United States District Court, E.D. Michigan, Southern Division
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
Page Hood Chief Judge
Mikron Digital Imaging, Inc. (“Mikron”) commenced
this action on August 30, 2016. On September 27, 2016, Mikron
filed a First Amended Complaint against Defendants Omega
Medical Imaging, Inc. (“Omega Inc.”) and Omega
Medical Imaging, LLC (“Omega LLC”) (collectively
“Omega”), which Mikron alleges are alter egos of
one another, alleging breach of contract (Count I), tortious
interference with business relationships and expectancies
(Count II), unjust enrichment (Count III), fraud by
misrepresentation and concealment (Count IV), statutory and
common-law conversion (Count V), and successor liability / de
facto merger / fraudulent transfer (Count VI). (Doc # 6) On
October 25, 2016, Defendant Omega LLC filed a Motion to
Dismiss. (Doc # 11). Mikron filed a Response on November 18,
2016. (Doc # 14)
facts alleged in the First Amended Complaint are as follows.
Mikron is a Michigan corporation that sells, installs, and
services medical imaging equipment in the Midwest. (Doc # 6,
Pg ID 29) Omega Inc. is a now defunct Florida corporation
that manufactured and distributed medical imaging equipment.
Id. at 26-27. In 2010, Mikron and Omega Inc. entered
into a Dealership Agreement (“Agreement”),
identifying Mikron as the Dealer, under which Mikron would
sell Omega products in Michigan and northern Illinois.
Id. at 26; Doc # 9, Pg ID 47. The Agreement
provides: “This agreement shall automatically terminate
exactly one year from the date of the last person or entity
to sign this agreement. At the termination of the Agreement
and every year following the termination, DEALER may opt for
a one-year extension if all sales goals are met and their
account is current.” (Doc # 9, Pg ID 47) The Agreement
assigned Mikron a particular territory and stated:
“OMEGA agrees not to appoint any other dealer in the
territory as long as DEALER meets or exceeds the minimum
annual sales performance of complete systems as detailed
below.” Id. The Agreement required Mikron to
sell one system in the first year, two systems in the second
year, and two systems in the third year. Id. The
Complaint alleges that the Agreement was perpetually
renewable each year on the condition that Mikron met or
exceeded sales goals, and that Omega Inc. could not
unilaterally terminate the Agreement at its discretion.
Id. at 30.
LLC is a Florida company that manufactures, markets, and
sells its medical imaging equipment in the United States and
abroad. (Doc # 6, Pg ID 27) The Complaint alleges that some
months after the execution of the Agreement between Mikron
and Omega Inc., the officers of Omega Inc. voluntarily
dissolved the company and transferred all of its business
interests, including the Agreement with Mikron, to Omega LLC.
Omega LLC administered the Agreement and enjoyed the benefits
of the Agreement for approximately five years. Id.
at 26-27. The operations of Omega Inc. and Omega LLC were
carried out at the same address in Florida, “and there
was a complete continuity of enterprise between the two
entities.” Id. at 29. Omega LLC allegedly
failed to disclose to Mikron the transfer of the Agreement
from Omega Inc. to Omega LLC until after the filing of this
lawsuit. Id. at 35.
2015, Omega LLC allegedly demanded that Mikron enter into a
new agreement under which Mikron would pay substantial
additional fees to Omega LLC in contravention of the 2010
Agreement. Id. at 31. Mikron refused to enter into
the new proposed agreement. Id. By this point,
Mikron had allegedly invested heavily in the development of a
substantial customer base for Omega products. Id. at
30. Omega LLC allegedly has access to Mikron's customer
lists and confidential business processes and methods.
Id. at 37. The Complaint alleges that after Mikron
refused to enter into the new proposed agreement, Omega LLC
threatened to call customers directly and to interfere with
Mikron's ongoing business relationships and service
contracts with Mikron's customers. Id. at 31.
Omega LLC has allegedly “converted at least one account
in Illinois, and possibly others.” Id. On
August 4, 2016, Omega LLC issued a letter of termination of
the Agreement allegedly failing to cite any valid
justification. Id. Omega LLC has also allegedly
worked with another dealer to sell products inside
Mikron's exclusive territory. Id. The Complaint
alleges that “Mikron fully performed its obligations
under the Dealership Agreement.” Id. at 32.
Complaint alleges that Omega played a corporate shell game in
order to insulate themselves from liability under the
Agreement. Id. at 30. Omega allegedly concealed from
Mikron that Omega Inc. was dissolved and insolvent, and Omega
LLC carried on performance under the Agreement for years
until it wrongfully terminated the Agreement in bad faith,
and then disavowed responsibility under the Agreement.
Id. at 36. Mikron alleges that Omega usurped the
fruits of Mikron's performance with the intention to
squeeze Mikron out of the marketplace and withhold the
consideration that Mikron was owed under the Agreement.
Id. at 28, 32.
Standard of Review
12(b)(6) of the Federal Rules of Civil Procedure provides for
a motion to dismiss for failure to state a claim upon which
relief can be granted. Fed.R.Civ.P. 12(b)(6). This type of
motion tests the legal sufficiency of the plaintiff's
complaint. Davey v. Tomlinson, 627 F.Supp. 1458,
1463 (E.D. Mich. 1986). When reviewing a motion to dismiss
under Rule 12(b)(6), a court must “construe the
complaint in the light most favorable to the plaintiff,
accept its allegations as true, and draw all reasonable
inferences in favor of the plaintiff.” Directv Inc.
v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). A court,
however, need not accept as true legal conclusions or
unwarranted factual inferences.” Id. (quoting
Gregory v. Shelby Cnty., 220 F.3d 443, 446 (6th Cir.
2000)). “[L]egal conclusions masquerading as factual
allegations will not suffice.” Edison v. State of
Tenn. Dep't of Children's Servs., 510 F.3d 631,
634 (6th Cir. 2007). As the Supreme Court has explained,
“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. Factual allegations must be enough to raise a
right to relief above the speculative level… .”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007) (citations omitted); see LULAC v. Bresdesen,
500 F.3d 523, 527 (6th Cir. 2007). To survive dismissal, the
plaintiff must offer sufficient factual allegations to make
the asserted claim plausible on its face. Ashcroft v.
Iqbal, 556 U.S. 662, 663 (2009). “A claim has
facial plausibility when the pleaded factual content allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Id.
“The plausibility standard is not akin to a probability
requirement, but it asks for more than a sheer possibility
that a defendant has acted unlawfully. Where a complaint
pleads facts that are merely consistent with a
defendant's liability, it stops short of the line between
possibility and plausibility of entitlement to relief.”
Id. at 678 (internal citations and quotations
omitted). The court primarily considers the allegations in
the complaint, although matters of public record, orders,
items appearing in the record of the case, and exhibits
attached to the complaint may also be taken into account.
Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir.
Breach of Contract Claim (Count I)
LLC argues that Count I should be dismissed because Omega did
not have a valid contract with Mikron, and Omega did not
breach the contract with Mikron. Omega LLC argues that Mikron
had not actually met its sales goals or opted to extend the
Agreement, and Mikron's sole allegation that it
“fully performed its obligations” without a valid
explanation is not sufficient to survive a Motion to Dismiss.
Omega LLC further argues that it did not wrongfully terminate
the Agreement because there was no valid agreement between
the parties at the time that Omega LLC terminated its
relationship with Mikron.
argues that its allegations of the existence of a valid and
binding contract and of Mikron fully performing its
obligations under the contract are enough to state a valid
breach of contract claim. Mikron asserts that Omega breached
the valid Agreement when it wrongfully terminated the
Agreement without valid justification.
state a claim for breach of contract in Michigan, a plaintiff
must allege: (1) the existence of a valid contract, (2) the
terms of the contract, (3) breach of the contract, and (4) an
injury caused by the breach. See Webster v. Edward D.
Jones & Co., L.P., 197 F.3d 815, 819 (6th Cir.
1999). In Michigan, the paramount goal when interpreting a
contract is to give effect to the intent of the contracting
parties. Old Kent Bank v. Sobczak, 243 Mich.App. 57,
63-64 (2000). The court is to read the agreement as a whole
and attempt to apply the plain language of the contract
itself. Id. If the intent is clear from the language
of the contract itself, there is no place for further
construction or interpretation of the agreement. Farm
Bureau Mut. Ins. Co. v. Nikkel, 460 Mich. 558, 566
(1999). A contract provision that is clear and unambiguous
must be “taken and understood in [its] plain, ordinary,
and popular sense.” Mich. Mut. Ins. Co. v.
Dowell, 204 Mich.App. 81, 87 (1994). “Express
provisions for termination govern a contract and courts
cannot create a contractual liability where the express
intent of the parties was to terminate the agreement upon a
given condition.” E3A v. Bank of America,
N.A., No. 13-10277, 2013 WL 1499560, at *2 (E.D. Mich.
Apr. 11, 2013).
to the Agreement in this case, attached to the Complaint,
Section 1.1 expressly states that the Agreement automatically
terminated exactly one year from the date of the last person
or entity to sign the Agreement. (Doc # 9, Pg ID 47). The
date appearing on the signature page is
“10/5/10.” Id. at 51. Under the
aforementioned clear and unambiguous provision, the Agreement
automatically terminated one year later, on 10/5/11. Section
1.1 of the Agreement then expressly provides that “[a]t
the termination of the Agreement and every year following the
termination, [Mikron] may opt for a one-year extension if all
sales goals are met and their account is current.”
Id. at 47. Under this clear and unambiguous
provision, Mikron had the option of extending the Agreement
each year if all sales goals were met and Mikron's
account was current. The Complaint does not allege that
Mikron met the unambiguous contractual conditions, namely
that Mikron met all sales goals and that Mikron's account
was current. Mikron has failed to allege any facts from ...