United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART DEFENDANT'S MOTION TO DISMISS AMENDED COMPLAINT AND,
IN THE ALTERNATIVE, MOTION FOR A MORE DEFINITE STATEMENT
A. GOLDSMITH United States District Judge.
matter is before the Court on Defendant ValvTechnologies,
Inc.'s (“VTI”) motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6), and in the
alternative, for a more definite statement pursuant to Rule
12(e) (Dkt. 14). The issues have been fully briefed, and a
hearing was held on December 1, 2016. VTI seeks a ruling that
Plaintiff Power Process Engineering Company
(“PPEC”) has failed to state a claim because it
has failed to plead facts sufficient to establish a
contractual obligation to repurchase valves sold by VTI to
PPEC. VTI argues that even if there was such an obligation,
PPEC has not pleaded sufficient facts demonstrating that VTI
breached this obligation. Furthermore, VTI argues that PPEC
has failed to plead a legally viable claim for unjust
enrichment because it has pleaded the existence of an
enforceable contract that governs the present dispute and
because it fails to allege facts sufficient to establish that
it is without an adequate remedy at law. In the alternative,
VTI moves for a more definite statement from PPEC. For the
reasons stated below, the Court grants in part and denies in
part VTI's motion.
a manufacturer of custom valves that are used in the oil and
gas, power generation, nuclear generation, and petrochemicals
industries. Am. Compl. ¶ 12 (Dkt. 12). In April 1991,
VTI entered into a distribution agreement with PPEC, a valve
distributor located in Farmington Hills, Michigan.
Id. ¶ 14. PPEC and VTI entered into another
distribution agreement on July 30, 2014. Id. These
distribution agreements designated PPEC as VTI's
authorized valve distributor in Michigan and Toledo, Ohio.
relevant portion of the 1991 agreement states that
“Valvtech will negotiate in good faith to purchase
distributor inventory in the event the distributor agreement
is terminated by Valvtech. Full purchased price will be
allowed on new, current design and resalable items.”
1991 Agreement, Ex. B to Compl., at 7 (cm/ecf page) (Dkt.
1-3). The 2014 agreement has nearly identical language,
stating that “Manufacturer will negotiate in good faith
to purchase Distributor's inventory in the event that
this Agreement is terminated by Manufacturer. Manufacturer
will refund the full purchase price only for items of current
design in new, resaleable condition.” 2014 Agreement,
Ex. A to Compl., at 7-8 (Dkt. 1-2).
their business relationship, the vast majority of the valves
PPEC purchased from VTI were used in the production of
polycrystalline silicon, which PPEC would then resell to
Hemlock Semi-Conductors (“Hemlock”). Id.
¶ 16. In December 2013, Hemlock abruptly stopped
purchasing valves from PPEC. Id. ¶ 17.
February 24, 2014, PPEC's representatives met with Barry
Hoeffner, VTI's vice president of downstream and
specialty products. Id. ¶ 18. At the meeting,
PPEC's representatives requested that VTI buy back the
valves that PPEC had purchased for resale to Hemlock.
Id. ¶ 19. In response, Hoeffner told PPEC's
representatives that VTI would repurchase all of the valves
that were intended for Hemlock. Id. ¶ 20. The
valves were valued at $1, 972, 263.28. Id. ¶
28. After the meeting, PPEC's representatives attempted
to follow up with Hoeffner on numerous occasions regarding
the repurchasing of the valves, to no avail. Id.
¶ 22-23. After several months, Hoeffner informed
PPEC's representatives that VTI refused to repurchase the
valves intended for Hemlock. Id. ¶ 24. On
August 31, 2015, VTI informed PPEC that it was terminating
the distribution agreements. Id. ¶ 25.
VTI terminated the agreements, PPEC wrote to VTI and demanded
that VTI refund the full purchase price for the valves.
Id. ¶ 31. According to PPEC, despite
“numerous efforts, the Defendant never negotiated in
good faith to repurchase the ValvTech Inventory. Instead, the
Defendant rejected outright Plaintiff's overtures and
refused to refund the purchase price for even a single valve
from the ValvTech Inventory.” Id. ¶ 33.
STANDARD OF REVIEW
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.' 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.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). “[T]he tenet that a court must accept
as true all of the allegations contained in a complaint is
inapplicable to legal conclusions. Threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id.
“[D]ocuments attached to the pleadings become part of
the pleadings and may be considered on a motion to
dismiss.” Commercial Money Ctr., Inc. v. Illinois
Union Ins. Co., 508 F.3d 327, 335 (6th Cir. 2007).
Furthermore, “when a document is referred to in the
pleadings and is integral to the claims, it may be considered
without converting a motion to dismiss into one for summary
judgment.” Id. at 335-336. Because the
distribution agreements are attached to the pleadings and
integral to the claims, they will be considered in the
first cause of action against VTI is for breach of contract.
“To state a claim for breach of contract under Michigan
law, a plaintiff first must establish the elements of a valid
contract.” Bowlers' Alley, Inc. v. Cincinnati
Ins. Co., 32 F.Supp.3d 817, 822 (E.D. Mich. 2014).
“Once a valid contract has been established, the
plaintiff then must prove (1) the terms of the contract, (2)
breach of those terms by the defendant, and (3) injury to the
plaintiff resulting from the breach.”
Id. VTI does not dispute that the distribution
agreements constituted a valid contract. As a result, it must
be determined, after reviewing the facts alleged in the
complaint and attached distribution agreements, whether PPEC
has plausibly alleged that VTI breached the contract.
the terms of the contract that require performance, PPEC
alleges that “[t]he Distribution Agreements required
Defendant to negotiate in good faith to repurchase the
ValvTech Inventory upon termination by Defendant.” Am.
Compl. ¶ 26. The complaint also alleges that
“[f]urthermore, the Distribution Agreement required
Defendant to refund the full purchased price for all ValvTech
Inventory that was of current design, resalable and
new.” Id. ¶ 27. The 1991 distribution
agreement states that “Valvtech will negotiate in good
faith to purchase distributor inventory in the event the
distributor agreement is terminated by Valvtech. Full
purchased price will be allowed on new, current design and
resalable items. Return of inventory not otherwise covered
herein will be negotiated at the time of termination.”
1991 Agreement at 7 (cm/ecf page). The 2014 agreement
contains nearly identical language to the first two
provisions, but omits the provision that “[r]eturn of
inventory not otherwise covered herein will be negotiated at
the time of termination.” 2014 Agreement at 7-8.
1991 distribution agreement appears to provide clear
instructions regarding VTI's obligations upon
termination. If the items are new, of current design and
resalable, then VTI must pay PPEC the full purchased price.
If the items do not meet this description, then VTI is ...