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Kemps LLC v. IPL, Inc.

United States District Court, W.D. Missouri, Western Division

January 8, 2020

KEMPS LLC, Plaintiff,
v.
IPL, INC., et al., Defendants.

          ORDER AND OPINION DENYING DEFENDANT IPL USA'S MOTION TO DISMISS COUNTS III AND IV FOR FAILURE TO STATE A CLAIM

          BETH PHILLIPS, UNITED STATES DISTRICT COURT CHIEF JUDGE

         Plaintiff has sued IPL, Inc., (“IPL”), and IPL USA, Inc., (“IPL USA”), asserting claims for breach of warranty and breach of contract. IPL USA seeks dismissal of Counts III and IV, contending those two counts fail to state a claim. After considering the parties' arguments, the Motion to Dismiss, (Doc. 22), is DENIED.

         I. BACKGROUND

         Plaintiff manufactures dairy food products, including frozen yogurt and ice cream. (Doc. 18, ¶¶ 1, 11.) IPL is a Canadian corporation with its principal place of business in Quebec. (Doc. 18, ¶ 6.) IPL USA is Missouri corporation with its principal place of business in Lee's Summit, Missouri, and it is a wholly-owned subsidiary of IPL. (Doc. 18, ¶ 7.) Collectively, Defendants “are highly-specialized consumer packaging engineer-manufacturers.” (Doc. 18, ¶ 1; see also Doc. 18, ¶ 12.) “In or before August 2015, [Plaintiff] sought a specialist that could provide containers suitable for the low-temperature storage and handling conditions of a traditional frozen-dairy-product supply chain.” (Doc. 18, ¶ 13.) In particular, Plaintiff sought “a series of one-pint, clear plastic containers (the ‘Containers') based on [Defendants'] ‘SealPack' pint containers” that could be used for its frozen dairy products. (Doc. 18, ¶ 1; see also Doc. 18, ¶¶ 14, 18.) Negotiations ensued and culminated with a contract for Plaintiff to be supplied the one-pint containers it sought. (Doc. 18, ¶ 18.)

         The containers proved to be defective in that the containers broke, causing pieces of plastic to be found in the food. (Doc. 18, ¶¶ 2, 32-40.) “The defects caused [Plaintiff] to recall the affected frozen dairy food products and take other corrective action at significant expense.” (Doc. 18, ¶ 2; see also Doc. 18, ¶ 43.) In April 2017, Plaintiff gave Defendants written notice of the defects and asserted their liability for Plaintiff's costs and damages, but they “refused to honor [the] claim, despite their duty to cover all losses related to such product defects, including product recalls, under both the terms of sale and a separate indemnity agreement.” (Doc. 18, ¶ 47 (emphasis supplied).)

         Plaintiff has now filed suit, asserting claims for (1) breach of express warranty, (2) breach of the implied warranty of merchantability, (3) breach of the implied warranty of fitness for a particular purpose, and (4) breach of contract (for alleged breach of the separate indemnification agreement). With respect to Count III, Plaintiff alleges that Defendants “knew that [Plaintiff] wanted clear resin containers with IML labels for consumer-grade frozen dairy food packaging, ” (Doc. 18, ¶ 64), but “[t]he Containers were not fit for [Plaintiff's] purposes when [Defendants] sold them because they broke at unacceptably high rates when so used.” (Doc. 18, ¶ 68.) With respect to Count IV, Plaintiff alleges that Defendants “signed an Indemnity Agreement with [Plaintiff] on March 11, 2016, related to the Containers' sale, ” pursuant to which they agreed to compensate Plaintiff for any losses or damages related to “any breach of . . . . warranties related to the Containers; any defect in the Containers; or any voluntary recall of products related to the Containers for any reason.” (Doc. 18, ¶¶ 71-72.)

         IPL USA contends that Counts III and IV must be dismissed because they are not adequately pleaded. It argues that Count III must be dismissed because the Amended Complaint does not adequately allege that it knew that the Containers would be used for a particular purpose separate and apart from the Containers' regular purpose. It also argues that Count IV must be dismissed because the Amended Complaint does not sufficiently identify the indemnity agreement. Plaintiff contends that the Amended Complaint adequately alleges both claims. The Court resolves the parties' arguments below.

         II. DISCUSSION

         Under Rule 12(b)(6), the Court is limited to a review of the Complaint, exhibits attached to the Complaint, and materials necessarily embraced by the Complaint, e.g., Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003), and the Court “must accept as true all of the complaint's factual allegations and view them in the light most favorable to the Plaintiff[ ].” Stodghill v. Wellston School Dist., 512 F.3d 472, 476 (8th Cir. 2008).

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. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotations and citations omitted). A claim is facially plausible if it allows the reasonable inference that the defendant is liable for the conduct alleged. E.g., Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); Horras v. American Capital Strategies, Ltd., 729 F.3d 798, 801 (8th Cir. 2013). However, “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.” Iqbal, 556 U.S. at 678.

         A. Count III - Breach of Implied Warranty of Fitness for a Particular Purpose

         The parties do not conduct a choice of law analysis to determine which state's law governs Plaintiff's warranty claims. Plaintiff represents that its claims will be governed by Missouri or Minnesota law and suggests that the law of both jurisdictions is the same because both states have enacted Article 2 of the Uniform Commercial Code. (Doc. 28, p. 7 n.4.) IPL USA relies solely on Missouri authorities. Therefore, the Court will rely on ...


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