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Nacco Materials Handling Group, Inc. v. Kollmorgen Corporation

United States District Court, E.D. North Carolina, Eastern Division

January 30, 2015



LOUISE W. FLANAGAN, District Judge.

This matter is before the court on defendants' motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure Rule 12(b)(6), or to compel arbitration.[1] (DE 20). The issues raised have been fully briefed and are ripe for decision. For the reasons stated more specifically herein, defendants' motion to dismiss is denied, and motion to compel is dismissed as moot.


Plaintiff, a manufacturer and designer of materials handling equipment, initiated this suit on June 26, 2014. Plaintiff alleges defendants Kollmorgen AB, a Swedish corporation and, as relevant here, a manufacturer of certain vehicle controllers, along with Kollmorgen Corporation, its American subsidiary, violated the terms of a cost-splitting agreement between the parties arising out of defects necessitating repair of a number of defendants' controllers purchased by plaintiff.[2] In particular, plaintiff complains defendants breached a contract requiring the parties share the cost of repairs, undertaken by plaintiff on defendants' behalf, to improve upon defendants' allegedly defective controllers ("Count I and III");[3] were unjustly enriched as a result of the repairs ("Count II"); are obligated to indemnify plaintiff for its expenditures on the repairs ("Counts IV and V"); and breached warranties associated with the controllers ("Count VI").

Defendants filed the instant motion on September 12, 2014. In their motion to dismiss, defendants argue first that Counts I and II, as well as any act giving rise to Counts IV and V occurring after July 2007, are barred by the applicable statute of limitations. In addition, defendants submit Counts I and II, as well as any portion of Count VI occurring after July 2007, are legally insufficient to state a claim under North Carolina law. Lastly, defendants contend that neither Count II nor Count III is well pleaded.

With respect to defendants' associated motion to compel, therein defendants contend certain transactions giving rise to the complaint require arbitration and request the court compel the same. Specifically, defendants argue that plaintiff is contractually required to arbitrate all transactions giving rise to Counts IV, V, and VI occurring before, July 2007.

Plaintiff filed a response in opposition on October 27, 2014. In its response, plaintiff does not contest the dismissal of Counts I, IV, V, and VI. Rather, plaintiff refutes defendants' arguments in favor of dismissing Counts II and III. In particular, plaintiff argues both Counts II and III are well pleaded, and, in addition, Count II is not time barred.


From 2003 until 2011 plaintiff purchased certain vehicle controllers from defendants. (Compl. ¶¶12-13). In particular, between 2006 and 2008 plaintiffs purchased several Kollmorgen Vehicle Master Controllers for use in industrial trucks. (Id. ¶12). Between 2003 and 2011 plaintiff purchased a number of Kollmorgen Traction Motor Controllers, also for use in industrial trucks. (Id. ¶13). As pertinent here, both the Vehicle Master and Traction Motor Controllers contained software created and installed by defendants. (Id. ¶14). Ultimately, plaintiff installed one or both of defendants' products on more than 17, 000 industrial trucks. (Id. ¶15).

In 2011, defendants' software imbedded in the controllers began to malfunction. (Id.). As a result, plaintiff and defendants agreed that plaintiff would undertake a "Field Product Improvement campaign, " ("FPI campaign" or "campaign"), during which the malfunctioning software would be updated with new software to be developed and supplied by defendants. (Id. ¶¶16-17). The cost of the FPI campaign was to be shared by the parties in amounts that were to be determined at a later date. (Id. ¶18). As a result of this agreement, defendants supplied the updated software. (Id. ¶19).

In July 2011, prior to the inception of the campaign, plaintiff provided defendants with the FPI campaign's estimated cost, a total of $1, 563, 740.00, which defendants "acknowledged as reasonable." (Id. ¶20). At this time, the parties had no agreement regarding cost sharing. (Id. ¶22). However, later in 2011, the parties resolved the cost-splitting issue, and in 2012, entered into an agreement, via email, which required defendants pay $750, 000.00 of the costs associated with the campaign in exchange for release from liability. (Id. ¶¶22-23). Thereafter, plaintiff undertook the FPI campaign, as contemplated by the parties' agreement. (Id. ¶24). However, defendants have not paid the $750, 000.00 agreed upon. (Id.).


A. Standard of Review

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint but "does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992); see also Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999). A complaint states a claim if it contains "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. Twombly, 550 U.S. 544, 570 (2007)). "Asking for plausible grounds... does not impose a probability requirement at the ...

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