Basf Corp. v. Martineaus Auto Body, Inc., Civil Action No. 18-cv-10881-ADB

• Court: United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
• Writing for the Court: BURROUGHS, D.J.
• Parties: BASF CORPORATION, Plaintiff, v. MARTINEAUS AUTO BODY, INC. d/b/a and/or a/k/a METROPOLITAN AUTO BODY, Defendant.
• Docket Number: Civil Action No. 18-cv-10881-ADB
• Decision Date: 30 January 2019

BASF CORPORATION, Plaintiff,
v.
MARTINEAUS AUTO BODY, INC. d/b/a
and/or a/k/a METROPOLITAN AUTO BODY, Defendant.

Civil Action No. 18-cv-10881-ADB

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

January 30, 2019

MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO DISMISS

BURROUGHS, D.J.

Plaintiff BASF Corporation ("BASF") filed this action against Defendant Martineaus Auto Body, Inc. d/b/a and/or a/k/a Metropolitan Auto Body alleging claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment, and seeking a declaratory judgment. [ECF No. 1]. On August 10, 2018, Plaintiff filed an Amended Complaint. [ECF No. 12 (hereinafter "Am. Compl.")]. On August 20, 2018, Defendant filed a motion to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). [ECF. No. 13]. For the reasons set forth below, Defendant's motion to dismiss is GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

The following facts are drawn from the Amended Complaint, the well-pleaded allegations of which are taken as true for purposes of evaluating Defendant's motion to dismiss, and documents expressly incorporated into the Amended Complaint. See Ruivo v. Wells Fargo Bank, 766 F.3d 87, 90 (1st Cir. 2014); Hannigan v. Bank of Am., N.A., 48 F. Supp. 3d 135, 140 (D. Mass. 2014). Plaintiff sells aftermarket paints, refinishes, coating, primers, thinners,

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reducers, and other products related to reconditioning, refinishing, and repainting vehicles ("Refinish Products"). Am. Compl. ¶ 3. Defendant is an auto body shop that reconditions, refinishes, and repaints vehicles. Id. ¶ 4.

On or about March 22, 2012, Plaintiff and Defendant entered into the Requirements Agreement. Id. ¶ 8; [ECF No. 12-1 (hereinafter the "Requirements Agreement" or the "Agreement")]. Pursuant to the Requirements Agreement, Defendant agreed to purchase 100 percent of its needed Refinish Products, up to a minimum purchase requirement of $253,000, from an authorized BASF distributor. Am. Compl. ¶ 11; Requirements Agreement ¶¶ 1-2. The Requirements Agreement does not have a fixed term; rather, the parties agreed to continue the Agreement until Plaintiff fulfilled the $253,000 minimum purchase requirement. See Requirements Agreement ¶ 1. In consideration for Defendant fulfilling its obligations under the Agreement, Plaintiff paid it $30,000 (the "Contract Fulfillment Consideration"). Am. Compl. ¶ 12; Requirements Agreement ¶ 3. Defendant is obligated to refund the Contract Fulfillment Consideration if, prior to completing the minimum purchase requirement, the Agreement is terminated for any reason or Defendant is sold. Am. Compl. ¶¶ 13-14; Requirements Agreement ¶ 3. To date, Defendant has purchased approximately $128,000 of BASF Refinish Products under the Requirements Agreement. See Am. Compl. ¶ 18.

In or about May 2017, Defendant's operations were sold to another body shop owner who was under contract with a competitor of BASF. Am. Compl. ¶¶ 15-16. Since May 2017, Defendant has purchased only about $2,700 of BASF Refinish Products total and has purchased the remainder of its Refinish Products from one of BASF's competitors. Id. ¶¶ 19, 32. On July 18, 2017, Plaintiff notified Defendant by letter that it was in breach of its contractual obligations under the Requirements Agreements and demanded that it refund the Contract Fulfillment

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Consideration. Id. ¶ 26. To date, Defendant has not refunded the Contract Fulfillment Consideration to Plaintiff. Id. ¶¶ 17, 27.

II. STANDARD OF REVIEW

On a motion to dismiss for failure to state a claim, the Court accepts as true all well-pleaded facts in the complaint and draws all reasonable inferences in the light most favorable to the plaintiff. United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 383 (1st Cir. 2011). While detailed factual allegations are not required, the complaint must set forth "more than labels and conclusions," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), and it must contain "factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Gagliardi v. Sullivan, 513 F.3d 301, 305 (1st Cir. 2008) (quotation marks and citations omitted). The facts alleged, taken together, must "state a claim to relief that is plausible on its face." A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013) (quoting Twombly, 550 U.S. at 570). "A claim is facially plausible if supported by 'factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Eldredge v. Town of Falmouth, 662 F.3d 100, 104 (1st Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

When assessing the sufficiency of a complaint, the Court first "separate[s] the complaint's factual allegations (which must be accepted as true) from its conclusory legal allegations (which need not be credited)." Maddox, 732 F.3d at 80 (quoting Morales-Cruz v. Univ. of P.R., 676 F.3d 220, 224 (1st Cir. 2012)). Next, the Court "determine[s] whether the remaining factual content allows a 'reasonable inference that the defendant is liable for the misconduct alleged.'" Id. (quoting Morales-Cruz, 676 F.3d at 224). "[T]he court may not

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disregard properly pled factual allegations, 'even if it strikes a savvy judge that actual proof of those facts is improbable.'" Ocasio-Hernandez v. Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011) (quoting Twombly, 550 U.S. at 556). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct," however, a claim may be dismissed. Iqbal, 556 U.S. at 679.

III. DISCUSSION

A. Breach of Contract Claim (Count I)

In Count One, Plaintiff asserts that Defendant has breached the Requirements Agreement. "To prevail on a breach of contract claim under New Jersey law, a plaintiff must establish three elements: (1) the existence of a valid contract between the parties; (2) failure of the defendant to perform its obligations under the contract; and (3) a causal relationship between the breach and the plaintiff's alleged damages." Sheet Metal Workers Int'l Ass'n Local Union No. 27, AFL-CIO v. E.P. Donnelly, Inc., 737 F.3d 879, 900 (3d Cir. 2013) (citing Coyle v. Englander's, 488 A.2d 1083, 1088 (N.J. Super. Ct. App. Div. 1985)).¹ Plaintiff's Amended Complaint alleges that Defendant breached the Requirements Agreement in two respects. First, Plaintiff contends that Defendant breached paragraph 3 of the Requirements Agreement when, prior to completing the minimum purchase requirement under the Agreement, Defendant's operations were sold and it failed to refund the Contract Fulfillment Consideration to BASF. Am. Compl. ¶¶ 15-17, 29-30.

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Second, Plaintiff asserts that Defendant breached paragraphs 1 and 2 of the Requirements Agreement by failing to purchase 100 percent of its required Refinish Products from BASF for the term of the contract when it began purchasing Refinish Products from one of BASF's competitors beginning in about May 2017. Id. ¶¶ 10-22, 31-32.

Defendant argues that the Court should dismiss Plaintiff's breach of contract claim because, contrary to the Amended Complaint, Defendant has not sold its business and has purchased 100 percent of its needed Refinish Products from BASF since entering into the Requirements Agreement. [ECF No. 14 at 6-8]. In support of these assertions, Defendant has submitted extrinsic evidence in the form of a sworn affidavit of Paul Martineau, which controverts various allegations in the Amended Complaint. [ECF No. 15 ¶¶ 2-7, 10-15]. In addition, as exhibits to the Martineau affidavit, Defendant has submitted copies of its Registration for Motor Vehicle Repair Shop and eighteen invoices, which Defendant contends respectively demonstrate that it is still in business and has only purchased Refinish...