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Packrite, LLC v. Graphic Packaging International, Inc.

United States District Court, M.D. North Carolina

July 9, 2019

PACKRITE, LLC, Plaintiff,
v.
GRAPHIC PACKAGING INTERNATIONAL, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          LORETTA C. BIGGS, DISTRICT JUDGE.

         On August 29, 2018, this Court granted Defendant's partial motion to dismiss related to three of Plaintiff's claims in its original complaint (“2018 Order”). (ECF No. 19.) Specifically, this Court dismissed without prejudice Defendant's Fraudulent Misrepresentation/Inducement claim, Negligent Misrepresentation/Detrimental Reliance claim, and Unfair and Deceptive Trade Practices Act claim due to the failure of those claims to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). (Id. at 18.) After seeking leave of this Court, Plaintiff filed an Amended Complaint on October 15, 2018. (ECF Nos. 21, 24.) Before the Court is Defendant's Partial Motion to Dismiss Plaintiff's Amended Complaint pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure, requesting that this Court dismiss four of the six claims in Plaintiff's Amended Complaint. (ECF No. 26.) For the reasons that follow, Defendant's Partial Motion to Dismiss is granted in part and denied in part.

         I. FACTUAL BACKGROUND[1]

         Packrite, LLC (“Packrite”), a North Carolina company, is a “specialized trade finisher for the corrugated and folding carton packaging industries.” (ECF No. 24 ¶¶ 1, 4.) Graphic Packaging International, Inc. (“Graphic”) is a Delaware company, headquartered in Atlanta, Georgia, that manufactures “folding cartons, unbleached paperboard, and coated recycled board used in packaging for the food, beverage, and consumer product industries.” (Id. ¶¶ 2, 5.)

         Beginning in or around 2012, Graphic engaged Packrite's services as an outsource vendor, on an as-needed basis, to assist with fulfilling customer orders and meeting Graphic's manufacturing needs. (Id. ¶¶ 8, 12.) In or around August 2016, Graphic requested Packrite's temporary assistance “in producing the packaging for Clorox Kitty Litter, ” (the “Clorox Business”). (Id. ¶ 15 (internal quotation marks omitted).) The Clorox Business “was part of a very large contract obtained by [Graphic, ]” and Graphic “did not have the resources, equipment, or capacity to undertake the Clorox Business itself.” (Id. ¶¶ 16, 17.) According to the Amended Complaint, “Packrite was initially unwilling to assist” Graphic with the Clorox Business because Packrite also lacked the necessary resources to assist on such a large project and, further, such assistance would limit Packrite's ability to pursue or obtain other business opportunities. (Id. ¶¶ 21, 23, 25.)

         The Amended Complaint alleges that Chris Berndt, Graphic's Director of Operations, stated to Packrite that, should Packrite agree to assist Graphic with the Clorox Business, Graphic would then agree to enter into a three year contract “under which Packrite would be the sole producer of [Graphic's] requirements of [b]eer [c]artons” (the “Beer Carton Project” or “Beer Carton Contract”). (Id. ¶ 27.) Chris Berndt “specifically and unequivocally” told Packrite that the Beer Carton Project “would result in gross revenue of approximately $10, 000, 000.00 per year to Packrite.” (Id. ¶ 31.) “Based solely upon the[se] representations, ” Packrite agreed to assist Graphic with the Clorox Business and, in early September 2016, Packrite began its production preparations, followed by the start of actual production in November 2016. (Id. ¶¶ 32, 39, 41.)

         Also in November 2016, shortly after Packrite began production on the Clorox Business, Packrite representatives met with Kristopher Dover, Vice President of Operations at Graphic. (Id. ¶ 47.) At that meeting, Mr. Dover informed Packrite that Chris Berndt “did not actually have the requisite authority to commit [Graphic] to the promised [Beer Carton Project] when he did so in August 2016.” (Id. ¶ 48.) Nevertheless, Mr. Dover, who did have authority to commit Graphic to the Beer Carton Project, stated that Graphic “would honor Mr. Berndt's original promise” and that Graphic would complete the Beer Carton Project with Packrite, “on the same terms promised in August 2016.” (Id. ¶ 49.)

         In early 2017, Graphic provided Packrite with an initial draft of the Beer Carton Project contract, to which Packrite proposed revisions and returned to Graphic. (Id. ¶¶ 57, 59; see also Id. at 27-35, 36-44.) Packrite did not receive any further “specific response from [Graphic] regarding either its proposed changes to the draft Beer Carton Contract or the omitted quantity and price terms, although the parties continued discussions and negotiations relating to the same through approximately May 2017.” (Id. ¶ 60.) Ultimately, the parties never executed a contract for the Beer Carton Project. (Id. ¶ 74.)

         Defendant now moves to dismiss Plaintiff's claims in its Amended Complaint for Fraudulent Misrepresentation/Inducement (Claim III), Fraudulent Omission (Claim IV), Negligent Misrepresentation (Claim V), and Unfair and Deceptive Trade Practices (“UDTPA”) (Claim VI[2]), for failure to state a claim upon which relief can be granted. (ECF No. 26 ¶¶ 1-3.)

         STANDARD OF REVIEW

         A. Rule 12(b)(6)

         A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure “challenges the legal sufficiency of a complaint, ” including whether it meets the pleading standard of Rule 8(a)(2). Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). Rule 8(a)(2) requires a complaint to contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), thereby “giv[ing] the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original) (citation omitted). Because a Rule 12(b)(6) motion tests the sufficiency of a complaint without resolving factual disputes, a district court “must accept as true all of the factual allegations contained in the complaint and draw all reasonable inferences in favor of the plaintiff.” Kensington Volunteer Fire Dep't, Inc. v. Montgomery Cty., 684 F.3d 462, 467 (4th Cir. 2012) (internal quotation marks omitted).

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter . . . to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A complaint may fail to state a claim upon which relief can be granted in two ways: first, by failing to state a valid legal cause of action, i.e., a cognizable claim, see Holloway v. Pagan River Dockside Seafood, Inc., 669 F.3d 448, 452 (4th Cir. 2012); or second, by failing to allege sufficient facts to support a legal cause of action, see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013). In considering a Rule 12(b)(6) motion to dismiss, the “court evaluates the complaint in its entirety, as well as documents attached [to] or incorporated into the complaint.” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011).

         B. Rule 9(b)

         Where a party alleges fraud, the complaint must satisfy the pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure. Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783-84 (4th Cir. 1999). Under Rule 9(b), “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). The alleged “circumstances” which must be plead with particularity include “the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” Harrison, 176 F.3d at 784 (citation omitted).

         The primary purposes of Rule 9(b) are: (1) to give a defendant sufficient notice of the claim(s) against him so that he may formulate a defense; (2) to forestall frivolous lawsuits; (3) to prevent fraud actions in which all facts are learned only through discovery; and (4) to protect a defendant's goodwill and reputation. See Id. According to the Fourth Circuit, “[a] court should hesitate to dismiss a complaint under Rule 9(b) if the court is satisfied (1) that the defendant has been made aware of the particular circumstances for which [it] will have to prepare a defense at trial, and (2) that plaintiff has substantial prediscovery evidence of those facts.” Id. Failure to satisfy the heightened pleading requirements of Rule 9(b) subjects a fraud claim to dismissal under Rule 12(b)(6). Id. at 783 n.5.

         II. ...


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