Issuer Advisory Grp. LLC v. Technical Consumer Prods., Inc.
| Decision Date | 03 February 2015 |
| Docket Number | CASE NO. 5:14CV1705 |
| Court | U.S. District Court — Northern District of Ohio |
| Parties | ISSUER ADVISORY GROUP LLC, PLAINTIFF, v. TECHNICAL CONSUMER PRODUCTS, INC., DEFENDANT. |
MEMORANDUM OPINION AND ORDER
In this contract action, defendant Technical Consumer Products, Inc. ("defendant" or "TCPI") moves to dismiss the complaint (Doc. No. 4 ["Mot"]). Plaintiff Issuer Advisory Group LLC ("plaintiff or "IAG") opposes the motion (Doc. No. 8 ["Opp."]), and TCPI has filed a reply (Doc. No. 9 ["Reply"]). For the reasons set forth below, the motion is denied.
According to the complaint, IAG "is a Maryland limited liability company, with its principal place of business located in Chevy Chase, Maryland." TCPI "is an Ohio corporation with its principal place of business located in Aurora, Ohio." (Id. ¶ 2.) "In late 2011[,]" TCPI made the decision to make an Initial Public Offering ("IPO") of its stock. (Id. ¶ 7.) In April 2012, TCPI authorized IAG to guide it through the IPO process. (Id. ¶ 10.) To memoralize the parties' arrangement, IAG drafted an engagement letter that detailed the consulting services IAGwould provide. (Id. ¶ 11.) It is undisputed that the engagement letter contained a guarantee whereby IAG promised, (Doc. No. 4-2 ["engagement letter"] at 29, emphasis in the original.)1 "Through oversight, the engagement letter was not executed," though IAG asserts that it fully performed its contractual obligations with full knowledge, and under the direction, of TCPI. (Id. ¶ 12.)
As part of its duties, IAG scheduled meetings in New York between officers of TCPI and officials from the New York Stock Exchange ("NYSE") and the National Association of Securities Dealers Automated Quotations ("NASDAQ"). (Id. ¶ 11.) Following these meetings, both exchanges made offers to list TCPI's stock. (Id. ¶ 14.) IAG continued to negotiate with both exchanges, on behalf of TCPI, in order to obtain the best terms possible. (Id. ¶ 15.) "On or about July 2, 2012," TCPI's Chief Financial Officer instructed IAG to inform NASDAQ that TCPI would accept its offer to list TCPI's stock when it was made public. (Id. ¶ 17.) IAG asserts that it continued to work on TCPI's behalf to ensure that TCPI met the requirements for listing on NASDAQ. (Id. ¶ 18.) "However, without prior warning, in October of 2012 [TCPI] withdrew its SEC F-1 filing, essentially withdrawing its application to go public." (Id. ¶ 19.)
When IAG contacted representatives at TCPI to inquire about payment for the effort it expended on TCPI's anticipated IPO, TCPI purportedly agreed to pay but asked IAG "to defer until TCPI reinitiated its efforts to go public, which it advised [IAG]it intended to do in the near future." (Id. ¶ 20.) IAG "agreed to defer its payment, as it expected to provide more services when TCPI re-initiated its efforts to go public." (Id. ¶ 21.) And in fact, TCPI did re-initiate its efforts to go public, but did so without the assistance of IAG. (Id. ¶ 22.) When TCPI rebuffed IAG's attempts to collect for the services it rendered, IAG filed suit. (Id. ¶ 23.)
IAG's complaint, filed in state court on July 7, 2014, raised three causes of action: breach of contract, promissory estoppel, and unjust enrichment. (Compl. at 9-10.) On August 4, 2014, TCPI removed the action to this Court, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). (Doc. No. 1 [Notice of Removal] ¶ 4.) The present motion to dismiss followed. TCPI offers two separate reasons why the complaint is subject to dismissal. First, TCPI argues that IAG lacks capacity to bring this action because it is not registered to conduct business in Ohio as a foreign company, and, second, IAG did not perform its services to the satisfaction of TCPI. (Mot. at 20.)
A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil procedure tests the sufficiency of the pleading. Davis H. Elliot Co., Inc. v. Caribbean Util. Co., 513 F.2d 1176, 1182 (6th Cir. 1975). All allegations of fact by the non-moving party are accepted as true and construed in the light most favorable to that party. See Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998) (citing Meador v. Cabinet for Human Res., 902 F.2d 474, 475 (6th Cir. 1990)). The court, however, "need not accept as true legal conclusions or unwarranted factual inferences." Mixon v. Ohio, 193 F.3d 389,400 (6th Cir. 1999) (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)).
The sufficiency of the pleading is tested against the notice pleading requirements of Fed. R. Civ. P. 8. Rule 8(a)(2) provides that a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief[.]" Although this standard is liberal, Rule 8 still requires a complaint to provide the defendant "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1975, 167 L. Ed. 2d 929 (2007). Thus, "[t]o survive a 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) (quoting Twombly, 550 U.S. at 570).
In entertaining a Rule 12(b)(6) motion, the Court may consider documents that are referred to in the pleadings and are integral to the claims without converting the motion to one for summary judgment. See Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (citing Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001)); Commercial Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 335-36 (6th Cir. 2007) (citation omitted); see also Weiner v. Klais & Co., Inc., 108 F.3d 86, 89 (6th Cir. 1997) (). The engagement letter is specifically referenced in the complaint and is integral to IAG's claims, as it isthe purported source of IAG's contract rights. It is, therefore, appropriate to consider it in connection with TCPI's pending motion.
Both sides, however, have strayed well beyond the pleadings, supporting their briefs with facts and documents not referenced in the complaint. As previously discussed, ordinarily "[m]atters outside of the pleadings are not to be considered by a court in ruling on a 12(b)(6) motion to dismiss." Weiner, 108 F.3d at 88 (citing Hammond v. Baldwin, 866 F.2d 172, 175 (6th Cir. 1989) (citation omitted), and a court considering such matters typically will convert a Rule 12 motion to a Rule 56 motion for summary judgment. Fed. R. Civ. P. 12(d). It is solely within the Court's discretion, however, to either consider these matters and convert the motion to one for summary judgment or to exclude the extra-pleading materials and apply the standard set forth in Rule 12. See Shelby Cnty. Health Care Corp. v. S. Council of Indus. Workers Health & Welfare Trust Fund, 203 F.3d 926, 931 (6th Cir. 2000); Batt v. United States, 976 F. Supp. 1095, 1096-97 (N.D. Ohio 1997) () (citation omitted).
"Where there is a real dispute as to whether discovery is complete, it would be imprudent to consider the extra-pleading material and decide [the] motion for summary judgment." Kelley ex rel. Mich. Natural Res. Comm'n v. Arco Indus. Corp., 721 F. Supp. 873, 877-78 (W.D. Mich. 1989). "Considering the motion as a motion for summary judgment would be improper in those situations because the parties may not be able to present enough material to support or oppose a motion for summary judgment since no factual record has yet been developed." Black v. N. Hills Sch. Dist., Civil ActionNo. 06-807, 2007 WL 2728601, at *1 (W.D. Pa. Sept. 17, 2007) (quotation marks and citations omitted).
The Court shall exercise its discretion to exclude the extra-pleading materials presented by the parties. The present action is still in its infancy, and the parties have not conducted any discovery. In fact, the Court has not yet held a Case Management Conference ("CMC") with counsel and the parties where the dates and deadlines—including the deadline for fact discovery—that will govern the case will be set. Under these circumstances, treating defendant's motion as one for summary judgment would be premature. See, e.g., Marsilio v. Vigluicci, 924 F. Supp. 2d 837, 847 (N.D. Ohio 2013) () (citation omitted). The Court will, therefore, confine its analysis to the pleadings and the engagement letter.
Because this action is here under diversity jurisdiction, state law governs the substantive issues. See generally Gass v. Marriott Hotel Servs., Inc., 558 F.3d 419, 425-26 (6th Cir. 2009). Count One of the complaint alleges a claim for breach of contract. "Under Ohio law, the elements of a breach of contract claim are: (1) the existence of a contract; (2) performance by the plaintiff; (3) breach by the defendant; and (4) damage or loss to the plaintiff as a result of the breach." V & M Star Steel v. Centimark Corp., 678 F.3d 459, 465 (6th Cir. 2012) (). IAG properly pled facts that support each and every one of these elements, including the existence of a valid contract(in the form of the engagement letter),...
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