Brand Central, LLC v. Snapple Beverage Corp. et al
Filing
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MEMORANDUM OPINION AND ORDER. It is ORDERED that Defendants' Partial Motion to Dismiss Plaintiff's Amended Complaint (Dkt. # 20 ) is hereby DENIED. Signed by District Judge Amos L. Mazzant, III on 11/6/2018. (rpc, )
United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
BRAND CENTRAL, LLC
v.
SNAPPLE BEVERAGE CORP.;
DR PEPPER/SEVEN UP, INC.; and
MOTT’S LLP
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Civil Action No. 4:18-CV-00358
Judge Mazzant
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendants Snapple Beverage Corp., Dr Pepper/Seven Up,
Inc., and Mott’s LLP’s Partial Motion to Dismiss Plaintiff’s Amended Complaint (Dkt. #20).
Having reviewed the motion and relevant pleadings, the Court finds that the motion should be
denied (Dkt. #20).
BACKGROUND
Plaintiff Brand Central, LLC entered into several written licensing agreements with
Defendants.1 Pursuant to these agreements, Plaintiff—a licensing agency—earned commissions
by finding third parties to license Defendants’ property.
In 2012, Plaintiff and Defendants entered into one of these agreements (the “2012
Agreement”). The 2012 Agreement expired on December 31, 2013, and included an additional
four-year tail period, which continued through December 31, 2017.2
1.
2.
The parties executed agreements in 2008, 2010, 2012, and 2014.
The agreements executed by the parties provided for four-year “tail periods” commencing at the expiration of the
agreements. During these periods, Defendants paid Plaintiff commissions so long as Defendants continued to
receive licensing revenue from licensees (Dkt. #16 ¶ 15).
Plaintiff and Defendants entered into a new agreement on January 1, 2014 (the “2014
Agreement”). The 2014 Agreement expired on December 31, 2015, and contained a four-year tail
period, which continued through December 31, 2019.
The 2014 Agreement provided that “Plaintiff shall earn a commission in the amount of
25% of all Licensing Revenue (the ‘Commission’) beginning 45 days following each quarter in
which such Licensing Revenues were received.” (Dkt. #16 ¶ 25). The 2014 Agreement defined
Licensing Revenue as “any and all advances, royalties, fees and monetary minimum guarantees
received by [Defendants] in consideration for the rights granted pursuant to a License Agreement,
but shall be exclusive of any applicable withholding taxes.”3 (Dkt. #16 ¶ 25).
After the expiration of the 2014 Agreement, Defendants decided not to enter into a new
licensing agreement with Plaintiff. However, Plaintiff continued to provide licensing services to
Defendants, and Defendants continued to pay commissions to Plaintiff until April 2017.
Defendants contend that their obligation to pay commissions to Plaintiff ended on December 31,
2015, the expiration date of the 2014 Agreement. Plaintiff claims it is entitled to commissions that
were incurred during the 2012 and 2014 Agreements, as well as the respective tail periods.
Consequently, Plaintiff filed suit on May 15, 2018 (Dkt. #1). On June 26, 2018, Plaintiff
filed its First Amended Complaint (Dkt. #16). On July 10, 2018, Defendants filed their Partial
Motion to Dismiss Plaintiff’s Amended Complaint (Dkt. #20). On July 24, 2018, Plaintiff filed
Plaintiff’s Opposition to Defendants’ Partial Motion to Dismiss Amended Complaint (Dkt. #23).
On July 31, 2018, Defendants filed their Reply in Support of their Partial Motion to Dismiss
Plaintiff’s Amended Complaint (Dkt. #26). On August 2, 2018, Plaintiff filed Plaintiff’s SurReply in Opposition to Defendants’ Partial Motion to Dismiss Amended Complaint (Dkt. #27).
3.
The 2012 Agreement contains the same material terms regarding Licensing Revenues as the 2014 Agreement.
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LEGAL STANDARD
The Federal Rules of Civil Procedure require that each claim in a complaint include a “short
and plain statement . . . showing that the pleader is entitled to relief.”
FED. R. CIV. P. 8(a)(2).
Each claim must include enough factual allegations “to raise a right to relief above the speculative
level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
A Rule 12(b)(6) motion allows a party to move for dismissal of an action when the
complaint fails to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). When
considering a motion to dismiss under Rule 12(b)(6), the Court must accept as true all well-pleaded
facts in the plaintiff’s complaint and view those facts in the light most favorable to the plaintiff.
Bowlby v. City of Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). The Court may consider “the
complaint, any documents attached to the complaint, and any documents attached to the motion to
dismiss that are central to the claim and referenced by the complaint.” Lone Star Fund V (U.S.),
L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). The Court must then determine
whether the complaint states a claim for relief that is plausible on its face. “‘A claim has facial
plausibility when the plaintiff pleads factual content that allows the [C]ourt to draw the reasonable
inference that the defendant is liable for the misconduct alleged.’” Gonzalez v. Kay, 577 F.3d 600,
603 (5th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “But where the wellpleaded facts do not permit the [C]ourt to infer more than the mere possibility of misconduct, the
complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’” Iqbal,
556 U.S. at 679 (quoting FED. R. CIV. P. 8(a)(2)).
In Iqbal, the Supreme Court established a two-step approach for assessing the sufficiency
of a complaint in the context of a Rule 12(b)(6) motion. First, the Court should identify and
disregard conclusory allegations, for they are “not entitled to the assumption of truth.” Iqbal, 556
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U.S. at 664. Second, the Court “consider[s] the factual allegations in [the complaint] to determine
if they plausibly suggest an entitlement to relief.” Id. “This standard ‘simply calls for enough
facts to raise a reasonable expectation that discovery will reveal evidence of the necessary claims
or elements.’” Morgan v. Hubert, 335 F. App’x 466, 470 (5th Cir. 2009) (citation omitted). This
evaluation will “be a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Iqbal, 556 U.S. at 679.
Therefore, “[t]o 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.”’ Id. at 678 (quoting
Twombly, 550 U.S. at 570).
ANALYSIS
Defendants move to dismiss Plaintiff’s promissory estoppel, unjust enrichment, and
quantum meruit claims because quasi-contract claims are barred under Texas law when neither
party disputes the existence of a contract governing a lawsuit (Dkt. #20) (citing Farmer v. Bank of
Am., 4:13-CV-472, 2014 WL 12575849, at *7 (E.D. Tex. July 15, 2014), report and
recommendation adopted sub nom., Farmer v. Bank of Am., N.A., 4:13-CV-472, 2014 WL
12573521 (E.D. Tex. Aug. 19, 2014)). Specifically, Plaintiff pleads its quasi-contract claims only
to the extent that Defendants deny the existence, enforceability, or validity of the agreements at
issue (Dkt. #16 ¶¶ 43, 51, 57). Defendants state that they “do not deny the existence of valid,
enforceable, express contracts governing the parties’ dispute.” (Dkt. #20 at p. 2) (emphasis in
original). Therefore, Defendants argue Plaintiff’s quasi-contract claims are barred as neither party
disputes the validity or existence of the agreements.
Plaintiff responds that dismissal of its quasi-contract claims is premature (Dkt. #23).
Plaintiff first explains that it is entitled to explore alternative theories under Federal Rule of Civil
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Procedure 8(d). Plaintiff also contends:
Defendants’ assertion that there is no disagreement regarding the
parties’ express contracts is misleading. Although Defendants
acknowledge that the contracts alleged in the Amended Complaint
are valid and enforceable, the parties disagree about the extent to
which the express contracts govern the services rendered by
Plaintiff. In particular, Plaintiff contends that it should be
compensated under the parties’ contracts for the work that it
performed during the four (4) year “Tail Period” following
expiration of each contract’s two (2) year term. Defendants,
however, dispute that such services fall within the scope of the
parties’ express written contracts. Because Plaintiff performed
work during the Tail Periods at Defendants’ direction and
Defendants accepted the benefits of Plaintiff’s efforts, Plaintiff is
entitled to pursue “implied” or “quasi” contract theories of relief to
obtain equitable compensation for its services. If Plaintiff’s claims
for unjust enrichment, quantum meruit and promissory estoppel are
dismissed now, and it is later determined that the parties’ contracts
do not cover the services Plaintiff provided during the Tail Periods,
then Plaintiff will be left without any recourse to recover for the
valuable work it performed for Defendants’ benefit and at
Defendants’ request.
(Dkt. #23 at p. 2).
The Court agrees that dismissal of Plaintiff’s quasi-contract claims is premature. After a
review of the motion and relevant pleadings, it is clear the parties do not dispute that the
agreements are valid and enforceable, and to at least some extent govern the lawsuit. However, it
is unclear whether Defendants claim that certain licensing services allegedly performed by
Plaintiff fall outside the scope of the parties’ agreements. At this point, Plaintiff’s quasi-contract
claims are at least plausible on their face as the facts alleged in the Amended Complaint raise
Plaintiff’s right to relief above the speculative level. See Hill v. Shamoun & Norman, LLP, 544
S.W.3d 724, 737 (Tex. 2018) (citing Black Lake Pipe Line Co. v. Union Constr. Co., 538 S.W.2d
80, 86 (Tex. 1976), overruled on other grounds by Sterner v. Marathon Oil Co., 767 S.W.2d 686
(Tex. 1989) (“[T]he existence of an express contract does not preclude recovery in quantum meruit
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for the reasonable value of work performed and accepted which is not covered by an express
contract.”); Cardinal Database Servs., LLC v. Kleski, 1:15-CV-494 RP, 2015 WL 5062293, at *3
(W.D. Tex. Aug. 27, 2015) (citations omitted) (“[W]hen parties initially operate under an express
contract, but continue to operate in essentially the same manner after the contract has expired, the
rights of the parties are determined under implied contract principles.”); Quintel Tech. Ltd. v.
Huawei Techs. USA, Inc., 415CV00307GHDCMC, 2016 WL 5423178, at *16 (E.D. Tex. Sept.
27, 2016).
.
Therefore, the Court will not dismiss Plaintiff’s quasi-contract claims without
additional evidence demonstrating that the parties’ dispute is solely governed by the agreements.
CONCLUSION
It is therefore ORDERED that Defendants’ Partial Motion to Dismiss Plaintiff’s Amended
Complaint (Dkt. # 20) is hereby DENIED.
SIGNED this 6th day of November, 2018.
___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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