Huongsten Prod. Import & Export Co. v. Sanco Metals LLC
| Decision Date | 16 August 2011 |
| Docket Number | Civil No. 10-1610 (SEC) |
| Court | U.S. District Court — District of Puerto Rico |
| Parties | HUONGSTEN PRODUCTION IMPORT & EXPORT CO. LTD, ET AL Plaintiffs v. SANCO METALS LLC., ET AL Defendants |
Before the Court are plaintiffs Huongsen Production Import & Export Company LTD a/k/a Senprodimex Vietnam, Linh Hoang, and Tung Mai's (collectively "Plaintiffs") Motion to Dismiss (Docket # 39);1 Corporacion LAREB and Hector Ayala's (collectively "LAREB") opposition thereto (Docket # 56);2 and Plaintiffs' reply (Docket # 91). After reviewing the filings and the applicable law, Plaintiffs' motion is GRANTED IN PART AND DENIED IN PART.
Factual and procedural Background
This diversity case dates back to July 2, 2010, when Plaintiffs filed suit for breach of contract and damages against LAREB, among others, in connection with a contract for the extraction of scrap and steel metal from the Lafayette Mill in Arroyo (the "Mill"). Docket # 1. On August 18, 2010, LAREB filed its answer and a counterclaim against Plaintiffs, alleging that Plaintiffs (1) tortiously interfered with an agreement between LAREB and Sanco Metals LLCand Sanco Metal & Recycling Center- Puerto Rico Branch (collectively "SANCO"); (2) negligently hired Puerto Rico Salvage & Demolition Inc. and Zen America Capital Corporation (collectively the "Independent Contractors") to remove the steel and scrap metal from the Mill; and (3) failed to adequately supervise the Independent Contractors. LAREB's allegations are predicated on Article 1802 and 1803, Puerto Rico's tort statutes.3
On October 1, 2009, LAREB and SANCO signed their first contract whereby LAREB sold to SANCO all of the scrap metal contained at the Mill, and conferred upon SANCO the rights to extract it from the Mill.4 This contract required SANCO to obtain a public liability insurance policy for the work performed, workers' compensation insurance, as well as all of the legal permits required by the Commonwealth for the extraction of scrap metal and toxic waste.5
Subsequently, on December 15, 2009, LAREB and SANCO signed a second contract that stipulated essentially the same aforementioned obligations. Under the new contract, however, SANCO was also obligated to employ "competent" personnel who would efficiently remove both the scrap metal and the toxic waste from the Mill. As part of the contract's negotiations,LAREB informed SANCO of the agreement between LAREB and Asociacion, particularly regarding the time restrictions for removing all steel and scrap metal without penalties, and the responsibility of removing all asbestos from the site. During these negotiations, SANCO never informed LAREB that it intended to resell the steel and scrap metal from the Mill; this led LAREB to believe that SANCO would directly perform and engage in all required work.
On November 9, 2009, while SANCO and LAREB negotiated the terms of their second contract, SANCO turned around and sold all the steel and scrap metal to Plaintiffs.6 LAREB alleges that Plaintiffs knew about the contractual agreements between LAREB and SANCO, and that it was unaware that SANCO had contracted with Plaintiffs. On January 14, 2010, Plaintiffs signed a service agreement with the Independent Contractors to remove all steel and scrap metal from the Mill and transport the same to Plaintiffs.
According to the counterclaim, notwithstanding their knowledge, Plaintiffs' agreements with the Independent Contractors tortiously interfered with the terms and conditions of the LAREB-SANCO agreement. By virtue of Plaintiffs' agreements with the Independent Contractors, the latter had to obtain all required permits to remove the steel and scrap metal from the Mill; they also had the duty to obtain workers' compensation insurance for all employees who would remove the scrap metal from the Mill. According to LAREB, the Independent Contractors were unqualified to perform the removal of the steel and scrap metal from the Mill. They failed to (1) obtain the demolition permits necessary for the extraction of metal; (2) secure the permits for the removal of asbestos from the metal in the Mill; (3) acquire a workers' compensation insurance policy or public liability insurance; and (4) secure the Mill'spremises. This last omission resulted in the loss through theft of substantial amounts of steel and scrap metal.
As a result of these omissions, LAREB faced proceedings before local government agencies as well as workers' compensations claims from employees injured at the Mill. LAREB was also forced to seek injunctive relief before the state courts to enjoin Puerto Rico Salvage & Demolition Inc., and SANCO from removing metal from the Mill without the appropriate permits. Additionally, LAREB failed to remove the metal from the Mill within six months, as agreed with Asociacion, and consequently, had to pay fines because of said breach of contract.
In its counterclaim, LAREB advances two claims. First, that under Articles 1802 and 1803 of the Puerto Rico Civil Code, Plaintiffs were negligent or at fault in selecting the Independent Contractors to remove the steel and scrap metal from the Mill, and that Plaintiffs failed to properly supervise the work performed by them. Second, that Plaintiffs tortiously interfered with the agreement between LAREB and SANCO, by executing agreements with the Independent Contractors that contained terms and conditions contrary to those of the LAREB-SANCO agreement.
On September 8, 2010, Plaintiffs moved to dismiss the counterclaim, arguing that LAREB lacks standing to claim (1) damages to the Mill property; (2) damages as a result of claims for injured workers; and (3) damages for loss of steel and scrap metal. They also contend that LAREB's tortious interference claim fails because Plaintiffs' intent to interfere, a required element, cannot be inferred from their actions. Alternatively, they argue that LAREB is estopped from enforcing the LAREB-SANCO Contract II.
Regarding LAREB's Article 1803 claims, Plaintiffs contend that the Independent Contractors were experienced in their line of business. Furthermore, Plaintiffs aver that they were not required to supervise them. Finally, they allege that LAREB suffered no damages because they were paid for all rights to the metal at the Mill.7 LAREB timely opposed. Docket # 56.
To survive a Rule 12(b)(6) motion to dismiss, Plaintiffs' "well-pleaded facts must possess enough heft to show that [they are] entitled to relief." Clark v. Boscher, 514 F. 3d 107, 112 (1st Cir. 2008).8 In evaluating whether Plaintiffs are entitled to relief, the court must accept as true all "well-pleaded facts [and indulge] all reasonable inferences" in plaintiffs' favor." Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The First Circuit has held that "dismissal for failure to state a claim is appropriate if the complaint fails to set forth factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Gagliardi v. Sullivan, 513 F. 3d 301, 305(1st Cir. 2008). Courts "may augment the facts in the complaint by reference to documents annexed to the complaint or fairly incorporated into it, and matters susceptible to judicial notice." Id. at 305-306. Nevertheless, in judging the sufficiency of a complaint, courts must "differentiate between well-pleaded facts, on the one hand, and 'bald assertions, unsupportable conclusions, periphrastic circumlocution,and the like,' on the other hand; the former must be credited, but the latter can safely be ignored." LaChapelle v. Berkshire Life Ins., 142 F.3d 507, 508 (quoting Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996)); Buck v. American Airlines, Inc., 476 F. 3d 29, 33 (1st Cir. 2007); see also Rogan v. Menino, 175 F.3d 75, 77 (1st Cir. 1999). Thus, Plaintiffs must rely on more than unsupported conclusions or interpretations of law, as these will be rejected. Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir. 1997) (citing Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir. 1988)).
Moreover, "even under the liberal pleading standards of Fed R. Civ. P. 8, the Supreme Court has recently held that to survive a motion to dismiss, a complaint must allege 'a plausible entitlement to relief.'" Twombly, 550 U.S. at 559. Although complaints do not require detailed factual allegations, the plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Id. at 556.
In Ashcroft v. Iqbal, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009), the Supreme Court reaffirmed Twombly and clarified that two underlying principles must guide a court's assessment of the adequacy of pleadings when evaluating whether a complaint can survive a Rule 12(b)(6) motion. See Iqbal, 129 S. Ct. at 1949-50. First, the court must identify any conclusory allegations in the complaint as such allegations are not entitled to an assumption of truth. Id. at 1949. Specifically, the court is not obligated to accept legal conclusions set forth as factual allegations in the complaint. Id. Moreover, "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (quoting Twombly, 550 U.S. at 555); see also Penalbert-Rosa v. Fortuno-Burset, 631 F.3d 592, 595 (1st Cir. 2011) (). In other words, "[a] plaintiff is not entitled to 'proceed perforce' by virtue of allegations that merely parrot the elements of the cause of action." Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1,12 (1st Cir. 2011).
Second, a complaint survives only if it states a plausible claim for relief. Id. (citing Twombly, 550 U.S. at 556). Thus, any nonconclusory factual allegations in the complaint,...
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