CANA Distribs. v. PortoVino, LLC
| Decision Date | 08 May 2023 |
| Docket Number | 20-10659 |
| Parties | CANA DISTRIBUTORS, LLC, Plaintiff, v. PORTOVINO, LLC, Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
ORDER DENYING DEFENDANT'S MOTION DISMISS [ECF No 2]
On March 11, 2020, Plaintiff Cana Distributors, LLC (“Cana”) filed a complaint in the Circuit Court for the County of Oakland against Defendant PortoVino, LLC. (“PortoVino”). [ECF No. 1]. On March 11, 2020 PortoVino filed a Notice of Removal to remove this action to this Court. [ECF No. 1].
In its Notice of Removal, PortoVino asserts that the Court has original jurisdiction over the action because there is diversity of citizenship pursuant to 28 U.S.C. §1332. ECF No. 1, PageID 3. Cana is a Michigan-based company and PortoVino is a New York-based company with its principal place of business also in New York. Id. PortoVino asserts that the amount in controversy is in excess of $75,000 and therefore meets the diversity jurisdiction threshold to warrant removal to this Court. Id. at PageID 5. PortoVino asserts that Cana underestimated its damages when claiming the amount in controversy is “unspecified damages of less than $75,000 exclusive of interest, costs and attorneys' fees but, in the prayer for relief contained within Cana's Complaint, Cana seeks costs and attorneys' fees in addition to its claim for monetary damages of less than $75,000.” Id at PageID 3,4,5.
On March 13, 2020, PortoVino filed a Motion to Dismiss Complaint (“Motion to Dismiss”) [ECF No. 2], and it has been fully briefed. For the reasons that follow, the Court denies PortoVino's Motion to Dismiss.
Cana filed this case because PortoVino, a wine supplier based in New York, allegedly improperly terminated its agreement with Cana, a wine wholesaler in Michigan. Cana alleges that PortoVino was “bound by an agreement” between PortoVino's predecessor and Cana. ECF No. 4-2, at ¶8. Cana alleges PortoVino indicated that it wanted to terminate that agreement, PortoVino was obligated to pay Cana compensation for the diminished value of Cana's business, as set forth in MCL § 436.1305(17). ECF No 2-4, at ¶10. Cana alleges that no accord was reached regarding compensation, and PortoVino proceeded in bad faith by “concocting” claims that Cana was engaging in business misconduct to create a basis for terminating the business relationship. ECF No. 2-3, at ¶12.
PortoVino seeks to dismiss Cana's cause of action on the grounds that (1) Cana cannot state a claim upon which relief can be granted, and (2) Cana's prior breach prevents Cana from stating a claim upon which relief can be granted. ECF No. 2, PageID 25. PortoVino asserts that Cana repeatedly made late payments to PortoVino, sometimes up to eight months delayed. ECF No. 2, PagelD 31 [see 32 -some factual basis/invoices]. PortoVino also asserts that Cana's late payments caused PortoVino to violate MCL § 436.2013, which states that “the sales of alcoholic liquor to licensees shall be for cash only.” PortoVino interprets this to mean that a wholesaler (Cana) is required to pay a supplier (PortoVino) upon the wholesaler taking possession of the alcohol. ECF No. 2, PageID 42. PortoVino contends that, due to Cana's failures to timely pay PortoVino, PortoVino was inadvertently extending credit terms to Cana unlawfully under MCL § 436.2013. Id. Cana denies that PortoVino was forced to extend credit and states that PortoVino repeatedly offered to sell product to Cana on credit terms. ECF No. 4, PageID 195.
A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the plaintiff's complaint. Accepting all factual allegations as true, the court will review the complaint in the light most favorable to the plaintiff.
Eidson v. Tennessee Dep't of Children's Servs., 510 F.3d 631, 634 (6th Cir. 2007). As a general rule, to survive a motion to dismiss, the complaint must state sufficient “facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The complaint must demonstrate more than a sheer possibility that the defendant's conduct was unlawful. Id. at 556. Claims comprised of “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555. Rather, “[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, 678 (2009).
MCL § 436.1305 et seq. controls the wine industry in Michigan. Excerpts from this section identify prohibited conduct, termination, cancellation, nonrenewal, or discontinuance of agreements, compensation for diminished value of wholesaler's business, actual damages, exemplary damages and procedures for resolving violations. The following is a provision of the statute:
MCL § 436.2013 mandates that all sales of alcoholic liquor by Michigan liquor stores or Michigan licensees shall be for cash only. The statute provides that “[a] sale or purchase of alcoholic liquor made in a state liquor store and by all types of licensees shall be for cash only, except for” six exceptions. Neither party suggests any of those exceptions is applicable in this case.
I. ANALYSIS
In its complaint, Cana alleges that, pursuant to MCL § 436.1305(17): (a) there was an agreement between it and PortoVino which was terminated by PortoVino; and (b) as a result of that termination, PortoVino owes Cana reasonable compensation for the diminished value of Cana's business. In its Motion to Dismiss, PortoVino asserts that Cana's complaint lacks specificity and relevant information, ECF No. 2, PageID 25, and that Cana avoided putting its own wrongdoings in the complaint. Id at 39. PortoVino contends that Cana's allegations that PortoVino terminated the agreement and concocted claims of misconduct by Cana were vague. Id. PortoVino cites the lack of documentation attached to Cana's claim to support PortoVino's assertion that Cana's claim is so vague that it should be dismissed pursuant to Rule 12(b)(6). Id.
The Court notes that Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” This requires only that the defendant has notice of the claim and the grounds upon which the claim rests. Conley v. Gibson, 355 U.S. 41, 47 (1957). Factual allegations do not need to be detailed, but they must be enough to enable a court to consider a right to relief beyond a speculative level. Twombly 550 U.S. at 545.
Cana alleges that PortoVino terminated its agreement with Cana without complying with the requirements of MCL § 436.1305. ECF No. 4-2, PageID 205, at ¶14. “Pursuant to MCL § 436.1305(17), if Defendant cancelled and/or terminated its agreement with Plaintiff, Defendant would be required to pay Plaintiff reasonable compensation for the diminished value of Plaintiff's business.” Id at ¶15. Cana also contends “Defendant cancelled and/or terminated its agreement with Plaintiff” and “Defendant has not paid Plaintiff reasonable compensation for the diminished value of Plaintiff's business.” Id at 206, ¶14, 16. PortoVino does not address these claims but instead asserts affirmative defenses to justify terminating the agreement. Cana counters that it is permitted to maintain a civil action against PortoVino to recover actual damages, exemplary damages, court costs and attorneys' fees pursuant to MCL 436.1305 (28-31). Id at ¶17.
The Court finds that, although Cana's claim provides only a short statement without detailed facts, it does contain simple allegations stemming from a Michigan statute and a request for relief. Stating a claim only requires that the complaint have enough facts to suggest an agreement was in place. Twombly, 550 U.S. at 545. The Court concludes that the level of detail PortoVino submitted in an attempt to justify its actions actually supports a conclusion that Cana's complaint was well-pleaded. In this case, both parties acknowledge that there was an agreement between them. ECF No. 4-2, PageID 205, ECF No. 2, PageID 32, at ¶7 and ECF No. 2, PageID 32. In both parties' pleadings, it is evident that the agreement was terminated by PortoVino, though there is a dispute about whether that termination was warranted and permissible. Based on Cana's allegations, the Court finds Cana's claim plausible and, if true, presents a reasonable inference that PortoVino is liable. The Court concludes that constitutes a sufficiently pleaded claim for violation of MCL § 436.1305.
PortoVino asserts that (1) Cana's failure to pay for goods PortoVino supplied was evidence of the Cana's insolvency; and (2) Cana was prohibited from purchasing alcohol from PortoVino on credit. ECF No. 2, PageID 25. PortoVino argues that these two assertions establish that Cana breached the agreement and that breach precludes Cana from stating a claim for relief. Id at 26.
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