632 F.3d 148 (5th Cir. 2010), 10-10039, City of Clinton, Arkansas v. Pilgrim's Pride Corp.

Docket Nº:10-10039.
Citation:632 F.3d 148
Opinion Judge:GARWOOD, Circuit Judge:
Party Name:CITY OF CLINTON, ARKANSAS, Plaintiff-Appellant, v. PILGRIM'S PRIDE CORPORATION, Defendant-Appellee.
Attorney:Mark Crosby Brodeur (argued), Brodeur Law Firm, Christopher J. Moser, Quilling, Selander, Lownds, Winslett & Moser, P.C., Dallas, TX, for Appellant. Clayton E. Bailey (argued), Alexander Max Dougles Brauer, Baker & McKenzie, L.L.P., Dallas, TX, for Appellee.
Judge Panel:Before KING, GARWOOD and DAVIS, Circuit Judges.
Case Date:December 21, 2010
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
FREE EXCERPT

Page 148

632 F.3d 148 (5th Cir. 2010)

CITY OF CLINTON, ARKANSAS, Plaintiff-Appellant,

v.

PILGRIM'S PRIDE CORPORATION, Defendant-Appellee.

No. 10-10039.

United States Court of Appeals, Fifth Circuit

December 21, 2010

Page 149

[Copyrighted Material Omitted]

Page 150

Mark Crosby Brodeur (argued), Brodeur Law Firm, Christopher J. Moser, Quilling, Selander, Lownds, Winslett & Moser, P.C., Dallas, TX, for Appellant.

Clayton E. Bailey (argued), Alexander Max Dougles Brauer, Baker & McKenzie, L.L.P., Dallas, TX, for Appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before KING, GARWOOD and DAVIS, Circuit Judges.

Page 151

GARWOOD, Circuit Judge:

Defendant-appellee Pilgrim's Pride Corporation (Pilgrim's) is the owner of a facility for growing and processing poultry in the City of Clinton, Arkansas (City). Pilgrim's acquired the facility in 2004 from another poultry processing company, ConAgra. In October 2008, Pilgrim's announced that it would close its operations in the City. Pilgrim's subsequently filed for relief under Chapter 11 of the Bankruptcy Code, 11 U.S. C. §§ 101 et seq., on December 1, 2008.

As a result of the plant's closure, the City has experienced economic distress, including difficulty in repaying debts the City incurred in the construction of a water purification system designed to serve the needs of the poultry plant. On June 1, 2009, the City of Clinton initiated an Adversary Proceeding in Bankruptcy Court, alleging that Pilgrim's violated the Packers and Stockyards Act (PSA), 7 U.S. C. §§ 187 et seq., by closing the plant " for the purpose" and with the " effect" of manipulating the price of commodity chicken, id. at § 192(a)-(e), and further alleging fraud, fraudulent non-disclosure, and promissory estoppel. The District Court for the Northern District of Texas, Fort Worth Division, withdrew the case from Bankruptcy Court on August 18, 2009 pursuant to 28 U.S. C. § 157(d).

On September 15, 2009, the district court dismissed without prejudice the City's original complaint, finding that the City lacked standing to pursue its claims under the PSA, and that the City's complaint failed to state a claim for promissory estoppel, fraud, or fraudulent non-disclosure. The City subsequently filed a motion for leave to amend, and attached a proposed First Amended Complaint that sought to plead the fraud and promissory estoppel claims with sufficient specificity and to add claims for violations of the Arkansas Deceptive Trade Practices Act (ADTPA) and unjust enrichment. The district court denied leave to amend on the basis that amending the complaint would be futile, and dismissed the civil action with prejudice. The district court thereafter entered a Rule 54(b) Final Judgment. The City appeals the judgment. Although the amended complaint repeated the claims for violation of the PSA, fraudulent non-disclosure, and attorneys fees, the City does not challenge on appeal the dismissal of any of those claims. Judgment in favor of Pilgrim's and adverse to the City has thus become final on each of those claims. Cf. Nilsen v. City of Moss Point, 701 F.2d 556 (6th Cir.1983) (en banc). Rather, the instant appeal concerns only the adequacy of the allegations related to the City's claims of fraud, promissory estoppel, unjust enrichment, and the Arkansas Deceptive Trade Practice Act (ADTPA).

BACKGROUND

The proposed amended complaint attempts to add specificity to the City's allegations that both ConAgra and Pilgrim's represented to the City that if the City expanded its water treatment facilities to meet their needs, they would keep the facility open and operational, or in the event that the facility closed, would pay off the remaining bonds for the expansion. To this end, the City relies entirely upon two oral statements by representatives of ConAgra, which is not a defendant herein, and Pilgrim's, that allegedly induced the City to undertake the expansion project.

First, the City alleges that in January 1985, the City Council and the Water and Sewer Department met with management for ConAgra to discuss the proposed expansion of the City's water and sewer facilities to meet the needs of the ConAgra poultry plant and the proposed issuance of

Page 152

40-year municipal bonds by the City to fund the expansion. City Councilman Paul Bone allegedly asked the ConAgra representatives how the City would repay the bonds if ConAgra " pulled up stakes and left." Mr. Hooper, ConAgra's Clinton Plant Manager, allegedly replied: " We will not go off and leave you holding the bag." The City allegedly understood this statement, coupled with the silence of the other attending ConAgra representatives, as a promise by ConAgra not to close the plant without the bonds having first been paid off and as inducement to the City to issue the bonds and expand the City's water treatment system. The City issued a series of bonds, beginning in 1986, allegedly in reliance on ConAgra's said promise. Pilgrim's acquired the plant in 2004.1

Second, the City alleges that Pilgrim's ratified this 1985 ConAgra promise on January 31, 2004. On that date, Bob Hendrix, a senior vice president of Pilgrim's, stated that Pilgrim's would " have a long-term commitment to the City of Clinton" as its " community partner." The statement was allegedly made at " a meeting of the Clinton Chamber of Commerce," attended that day by the City's mayor and Water and Sewer Commission president, among others. The proposed amended complaint alleges that this statement " was false because, at the time it was made, Pilgrim's did not intend to make a long-term commitment to the City of Clinton" and " [i]n fact, at the same time, Pilgrim's was reviewing plans to close the Clinton processing plant." It is further alleged that " Pilgrim's intended for" the City " to rely upon" Hendrix's said statement " in making further expenditures for water and sewer facilities" and that the City " relied upon this promise by Pilgrim's by continuing to incur [unspecified] significant debt in order to keep the poultry plant in Clinton, Arkansas in operation." The complaint alleges that over four years later " in October 2008" Pilgrim's announced " it was closing its operations in Clinton," and completed doing so within the next thirty days. Pilgrim's filed for Chapter 11 on December 1, 2008.

After evaluating the City's amended complaint, the district court dismissed all of the City's claims with prejudice. The district court found that the 1985 and 2004 statements contained no facts and could not serve as a material misrepresentation or operative act to support a fraud, promissory estoppel or unjust enrichment claim. In addition, the district court found that the statements relate to future events and therefore could not form the basis of a fraud action. The district court also found that the City could not maintain an action under the ADTPA because the City was not a " person" under that statute.

STANDARD OF REVIEW

Ordinarily, this court reviews the denial of a motion for leave to file an amended complaint for abuse of discretion. However, where, as here, the district court's denial of leave to amend was based solely on futility, we apply a de novo standard of review identical, in practice, to the standard used for reviewing a dismissal under Rule 12(b)(6). Wilson v. Bruks-Klockner, Inc., 602 F.3d 363, 368 (5th Cir.2010). Under the 12(b)(6) standard, all well-pleaded facts are viewed in the light most favorable to the plaintiff, but plaintiffs must allege facts that support the elements of the cause of action in order to

Page 153

make out a valid claim. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007) (" Factual allegations must be enough to raise a right of relief above the speculative level." ). We do not accept as true " [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Ashcroft v. Iqbal, __ U.S. __, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).

This court may affirm the district court's dismissal " on any grounds supported by the record." Hosein v. Gonzales, 452 F.3d 401, 403 (5th Cir.2006).

DISCUSSION

All of the City's claims at issue in this appeal-fraud, promissory estoppel, unjust enrichment, and violation of the ADTPA-stem from the two alleged " promises" by Hooper and Hendrix, respectively described above.

A. Fraud

In order to make out a claim for fraud under Arkansas law,2 the plaintiff must allege " (1) a false representation of a material fact; (2) knowledge that the representation is false or that there is insufficient evidence upon which to make the representation; (3) intent to induce action or inaction in reliance upon the representation; (4) justifiable reliance on the representation;...

To continue reading

FREE SIGN UP