Aab Logistics, Inc. v. Forward Air, Inc.
| Decision Date | 18 November 2016 |
| Docket Number | CIVIL ACTION NO. 3:15-CV-3840-G |
| Parties | AAB LOGISTICS, INC., SUCCESSOR BY ASSIGNMENT OF CANOLLI FREIGHT, LLC f/d/b/a CANOLLI FREIGHT, INC., Plaintiff, v. FORWARD AIR, INC., ET AL., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Before the court are the defendants' motions to dismiss under Rule 12(b)(6) (docket entries 17 and 19). For the reasons stated below, the motions are granted in part and denied in part.
Canolli Freight, LLC ("Canolli"), later succeeded by the plaintiff, AAB Logistics, Inc. (collectively, "AAB"), commenced this action against the defendants, Towne Air Freight, LLC, CLP Towne, Inc. (collectively, "Towne"), and Forward Air, Inc. ("Forward"), asserting various claims arising out of a series of contracts. See AAB's Second Amended Complaint ("Amended Complaint") ¶¶ 10-12 (docket entry 16). Canolli was a small trucking company with twenty trucks. Id. ¶ 10. Towne was a logistics company that was subsequently acquired by Forward. Id. ¶ 11.
Beginning in 2010, Canolli entered into a series of contracts with Towne. Id. ¶ 12. The contracts called for Towne to arrange deliveries for Canolli on behalf of shippers, collect money from the shippers, and pay Canolli upon the completion of the shipment. See id. ¶¶ 12, 51. The contract called for Towne to make certain deductions, such as fuel expenses. Id. ¶ 13.
The agreement operated satisfactorily for a year and a half. Id. ¶ 12. However, Towne began deducting "a series of substantial phantom billings and/or unauthorized changes from the payment [of] remittals." Id. Specifically, Towne deducted excessive base plate fees and road taxes, and Towne failed to present line item deduction reports to Canolli. Id. ¶¶ 12-13. Canolli received a fraction of the amount owed in comparison to other similar contracts. Id. ¶ 25.
Moreover, Towne ignored Canolli's inquiries into the deficiencies. Id. ¶¶ 17, 20, 25. In response to Canolli's inquiries, Towne cut the number of contracts that it assigned to Canolli, which ultimately caused Canolli to file for Chapter 11 bankruptcy. Id. ¶¶ 17, 19. AAB contends that Towne owes it, at a minimum, $921,350.94. See id. ¶ 18.
In early 2015, Canolli learned that Forward sought to acquire Towne. Id. ¶ 26. In February 2015, Canolli first refused to sign a consent agreement and a new contract with Forward. Id. ¶¶ 26-27. However, Forward verbally agreed to assume Towne's liabilities to Canolli, which would be paid from a $20 million fund. Id. ¶ 28. In reliance on Forward's statements, Canolli signed the consent agreement. Id. Finally, in March 2015, Forward either acquired or merged with Towne and assumed responsibility to pay Towne's liabilities to Canolli. Id. ¶ 29.
On October 19, 2015, Canolli filed a voluntary petition for Chapter 11 bankruptcy. Forward's Motion for Permissive Abstention and Dismissal and Alternative Motion for Withdrawal of Reference at 1-2 (docket entry 1-1). Canolli commenced this adversary action between the parties on October 27, 2015. Id. at 2. On December 1, 2015, Forward filed a motion to withdraw the reference. Id. On January 12, 2016, Canolli amended its complaint to include claims against Towne. AAB's Amended Brief in Support of AAB's Response to Towne's Motion to Dismiss ("AAB Towne Response") at 6 (docket entry 32); AAB's Amended Brief in Support of AAB's Response to Forward's Motion to Dismiss ("AAB Forward Response") at 7 (docket entry 29).
On March 14, 2016, this court granted Forward's motion to withdraw the reference. Order Granting Forward's Motion to Withdraw the Reference (docketentry 5). On July 7, 2016, AAB purchased by assignment all right, title, and interest in this lawsuit from a bankruptcy auction. AAB Towne Response at 6; AAB Forward Response at 8. On July 11, 2016, AAB amended its complaint. See Amended Complaint. On July 25, 2016, Towne and Forward both filed the instant motions. The motions are now ripe for decision.
"To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead 'enough facts to state a claim to relief that is plausible on its face.'" In re Katrina Canal Breaches Litigation, 495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 570 (2007)), cert. denied, 552 U.S. 1182 (2008). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of [its] entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal quotation marks, brackets, and citation omitted). "Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." In re Katrina Canal, 495 F.3d at 205 (quoting Twombly, 550 U.S. at 555) (internal quotationmarks omitted). "The court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff." Id. (quoting Martin K. Eby Construction Company, Inc. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)) (internal quotation marks omitted).
The Supreme Court has prescribed a "two-pronged approach" to determine whether a complaint fails to state a claim under Rule 12(b)(6). See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). The court must "begin by identifying the pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 679. The court should then assume the veracity of any well-pleaded allegations and "determine whether they plausibly give rise to an entitlement of relief." Id. The plausibility principle does not convert the Rule 8(a)(2) notice pleading standard to a "probability requirement," but "a sheer possibility that a defendant has acted unlawfully" will not defeat a motion to dismiss. Id. at 678. The plaintiff must "plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "[W]here the well-pleaded facts do not permit the court 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.'" Id. at 679 (alteration in original) (quoting FED. R. CIV. P. 8(a)(2)). The court, drawing on its judicial experience and common sense, must undertake the "context-specific task" of determining whether the plaintiff'sallegations "nudge" its claims against the defendant "across the line from conceivable to plausible." See id. at 679, 683.
A complaint need only recite a short and plain statement of the claim showing that the pleader is entitled to relief. FED. R. CIV. P. 8(a)(2). When, however, defendants are charged with fraudulent activity, the plaintiff must state with particularity the circumstances constituting fraud.1 FED. R. CIV. P. 9(b). Rule 9(b) provides that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." The Fifth Circuit interprets Rule 9(b) strictly, requiring the plaintiff to "specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent." Williams v. WMX Technologies, Inc., 112 F.3d 175, 177 (5th Cir. 1997), cert. denied, 522 U.S. 966 (1997); Nathenson v. Zonagen Inc., 267 F.3d 400, 412 (5th Cir. 2001); see also Benchmark Electronics, Inc. v. J.M. Huber Corporation, 343 F.3d 719, 724 (5th Cir. 2003) (), opinion modified on denial of reh'g, 355 F.3d 356 (5th Cir. 2003). If the facts pleaded in a complaint are within the opposing party's knowledge, fraud pleadings may be based on information and belief. See Tuchman, 14 F.3d at 1068.
Rule 9(b) permits a plaintiff to allege generally the defendant's intent to commit fraud. FED. R. CIV. P. 9(b) (). A mere allegation that the defendant had the requisite intent, however, will not satisfy Rule 9(b). Melder v. Morris, 27 F.3d 1097, 1102 (5th Cir. 1994); Tuchman, 14 F.3d at 1068. To adequately plead fraudulent intent, the plaintiff must set forth specific facts that support an inference of fraud. Tuchman, 14 F.3d at 1068. The factual background adequate for an inference of fraudulent intent can be satisfied by alleging facts that show the defendant's motive. See id.
To succeed on a breach of fiduciary duty claim under Indiana law2 the plaintiff must prove that: (1) a fiduciary relationship existed; (2) a duty arising from this relationship was breached; and (3) the breach harmed the fiduciary relationship's beneficiary. Farmers Elevator Company of Oakville, Inc. v. Hamilton, 926 N.E.2d 68, 79(Ind. Ct. App.), transfer denied, 940 N.E.2d 823 (Ind. 2010); Rapkin Group, Inc. v. Cardinal Ventures, Inc., 29 N.E.3d 752, 757 (Ind. Ct. App.), transfer denied, 40 N.E.3d 857 (Ind. 2015).
Towne contends that its mere contractual relationship with AAB did not amount to a fiduciary relationship. See Towne's Brief in Support of Its Motion to Dismiss ("Towne Brief") at 3-4 (docket entry 20). It is true that a contract, alone, does not give rise to a fiduciary relationship. Morgan Asset Holding Corporation v. CoBank, ACB, 736 N.E.2d 1268, 1273 (Ind. Ct. App. 2000) (). However, "special relationships" arising from...
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