Inland Waste Solutions, LLC v. City of Germantown
Filing
28
ORDER DENYING DEFENDANT'S MOTION 17 TO DISMISS AND GRANTING PLAINTIFF'S MOTION 26 TO AMEND COMPLAINT. Signed by Judge S. Thomas Anderson on 6/8/2016. (Anderson, S.)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
_________________________________________________________________
INLAND WASTE SOLUTIONS, LLC,
Plaintiff,
v.
CITY OF GERMANTOWN,
Defendant.
)
)
)
)
)
)
)
)
)
No.: 2:16-cv-2012-STA-tmp
ORDER DENYING DEFENDANT’S MOTION TO DISMISS
AND GRANTING PLAINTIFF’S MOTION TO AMEND COMPLAINT
Before the Court is the motion to dismiss of Defendant City of Germantown
(“City”). (ECF No. 17.) Plaintiff Inland Waste Solutions, LLC, (“Inland”) has filed a
response to the motion (ECF No. 24), and Defendant City has filed a reply to the
response.
(ECF No. 25.)
For the reasons set forth below, Defendant’s motion is
DENIED.
On May 18, 2016, Plaintiff filed a motion to amend the complaint. (ECF No. 26.)
Defendant opposes the amendment on the ground that the amendment does not cure the
defects in the original complaint, and, thus, the amendment would be futile. (ECF No.
27.) Because the Court finds that the amendment would not be futile, Plaintiff’s motion
to amend the complaint is GRANTED.
Pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint may be
dismissed for failure to state a claim upon which relief may be granted. “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’”1 This standard is met “when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”2 The factual allegations “must do
more than create speculation or suspicion of a legally cognizable cause of action ....”3
“Merely pleading facts that are consistent with a defendant’s liability or that permit the
court to infer misconduct is insufficient to constitute a plausible claim.”4
While
plausibility requires relief to be more than speculative, “a well-pleaded complaint may
proceed even if it strikes a savvy judge that actual proof of those facts is improbable and
that recovery is very remote and unlikely.”5
In considering a motion to dismiss under Rule 12(b)(6), the Court views the
complaint in the light most favorable to the plaintiff, accepts the allegations as true, and
draws all reasonable inferences in favor of the plaintiff.6 “A legal conclusion couched as
a factual allegation need not be accepted as true on a motion to dismiss, nor are
recitations of the elements of a cause of action sufficient.”7 Instead, “to state a valid
1
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)).
2
Id. (citing Twombly, 550 U.S. at 556).
3
League of Latin American Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007)
(citing Twombly, 550 U.S. at 555–56).
4
HDC, LLC v. City of Ann Arbor, 675 F.3d 608, 611 (6th Cir. 2012) (citing Iqbal, 556
U.S. at 678).
5
Erie Cnty., Ohio v. Morton Salt, Inc., 702 F.3d 860, 867 (6th Cir. 2012) (quoting
Twombly, 550 U.S. at 556) (internal quotation marks omitted)).
6
KSR Int’l Co. v. Delphi Auto. Sys., 2013 WL 1749336 at *1 (6th Cir. Apr. 23, 2013)
(citing Bassett v. Nat’l Collegiate Athletic Ass’ n, 528 F.3d 426, 430 (6th Cir. 2008)).
7
Handy–Clay v. City of Memphis, 2013 WL 2948442 at *4 (W.D. Tenn. June 14, 2013)
(quoting Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009)) (internal
quotation marks omitted)); see also Infection Prevention Techs. v. UVAS, LLC, 2011 WL
2
claim, a complaint must contain either direct or inferential allegations respecting all the
material elements to sustain recovery under some viable legal theory.”8
According to the complaint, Inland currently provides solid waste collection
services for the City under a Request for Proposal (“RFP”) and Contract issued by the
City in 2011.9 The City originally awarded the Contract to Advanced Disposal Services
of Mid-South, LLC (“Advanced Disposal”).10 Advanced Disposal assigned the Contract
to BFI Waste Services, LLC (“BFI”).11 On October 12, 2014, BFI assigned the Contract
to Inland, which has provided solid waste collection services to the City since November
2014.12
Pursuant to the Contract, Inland is responsible for collecting three categories of
waste materials from the City and its residents: (1) garbage, rubbish, and excess trash; (2)
recyclable materials; and (3) yard debris.13
The Contract sets forth the terms governing the City’s payment of compensation
to Inland. Inland is to be paid monthly by the City.14 The Contract provides that “the
4360007 at *24 (S.D. Mich. July 25, 2011) rep. and rec. adopted, 2011 WL 4360091
(E.D. Mich. Sept. 19, 2011) (“[Plaintiff] asserts that Defendants’ ‘actions were in bad
faith, willful, wanton.’ But these statements are pure legal conclusions insufficient to
state a claim upon which relief may be granted.”).
8
Boland v. Holder, 682 F.3d 531, 534–35 (6th Cir. 2012) (quoting Bredesen, 500 F.3d at
527) (internal quotation marks omitted))
9
(Compl. ¶ 5, ECF No. 1.)
10
(Id. ¶ 13.)
11
(Id. ¶ 14.)
12
(Id. ¶¶ 15-16.)
13
(Id. ¶ 6.)
14
(Compl. Att., Contract § 3.02(a), ECF No. 11.) In ruling on the motion to dismiss, the
Court may consider the Contract and the RFP because they are attached to the complaint
and are central to Plaintiff’s claims. See Rondigo, L.L.C. v. Twp. of Richmond, 641 F.3d
3
City reserves the right to partially pay any billing submitted by the CONTRACTOR for
failure to complete collection routes or for failure to complete all collection services
required during the collection route schedules such determination to be made in the sole
and absolute discretion of the CITY.”15
The Contract incorporates by reference the RFP, making the RFP part of the
parties’ agreement.16 The RFP sets forth a process for addressing residents’ complaints
regarding the Contractor’s service. These complaints may include, but are not limited to,
calls regarding missed service, failure to follow container handling and placement
guidelines, failure to collect all solid waste, and other items outlined in the RFP’s service
specifications.17
Under the RFP, “Notice received from a customer will be considered a justified
complaint unless the Contractor can prove to the City’s satisfaction that the complaint is
not warranted.”18 The RFP further provides that “[t]he Contractor has the right to contest
any complaint and resolution shall be jointly agreed upon by the City and the
Contractor.”19 However, “[t]he determination of the justification of the complaints shall
673, 680-81 (6th Cir. 2011) (explaining that a court may consider exhibits attached [to
the complaint], public records, items appearing in the record of the case and exhibits
attached to defendant’s motion to dismiss so long as they are referred to in the complaint
and are central to the claims contained therein, without converting the motion to one for
summary judgment).
15
(Id. § 3.02(b).)
16
(Id. § 1.00.)
17
(Compl. Att., RFP III.6 § 1(e)(1), ECF No. 2.)
18
(Id. § 1(e)(4).)
19
(Id. § 1(e)(2).)
4
lie solely with the City, based upon criteria developed jointly by the City and the
Contractor.”20
From the first month that Inland began work under the Contract and RFP, the City
received complaints from residents about the collection services provided by Inland.21
Based on these complaints, the City withheld $459,412.49 in payments from Inland
between November 2014 and November 2015.22 The Contract expires on June 30,
2016.23
The Contract contains a choice-of-law provision providing that Tennessee law
shall govern the agreement.24
Inland filed this lawsuit alleging breach of contract on January 7, 2016, to recoup
the money withheld by the City.25 Inland points to the language in the RFP which states
that the City and the Contractor are to jointly develop criteria by which the determination
of justification of complaints of improper collection services would be made. Inland
alleges that it made requests to the City “to develop and establish joint criteria for the
determination of the justification of complaints of improper collection services.”26
Inland further alleges that the City breached the Contract when it “refused to develop and
20
(Id.)
21
(Compl. ¶ 20, ECF No. 1.)
22
(Id. at ¶ 27.)
23
(Compl. Att., Contract § 2.00, ECF No. 11.)
24
(Id. at § 27.00.)
25
(ECF No. 1.)
26
(Compl. ¶ 18, ECF No. 1.)
5
establish joint criteria for the determination of whether a complaint of improper
collection services was justified.”27
Defendant City contends that Inland has not alleged a viable breach of contract
claim against it because the unambiguous terms of the Contract show that it acted within
its contractual rights when it withheld payments based on complaints regarding Inland’s
service, and, therefore, the complaint should be dismissed.28 According to the City, it
was under no legal obligation to develop joint criteria with Inland because Inland, as an
assignee of the Contract, was bound by the criteria and process established between the
City and the original contractor, Advanced Disposal. There is no evidence in the record
as to what, if any, criteria was established by the City and Advanced Disposal.
As noted by Defendant City, “[f]ollowing an effective assignment, it is well
settled that the assignee stands in the shoes of the assignor and has all the rights, and is
subject to all the obligations, of the assignor.”29 The assignment transfers the assignor’s
contract rights against the other contracting party to the assignee.30 “Thus, the assignee
succeeds to the assignor’s rights under the original agreement.”31
In this case, Inland succeeded to the rights of Advanced Disposal under the
Contract and the RFP. As an assignee, Inland stepped into the shoes of Advanced
27
(Id. ¶ 19.)
28
(Compl. Att., RFP III.6 § 1(e)(2), ECF No. 2.)
29
Collier v. Greenbrier Developers, LLC, 358 S.W.3d 195, 201 (Tenn. Ct. App. 2009).
See also 6 Am.Jur. 2D Assignments, § 144 (1999) (As a general rule, an assignee takes
the subject of the assignment with all the rights and remedies possessed by or available to
the assignor.”)
30
See SunTrust Bank, Nashville v. Johnson, 46 S.W.3d 216, 226 (Tenn. Ct. App. 2000).
31
Pac. E. Corp. v. Gulf Life Holding Co., 902 S.W.2d 946, 959 (Tenn. Ct. App. 1995).
6
Disposal, and the contractual requirement to establish criteria for evaluating resident
complaints now binds the City and Inland, just as the contractual requirements for
payment or non-payment bind the City and Inland. It is somewhat disingenuous of the
City to argue that the parties are bound by the payment and non-payment provisions of
the Contract but not the development of joint criteria provision. Because Inland has
stated a claim for breach of contract in its complaint that would entitle it to relief if
proved at trial, the City’s motion to dismiss must be denied.
Inland has moved to amend the original complaint “to clarify the allegations and
cause of action.”32 Inland also seeks to include additional damages and to attach an
executed copy of the Assignment in place of the unexecuted Assignment that was
submitted with the original complaint.33
The City objects to Inland’s motion to amend on the ground that the motion is
futile based on the arguments contained in the City’s motion to dismiss that Inland has
failed to state a claim.34 According to the City, the proposed amendment does not cure
the “defects” in the original complaint.35
Motions to amend are governed by Federal Rule of Civil Procedure 15(a). Rule
15(a)(2) requires a party seeking to amend its pleadings at this stage of the proceedings to
obtain leave of court. Although Rule 15(a)(2) provides that “[t]he court should freely
give leave when justice so requires,” leave may be denied on the basis of undue delay,
bad faith by the moving party, repeated failure to cure defects by previously-allowed
32
33
34
35
(Mot. Amd. Compl, p. 1, ECF No. 26.)
(Id. at pp. 2 – 3.)
(Resp. Mot. Amd. Compl., p. 1, ECF No. 27.)
(Id.)
7
amendments, futility of the proposed new claim, or undue prejudice to the opposite
party.36 If the Court concludes that the pleading as amended could not withstand a
motion to dismiss, then the Court may deny the motion to amend as futile.37
In this case, because the original complaint has withstood the City’s motion to
dismiss, the Court finds that the proposed amendment is not futile. Accordingly, Inland’s
motion to amend is granted. Inland will have seven (7) days in which to file an amended
complaint.
In summary, the motion to dismiss of Defendant City of Germantown is
DENIED. The motion to amend of Plaintiff Inland Waste Solutions, LLC, is
GRANTED.
IT IS SO ORDERED.
s/ S. Thomas Anderson
S. THOMAS ANDERSON
UNITED STATES DISTRICT JUDGE
Date: June 8, 2016.
36
Foman v. Davis, 371 U.S. 178, 182 (1962); Duggins v. Steak ‘N Shake, Inc., 195 F.3d
828, 834 (6th Cir. 1999).
37
Head v. Jellico Housing Auth., 870 F.2d 1117, 1123 (6th Cir. 1989).
8
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?