United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
W. SIPPEL, UNITED STATES DISTRICT JUDGE
Imperial Zinc Corp. brings two claims-Counts I and IV-for
breach of contract and for action on account against
Defendant Engineered Products Industries, LLC (EPI), and two
class action claims-Counts II and III-against Defendant EFR,
LLC, a member of and the manager of EPI, for breach of trust
relationship and breach of fiduciary duty. EFR moves to
dismiss Counts II and III, arguing Imperial has failed to
state cognizable claims recognized under Missouri law. See
Fed.R.Civ.P. 12(b)(6). I will grant the motion and dismiss
the claims against EFR.
Plaintiff Imperial alleges the following facts. Imperial is
an Illinois corporation that manufactures and sells zinc
goods in Illinois. Defendant EPI is a Missouri limited
liability company, the members of which are citizens of
Missouri and Florida, which engaged in zinc and aluminum die
casting and operated out of St. Clair, Missouri. Defendant
EFR is a member of and the manager of EPI. Imperial alleges
that EFR's member is a citizen of Missouri.
alleges that on a number of dates between July and November
2013, EPI orally contracted with Imperial to purchase zinc
goods totaling more than $530, 000. Imperial manufactured the
goods and delivered them to EPI, and EPI accepted and used
the goods but did not pay for them. After Imperial applied
all credits and setoffs, it demanded payment of $509, 857.28
from EPI. EPI admitted the debt but refuses to pay it.
Imperial brings Counts I and IV against EPI for breach of
contract and action on account.
also brings two class action claims, Counts II and III,
against EFR in its capacity as the manager and director of
EPI. Imperial alleges the Plaintiff Class consists of
Imperial and all of EPI's other unidentified creditors to
whom EPI owed money at the time that it ceased doing business
and whose debts have not been resolved. Imperial alleges the
predominant common question is whether EPI continued to do
business and incur business debt when it was insolvent by
purchasing goods and services which its management, including
EFR, knew or should have known could not be paid for because
of the insolvency.
Count II, Imperial asserts a claim for breach of trust
relationship. Imperial alleges EFR was EPFs manager on
January 1, 2013 and served in the roles of officer and
director of EPI during all times relevant to this suit.
Imperial alleges EPI was insolvent on or around January 1,
2013, as its short-term and long-term debts and liabilities
exceeded its assets. Imperial alleges EFR knew EPI was
insolvent due to knowledge of EPFs financial records.
Imperial alleges EFR knew EPI continued to be insolvent on or
around July 7, 2013, when EPI began contracting with Imperial
for delivery of goods for which it ultimately did not pay.
Imperial alleges that due to its continued insolvency, on
July 7, 2013, EPI was not a going concern, was incapable of
doing business, and was effectively a de facto
dissolved limited liability company. Imperial alleges that
under Missouri law, EPFs status as a de facto
dissolved company caused EFR, as manager, to hold a
trustee-like position for the equal benefit of all of EPFs
creditors. Imperial alleges EFR breached that trustee-like
duty to EPFs creditors by allowing EPI to order more goods
and services and engage in business transactions instead of
forcing EPI to wind-up its affairs for the equal benefit of
all creditors. Imperial seeks to recover its damages from
Count III, Imperial asserts a claim for breach of fiduciary
duty, alleging EFR owed a fiduciary duty to Imperial and
other members of the Plaintiff Class when EPI was insolvent
and no longer a going concern. Imperial alleges that under
Missouri law, EFR was duty-bound to ensure EPI did not
continue to order zinc goods from Imperial or engage in other
business transactions with its creditors and instead was
required to wind-up EPFs affairs for the benefit of all of
EPFs creditors. Imperial alleges EFR breached this duty by
causing or allowing EPFs agents to continue to order goods
and engage in transactions after it was insolvent.
moves to dismiss Counts II and III, arguing Imperial has
failed to state claims that are recognized under Missouri law
and that, to the extent Missouri recognizes the claims,
Imperial fails to allege facts sufficient to support them.
ruling on a motion to dismiss, I must accept as true all
factual allegations in the complaint and view them in the
light most favorable to the plaintiff. Hager v. Ark.
Dep't of Health, 735 F.3d 1009, 1013 (8th Cir.
2013). Under the federal rules, a plaintiff need not provide
'"detailed factual allegations, '" but must
provide "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) (quoting Bell Atl. Corp. v. Twomblv, 550 U.S.
544, 555, 570 (2007)). "[T]he tenet that a court must
accept as true all of the allegations contained in a
complaint is inapplicable to legal conclusions."
Id. "[O]nly a complaint that states a plausible
claim for relief survives a motion to dismiss."
Id. at 679.
alleges jurisdiction based on diversity of citizenship. The
parties do not dispute that Missouri law governs the claims
in this diversity case. This Court is therefore bound by the
decisions of the Missouri Supreme Court, and if there is no
decision on point, "we must predict how the court would
rule, and we follow decisions from the intermediate state
courts when they are the best evidence of Missouri law."
United Fire & Cas. Co. v. Titan Contractors Serv.,
Inc., 751 F.3d 880, 883 (8th Cir. 2014) (internal
I note that the cases and statutes the parties primarily rely
on deal with the duties of directors of corporations, not the
managers of limited liability companies. Different statutory
chapters govern Missouri corporations and LLCs. See
Mo. Rev. Stat. §§ 347.010, et seq.
(Missouri Limited Liability Company Act) and 351.010, et
seq., (The General and Business Corporation Law of
Missouri); see also Hibbs v. Berger, 430 S.W.3d 296,
313-14 (Mo.Ct.App. 2014) (noting the difference between
analyzing fiduciary duties of individuals in charge of
corporations and partnerships and the duties of members and
managers of LLCs). "A limited liability company is a
creature of statute and its corresponding rights and
obligations are derived from statute." Hibbs,
430 S.W.3d at 313 (quotation marks omitted). ...