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Rain Air Benelux, B.V.B.A. v. Rexair, LLC

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

September 25, 2017

Rain Air Benelux, B.V.B.A. and Benjamin Ginsburg, Plaintiffs,
Rexair, LLC, Defendant.

          Elizabeth A. Stafford, Mag. Judge


          JUDITH E. LEVY, United States District Judge

         This is a diversity case in which plaintiffs bring four counts: breach of contract, tortious interference with a business relationship or expectancy, conversion, and declaratory judgment (based on the alleged contract). (Dkt. 16.) Plaintiffs, Rain Air Benelux, B.V.B.A. (a Belgian corporation) and Benjamin Ginsberg (sole owner of Rain Air Benelux, B.V.B.A.) sell vacuums manufactured by defendant. Plaintiffs primarily allege that defendant Rexair violated a 2002 exclusive distributorship agreement covering Belgium by allowing competitors to sell in the same region. Before the Court is defendant's motion to dismiss the first amended complaint for failure to state a claim. (Dkt. 18.) The Court heard oral argument on the motion on August 8, 2017. For the reasons set forth below, defendant's motion to dismiss is granted.

         I. Background

         Because the case is before the Court on defendant's motion to dismiss, the following background is drawn from plaintiff's complaint, accepting all allegations as true and in the light most favorable to plaintiff unless otherwise noted.

         Rexair is a Delaware corporation with its principal place of business in Michigan. (Dkt. 16 at 1.) Rexair manufactures Rainbow vacuums and accessories, which it sells exclusively through independent authorized distributors worldwide. (Id. at 2.) Rexair uses a multi-tiered distribution network with a program that includes cash awards and all-expenses paid trips to incentivize distributors to meet sales goals and grow their sales networks. (Id.) BGF-a UK company to which Rain Air Benelux is the successor in interest-was one of those distributors. (Id. at 4.)

         BGF and Rexair's relationship began in 1992. They had various disputes during the course of their relationship, including litigation on both sides, that resulted in a 2002 Confidential Settlement Agreement to resolve the pending disputes. (Id.) In one relevant section of the settlement agreement, Rexair agreed to “execute a new Rainbow International Distributor Agreement” with BGF “for a term of three years” as the sole regional distributor in Belgium and entitling BGF to participate fully in Rexair's incentive program. (Id.) Rexair also agreed in the settlement that the new distributor agreement (“2002 distributor agreement”) “shall be renewed annually” if BGF obtained “reasonable market penetration as agreed upon by the parties.” (Id.)

         The 2002 distributor agreement was to terminate on December 31, 2005 (a period of slightly over three years from formation of the agreement), except that Rexair:

shall renew this Agreement at the end of the initial term provided that Distributor has performed its obligations under this Agreement in accordance with standards applicable to other similarly situated Registered General Distributors. Any renewal term shall be for a term of three years, beginning on January 1 of the first year of such renewal term, and ending on December 31 of the third year thereafter. Any such renewal of this Agreement shall only be effective if executed in writing by Rexair's Chief Executive Officer, President, or Vice President of Marketing. No other renewal or attempted renewal of this Agreement shall be effective.

Id. at 5 (emphasis added).) Plaintiffs became the successors to the rights and obligations of BGF in 2008, three years after the contract's original December 2005 termination date. (Id. at 6.) BGF fulfilled all of its obligations to trigger the requirement that Rexair renew the contract for three-year terms, and the renewal is evidenced by Rexair's repeated acknowledgement that Rain Air Benelux is an active distributor, including the award of a Certificate of Excellence. (Id. at 6-7.) Plaintiffs do not allege that there is a written agreement to renew. Plaintiffs allege that Rexair has breached its contractual obligations, “most generally by refusing to treat Rain Air comparably to other International Distributors.” (Id. at 7.) Examples of Rexair's non-comparable treatment of Rain Air Benelux include: extending more generous payment terms to competitors of Rain Air Benelux, refusing to promote well-qualified Rain Air Benelux sub-distributors, and refusing to protect Rain Air Benelux's exclusive distribution rights in Belgium. (Id.)

         According to plaintiffs, Rexair also tortiously interfered with Rain Air Benelux's business relationships by telling at least fifty of Rain Air Benelux's sub-distributors at a conference that plaintiff Ginsburg is a “cheap Jew” who would not pay bonuses. (Id. at 9-10.) And plaintiffs claim Rexair is liable for statutory conversion under Mich. Comp. Laws § 600.2919a, because a Rexair distributor from Holland purchased a customer list of 15, 000 Rain Air Benelux customers from a disgruntled Rain Air Benelux employee who had stolen the list, and Rexair profited from the Dutch distributor's wrongful use of the stolen list. (Id. at 10.) Finally, plaintiffs seek a declaration that (1) determines the parties are still bound by the terms of the 2002 distributor agreement, and (2) sends the dispute to arbitration per the arbitration clause therein. (Id. at 11.)

         Defendant moved to dismiss all counts under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

         II. Standard

         When deciding a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the Court must “construe the complaint in the light most favorable to the plaintiff and accept all allegations as true.” Keys v. Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012). “To 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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A plausible claim need not contain “detailed factual allegations, ” but it must contain more than ...

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