Baumgardner v. Bimbo Food Bakeries Distribution, Inc., Case No. 5:09-CV-1613.

CourtUnited States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
Citation697 F. Supp.2d 801
Docket NumberCase No. 5:09-CV-1613.
Decision Date02 March 2010

697 F. Supp.2d 801

Timothy BAUMGARDNER, Plaintiff,

Case No. 5:09-CV-1613.

United States District Court, N.D. Ohio, Eastern Division.

March 2, 2010.

697 F. Supp.2d 803

Todd W. Evans, Attorney at Law, Cari F. Evans, Fischer, Evans & Robbins, Canton, OH, for Plaintiff.

Thomas M.L. Metzger, Littler Mendelson, Columbus, OH, for Defendant.


SARA LIOI, District Judge.

This matter comes before the Court on the motion of Defendant Bimbo Food Bakeries Distribution, Inc. ("BFBD") to dismiss a portion of Plaintiff Timothy Baumgardner's complaint (Doc. No. 1) for failure to state a claim upon which relief may be granted (Doc. No. 6) and BFBD's separate motion to strike Baumgardner's demand for a trial by jury. (Doc. No. 7.) For the following reasons, both of BFBD's motions are GRANTED.


Except where noted, the facts of this case are taken from Baumgardner's Complaint and are assumed true for purposes of this Memorandum Opinion and Order. Plaintiff Timothy Baumgardner is a resident of Stark County, Ohio. Defendant BFBD Food Bakeries, Inc., is a Delaware corporation with its principal place of business in Pennsylvania. (Doc. No. 2, ¶ 3.)

On or about October 1, 2001, Baumgardner purchased from BFBD, formerly known as George Weston Bakeries Distribution Inc., the right to distribute assorted bakery products in a defined sales area in northeast Ohio (hereinafter sometimes referred to as "the Route"). A distribution agreement governed the relationship, and that agreement contained provisions relating to the sale and transfer of Baumgardner's distribution rights. On January 12, 2009, BFBD issued Baumgardner a notice

697 F. Supp.2d 804
of termination pursuant to the distribution agreement

Under the distribution agreement, Baumgardner was allowed to sell or otherwise transfer his distribution rights. Any such transfer or sale, however, was subject to two conditions: (1) the prior written approval of BFBD, and (2) a right of first refusal on the part of BFBD under the same terms and conditions of the proposed sale or transfer. Baumgardner alleges that he obtained a ready, willing, and able buyer who agreed to purchase the distribution rights for $325,000, and that he gave BFBD notice of his intent to sell on or about January 29, 2009.

On February 6, 2009, BFBD acknowledged, in a written letter, receipt of Baumgardner's intent to sell the distribution rights. BFBD, however, "claimed the sale price was $121,706 rather than $325,000." (Doc. No. 1, ¶ 12.) BFBD then attempted to exercise its right of first refusal at the lower price. A dispute ensued. Baumgardner submitted sworn affidavits documenting his intent to sell the distribution rights for $325,000. During the dispute, BFBD operated the route previously operated by Baumgardner, but, according to Baumgardner, did so in a manner which caused profits to decrease. Furthermore, Baumgardner claims that BFBD "failed to make reasonable payment to Baumgardner for the income generate sic during" this time. (Doc. No. 1, ¶ 19.)

Baumgardner claims that, due to financial hardship resultant from BFBD's termination of his Route, he proceeded with the sale of the Route to BFBD for $140,430, but reserved the right to seek redress for damages arising out of the distribution agreement or in tort.

On June 17, 2009, Baumgardner filed a civil action against BFBD in the Stark County Court of Common Pleas. BFBD removed the action to federal court on July 14, 2009, pursuant to 28 U.S.C. §§ 1441 and 1446. On July 31, 2009, BFBD filed, separately, a motion to dismiss a portion (specifically, four out of seven) of Baumgardner's claims and a motion to strike Baumgardner's jury demand. (Doc. Nos. 6, 7.) Baumgardner filed a combined opposition on July 31, 2009 (Doc. No. 13), and BFBD thereafter filed separate replies. (Doc. Nos. 14, 15.)


Baumgardner's complaint alleges seven claims for relief, numbered one through five, seven and eight.1 BFBD's motion to dismiss addresses claims four, five, seven and eight. Following a discussion regarding the law of the state that governs this dispute, each will be discussed seriatim.

A. Choice of Law

The distribution agreement contains a choice-of-law provision in section 11.8 that specifies New York law as controlling the validity, performance and interpretation of the agreement. In its entirety, section 11.8 of the distribution agreement reads, "CONTROLLING LAW: The validity, interpretation and performance of this Agreement shall be controlled by and construed in accordance with the laws of New York." (Doc. No. 1 at p. 17.) Baumgardner's complaint alleges seven claims for relief. Claims one through three sound in contract,2 claims four and seven in tort, and claim five in quasi-contract. Claim eight seeks punitive damages based on

697 F. Supp.2d 805
BFBD's "conduct as identified in this complaint." (Doc. No. 2-1 at ¶ 69.)

In a diversity action, the choice of law rules of the forum state apply. Glenway Indus., Inc. v. Wheelabrator-Frye, Inc., 686 F.2d 415, 417 (6th Cir.1982) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). Therefore, the Court applies Ohio choice of law rules. The Ohio Supreme Court has adopted the Restatement (Second) of Conflict of Laws, which provides:

The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.

Tele-Save Merch. Co. v. Consumers Distrib. Co., Ltd., 814 F.2d 1120, 1122 (6th Cir.1987) (quoting Schulke Radio Prods., Ltd. v. Midwestern Broad. Co., 6 Ohio St.3d 436, 438-39, 453 N.E.2d 683 (1983)).

In its motion to dismiss, BFBD argues that, while New York law should apply to Baumgardner's claims pertaining to the "validity, interpretation and performance of the Distribution Agreement," Ohio law should apply to Baumgardner's intentional interference with contract claim (claim four) and unjust enrichment claim (claim five) because they "only indirectly pertain" to the Distribution Agreement.3 Noticeably absent from Baumgardner's complaint, originally filed in state court, and in his opposition memorandum, is any discussion of choice-of-law. As discussed below, the Court finds BFBD underestimates the scope of the choice of law clause in the Distribution Agreement, and holds New York law applies to each claim in Baumgardner's complaint.

The Sixth Circuit has addressed the scope of choice of law clauses on multiple occasions. In Moses v. Bus. Card Express, Inc., 929 F.2d 1131 (6th Cir.), cert. denied, 502 U.S. 821, 112 S.Ct. 81, 116 L.Ed.2d 54 (1991), the court found that a choice of law clause applied to the plaintiffs' claims for fraud and misrepresentation, rejecting the plaintiffs' contention that the provision applied only to construction of the contract itself. 929 F.2d at 1139-1140. The language of the choice of law provision in Moses stated: "This Franchise and License Agreement and the construction thereof shall be governed by the laws of the state of Michigan ...." Id. at 1140. Analyzing the clause, the court in Moses concluded that, "clearly, the clause refers to more than construction of the agreement; otherwise the first six words would be surplusage." Id. In reaching this conclusion, the court contrasted the choice of law provision at issue with the one scrutinized by the Fifth Circuit in Caton v. Leach, 896 F.2d 939 (5th Cir.1990). In Caton, the Fifth Circuit held that a choice of law clause did not apply to the plaintiff's tort and quantum meruit claims where the clause provided that "this agreement shall be construed under the laws of the

697 F. Supp.2d 806
State of California." Caton, 896 F.2d at 943. In a footnote, the court in Caton contrasted the narrow choice of law clause with an example of a broad provision choosing the law of a particular state to "govern, construe and enforce all of the rights and duties of the parties arising from or relating in any way to the subject matter of this contract." Id. at 943 n. 3. In Moses, the Sixth Circuit concluded that the choice of law provision before it fell between the two extremes discussed in Caton (the actual clause at issue in Caton on the narrow end of the spectrum, and the hypothetical clause on the broad end). Moses, 929 F.2d at 1140

Similarly, in Banek Inc. v. Yogurt Ventures U.S.A., Inc., 6 F.3d 357, 363 (6th Cir.1993), the Sixth Circuit held that a choice of law provision contained in a franchise agreement was sufficiently broad to cover the plaintiff's claims for fraud and misrepresentation. Id. at 363. In doing so, the court rejected the franchisee plaintiff's assertions regarding narrow construction of the choice of law provision, finding that the plaintiff's fraud and misrepresentation claims related directly to the franchise agreement. The Sixth Circuit panel in Banek stated that "had these claims only been tangentially related to the franchise relationship, we would be much more inclined to find the choice of law provision not applicable." Id. The choice of law provision at issue in Banek provided: "this Agreement was made and entered into in the State of Georgia and all rights and obligations of the parties hereto shall be governed by and construed in...

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