United States District Court, E.D. Michigan, Southern Division
Steven Whalen Mag. Judge.
OPINION AND ORDER GRANTING GENTRY MILLS, INC.'S
MOTION TO DISMISS THE THIRD-PARTY COMPLAINT 
E. LEVY UNITED STATES DISTRICT JUDGE.
E. Levy United States District Judge Mag. Judge R. Steven
Carhartt, Inc. found out that its fire resistant garments
containing Innovative Textiles, Inc.'s
(“ITI”) fire resistant fabric were not actually
fire resistant, Carhartt sued ITI. Carhartt brings claims for
breach of contract, negligence, and other theories against
ITI, alleging that ITI's decision to change the fibers it
incorporated into its fire resistant fabric from an industry
standard fiber to a new, untested competitor caused the
defect in Carhartt's products. ITI then filed a
third-party complaint against Gentry Mills, Inc.
(“GMI”), a subcontractor involved in ITI's
fabric production business.
alleges that GMI is responsible for the defects in the
products that it sold to Carhartt because “[a]ll of the
fabric Carhartt contends was defective was dyed, treated,
finished, and tested by GMI before it was ultimately supplied
to Carhartt.” (Dkt. 8 at 3.) ITI brings five counts
against GMI: breach of contract (Count I), breach of express
warranty (Count II), breach of implied warranty (Count III),
common law indemnity (Count IV), and implied contractual
indemnity (Count V).
moves to dismiss the third-party complaint. This matter was
fully briefed by the parties, and, pursuant to Local Rule 7.1
the Court determines that no hearing is necessary.
Standard of Review
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
“labels and conclusions” or “a formulaic
recitation of the elements of a cause of action.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
Choice of Law
argues that North Carolina law should apply to the
allegations in its third-party complaint, and, although GMI
did not affirmatively raise this issue, it appears not to
Michigan federal court exercises jurisdiction based on the
diversity of the parties, the “conflict of laws rules
to be applied by the federal court in [Michigan] must conform
to those prevailing in [Michigan's] state courts.”
See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S.
487, 496 (1941). In actions based in contract, Michigan
courts apply §§ 187 and 188 of the Second
Restatement of Conflict of Laws. Chrysler Corp. v.
Skyline Indus. Servs., Inc., 448 Mich. 113, 124 (1995).
Where the parties have not agreed upon the applicable law,
§ 188 dictates that courts apply “the local law of
the state which, with respect to that issue, has the most
significant relationship to the transaction and the
parties.” Restatement (Second) of Conflict of Laws
§ 188(1) (1971); see also Chrysler Corp., 448
Mich. at 128. The state with the most significant
relationship to the transaction and parties is determined by
looking to “(a) the place of contracting, (b) the place
of negotiation of the contract, (c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) the domicil, residence, nationality, place of
incorporation and place of business of the parties.”
Restatement § 188(2).
this action is in a Michigan federal court, North Carolina
has the most significant relationship to the transaction and
the parties.Both parties are North Carolina
corporations, and they each maintain their principal place of
business there. (Dkt. 8 at 1-2.) Though the third-party
complaint does not contain detailed factual allegations about
the interactions between the parties, it is reasonable to
assume that because they are both headquartered in North
Carolina, “the place of contracting, place of
negotiation of the contract, place of performance, and
location of the subject matter of the contract” are all
North Carolina. See Restatement § 188(2)(a)-(d)
(internal formatting altered).
addition, none of the § 188 factors indicate that
Michigan has an interest in applying its law to this case.
This action is in Michigan court by operation of a choice of
forum clause in the agreement between Carhartt and ITI. (Dkt.
1-2 at 15.) That clause has no bearing on the relationship
between ITI and GMI, and there is nothing else about the
parties' relationship that indicates they would
reasonably expect to litigate pursuant to Michigan law.
these reasons, North Carolina law applies to the allegations
in the third-party complaint.
Breach of Contract
first count of ITI's complaint is for breach of contract.
It alleges that “GMI breached its contractual
obligations to ITI to provide goods and services in
accordance with ITI's purchase orders and industry
standards.” (Dkt. 8 at 3.)
North Carolina law, a party alleging breach of contract must
demonstrate “(1) the existence of a valid contract and
(2) breach of the terms of the contract.” Martinez
v. Univ. of N. Carolina, 223 N.C.App. 428, 432 (2012)
(quoting Long v. Long, 160 N.C.App. 664, 668
fails to allege sufficient facts to sustain its breach of
contract claim. First and foremost, ITI does not allege the
existence of a contract. The third-party complaint's only
mention of a contract between ITI and GMI is the language
quoted above, alleging that “GMI breached its
contractual obligations to ITI.” (Dkt. 8 at 3.) There
is no explanation, for example, of when the contract was
formed, who the parties are, or whether it was oral or
written. Absent such information, the third-party complaint
contains only “labels or ...