008–
NMCA–121, ¶ 21, 192 P.3d 1244, and Andrews v. Stallings, 1995-NMCA-015, 892 P.2d
611, for the proposition that a plaintiff “must plead precisely the statements about which
they complain” is unavailing because this Court is not bound by pleading standards based
in state law. [Doc. 13, pg. 4 (quoting Andrews, 1995-NMCA-015, ¶ 14)] Instead, federal
courts apply Rule 8 of the Federal Rules of Civil Procedure when assessing the
sufficiency of a complaint. See McGeorge v. Cont’l Airlines, Inc., 871 F.2d 952, 955
(10th Cir. 1989) (analyzing a defamation claim under Rule 8). Rule 8 generally requires
only “a short and plain statement of the claim.” Scholars have noted that, in spite of Rule
8’s standard, “the standard for successfully pleading defamation tends to be more
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stringent than that applicable to most other substantive claims because of the historically
unfavored nature of this type of action, the First Amendment implications of many of
these cases, and the desire to discourage what some believe to be all too frequently
vexatious litigation.” 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure, § 1245 (3d ed.). Some courts have rejected a heightened pleading standard
for defamation claims, holding that only Rule 8’s standards apply. See, e.g., Geisler v.
Petrocelli, 616 F.2d 636, 640 (2d Cir. 1980) (stating that “[a]lthough charges of libel and
slander under former practice were considered largely vexatious and their litigation
discouraged by requirements that such contentions be set forth in considerable detail, . . .
the federal rules do not require special pleading” and that “the mode of pleading
defamation is governed by Rule 8, . . . which requires only that plaintiff’s charges be set
forth in a short and concise statement, detailed only to the extent necessary to enable
defendant to respond and to raise the defense of res judicata if appropriate”).
Even when applying Rule 8, however, “the degree of specificity necessary to
establish plausibility and fair notice, and therefore the need to include sufficient factual
allegations, depends on context[.]” Robbins v. Oklahoma, 519 F.3d 1242, 1248 (10th Cir.
2008). Thus, in 1984, our Tenth Circuit examined the sufficiency of the plaintiff’s
defamation claim that the defendants “damage[d] [the plaintiff’s] reputation by
‘representing to third persons and to the public that the fault claimed and defamatory
statements made against [the p]laintiff were true.” Pike v. City of Mission, Kansas, 731
F.2d 655, 661 (10th Cir. 1984) (overruled on other grounds as stated in Baker v. Board
of Regents, 991 F.2d 628, 633 (10th Cir.1993)). It held that “this allegation is inadequate
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under Fed.R.Civ.P. 8(a)(2) because it pleads insufficient facts concerning time, place,
actors, or conduct to enable defendants to respond.” Id. In 1989, the Tenth Circuit stated
that a defamation complaint must provide “sufficient notice of the communications
complained of to allow [the defendant] to defend itself.” McGeorge, 871 F.2d at 955.
Federal courts relying on a Rule 8 standard have held that some specificity about
the allegedly defamatory communication is required in order to give the defendant
adequate notice.
See 50 Am. Jur. 2d § 416 (stating that “[u]nder federal pleading
standards, the complaint must at least identify the allegedly defamatory statements, the
person who made the statements, the time when the statements were made, and the third
parties to whom the statements were published”). For example, in Croslan v. Housing
Authority for City of New Britain, the Court found that the plaintiff’s allegation that
“[defendants] made ‘numerous public statements charging [the plaintiff] with lack of
skill, mismanagement and general incompetence’” was not sufficiently specific because
the plaintiff had failed to “identify the specific subject matter of those statements, the
times when the statements were made, and the context in which they were made.” 974 F.
Supp. 161, 170 (D. Conn. 1997); see King-Hardy v. Bloomfield Bd. of Educ., No. CIV.
3:01CV979(PCD), 2002 WL 32500923, at *10 (D. Conn. Sept. 17, 2002) (holding that an
allegation that defendants had placed “‘defamatory material of incompetence . . . in the
personnel file’ of plaintiff” was insufficient because it did “no more than describe the
subject matter of statements made by defendants”). In Bank of Commerce, the Court
found that the defamation claim was not adequately stated where the claimant asserted
that the “plaintiff has made and continues to make wildly inaccurate, baseless and false
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statements regarding defendant and his business practices, including, . . . that defendant
had stolen or otherwise misappropriated funds from his clients [and committed other
crimes]” and that “[t]hese false and defamatory statements were communicated to
defendant’s clients and investors, such as the First State Bank of Livingston, on multiple
occasions.” Bank of Commerce & Tr. Co. v. Dominique, No. CV 07-1332-MLB, 2008
WL 11378844, at *2 (D. Kan. Aug. 22, 2008). The Court stated that these assertions
were not sufficient because the claimant “failed to allege who made the statements and to
whom the statements were made” and “to give a specific time frame for the alleged
statements.” Id. (footnote omitted).
On the other hand, a claim was stated where the “[p]laintiffs ha[d] identified a
specific third person to whom the statements were published, specified a date on which
statements were made, and described the content of two allegedly false and defamatory
statements,” C & M Prop. Mgmt., LLC v. Moark, LLC, No. 2:15-CV-336-GZS, 2016 WL
1298098, at *3 (D. Me. Mar. 31, 2016), and where the plaintiffs alleged that “James T.
Rymes has published defamatory statements to Brian Fleming,” that “[t]hese statements,
. . . were made during the fall of 2008, [and] concerned [the plaintiffs’ business],” and
that the statements accused the plaintiff of committing a crime. Cedar Rapids Lodge &
Suites, LLC v. JFS Dev., Inc., No. 09-CV-175-LRR, 2010 WL 2836949, at *3, *5 (N.D.
Iowa July 19, 2010) (stating that these allegations were sufficient because they “identify
the speaker of the allegedly defamatory statement, the recipient of the statement and what
was said,” as well as specifically when the statements were made).
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The Court concludes that Faith Electric has failed to state a claim about the alleged
defamatory statements with sufficient specificity to permit Royal Pacific to defend itself.
To reiterate, Faith Electric alleges that Royal Pacific, “commencing in or around March
2016 and continuing thereafter, represented to third parties that Faith [Electric’s] products
were defective and presented safety hazards to persons purchasing and/or using Faith
[Electric’s] products.” [Doc. 10, ¶ 23] While Faith Electric’s allegations identify the
content of the allegedly defamatory statements (the quality of their product), they do not
identify with any precision when the statements were made, by whom, to whom, or in
what context.
Instead, Faith Electric alleges that the communications were made
sometime after March, 2016, by an unnamed person. Since Faith Electric’s counterclaim
was filed in October, 2017, this allegation encompasses approximately eighteen months
in which the communication(s) could have occurred. Moreover, the assertion (made only
in Faith Electric’s Response, not its counterclaim) that the recipients of the statements
include “at minimum, some of or all of” nine different companies merely highlights the
vagueness of the assertion. In sum, Faith Electric alleges that, at some point in an
eighteen month period, someone at Royal Pacific told, one or more times, one or more
people at one or more of nine different companies that Faith Electric’s product was
faulty.
Moreover, Faith Electric concedes that “it is true that at present Faith [Electric]
does not know the exact date of the statements, emails, and other forms of publication of
defamatory statements made by [Royal Pacific] to third parties after March 2016.” [Doc.
21, pg. 6] It argues that “these details already are in [Royal Pacific’s] hands” and that
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Faith Electric will have access to those details through discovery. [Id.] The problem
with this argument is that it suggests that Faith Electric lacks the factual underpinning
necessary to plead a defamation claim. By acknowledging that it lacks these facts, Faith
Electric “[has] essentially conceded that [it does] not now have information or knowledge
which would support the conclusion that [Royal Pacific] defamed [it].” Kennedy v.
Enter. Leasing Co. W., No. CIV. 98-718 MV/RLP, 1998 WL 1674699, at *5–6 (D.N.M.
Oct. 30, 1998). However, “[a]bsent a specific factual foundation which would support
the inference of defamation, [Faith Electric] cannot pursue this claim.” Id. This claim
will be dismissed without prejudice. See Brever v. Rockwell Int'l Corp., 40 F.3d 1119,
1131 (10th Cir. 1994) (discussing the district courts’ authority to dismiss with or without
prejudice).
D. Interference with Prospective Business Advantage (Count IV)
Royal Pacific asserts that Faith Electric’s claim for interference with prospective
business advantage must be dismissed because Faith Electric has failed to plead facts
relevant to the elements of this claim. [Doc. 13, pg. 9-10] The tort of interference with
contractual relations, which encompasses both existing and prospective business
relationships, is “well recognized” in New Mexico law. M & M Rental Tools, Inc. v.
Milchem, Inc., 1980-NMCA-072, ¶ 14, 612 P.2d 241; Zarr v. Washington Tru Solutions,
LLC, 2009-NMCA-050, ¶ 6, 208 P.3d 919; see Silverman v. Progressive Broad., Inc.,
1998-NMCA-107, ¶ 28, 964 P.2d 61 (stating that “[a] claim for tortious interference with
contractual relations that does not induce the breach of an existing contract is in the
nature of a claim for interference with prospective business advantage”). “The general
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rule [is] that one who, without justification or privilege to do so, induces a third person
not to perform a contract with another is liable for the harm caused by his action.” Zarr,
2009-NMCA-050, ¶ 6, (internal quotation marks, citation and alteration omitted); see M
& M Rental Tools, Inc., 1980-NMCA-072, ¶ 20 (adopting the Restatement of Torts 2d, §
766B definition of the tort3).
“To prove a claim of intentional interference with
prospective contractual relations, [a plaintiff is] required to establish that [the defendant]
either induced [a third party] not to enter into or continue a prospective relation with [the
plaintiff], or prevented [the plaintiff] from acquiring or continuing a prospective relation
with [the third party], by interfering through improper means or with an improper
motive.” Gregory Rockhouse Ranch, L.L.C. v. Glenn’s Water Well Serv., Inc., 2008NMCA-101, ¶ 43, 191 P.3d 548, abrogated on other grounds by Helena Chem. Co. v.
Uribe, 2012-NMSC-021, ¶ 43, 281 P.3d 237. “What may qualify as ‘improper means’
depends to some degree on context and can include, but is not limited to predatory
behavior, violence, threats or intimidation, deceit or misrepresentation, bribery, economic
pressure, unfounded litigation, defamation, unlawful conduct, and perhaps violation of
business ethics and customs.” Zarr, 2009-NMCA-050, ¶ 11 (emphasis added).
Royal Pacific asserts first that Faith Electric has failed to allege facts showing that
it had a prospective business advantage vis á vis Menard because any products purchased
3
“One who intentionally and improperly interferes with another’s prospective contractual
relation (except a contract to marry) is subject to liability to the other for the pecuniary
harm resulting from loss of the benefits of the relation, whether the interference consists
of (a) inducing or otherwise causing a third person not to enter into or continue the
prospective relation or (b) preventing the other from acquiring or continuing the
prospective relation.” Restatement of Torts 2d, § 766B.
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by Menard were purchased only through Royal Pacific and there was no contract between
Faith Electric and Menard. [Doc. 13, pg. 10] In its counterclaim, Faith Electric alleges
that it or its predecessor had a relationship with Menard dating back to 2008. [Doc. 10,
¶ 2] It further alleges that
Faith informed [Royal Pacific] during their discussions in 2013 that Menard
was a significant long-term purchaser of the products manufactured and
sold by Faith’s predecessor, Hongan, in North America and that Faith
intended that any North American distribution contract for Faith’s products
would include Menard with the intention and business plan of continuing
and enhancing the longstanding relationship between Faith/Hongan and
Menard.
[Doc. 10, ¶ 4] It also states that “Menard purchased $6,448,175.22 of Faith’s products
between July 1, 2015 and March 20, 2017.” [Doc. 10, ¶ 15] These assertions, if true,
show that Faith Electric had a relationship with Menard that it took pains to develop and
that Royal Pacific was aware of the relationship and Faith Electric’s interest in its
continuing. Although Faith Electric does not assert that it had a contract with Menard or
that Menard purchased goods directly from it, the allegations above related to its
relationship to Menard are sufficient to allege a prospective business relationship. See
Restatement (Second) of Torts § 766B (1979) (“Also included is interference with a
continuing business or other customary relationship not amounting to a formal
contract.”).
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Royal Pacific also argues that the interference claim is faulty because “Faith
[Electric] does not allege any improper means” or that Royal Pacific “acted solely to
harm Faith” Electric.4 [Doc. 13, pg. 9-10] Faith Electric alleges that:
35. Faith [Electric] had a prospective business advantage with Menard.
36. [Royal Pacific] used improper means or acted with an improper motive
to interfere with Faith [Electric]’s prospective business advantage with
Menard without privilege and solely for [Royal Pacific]’s benefit.
37. [Royal Pacific]’s interference with Faith [Electric]’s prospective
business advantage with Menard harmed Faith [Electric].
[Doc. 10] These assertions are mere recitations of the elements of the claim and, thus,
are insufficient to state a claim. See Iqbal, 556 U.S. at 678 (“Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not suffice.”).
In its Response, Faith Electric argues that it has sufficiently pled its claim because its
interference claim “is predicated on [Royal Pacific’s] defamatory statements and related
conduct concerning the allegedly defective and/or unsafe nature of Faith [Electric’s]
electric components.” [Doc. 21, pg. 12] It argues that through the defamation claim it
has sufficiently pled that Royal Pacific “used improper means to interfere with the
longstanding commercial relationship between Faith and Menard.” [Id.] The problem
with this argument is that, as discussed above, Faith Electric’s factual basis for a
defamation claim is itself not sufficient. Hence, it does not provide a sufficient factual
4
In the counterclaim, Faith Electric states that “[Royal Pacific] used improper means or
acted with an improper motive.” [Doc. 10, ¶ 36] Based on the arguments in its
Response, however, it appears that Faith Electric has abandoned its allegation that Royal
Pacific acted with an improper motive. [See Doc. 21, pg. 12] The Court therefore will
not address this issue.
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showing that Royal Pacific interfered with Faith Electric’s business relationship by
defaming it.
See Lewis v. Herrman’s Excavating, Inc., No. 00-4036, 2000 WL
33407060, at *4 (D. Kan. Nov. 2, 2000) (unreported) (finding that because the plaintiff’s
“inadequately alleged defamation is the wrongful conduct upon which plaintiff relies to
state a claim for interference with prospective business relations, the failure to properly
assert a defamation claim makes plaintiff’s interference claim deficient”).
Because the Court will dismiss Faith Electric’s defamation claim without
prejudice, the Court will similarly dismiss Faith Electric’s interference with prospective
business relations claim (Count IV) without prejudice.
III.
Conclusion
For the foregoing reasons, the Court GRANTS Faith Electric leave to amend its
complaint as discussed in this Memorandum Opinion and Order. Faith Electric shall file
an amended complaint no later than June 29, 2018.
In addition, the Court GRANTS in PART and DENIES in PART Royal
Pacific’s Motion to Dismiss Defendant’s Counterclaims [Doc. 13]. Specifically, the
COURT:
DENIES as MOOT Royal Pacific’s Motion to Dismiss as to Faith Electric’s
NMUPA and prima facie tort claims (Counts III and Count V);
GRANTS Royal Pacific’s Motion to Dismiss as to Faith Electric’s defamation
claim (Count II) and DISMISSES Count II without prejudice;
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GRANTS Royal Pacific’s Motion to Dismiss as to Faith Electric’s interference
with prospective business advantage claim (Count IV) and DISMISSES Count IV
without prejudice.
SO ORDERED this 13th day of June, 2018.
M. CHRISTINA ARMIJO
Senior United States District Judge
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