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Swift Beef Company v. Alex Lee, Inc.

United States District Court, W.D. North Carolina, Statesville Division

October 20, 2017

ALEX LEE, INC., Defendant.



         THIS MATTER is before the court on plaintiff's Emergency Motion for a Temporary Restraining Order (#3), which converted to a motion for preliminary injunction, and defendant's associated Motion to Alter or Amend Judgment (#16). After considering the motions and reviewing the pleadings, the court enters the following Amended Order.[1]

         I. Background

         Plaintiff Swift Beef Company is a meat company that offers a range of brands and programs designed to meet the needs of purchasers. One such program is known as “Case Ready, ” which provides fresh meat cut and packaged to customer specifications and made ready for placement in coolers or freezers, such as at local grocery stores. Plaintiff offers beef, pork, and poultry options in its Case Ready business line. (Emergency Motion for TRO, #4 at 3-4). Defendant Alex Lee, Inc., is a privately held company with two primary food distribution and retail operating companies: Merchants Distributors, Inc. and Lowes Foods, LLC. They service customers in North and South Carolina, Virginia, West Virginia, Georgia, Alabama, Florida, Tennessee, Ohio, Pennsylvania, and Kentucky. Defendant owns a plant in Lenoir, North Carolina, which is used as a meat processing and packaging facility that defendant leases out to operators. On April 21, 2014, defendant and plaintiff entered into a Lease Agreement and a Purchase Agreement (“the Agreements”). The Agreements had defendant lease the Lenoir plant to plaintiff, and required plaintiff to supply defendant with certain Case Ready products. The Agreements have a ten year term and are linked; if a party fails to perform under one, both may be terminated. (#4 at 4-8).

         Plaintiff contends that a material breach of the Agreements is imminent, arguing that defendant is attempting to evict plaintiff from the Lenoir plant without cause. (#4 at 10-11). In doing so, plaintiff claims irreparable harm will result in the form of loss of goodwill, sales, customers, and business opportunities, as well as denial of property rights. (#4 at 18). Defendant argues that they are not attempting to evict plaintiff, but if they did, they would be within their rights given certain alleged breaches in performance by plaintiff. (Defendant's Response, #13 at 7-8). Further, defendant notes that an eviction is impossible without commencing summary ejectment proceedings in state court, and suggests that a preliminary injunction is unwarranted given defendant's ability to make their case in ejectment proceedings instead. (#13 at 5-6).

         II. Legal Standard

         Whether to grant injunctive relief is within the sound discretion of the district court. See Hughes Network Sys. V. InterDigital Commc'ns Corp., 17 F.3d 691, 693 (4th Cir. 1994). However, granting a preliminary injunction “requires that a district court, acting on an incomplete record, order a party to act, or refrain from acting, in a certain way. The danger of a mistake in this setting is substantial.” Scotts Co. v. United Indus. Corp., 315 F.3d 264, 284 (4th Cir. 2002) (citations and internal quotations omitted). Consequently, a preliminary injunction is “an extraordinary remedy . . . which is to be applied ‘only in [the] limited circumstances' which clearly demand it.” Direx Israel, Ltd. V. Breakthrough Med. Corp., 952 F.2d 802, 811 (4th Cir. 1992) (quoting Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 800 (3rd Cir. 1989)). The injunction must “be tailored to restrain no more than what is reasonably required to accomplish its ends.” Consolidation Coal Co. v. Disabled Miners of S. W.Va., 442 F.2d 1261, 1267 (4th Cir. 1971).

         A party seeking a preliminary injunction must establish (1) that it is likely to succeed on the merits; (2) that it is likely to suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in its favor; and (4) that an injunction is in the public interest. See Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008). While a balancing test was previously used, today every preliminary injunction factor must be “satisfied as articulated” and courts “must separately consider each Winter factor.” Pashby v. Delia, 709 F.3d 307, 320 (4th Cir. 2013) (citing The Real Truth About Obama, Inc. v. FEC, 575 F.3d 342, 347 (4th Cir. 2009)). The Court will, therefore, deem defendant's Motion to Alter or Amend Judgment a Motion for Reconsideration (inasmuch as defendant seeks reconsideration of an Order rather than a Judgment) and grant that motion. In considering the Winter elements, the Court will consider each factor separately and delve into why each factor has been satisfied as articulated, particularly the element requiring plaintiff to show that it is likely to succeed on the merits.

         III. Discussion

         A. Likelihood of Success on the Merits

         First, the court considers the likelihood of plaintiff's success on the merits. Plaintiff must make a “clear showing” they are likely to succeed at trial. Real Truth, 575 F.3d at 345. However, plaintiff “need not show a certainty of success.” Pashby, 709 F.3d at 321 (citing 11A Charles Alan Wright et al., Federal Practice & Procedure § 2948.3 (2d ed. 1995)). Furthermore, “the possibility of irreparable harm does not constitute a ‘clear showing' that the plaintiff is entitled to relief.” Di Biase v. SPX Corp., 2017 U.S. App. LEXIS 18757, *21 (4th Cir. Sept. 28, 2017). When plaintiff has produced undisputed evidence on the issue at hand, they have established a clear showing that they are likely to succeed at trial. See League of Women Voters of N. Carolina v. North Carolina, 769 F.3d 224, 246 (4th Cir. 2014).

         In conducting this inquiry, the Court first considers the nature of the substantive claim asserted by plaintiff in its Complaint. Here, plaintiff contends that defendant, in threatening to prematurely terminate the lease, is anticipatorily breaching the contract that exists between the parties. Under North Carolina law, “the elements of a breach of contract claim are (1) existence of a valid contract and (2) breach of the terms of that contract.” Wooton v. CL, LLC, No. 2:09-CV- 34-FL, 2010 WL 3767308, at *5 (E.D. N.C. 2010) (citing Lake Mary Ltd. P'ship v. Johnston, 145 N.C.App. 525, 536 (2001)). Similarly, the elements of a valid contract are “mutual assent, legal capacity, consideration, and a legal bargain.” Orthodontic Ctrs. of Am., Inc. v. Hanachi, 151 N.C.App. 133, 135 (2002). It does not appear that either party challenges the validity of the underlying contract; thus, the issue is whether plaintiff will likely show by a preponderance of the evidence that defendant has anticipatorily breached that agreement.

         “Breach of contract occurs when a party fails to perform a contractual duty which has become absolute.” Millis Constr. Co. v. Fairfield Sapphire Valley, 86 N.C.App. 506, 510 (1987). In contrast, an anticipatory breach occurs when “[a] breach is committed before there is a present duty of performance, and is the outcome of words evincing intention to refuse performance in the future.” Cook v. Lawson, 3 N.C.App. 104, 107 (1968) (citation omitted) (internal quotations omitted). In considering whether plaintiff has made a clear showing, the Court has closely reviewed both the allegations of anticipatory breach and the proffer of evidence plaintiff contends supports such assertions under the applicable standard, highlighted by the defense's instant motion seeking reconsideration.

         Plaintiff has presented evidence that defendant, through communications by its president and then its counsel, has threatened to terminate the lease. That evidence tends to show that on July 3, 2017, defendant's President and CEO, Brian George, issued an email to Swift stating that “it will be best for our respective companies to end the case ready plant relationship by terminating the lease.” Bode Decl. at ¶ 20 (Plaintiff's Exhibit “A”). Mr. George did not, however, preface that assertion with any claim that plaintiff had defaulted under the Agreements in any manner. Id. Plaintiff's evidence then shows that four days later, it offered to buy the plant from defendant for $30 million, id. at ¶ 21, which was met with an “Offer Notice” from defendant to sell the plant for $50 million. Offer Notice (#1-5 at 2). According to plaintiff, defendant mistakenly characterized plaintiff's “Right of First Refusal” under Section 31 of the ...

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