Brookshire Mgmt. v. ADT/Defenders, Inc.
| Decision Date | 29 September 2022 |
| Docket Number | 1:22-cv-01086-JMS-DML |
| Parties | Brookshire Management Inc., doing business as TRAVEL LEADERS INDIANAPOLIS,, v. ADT LLC/Defenders, Inc., . |
| Court | U.S. District Court — Southern District of Indiana |
Plaintiff Brookshire Management Inc., doing business as Travel Leaders Indianapolis, ("Travel Leaders"), alleges that Defendant ADT LLC/Defenders, Inc. ("ADT") breached the terms of a Corporate Travel Agreement (the "Agreement") wherein Travel Leaders agreed to provide travel booking services to ADT. [Filing No. 6-2 at 1.] ADT has filed a Motion to Dismiss, which seeks dismissal of Travel Leaders' claims pursuant to Fed.R.Civ.P 12(b)(6). [Filing No. 10.] ADT's Motion has been fully briefed and is ripe for the Court's review. [Filing No 11; Filing No. 22; Filing No. 23.]
Under Rule 12(b)(6), a party may move to dismiss a claim that does not state a right to relief. The Federal Rules of Civil Procedure require that a complaint provide the defendant with "fair notice of what the . . . claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007.)). In reviewing the sufficiency of a complaint, the Court must accept all well-pled facts as true and draw all permissible inferences in favor of the plaintiff. SeeActive Disposal Inc. v. City of Darien, 635 F.3d 883, 886 (7th Cir. 2011).
A Rule 12(b)(6) motion to dismiss asks whether the complaint "contain[s] sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotingTwombly, 550 U.S. at 570). The Court may not accept legal conclusions or conclusory allegations as sufficient to state a claim for relief. SeeMcCauley v. City of Chicago, 671 F.3d 611, 617 (7th Cir. 2011). Factual allegations must plausibly state an entitlement to relief "to a degree that rises above the speculative level." Munson v. Gaetz, 673 F.3d 630, 633 (7th Cir. 2012). This plausibility determination is "a contextspecific task that requires the reviewing court to draw on its judicial experience and common sense." Id.
The following factual allegations are set forth in Travel Leaders' Complaint, [Filing No. 62], which the Court must accept as true at this time.
On January 15, 2018, Travel Leaders and Defenders Inc. ("Defenders") entered into the Agreement which provided that Travel Leaders would serve as a full-service travel agency for Defenders' corporate travel needs for three years. [Filing No. 6-2 at 2.] Defenders was subsequently acquired by ADT, and "ADT took on all obligations of the Agreement." [Filing No. 6-2 at 2.] Following the acquisition, the relationship between Travel Leaders and ADT continued to be "satisfactory at a local level." [Filing No. 6-2 at 2.] In December of 2020, the Agreement automatically renewed for two additional years when "no notice to the contrary" was provided. [Filing No. 6-2 at 3.]
The Agreement states that "the estimated volume value for the [Agreement] is $4,000,000.00 per year but that upon a variation of more than twenty-five percent (25%), 'either party reserves the right to re-negotiate the scope of service and associated cost.'" [Filing No. 6-2 at 4.]
The Agreement further states that ADT "agrees to regularly communicate with [Travel Leaders'] management and executives to ensure the success of this agreement." [Filing No. 6-2 at 4.]
Beginning in the first quarter of 2021, Travel Leaders noticed that its business volume from ADT had "dropped significantly despite the renewal of the Agreement." [Filing No. 6-2 at 3.] Travel Leaders alleges that the travel volume "dropped below the anticipated volume of the [Agreement] because [ADT] refused to honor the terms of the Agreement, not because of any unexpected or unintended drop in travel demand." [Filing No. 6-2 at 5.] Travel Leaders attempted to communicate the loss in travel volume to ADT, but ADT failed to "adequately communicate" with Travel Leaders and has provided "no reason for [its] failure to comply with the Agreement." [Filing No. 6-2 at 3.] Moreover, despite "numerous attempts," ADT has been "unwilling to engage in a good-faith re-negotiation of the Agreement as it was required to do." [Filing No. 6-2 at 5.] On January 10, 2022, ADT provided Travel Leaders with notice of non-renewal of the Agreement. [Filing No. 6-2 at 3.]
Travel Leaders alleges that ADT has breached the terms of the Agreement in three ways: (1) failing to communicate as required by the Agreement; (2) refusing to engage in a good-faith renegotiation of the Agreement; and (3) failing to satisfy "demands for payment representing the monthly net revenue loss incurred due to [ADT's] refusal to provide the travel volume outlined in the Agreement," amounting to $188,939.71 as of December 17, 2021. [Filing No. 6-2 at 4-6.] Travel Leaders seeks "damages in an amount sufficient to compensate it for all outstanding invoices undisputed" by ADT, as well as an award of its costs, attorneys' fees, prejudgment interest, and expenses. [Filing No. 6-2 at 6.]
Travel Leaders initially filed its Complaint in the Marion Superior Court on April 20, 2022. [Filing No. 6-2.] On May 26, 2022, ADT removed the case to this Court pursuant to 28 U.S.C. § 1332. [Filing No. 1.]
In support of dismissal, ADT argues that Travel Leaders' claims fail as a matter of law because "it cannot identify a provision of the [Agreement] that ADT allegedly breached," but even if it could, there are no facts that support a causal connection between the alleged breach and the damages that Travel Leaders seeks.[1] [Filing No. 11 at 6.] Specifically, ADT argues that the Agreement does not require it to communicate with Travel Leaders regarding a decrease in its estimated travel volume or to meet a specific travel volume. [Filing No. 11 at 6-8.] While the Agreement provides an estimated volume of work, ADT argues the "clear language" of the Agreement establishes that this was not a requirement because "the parties understood this estimate could fluctuate by more than 25% in either direction" and the Agreement "allows each party-if the party chooses-the option to re-negotiate the scope of the [Agreement] in the event of a substantial decrease." [Filing No. 11 at 8-9.] Even if ADT did breach the Agreement, it argues that Travel Leaders failed to plead "any factual allegations showing" how its failure to communicate resulted in a monetary loss, and therefore any alleged loss in revenue is purely speculative because the parties never agreed to a specific travel volume. [Filing No. 11 at 9-10.] Finally, ADT argues that even if it were required under the Agreement to provide a specified travel volume, it would have been impossible to do so because, during the relevant time period, "many cities across the country and the world had made business travel impossible because of the Covid-19 pandemic," and therefore ADT should be excused for any failure to "provide the same travel volume [as] it did prior to [the] Covid-19 pandemic." [Filing No. 11 at 10-11.]
Travel Leaders responds that the Agreement is a requirements contract, which requires ADT to "book all of its travel through Travel Leaders," and that it has adequately alleged a breach of a requirements contract because "ADT continued to travel, just not with Travel Leaders." [Filing No. 22 at 3-5.] Accordingly, ADT argues that the "appropriate question in a requirements contract is whether the reduction in offered goods or services was done in good faith," and it has adequately pled that ADT's reduction in travel volume was not in good faith based on the drop in travel, refusal to communicate, and "subsequent attempt to cancel." [Filing No. 22 at 6.] Regarding ADT's purported failure to communicate, Travel Leaders argues that the Agreement requires that if the travel volume varied by 25%, "either party reserves the right to re-negotiate the scope of service and associated costs," but it was denied this right by ADT's "continued lack of effort to communicate." [Filing No. 22 at 7.] Travel Leaders argues that it "was merely required to allege facts sufficient to support a plausible inference that it sustained damages; it need not have specifically identified what damages it sustained." [Filing No. 22 at 8.] Finally, Travel Leaders argues that ADT's impossibility defense is not appropriate for resolution on a Motion to Dismiss because "that determination cannot be fairly made without conducting discovery," but even so, it is "dubious to infer that [ADT's] travel volume - even if impacted by COVID - went from $4 million to $0 in the first quarter of 2021" based on the timing of the pandemic. [Filing No. 22 at 9.]
ADT replies that Travel Leaders' Response was untimely and, therefore, the Court should summarily grant the Motion to Dismiss. [Filing No. 23 at 1-2.] Additionally, ADT argues that the Agreement is not a requirements contract because it does not involve the sale of goods, and nothing in the Agreement requires ADT to "look exclusively to Travel Leaders for its travel arrangements." [Filing No. 23 at 2-6.] Finally, ADT reasserts its arguments that Travel Leaders cannot identify a provision in the Agreement that creates the obligations that Travel Leaders alleges it breached, and even if it had breached those obligations, Travel Leaders cannot establish a causal connection between those obligations and its alleged damages. [Filing No. 23 at 4-9.]
The Court will first address the timeliness of Travel Leaders' Response before turning to ADT's dismissal arguments.
Travel Leaders'...
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