Dominion Liquid Technologies, LLC et al v. Weiss
Filing
33
OPINION AND ORDER granting in part 12 Defendant Tom Weiss' Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue, or in the Alternative, Motion to Transfer Venue, Motion to Dismiss for Failure to State a Claim Upon Which Relie f Can be Granted. The Court GRANTS Defendant Weiss' motion only as to Plaintiff's intentional misrepresentation claim and DENIES it in all other respects; denying 13 Defendant GT Beverage's Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue, or in the Alternative, Motion to Transfer Venue in its entirety. Signed by Judge S Arthur Spiegel on 4/10/2012. (km1)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
DOMINION LIQUID TECHNOLOGIES, :
LLC, et al.,
:
:
Plaintiffs,
:
:
v.
:
:
TOM WEISS, et al.,
:
:
:
Defendants.
:
NO. 1:11-CV-00444
OPINION & ORDER
This matter is before the Court on Defendant Tom Weiss’
Motion to Dismiss for Lack of Personal Jurisdiction and Improper
Venue, or in the Alternative, Motion to Transfer Venue, Motion to
Dismiss for Failure to State a Claim Upon Which Relief Can be
Granted (doc. 12) and Defendant GT Beverage’s Motion to Dismiss for
Lack of Personal Jurisdiction and Improper Venue, or in the
Alternative, Motion to Transfer Venue (doc. 13) and the respective
responsive memoranda (docs. 15, 17, 20, 21).
For the following
reasons, the Court DENIES Defendant Weiss’ motion in part and
GRANTS it in part (doc. 12) and DENIES Defendant GT Beverage’s
motion in its entirety (doc. 13).
I.
Background
Here on diversity of citizenship pursuant to 28 U.S.C. §
1332, this is a contract and tort action brought by an Ohio company
against GT Beverage Company, LLC, a Nevada company with its
principal place of business in California, and Tom Weiss, a
director
or
member
of
GT
Beverage,
who
is
a
resident
and
domiciliary of California (doc. 22-1).
Plaintiff asserts that
Defendants are subject to the personal jurisdiction of the Court
pursuant to Ohio’s long arm statute, O.R.C. § 2307.382(A), and that
venue is proper here because the contract giving rise to the claims
was negotiated in Cincinnati, Ohio and was to be performed at
Plaintiff’s facility in Cincinnati (Id.).
According
to
Plaintiff’s
Complaint,
Plaintiff
and
Defendant GT Beverage executed a contract on August 24, 2010,
pursuant to which Plaintiff would provide bottling services at its
Cincinnati
plant
and
provide
for
delivery
of
Defendant
GT
Beverage’s bottled product to retail facilities in the United
States and Canada (Id.).
On July 21, 2010, Defendant Weiss
communicated to Plaintiff the process through which Plaintiff was
to prepare an initial draft of the contract, and on August 4, 2010,
Defendant Weiss visited Cincinnati in order to determine whether
Plaintiff’s plant would be sufficient to meet GT Beverage’s needs
(Id.).
During that visit, Plaintiff and Defendant Weiss discussed
the contract, and Defendant Weiss indicated that Defendant GT
Beverage would be supplying Plaintiff with a large volume of
product (Id.).
The contract as executed reflects Defendant Weiss’
representations as to volume as well as a provision that all
bottling and related services subject to the contract would be
performed exclusively at Plaintiff’s Cincinnati facilities (Id.).
The parties to the contract understood and agreed that in
2
order to meet the volume requirements of Defendant GT Beverage,
Plaintiff would need to construct an additional and speciallydesigned bottling line in its Cincinnati facility (Id.).
Plaintiff
had
projected
that
the
initial
phase
of
Although
the
line
construction would be completed in the fourth quarter of 2010, the
construction was delayed because of the imposition of detailed
specifications
by
Defendant
GT
Beverage
on
the
third-party
manufacturer, a company in China (Id.). Through the fourth quarter
of 2010 and the first quarter of 2011, Plaintiff and Defendant
Weiss had discussions in which they agreed that Defendant GT
Beverage would temporarily use other companies for their bottling
needs until Plaintiff’s line was ready (Id.).
Defendant Weiss
assured Plaintiff that Defendant GT Beverage would honor the
contract between the parties once the line was ready (Id.).
On
April
27,
2011,
Plaintiff
informed
Defendant
GT
Beverage that the line was completed and ready for production
(Id.). Defendant GT Beverage refused to honor the contract (Id.).
Plaintiff’s expense in reliance on the contract is in excess of
$896,414 (Id.).
Plaintiff claims that (i) Defendant GT Beverage is liable
to Plaintiff for all amounts Plaintiff spent for the manufacture
and installation of the additional bottling line because Defendant
GT Beverage breached the contract; and (ii) Defendant Weiss is
liable to Plaintiff for all amounts Plaintiff spent for the
3
manufacture and installation of the additional bottling line as a
result of Defendant GT Beverage’s breach because Plaintiff relied
on
Defendant
Weiss’s
material
misrepresentations
regarding
Defendant GT Beverage’s intentions with respect to the contract
(Id.).
Pursuant to Federal Rules of Civil Procedure 12(b)(2) and
12(b)(3), Defendant Weiss moves the Court to dismiss the complaint
as
against
him,
asserting
that
the
Court
lacks
personal
jurisdiction over him and that venue in the Southern District of
Ohio is improper (doc. 12).
In addition, pursuant to Federal Rule
of Civil Procedure 12(b)(6), Defendant Weiss moves the Court to
dismiss the complaint because, he contends, it fails to state a
claim upon which relief can be granted (Id.).
In the alternative,
Defendant Weiss moves the Court to transfer the matter to the
United
States
District
Court
for
the
Central
District
of
California, pursuant to 28 U.S.C. § 1404(a) (Id.).
Defendant GT Beverage moves the Court to dismiss the
complaint as against it, asserting that the Court lacks personal
jurisdiction over it and that venue in the Southern District of
Ohio is improper (doc. 13).
In the alternative, Defendant GT
Beverage moves the Court to transfer the matter to the United
States District Court for the Central District of California,
pursuant to 28 U.S.C. § 1404(a) (Id.).
II.
Federal
Rule
Jurisdiction
of
Civil
Procedure
4
12(b)(2):
Personal
In a diversity case, a plaintiff must satisfy both the
state-law
requirements
for
personal
jurisdiction
and
the
requirements of the Due Process Clause of the federal Constitution.
Estate of Thomson ex rel. Estate of Rakestraw v. Toyota Motor Corp.
Worldwide, 545 F.3d 357, 361 (6th Cir. 2008).
Ohio’s long-arm
statute establishes a statutory basis for jurisdiction over foreign
defendants by providing in relevant part that “[a] court may
exercise personal jurisdiction over a person who acts directly or
by
an
agent,
as
to
a
person’s...[t]ransacting
cause
any
of
action
business
in
arising
this
from
the
state...[or]
[c]ausing tortious injury in this state to any person by an act
outside this state committed with the purpose of injuring persons,
when he might reasonably have expected that some person would be
injured thereby in this state.” Ohio Rev. Code § 2307.382(A)(1).
The Sixth Circuit has recognized that “Ohio’s long-arm statute is
not coterminous with federal constitutional limits.”
Thomson, 545 F.3d at 361.
whether
minimum
contacts
Estate of
However, the Court’s central inquiry is
are
satisfied
so
as
not
to
offend
“traditional notions of fair play and substantial justice.”
Caphalon v. Rowlette, 228 F.3d 718 (2000) (citing Cole v. Mineti,
133 F.3d 433, 436 (6th Cir. 1998) and Goldstein v. Christiansen, 70
Ohio St.3d 232, 638 N.E.2d 541, 545 n. 1)(Ohio 1994) (per curiam));
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting
Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
5
“The party seeking to assert personal jurisdiction bears
the burden of demonstrating that such jurisdiction exists.”
Bird
v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002).
Where, as here, the
Court
does
relies
on
the
parties’
filings
and
not
hold
an
evidentiary hearing, the burden consists of “a prima facie showing
that personal jurisdiction exists.” Serras v. First Tennessee Bank
National Association, 875 F.2d 1212, 1214 (6th Cir. 1989).
The
Court views “the facts in the light most favorable to the plaintiff
and do[es] not consider facts proffered by the defendant that
conflict with those offered by the plaintiff.”
Aristech Chemical
Intern. Ltd. v. Acrylic Fabricators Ltd., 138 F.3d 624, 626 (6th
Cir. 1998).
To determine that jurisdiction is proper, the Court must
find: (1) purposeful availment of the privilege of acting in the
forum state or causing a consequence in the forum state; (2) that
the cause of action arises from activities in the state; and (3)
that a substantial enough connection exists with the forum state to
make the exercise of jurisdiction over the defendant reasonable.
Youn v. Track, Inc., 324 F.3d 409, 418 (6th Cir. 2003).
1.
The Parties’ Arguments
Defendant Weiss argues that the Court lacks jurisdiction
over him because his sole connection to Ohio is the August 4, 2010
trip he took to meet with Plaintiff and inspect Plaintiff’s
facilities (doc. 21).
He notes that the Sixth Circuit has held
6
that “personal jurisdiction over a corporate entity without more
does not confer personal jurisdiction over individual officers and
employees of that company,” and contends that Plaintiff has offered
no facts specific to Defendant Weiss that speak to jurisdiction
other than that isolated trip (Id., citing Robertson v. AVC
Systems, Inc., 51 F.3d 273 (6th Cir. 1995)).
Defendant Weiss
further notes that he has never contacted Ohio for his own personal
benefit, that he did not negotiate or execute the contract on
behalf of Defendant GT Beverage, that he had a few telephone and
email conversations with Plaintiff’s employees but that these
conversations were generally initiated by Plaintiff in Ohio, and
that, at base, all events relating to him occurred as a result of
Plaintiff contacting and wanting to do business with GT Beverage.
Defendant GT Beverage argues that its contacts with Ohio
are insufficient to be seen as having availed itself of Ohio’s
laws. Specifically, GT Beverage notes that it is not a resident of
Ohio, has no offices here, is not registered here as a foreign
corporation and has no contracts with any Ohio companies (doc. 13).
In addition, it argues that its one-day visit to Plaintiff’s
facility in Ohio, where no contract negotiations took place, cannot
constitute purposeful availment.
Plaintiff contends that Defendant Weiss did, indeed,
discuss the terms of the contract during his visit to Cincinnati,
including compensation, volume, the market territory to be covered
7
by the contract, and the facilities that would be needed (doc. 15).
In addition, Plaintiff avers that Defendant Weiss, prior to his
visit to Ohio, placed an order with Plaintiff and repeatedly, via
telephone, reassured Plaintiff that the delay in the bottling line
construction
would
not
adversely
affect
the
parties’
ongoing
business relationship evidenced by the contract (Id.).
With respect to Defendant GT Beverage, Plaintiff notes
that company representatives visited Plaintiff’s plant on two
occasions, that GT Beverage negotiated the contract via phone, fax
and email, and that it ordered its suppliers to send supplies to
Plaintiff in anticipation of the future orders contemplated by the
contract (Id.).
In addition, Plaintiff avers that GT Beverage
mandated that Plaintiff’s new bottling line be built according to
its specifications; recommended a contractor and a manufacturer;
and,
several
approximately
installed,
months
a
after
month
provided
the
before
signing
the
additional
new
design
of
the
contract
line
was
to
have
specifications
and
been
to
the
contractor (Id.).
2.
The Court Has Personal Jurisdiction Over Defendants
Having
reviewed
this
matter,
the
Court
finds
Defendants are properly subject to its jurisdiction.
Defendant
Weiss,
his
trip
to
Cincinnati
for
the
that
As to
purpose
of
inspecting Plaintiff’s facilities and, according to Plaintiff,
negotiating terms of the contract, constitutes conducting business
8
in Ohio, as do the telephone calls and emails he exchanged with
Plaintiff, such that he falls within the ambit of Ohio’s long-arm
statute.
The multiple phone calls and emails Defendant Weiss
exchanged with Plaintiff assuring Plaintiff that the delay in
construction of its speciality line form the basis of Plaintiff’s
misrepresentation claim against Defendant Weiss. While he may have
been physically in California at the time he participated in those
exchanges, he was actively engaged in business transactions with an
Ohio-based company and cannot reasonably claim that he could not
have foreseen that his actions could cause injury to that Ohio
company.
Defendant Weiss purposefully availed himself of Ohio’s
laws when he traveled here and conducted business here.
The
allegations of misrepresentation directly relate to the contract,
which was to be performed in Ohio, including the specially-designed
bottling line, which Defendant Weiss directed Plaintiff to build,
making Plaintiff’s cause of action arise out of activities in Ohio.
As to Defendant GT Beverage, the Court has no trouble
finding that the company may properly be called to defend itself in
Ohio.
Defendant
GT
Beverage
sent
its
representative
to
Cincinnati–in the form of Defendant Weiss–to lay the foundation for
an ongoing business relationship with an Ohio company. GT Beverage
also emailed and faxed various iterations of the contract to
Plaintiff and engaged Plaintiff on multiple occasions in telephone
conversations
about
the
contract
9
and
about
the
ongoing
relationship.
In addition, evidencing their ongoing relationship,
GT Beverage sent product and supplies to Plaintiff, which were
stored at Plaintiff’s Cincinnati facility.
GT Beverage determined
that Plaintiff’s Ohio facility needed to be expanded and was
intimately
involved
in
the
design
specifications
for
that
expansion, even sending a representative to the Cincinnati plant
after the contract was signed in order to consult with Plaintiff
regarding the specifications GT Beverage required for Plaintiff’s
new bottling line.
communicated
with
Representatives of GT Beverage repeatedly
Plaintiff
about
the
time-frame
for
the
development of the new line, placed orders with Plaintiff, and
assured Plaintiff that the delay in construction–due, according to
Plaintiff,
to
specifications
GT
and
Beverage’s
to
the
use
alterations
of
GT
to
Beverage’s
the
design
recommended
manufacturer–would not alter the contract. All of these activities
demonstrate that Defendant GT Beverage purposefully availed itself
of the privilege of acting in Ohio and that Plaintiff’s causes of
action arise from GT’s contacts with Ohio.
See, e.g., Cole v.
Mileti, 133 F.3d 433, 436 (6th Cir. 1998), citing, inter alia,
Burger King, 471 U.S. at 475–76, 479, 105 (where a nonresident
defendant
transacts
business
by
negotiating
and
executing
a
contract via telephone calls and letters to an Ohio resident, the
defendant has purposefully availed himself of the forum by creating
a continuing obligation in Ohio).
10
“[W]here, as here, the first two criter[ia] are met, ‘an
inference of reasonableness arises’ and ‘only the unusual case will
not meet [the substantial connection] criteri[on].’”
Air Prods. &
Controls, Inc., 503 F.3d 544, 554 (quoting Theunissen v. Matthews,
935 F.2d 1454, 1461 (6th Cir. 1991)). “In determining whether the
exercise of jurisdiction is reasonable, the court should consider,
among
others,
the
following
factors:
(1)
the
burden
on
the
defendant; (2) the interest of the forum state; (3) the plaintiff's
interest in obtaining relief; and (4) other states’ interest in
securing the most efficient resolution of the [controversy].” Id.
at 554-55.
While defending this matter in Ohio imposes a burden on
Defendants, the Court cannot conclude that this burden creates an
“unusual case” where the “inference of reasonableness” should be
abandoned.
See Youn, 324 F.3d at 420.
Moreover, Ohio has an
interest in ensuring that its residents have adequate recourse for
harms inflicted by nonresidents, and requiring Plaintiff, a small
company, to litigate this dispute in California would impose a
substantial burden on it.
Cf. Nationwide Mut. Ins. Co. v. Tryg
Int’l Ins. Co., 91 F.3d 790, 797 (6th Cir. 1996) (noting concern
not implicated where plaintiff is large corporation that “can
easily
travel
redress”).
to
the
defendant’s
home
jurisdiction
to
seek
In contrast, California has no real interest in this
matter apart from an attenuated and general concern that two of its
11
citizens must defend their actions in another state, a concern that
is present in any litigation involving citizens from different
states.
“Because there is an inference of reasonableness when the
first two Southern Machine prongs are satisfied, and because there
are no considerations put forward by [Defendants] to overcome or
contradict
that
inference,
the
exercise
of
jurisdiction
reasonable under the circumstances of this case.”
is
Air Prods. &
Controls, Inc., 503 F.3d at 555, citing Southern Mach. Co. v.
Mohasco Indus., Inc., 401 F.2d 374 (6th Cir. 1968).
Given their contacts, interactions, negotiations and
ongoing
relationship
with
an
Ohio
company,
Defendants
cannot
legitimately claim that to be haled into court here was either
unforeseeable or unreasonable.
World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 291, 297 (1980)(Due process requires that a
defendant have “minimum contacts . . . with the forum State . . .
such that he should reasonably anticipate being haled into court
there.”).
Plaintiff has succeeded in showing that litigating this
case in the Southern District of Ohio comports with both due
process and the Ohio long-arm statute.
Defendants’ Motions to
Dismiss for Lack of Personal Jurisdiction are therefore DENIED
(docs. 12 & 13).
B.
Federal Rule of Civil Procedure 12(b)(3): Venue
Pursuant to 28 U.S.C. § 1391(a)(2), a plaintiff may file
his complaint in any forum where a substantial part of the events
12
or omissions giving rise to the claim arose, including any forum
with a substantial connection to the plaintiff’s claim.
See 28
U.S.C. § 1391(a); First of Michigan Corp. v. Bramlet, 141 F.3d 260,
263 (6th Cir. 1998).
Defendants argue that venue is improper in the Southern
District of Ohio because a substantial part of the events giving
rise to Plaintiff’s claim did not occur in the Southern District of
Ohio but, instead, in the Central District of California (doc. 12).
As to Defendant Weiss, Defendants argue that venue is improper
because the only allegation against him is that he “verbally
assented on behalf of GT Beverage to [Plaintiff’s] delay of its
installation and operation of its additional bottling line” (Id.).
This act took place in California, not in Ohio, so Defendants
contend that venue is improper here. As to Defendant GT Beverage,
Defendants argue that venue is improper here because GT Beverage’s
alleged refusal to abide by the terms of the contract occurred in
California, not in Ohio, and no events giving rise to Plaintiff’s
claim against GT Beverage occurred here (doc. 13).
Plaintiff argues that venue here is proper because a
substantial part of the events giving rise to its action did occur
here (doc. 17).
Specifically, Plaintiff points to the following
facts alleged in the complaint: Defendant Weiss initially placed an
order with Plaintiff in Cincinnati; he visited Plaintiff’s Ohio
facility; he discussed, in Cincinnati, various items that were
13
incorporated into the contract as well as the requirement in the
contract for Plaintiff to purchase and install a new blending and
bottling line at its Ohio plant to service Defendant GT Beverage’s
orders; the multiple shipments of Defendant GT Beverage’s packaging
materials to Plaintiff’s facility; numerous telephone and email
communications
between
Defendant
GT
Beverage
and
Plaintiff
regarding the terms of the Agreement; and the receipt of design
specifications for the new bottling line as well as specific orders
placed by Defendant GT Beverage through April 2011 (Id.).
Plaintiff has the better end of this argument, and the
Court finds that venue here is proper.
As Plaintiff notes, a
substantial part of the events giving rise to its claims did occur
in Ohio.
For example, the terms of the contract were negotiated
via email and phone between Ohio and California; the contract was
to be performed in Ohio, with Defendants shipping their product to
Plaintiff’s
Ohio
facility,
which
Defendants
were
intimately
involved in building to their specifications; and the alleged
breach of contract resulted in damages to Plaintiff in Ohio.
Cf.
Union Cent. Life Ins. Co. v. Andraos Capital Management & Insurance
Svcs., Inc., 2010 WL 5093396 (S.D. Ohio, December 8, 2010).
Plaintiff chose this venue, and the Court affords considerable
weight to Plaintiff’s choice of forum.
Midwest Motor Supply Co.,
Inc. v. Kimball, 761 F.Supp. 1316, 1318 (S.D. Ohio 1991).
That
some of the events that gave rise to this action may have occurred
14
in
California
Plaintiff’s
is
choice
not
of
reason
enough
forum.
The
for
the
Court
Court
therefore
to
undo
DENIES
Defendants’ motion to dismiss on the basis of improper venue.
C.
Motion to Transfer Pursuant to 28 U.S.C. § 1404(a)
“[T]he threshold consideration under § 1404(a) is whether
the action ‘might have been brought’ in the transferee court.” Kay
v. National City Mortgage Co., 494 F.Supp.2d 845, 849 (S.D. Ohio
2007).
“Once it is determined that a case could have been brought
in the transferee court, the issue becomes whether the transfer is
justified under the balance of the language of Section 1404(a).”
Jamhour v. Scottsdale Ins. Co., 211 F.Supp.2d 941, 945 (S.D. Ohio
2002).
Under 28 U.S.C. § 1404, a district court may transfer a
civil action to any other district where the action may have been
brought for the convenience of the parties or witnesses. “In order
for a transfer to take place, the Defendant must make a strong
showing of inconvenience to warrant upsetting the Plaintiff's
choice of forum.”
Hobson v. Princeton–New York Investors, Inc.,
799 F.Supp. 802, 805 (S.D. Ohio 1992).
forum is given great weight.”
“A plaintiff’s choice of
Id. at 804.
When considering a motion to transfer venue, a district
court
should
consider
the
convenience
of
the
parties,
the
convenience of potential witnesses, and the interests of justice.
Moses v. Business Card Express, Inc., 929 F.2d 1131, 1137 (6th Cir.
15
1991). Venue should not be transferred unless these factors weigh
heavily in favor of the defendant.
West American Insurance v.
Potts, 908 F.2d 974, 1990 WL 104034 at *2 (6th Cir. 1990).
Defendants seek transfer to the Central District of
California, arguing that the inconvenience Defendants would suffer
should the case stay in the Southern District of Ohio is greater
than any inconvenience Plaintiff would suffer should the Court
transfer the case to California (doc. 12). In addition, Defendants
argue that the interests of justice would be better served with a
transfer because, statistically, cases get resolved quicker in the
Central District of California than in the Southern District of
Ohio (Id.).
Plaintiff argues that a transfer is inappropriate because
the convenience of the parties and witnesses and the interests of
justice do not weigh heavily in favor of Defendants (doc. 17).
On
the contrary, Plaintiffs note that Defendants’ position would
simply
shift
the
inconvenience
Defendants
will
suffer
from
litigating this matter in Ohio to Plaintiffs, should the matter be
litigated in California. They note that where the choice of forums
is “equally convenient or inconvenient,” transfer should not be
granted (Id., citing Van Dusen v. Barrack, 376 U.S. 612, 646
(1964)).
In addition, Plaintiff contends that the contract at
issue is governed by Ohio law, and this Court is more familiar with
the governing law than a California court would be (Id., citing
16
Global Décor, Inc. v. Cincinnati Ins. Co., 2011 WL 2437236, *2-3
(C.D. Cal. 2011)(“A diversity case should be litigated in a forum
that is at home with the law that must govern the action.”).
A district court has broad discretion when considering
motions
to
transfer
venue
under
28
U.S.C.
§
1404.
Hayes
v.
Chesapeake & Ohio Railway Co., 374 F.Supp. 1068 (S.D. Ohio 1973).
After reviewing the facts of this case, the Court finds Plaintiff’s
arguments compelling and is not satisfied that Defendants have
shown that the factors for transfer of venue weigh heavily in their
favor.
Therefore, the Court DENIES Defendants’ Motion to Transfer
Venue.
D.
Federal Rule of Civil Procedure 12(b)(6): Failure to
State a Claim
A motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6) requires the Court to determine whether a
cognizable claim has been pled in the complaint. The basic federal
pleading requirement is contained in Fed. R. Civ. P. 8(a), which
requires that a pleading "contain . . . a short and plain statement
of the claim showing that the pleader is entitled to relief."
Westlake v. Lucas, 537 F.2d 857, 858 (6th
Pardus, 551 U.S. 89 (2007).
Cir. 1976); Erickson v.
In its scrutiny of the complaint, the
Court must construe all well-pleaded facts liberally in favor of
the party opposing the motion.
236 (1974).
Scheuer v. Rhodes, 416 U.S. 232,
A complaint survives a motion to dismiss if it
17
“contain[s] sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face.”
Courie v. Alcoa
Wheel & Forged Products, 577 F.3d 625, 629-30 (6th Cir. 2009),
quoting Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009), citing Bell
Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
A motion to dismiss is therefore a vehicle to screen out
those
cases
implausible.
that
are
impossible
as
well
as
those
that
are
Courie, 577 F.3d at 629-30, citing Robert G. Bone,
Twombly, Pleading Rules, and the Regulation of Court Access, 94
IOWA L. REV. 873, 887-90 (2009).
A claim is facially plausible
when the plaintiff pleads facts that allow the court to draw the
reasonable inference that the defendant is liable for the conduct
alleged.
Iqbal, 129 S.Ct. at 1949.
Plausibility falls somewhere
between probability and possibility. Id., citing Twombly, 550 U.S.
at 557.
As the Supreme Court explained,
“In keeping with these principles a court considering a motion
to dismiss can choose to begin by identifying pleadings that,
because they are no more than conclusions, are not entitled to
the assumption of truth. While legal conclusions can provide
the framework of a complaint, they must be supported by
factual allegations. When there are well-pleaded factual
allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement
to relief.” Id. at 1950.
The
admonishment
to
construe
the
plaintiff's
claim
liberally when evaluating a motion to dismiss does not relieve a
plaintiff of his obligation to satisfy federal notice pleading
requirements
and
allege
more
than
18
bare
assertions
of
legal
conclusions.
Wright,
Miller
&
Procedure: § 1357 at 596 (1969).
Cooper,
Federal
Practice
and
"In practice, a complaint . . .
must contain either direct or inferential allegations respecting
all of the material elements [in order] to sustain a recovery under
some viable legal theory."
Car Carriers, Inc. v. Ford Motor Co.,
745 F.2d 1101, 1106 (7th Cir. 1984), quoting In Re: Plywood
Antitrust Litigation, 655 F.2d 627, 641 (5th Cir. 1981); Wright,
Miller & Cooper, Federal Practice and Procedure, § 1216 at 121-23
(1969).
The United States Court of Appeals for the Sixth Circuit
clarified the threshold set for a Rule 12(b)(6) dismissal:
[W]e are not holding the pleader to an impossibly high
standard; we recognize the policies behind Rule 8 and the
concept of notice pleading.
A plaintiff will not be
thrown out of court for failing to plead facts in support
of every arcane element of his claim.
But when a
complaint omits facts that, if they existed, would
clearly dominate the case, it seems fair to assume that
those facts do not exist.
Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 437 (6th
Cir. 1988).
1.
Defendant’s Arguments
Defendant Weiss1 bases his motion to dismiss for failure
to state a claim on two premises: that Plaintiff has failed to set
forth with particularity the facts necessary to support a claim for
fraud and that Plaintiff has inappropriately based its tort claim
against Defendant Weiss on a breach of contract claim against
1
Defendant GT Beverage did not file a 12(b)(6) motion.
19
Defendant GT Beverage (doc. 12).
Specifically, Defendant Weiss
contends that Plaintiff’s complaint attempts to morph a contract
claim into a tort claim, in contravention of Ohio law (Id., citing,
inter alia, Textron Financial Corp. v. Nationwide Mutual Ins. Co.,
115
Ohio
App.3d
137,
151,
684
N.E.2d
1261
(1996);
Picker
International, Inc. v. Mayo Foundation, 6 F. Supp. 2d 685, 689
(N.D. Ohio 1998)(“[The plaintiff] may not recast its breach of
contract claim as a tort claim, where the only duty breached is a
contractual duty.”)).
In addition, Defendant Weiss argues that the negligent
misrepresentation claim against him must be dismissed because
Plaintiff has not set forth allegations in the complaint from which
the Court could plausibly infer that he had a special relationship
with Plaintiff, which is a “core requirement” of the claim (Id.).
As to Plaintiff’s fraudulent misrepresentation claim, Defendant
Weiss argues it, too, must be dismissed because Plaintiff failed to
plead that Defendant Weiss acted with the requisite intent of
misleading
Plaintiff
into
relying
on
his
allegedly
false
misrepresentations (Id.).
2.
Plaintiff Has Stated A Claim
As an initial matter, the Court agrees with Plaintiff’s
analysis of the relevant case law: Plaintiff’s tort claims against
Defendant Weiss are not precluded by its contract claim against
Defendant GT Beverage, even though they arise from the same set of
20
facts,
because
defendants.
the
claims
are
lodged
against
two
different
The cases upon which Defendant Weiss relies are
inapposite for that reason.
With respect to Plaintiff’s negligent misrepresentation
claim, the Court notes that the elements for such a claim are that
the Defendant supplied false information for the guidance of the
Plaintiff in its business transactions; the Plaintiff was justified
in relying on the information; and the Defendant failed to exercise
reasonable care or competence in obtaining and/or communicating the
information. CCB Ohio LLC v. Chemque, Inc., 649 F.Supp.2d 757, 767
(S.D. Ohio 2009).
Plaintiff has alleged that Defendant Weiss
repeatedly assured Plaintiff that the delay in the construction of
the new bottling line would not affect the ongoing relationship
evidenced by the contract. This speaks to the first element of the
claim.
GT
The fact that Defendant Weiss was a director or member of
Beverage
made
Plaintiff’s
reliance
on
his
representations
reasonable and justifiable, satisfying the second element of the
claim.
And, Plaintiff has alleged that Defendant Weiss knew or
should have known, as a director or member of the company, that GT
Beverage did not in fact intend to abide by the contractual
agreement, thus satisfying the third element of the claim.
Plaintiff has therefore alleged facts sufficient to allow the Court
to plausibly infer a cause of action here, and Defendant Weiss’s
motion as to this claim is denied.
21
As
to
Plaintiff’s
intentional
(or
fraudulent)
misrepresentation claim, a different result obtains.
As Plaintiff
notes, the elements of this claim are
1) a representation or,
where there is a duty to disclose, concealment of a fact, 2) which
is material to the transaction at hand, 3) made falsely, with
knowledge
of
its
falsity,
or
with
such
utter
disregard
and
recklessness as to whether it is true that knowledge may be
inferred, 4) with the intent of misleading another into relying
upon
it,
5)
justifiable
reliance
upon
the
representation
or
concealment, and 6) a resulting injury proximately caused by the
reliance
(doc.
18,
citing
Carpenter
v.
Scherer-Mountain
Ins.
Agency, 135 Ohio App.3d 316, 733 N.E.2d 1196, 1204 (Ohio Ct.
App.1999), citing and quoting from Burr v. Stark Cty. Bd. Of
Commrs., 23 Ohio St.3d 69, 491 N.E.2d 1101, syllabus, ¶ 2 (Ohio
1986)).
Defendant Weiss correctly observes that Plaintiff needed
to have pled facts sufficient to support a plausible inference that
Defendant Weiss acted with “the intent of misleading [Plaintiff]
into relying” on his alleged misrepresentations. Plaintiff did not
allege such facts.
The Court cannot fairly infer the requisite
intent here merely on the allegations that the representations were
made by a director or member of the company, which are the
operative allegations.
That would require an inferential leap of
a magnitude that is impermissible under Twombly
and Iqbal.
Plaintiff needed to have alleged facts that speak to Defendant
22
Weiss’ intent, a distinct element of the cause of action, and it
did not do so.
Therefore, the Court finds that dismissal of
Plaintiff’s intentional (fraudulent) misrepresentation claim is
appropriate.
IV.
Conclusion
For the foregoing reasons, the Court GRANTS Defendant
Weiss’
motion
to
dismiss
only
as
to
Plaintiff’s
intentional
misrepresentation claim and DENIES it in all other respects (doc.
12) and DENIES Defendant GT Beverage’s motion in its entirety (doc.
13).
SO ORDERED.
Dated: April 10, 2012
/s/ S. Arthur Spiegel
S. Arthur Spiegel
United States Senior District Judge
23
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