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Dynamic Campus Solutions, Inc. v. Pfeiffer University

United States District Court, M.D. North Carolina

April 20, 2018

DYNAMIC CAMPUS SOLUTIONS, INC., Plaintiff,
v.
PFEIFFER UNIVERSITY, Defendant.

          RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE.

          JOE L. WEBSTER UNITED STATES MAGISTRATE JUDGE.

         This matter is before the Court upon Defendant Pfeiffer University's Motion to Dismiss Counts II through IV of Plaintiff Dynamic Campus Solutions, Inc.'s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. (Docket Entry 12.) Plaintiff has filed a response. (Docket Entry 17.) The matter is ripe for disposition. For the following reasons, the Court will recommend Defendant's motion to dismiss be granted in part and denied in part.

         I. BACKGROUND

         This action arises from an information technology services agreement ("IT Agreement") between Plaintiff and Defendant. (See generally Complaint, Docket Entry 1.) According to Plaintiff, the parties executed the IT Agreement on or about September 23, 2016, whereby Plaintiff agreed to provide certain information technology services to Defendant. (Id. ¶ 5.) Plaintiff states that initially the business relationship was great and Defendant public and privately commended Plaintiffs work. (Id. ¶ 6.) However, on or about August 8, 2017, Defendant sought to renegotiate the IT Agreement with Plaintiff, whereby Plaintiff would agree to take an 80% reduction in compensation for the services it provided to Defendant. (Id. ¶ 7.) Plaintiff declined to do so and Defendant refused to consider any other restructuring options. (Id. ¶¶ 7-8.) Plaintiff states that during this time, Defendant had no assertions regarding any breach under the IT Agreement. (Id. ¶ 9.) Shortiy thereafter, in a letter dated October 3, 2017 (the "Termination Letter"), Defendant falsely asserted that Plaintiff breached the IT Agreement and purported to terminate the contract. (Id. ¶ 10.) Plaintiff alleges that it was Defendant who was in breach of the IT Agreement, being seriously delinquent in payments until one month before sending the Termination Letter. (Id. ¶ 11.) While covering five monthly payments in arrears, Defendant failed to provide payment for any late fees incurred pursuant to the IT Agreement. (Id.) Plaintiff states that Defendant is having financial issues and its "apparent buyer's remorse with regard to the [IT] Agreement is no justification for its actions." (Id. ¶¶ 12-13.)

         After receiving the Termination Letter, Plaintiff informed Defendant that it was ready, willing and able to perform under the IT Agreement, but Defendant refused to allow Plaintiff to continue performance. (Id. ¶ 14.) As a result of Defendant's alleged breach, Plaintiff has suffered a significant injury in excess of $75, 000.00. (Id. ¶ 15.) Plaintiff raises 4 causes of action against Defendant: (1) breach of contract for failing to pay late fees, failing to allow the right to cure any alleged defaults, and refusing Plaintiffs tender of continued performance; (2) breach of covenant of good faith and fair dealing for manufacturing false breaches of the IT Agreement, interfering in Plaintiffs performance of services, and wrongful termination; (3) defamation per se for making false and defamatory statements about Plaintiff to third parties which were likely to cause harm to Plaintiffs professional reputation; and (4) a claim under the North Carolina Unfair and Deceptive Trade Practices Act for Defendant's defamatory statements which were injuries to Plaintiff in its profession. (Id. ¶¶ 19-39.)

         On November 30, 2017, Defendant filed the pending motion to dismiss Counts II through IV of Plaintiffs Complaint. (Docket Entry 12.) Plaintiff filed a response brief and Defendant thereafter filed a reply. (Docket Entries 17, 21.)

         II. DISCUSSION

         A motion to dismiss pursuant to Rule 12(b)(6) tests the sufficiency of the complaint. Edwards v. City of Goldsboro, 178 F.3d 231, 243 (1999). A complaint that does not "contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face'" must be dismissed. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)). "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." Id.; see also Simmons & United Mortg. & Loan Invest., 634 F.3d 754, 768 (4th Cir. 2011) ("On a Rule 12(b)(6) motion, a complaint must be dismissed if it does not allege enough facts to state a claim to relief that is plausible on its face.") (emphasis in original) (internal citation and quotation marks omitted). The "court accepts all well-pled facts as true and construes these facts in the light most favorable to the plaintiff in weighing the legal sufficiency of the complaint, " but does not consider "legal conclusions, elements of a cause of action, . . . bare assertions devoid of factual enhancement[, ] . . . unwarranted inferences, unreasonable conclusions, or arguments." Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009) (citations omitted). In other words, the standard requires a plaintiff to articulate facts, that, when accepted as true, demonstrate the plaintiff has stated a claim that makes it plausible she is entitled to relief. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Ck. 2009) (quoting Iqbal, 556 U.S. at 678, and Twombly, 550 U.S. at 557).

         1. Count II (Breach of Covenant of Good Faith and Fair Dealing)

         Defendant first argues that Plaintiffs claim for breach of covenant of good faith and fair dealing should be dismissed because this claim and Plaintiffs breach of contract claim "rely on the same facts." (Docket Entry 13 at 4.) "In every contract there is an implied covenant of good faith and fair dealing that neither party will do anything which injures the right of the other to receive the benefits of the agreement." Williams v. Craft Dev., LLC, 199 N.C.App. 500, 506, 682 S.E.2d 719, 723 (2009) (internal quotation marks and citation omitted). Where the claim for breach of good faith is "part and parcel" of a similar claim for breach of an express term of the contract claim, that claim will rise and fall with the other breach of contract claim. Lord of Shalford v. Shelley's Jewelry, Inc., 127 F.Supp.2d 779, 787 (W.D. N.C. 2000) (quoting Murray v. Nationwide Mut. Ins. Co., 123 N.C.App. 1, 472 S.E.2d 358, 368 (1996)). The covenant of good faith and fair dealing is an implied term, therefore it cannot be used to contradict the express terms of a contract. Rich Food Sen's., Inc. v. Rich Plan Corp., 98 Fed.Appx. 206, 211 (4th Or. 2004) (unpublished) (citing Campbell v. Blount, 24 N.C.App. 368, 371, 210 S.E.2d 513, 515 (1975)). "This understanding conforms with the central purpose of the implied duty of good faith, which is to allow enforcement of a vague or incomplete agreement that the ratifying parties intended to be binding but that lacks certain terms essential to proper contract formation." Performance Sales & Mktg., LLC v. Lowe's Companies, Inc., No. 5:07CV140, 2010 WL 2294323, at *10 (W.D. N.C. June 4, 2010) (unpublished) (citing Ultra Innovations, Inc. v. Food Lion, Inc., 130 N.C.App. 315, 317, 502 S.E.2d 685, 687 (1998)). In such cases, "the duty of good faith provides the missing terms of the agreement that necessarily flow from the parties' intentions, thus allowing enforcement of the contract." Id.

         In instances where a claim for breach of the covenant of good faith and fair dealing is accompanied with a breach of contract claim, "the weight of North Carolina authority holds that a claim for breach of covenant of good faith and fair dealing based on facts identical to those supporting a breach of contract claim should not be pursued separately." Exact Sets. Corp. v. Blue Cross & Blue Shield of N. Carolina, No. 1:16CV125, 2017 WL 1155807, at *13 (M.D. N.C. Mar. 27, 2017) (citation omitted) (unpublished). See also, Shelley's Jewelry, 127 F.Supp.2d at 787; Mech. Indus, v. O'Brien/Atkins Assocs., P.A., No. 1:97CV99, 1998 U.S. Dist. LEXIS 5389, at *11 (M.D. N.C. Feb. 4, 1998) (noting that North Carolina recognizes a separate cause of action for breach the covenant of good faith and fair dealing only in limited circumstances involving special relationships between the parties, such as cases involving funeral services and insurance contracts).

         Here, Defendant argues that although worded differently, Plaintiffs claims are substantively duplicative. (Docket Entry 21 at 4.) Plaintiff argues that the two claims are based upon separate allegations; that is, Plaintiffs breach of contract claim alleges that Defendant wrongly sent the Termination Letter, failed to pay late fees and failed to provide the notice and the right to cure the IT Agreement, while Plaintiffs second cause of action is based upon making false assertions of breaches and interfering with Plaintiffs ability to perform under the IT Agreement. (Docket Entry 17at 5; see also Compl. ¶¶ 10, 20, 23-26.) The Court finds Plaintiffs argument here unpersuasive. As Defendant argues, Plaintiffs claim for breach of covenant of good faith and fair dealing, although stated differently, is essentially based upon the same underlining allegations in its breach of contract claim. Plaintiff asserts that Defendant "breached its duties of good faith and fair dealing by manufacturing false breaches of the [FT] Agreement. . . interfering in Plaintiffs performance of services, and by wrongly terminating the [IT] Agreement pursuant to the Termination Letter." (Compl. ¶ 24.) Plaintiff then proceeds to discuss one of the purported grounds discussed in the Termination Letter. (Id. ¶¶ 25-26.) These are all underlining facts that would support Plaintiffs breach of contract claim. Thus, the two claims should not be pursued separately. Exact Scis., 2017 WL 1155807, at *13 ("Because [Plaintiff] bases its breach of the duty of good faith and fair dealing on the same factual allegations as form its breach of contract claim, the former cannot be pursued independently."); BioSignia, Inc. v. Life Line Screening of Am., Ltd., No. L12CV1129, 2014 WL 2968139, at *5 (M.D. N.C. July 1, 2014) (unpublished) (finding that "Plaintiffs separate cause of action for breach of the covenant of good faith and fair dealing should be dismissed as duplicative of its breach of contract claim"). In sum, Defendant's motion should be granted as to Count II of Plaintiffs Complaint.

         2. Count HI (Defamation Per Se)

         Defendant also moves to dismiss Plaintiffs claim for defamation per se. (Docket Entry 13 at 5-8.) The Court evaluates a defamation claim by applying state substantive law and federal procedural law. Federal Rule of Civil Procedure 8 specifying the general pleading requirements in federal court "does not contain a special pleading requirement for defamation." Wuchenich v. Shenandoah Metn'l Hosp., No. 99-1273, 215 F.3d 1324 (table), 2000 WL 665633, at *14 (4th Or. May 22, 2000) (unpublished); see also TMMData, LLC v. Braganza, No. 5:14-cv-729, 2015 WL 4617326, at *5 (E.D. N.C. July 31, 2015) (explaining that, "unlike fraud claims, there is no heightened pleading standard for [defamation]"); Exclaim Mktg. v. DIRECTV, Inc., No. 5:11-cv-684, 2012 WL 3023429, at *8 (E.D. N.C. July 24, 2012) ("[N]either the [Rules] nor the Fourth Circuit impose a special or heightened pleading standard for defamation." (internal quotation marks omitted)). Therefore, "the ...


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