Biotronx, LLC v. Tech One Biomedical, LLC

• Decision Date: 08 June 2020
• Docket Number: No. 3:19-cv-01035,3:19-cv-01035
• Citation: 465 F.Supp.3d 797
• Parties: BIOTRONX, LLC, and Scott Stevenson, Plaintiffs, v. TECH ONE BIOMEDICAL, LLC, and Matthew Mincer, Defendants.
• Court: U.S. District Court — Middle District of Tennessee

465 F.Supp.3d 797

BIOTRONX, LLC, and Scott Stevenson, Plaintiffs,

v.TECH ONE BIOMEDICAL, LLC, and Matthew Mincer, Defendants.

No. 3:19-cv-01035

United States District Court, M.D. Tennessee, Nashville Division.

Filed June 8, 2020

James L. Smith, Law Offices of James L. Smith, Hendersonville, TN, Raymond G. Prince, Prince & Hellinger, Nashville, TN, for Plaintiffs.

E. Todd Presnell, Kristina A. Reliford, Bradley Arant Boult Cummings LLP, Nashville, TN, for Defendants.

MEMORANDUM

WILLIAM L. CAMPBELL, JR., UNITED STATES DISTRICT JUDGE

I. Introduction

Pending before the Court are Defendants’ Motion to Dismiss (Doc. No. 18); Plaintiffs’ Response (Doc. No. 26); and Defendants’ Reply (Doc. No. 28). For the reasons set forth below, Defendants’ Motion is GRANTED in part, and DENIED in part. Accordingly, Plaintiffs’ breach of contract claim is dismissed. In all other respects, Defendants’ Motion is denied.

II. Factual and Procedural Background

Plaintiffs Scott Stevenson and BiotronX, LLC ("BiotronX") assert claims for breach of contract, promissory estoppel, and promissory fraud against Defendants Tech One Biomedical, LLC ("Tech One") and Matthew Mincer, arising out of the parties’ discussions and actions regarding the potential sale of BiotronX to Tech One. (Amended Complaint (Doc. No. 15)). Plaintiffs allege BiotronX is a laboratory instrument repair company, owned by Mr. Stevenson, that specializes in maintenance of an immunohistochemistry

("IHC") laboratory instrument called the Autostainer. (Id. ¶¶ 2, 6). Tech One is a laboratory instrument repair company that services general laboratory equipment commonly found in most histology laboratories. (Id. ¶ 6). Mr. Mincer is the president of Tech One. (Id. ¶ 4).

In the spring of 2018, Mr. Stevenson and Mr. Mincer entered into negotiations regarding Tech One investing in or buying BiotronX. (Id. ¶ 7). At that time, Mr. Mincer allegedly stated he did not wish to enter the IHC instruments market, that the Autostainer was declining in popularity, and no one at Tech One had experience maintaining such instruments. (Id. ) On April 18, 2018, however, Mr. Mincer hired Mr. Stevenson as Field Engineer to repair lab instruments in the field and allowed Mr. Stevenson to continue working for BiotronX. (Id. ¶ 8).

In August 2018, Plaintiffs learned that Biocare Medical LLC ("Biocare"), a leading supplier of IHC instrumentation, was discontinuing service for the Autostainer, and an identical instrument called the Nemesis, and that Tech One had been chosen as a qualified company to service the instruments. (Id. ¶ 9). At that time, Mr. Stevenson was the only representative of Tech One with experience servicing the instruments. (Id. ) The negotiations resulting in the contract with Biocare had occurred over several months, without Mr. Stevenson's knowledge. (Id. ¶ 10).

On August 2, 2018, Mr. Stevenson called Mr. Mincer about the Biocare contract, and told him that he (Mr. Stevenson) could not service the contract without being paid a higher salary, or in the absence of the purchase of his business. (Id. ) Mr. Mincer advised Mr. Stevenson, among other things, that he was considering having Plaintiffs do most of the work on the Biocare contract, and would get back in touch with him. (Id. )

On August 29, 2018, Mr. Mincer sent a text to Mr. Stevenson stating he had been working on a preliminary plan that "will keep you here and work for both you and TOBS [Tech One]." (Id. ¶ 11). Beginning on that date, Plaintiffs allege the parties had concrete discussions, by telephone, text, and in person, in Chicago, Illinois, concerning both the purchase of BiotronX and the further employment of Mr. Stevenson by Tech One. (Id. ¶¶ 11-12). By September 13, 2018, the parties were concentrating on a plan for Tech One to buy BiotronX, with the price as the only matter to be resolved. (Id. ¶ 12). On that date, Mr. Mincer sent a text stating: "I'm buying everything as far as I know." (Id. ) The parties then began to discuss the other matters that needed to be resolved to complete the sale:

While discussing BiotronX's inventory, Stevenson explained that he had several intact instruments in addition to spare parts inventory. Mincer replied that Tech One had no interest in reselling instruments of any kind because it was not worth the effort and that he wanted only to service lab instruments. Mincer also stated that Tech One did not want to receive the intact instruments from Plaintiffs and that, as part of the sale and in order to get the inventory ready for transfer, Stevenson needed to go ahead and break down the instruments and save only the parts, as Tech One wanted to buy only the parts and not the intact instruments. Stevenson, before he began to disassemble the instruments, asked Mincer if Defendants wanted to keep the remaining body panels and chassis. Mincer stated that Tech One did not want those items and that they should be discarded or scrapped. The deal on parts, as Mincer explained during that telephone conversation, was that Tech One would buy only BiotronX's parts inventory, and Stevenson agreed. When the conversation ended, Stevenson and Mincer had agreed that in return for Tech One's agreement to purchase BiotronX's inventory, Stevenson agreed to dismantle the instruments in the inventory and discard the panels and chassis.

(Id. ) According to Plaintiffs, Mr. Mincer did not suggest they should wait to dismantle the instruments until a formal contract was signed, or that Mr. Mincer might change his mind about purchasing BiotronX. (Id. )

On September 20, 2018, Mr. Stevenson sent an email to Mr. Mincer with an inventory listing ten instruments. (Id. ¶ 13). Plaintiffs allege Defendants were aware of the harm that would result if Defendants breached the agreement to purchase. (Id. ¶ 14). Plaintiffs also allege Mr. Mincer induced Mr. Stevenson to begin disassembling the instruments, and Mr. Stevenson reasonably relied on Mr. Mincer's promise to purchase the inventory in disassembling the instruments. (Id. ) On September 28, 2018, Mr. Mincer asked Mr. Stevenson if he had been working on the request to disassemble the instruments. (Id. ¶ 15).

On October 1, 2018, Mr. Stevenson texted Mr. Mincer the following:

Another reason I was being a little pushy was because although I understand none of this is your problem, in August when you told me of your plan to move forward with this purchase, my wife and I altered our financial plans accordingly. We don't have much time, and it's getting a bit too late for us to revert back to our original plans.

(Id. ¶ 16). Plaintiffs allege this text and other communications indicate Defendants understood the financial consequences of failing to complete the purchase agreement. (Id. )

Also, on October 1, 2018, Plaintiffs allege Mr. Mincer telephoned Mr. Stevenson, and they agreed on a price of $250,000 for the purchase of BiotronX's inventory, to be paid in cash. (Id. ¶ 17). Mr. Mincer also represented that Tech One had plenty of liquid assets to consummate the purchase and Plaintiffs should not worry. (Id. ) A subsequent telephone call that day "confirmed the purchase price for the going concern value of BiotronX, as determined by Tech One's accountant, as $142,000.00." (Id. )

On October 10, 2018, Mr. Mincer called Mr. Stevenson and advised that Tech One would not purchase BiotronX's inventory. (Id. ¶ 18). When asked the reason, Mr. Mincer replied "nothing had changed except his mind." (Id. ) Mr. Mincer also stated he did not need to buy BiotronX because he already had Mr. Stevenson on his payroll. (Id. )

On October 11, 2018, Mr. Mincer called Mr. Stevenson and terminated Mr. Stevenson's employment with Tech One because "there was no longer mutual trust between the parties." (Id. ¶ 19). Mr. Mincer offered to let Mr. Stevenson subcontract for Tech One, and Mr. Stevenson sent a proposal, "which came to naught." (Id. )

Through the pending motion, Defendants argue Plaintiffs’ claims should be dismissed.

III. Analysis

A. The Standards Governing Motions to Dismiss

In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court must determine whether the plaintiff has sufficiently alleged "a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Ashcroft v. Iqbal , 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). Well-pleaded factual allegations are accepted as true and are construed in the light most favorable to the nonmoving party. 129 S. Ct. at 1950 ; Mills v. Barnard , 869 F.3d 473, 479 (6th Cir. 2017).

B. Breach of contract

Defendants argue Plaintiffs’ claim for breach of an oral contract must be dismissed because it fails to comply with the statute of frauds provision of the Tennessee Uniform Commercial Code ("UCC"), Tennessee Code Annotated Section 47-2-201(1). Section 47-2-201(1) provides, in pertinent part:

(1) Except as otherwise provided in this section, a contract for sale of goods for the price of five hundred dollars ($500) or more is not enforceable by way of action or defense unless there is some writing or record sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.

The statute goes on to list the following exceptions to the writing requirement:

(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable:

(a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the

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