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Wallace Sales & Consulting, LLC v. Tuopu North America, Ltd.

United States District Court, E.D. Michigan, Southern Division

July 24, 2015

WALLACE SALES & CONSULTING, LLC, Plaintiff,
v.
TUOPO NORTH AMERICA, LIMITED, Defendant.

ORDER DENYING DEFENDANT’S MOTION PURSUANT TO 12(B)(6) [#7]

GERSHWIN A. DRAIN, UNITED STATES DISTRICT JUDGE.

I. INTRODUCTION AND FACTUAL BACKGROUND

On March 2, 2015, Plaintiff, Wallace Sales & Consulting, LLC, filed a Complaint alleging two counts against Defendant, Tuopu North America, Limited. Count one alleges breach of contract to pay sales commissions. Count two seeks declaratory judgment that Defendant is liable to pay sales commissions for the life of any purchase order obtained by Plaintiff as described in the contract (the “Agreement”) between the parties. Plaintiff alleges that he was terminated by Defendant without cause. Thus, ¶ 14.1 of the Agreement states that Plaintiff is entitled to continuing sales commissions for all orders as described in the Agreement, however Defendant has refused to pay the commissions to which Plaintiff is entitled.

Presently before the Court is Defendant’s Motion for Summary Judgment pursuant to Rule 12(b)(6).[1] Defendant argues that the case herein should be dismissed for failure to state a viable claim. See Def.’s Mot. at 4. Defendant also requests that Ontario law be used when analyzing the issues at bar, citing ¶ 17.2 of the Agreement, “Selection of Forum and Choice of Law.” Id.[2] Finally, Defendant argues that Plaintiff was actually terminated for cause, therefore ¶ 14.2, or the termination for cause provision of the Agreement should apply to the dispute and entitles Defendant to a partial refund of the commissions it has paid to Plaintiff.

In response, Plaintiff argues that dismissal is not appropriate because the pleading standard for a breach of contract claim has been met. See Plf.’s Resp. at 14. Plaintiff also relies on Ontario case law to demonstrate that the elements of a breach of contract claim are sufficiently stated in the complaint. Id. at 15.

For the reasons that follow, the Court will DENY Defendant’s Motion.

II. LAW AND ANALYSIS

A. Defendant’s Motion must be analyzed under Rule 12(b)(6)’s Failure to State a Claim Standard

On April 28, 2015, Defendant filed a Motion for Summary Judgment Pursuant to Rule 12(b)(6). It is unclear whether Defendant intended the Court to analyze this motion under Federal Rule of Civil Procedure (“FRCP”) 12(b)(6) as a motion to dismiss, or under FRCP Rule 56, as a motion for summary judgment. Both parties cite the legal standard of review for Rule 12(b)(6) motions in their briefings. See Def.’s Mot. at 5; see also Plf.’s Resp. at 11. However, Defendant requests that the Court make conclusions on the merits of the claim, relying on evidence outside the four corners of the Complaint. Thus, the Court must determine whether this motion should be treated as a Rule 12(b)(6) motion to dismiss or a Rule 56 motion for summary judgment.

The Court will analyze Defendant’s motion as a Rule 12(b)(6) motion to dismiss. Rule 12(d) of the Federal Rules of Civil Procedure allows the Court to convert a Rule 12(b)(6) motion to dismiss into a Rule 56 motion for summary judgment. Rule 12(d) states:

If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.

Fed. R. Civ. P. 12(d). Under this rule, it is within this Court’s discretion whether to convert a motion to dismiss into a motion for summary judgment. Neither party invokes Rule 12(d) in order to convert this motion into a Rule 56 motion for summary judgment. Thus, if the court converted the present motion into one for summary judgment, it would be sua sponte.

While the Sixth Circuit allows conversion of a Rule 12(b)(6) motion into a Rule 56 motion, it requires district courts to proceed carefully when doing so. The Sixth Circuit has held that conversion into a Rule 56 analysis “should be exercised with great caution and attention to the parties’ procedural rights.” Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 487 (6th Cir. 2009)(citing § 1366 Conversion of a Rule 12(b)(6) Motion into a Summary Judgment Motion, 5C Fed. Prac. & Proc. Civ. § 1366 (3d ed.)).

Parties also must be given adequate notice prior to converting a motion to dismiss into one for summary judgment. In Tackett, the court held that prior to conversion sua sponte, “the district court must afford the party against whom sua sponte summary judgment is to be entered ten-days notice and an adequate opportunity to respond.” Id. (citing Yashon v. Gregory, 737 F.2d 547, 552 (6th Cir. 1984)). In Briggs, the Sixth Circuit reversed the district court’s decision to convert a Rule 12(b)(6) motion when it did not provide the ...


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