W. Silver Recycling, Inc. v. Nidec Motor Corp., No. 4:20-CV-00837 JAR
| Decision Date | 24 December 2020 |
| Docket Number | No. 4:20-CV-00837 JAR |
| Parties | W. SILVER RECYCLING, INC., Plaintiff, v. NIDEC MOTOR CORPORATION, Defendant. |
| Court | U.S. District Court — Eastern District of Missouri |
Aaron D. French, James Rixey Ruffin, Sandberg Phoenix PC, St. Louis, MO, for Plaintiff.
Joseph C. Orlet, Glennon P. Fogarty, Robert Jacob Hurtt, Jr., Husch Blackwell LLP, St. Louis, MO, for Defendant.
This matter is before the Court on Defendant Nidec Motor Corporation's Motion to Dismiss. (Doc. 9). The motion is fully briefed and ready for disposition. For the reasons discussed below, the motion will be granted in part and denied in part.
On August 31, 2018, Plaintiff W. Silver Recycling, Inc. ("WSR") and Defendant Nidec Motor Corporation ("Nidec") executed a Scrap Management Agreement (the "Agreement"). (Doc. 1 at ¶ 12; Doc. 4-1).1 Pursuant to the Agreement, WSR would process and purchase scrap metal created as a by-product of Nidec's manufacturing at seven facilities until August 31, 2021. (Doc. 1 at ¶¶ 12-14). On April 16, 2020, Nidec informed WSR that, specifically as to the Nidec Laminaciones de Acero SA de CV facility ("NLA"), Nidec was "aggressively looking to improve revenue and is prepared to test the market." (Id. at ¶ 40). WSR promptly replied that the parties "are of course under contract," and NLA "falls under the contract." (Id. at ¶¶ 41-42). On June 9, 2020, Nidec informed WSR that it "no longer requires" WSR's scrap management services at NLA. (Id. at ¶ 43). Nidec is currently selling the NLA scrap metal to the buyer who preceded WSR while allegedly continuing to utilize WSR's equipment. (Id. at ¶¶ 46-47).
Approximately two weeks after being informed its services were no longer necessary, WSR filed the instant Complaint including the following counts:
WSR's overarching argument is that the Agreement constituted an exclusive arrangement which Nidec has breached by terminating services at NLA without following the termination procedures of the Agreement. (Id. at ¶ 61 ()). In its Motion to Dismiss, Nidec argues that WSR cannot establish breach of contract as a matter of law because the Agreement is not exclusive, so there has been no termination.
To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), "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 Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A 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. (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (alteration in original) (citations omitted).
"When ruling on a motion to dismiss [under Rule 12(b)(6) ], the district court must accept the allegations contained in the complaint as true and all reasonable inferences from the complaint must be drawn in favor of the nonmoving party." Young v. City of St. Charles , 244 F.3d 623, 627 (8th Cir. 2001). A complaint should not be dismissed under Rule 12(b)(6) "unless it appears beyond a reasonable doubt that plaintiff can prove no set of facts in support of a claim entitling him to relief." Id. Dismissal is warranted, however, when actions "are fatally flawed in their legal premises and designed to fail, thereby sparing litigants the burden of unnecessary pretrial and trial activity." Id.
WSR alleges that Nidec breached the Agreement by terminating without cause and without following the procedural requirements for termination. (Doc. 1 at ¶¶ 61, 71). Under Missouri law, a breach of contract claim requires the following elements: "(1) the existence and terms of a contract; (2) that plaintiff performed or tendered performance pursuant to the contract; (3) breach of the contract by the defendant; and (4) damages suffered by the plaintiff." Keveney v. Missouri Military Acad. , 304 S.W.3d 98, 104 (Mo. banc 2010) (citing Howe v. ALD Servs., Inc. , 941 S.W.2d 645, 650 (Mo. App. 1997) ). Nidec claims that, as a matter of law, it has not breached the agreement. The critical question is whether Nidec terminated the Agreement (and accordingly failed to abide by the Agreement's termination procedures) by determining that it would not sell the NLA scrap to WSR.
The Agreement is brief, comprising only six pages excluding the exhibits. Yet the parties offer two entirely different interpretations of the Agreement's purpose. According to WSR, the parties "intended to create an exclusive relationship" pursuant to which WSR would be the only purchaser of scrap metal at the seven facilities. (Doc. 14 at 7). Alternatively, Nidec argues that the Agreement "allows the parties to have a common understanding of how they each will operate regarding the scrap recycling when the recycling is requested [by Nidec]." (Doc. 15 at 6).
WSR contends that because the Agreement constitutes an exclusive arrangement, ceasing sale of scrap metal to WSR at NLA constitutes termination, and Nidec has failed to comply with the termination provisions of Article 4. Nidec effectively admits that it has not complied with these termination provisions but argues that is because no termination has occurred. WSR identifies four specific sections which supposedly establish an exclusive arrangement:
WSR argues that Article 1.3 "sets out [WSR's] contractual obligations" and therefore "also creates [WSR's] right to meets its obligations." (Doc. 14 at 3). WSR similarly contends that Articles 2.1 and 2.2 set out mandatory obligations. Finally, according to WSR, the termination provisions of Article 4 serve no purpose if Nidec can simply choose to stop services at one facility, especially given there "is no provision for partial revocation or partial performance, or select discontinuance of services." (Doc. 14 at 6).
Nidec does not rely on specific portions of the Agreement for its argument; instead, Nidec highlights the Agreement's silence as to exclusivity. Simply put, the Agreement does not explicitly state that WSR will be Nidec's exclusive scrap metal seller. The Agreement only uses the word exclusive once, but in reference to exclusive jurisdiction and venue. (Doc. 4-1 at Art. 7). In its reply, Nidec argues that the sections cited by WSR in an "attempt[ ] to patch together an exclusivity requirement" actually buttress Nidec's interpretation of the Agreement. (Doc. 15 at 5). Nidec claims, for example, that the phrase "[a]t times specified" in Article 2.1 establishes that "Nidec has the contractual right to say when [WSR] can come to its identified facilities for scrap." (Id. at 6).
"The cardinal rule in the interpretation of a contract is to ascertain the intention of the parties and to give effect to that intention." J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club , 491 S.W.2d 261, 264 (Mo. banc 1973). When a contract contains an integration clause, as the Agreement does,3 parol evidence may only be considered if there is an ambiguity which cannot be resolved within the four corners of the contract. See Tribus, LLC v. Greater Metro, Inc. , 589 S.W.3d 679, 702 (Mo. App. 2019). If the Agreement is unambiguously non-exclusive, then Nidec has not breached because its decision to use another company at NLA does not constitute a termination. Alternatively, if there is ambiguity as to exclusivity, WSR may demonstrate exclusivity through parol evidence and dismissal at this stage would be premature.
The presence of ambiguity is a question of law. See Whelan Sec. Co. v. Kennebrew , 379 S.W.3d 835, 846 (Mo. banc 2012). "A contract is ambiguous only if its terms are susceptible to more than one meaning so that reasonable [persons] may fairly and honestly differ in their construction of the terms." Eisenberg v. Redd , 38 S.W.3d 409, 411 (Mo. banc 2001) (quoting Jake C. Byers, Inc. v. J.B.C. Invs. , 834 S.W.2d 806, 816 (Mo. App. 1992) ). "An ambiguity arises where there is duplicity, indistinctness or uncertainty in the meaning of the words used in the contract." Patterson v. Rough Road Rescue, Inc. , 529 S.W.3d 887, 894 (Mo. App. 2017) (citing J.H. Berra Constr. Co., Inc. v. City of...
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