Martin v. Bimbo Foods Bakeries Distribution, LLC
Filing
18
ORDER granting in part and denying in part 11 Motion to Dismiss for Failure to State a Claim: Plaintiff's negligence, breach of fiduciary duty, and fraud claims are DISMISSED. The Clerk is DIRECTED to consolidate this case with Case No. 5:14- CV-17-BR and to close this case, No. 5:15-CV-96-BR. The Clerk is also DIRECTED to correct the docket to reflect the name of the proper defendant: Bimbo Foods Bakeries Distribution, LLC. The parties are DIRECTED to make all future filings only under Case No. 5:14-CV-17-BR. Signed by Senior Judge W. Earl Britt on 4/24/2015. (Lee, L.)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:15-CV-96-BR
JOHN T. MARTIN,
Plaintiff,
v.
BIMBO FOODS BAKERIES
DISTRIBUTION, LLC; and BIMBO FOODS
BAKERIES DISTRIBUTION, INC., f/k/a
GEORGE WESTON BAKERIES
DISTRIBUTION, INC.,
ORDER
Defendants.
This matter comes before the court on defendant Bimbo Foods Bakeries Distribution,
LLC, f/k/a Bimbo Foods Bakeries Distribution, Inc., f/k/a George Weston Bakeries Distribution,
Inc.’s (“defendant”) motion to dismiss.1 (DE # 11.) Plaintiff John T. Martin (“plaintiff”) filed a
response, (DE # 14), to which defendant replied, (DE # 17). This matter is ripe for disposition.
I. BACKGROUND
In 2006, plaintiff, as an “independent operator,” purchased for $108,000 a distribution
route which granted him exclusive rights to purchase bakery products from defendant and sell
those products to grocery store chains and other customers within a designated territory.
(Compl., DE # 1-1, ¶¶ 5-7.) At the same time, he entered into a Distribution Agreement
1
Although plaintiff has sued defendant as both a corporation and limited liability company, this case involves only
one defendant. In December of 2013, Bimbo Foods Bakeries Distribution, Inc. was converted into a limited liability
company — Bimbo Foods Bakeries Distribution, LLC. (DE # 12-1.) Plaintiff acknowledges this by repeatedly
referring to a singular “defendant” in his memorandum in opposition to the instant motion. (DE # 14.)
(“Agreement”) with defendant and was “to be paid on a percentage of sales or a margin on the
sale of product.” (Case No. 5:14-CV-17-BR, Compl., DE # 1-1, ¶ 8 & Ex. 1.) 2
In June 2013, defendant informed plaintiff and other local independent operators that it
was reducing the margins to be paid to them. (Id. ¶ 10.) Plaintiff and most of the other
independent operators “united in an effort to fight the Defendant’s effort to unilaterally reduce
margins.” (Id. ¶ 12.) On 21 December 2013, defendant issued to plaintiff a “Notice of
Termination of Distribution Agreement” which alleged that plaintiff had created false sales and
“buyback” invoices in order to reflect that he had made deliveries which he in fact did not make.
(Id. ¶ 24 & Ex. 5.) Plaintiff subsequently filed suit challenging the termination of the Agreement
and seeking a preliminary injunction to enjoin defendant from interfering with the operation of
his distribution route. Martin v. Bimbo Food Bakeries Distrib., Inc., No. 5:14-CV-17-BR
(E.D.N.C. 2014). This court denied plaintiff’s motion for a preliminary injunction. 3 (Id., DE #
40.)
The Agreement permitted plaintiff to sell his route “during the first 90 days following the
termination of the . . . agreement.” (Compl., DE # 1-1, ¶ 11.) Plaintiff elected not to do so in
light of his motion for a preliminary injunction which was pending at that time. (Id.) Defendant
proceeded to operate plaintiff’s route on his behalf “for a period of approximately eight months.”
(Id. ¶¶ 13, 15.) Based on approximate historical earnings of $7,000 per month in the operation of
his route, plaintiff estimates he would have earned $56,000 during those eight months. (Id. ¶¶
12, 15.) Instead of turning over to plaintiff any profits garnered from the operation of his route,
2
As explained below, this lawsuit is closely related to another case between these two parties which is pending
before this court: Martin v. Bimbo Food Bakeries Distrib., Inc., No. 5:14-CV-17-BR. In his complaint in the instant
case, plaintiff explicitly incorporated by reference and attached as an exhibit his complaint in the prior action. (DE #
1-1, ¶ 8.) Accordingly, the court will consider relevant allegations included in the prior complaint.
3
In the first case, plaintiff’s breach of contract and unfair and deceptive trade practices claims remain pending
before this court. (No. 5:14-CV-17-BR, DE # 53.)
2
defendant “charged the Plaintiff $26,918.00 . . . .” (Id. ¶ 16.) Defendant subsequently sold the
rights to plaintiff’s route “without any approval whatsoever from the Plaintiff” for $135,581.
(Id. ¶ 19 & Ex. 3. 4)
On 5 February 2015, plaintiff filed this action in state court asserting claims for breach of
contract, negligence, fraud, breach of fiduciary duty, and unfair and deceptive trade practices.
(Compl., DE # 1-1, ¶¶ 35-52.) On 11 March 2015, defendant removed the case to this court.
(DE # 1.) Now, pursuant to Federal Rule of Civil Procedure 12(b)(6), defendant moves to
dismiss plaintiff’s complaint in its entirety.
II. LEGAL STANDARD
Rule 12(b)(6) permits a court to dismiss an action for “failure to state a claim upon which
relief can be granted.” Fed. R. Civ. P. 12(b)(6). To state a claim, a complaint need only contain
“a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.
Civ. P. 8(a)(2). A 12(b)(6) motion should only be granted if “it appears certain that the plaintiff
cannot prove any set of facts in support of his claim entitling him to relief.” Edwards v. City of
Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). However, a complaint that proffers only “a
formulaic recitation of the elements of a cause of action” with no “further factual enhancement”
is insufficient. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 557 (2007). To survive
dismissal, a party must come forward with “enough facts to state a claim to relief that is plausible
on its face.” Id. at 548. The plausibility standard is met “when the pleaded factual content
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). The court must accept as true all wellpleaded allegations and must draw all reasonable factual inferences in favor of the plaintiff. See
4
Plaintiff has identified two separate exhibits as “Exhibit 3.” Here, the court refers to Exhibit 3 identifying the Bill
of Sale. (DE # 1-1, at 86-89.)
3
Venkatraman v. REI Sys., Inc., 417 F.3d 418, 420 (4th Cir. 2005); Myan Labs., Inc. v. Matkari, 7
F.3d 1130, 1134 (4th Cir. 1993). Additionally, the court may consider exhibits that plaintiff
attached to his complaint. See United States ex rel. Constructors, Inc. v. Gulf Ins. Co., 313 F.
Supp. 2d 593, 596 (E.D. Va. 2004). If allegations in the complaint are inconsistent with an
exhibit, the exhibit controls. Id. (citing Fayetteville Investors v. Commercial Builders, Inc., 936
F.2d 1462, 1465 (4th Cir. 1991)).
III. DISCUSSION5
A. Consolidation of cases
As noted previously, plaintiff has a related suit against defendant pending in this court in
which he asserts claims arising out of the alleged wrongful termination of the Agreement.
Defendant urges the court to dismiss the present suit for being entirely duplicative of the prior
case, or, in the alternative, to stay this case or consolidate it with the first case. (DE # 12, at 710, 17.) Plaintiff also requests that the court consolidate this case with his prior case. (DE # 14,
at 29.)
As the Fourth Circuit Court of Appeals has recognized, the abstention doctrine that the
Supreme Court articulated in Colorado River Water Conservation Dist. v. United States, 424
U.S. 800, 817 (1976), “permits dismissal of duplicative federal action when ‘[w]ise judicial
administration, giving regard to conservation of judicial resources and comprehensive
disposition of litigation’ clearly favors abstention.” Chase Brexton Health Servs., Inc. v.
Maryland, 411 F.3d 457, 463 (4th Cir. 2005) (quoting Colorado River) (alteration in original)
(emphasis omitted). However, dismissal of a duplicative suit is not required, as a court may
5
The parties present arguments that are almost identical to those presented in the briefs addressing the motion to
dismiss in Ramsey v. Bimbo Foods Bakeries Distrib., LLC, No. 5:15-CV-6-BR (E.D.N.C. 2015) (subsequently
consolidated with Ramsey v. Bimbo Foods Bakeries Distrib., LLC, No. 5:14-CV-26-BR (E.D.N.C. 2014)).
Accordingly, apart from the differing facts of which the court takes note, the court’s analysis in the instant order is
significantly similar to its analysis in its order addressing defendant’s motion to dismiss in Ramsey. (No. 5:15-CV6-BR, DE # 19.)
4
permissibly consolidate the two actions. See Sensormatic Sec. Corp. v. Sensormatic Elecs.
Corp., 452 F. Supp. 2d 621, 626 n.2 (D. Md. 2006) (citing Curtis v. Citibank, N.A., 226 F.3d
133, 139 (2d Cir. 2000)).
The court concludes that dismissal of the instant case on the ground that it duplicates the
prior case is unwarranted. Any risk posed by duplicative litigation is cured by consolidation of
this case with the prior case, No. 5:14-CV-17-BR. See First Fin. Sav. Bank, Inc. v. Am. Bankers
Ins. Co. of Fl., 699 F. Supp. 1164, 1166 (E.D.N.C. 1988) (“[A]ny potential risk of duplicative
proceedings can be eliminated if the court consolidates [the two] actions.”) (citing I.A. Durbin,
Inc. v. Jefferson Nat’l Bank, 793 F.2d 1541, 1552 n.13 (11th Cir. 1986); Walton v. Eaton Corp.,
563 F.2d 66 (3d Cir. 1977)). Accordingly, to the extent plaintiff’s complaint survives
defendant’s motion to dismiss, the court will consolidate it with Case No. 5:14-CV-17-BR. 6
B. Choice of law
The parties included a choice of law provision in the Agreement which states, “The
validity, interpretation and performance of this Agreement shall be controlled by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.” (Compl., DE # 1-1, Ex. 1,
§ 11.8.) Sitting in diversity, this court must apply the substantive law of the forum state —here,
North Carolina—including the state’s choice of law rules. Hitachi Credit Am. Corp. v. Signet
Bank, 166 F.3d 614, 624 (4th Cir. 1999). The North Carolina Supreme Court “has held that
where parties to a contract have agreed that a given jurisdiction's substantive law shall govern the
interpretation of the contract, such a contractual provision will be given effect.” Tanglewood
Land Co. v. Byrd, 261 S.E.2d 655, 656 (N.C. 1980). Further, where a plaintiff’s tort claims bear
a close relationship to the contract, the choice of law provision may cover such claims. See
6
On 7 April 2015, plaintiff filed a motion to consolidate his two pending lawsuits with two pending lawsuits of
Richard Ramsey, another distributor for defendant whose distribution agreement was terminated. That motion will
be addressed in a separate order, as it is not yet ripe for disposition.
5
Hitachi, 166 F.3d at 628. Generally, however, North Carolina courts apply the lex loci delicti
doctrine to actions sounding in tort, which requires application of the law of the state where the
injury occurred. See Boudreau v. Baughman, 368 S.E.2d 849, 854 (N.C. 1988). If the laws of
the two states at issue are the same, the court does not need to address the choice of law issue.
See Caper Corp. v. Wells Fargo Bank, N.A., No. 7:12-CV-357-D, 2013 WL 4504450, at *5
(E.D.N.C. Aug. 22, 2013) (citing Volvo Constr. Equip. N. Am., Inc. v. CLM Equip. Co., 386
F.3d 581, 600-01 (4th Cir. 2004)).
Here, plaintiff has asserted five causes of action: 1) breach of contract; 2) negligence; 3)
fraud; 4) breach of fiduciary duty; and 5) unfair and deceptive trade practices. (Compl., DE # 11, ¶¶ 35-52.) The choice of law provision, on its face, establishes that Pennsylvania law will
govern plaintiff’s breach of contract action, and the court will give effect to such intent of the
parties. In addition, the court finds that the parties’ choice of law provision is immaterial to the
disposition of plaintiff’s tort claims, as Pennsylvania and North Carolina law require the same
outcome. Accordingly, the court will apply North Carolina law to plaintiff’s tort claims.
C. Breach of contract claim
Plaintiff alleges that defendant breached § 8.4 of the Distribution Agreement by charging
him unreasonable expenses when operating his distribution route on his behalf, (id. ¶ 16), and by
failing to sell his distribution rights at the best price, (id. ¶ 24).
Section 8.4 of the Agreement reads:
ACTIONS FOLLOWING TERMINATION: Termination under §8.2 or §8.3
above shall entitle [defendant] to operate the business for the account of the
[plaintiff], deducting from the revenues generated the reasonable expenses of such
performance and delivering the balance, if any, to [plaintiff]. Termination shall
require [plaintiff] to sell the Distribution Rights, and in the event that [plaintiff]
has not consummated a sale to a qualified purchaser within 90 days of the date of
termination, [defendant] shall be authorized to sell [plaintiff’s] Distribution Rights
to a purchaser at the best price which can be obtained after proper notice and
6
advertisement. Said sale shall be for the account of the [plaintiff], and the
provisions of §6.3 and §6.4 hereof shall apply.
(Id., Ex. 1 (emphasis in original).)
In Pennsylvania, a breach of contract claim has three elements: “(1) the existence
of a contract, including its essential terms, (2) a breach of a duty imposed by the contract
and (3) resultant damages.” CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa.
Super. Ct. 1999). In its instant motion, defendant only challenges plaintiff’s allegations
regarding the second element — namely, whether plaintiff has properly alleged that
defendant breached a duty imposed by the Agreement.
Plaintiff alleges that defendant charged him unreasonable expenses while
operating his distribution route in violation of § 8.4 of the Agreement. (Compl., DE # 11, ¶ 16.) As noted above, he alleges that defendant operated his route for approximately
eight months and that he would have earned $56,000 during that time. (Id. ¶ 15.)
Plaintiff further alleges that defendant “took all the income or margins which [his] route
produced in the approximate sum of $56,000.00 and, in addition, [] charged [him]
$26,918.00 for operating his route.” (Id. ¶ 16.) While plaintiff concedes that the
Agreement permitted defendant to charge plaintiff the reasonable expenses of operating
his route, he contends that defendant’s $26,918 expense charge and failure to earn any
profit was “totally unreasonable.” (Id.)
In response, defendant argues that “Plaintiff fails to plead any fact which would
show that the operation of the business, and the amounts charged by [defendant] for that
operation over 8 months, were not entirely proper and reasonable.” (DE # 12, at 12
(emphasis in original).) Assuming the accuracy of plaintiff’s numbers, defendant
calculates that it ran the business at a weekly cost of $2,303. (DE # 17, at 4.) Defendant
7
contends that plaintiff has failed to adequately plead that defendant’s expenses, which
“include the cost of renting a truck, . . . paying a third party to actually operate the
business, . . . gas, insurance, and maintenance,” were not reasonable. (Id.)
Plaintiff further alleges that defendant breached the Agreement by not procuring
the “best price” in the sale of his distribution rights and argues that “Defendant
knowingly calculated the value of his route erroneously . . . .” (Compl., DE # 1-1, ¶ 24;
DE # 14, at 4.) The Bill of Sale indicates that defendant sold plaintiff’s distribution rights
for $135,581. (Id., Ex. 3.) In his complaint in his first case, plaintiff estimated that his
business was “worth in excess of $140,000.” (Case No. 5:14-CV-17-BR, Compl., DE #
1-1, ¶ 9.) Defendant contends that plaintiff provides only “bare conclusory statements”
in support of his claim that defendant failed to obtain the “best price” when selling
plaintiff’s distribution rights. (DE # 12, at 11.) It argues that “[p]laintiff presents no
facts to suggest [that $135,581] was not a fair price . . . .” (Id.)
The court concludes that plaintiff’s complaint sufficiently alleges that defendant
breached § 8.4 of the Distribution Agreement by charging plaintiff unreasonable
expenses in the operation of his route and by failing to procure the best price in the sale
of his distribution rights. The facts alleged by plaintiff make his claim plausible, and
amount to more than bare conclusory statements.
First, plaintiff alleges that defendant operated his route in excess of eight months
at a loss of $26,918. In light of plaintiff’s allegation that his route should have earned
$56,000 during that time frame, he has sufficiently alleged that defendant charged him
unreasonable expenses in violation of § 8.4 of the Agreement. Second, plaintiff alleges
an almost $5,000 difference between the estimated value and the actual sale price of his
8
distribution rights. Section 8.4 of the Agreement obligated defendant to sell plaintiff’s
distribution rights “at the best price which can be obtained,” not merely at a “fair” or
“reasonable” price. (Compl., DE # 1-1, Ex. 1.) Plaintiff’s complaint sufficiently alleges
that $135,581 was not the “best price.”
D. Plaintiff’s tort claims
Defendant argues that the economic loss rule bars plaintiff’s tort claims. (DE # 12, at
13.) Plaintiff counters that the “rule is confined to cases involving the sale of goods or products
liability,” and, thus, inapplicable to this case where the Agreement “involve[s] a hybrid mix of
goods, rights and services . . . .” (DE # 14, at 17, 19.)
“North Carolina courts have developed (and the Fourth Circuit has applied) the economic
loss rule, which prohibits recovery for purely economic loss in tort when a contract . . . operates
to allocate risk.” Kelly v. Georgia-Pacific LLC, 671 F. Supp. 2d 785, 791 (E.D.N.C. 2009)
(internal quotation omitted). “To pursue a tort claim and a breach of contract claim concerning
the same conduct, a plaintiff must allege a duty owed him by the defendant separate and distinct
from any duty owed under a contract.” Id. (internal quotation omitted). Further, a court should
construe narrowly the existence of an independent tort. See Broussard v. Meineke Discount
Muffler Shops, Inc., 155 F.3d 331, 346 (4th Cir. 1998) (“North Carolina has recognized an
independent tort arising out of breach of contract only in carefully circumscribed circumstances.”
(internal quotation omitted)). Additionally, despite plaintiff’s argument to the contrary, the
economic loss rule properly extends to cases beyond those involving the sale of goods or
products liability. See Colon v. Bimbo Foods Bakeries Distribution, Inc., No. 5:14-CV-361-D,
2014 WL 5509249, at *2 (E.D.N.C. Oct. 31, 2014) (“[T]he economic loss rule defeats plaintiffs’
breach of fiduciary duty claim.”); Akzo Nobel Coatings Inc. v. Rogers, No. 11 CVS 3013, 2011
9
WL 5316772, at *17 (N.C. Super. Nov. 3, 2011) (“[T]he ‘economic loss rule’ routinely operates
to bar tort claims that ‘piggyback’ breach of contract claims outside of the products liability
context.”).
1. Negligence and breach of fiduciary duty
Plaintiff alleges that “Defendant[] owed a duty to [him] to operate his route in a proper
and businesslike manner so as to make a profit . . . and not create a loss,” and that “Defendant[]
breached [that] duty . . . by carelessly and negligently operating Plaintiff’s route, as purported
agent of the Plaintiff . . . .” (Compl., DE # 1-1, ¶¶ 39-40.) Plaintiff further alleges that the
Agreement appoints defendant as plaintiff’s agent, and, thus, defendant “had a fiduciary duty to
act in the Plaintiff’s best interest and not in [its] own best interest,” which it breached. (Id. ¶¶
47-48.)
The court concludes that the economic loss rule bars plaintiff’s negligence and breach of
fiduciary duty claims. First, plaintiff has alleged purely economic damages. Second, each claim
arises out of defendant’s performance under the terms of the contract. Any duty that defendant
owed plaintiff regarding the operation and sale of his distribution route is contractually-based.
Thus, these claims are not truly independent of the breach of contract action and will be
dismissed. Plaintiff must pursue a remedy in contract for these alleged breaches.
2. Fraud
The court need not reach the issue of whether the economic loss rule bars plaintiff’s fraud
claim, as the court concludes that plaintiff has failed to adequately plead all the elements of such
claim.
To state a claim for fraud in North Carolina, plaintiff must allege: “(1) False
representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made
10
with intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injury
party.” Ragsdale v. Kennedy, 209 S.E.2d 494, 500 (N.C. 1974).
In his complaint, plaintiff alleges that:
Defendant[] [has] made false statements to the Plaintiff relative to the reasonable
costs of operating Plaintiff’s distribution route, . . . with regard to the calculation
of the value of Plaintiff’s route at the time that it was sold, . . . and . . . relative to
the amount of money that was due the Plaintiff in connection with the sale of the
route . . . . The Defendant[] intended for Plaintiff to rely upon such false
statements which were made for the purpose of misinforming the Plaintiff and for
the purpose of receiving money to which Defendant[] [was] not entitled, all for
the purpose of committing fraud upon the Plaintiff.
(Compl., DE # 1-1, ¶ 30.) The court finds this insufficient to state a plausible claim of fraud, as
plaintiff has failed to allege that he was ever in fact deceived by defendant’s alleged false
statements. Accordingly, his fraud claim will be dismissed.
E. Unfair and deceptive trade practices claim
Defendant contends that the economic loss rule bars plaintiff’s unfair and deceptive trade
practices claim and, alternatively, that plaintiff has failed to allege any unfair or deceptive trade
practice which would expose defendant to liability. (DE # 12, at 13, 16.)
“In order to state a claim under the [North Carolina Unfair and Deceptive Trade Practices
Act], a plaintiff must show (1) defendant committed an unfair or deceptive act or practice; (2) the
action in question was in or affecting commerce; and (3) the act proximately caused injury to the
plaintiff.” Ellis v. Louisiana-Pac. Corp., 699 F.3d 778, 787 (4th Cir. 2012) (internal quotation
omitted). Whether an act rises to the level of unfair or deceptive is a question of law for the
court to determine. See, e.g., Tucker v. Boulevard at Piper Glen LLC, 564 S.E.2d 248, 250
(N.C. Ct. App. 2002). For an act to fall under the statute’s purview, it “must be immoral,
unethical, oppressive, unscrupulous, or substantially injurious to consumers.” Kelly, 671 F.
Supp. 2d at 798-99. It is well-settled that a simple breach of contract claim does not amount to
11
an unfair or deceptive act under the statute, “absent substantial aggravating circumstances.” See,
e.g., Gilbane Bldg. Co. v. Fed. Reserve Bank of Richmond, Charlotte Branch, 80 F.3d 895, 903
(4th Cir. 1996) (internal quotation omitted). Aggravating factors may be found “in the
circumstances” of the breach of the contract. Bartolomeo v. S.B. Thomas, Inc., 889 F.2d 530,
535 (4th Cir. 1989).
To begin, the court declines to apply the economic loss rule to plaintiff’s Unfair and
Deceptive Trade Practices Act (“UDTPA”) claim. Defendant cites Bussian v. DaimlerChrysler
Corp., 411 F. Supp. 2d 614, 625 (M.D.N.C. 2006), for the proposition that the economic loss rule
bars UDTPA claims. (DE # 12, at 13.) While that court found that the rule blocked the
plaintiff’s UDTPA action, it limited its holding, stating:
[T]his Court is careful to note that it is not finding, nor could it find, that the
economic loss rule bars all claims of unfair trade practices that allege only
economic losses. See [Coker v. DaimlerChrysler Corp.. 617 S.E.2d 306, 318
(N.C. Ct. App. 2005)] (noting numerous North Carolina cases allowing purely
economic recovery in unfair trade practices claims). The Court limits its decision
to cases such as the instant case involving allegations of a defective product
where the only damage alleged is damage to the product itself and the allegations
of unfair trade practices are intertwined with the breach of contract or warranty
claims.
Bussian, 411 F. Supp. 2d at 627. Unlike Bussian, the instant case does not involve
products liability, and, thus, the case has little persuasive effect.
The North Carolina courts have not decided whether the economic loss rule
applies to UDTPA claims. See Ellis, 699 F.3d at 787 n.5. In the face of such uncertainty,
federal courts have declined to extend the rule to bar UDTPA claims. See id. at 786-87
(declining to affirm the district court’s judgment on the ground that the economic loss
rule barred a plaintiff’s UDTPA claim); Yancey v. Remington Arms Co., LLC, Nos.
1:12CV477, 1:12CV437, 1:10CV918, 2013 WL 5462205, at *10 n.13 (M.D.N.C. Sept.
12
30, 2013) (declining to rely on the economic loss rule to dismiss plaintiff’s UDTPA
claims). This court, sitting in diversity, declines to create North Carolina common law by
extending the economic loss rule to bar plaintiff’s UDTPA claim. See Time Warner
Entm’t-Advance/Newhouse P’ship v. Carteret-Craven Elec. Membership Corp., 506 F.3d
304, 315 (4th Cir. 2007) (“[A]s a court sitting in diversity, we should not create or extend
the North Carolina common law”).
Further, the court finds that plaintiff’s UDTPA claim is sufficient to survive defendant’s
motion to dismiss. In plaintiff’s first case, the court found that his UDTPA claim survived
defendant’s motion to dismiss where he alleged that defendant terminated the Agreement in
retaliation for his opposition to the change in margins, which the court found may constitute an
“aggravating circumstance.” Martin v. Bimbo Foods Bakeries Distrib., Inc., No. 5:14-CV-17BR, DE # 41, at 7 (E.D.N.C. July 31, 2014). Similarly, in the case at hand, plaintiff contends
that defendant’s actions were used to “punish[] him for his actions in opposing the Defendant’s
abusive business practices toward its distributors . . . .” (DE # 14, at 28; Compl., DE # 1-1, ¶
29.) Plaintiff further alleges that defendant mistreated him in order to send a message to other
independent operators that any opposition to defendant’s change in margins would be met with
termination of their own agreements and financial damage. (Compl., DE # 1-1, ¶ 29.)
Defendant counters by arguing that none of plaintiff’s allegations amount to more than a breach
of contract claim. (DE # 12, at 16-17.)
Plaintiff has adequately alleged more than a simple breach of contract action. His
allegations — namely, that defendant charged him unreasonable expenses in the operation of his
route and failed to obtain the best price for his distribution rights in order to retaliate against him
and intimidate other distributors — may amount to substantially aggravating circumstances
13
attendant to the alleged breach of contract. Taking plaintiff’s allegations as true, he has stated a
valid claim for relief under the UDTPA.
IV. CONCLUSION
Based on the foregoing, defendant’s motion to dismiss, (DE # 11), is GRANTED IN
PART and DENIED IN PART. Plaintiff’s negligence, breach of fiduciary duty, and fraud claims
are DISMISSED. The Clerk is DIRECTED to consolidate this case with Case No. 5:14-CV-17BR and to close this case, No. 5:15-CV-96-BR. The Clerk is also DIRECTED to correct the
docket to reflect the name of the proper defendant: Bimbo Foods Bakeries Distribution, LLC.
The parties are DIRECTED to make all future filings only under Case No. 5:14-CV-17-BR.
This 24 April 2015.
__________________________________
W. Earl Britt
Senior U.S. District Judge
14
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?