Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Jacobson Warehouse Co., Inc. v. Schnuck Markets, Inc.

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

July 16, 2018

JACOBSON WAREHOUSE COMPANY, INC., d/b/a XPO LOGISTICS SUPPLY CHAIN, Plaintiff/Counterclaim Defendant,
v.
SCHNUCK MARKETS, INC., Defendant/Counterclaim Plaintiff.

          MEMORANDUM AND ORDER

          JOHN A. ROSS UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff/Counterclaim Defendant Jacobson Warehouse Co., Inc., d/b/a/ XPO Logistics Supply Chain (“XPO”)'s Motion for Partial Judgment on the Pleadings as to Counts IV and V of Second Amended Counterclaim. (Doc. No. 73) The motion is fully briefed and ready for disposition.[1]

         I. Background

         The background of this case is set out in detail in the Court's November 29, 2017 Order and incorporated by reference herein. (See Doc. No. 64) Briefly, XPO and Schnuck entered into an Operating Agreement setting forth the terms and conditions under which XPO would provide certain warehouse management services for a new distribution facility Schnuck was designing. Each side contends the other breached their contractual and other obligations under the Agreement. On February 17, 2017, XPO filed its Complaint against Schnuck for breach of contract (Count I); declaratory judgment (Count II); action on account (Count III); quantum meruit (Count IV); and unjust enrichment (Count V). (Complaint (“Compl.”), Doc. No. 1) Schnuck counterclaimed for breach of contract (Count I); breach of the covenant of good faith and fair dealing (Count II); negligence (Count III); fraud (Count IV); conversion (Count V); and breach of contract - transition services agreement (Count VI). (First Amended Counterclaim (“FAC”), Doc. No. 59)

         The Court dismissed XPO's claims for quantum meruit and unjust enrichment, limited Schnuck's damages under Counts I, II and III of its counterclaim to direct damages as set forth in a limitation of liability provision in Section 5(b) of the Agreement, and dismissed Count IV of its counterclaim without prejudice for failure to sufficiently plead the elements of a claim for fraudulent misrepresentation. (Doc. No. 64) On December 18, 2017, Schnuck repleaded its fraud claim in Count IV of its Second Amended Counterclaim. (Second Amended Counterclaim (“SAC”), Doc. No. 69)

         II. Parties' arguments

         XPO moves for partial judgment on the pleadings as to Schnuck's newly pleaded claim for fraud in the inducement (Count IV) and Schnuck's claim for conversion (Count V). XPO first argues that because this Court has already ruled that the limitation of liability in Section 5(b) of the Agreement applies to all claims seeking more than direct damages (see Doc. No. 64 at 11), Section 5(b) prohibits Schnuck from recovering any incidental or consequential damages or indirect, special or punitive damages on its fraud and conversion claims. (Doc. No. 74 at 6-11) Next, XPO argues that because Schnuck has chosen to seek damages rather than rescission, its fraud in the inducement claim is subject to the contractual limitation of liability in Section 5(b). (Id. at 9-11) Lastly, XPO argues that Schnuck cannot base its claim for conversion on XPO's alleged negligent acts because conversion is an intentional tort. (Id. at 4-6)

         Schnuck opposes XPO's motion, and urges the Court to reconsider its ruling granting XPO's motion for judgment on the pleadings on Schnuck's contract claims. (Doc. No. 77 at 13-15) Relying on Alack v. Vic Tanny Int'l of Missouri, Inc., 923 S.W.2d 330, 337 (Mo. 1996); Coomer v. Kansas City Royals Baseball Corp., 437 S.W.3d 184 (Mo. 2014); and Stark v. Sandberg, Phoenix & von Gontard, P.C., 381 F.3d 793 (8th Cir. 2004), Schnuck further argues that the limitation of liability in Section 5(b) of the Agreement is invalid to the extent it purports to limit Schnuck's damages resulting from XPO's intentional torts. (Doc. No. 77 at 3-8)

         Next, Schnuck argues it did not “affirm” the validity of Section 5(b) by seeking damages rather than rescission in its claim for fraudulent inducement, citing Alack and Stark. Schnuck argues that XPO's affirmation argument is also negated by well-established Missouri case law holding that a party may not, by disclaimer or otherwise, contractually exclude liability for fraud in inducing that contract. See, e.g., Hess v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 767 (Mo. 2007). (Id. at 8-9) Lastly, Schnuck contends it has pled a valid claim for conversion by alleging XPO's wrongful use of Schnuck's property while in possession. (Id. at 10-11)

         XPO replies that Schnuck's request for reconsideration is procedurally improper and unwarranted; Schnuck is simply reiterating the same arguments this Court considered and overruled. (Doc. No. 81 at 3-6) In further reply, XPO argues it is well settled that a fraud in the inducement plaintiff that seeks money damages under a contract is bound by any limitation of liability in the contract, citing Riley v. Lucas Lofts Invs., LLC, 412 S.W.3d 285, 290 (Mo.Ct.App. 2013). (Id. at 7) As for Schnuck's argument that the Agreement's integration clauses do not foreclose liability for fraud in the inducement, XPO replies that the effect of the Agreement's integration clauses is irrelevant to the applicability of the limitation of liability to the claim on which Schnuck seeks to recover. (Id. at 8) Finally, XPO argues that Schnuck's conversion claim cannot be premised on negligent theories of misconduct; conversion is an intentional tort that requires an allegation that the defendant intended to, and did, take possession of the property at issue. (Id. at 8-9)

         III. Discussion

         A. Schnuck's request for reconsideration

         With regard to Schnuck's request that the Court reconsider its ruling granting XPO's motion for judgment on the pleadings on Schnuck's contract claims, the Court finds Schnuck is largely reiterating the same arguments it made in opposition to XPO's previous motion, which the Court considered and rejected. There is no question that Missouri law does not allow parties to contractually exonerate themselves for willful acts or gross negligence. See Alack, 923 S.W.2d at 337 (citing Liberty Financial, 670 S.W.2d at 48). However, Missouri law does allow sophisticated business entities to enter contracts with each other which limit liability for gross negligence or a willful injury arising out of the performance of the contract. Id. Contrary to Schnuck's assertion (Doc. No. 77 at 2), “[e]xoneration versus a limitation of liability is a distinction with a difference.” In re NHB, LLC, 287 B. R. 475, 480 (Bankr. E.D. Mo. 2002). For these reasons, and the reasons set out in the Court's November 29, 2017 Order and incorporated by reference herein, Schnuck's request for reconsideration will be denied.

         B. XPO's motion for partial judgment on the pleadings ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.