Edwards, et al. v. Genex Cooperative, Inc.

Filing 21

ORDER denying 15 Motion to Dismiss. Signed by District Judge Terrence W. Boyle on 7/29/2016. (Romine, L.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
No. 7:16-CV-53-BO

DEXTER EDWARDS AND NICHOLAS
EDWARDS, D/B/A EDWARDS LAND
& CATTLE,
Plaintiffs,

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v.
GENEX COOPERATIVE, INC.,
Defendant.

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ORDER

This cause comes before the Court on defendant's motion to dismiss. [DE 15]. Plaintiffs
have responded in opposition, defendant did not reply, and the matter is ripe for ruling. For the
reasons discussed below, defendant's motion is DENIED.
BACKGROUND
Edwards Land & Cattle (ELC), owned by plaintiffs Dexter and Nicholas Edwards, is a
business engaged in the genetic reproduction of elite cattle. ELC stores much of its supply of
elite semen and embryos in tanks filled with liquid nitrogen which, for years, has been supplied
by defendant Genex Cooperative, Inc. (Genex). The tanks must be refilled every 16 and 20
weeks.
On September 23, 2015, plaintiffs received a letter dated September 17, 2015, from
Genex stating that the tanks had been filled on August 31, 2015, but Genex would no longer fill
the tanks in the future. Plaintiffs now contend that Genex in fact did not fill the tanks on August
31, 2015, and that plaintiffs lost their existing stock of semen and embryos as a result.
Plaintiffs brought this suit claiming one count of breach of contract against Genex. Genex
has moved to dismiss pursuant to the economic loss rule.

DISCUSSION
A Rule 12(b)( 6) motion to dismiss for failure to state a claim for which relief can be
granted challenges the legal sufficiency of a plaintiffs complaint. Francis v. Giacomelli, 588
F.3d 186, 192 (4th Cir. 2009). When ruling on the motion, the court "must accept as true all of
the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007)
(citing Bell At/. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). Although complete and
detailed factual allegations are not required, "a plaintiffs obligation to provide the 'grounds' of
his 'entitle[ment] to relief requires more than labels and conclusions .... " Twombly, 550 U.S. at
555 (citations omitted). "Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 555). Similarly, a court need not accept as true a plaintiffs "unwarranted
inferences, unreasonable conclusions, or arguments." E. Shore Mkts., Inc. v. JD. Assocs. Ltd,
213 F.3d 175, 180 (4th Cir. 2000).
North Carolina's economic loss doctrine provides that a breach of contract does not
ordinarily 'give rise to a tort action by the promisee against the promisor.' More
specifically, it 'prohibits recovery for purely economic loss in tort when a contract, a
warranty, or the UCC operates to allocate risk.' In cases arising out of the sale of failed
goods, the economic loss doctrine thus bars 'recovery for purely economic loss in tort, as
such claims are instead governed by contract law.'
Severn Peanut Co. v. Indus. Fumigant Co., 807 F.3d 88, 94 (4th Cir. 2015) (citations omitted).
Here, defendant filed a motion to dismiss on the grounds that plaintiffs use of the terms
"negligence" and "grossly negligent" in the text of its breach of contract claim is insufficient to
create causes of action for negligence and gross negligence and, moreover, that any claim for
negligence or gross negligence in this case would be barred by the economic loss rule.
Plaintiffs responded that their only claim is for breach of contract-not negligence or
gross negligence. Plaintiffs assert that they understand the rationale of the economic loss rule and

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explain that the terms "negligence" and "grossly negligent" were used to explain how defendant
breached the contract-as opposed to an intentional breach-rather than to state additional
claims. Accordingly, plaintiffs argue the economic loss rule is of no moment, and the motion to
dismiss should be denied.
Bearing in mind the appropriate Rule 12(b)( 6) standard, the Court agrees with plaintiffs
position and denies the motion to dismiss.
CONCLUSION
Defendant's motion to dismiss is hereby DENIED. [DE 15].

SO ORDERED, this

li_ day of~~

'2016.

TERRENCE W. BOYLE
UNITED STATES DISTRICT J

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