Johnson Elec. N. Am. v. Daimay N. Am. Auto.
| Decision Date | 21 September 2021 |
| Docket Number | 19-cv-13190 |
| Parties | Johnson Electric North America, Inc., et al., Plaintiffs, v. Daimay North America Automotive, Inc., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Mag Judge David R. Gr and Case
Plaintiffs Johnson Electric North America, Inc. (“JENA”) and Parlex USA LLC (“Parlex”) brought a breach of contract action against Defendant Daimay North America Automotive, Inc. (“Daimay Michigan”) (ECF No. 1.) Defendant moved to dismiss, arguing that it was not a party to the contracts at issue and could not be sued for their breach. (ECF No. 9.). The Court granted Defendant's motion but permitted Plaintiffs to amend their complaint. (ECF No. 16.) Plaintiffs filed an amended complaint adding Daimay Automotive Interiors, S. de R.L. de C.V (“Daimay Mexico”) as a defendant and adding claims for promissory estoppel and “alter ego.” (ECF No. 17.) Daimay Michigan now moves to dismiss all claims against it. For the reasons set forth below, Defendant Daimay Michigan's motion is granted, and all claims against Daimay Michigan are dismissed.
In August of 2018, Parlex, a subsidiary of JENA, sold 30, 000 unique parts to a Mexico-based buyer, known at the time as Motus Automotive Interiors. Shortly after the initial agreement was reached, the buyer requested that the order be expedited. In exchange for a $60, 000 fee, the parties agreed to an expedited shipment schedule. That schedule was split into five waves of deliveries. Parlex shipped the first wave and received timely payment. Soon after, it invoiced the agreed-to expedite charge, but the buyer did not pay. The second and third shipments were delivered and paid for. The fourth shipment was delivered but not paid for. Parlex withheld the fifth shipment, demanding payment on the fourth shipment and the expedite charge. The buyer acknowledged its responsibility to pay for both, but attempted to renegotiate the charges. To date, neither charge has been paid and the fifth shipment remains undelivered and unpaid for. Total damages amount to at least $120, 000.
On October 30, 2019, Parlex and JENA sued Daimay Michigan for breach of contract and unjust enrichment. Daimay Michigan moved to dismiss the complaint, arguing that it was not the proper defendant because it was not a party to the contract. The Court granted the motion to dismiss but permitted Plaintiffs to amend their complaint. (ECF No. 16.)
In their amended complaint, Plaintiffs add Daimay Mexico as a Defendant. However, Plaintiffs also maintain each of their claims against Daimay Michigan and add counts for “alter ego” and promissory estoppel. (ECF No. 17.) Daimay Michigan's motion to dismiss is before the Court.
When deciding a motion to dismiss under Federal Rule of Procedure 12(b)(6), the Court must “construe the complaint in the light most favorable to the plaintiff and accept all allegations as true.” Keys v. Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012). “To 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 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A plaintiff's claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A plausible claim need not contain “detailed factual allegations, ” but it must contain more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. Although the Court must accept well-pleaded factual allegations of the complaint as true at the motion to dismiss stage, the Court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555.
The Court previously dismissed Parlex's breach of contract claims against Daimay Michigan because the complaint did not “plausibly set forth any direct contractual obligations to Plaintiffs on the part of” Daimay Michigan. (ECF No. 16, PageID.148-152.) (quoting Koppers Co. v. Garling & Langlois, 594 F.2d 1094, 1098 (6th Cir. 1979)). Because Parlex renews its breach of contract claims virtually unchanged, they must again be dismissed.
Plaintiffs still rely on the theory that Defendant Daimay Michigan must be the buyer because its employees accepted a quote for the expedited shipping fee and were involved in general negotiations regarding the unpaid invoices. (ECF No. 17, PageID.161-163; ECF No. 21, PageID.283.) The Court previously rejected this argument because nothing in the complaint suggested Daimay Michigan had any authority to act independently of Daimay Mexico (ECF No. 16, PageID.151.). Plaintiffs now try to overcome this in two ways.
First, Plaintiffs add a conclusory allegation asserting that Daimay Michigan did have such independent authority (ECF No. 17, PageID.163.).[1] But no new facts are pleaded in support of this allegation. It is therefore insufficient. To survive a motion to dismiss, Plaintiffs must do more than merely append the required legal conclusion to their complaint. Twombly, 550 U.S. at 555.
Second, Plaintiffs argue that the involvement of Daimay Michigan employees in the transactions at issue establishes a “course of performance” between Parlex and Daimay Michigan. (ECF No. 21, PageID.283.) This argument is also unavailing. To be sure, Courts may look to a course of performance to interpret ambiguous terms in a written contract. E.g., Radiance Aluminum Fence, Inc., v. Marquis Metal Material, Inc., 461 F.Supp.3d 531, 542 (E.D. Mich. 2020); Mich. Comp. Laws § 440.1303. But, as the Court has already held, Daimay Michigan's part in negotiating the shipment of goods to Daimay Mexico is insufficient to establish that Daimay Michigan had any contractual responsibility for the payment of those shipments.
Accordingly, Counts I-III are dismissed as to Daimay Michigan.
Because the amended complaint does not set forth sufficient facts to show that Daimay Michigan had contractual obligations to Parlex, JENA's third-party beneficiary claim must also fail. Third-party beneficiaries do not have greater rights to enforce promises than direct beneficiaries. Shay v. Aldrich, 487 Mich. 648, 675-76 (2010) ()
Accordingly, Count IV is also dismissed as to Daimay Michigan.
Plaintiffs renew their unjust enrichment claim against Daimay Michigan. In Michigan, the elements of unjust enrichment are (1) a benefit received by the defendant from the plaintiff, and (2) inequity to the plaintiff as a result. See Dumas v. Auto Club Ins. Ass'n, 437 Mich. 521, 546 (1991).
The Court previously rejected this claim because although Plaintiffs argued that Daimay Michigan had “received and retained” its shipments, its own pleadings showed that those shipments were in fact delivered to Mexico. (ECF No. 16, PageID.153.) Thus, Plaintiffs could not show that Daimay Michigan had received any benefit. Id. The amended complaint does not show otherwise. To the contrary: it explicitly states that all of Plaintiffs' shipments were delivered to “DaimayMex” in Mexico. (ECF No. 17, PageID.163-165.)
Plaintiffs assert that Daimay Michigan was nevertheless enriched because it used Plaintiffs' products in its manufacturing process. (ECF No. 17, PageID.173.) This allegation is unsupported by even a single fact in the amended complaint. But it would be insufficient even if better supported. As the Michigan Courts have held repeatedly, “the mere fact that a third person benefits from a contract between two other persons does not make such third person liable in...unjust enrichment.” Karaus v. Bank of New York Mellon, 300 Mich.App. 9, 23-24 (2012) (quoting Morris Pumps v. Centerline Piping, Inc., 273 Mich.App. 187, 193 (2006)). For an unjust enrichment claim to lie against Daimay Michigan, it must have received a benefit from Plaintiffs. Landstar Express Am., Inc., v. Nexteer Auto. Corp., 319 Mich.App. 192, 205 (2017) (quoting Morris Pumps, 273 Mich.App. at 193). At most, it has received a benefit from the contract between Plaintiff and Daimay Mexico. That is insufficient. See Karaus, 300 Mich.App. at 24 ()
Accordingly, Count V must also be dismissed.
Plaintiffs add a claim for “alter ego” to their amended complaint and request that the Court “pierce the corporate veil.” Under Michigan law, however, piercing the corporate veil is a remedy, not a separate cause of action. Thomas v. Khrawesh, 272 F.Supp.3d 995, 1000 (E.D. Mich. 2017); Gallagher v. Persha, 315 Mich.App. 647, 654 (2016). In addition, “Michigan courts will not pierce the corporate veil unless (1) the corporate entity was a mere instrumentality of another entity or individual; (2) the corporate entity was used to commit a fraud or wrong; and (3) the plaintiff suffered an unjust loss.” EPLET, LLC. v. DTE Pontiac N., LLC, 984 F.3d 493, 499 (6th Cir. 2021) (Quoting Servo Kinetics, Inc. v. Tokyo Precision Instruments Co., Ltd., 475 F.3d 783, 798 (6th Cir. 2007)).
In support of their “alter ego” cause of action Plaintiffs provide nothing more than a formulaic recitation of these three elements. (ECF No. 17,...
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