United States District Court, E.D. Michigan, Southern Division
OPINION & ORDER GRANTING, IN PART, AND DENYING,
IN PART, DEFENDANTS' MOTION FOR PARTIAL DISMISSAL (DKT.
18), AND DENYING DEFENDANT VERGANI'S MOTION
TO DISMISS OR, IN THE ALTERNATIVE, FOR SUMMARY
JUDGMENT (DKT. 23)
A. GOLDSMITH UNITED STATES DISTRICT JUDGE.
matter is before the Court on a motion for partial dismissal
filed by Defendants Sofir Italia s.r.l., Alvaro Fregolent,
and Marco Vergani (collectively, the
“Defendants”) (Dkt. 18), as well as Vergani's
separate motion to dismiss or, in the alternative, for
summary judgment (Dkt. 23). The issues have been fully
briefed, and a hearing was held on August 3, 2017. For the
reasons stated below, Defendants' motion is granted, in
part, and denied, in part, and Vergani's motion is
2013, Komatsu Ltd., a Japanese manufacturing company, was
seeking an American contractor to install its presses in two
Chrysler Group LLC plants located in Michigan. Am. Compl.
¶ 8 (Dkt. 16). Komatsu contacted Plaintiff International
Industrial Contracting Corporation (“IICC”) and
issued an invitation to quote the project, “which
included drawings, specifications and ‘other design
information' necessary to prepare a quotation for the
installation of the Komatsu presses in the Chrysler
plants.” Id. ¶¶ 8-9. This
“other design information” included a table that
indicated “the types and quantities of cables that
would have to be pulled and connected in connection with the
installation . . . .” Id. ¶ 10.
response to Komatsu's invitation, IICC submitted a
quotation, to which Komatsu responded via email and provided
more detailed information about the presses. Id.
¶¶ 12-13. IICC then revised its quote several times
between November 2013 and June 2014. Id. ¶ 14.
27, 2014, Sofir informed IICC that it was the
“supplier” of the Komatsu presses for the project
and sent IICC a Request for Quotation (“RFQ”) for
installation services. Id. ¶ 18.Attached to the
RFQ was a “Technical Specification, ” which
stated that it “update[d] and replace[d] completely any
previous specification used for preliminary quotation.”
Id. ¶ 19. Although the Technical Specification
still “referenced several drawings of the Komatsu
presses and other documents that were identical to those that
had been previously provided to IICC by Komatsu, ”
neither the RFQ nor the Technical Specification
“included any electrical design drawings or
specifications or any tables indicating the types and numbers
of cable that would have to be installed on the
Project.” Id. ¶¶ 20-21.
on the information provided by Komatsu, as well as
Sofir's RFQ, IICC submitted a quotation on July 14, 2014.
Id. ¶ 24. Although the quotation was addressed
to Komatsu, it was intended for Sofir. Id. Sofir
responded by informing IICC that the quotation needed to be
submitted to Sofir, and identifying several items that it
contested and required further information. Id.
¶ 25. IICC then submitted several revised quotations to
Sofir through August 2014. Id. ¶¶ 26-27.
October 10, 2014, IICC and Sofir entered into a contract for
the installation of the Komatsu presses “in accordance
to the Technical Specification.” Id. ¶
33. According to IICC, the parties' contract consists of
five purchase orders, see id., which were attached
as an exhibit to the amended complaint, see Purchase
Orders, Ex. 6 to Am. Compl. (Dkt. 16-6). At no point between
June 2014 and October 2014, however, did Sofir (i) provide
IICC with a basis to determine the actual number of cables
and connections required for the project, (ii) determine
IICC's understanding of the number of cables and
connections required for the project, or (iii) inform IICC
that the actual number of cables and connections required for
the project exceeded the amount extrapolated from the
information in a February 2014 email from Komatsu. Am. Compl.
March 9, 2015, IICC began site preparation for the project.
Id. ¶ 35. The first delivery of Komatsu presses
arrived in Baltimore, Maryland, on March 28, and the first
load from Baltimore arrived at a Chrysler plant on March 31.
discovered that, as part of its scope of the work, it
actually had to pull and connect more than double the number
of cables. Id. ¶ 36. Realizing that the number
of cables and connections exceeded the amount previously
estimated, IICC determined the actual number of cables and
connections required for the project and informed Sofir.
Id. ¶ 37. The additional cables and connections
also required the installation of cable trays that were not
included in any of the specifications. Id. ¶
38. Sofir thereafter approved a number of change orders,
including the additional cable trays. Id. ¶ 39.
However, despite IICC's repeated requests, Sofir has
refused to pay for the installation of the additional cables.
Id. ¶ 40. Sofir has also “refused to pay
IICC the remaining sums owed to IICC for completed work that
was already agreed upon by the parties.” Id.
on the foregoing allegations, IICC has asserted the following
state-law claims in its amended complaint: (i) breach of
contract against Sofir; (ii) negligent misrepresentation,
innocent misrepresentation, and constructive fraud against
Sofir; (iii) abandonment/quantum meruit against Sofir; (iv)
violation of the Michigan Building Contract Fund Act
(“MBCFA”), Mich. Comp. Laws 570.151 et
seq., against Sofir, Fregolent, and Vergani; and (v)
both common-law and statutory conversion against Sofir,
Fregolent, and Vergani.
STANDARD OF DECISION
motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6), “[t]he defendant has the burden of showing
that the plaintiff has failed to state a claim for
relief.” Directv, Inc. v. Treesh, 487 F.3d
471, 476 (6th Cir. 2007) (citing Carver v. Bunch,
946 F.2d 451, 454-455 (6th Cir. 1991)), cert.
denied, 552 U.S. 1311 (2008). To survive a Rule 12(b)(6)
motion, the plaintiff must allege sufficient facts to state a
claim to relief above the speculative level, such that it is
“plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). The plausibility
standard requires courts to accept the alleged facts as true,
even when their truth is doubtful, and to make all reasonable
inferences in favor of the plaintiff. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009); Twombly, 550
U.S. at 555-556.
a complaint's plausibility is a “context-specific
task that requires the reviewing court to draw on its
judicial experience and common sense.” Iqbal,
556 U.S. at 679. Although a complaint that offers no more
than “labels and conclusions, ” a
“formulaic recitation of the elements of a cause of
action, ” or “naked assertion[s]” devoid of
“further factual enhancement” will not suffice,
Iqbal, 556 U.S. at 678, it need not contain
“detailed factual allegations, ”
Twombly, 550 U.S. at 555; see also Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (“[S]pecific facts
are not necessary . . . .”). Rather, a complaint needs
only enough facts to suggest that discovery may reveal
evidence of illegality, even if the likelihood of finding
such evidence is remote. Twombly, 550 U.S. at 556.
Thus, a motion to dismiss “should not be granted unless
it appears beyond doubt that the plaintiff can prove no set
of facts in support of his claim which would entitle him to
relief.” Directv, 487 F.3d at 476.
Breach of Contract
state a claim for breach of contract under Michigan law, IICC
must first establish the existence of a valid contract, the
elements of which include: “(1) parties competent to
contract, (2) a proper subject matter, (3) a legal
consideration, (4) mutuality of agreement, and (5) mutuality
of obligation.” Hergenreder v. Bickford Senior
Living Grp., LLC, 656 F.3d 411, 417 (6th Cir. 2011)
(quoting Hess v. Cannon Twp., 696 N.W.2d 742, 748
(Mich. Ct. App. 2005)).Once a valid contract has been
established, IICC must allege the terms of the contract, that
Sofir breached those terms, and that IICC suffered damages as
a result of the breach. In re Brown, 342 F.3d 620,
628 (6th Cir. 2003); Galeana Telecomms. Invs., Inc. v.
Amerifone Corp., 202 F.Supp.3d 711, 721 (E.D. Mich.
amended complaint, IICC alleges that it entered into a
contract with Sofir to install the press lines in accordance
with Sofir's specifications. Am. Compl. ¶ 33. IICC
further alleges that it performed its obligations under the
parties' contract, and that Sofir breached its
obligations by “failing to make payments when due and
by failing to provide complete, accurate and constructible
design documents.” Id. ¶ 44. Sofir also
“breached the implied covenant of good faith and fair
dealing, ” which IICC claims is part of the
parties' contract. Id. ¶ 45.
argue that, insofar as IICC is seeking payment for the
installation of additional cables, the breach-of-contract
claim should be dismissed because the contract was a
“fixed-price” contract for the
“turn[-]key” installation of the press lines, as
opposed to a variable-cost contract. Defs. Mot. at 9, 11.
According to Defendants, the contract did not “include
any limitations or assumptions regarding the number of
cables” required to install the press lines, and,
therefore, “IICC assumed the risk that its actual costs
may turn out to be higher than anticipated.”
Id. at 9. Defendants also argue that this claim
cannot be based on IICC's purported reliance on the
Komatsu table, because that table was not a part of the
contract, and the terms and conditions of the purchase orders
contained an integration clause, which confirmed that the
purchase orders constituted the “entire agreement
between the parties.” Id. at 10.
response, IICC contends that the language in the contract is
ambiguous, particularly in regard to the word
“turnkey.” Pl. Resp. at 12 (Dkt. 21). IICC
further claims that the parties' course of performance
undermines Sofir's assertion that the parties had a
fixed-price contract. Id. at 15. At this pleading
stage, the Court agrees with IICC.
construing contractual language, the Court must “give
effect to the parties' intention at the time they entered
into the contract.” Beck v. Park W. Galleries,
Inc., 878 N.W.2d 804, 807 (Mich. 2016) (per curiam).
Such an undertaking requires the Court to examine the
contract's language “according to its plain and
ordinary meaning.” Id.; see also Rory v.
Cont'l Ins. Co., 703 N.W.2d 23, 28 (Mich. 2005)
(“In ascertaining the meaning of a contract, we give
the words used in the contract their plain and ordinary
meaning that would be apparent to a reader of the
instrument.”). If the language is clear and
unambiguous, the contract must be interpreted and enforced as
written. Beck, 878 N.W.2d at 807; Reardon v.
Kelly Servs., Inc., 210 F. App'x 456, 459 n.4 (6th
Cir. 2006) (“[A] fundamental tenet of our jurisprudence
is that unambiguous contracts are not open to judicial
construction and must be enforced as written[.]”
(quoting Rory, 703 N.W.2d at 30-31).
test for ambiguity under Michigan law is whether (i)
“two provisions ‘irreconcilably conflict with
each other, '” or (ii) a term is
“‘equally susceptible to more than a single
meaning.'” RBS Citizens Bank, N.A. v.
Purther, 22 F.Supp.3d 747, 752 (E.D. Mich. 2014)
(quoting Choates v. Bastian Bros., Inc., 741 N.W.2d
539, 543 (Mich. Ct. App. 2007)). Whether a contract's
language is ambiguous is a question of law, while the meaning
of ambiguous language remains a question of fact.
Id. Further, ambiguity may either be patent or
latent. Shay v. Aldrich, 790 N.W.2d 629, 641 (Mich.
2010). The former appears from the face of the document and
may not be identified with extrinsic evidence, while the
latter “exists when the language in a contract appears
to be clear and intelligible and suggests a single meaning,
but other facts create the necessity for interpretation or
choice among two or more possible meanings.”
the hearing, Defendants explained that the phrase “Our
Specification N. 01402502 Rev. 2, ” which appears in
the purchase orders, see, e.g., Purchase Orders at 2
(em/ecf page), was a reference to the Technical Specification
in Sofir's June 27, 2014 RFQ, and acknowledged that those
specifications also make up part of the parties'
contract. However, those specifications were not attached to
the amended complaint, nor were the details or terms of those
specifications specifically alleged. Further, while the
phrase “turn key” does appear in the purchase
orders, that term is not self-explanatory based the language
of the purchase orders (which includes both English and
Italian). Without further factual development regarding the
precise terms of the parties' contract beyond the
allegations in the complaint and the attached purchase
orders, it would be premature for the Court to rule on
Defendants' arguments that the contract was for a
fixed-price, thereby precluding IICC's recovery for the
installation of additional cables.
portion of Defendants' motion is denied.
Constructive Fraud: Negligent and ...