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ATLANTIC PAPER BOX CO. v. WHITMAN'S CHOCOLATES

February 2, 1994

ATLANTIC PAPER BOX CO.
v.
WHITMAN'S CHOCOLATES and PET, INCORPORATED



The opinion of the court was delivered by: BY THE COURT; DONALD W. VANARTSDALEN

 VanARTSDALEN, S.J.

 I. INTRODUCTION

 Plaintiff, Atlantic Paper Box Co. (Atlantic), filed this action against Whitman's Chocolates (Whitman's) and Pet Incorporated (Pet) on November 12, 1993 seeking damages under contract, promissory estoppel and loss of business opportunity theories. Counts I and II are claims for breach of contract; counts III and IV are claims based on promissory estoppel; counts V is a claim for loss of business opportunity; and count VI is a claim for intentional interference with a contractual relationship. Subsequently, by stipulation filed December 21, 1993, Whitman's was dismissed as a party, and Count VI, relating to Pet's intentional interference with the contractual relations between Whitman's and plaintiff, was dismissed with prejudice. Apparently, the parties agreed to this stipulation because Whitman's is neither a corporation nor a business entity as originally averred by plaintiff in its complaint, *fn1" and consequently the only contractual relationship that could have existed was between Atlantic and Pet. (Filed Doc. No. 4.)

 Atlantic avers that it is in the business of producing specialty candy boxes for candy manufacturers, "primarily heart-shaped boxes used for Valentine's Day candy." (Complaint at P 5.) Atlantic alleges that it has produced candy boxes for defendant "in recent years," which has accounted for approximately 40% of plaintiff's business. (Complaint at P 6.) According to plaintiff and presumably consistent with industry practice, *fn2" discussions between plaintiff and defendant began in October 1992 concerning Whitman's candy box needs for Valentine's Day 1994. (Complaint at P 8.) Plaintiff further alleges that it received assurances in December that defendant would place orders with plaintiff for 1994 Valentine's Day candy boxes and that on or about February 16, 1993, defendant's authorized agent gave plaintiff purchase order numbers and other specifics by telephone which amounted to an order totaling $ 304,557.50. (Complaint at P 10, 11.)

 In addition, plaintiff alleges that on February 24, 1993 defendant, by telephone, placed additional purchase orders for boxes with specific styles, quality, quantity and prices resulting in an order which totaled $ 1,076,095.50 when combined with the previous order. (Complaint at P 12.) Plaintiff also contends that defendant requested that plaintiff "reserve its manufacturing capacity to accommodate this additional order." (Id.)

 Plaintiff alleges that "during the course of negotiations" plaintiff, knowing that Whitman's was for sale, asked defendant whether Russell Stover was a potential buyer of Whitman's. (Complaint at P 13.) This information was apparently important to plaintiff because Russell Stover produced its own candy boxes and therefore would not be a customer of plaintiff for candy boxes if it purchased Whitman's. According to plaintiff, defendant gave assurances that Russell Stover would not be a buyer of Whitman's. (Id.) Subsequently, on March 1, 1993, defendant allegedly notified plaintiff that all orders were to be put on hold pending negotiations for the sale of Whitman's to two potential buyers neither of which were identified as Russell Stover. (Complaint at P 14.) On March 8, 1994, plaintiff alleges that defendant notified it that Russell Stover would purchase Whitman's and, that as a result, all business with Atlantic was terminated. (Complaint at P 15.)

 Essentially, plaintiff's claims relate to the alleged contractual relationship that existed between Atlantic and Pet. Plaintiff has sought relief on both contractual and promissory estoppel theories. Additionally, plaintiff has sought damages for "loss of business opportunity," by averring that as a result of defendant's actions plaintiff suffered an "immediate and irreparable diminution in value," causing a potential buyer of plaintiff to withdraw an offer to purchase the company. (Complaint at PP 56-57.) Defendant has moved to dismiss counts III and IV, relating to promissory estoppel theories and count V, relating to loss of business opportunity, under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claims upon which relief can be granted. No motion has been filed as to counts I and II for breach of contract of sale of specially manufactured goods.

 II. DISCUSSION

 A. Motion to Dismiss

 A motion to dismiss tests the legal sufficiency of the complaint. See Sturm v. Clark, 835 F.2d 1009, 1011 (3d Cir. 1987). A court may grant a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted only if it appears beyond a doubt that plaintiff can prove no facts to support the relief requested. Conley v. Gibson, 355 U.S. 41, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Commonwealth ex rel. Zimmerman v. Pepsico, Inc., 836 F.2d 173, 179 (3d Cir. 1988). In deciding a motion to dismiss, all allegations in the complaint and all reasonable inferences that can be drawn therefrom must be accepted as true and viewed in the light most favorable to the non-moving party. Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir. 1989).

 B. Choice of Law

 A federal court, sitting in diversity, must apply the choice of law rule of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941); Erie R.R. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938). Because the alleged contract clearly involves the sale of goods, see U.C.C. § 2-105(a), 13 Pa. Cons. Stat. Ann. § 2105(a), *fn3" the choice of law provision of Pennsylvania's Uniform Commercial Code (UCC) would be an appropriate starting point. U.C.C. § 1-105(a), 13 Pa. Cons. Stat. Ann. § 1105(a). This provision, however, does not provide much guidance. It merely states that when the parties have failed to agree on the applicable choice of law, Pennsylvania's UCC "applies to transactions bearing an appropriate relation to this Commonwealth." Id.

 I turn, then, to the choice of law rules as they pertain to contract cases. "Under Pennsylvania's choice-of-law principles, the place having the most interest in the [contract] and which is most intimately concerned with the outcome is the forum whose law should be applied." In Re Complaint of Bankers Trust Co., 752 F.2d 874, 882 (3d Cir. 1984); Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796, 805-06 (Pa. 1964). Under this approach, the places of negotiation, contracting, and performance, the location of the subject matter of the contract, and the citizenship of the parties are all considered. Reading Metal Craft Co. v. Hopf Drive Assocs., 694 F. Supp. 98, 105 (E.D. Pa. 1988).

 Clearly, under these principles, either Pennsylvania or Massachusetts *fn4" law applies. Defendant has maintained that the parties in previous negotiations or contracts had chosen Pennsylvania law as governing their relationship. (Def.'s Mem. Supp. Mot. to Dismiss at 3.) Plaintiff has not disputed this contention. Moreover, both defendant and plaintiff have cited mainly Pennsylvania and Third Circuit law in their briefs. Neither party has cited any Massachusetts law. Consequently, I will apply the law of the Commonwealth of Pennsylvania to this action. *fn5"

 I must follow state law as interpreted by the Supreme Court of Pennsylvania. Borman v. Raymark Indus., Inc., 960 F.2d 327 (3d Cir. 1992). Where Pennsylvania's highest court has not spoken definitively on an issue, however, "decisions of an intermediate state court should not be disregarded unless other 'persuasive data'" indicate that the Supreme Court of Pennsylvania would decide otherwise. Fisher v. USAA Casualty Ins. Co., 973 F.2d 1103, ...


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