Fitzgerald Fruit Farms LLC v. Aseptia, Inc.

• Decision Date: 20 June 2019
• Docket Number: No. 5:18-CV-437-D,5:18-CV-437-D
• Citation: 527 F.Supp.3d 790
• Parties: FITZGERALD FRUIT FARMS LLC, Plaintiff, v. ASEPTIA, INC., Wright Foods, Inc., and Worth Harris, Defendants.
• Court: U.S. District Court — Eastern District of North Carolina

527 F.Supp.3d 790

FITZGERALD FRUIT FARMS LLC, Plaintiff,

v.ASEPTIA, INC., Wright Foods, Inc., and Worth Harris, Defendants.

No. 5:18-CV-437-D

United States District Court, E.D. North Carolina, Western Division.

Signed June 20, 2019

Filed June 21, 2019

George A. Koenig, Koenig Law Group, PC, Atlanta, GA, Culley C. Carson, IV, The Carson Law Firm, PLLC, Raleigh, NC, for Plaintiff.

ORDER

JAMES C. DEVER III, United States District Judge

On September 7, 2018, Fitzgerald Fruit Farms LLC ("Fitzgerald Farms" or "plaintiff") filed a complaint against Aseptia, Inc. ("Aseptia"), Wright Foods, Inc. ("Wright Foods"), and Worth Harris ("Harris"; collectively "defendants") [D.E. 1].¹ On November 13, 2018, Harris moved to dismiss Fitzgerald Farms's complaint and moved to strike portions of the complaint [D.E. 17] and filed a memorandum in support [D.E. 18]. On December 18, 2018, Fitzgerald Farms responded in opposition [D.E. 21]. On January 16, 2019, Harris replied [D.E. 25]. On January 24, 2019, Fitzgerald Farms moved for leave to file a sur-reply [D.E. 26]. On March 8, 2019, the court granted the motion and received Fitzgerald Farm's sur-reply [D.E. 26-1] into the record [D.E. 31]. As explained below, the court grants Harris's motion to dismiss.

I.

Fitzgerald Farms's complaint concerns an alleged agreement between Fitzgerald Farms and defendants. Aseptia and Wright Foods are North Carolina and Delaware corporations, respectively, and Harris is the chairperson of Aseptia's board. See Compl. [D.E. 1] ¶¶ 2–4. Fitzgerald Farms alleges that defendants hired it "to assist [defendants] in the purchase, delivery, storage, and treatment of apples for the 2014 apple pack." Id. ¶ 7. On September 10, 2014, Sean Lennon ("Lennon"), the president and owner of Fitzgerald Farms, met with Harris and other representatives of the defendants to discuss payment and other terms of their relationship. See id. ¶¶ 6, 8. According to Fitzgerald Farms, the parties agreed that Fitzgerald Farms would assist defendants in acquiring 8,500,000 pounds of apples by December 2014. See id. ¶ 9. Fitzgerald Farms would initially "pay the growers for the apples and for services such as shipping and treatment of the apples," and defendants would pay Fitzgerald Farms "in accordance with the agreed upon rates." Id.; see [D.E. 1-1] 3. Because Fitzgerald Farms had "concerns regarding payment," Harris assured Lennon that Fitzgerald Farms "would be paid in full" for its work "with ‘[Harris's] money.’ " Compl. [D.E. 1] ¶ 10.

Fitzgerald Farms alleges that it performed the work as defendants instructed. See id. ¶¶ 14–15. Fitzgerald Farms submitted invoices for payment to Aseptia. See id. ¶ 16; [D.E. 1-5]. Defendants, however, failed to pay Fitzgerald Farms in full. See Compl. [D.E. 1] ¶ 17. Fitzgerald Farms alleges that, during the summer of 2015, defendants assured it that defendants would pay in full after defendants sold Wright Foods and that any attempt by Fitzgerald Farms to involve lawyers in the dispute would complicate payment. See id. ¶¶ 17–18. On July 8, 2015, defendants instructed Fitzgerald Farms "to dispose of hundreds of tons of left-over apples being held in storage on [d]efendants’ behalf." Id. ¶ 19. Fitzgerald Farms did so, thereby incurring disposal charges of $ 124,150. See id.

Despite defendants’ representations, defendants failed to pay in full. See id. ¶¶ 17, 23. On September 18, 2015, defendants made their last payment to Fitzgerald Farms. See id. ¶ 20. On March 4, 2016, defendants informed Fitzgerald Farms that Aseptia would pay the remaining balance owed to Fitzgerald Farms. See id. ¶ 22; [D.E. 1-3]. Nevertheless, Aseptia did not pay the balance owed to Fitzgerald Farms. See id. ¶ 23.

On September 7, 2018, Fitzgerald Farms filed a complaint against defendants alleging seven causes of action: breach of contract, open account, fraud, negligent misrepresentation, quantum meruit and unjust enrichment, piercing the corporate veil, and unfair trade practices in violation of the North Carolina Unfair and Deceptive Trade Practices Act ("UDTPA"), N.C. Gen. Stat. § 75-1 et seq. See id. ¶¶ 27–64.

II.

A motion to dismiss under Rule 12(b)(6) tests the complaint's legal and factual sufficiency. See Ashcroft v. Iqbal, 556 U.S. 662, 677–80, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–63, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Coleman v. Md. Court of Appeals, 626 F.3d 187, 190 (4th Cir. 2010), aff'd, 566 U.S. 30, 132 S.Ct. 1327, 182 L.Ed.2d 296 (2012) ; Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009) ; Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). To withstand a Rule 12(b)(6) motion, a pleading "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quotation omitted); see Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ; Giarratano, 521 F.3d at 302. In considering the motion, the court must construe the facts and reasonable inferences "in the light most favorable to the [nonmoving party]." Massey v. Ojaniit, 759 F.3d 343, 352 (4th Cir. 2014) ; see Clatterbuck v. City of Charlottesville, 708 F.3d 549, 557 (4th Cir. 2013), abrogated on other grounds by Reed v. Town of Gilbert, 576 U.S. 155, 135 S. Ct. 2218, 192 L.Ed.2d 236 (2015). A court need not accept as true a complaint's legal conclusions, "unwarranted inferences, unreasonable conclusions, or arguments." Giarratano, 521 F.3d at 302 (quotation omitted); see Iqbal, 556 U.S. at 678–79, 129 S.Ct. 1937. Rather, plaintiffs’ allegations must "nudge[ ] their claims," Twombly, 550 U.S. at 570, 127 S.Ct. 1955, beyond the realm of "mere possibility" into "plausibility." Iqbal, 556 U.S. at 678–79, 129 S.Ct. 1937.

When evaluating a motion to dismiss, a court considers the pleadings and any materials "attached or incorporated into the complaint." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011) ; see Fed. R. Civ. P. 10(c) ; Thompson v. Greene, 427 F.3d 263, 268 (4th Cir. 2005). A court may also consider a document submitted by a moving party if it is "integral to the complaint and there is no dispute about the document's authenticity." Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016). A court also may take judicial notice of public records without converting the motion to dismiss into a motion for summary judgment. See, e.g., Fed. R. Evid. 201(d) ; Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) ; Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009).

Subject-matter jurisdiction is based on diversity of citizenship, and the court applies state substantive law and federal procedural rules. See Erie R.R. v. Tompkins, 304 U.S. 64, 78–80, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) ; Dixon v. Edwards, 290 F.3d 699, 710 (4th Cir. 2002). The parties agree that North Carolina law applies. Accordingly, this court must predict how the Supreme Court of North Carolina would rule on any disputed state-law issue. See Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C., 433 F.3d 365, 369 (4th Cir. 2005). In doing so, the court must look first to opinions of the Supreme Court of North Carolina. See id. at 369. If there are no governing opinions from that court, this court may consider the opinions of the North Carolina Court of Appeals, treatises, and "the practices of other states." Id. (quotation omitted).² In predicting how the highest court of a state would address an issue, this court must "follow the decision of an intermediate state appellate court unless there [are] persuasive data that the highest court would decide differently." Toloczko, 728 F.3d at 398 (quotation omitted). Moreover, in predicting how the highest court of a state would address an issue, a federal court "should not create or expand a [s]tate's public policy." Time Warner Entm't-Advance/Newhouse P'ship v. Carteret-Craven Elec. Membership Corp., 506 F.3d 304, 314 (4th Cir. 2007) (alteration and quotation omitted); Wade v. Danek, Inc., 182 F.3d 281, 286 (4th Cir. 1999).

A.

As for Fitzgerald Farms's breach of contract claim in count one, under North Carolina law, a breach of contract claim has two elements: (1) the existence of a valid contract and (2) a breach of the terms of that contract. See McLamb v. T.P. Inc., 173 N.C. App. 586, 588, 619 S.E.2d 577, 580 (2005) ; Cater v. Barker, 172 N.C. App. 441, 445, 617 S.E.2d 113, 116 (2005), aff'd, 360 N.C. 357, 625 S.E.2d 778 (2006) ; Poor v. Hill, 138 N.C. App. 19, 26, 530 S.E.2d 838, 845 (2000). Harris contends that he is not a party to the contract in his individual capacity. Thus, Harris argues that he cannot be held liable for any breach that occurred.

"Before a valid contract can exist, there must be mutual agreement between the parties as to the terms of the contract." Mosely v. WAM, Inc., 167 N.C. App. 594, 598, 606 S.E.2d 140, 143 (2004) ; see Walker v. Goodson Farms, Inc., 90 N.C. App. 478, 486, 369 S.E.2d 122, 126 (1988). "An authorized agent who enters into a contract on behalf of a disclosed principal generally is not personally liable to third parties since the contract is with the principal." Baker v. Rushing, 104 N.C. App. 240, 248, 409 S.E.2d 108, 112 (1991) ; see Walston v. R. B. Whitley & Co., 226 N.C. 537, 540-41, 39 S.E.2d 375, 377 (1946) ; Advanced Internet Techs., Inc. v. McGarrity, No. 5:13-CV-638-D, 2014 WL 4384658, at *2 (E.D.N.C. Sept. 4, 2014) (unpublished).

Even viewing the evidence in the light most favorable to Fitzgerald Farms, Fitzgerald Farms fails to plausibly allege that Harris is a party to the contract. Harris was the chairperson of Aseptia's board and attended the meeting on September 10, 2014, in that capacity, and Fitzgerald Farms knew that Harris represented Aseptia during that meeting. Fitzgerald Farms's allegation that Harris would pay with his money, by itself, does...