Mitsuiya Indus. Co. v. Formed Fiber Techs., Inc.
| Decision Date | 11 February 2021 |
| Docket Number | 2:20-CV-10941-TGB |
| Parties | MITSUIYA INDUSTRIES CO., LTD., Plaintiff, v. FORMED FIBER TECHNOLOGIES, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS, AND DENYING MOTION TO STRIKE
Plaintiff Mitsuiya Industries Co., LTD. ("Mitsuiya") brought this complaint against Formed Fiber Technologies, Inc. ("FFT Inc.") and a group of related corporate defendants, alleging breach of contract, unjust enrichment, and trade secret misappropriation under state and federal law. The current operative pleading is a first amended complaint ("FAC"). ECF No. 23. Defendants filed a motion to dismiss which specifically seeks dismissal of one defendant and four counts (some in part, some entirely) and includes a motion to strike parts of the FAC. ECF No. 25. For the following reasons, Defendants' motion will be GRANTED in part and DENIED in part. The motion to dismiss Count I of the FAC, and seeking to dismiss Defendant FFT Inc., will be GRANTED. The motion to dismiss parts of Counts II and III and to entirely dismiss Counts IV and V, as well as the motion to strike, will be DENIED.
Plaintiff Mitsuiya is a manufacturer of automobile parts for Toyota Motor Corporation and its affiliates. It also regularly licenses its technology to other manufacturers, who can then manufacture and sell parts to Toyota. Defendant Formed Fiber Technologies, Inc. ("FFT Inc.") was one such manufacturer, incorporated in Delaware, that entered into a technology licensing agreement ("TLA") with Mitsuiya in 2004. In exchange for technology specs for manufacturing fender liners, trunk trim, and other interior trim parts, as well as technical support, FFT Inc. agreed to pay Mitsuiya a percentage of any sales of these products as royalties. First Am. Compl., ECF No. 23, PageID.308-09.
Mitsuiya and FFT Inc. did business under this agreement without incident for almost ten years. In 2013, Mitsuiya alleges that FFT Inc. went through a reorganization where its assets were sold to a new company and its management changed. ¶¶ 59-83, ECF No. 23, PageID.331-38. It also alleges that around this time FFT Inc. fell behind on its royalty payments. Id. at PageID.347. On December 31, 2013, a certificate of dissolution for FFT Inc. was filed in Delaware. Id. at ¶ 73,PageID.335. FFT Inc.'s successor in interest is Defendant FFT Technologies. Tr. 10/15/20 at 8:9-12, ECF No. 36, PageID.803.
According to Mitsuiya, it received no royalties for a period of about eighteen months. ECF No. 23, PageID.352. In June 2014 executives from Mitsuiya and FFT Technologies met to negotiate a schedule for repayment and an accommodation regarding future royalty rates. Id. After this meeting, Mitsuiya entered into two agreements, one entitled "Agreed Matters" and a second called "Revised Agreed Matters" ("AM" and "RAM," respectively). ECF No. 23, PageID.470-74. In these contracts, Mitsuiya and FFT Technologies1 agreed on a payment schedule for missed royalties, agreed to a temporary reduction in the royalty rate, and agreed that future royalties "will be discussed." Id.
After the AM and RAM were signed, Mitsuiya alleges that FFT Technologies made only some of the required payments. ¶¶ 231-33, ECF No. 23, PageID.379. No agreement on a new royalty rate was ever reached. Id. at ¶ 166, PageID.363. Mitsuiya also alleges it made multiple unsuccessful attempts to follow up on missed payments and to engage FFT Technologies in discussions concerning other terms of the RAM. Id. at PageID.359-64. Finally, in April 2017, the TLA was terminated. Id. atPageID.309. Mitsuiya alleges that despite the termination of the licensing agreement, even through to the present day, some or all of the Defendants continue to use Mitsuiya's proprietary technology without authorization or the payment of any royalties. Id. at PageID.339.
Mitsuiya filed its complaint on April 16, 2020. Defendants filed this Motion to Dismiss in lieu of an answer on June 18. They seek to (1) dismiss FFT Inc. as a defendant, (2) dismiss Count I of the FAC, which is only against FFT Inc., (3) dismiss in part Counts II and III, making breach of contract allegations against FFT Technologies (Count II) and FFT Holdings (Count III) , (4) dismiss Count IV, alleging liability for FFT Auburn, FFT Sidney, and Conform as alter egos for FFT Inc., FFT Technologies, and/or FFT Holdings, (5) dismiss Count V, alleging unjust enrichment against any defendants not having contractual liability, and (6) strike various sections of the FAC as "redundant, immaterial, or scandalous." The motion was fully briefed and the Court held a hearing on October 15, 2020.
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits dismissal of a lawsuit or claim where the defendant establishes the plaintiff's "failure to state a claim upon which relief can be granted." Jones v. City of Cincinnati, 521 F.3d 555, 562 (6th Cir. 2008). Consideration of a Rule 12(b)(6) motion is confined to the pleadings. Id. In evaluating the motion, courts "must construe the complaint in thelight most favorable to the plaintiff, accept all well-pled factual allegations as true and determine whether the plaintiff undoubtedly can prove no set of facts consistent with their allegations that would entitle them to relief." League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007) (citing Kottmyer v. Maas, 436 F.3d 684, 688 (6th Cir. 2006)).
Though this standard is liberal, it requires a plaintiff to provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action" in support of her grounds for entitlement to relief. Albrecht v. Treon, 617 F.3d 890, 893 (6th Cir. 2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007)). Under Ashcroft v. Iqbal, the plaintiff must also plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." 556 U.S. 662, 678 (2009) (citation omitted). A plaintiff falls short if she pleads facts "merely consistent with a defendant's liability" or if the alleged facts do not "permit the court to infer more than the mere possibility of misconduct." Albrecht, 617 F.3d at 893 (quoting Iqbal, 556 U.S. at 678-79).
Defendants state that Plaintiff fails to make out a claim against FFT Inc. because it was dissolved in 2013. ECF No. 25, PageID.499; Tr.10/15/20 at 11:6-10, ECF No. 36, PageID.806. The capacity of an organization to be sued is determined by the law of the state under which it was organized. Fed. R. Civ. P. 17(b)(2). FFT Inc. was incorporated under the law of Delaware in 2003. ¶ 2, ECF No. 23, PageID.312. Under Delaware law, corporations may be sued "for the term of 3 years from . . . expiration or dissolution or for such longer period as the Court of Chancery shall in its discretion direct." DEL. CODE ANN. tit. 8, § 278 (2010).
Here, FFT Inc. appears to have been dissolved at the end of 2013. ECF No. 25, PageID.499. Without any extension from the Court of Chancery, it could only be sued until the end of 2016. This lawsuit was brought in 2020. Consequently, Plaintiff cannot bring a claim against FFT Inc.
Plaintiff concedes that FFT Inc. filed dissolution paperwork in Delaware but argues that this was a "paper" dissolution and should be considered invalid for at least three reasons. ECF No. 31, PageID.580-83. First, it says Defendants did not publish notice of dissolution or provide Mitsuiya with notice. But notice is not required under Delaware law, which says a corporation "may give notice" after a corporation has been dissolved. 8 DEL. CODE ANN. tit. 8, § 280(a)(1) (2010) (emphasis added). Mitsuiya does not point to any authority to the contrary. ECF No. 31, PageID.583. Second, Plaintiff points to a financing statement filed against FFT Inc. by a third-party creditor in 2019 as evidence that FFTInc. still exists. Ex. A, Mot. to Dismiss, ECF No. 25, PageID.523-27. Even viewing the evidence in the light most favorable to Plaintiff, without some corroborating evidence of continued business activities the Court cannot reasonably conclude the financing statement shows FFT Inc. still existed in 2019. There is no statutory or caselaw support for the position that a financing statement filed by another party can revive a dissolved corporation. Third, Plaintiff claims the AM and RAM signed in 2014 "affirmatively represented to Mitsuiya that FFT Inc. remained in existence." ECF No. 31, PageID.581. But the signatory named in the text of the documents is FFT LLC, not FFT Inc. ECF No. 23, PageID.470-74. Defendants state on the record that FFT LLC is a successor in interest to FFT Inc, not the same entity. ECF No. 35, PageID.793.
So, FFT Inc. no longer exists. But Mitsuiya argues in the alternative that Delaware law gives it the right to petition for the creation of a trust to collect on FFT Inc.'s assets up until ten years after its dissolution, or until 2024. DEL. CODE ANN. tit. 8, § 279 (2010). While this is true, the life of a corporation can only be extended in a manner that the "Court of Chancery shall in its discretion direct." Id. at § 278. Plaintiff has not asked the Delaware Court of Chancery to establish such a trust, nor has it explicitly asked this Court for one, instead suggesting this Court could authorize one because the parties agreed in the TLA that "any and all litigation" should be brought in the Eastern District of Michigan. Tr. 10/15/20, ECF No. 36, PageID.822-23. The Court disagrees.The Delaware statutes are clear in that they vest the Court of Chancery with the power to create a trust. DEL. CODE ANN. tit. 8, §§ 278, 279 (2010). This Court has found no examples of courts outside the Delaware Court of Chancery's jurisdiction creating trusts under this statute, and a decision...
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