United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER GRANTING MOTION FOR PARTIAL
DISMISSAL  AND FINDING MOTION FOR EXTENSION OF TIME TO
FILE ANSWER  MOOT
STEPHEN J. MURPHY, III UNITED STATES DISTRICT JUDGE
Resource Recovery Systems, LLC ("RRS") and FCR, LLC
(collectively, "ReCommunity") sued the City of Ann
Arbor for alleged violations of Michigan law that arose from
the parties' contractual relationship. Before the Court
are the City's motions for partial dismissal, and for an
extension of time and stay of discovery. The Court has
reviewed the briefs, and finds that a hearing is not
necessary. See E.D. Mich. LR 7.1(f).
1993 to 2016, ReCommunity operated a City-owned materials
recycling facility and transfer station (the
"Plant") pursuant to a recurrently amended
Operating and Management Contract (the "Contract")
between the City and RRS. The most recent amendment extended
the Contract through 2021. ECF 1, ¶ 14. At some point,
the City encouraged ReCommunity to enter into
materials-recycling contracts with public and private third
parties, and the Contract was amended to include a
revenue-sharing agreement. Pursuant to the agreement, revenue
sharing was "triggered" when net revenue was higher
than $54.00 per ton, and the City would receive a certain
percentage of recycled tons from the City and third parties.
When the net revenue fell below the trigger price, however,
the difference in revenue would be added to the amount the
City owed ReCommunity. The City also promised to take
responsibility for the costs borne by ReCommunity for
transporting those materials to the Plant. For example, the
City approved the purchase of a new baler to reliably compact
recyclables for transport. ReCommunity purchased one for
$550, 000 and the City confirmed that it would cover the
parties profited handsomely from the third-party contracts
until failing commodity prices dropped per-ton revenues below
the trigger price and "shift[ed] the historical flow of
payments (from ReCommunity to the City) in the opposite
direction." Id. ¶ 27. ReCommunity claims
that the City owes it $183, 566.33 as a result of the
reversal, and-despite ReCommunity's offers to amend the
Contract-the City has yet to pay.
commodity prices continued to fall, the parties'
relationship deteriorated, and various disputes precipitated
back-and-forth communications. Id. ¶¶
41-70. On July 7, 2016, the City sent ReCommunity a letter
purporting to terminate the Contract, and eventually
"barred ReCommunity from entering the Plant and
providing its recycling services to the City."
Id. ¶¶ 71, 81. On July 19, 2016,
ReCommunity sent the City a letter terminating the Contract.
instant complaint alleges state-law claims of breach of
contract (Count I and II), promissory estoppel (Count III),
and unjust enrichment (Count IV).
Rule of Civil Procedure 12(b)(6) provides for dismissal of a
complaint that fails to state a claim upon which relief can
be granted. The Court may grant a Rule 12(b)(6)
to dismiss only if the allegations do not sufficiently
"raise a right to relief above the speculative
level" and "state a claim to relief that is
plausible on its face." Hensley Mfg. v. ProPride,
Inc., 579 F.3d 603, 609 (6th Cir. 2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570
(2007)). In evaluating the motion, the Court presumes the
truth of all well-pled factual assertions. Bishop v.
Lucent Techs., 520 F.3d 516, 519 (6th Cir. 2008).
Moreover, the Court must draw every reasonable inference in
favor of the nonmoving party. Dubay v. Wells, 506
F.3d 422, 427 (6th Cir. 2007). But a "pleading that
offers 'labels and conclusions' or 'a formulaic
recitation of the element of a cause of action will not
do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Twombly, 550 U.S. at 555).
City argues that ReCommunity's promissory estoppel and
unjust enrichment claims should be dismissed because the
Contract governed the parties' relationship, and the
claims are barred by Michigan's Governmental Tort
Liability Act ("GTLA").
courts of Michigan will imply a contract when a plaintiff can
establish that no express contract concerning the subject
matter exists and that the defendant has received a benefit
from the plaintiff and retained it, resulting in an
inequity." Solo v. United Parcel Serv. Co., 819
F.3d 788, 796 (6th Cir. 2016) (citations omitted). "A
plaintiff can only plead breach of contract and implied
contract claims in the alternative if there is doubt as to
the existence of a contract." Llewellyn-Jones v.
Metro Prop. Grp., LLC, 22 F.Supp.3d 760, 794 (E.D. Mich.
2014). "If the parties admit that a contract exists, but
dispute its terms or effect, an action will not also lie for
quantum meruit or implied contract. In other words,
alternative pleading of an implied contract claim is only
allowed in a contract setting where a party doubts the
existence of a contract." Id. (citations
other things, the City states that the Contract "is a
part of the Complaint for all purposes" because
ReCommunity incorporated it by reference, the
"procedures and obligations of both [ReCommunity] and
the City relative to third party tonnages is [sic] explicitly
spelled out in the [C]ontract, " the Contract explicitly
addresses the requirements for ReCommunity "to be able
to enter into contracts with non-City customers who seek to
bring  recyclable materials" to the Plant for
processing, and "it is undisputed that at all relevant
times in the Complaint, the parties had an express and