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S R Distributing, LLC v. Pepperidge Farm, Inc.

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

October 22, 2019




         This matter comes before the Court on Defendant Pepperidge Farm, Inc.'s Motion to Dismiss [10]. The Court grants, in part, and denies, in part, the motion.

         I. BACKGROUND

         Plaintiff S R Distributing LLC filed a petition against Pepperidge Farm, Inc. in the Circuit Court of St. Louis County. Pepperidge Farm removed the matter to this Court. In its petition, SR Distributing alleges Pepperidge Farm violated its distributorship agreement (the “Agreement”) with SR Distributing when Pepperidge Farm purchased the rights to distribute to “Club Stores” such as Costco or Sam's Club. SR Distributing asserts seven counts against Pepperidge Farm: (1) Breach of Contract, (2) Violation of the Missouri Franchise Act, § 407.400(1) RSMo. (3) Fraud in the Inducement; (4) Promissory Estoppel, (5) Violation of Missouri's Sales Commissions statute, § 407.913 RSMo, (6) Tortious Interference with Business Expectancy, and (7) an alternative claim seeking Arbitration to Calculate Fair Market Value of the repurchased distributorship rights. In its memorandum in opposition, ECF No. 12, to the motion to dismiss, SR Distributing dismissed the Missouri Franchise Act claim, and the Court does not address it here.

         II. STANDARD

         Under Federal Rule of Civil Procedure (“FRCP”) 12(b)(6), a party may move to dismiss a claim for “failure to state a claim upon which relief can be granted.” The notice pleading standard of FRCP 8(a)(2) requires a plaintiff to give “a short and plain statement showing that the pleader is entitled to relief.” To meet this standard and to survive a FRCP 12(b)(6) 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) (internal quotations and citation omitted). This requirement of facial plausibility means the factual content of the plaintiff's allegations must “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Park Irmat Drug Corp. v. Express Scripts Holding Co., 911 F.3d 505, 512 (8th Cir. 2018) (quoting Iqbal, 556 U.S. at 678). The Court must grant all reasonable inferences in favor of the nonmoving party. Lustgraaf v. Behrens, 619 F.3d 867, 872-73 (8th Cir. 2010). Ordinarily, only the facts alleged in the complaint are considered for purposes of a motion to dismiss; however, materials attached to the complaint may also be considered in construing its sufficiency. Reynolds v. Dormire, 636 F.3d 976, 979 (8th Cir. 2011).

         When ruling on a motion to dismiss, a court “must liberally construe a complaint in favor of the plaintiff[.]” Huggins v. FedEx Ground Package Sys., Inc., 592 F.3d 853, 862 (8th Cir. 2010). However, if a claim fails to allege one of the elements necessary to recover on a legal theory, the Court must dismiss that claim for failure to state a claim upon which relief can be granted. Crest Constr. II, Inc. v. Doe, 660 F.3d 346, 355 (8th Cir. 2011). Threadbare recitals of a cause of action, supported by mere conclusory statements, do not suffice. Iqbal, 556 U.S. at 678; Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007). Although courts must accept all factual allegations as true, they are not bound to take as true a legal conclusion couched as a factual allegation. Twombly, 550 U.S. at 555 (internal quotations and citation omitted); Iqbal, 556 U.S. at 677-78.


         In its motion to dismiss, Pepperidge Farm asserts SR Distributing's first six claims must be dismissed for failure to plead sufficient facts. First, Pepperidge Farm states the breach of contract claim must be dismissed because the unambiguous language of the Agreement gives Pepperidge Farm the right to repurchase Club Store rights. Second, Pepperidge Farm contends the claims for fraud in the inducement and promissory estoppel must be dismissed because the claims are improperly premised on an alleged promised made during negotiations. Third, Pepperidge Farm states the claim pursuant to the Missouri Merchandising Practices Act (“MMPA”) must be dismissed because SR Distributing has not earned any commissions for the time period in question. Fourth, Pepperidge Farm argues the claim for tortious interference with business expectancy must be dismissed because it does not identify an actionable business expectancy independent of the contract. Finally, Pepperidge Farm contends SR Distributing's claim for arbitration to calculate the fair market value is unnecessary because SR Distributing has the right to initiate arbitration without judicial involvement and has not yet done so.

         A. Breach of Contract Claim - Count I

         Pepperidge Farm asserts the breach of contract claim must be dismissed because Section 20 of the agreement unambiguously permits Pepperidge Farm to repurchase the Club Store rights. In response, SR Distributing argues Section 20 gives Pepperidge Farm the option to repurchase territory only, not any rights of the Agreement.

         In Missouri, [1] to state a claim for breach of contract, a plaintiff must establish the existence of a valid contract, the rights of the plaintiff and obligations of the defendant under the contract, a breach by the defendant, and damages resulting from the breach. Spectrum Brands, Inc. v. Compton's LLC, No. 2:16CV30 HEA, 2018 WL 3995687 at *4 (E.D. Mo. Aug. 21, 2018) (citing Gillis v. Principia Corp., 832 F.3d 865, 871 (8th Cir. 2016)). If the contract is unambiguous, the Court must not consider any extrinsic or parol evidence as to the intent and meaning of the contract. Id. “Courts may not unreasonably distort the language of a [contract] or exercise inventive powers for the purpose of creating an ambiguity where none exists.” Todd v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 163 (Mo. 2007). An ambiguity does not exist just because the parties dispute the meaning of the contract. Iappini v. Silverleaf Resorts, Inc., 116 F.Supp.3d 932, 938 (E.D. Mo. 2015). “Rather, a contract is ambiguous when the terms are susceptible to more than one meaning so that reasonable persons may fairly and honestly differ in their construction of the terms.” Id. The Court must read the terms of the contract as a whole, given their plain, ordinary, and usual meaning. Heisel v. John Deere Constr. & Forestry Co., No. 4:07CV1712 DDN, 2008 WL 53232 at *7 (E.D. Mo. Jan. 2, 2008) (citing Pepsi MidAmerica v. Harris, 232 S.W.3d 648, 654-55 (Mo.Ct.App. 2007)).

         Section 20 of the Agreement states as follows:

BAKERY'S OPTION TO BUY DISTRIBUTORSHIP. Bakery [Pepperidge Farm] shall have the right in its discretion to purchase all or any portion of the Distributorship at any time upon written notice to Consignee [SR Distributing]. Bakery shall become the owner of the Distributorship, or the portion being purchased, on the date specified in the notice, whether or not a final purchase price has been agreed upon or determined, as provided below. Bakery may begin operating the Distributorship, or the portion being purchased, for its own account on such date. If Bakery elects to purchase all or any portion of the Distributorship pursuant to this Paragraph, it will pay to Consignee a sum equal to (a) the fair market value of the Distributorship, or the portion thereof being purchased, as the case may be, on the date set forth in the written notice plus (b) 25% of such fair market value, to be determined either by agreement between Bakery and Consignee or, if they shall be unable to agree, by three arbitrators. . .

         ECF No. 5-1. The Agreement contains various definitions, including:

(c) TERRITORY - refers to the territory described in Schedule ...

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