La. Newpack Shrimp, Inc. v. Ocean Feast of China, Ltd.

SECTION: D (4)

ORDER AND REASONS^[1]

WENDY B. VITTER, UNITED STATES DISTRICT JUDGE

Before the Court is Longhai Desheng Seafood Stuff Co. Ltd.'s Motion to Dismiss, in which it seeks to dismiss two counterclaims asserted against it by Louisiana Newpack Shrimp Company, Inc.^[2] Louisiana Newpack opposes the Motion, ^[3] and Longhai has filed a Reply.^[4]

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After careful consideration of the parties' memoranda and the applicable law, the Motion is GRANTED.

I. FACTUAL AND PROCEDURAL BACKGROUND^[5]

This consolidated matter arises from a failed joint venture between Louisiana Newpack Shrimp Company, Inc. (“Louisiana Newpack”), Ocean Feast of China, 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.^[6] 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.^[7]

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, which was removed to this Court on October 3, 2019 (hereafter, “the Louisiana Newpack case”).^[8] Most of the claims stem from Louisiana Newpack's allegation that Indigo and Ocean Feast breached the Joint Venture Agreement and their fiduciary

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duties owed to 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.^[9]

On March 6, 2020, Longhai filed a Complaint for Breach of Contract and Claim on Open Account in this Court against Louisiana Newpack and 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 (hereafter, the “Longhai case”).^[10] On April 20, 2020, Louisiana Newpack and Lee filed a Motion to Consolidate the two cases.^[11] The Court granted the motion, and the cases were consolidated on May 29, 2020.^[12]

On May 26, 2020, Louisiana Newpack and Lee filed an Answer, Affirmative Defenses, Counterclaim Third Party Demand [sic] and Jury Demand (the “Original Counterclaim”) in the Longhai case, asserting counterclaims against Longhai and asserting third-party demands against Ocean Feast, Zeng, and Indigo.^[13] Without separating the counterclaims from the third-party demands, Louisiana Newpack and Lee asserted the following four claims in the Original Counterclaim: (1) a conspiracy claim against Longhai, Ocean Feast, and Indigo; (2) a claim for negligence and tortious interference with contract against Longhai, Ocean Feast, and Indigo; (3) a claim that Ocean Feast or Zeng are liable for any joint venture debts owed to Longhai;

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and, alternatively (4) a claim that Ocean Feast or Indigo are liable for any joint venture debts owed to Longhai.^[14] On March 2, 2021, the Court issued an Order and Reasons, granting a Motion to Dismiss Third-Party Demand, filed by Ocean Feast, Indigo, and Zeng, dismissing without prejudice counts one, three, and four of the Original Counterclaim as to Indigo, Ocean Feast, and Zeng, but giving Louisiana Newpack and Lee an opportunity to amend those claims to cure the deficiencies found by the Court.^[15] Pursuant to that Order, Louisiana Newpack timely filed its First Amended and Restated Counterclaim, Third Party Demand and Jury Demand (hereafter, the “Amended Counterclaim”) on March 17, 2021.^[16] The Amended Counterclaim contains the same two counterclaims against Longhai for conspiracy and for negligence and tortious interference with contract, and asserts a third-party demand against Ocean Feast and Zeng for any joint venture debts owed to Longhai.^[17]

On March 22, 2021, Longhai filed the instant Motion, seeking to dismiss the two counterclaims asserted against it in Louisiana Newpack's Amended Counterclaim.^[18] According to Longhai, Louisiana Newpack has asserted a claim against Longhai, Indigo, and Ocean Feast for conspiracy, claiming that the three entities conspired with specific and malicious intent to procure, sell, and resell OCEANA branded product separate and apart from the joint venture created by Louisiana Newpack, Indigo, and Ocean Feast, effectively cutting out Louisiana

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Newpack.^[19] Longhai asserts that it cannot be held liable for the alleged conspiracy because the Court has already determined that the Joint Venture Agreement entered into between Louisiana Newpack, Indigo, and Ocean Feast does not contain an exclusivity provision.^[20] Longhai also asserts that it cannot be held liable for the conspiracy claim because it is not a member of the joint venture and, therefore, no fiduciary relationship exists between Longhai and Louisiana Newpack.^[21] Longhai further asserts that Louisiana Newpack's counterclaim for negligence and tortious interference with a contract fails as a matter of law because Longhai was not a member of the Joint Venture Agreement and, therefore, owed no duty to Louisiana Newpack.^[22]

Louisiana Newpack opposes the Motion, first asserting that it should be denied as untimely because it was filed after Longhai filed its answer to Louisiana Newpack's Original Counterclaim.^[23] In doing so, however, Louisiana Newpack concedes that Longhai asserted in its original answer that the Original Counterclaim “fails to state a claim or right of action upon which relief can be granted.”^[24] Louisiana Newpack further recognizes that district courts in this Circuit have held that Fed.R.Civ.P. 12(c) and 12(h) permit the filing of the functional equivalent of a motion to dismiss under Rule 12(b)(6) after an answer is filed.^[25] Nonetheless, Louisiana Newpack argues that the Motion should be denied as untimely because the Amended

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Counterclaim and Original Counterclaim are identical with respect to the counterclaims asserted against Longhai, and Longhai should have raised its defense of failure to state a claim in a motion to dismiss the Original Counterclaim.^[26] Turning to the merits of the Motion, Louisiana Newpack argues that it has sufficiently stated a conspiracy claim against Longhai based on the underlying unlawful act of Longhai's contributory infringement of the joint venture's OCEANA branded product.^[27]Louisiana Newpack further asserts that it has sufficiently stated a claim against Longhai for negligence and tortious interference with a contract because Longhai owed a duty to not package and sell product under the joint venture's OCEANA brand.^[28]

In response, Longhai asserts that its defense for failure to state a claim is properly before the Court under Fed.R.Civ.P. 12(h)(2) because it raised the issue in its Answer to Louisiana Newpack's Original Counterclaim.^[29] Longhai also claims that the failure to state a claim is not a waivable defense, and that this Court may consider Longhai's Motion under Rule 12(c) as our sister court did in Furr v. City of Baker.^[30] Longhai maintains that Louisiana Newpack's counterclaim for conspiracy must be dismissed because there was no exclusivity provision in the Joint Venture Agreement, so nothing prevented Longhai from selling product on the open market and its actions were neither illegal nor tortious.^[31] Longhai argues that Louisiana

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Newpack, realizing that conspiracy is not an actionable claim under Louisiana law, argued, for the first time in its Opposition brief, that the underlying unlawful act of the conspiracy is Longhai's alleged “contributory infringement” of the joint venture's OCEANA brand. Longhai asserts that it “merely packed the crabmeat with labels ordered by its customer.”^[32] As such, Longhai maintains that the counterclaims should be dismissed

II. LAW AND ANALYSIS

A. The Timeliness of Longhai's Rule 12(b)(6) Motion.

To quote our sister court, while Louisiana Newpack “spills much ink” arguing that Longhai waived its right to file a Rule 12(b) motion when it answered the Original Counterclaim, ^[33] and insists that the instant Motion is untimely, Louisiana Newpack readily concedes, albeit in footnotes, that, “Longhai conclusorily asserted in its original answer that the ‘Counterclaim fails to state a claim or right of action upon which relief can be granted' (R. Doc. 64), ” and that, “several district courts within the U.S. Fifth Circuit have noted that Rules 12(c) and 12(h) permit the filing of the functional equivalent of a motion to dismiss under Rule 12(b)(6) after an answer is filed.”^[34] The Court recognizes that Louisiana Newpack is correct “[f]rom a doctrinal standpoint.”^[35] As explained by the Middle District of Louisiana, “[T]echnically, ‘a post-answer Rule 12(b)(6) motion is untimely and some other vehicle such as a motion

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for judgment on the pleadings or for summary judgment, must be used to challenge the failure to state a claim for relief.'”^[36]

Nonetheless, this Court agrees with the Middle District of Louisiana and “finds the issue to be purely academic and without bearing upon the instant motion.”^[37] As such, the Court “chooses ‘to overlook the semantic faux pas and restyle[] the motion as a Rule 12(c).'”^[3...