Michelin North America Inc v. Inter-City Tire and Auto Center Inc

Filing 76

OPINION and ORDER granting 56 Motion to Dismiss Counterclaims. Signed by Honorable Henry M Herlong, Jr on 8/26/13.(sfla)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
GREENVILLE DIVISION
Michelin North America, Inc., and
Michelin Retread Technologies, Inc.,
Plaintiffs,
vs.
Inter-City Tire and Auto Center, Inc., and
Inter-City Retread, Inc.,
Defendants.

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C.A. No. 6:13-1067-HMH
OPINION & ORDER

This matter is before the court on a motion by Plaintiff Michelin North America, Inc.,
(“MNA”) to dismiss Defendant Inter-City Tire and Auto Center, Inc.’s (“ICT”) counterclaims.
After review, the court grants MNA’s motion.1
I. FACTUAL AND PROCEDURAL BACKGROUND
The instant litigation arises from a series of commercial dealer agreements and Michelin
Americas Small Tires (“MAST”) retail agreements between MNA and ICT. (Answer &
Countercl. 22-27, ECF No. 24.) The factual allegations of the case have been thoroughly
outlined in two previous orders, and the court will not restate all the allegations here. See (Aug.
20, 2013 Order, ECF No. 75); (June 24, 2013 Order, ECF No. 53.). On April 19, 2009, MNA
filed a complaint in this court asserting a breach of contract claim against ICT and seeking
declaratory relief. (Compl. ¶¶ 25-40, ECF No. 1.) On April 30, 2013, MNA and Michelin
Retread Technologies, Inc. (collectively “Michelin”) filed an amended complaint in this court
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Pursuant to Local Rule of Civil Procedure 7.08, the district court may determine
motions without a hearing. A hearing is unnecessary because the issues presented have been
adequately briefed by the parties.
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raising additional declaratory judgment and breach of contract claims against ICT and Inter-City
Retread, Inc. (collectively “Inter-City”). (Am. Compl., generally, ECF No. 6.) On May 20,
2013, Inter-City filed its answer in this court to Michelin’s amended complaint, and ICT
asserted counterclaims against MNA. (Answer & Countercl., generally, ECF No. 24.) ICT
alleged a declaratory judgment counterclaim seeking a declaration that MNA violated the New
Jersey Franchise Practices Act (“NJFPA”) in terminating its agreements because ICT is a
franchisee of MNA under the NJFPA. (Id. at 27-29, ECF No. 24.) Further, ICT alleged a claim
for preliminary and permanent injunctive relief as provided for in the NJFPA. (Id. at 29-30,
ECF No. 24.) On June 24, 2013, the court denied Inter-City’s motion for a preliminary
injunction. (June 24, 2013 Order, ECF No. 53.) On June 27, 2013, MNA moved to dismiss
ICT’s counterclaims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. ICT
filed its response on July 22, 2013, and MNA submitted its reply on August 1, 2013. This
matter is now ripe for review.
II. DISCUSSION OF THE LAW
Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to
dismiss a cause of action if the opposing party fails to state a claim upon which relief can be
granted. Fed. R. Civ. P. 12(b)(6). When presented with a Rule 12(b)(6) motion to dismiss, the
court must restrict its inquiry to the sufficiency of the complaint rather than “resolve contests
surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party
of North Carolina v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). In order to survive a Rule
12(b)(6) motion, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

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(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S.
at 556). “Rule 12(b)(6) allows a court to eliminate actions that are fatally flawed in their legal
premises and destined to fail, thus sparing litigants the burdens of unnecessary pretrial and trial
activity.” Parham v. Pepsico, Inc., 927 F. Supp. 177, 178 (E.D.N.C. 1995) (citing Advanced
Cardiovascular Sys., Inc. v. SciMed Life Sys., Inc., 988 F.2d 1157 (Fed. Cir. 1993)), aff’d, 86
F.3d 1151 (4th Cir. 1996).
MNA moves to dismiss ICT’s counterclaims on the grounds that South Carolina law
applies to the agreements at issue, and as a result, ICT’s counterclaims, which are based on the
application of New Jersey law, fail to state a claim upon which relief can be granted. (Pls. Mot.
Dismiss Countercl. ¶¶ 5-7, ECF No. 56.) ICT opposes the motion, arguing that the court’s June
24, 2013 order finding that the South Carolina choice-of-law provisions in the agreements are
enforceable does not constitute the law of the case. (Defs. Opp. Mot. Dismiss 4-5, ECF No. 62.)
To the extent that the court’s June 24, 2013 order finding that South Carolina law applies is not
the law of the case, for the same reasons stated in that order, the court finds that South Carolina
law applies and incorporates the pertinent portions of the order herein by reference. See (June
24, 2013 Order 6-10, ECF No. 53.).
ICT also argues that its counterclaims should not be dismissed because its counterclaims
sound in tort, not contract, and therefore under South Carolina choice of law rules, New Jersey
law would govern as the location where the tort occurred. (Defs. Opp. Mot. Dismiss 6, ECF No.
62.) ICT claims that “the liability alleged against Michelin by [ICT] is predicated upon actions

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separate and distinct from the dealer agreements.” (Id. at 6-7, ECF No. 62.) In support of its
argument, ICT cites Glaesner v. Beck/Arnely Corp., 790 F.2d 384, 385 n.1 (4th Cir. 1986). In
Glaesner, the Fourth Circuit declined to apply a choice-of-law provision in a distributorship
agreement, instead applying South Carolina law because the plaintiff “alleged that [the
defendant was] liable in tort, rather than in contract.” Id. The court explained specifically that
“‘[n]o issue of contractual construction, interpretation, or enforceability is raised by this case.
The liability alleged is predicated, rather, upon actions separate and distinct from the [contract]
itself.’” Id. (quoting ITCO v. Michelin Tire Corp., 722 F.2d 42, 50 n.11 (4th Cir. 1983)). Thus,
ICT characterizes its allegation that MNA terminated the dealer agreements and MAST
agreement without good cause in violation of the NJFPA as a wrongful termination claim that
sounds in tort. (Defs. Opp. Mot. Dismiss 6-7, ECF No. 62.)
The court disagrees. In the present case, ICT has alleged claims that are predicated upon
the validity and enforceability of contract termination provisions in the agreements themselves,
not upon actions separate and distinct from those agreements. ICT’s counterclaims seek a
declaration that the provisions of the dealer agreements and the MAST agreement affording
MNA the right to terminate those agreements “are invalid and unenforceable.” (Answer &
Countercl. 29, ECF No. 24.) Thus, the counterclaims are predicated on issues of contractual
construction, interpretation, and enforceability, and ICT’s claims sound in contract, not tort. As
a result, South Carolina law applies.
ICT’s counterclaims for declaratory and injunctive relief are premised on the NJFPA.
Because the court finds that South Carolina law applies, ICT’s counterclaims do not state a
claim upon which relief can be granted. See PCJ Franchising Co., LLC v. Newsome, 7:08-CV-

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41-BO, 2008 WL 4772191, at *2 (E.D.N.C. Oct. 28, 2008) (unpublished). Based on the
foregoing, the court grants MNA’s motion and dismisses ICT’s counterclaims.
It is therefore
ORDERED that MNA’s motion to dismiss ICT’s counterclaims, docket number 56, is
granted.
IT IS SO ORDERED.

s/Henry M. Herlong, Jr.
Senior United States District Judge
Greenville, South Carolina
August 26, 2013

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