Rock Hill Dairy, LLC v. Genex Coop., Inc.

ROCK HILL DAIRY, LLC, Plaintiff, v. GENEX COOPERATIVE, INC., and ALTA GENETICS, INC., Defendants.

19-cv-845-wmc

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN

December 1, 2020

OPINION AND ORDER

Plaintiff Rock Hill Dairy, LLC ("Rock Hill") brings claims against defendants Genex Cooperative, Inc. ("Genex") and Alta Genetics, Inc. ("Alta") arising out of two contracts for the sale of individual bulls. According to plaintiff, defendants are not only liable for breach of contract, but for seven other related causes of action. Defendants have moved to dismiss, arguing that plaintiff failed to state a claim upon which relief may be granted under Federal Rule of Civil Procedures 12(b)(6). (Dkt. #20.) For the reasons discussed below, defendants' motion will be granted, although plaintiff will be given the opportunity to amend some of its claims.

ALLEGATIONS OF FACT¹

Plaintiff Rock Hill breeds bulls for sale, as well as sells related insemination goods and services. (Compl. (dkt. #1-2) ¶ 4.) In 2017, Rock Hill and defendant Genex entered into a contract for the sale of a bull named S-S-I Montross Jedi Et and related inseminationgoods and services. (Id. ¶ 5.) This "Genex contract," which plaintiff attached to its complaint, states in part that the seller (here, Rock Hill) agrees to sell the bull and buyer (Genex) agrees to pay the seller: "$50,000 at the time the bull enters BUYER'S facilities and registration has been transferred to buyer"; "$100,000 when 500 units of freezable conventional semen passing GENEX lab quality standards is collected"; and "$325,000 when the bull is activated to GENEX available sire lineup." (Compl., Ex. 1 (dkt. #1-2) 9.) So long as Rock Hill delivered the agreed-upon goods to Genex, Genex represented that it would pay in accordance with the contract. (Compl. (dkt. #1-2) ¶ 6.) The contract further states, "It is understood that all decisions of marketing or removal of the bull from the stud will rest solely with the BUYER. Neither PARTY will be held liable or guarantees any unrealized economic benefit." (Id. at 10.) Finally, under its terms, the contract is governed by Wisconsin law. (Id.)

Relying on the contract terms and Genex's representations, Rock Hill delivered the bull and rights to its related insemination goods and services to Genex. (Id. ¶ 6.) After delivery and acceptance, Genex sold its business to defendant Alta. (Id. ¶ 7.) Rock Hill alleges that "[a]t the time of the sale, Defendants both owned and possessed the goods and therefore both Defendants are liable for the contracts price." (Id.) Alternatively, Rock Hill alleges that "because Defendant Alta continued to possess the goods and was liable for performance of the remainder of the executory contract, Defendant Alta assumed Defendant Genex's liabilities under the contract." (Id. ¶ 8.)

In addition, Rock Hill entered into a second, separate contract with defendant Alta directly for the sale of a bull named AltaLonzo and "its associated property." (Id. ¶ 9.)This "Alta contract," also attached to the complaint, states that "[t]he owner [Rock Hill] grants to ALTA the option to purchase" the bull AltaLonzo, and that the purchase price for the bull "shall be a cash payment of $34,512.00 USA dollars OR a Peak credit payment of $43,140.00 USA dollars." (Compl., Ex. 2 (dkt. #2-1) 11.) The Alta contract further states that: (1) "[a] one-time cash payment of $165,488.00 USA dollars will be paid after Release of the Said Bull for public sale"; and (2) "ALTA may choose not to exercise their option to purchase or Release the Said Bull for any reason." (Id. at 11, 12.) The contract also explains that "to Release the Said Bull shall mean the semen for the Said Bull is distributed to Alta customers, for the purpose of progeny testing the Said Bull." (Id. at 12.) Finally, unlike the Genex contract, the Alta contract states that it "shall be governed by and construed in accordance with the laws of Canada and the province of Alberta." (Id.)

According to plaintiff Rock Hill, "[a]fter Defendants accepted the good, Defendants, or any combination of them, made a partial payment" pursuant to the contracts, but then "failed to perform [their] remaining obligations under the contracts," despite Rock Hill's complete performance. (Compl. (dkt. #2-1) ¶¶ 10-11.) Defendants Genex and Alta also failed to return the bulls and insemination goods and services to Rock Hill, preventing plaintiff from mitigating its damages by "use of the goods." (Id. ¶ 12.)

In its complaint, Rock Hill alleges eight causes of action against defendants Genex and Alta: (I) breach of contract; (II) breach of the implied covenant of good faith and fair dealing; (III) violation of unfair trade practices under New Mexico Statutes § 57-12-3; (IV) breach of fiduciary duty; (V) debt and money due; (VI) violation of the uniform commercial code; (VII) estoppel; and (VIII) negligent misrepresentation. (Id. at 4-8.)

OPINION

Under Rule 12(b)(6), dismissal is proper "when the allegations in a complaint, however true, could not raise a claim of entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007). To survive a motion to dismiss, a complaint must "plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The plaintiff need not provide detailed factual allegations, but must provide "enough facts to raise [the claim] above the level of mere speculation." Riley v. Vilsack, 665 F. Supp. 2d 994, 997 (W.D. Wis. 2009). In reviewing the sufficiency of a complaint under the plausibility standard, the court will accept the well-pleaded facts in the complaint as true, but "need not accept as true legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009). Moreover, exhibits or documents attached to a complaint are considered part of the pleadings, and they may be considered on a motion to dismiss for failure to state a claim. See Thompson v. Illinois Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002) (citing Beam v. IPCO Corp., 838 F.2d 242, 244 (7th Cir. 1988); Fed. R. Civ. P. 10(c)).

At the outset, the court addresses the substantive law to be applied to this case. As noted, both the Genex and Alta contracts contain choice-of-law provisions, applying the law of Wisconsin and the law of Alberta, respectively. Defendants assert that these choice-of-law provisions should be enforced as to plaintiff's four, so-called "contract claims" -- breach of contract, breach of the implied covenant of good faith and fair dealing, debt andmoney due, and violation of the Uniform Commercial Code. (Def.'s Br. (dkt. #21) 7 n.5.) As to the remaining claims, defendants assert that the application of choice-of-law rules dictates that Wisconsin law applies. (Id. at 12 n.9.) Plaintiff does not dispute either assertion and follows defendants' lead in applying Alberta law to the "contract claims" related to the Alta contract and Wisconsin law to the remaining claims. "Where the parties agree on the law that governs a dispute, and there is at least a 'reasonable relation' between the dispute and the forum whose law has been selected by the parties, '[this court] will forego an independent analysis of the choice-of-law issue and apply [the parties' choice].'" Harter v. Iowa Grain Co., 220 F.3d 544, 559 n.13 (7th Cir. 2000) (quoting Bird v. Centennial Ins. Co., 11 F.3d 228, 231 n.5 (1st Cir. 1993)). Accordingly, the court will not disturb the substantive law assigned by the parties and argued in their briefs.

I. Breach of Contract

To state a claim for breach of the Genex contract under Wisconsin law, plaintiff Rock Hill must allege "(1) the existence of a contract creating obligations flowing from defendant to plaintiff; (2) a breach of those obligations; and (3) damages from the breach." Uebelacker v. Paula Allen Holdings, Inc., 464 F. Supp. 2d 791, 801 (W.D. Wis. 2006) (citing Northwestern Motor Car, Inc. v. Pope, 51 Wis.2d 292, 296, 187 N.W.2d 200 (1971)). Similarly, to state a claim for breach of the Alta contract under Alberta law, a plaintiff must allege "that a contract existed; that [plaintiff] performed his contractual obligations; that [defendant] failed to perform its contractual obligations; and that [plaintiff] suffered damages." Warner v. Nutrien, Ltd., 2018 U.S. Dist. LEXIS 209531, *12-13 (D. Colo. Dec. 12, 2018) (citing Rocky Mountain House (Town) v. Alberta Mun. Ins. Exch. (2007), 79 Alta.L.R. 4th 141, at ¶ 17 (Can. Alta. Q.B.)). Defendants do not appear to dispute that plaintiff has alleged sufficient facts to show the existence of either contract, plaintiff's performance of its contractual obligations, or damages. Accordingly, the following discussion focuses on the only contested element: a causal breach.

To begin, the court will address plaintiff's general response to the motion to dismiss: by simply asserting that the defendants breached the contracts, it has satisfied the liberal pleadings requirements under the Federal Rules of Civil Procedure. (See Pl.'s Opp'n (dkt. #31) 8-9.) Certainly federal pleading standards do not require "detailed factual allegations," but "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements" are not sufficient to support a cause of action. Ashcroft, 556 U.S. at 678. A mere allegation that defendants "breached the contracts" is, therefore, not sufficient to support a claim for breach. See Bissessur v. Indiana Univ. Bd. of Trustees, 581 F.3d 599, 603 (7th Cir. 2009) ("A plaintiff may not escape dismissal on a contract claim . . . by stating that he had a contract with the defendant, gave the defendant consideration, and the defendant breached the contract."). Nevertheless, plaintiff's complaint does contain two, more specific allegations regarding the...