Houlihan Trading Co. v. CTI Foods, LLC

Decision Date01 April 2022
Docket NumberCase No. 4:21-cv-01030-SRC
Parties HOULIHAN TRADING COMPANY, Plaintiff(s), v. CTI FOODS, LLC, Defendant(s).
CourtU.S. District Court — Eastern District of Missouri

Richard Milton Elias, Elias LLC, St. Louis, MO, for Plaintiff.

James F. Bennett, Arsenio L. Mims, Dowd Bennett LLP, Clayton, MO, Monte Hurst, David Hammack, Pro Hac Vice, Joshua Clark Rovelli, Hallett and Perrin PC, Dallas, TX, for Defendant.

Memorandum and Order


Though Houlihan and CTI Foods long enjoyed a warm relationship, their association has turned icy. Despite supplying CTI with frozen chicken-breast trim for the entire first quarter of 2021, Houlihan says it never contracted with CTI. Winning a race-to-the-courthouse, Houlihan sued CTI in Missouri for a declaratory judgment, to which CTI responded with a two-count counterclaim alleging breach of contract and promissory estoppel. Houlihan now moves to dismiss CTI's counterclaim, arguing primarily that the facts as alleged by CTI fail to establish the existence of a contract.

I. Background

For purposes of the motion to dismiss, the Court accepts as true the following facts CTI alleges in its counterclaim. See Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see also McDonnell Douglas Corp. v. SCI Tech., Inc. , 933 F. Supp. 822, 824 (E.D. Mo. 1996) ("[T]his Court must take the allegations of the counterclaim as true.").

CTI, a food-product manufacturer, routinely purchases a substantial quantity of poultry from various suppliers, while Houlihan, a wholesale poultry distributor, functions as a middleman and procures poultry products for manufacturers like CTI. Doc. 27 at ¶¶ 6–7. In November 2020, CTI issued a request for proposal (RFP) to various poultry suppliers, including Houlihan, for about 3.2 million pounds of frozen chicken-breast trim—all the trim meat CTI needed for 2021. Id. at ¶¶ 8–9. In the cover e-mail sending the RFP to Houlihan, Jason Lansdell, CTI's protein procurement manager, wrote that "this RFQ pricing will be through the time period of January 1, 2021 through December 31 2021." Id. at ¶ 11. Under the terms of the RFP, a prospective supplier's quote would "constitute an offer, which remains valid for a minimum period of 120 days after the quotation submission date," and "each bid submitted by a supplier shall constitute an offer to supply in accordance with this RFP ... All bids submitted through the RFP shall remain valid, firm and subject to unconditional acceptance until award notifications are issued." Id. at ¶¶ 12–13; see also Doc. 30-1 at p. 3.

The RFP also contained the following language: "Nothing contained in this RFP creates, nor shall be construed to create, any contractual relationship between CTI Foods and any supplier.... [A]ny binding contractual relationship may be made only in and through a written agreement signed by both parties." Doc. 30-1 at p. 2. The RFP also says: "Due to the uncertainty in business demand, this estimate of needs does not constitute a commitment by CTI Foods to purchase a given quantity of any item. CTI Foods will make that commitment based upon need." Id. As a contract document attached to Houlihan's motion to dismiss, Doc. 30 at p. 2; Doc. 30-1, the authenticity and accuracy of which CTI does not contest, the Court considers the RFP at the motion-to-dismiss stage. See Stahl v. U.S. Dep't of Agric. , 327 F.3d 697, 700 (8th Cir. 2003) ("In a case involving a contract, the court may examine the contract documents in deciding a motion to dismiss.").

In an e-mail to CTI, Travis Griffin, a Houlihan trader, said that Houlihan could provide approximately one truckload per week of frozen chicken-breast trim at 69 cents per pound, plus spot help as needed. Doc. 27 at ¶¶ 14–15. Griffin then submitted a bid to supply CTI with frozen chicken-breast trim in 2021 by submitting a completed RFP. Id. at ¶ 16. Houlihan's completed RFP stated that Houlihan could provide the requested estimated quantity of approximately 3.2 million pounds of frozen chicken-breast trim at 69 cents per pound. Id.

Lansdell then called Griffin, asking Houlihan to drop its price to 67 cents per pound. Id. at ¶ 17. In December 2020, which CTI mistakenly referenced as December 2021 in its counterclaim, Griffin confirmed that Houlihan could supply frozen chicken-breast trim at a "set price" of 67 cents per pound in 2021. Id. at ¶ 18; see Doc. 38 at p. 2 n.1. Griffin also submitted a revised RFP listing the 67-cents-per-pound price. Doc. 27 at ¶ 19. CTI alleges that these communications, including Houlihan's revised RFP, constituted an offer. Id. at ¶ 20. CTI says it accepted Houlihan's offer in a telephone call between Griffin and Lansdell on December 16, 2021. Id. at ¶ 22.

Houlihan began performing its obligations under the contract in the new year. Id. at ¶ 23. In January 2021, Houlihan arranged for delivery of five truckloads, approximately 181,080 pounds, of frozen chicken-breast trim to CTI at the agreed price of 67 cents per pound. Id. at ¶ 24. In February 2021, Houlihan arranged for delivery of five truckloads, approximately 200,000 pounds, of frozen chicken-breast trim at the agreed price of 67 cents per pound. Id. at ¶ 25. In March 2021, Houlihan delivered three truckloads, approximately 120,000 pounds, of frozen chicken-breast trim to CTI at the agreed price of 67 cents per pound. Id. at ¶ 26. Then, towards the end of March 2021, CTI informed Houlihan that it needed four truckloads of frozen chicken-breast trim in April 2021. Id. at ¶ 27. Griffin confirmed that Houlihan would secure the requested product and follow up with CTI. Id. at ¶ 28.

On March 26, 2021, Griffin told Lansdell that Houlihan could not supply the requested frozen chicken-breast trim, but said that Houlihan would consider supplying fresh, chicken-breast trim as a substitute.

Id. at ¶ 29. On April 5, 2021, Lansdell followed up with Griffin and asked "What about bringing in fresh? Are you not going to honor the contract with fresh?" Id. at ¶ 30. Griffin responded that Houlihan had been "honoring our deal and bringing in frozen with a loss all year. We do not have a deal on fresh product." Id. at ¶ 31. From then on, Houlihan no longer provided CTI with frozen chicken-breast trim or a suitable alternative and refused to provide any compensation. Id. at ¶ 32.

As a result, CTI purchased cover product at market price. Id. at ¶ 33. CTI obtained enough frozen chicken-breast trim to meet its 2021 needs, but at a cost of between $1.10 to $1.30 per pound. Id. at ¶ 33. In its prayer for relief, CTI requests the Court award actual damages, interest, fees and costs, as well as "any other relief to which CTI may be justly entitled at law or at equity." Id. at p. 10.

Over the summer of 2021, Houlihan sued CTI in Missouri state court, seeking a declaration that the two companies had not entered into a contract for the sale of chicken trim. Doc. 7. CTI removed the case to this Court, Doc. 1, and Houlihan promptly moved for summary judgment., Doc. 9. CTI then moved to dismiss Houlihan's complaint, arguing the Court lacked personal jurisdiction over it. Doc. 18. The Court denied CTI's motion to dismiss, Doc. 25, so CTI filed its answer, along with a two-count counterclaim against Houlihan for breach of contract and promissory estoppel, Doc. 27. After that, the Court denied without prejudice Houlihan's then-pending motion for summary judgment to provide CTI an opportunity to conduct discovery. Doc. 40; see Fed. R. Civ. P. 56(d). Houlihan now moves to dismiss CTI's counterclaim for failure to state a claim upon which relief can be granted. Doc. 29; Fed. R. Civ. P. 12(b).

II. Standard

Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to dismiss a claim for "failure to state a claim upon which relief can be granted." The notice pleading standard of Rule 8(a)(2) of the Federal Rules of Civil Procedure requires the plaintiff to give "a short and plain statement showing that the pleader is entitled to relief ...." To meet this standard and to survive a Rule 12(b)(6) motion to dismiss, "a complaint must contain 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotations and citation omitted). This requirement of facial plausibility means the factual content of the plaintiff's allegations must "allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Park Irmat Drug Corp. v. Express Scripts Holding Co. , 911 F.3d 505, 512 (8th Cir. 2018) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). The Court must grant all reasonable inferences in favor of the nonmoving party. Lustgraaf v. Behrens , 619 F.3d 867, 872–73 (8th Cir. 2010). Ordinarily, only the facts alleged in the complaint are considered for purposes of a motion to dismiss; however, materials attached to the complaint may also be considered in construing its sufficiency. Reynolds v. Dormire , 636 F.3d 976, 979 (8th Cir. 2011).

When ruling on a motion to dismiss, a court "must liberally construe a complaint in favor of the plaintiff ...." Huggins v. FedEx Ground Package Sys., Inc. , 592 F.3d 853, 862 (8th Cir. 2010). However, if a claim fails to allege one of the elements necessary to recover on a legal theory, the Court must dismiss that claim for failure to state a claim upon which relief can be granted.

Crest Const. II, Inc. v. Doe , 660 F.3d 346, 355 (8th Cir. 2011). Threadbare recitals of a cause of action, supported by mere conclusory statements, do not suffice. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ; Twombly , 550 U.S. at 555, 127 S.Ct. 1955. Although courts must accept all factual allegations as true, they are not bound to take as true a legal conclusion couched as a factual allegation. Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (...

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