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Powers Distrubuting Co., Inc. v. Grenzebach Corp.

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

July 12, 2017

POWERS DISTRIBUTING COMPANY, INC, Plaintiff,
v.
GRENZEBACH CORPORATION and MATERIAL HANDLING TECHNOLOGIES, INC, Defendants.

          OPINION AND ORDER GRANTING DEFENDANT GRENZEBACH'S MOTION TO DISMISS (DKT. 12) AND DISMISSING THE CASE AS TO DEFENDANT MATERIAL HANDLING TECHNOLOGIES, INC.

          TERRENCE G. BERG UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Defendant Grenzebach Corporation moves to dismiss this case for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) on the ground that the parties' dispute must be arbitrated. Grenzebach previously moved to dismiss on the same ground, Dkt. 3, but the Court denied the motion without prejudice and gave Plaintiff the opportunity to amend its complaint to remedy the defects the Court identified in the original complaint, which had failed to distinguish between contractual obligations subject to arbitration and others which were not. Dkt. 9. Because Plaintiff's First Amended Complaint (Dkt. 10) also fails to state a claim that could be maintained without reference to the Grenzebach contracts and their mandatory arbitration provisions, Grenzebach's motion is GRANTED and the case against it is DISMISSED. And because Plaintiff asked only to amend its complaint to correct errors of ambiguity, not to add another party, the case against Defendant Material Handling Technologies, Inc. (“MHT”) is DISMISSED WITHOUT PREJUDICE.

         II. Background

         A more detailed statement of this case's background appears in the Court's order on Grenzebach's first motion to dismiss. Dkt. 9. In short, Plaintiff purchased from MHT a computerized system to operate Plaintiff's warehouse more efficiently. Dkt. 9, Pg. IDs 384-386. Plaintiff alleges that the original system had issues and never operated properly. Dkt. 9, Pg. IDs 384-386. Through some sort of transfer-Plaintiff alleges it was an outright purchase of the entire business line while Grenzebach contends it was simply an asset purchase-Grenzebach took MHT's place as the supplier of such systems, and then sold Plaintiff two upgrades to the system. Dkt. 9, Pg. IDs 384-386. Plaintiff alleges that these upgrades also had issues and that the system never operated effectively after the upgrades. Dkt. 9, Pg. IDs 384-386.

         Plaintiff originally sued Grenzebach, but not MHT, for breach of contract, breach of express and implied warranties, innocent misrepresentation, negligent misrepresentation, silent fraud, and indemnification. Dkt. 1-1, Pg. IDs 23-30. In its complaint, Plaintiff treated the three contacts at issue (the contract between Plaintiff and MHT for the original system; the contract between Plaintiff and Grenzebach for the first upgrade; and the contract between Plaintiff and Grenzebach for the second upgrade) as a single contract. Dkt. 9, Pg. IDs 384-386. This was important because the contract between Plaintiff and MHT did not have an arbitration provision, but the contracts between Plaintiff and Grenzebach did-and Grenzebach was seeking to send the entire case to arbitration. Dkt. 9, Pg. IDs 384-386.

         At the hearing on Grenzebach's motion to dismiss, Plaintiff's counsel asked for leave to amend the complaint if the Court found the allegations insufficiently pleaded. The Court issued an order explaining why Plaintiff's allegations as pleaded would require the Court to send the case to arbitration, but gave Plaintiff leave to file an amended complaint that properly separated the contractual obligations and the claims Plaintiff was making under each contract. Dkt. 9, Pg. ID 398. Plaintiff filed an amended complaint that not only added detail to its allegations but also added a new Defendant: MHT. Grenzebach moved to dismiss. Plaintiff opposed the motion. Having reviewed the briefs, the Court concludes that oral argument would not assist the Court in resolving Grenzebach's motion.

         III. Standard of Review

         A Rule 12(b)(1) motion attacks a complaint either facially or factually. United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). A facial attack challenges the sufficiency of the complaint itself, which requires a court to take as true all material allegations in the complaint and to construe those allegations in the light most favorable to the plaintiff. Id. at 598. A factual attack, however, challenges the factual existence of subject matter jurisdiction. A court analyzing a factual attack therefore need not accept as true the complaint's factual allegations, but instead must weigh any evidence properly before it. See Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990); Rogers v. Stratton Indus., Inc., 798 F.2d 913, 918 (6th Cir. 1986). Defendant argues that arbitration is the appropriate forum in which to settle this dispute. The complaint itself stands for Plaintiff's allegation that a court of law is the appropriate forum in which to settle this dispute. Thus Defendant's motion here is a factual attack questioning the factual existence of subject matter jurisdiction.

         IV. Analysis

         Plaintiff's amended complaint brings the same causes of action contained in the original complaint:

I. Breach of Contract;
II. Breach of Express and Implied ...

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