La. Newpack Shrimp, Inc. v. Ocean Feast of China, Ltd.
| Decision Date | 09 February 2021 |
| Docket Number | CIVIL ACTION NO. 20-782-WBV-KWR SECTION: D (4),CIVIL ACTION NO. 19-12948-WBV-KWR SECTION: D (4) |
| Parties | LOUISIANA NEWPACK SHRIMP, INC. v. OCEAN FEAST OF CHINA, LTD, ET AL. Consolidated with LONGHAI DESHENG SEAFOOD STUFF CO. LTD v. LOUISIANA NEWPACK SHRIMP, INC., ET AL. |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court is Defendants' Motion to Dismiss, filed by Ocean Feast Co., Ltd., Indigo Seafood Partners, Inc., Arthur Zeng and Jeffrey Martinez-Malo.1 Louisiana Newpack Shrimp, Inc. opposes the Motion,2 and Defendants have filed a Reply.3 After careful consideration of the parties' memoranda and the applicable law, the Motion is GRANTED in part and DENIED in part.
This consolidated matter arises from a failed joint venture between Louisiana Newpack Shrimp, Inc. ("Louisiana Newpack"), Ocean Feast Co., Ltd. ("Ocean Feast")and Indigo Seafood Partners, Inc. ("Indigo"), that operated between 2017 and 2019. On June 17, 2017, Louisiana Newpack, Ocean Feast and Indigo executed a Joint Venture Agreement, effective March 15, 2017, to purchase, import and sell seafood products from international seafood manufacturers.4 Edward Lee ("Lee") signed the Joint Venture Agreement as the legal representative of Louisiana Newpack, Arthur Zeng ("Zeng") signed as the legal representative of Ocean Feast, and Jeffrey G. Martinez-Malo ("Martinez-Malo") signed as the legal representative of Indigo.5 Under the terms of the Joint Venture Agreement, Louisiana Newpack served as the financier, Ocean Feast handled procurement and quality control, and Indigo was responsible for sales and marketing.6 Louisiana Newpack claims that the parties created the joint venture to sell seafood under the OCEANA brand.7 Louisiana Newpack also claims that under the Joint Venture Agreement, it receives 5% of each sale for general administration expenses and compensation, while the net profits are divided equally between Indigo and Ocean Feast and distributed every 30 days.8
On or about September 24, 2019, Louisiana Newpack filed a Petition for Declaratory Judgment, Suit on Open Account and Damages in Louisiana state court, asserting eleven causes of action against Ocean Feast, Indigo, Zeng and Martinez-Malo.9 Most of the claims stem from Louisiana Newpack's allegation that Indigo and Ocean Feast breached the Joint Venture Agreement and their fiduciary duties owedto the joint venture by procuring, marketing and selling seafood product outside of the joint venture, despite agreeing orally and in writing to the exclusive nature of the joint venture.10 As an example, Louisiana Newpack alleges that Ocean Feast and Indigo conspired to import and sell product from Longhai Desheng Seafood Stuff Co., Ltd. (hereafter, "Longhai"), which is one of the joint venture's largest supplier of crabmeat.11 On October 3, 2019, Zeng, Martinez-Malo, Indigo and Ocean Feast removed the case to this Court based upon diversity jurisdiction under 28 U.S.C. § 1332.12
On March 6, 2020, Longhai filed a Complaint for Breach of Contract and Claim on Open Account in this Court against Louisiana Newpack and Edward Lee, seeking to recover an outstanding balance of $998,188.03 allegedly owed by Louisiana Newpack for three lots of crabmeat that it purchased from Longhai in November and December of 2018.13 On April 20, 2020, Louisiana Newpack and Lee filed a Motion to Consolidate the two cases.14 The Court granted the motion, and the cases were consolidated on May 29, 2020.15
On March 16, 2020, Louisiana Newpack sought leave to file an amended complaint to assert additional claims against Indigo and Martinez-Malo, and to assert claims against Oceana Seafood Partners, LLC ("Oceana Seafood"), an entityowned by Martinez-Malo.16 The Court granted the motion, and Louisiana Newpack's First Amended Complaint for Declaratory Judgment, Suit on Open Account, and Damages (the "Amended Complaint") was filed into the record on March 26, 2020.17
On April 9, 2020, Ocean Feast, Indigo, Zeng and Martinez-Malo (collectively, "Defendants"), filed the instant Motion to Dismiss, asserting that all but one of Louisiana Newpack's claims (Count 12) fail to state a claim under Federal Rule of Civil Procedure 12(b)(6).18 Defendants assert that virtually all of Louisiana Newpack's claims are predicated on a fabricated breach of a non-existent exclusivity requirement in the Joint Venture Agreement. Defendants argue that because there was no exclusivity provision or non-compete obligation, there can be no breach or other violation, and that Louisiana Newpack's claims against them should be dismissed. Louisiana Newpack opposes the Motion, asserting that it has alleged sufficient facts that, if accepted as true, establish viable claims against Defendants that are plausible on their face.19 In their Reply brief, Defendants maintain that the parties never agreed to exclusivity and that dismissal is warranted.20
Under Federal Rule of Civil Procedure 12(b)(6), a defendant can seek dismissal of a complaint, or any part of it, for failure to state a claim upon which relief may be granted.21 To survive a Rule 12(b)(6) motion to dismiss, "a complaint must containsufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'"22 "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."23 "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."24
A court must accept all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.25 The Court, however, is not bound to accept as true conclusory allegations, unwarranted factual inferences, or legal conclusions.26 "Dismissal is appropriate when the complaint on its face shows a bar to relief."27 Nonetheless, the Fifth Circuit has held that a motion to dismiss under Rule 12(b)(6) is generally disfavored and is rarely granted.28 In deciding a Rule 12(b)(6) motion to dismiss, a court is generally prohibited from considering information outside the pleadings, but may consider documents outside of the complaint when they are: (1) attached to the motion; (2) referenced in the complaint; and (3) central to theplaintiff's claims.29 The Court can also take judicial notice of matters that are of public record, including pleadings that have been filed in a federal or state court.30
The Court now turns to the sufficiency of each cause of action at issue in Defendants' Motion.
Louisiana Newpack asserts various breach of contract claims against Defendants in Counts One, Two, and Six of the Amended Complaint. In Counts One and Two, Louisiana Newpack alleges that the joint venture partners "agreed both orally and in writing as to the exclusive nature of the Joint Venture."31 Louisiana Newpack alleges in Count One that Ocean Feast and Indigo breached the Joint Venture Agreement by procuring, importing and selling product separate and apart from the joint venture for their own personal economic benefit, effectively cutting Louisiana Newpack out.32 In Count Two, Louisiana Newpack alleges that Indigo and Martinez-Malo breached the Joint Venture Agreement by forming Oceana Seafood to market, sell and advertise seafood products under the OCEANA brand and compete with Louisiana Newpack and the joint venture.33 In Count Six, which is styled as"Breach of Contract," Louisiana Newpack alleges that Indigo and Ocean Feast breached their duty of good faith and fair dealing by procuring, importing and selling product without Louisiana Newpack's knowledge or permission, completely circumventing the joint venture.34 Louisiana Newpack alleges in Count Six that Indigo further breached its duty of good faith and fair dealing by: (1) forming Oceana Seafood to market, sell and advertise seafood product under the OCEANA brand and to compete with Louisiana Newpack and the joint venture; and (2) assigning the OCEANA brand to Oceana Seafood without the knowledge or consent of Louisiana Newpack or the joint venture.35
Defendants first argue that Louisiana Newpack should be barred from bringing any breach of contract claims because Louisiana Newpack initially breached the Joint Venture Agreement by failing to supply letters of credit and by failing to pay the joint venture's suppliers pursuant to the Joint Venture Agreement.36 Defendants further assert that Counts One, Two and Six are predicated upon the existence of an exclusivity obligation or a non-compete clause in the Joint Venture Agreement that does not exist.37 Defendants emphasize that the Joint Venture Agreement and the addendum thereto are both devoid of any exclusivity provision, which demonstrates the parties' intent on the subject of non-exclusivity. Defendants assert that contract interpretation is based upon the intent of the parties, and that courts will not read an exclusivity or non-compete provision into a contract where onedoes not exist on its face.38 Defendants also point out that Ocean Feast, Indigo and Louisiana Newpack operated other seafood businesses prior to creating the joint venture, which Louisiana Newpack continues to operate, and assert that the joint venture merely added a seafood procurement and sale venture to their existing businesses.39
Regarding Counts One and Two, Defendants assert that Louisiana Newpack has failed to state a claim for breach of contract against Indigo and Martinez-Malo because the Joint Venture Agreement does not limit Indigo to selling product only on behalf of the joint venture.40 Defendants similarly claim that Count One fails to state a claim against Ocean Feast because it does not allege that Ocean...
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