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Ronnoco Coffee, LLC. v. Westfeldt Brothers, Inc.

United States District Court, E.D. Missouri, Eastern Division

February 16, 2017

RONNOCO COFFEE, LLC, and MID-AMERICA ROASTERIE, LLC, Plaintiffs,
v.
WESTFELDT BROTHERS, INC., Defendant.

          MEMORANDUM AND ORDER

          JEAN C. HAMILTON UNITED STATES DISTRICT JUDGE

         This matter is before the Court on the Motion to Dismiss of Plaintiffs/Counterclaim Defendants Ronnoco Coffee, LLC and Mid-America Roasterie, LLC, and Third-Party Defendants Scott Meader and Eric Bomball. (ECF No. 18). The motion is fully briefed and ready for disposition.

         BACKGROUND [1]

         Westfeldt Brothers, Inc. ("Westfeldt") is a corporation organized and existing under the laws of the State of Louisiana, with its principal place of business in New Orleans, Louisiana. (Counterclaims and Third Party Complaint ("Counterclaim"), ¶ 1). Westfeldt is in the business of importing green coffee to supply to coffee roasters. (Id., ¶ 9).

         Sometime in 2010, U.S. Roasterie, Inc. ("U.S. Roasterie") became a customer of Westfeldt. (Counterclaim, ¶ 10). Throughout their course of dealing, Westfeldt and U.S. Roasterie entered into futures contracts for the purchase of green coffee. (Id., ¶ 11). Over time, U.S. Roasterie became delinquent in its payments due under the terms of the futures contracts. (Id., ¶ 12).

         In the late summer or fall of 2014, U.S. Roasterie and Counterclaim Defendant Ronnoco Coffee, LLC (“Ronnoco Coffee”) entered into negotiations for the sale of U.S. Roasterie's assets to Ronnoco Coffee. (Counterclaim, ¶¶ 2, 13). In conducting due diligence during the negotiations, Ronnoco Coffee became aware of the substantial debt that Westfeldt had allowed U.S. Roasterie to incur. (Id., ¶ 14). Ronnoco Coffee ultimately did not complete the purchase of U.S. Roasterie's assets.[2]

         At some subsequent point U.S. Roasterie's lender, Great Western Bank, took control of the assets of U.S. Roasterie. (Counterclaim, ¶ 17). All of U.S. Roasterie's assets then were formally acquired by Counterclaim Defendants Ronnoco Coffee and Mid-America Roasterie, LLC (“Mid-America”)[3], pursuant to a Sale Agreement dated February 9, 2015. (Id., ¶¶ 3, 26). That same day Westfeldt received two nearly identical letters, one from Ronnoco Coffee and one from Dixon Avenue Holdings, LLC[4], notifying it that the assets of U.S. Roasterie had been taken over by Great Western Bank and then sold to Mid-America, a subsidiary of Ronnoco Coffee, and that no invoices prior to the asset sale would be paid because Ronnoco Coffee did not assume any of U.S. Roasterie's liabilities. (Id., ¶ 28).[5]

         On or around the day after the asset sale closing, a telephone conference took place between Ronnoco Coffee, U.S. Roasterie's former CEO and CFO, and Westfeldt. (Counterclaim, ¶ 30). According to Westfeldt, Ronnoco Coffee expressly agreed during the conference to assume certain futures contracts that were previously in place between Westfeldt and U.S. Roasterie. (Id.). Westfeldt maintains that although Ronnoco Coffee/Mid-America (collectively “Ronnoco”) initially took delivery of the coffee subject to the futures contracts, it later informed Westfeldt that it would not continue taking delivery in fulfillment of the remaining assumed futures contracts. (Id., ¶ 33). Westfeldt further alleges that as of September, 2016, the value of the outstanding futures contracts assumed by Ronnoco was $145, 776.88. (Id., ¶ 34).

         Westfeldt filed its Counterclaim against Ronnoco on September 22, 2016. (ECF No. 9).[6] In its Counterclaim, Westfeldt asserts the following claims against Ronnoco: Breach of Contract/Successor Liability (Count I); Open Account/Successor Liability (Count II); Breach of Contract/Single Business Entity/Alter Ego (Count III); Open Account/Single Business Entity (Count IV); Unfair Trade Practices (Count V); Conversion/Civil Conspiracy to Commit Conversion (Count VI); Unjust Enrichment (Count VII); and Breach of Futures Contracts (Count VIII). Westfeldt also asserts a claim for Tortious Interference with Contractual Relations/Conspiracy to Tortiously Interfere with Contractual Relations against Third-Party Defendants Scott Meader and Eric Bomball. (Count IX).[7]

         As noted above, Ronnoco, Meader and Bomball (collectively “Movants”) filed the instant Motion to Dismiss on October 20, 2016, asserting all Westfeldt's counterclaims and third-party claims must be dismissed for failure to state a claim upon which relief can be granted. (ECF No. 18).

         STANDARD FOR MOTION TO DISMISS

         In ruling on a motion to dismiss, the Court must view the allegations in the complaint in the light most favorable to plaintiff. Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008). The Court, “must accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party.” Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005) (citation omitted). The complaint's factual allegations must be sufficient “to raise a right to relief above the speculative level, ” however, and the motion to dismiss must be granted if the complaint does not contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007) (abrogating the “no set of facts” standard for Fed.R.Civ.P. 12(b)(6) found in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). Furthermore, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 555 (pleading offering only “labels and conclusions” or “a formulaic recitation of the elements of a cause of action” will not do)).

         DISCUSSION

         I. Successor Liability (Counts I-II)

         A. Choice Of Law

         In their Motion to Dismiss, Movants first ask that the Court apply Iowa law to Counts I and II of Westfeldt's Counterclaim. (Memorandum in Support of Motion to Dismiss of Movants (“Movants' Memo in Support”), PP. 10-11). “A district court sitting in diversity must apply the conflict of law rules for the state in which it sits.” Inacom Corp. v. Sears, Roebuck and Co., 254 F.3d 683, 687 (8th Cir. 2001) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). “Missouri has adopted the Restatement (Second) of Conflict of Laws which uses the ‘most significant relationship' test to determine which state's laws govern.” Taylor v. Cottrell, Inc., 2015 WL 8021729, at *1 (E.D. Mo. Dec. 7, 2015) (citations omitted).[8] See also Dorman v. Emerson Elec. Co., 23 F.3d 1354, 1358 (8th Cir.) (citation omitted) (“Missouri courts apply the most-significant-relationship test as defined in the Restatement. Under this test, the identity of the state having the most significant relationship will depend upon the nature of the cause of action and upon the particular legal issue in dispute.”), cert. denied, 513 U.S. 964 (1994).

         In order to determine which state has the most significant relationship with a particular issue, the Court must consider Restatement (Second) of Conflict of Laws § 6, which provides in relevant part as follows:

(2) [T]he factors relevant to the choice of the applicable rule of law include
(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.

         For contract claims, the Court further considers § 188, which provides in relevant part as follows:

(2) In the absence of an effective choice of law by the parties….the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
(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.

         These contacts are to be evaluated according to their relative importance with respect to the particular issue.

         As noted above, Counts I and II of Westfeldt's Counterclaim attempt to hold Ronnoco liable on a theory of successor liability. (Counterclaim, ¶¶ 35-54). Specifically, the issue raised is whether Ronnoco can be held liable as a successor to U.S. Roasterie by virtue of its purchase of U.S. Roasterie's assets from Great Western Bank. By the terms of Westfeldt's Counterclaim, this issue requires the Court to consider whether Ronnoco assumed the liabilities by virtue of the Sale Agreement (Counterclaim, ¶¶ 39, 49), whether Ronnoco is a “mere continuation” of ...


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