United States District Court, M.D. Pennsylvania
MEMORANDUM & ORDER
E. JONES III, UNITED STATES DISTRICT JUDGE.
Presently before the Court are two pending motions. The first
motion is Plaintiff Kentex Asia Limited's
(“Kentex”) Motion to Dismiss Defendant's
Amended Counterclaims. (Doc. 21). Subsequent to Kentex's
Motion, Defendant ATT Southern Inc. (“ATT”) filed
a Motion for Leave to File a Second Amended Answer,
Affirmative Defenses, and Counterclaims. (Doc. 27). ATT
proposes to allege two additional counterclaims but does not
propose any changes to the counterclaims challenged in
Kentex's Motion. For the reasons that follow, we shall
deny Kentex's Motion and grant ATT's Motion.
initiated this diversity action by filing of a Complaint on
February 14, 2017. (Doc. 1). The Complaint alleges, in the
alternative, breach of contract, quantum meruit, and unjust
enrichment. ATT filed its Answer and Counterclaim on April
10, 2017. (Doc.11). On May 22, 2017, ATT filed an Amended
Answer and Counterclaims. (Doc. 18). ATT asserted six counts
in its Amended Counterclaims, including four counts of breach
of contract, false advertising under the Lanham Act,
tortious interference with contractual relations. Kentex
filed a Motion to Dismiss all of ATT's Amended
Counterclaims, except for the Lanham Act claim, on June 19,
2017. (Doc. 21). Kentex's Motion has been fully briefed
and is ripe for our review. (Docs. 22, 25, 26). While
Kentex's Motion was pending, ATT filed its motion seeking
to leave to file a Second Amended Answer and Counterclaims
with the addition of new counterclaims. (Doc. 27). ATT's
Motion also has been fully briefed and is ripe for our
review. (Docs. 31, 32, 33).
dispose of both pending Motions in this Memorandum and Order.
We will first outline the facts pertinent to both Motions and
will then address Kentex's Motion followed by ATT's
facts from ATT's Amended Counterclaims and assume them to
be true. This case involves agreements between ATT, Kentex,
and Dongguan Sunland Technology Co., Ltd.
(“Sunland”) for the manufacture of custom
planters using ATT's proprietary molds. ATT and Sunland
entered a Manufacturing Agreement and an Agreement of Title
and Ownership of Molds, Covenants of Confidentiality, and
Release and Disclaimer (“Mold Agreement”). (Doc.
18, Am. Countercl. ¶¶ 7, 8). Sunland later
instructed ATT to direct purchase orders, invoices, and
payment to Kentex. (Id. at ¶ 9). Original
shipping documents bore Kentex's name. (Id. at
¶ 10). The shipping documentation was later changed to
show Sunland as shipper because Kentex did not meet overseas
shipping regulations. (Id. at ¶ 11). Invoices
also showed Sunland as shipper and Kentex as beneficiary of
the purchase. (Id. at ¶ 12).
early 2015, Kentex delivered planters directly to ATT's
customers. (Id. at ¶ 32). Shortly after
receiving the planters, several of ATT's customers
complained to ATT of the planters' poor quality.
(Id. at ¶ 33). As a result of the complaints,
ATT was required to buy back more than $1.5 million in
defective planters from its customers. (Id. at
¶ 38). ATT contacted Kentex to inform Kentex of the
defective planters and demanded reimbursement for
charge-backs pursuant to the Manufacturing Agreement.
(Id. at ¶ 40). Kentex, in response, demanded
immediate payment for amounts due. (Id. at ¶
41). ATT did not pay Kentex, and Kentex instructed Sunland to
refrain from producing any planters for ATT. (Id. at
¶ 44). The production stoppage forced ATT to source
other manufacturers to fulfill ATT's obligations to its
customers, which resulted in increased costs to ATT.
(Id. at ¶¶ 45, 46). Thereafter, ATT ended
its relationship with Kentex. (Id. at ¶ 47).
has not returned samples that belong to ATT. (Id. at
¶¶ 49, 50). In addition, Kentex has displayed
products made using ATT's proprietary molds at trade
shows. (Id. at ¶ 51).
Kentex's Motion to Dismiss
Standard of Review
considering a motion to dismiss pursuant to Rule 12(b)(6),
courts “accept all factual allegations as true,
construe the complaint in the light most favorable to the
plaintiff, and determine whether, under any reasonable
reading of the complaint, the plaintiff may be entitled to
relief.” Phillips v. Cty. of Allegheny, 515
F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v. Roche
Holdings, Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)).
In resolving a motion to dismiss pursuant to Rule 12(b)(6), a
court generally should consider only the allegations in the
complaint, as well as “documents that are attached to
or submitted with the complaint, …and any matters
incorporated by reference or integral to the claim, items
subject to judicial notice, matters of public record, orders,
[and] items appearing in the record of the case.”
Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260
(3d Cir. 2006).
12(b)(6) motion tests the sufficiency of the complaint
against the pleading requirement of Rule 8(a). Rule 8(a)(2)
requires that a complaint contain a short and plain statement
of the claim showing that the pleader is entitled to relief,
“in order to give 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) (quoting
Conley v. Gibson, 355 U.S. 41, 47 (1957)). While a
complaint attacked by Rule 12(b)(6) motion to dismiss need
not contain detailed factual allegations, it must contain
“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). To survive a motion to dismiss, a civil plaintiff
must allege facts that “raise a right to relief above
the speculative level….” Victaulic Co. v.
Tieman, 499 F.3d 227, 235 (3d Cir. 2007) (quoting
Twombly, 550 U.S. at 555). Accordingly, to satisfy
the plausibility standard, the complaint must indicate that
defendant's liability is more than “a sheer
possibility.” Iqbal, 556 U.S. at 678.
“Where a complaint pleads facts that are ‘merely
consistent with' a defendant's liability, it
‘stops short of the line between possibility and
plausibility of entitlement to relief.'”
Id. (quoting Twombly, 550 U.S. at 557).
the two-pronged approach articulated in Twombly and
later formalized in Iqbal, a district court must
first identify all factual allegations that constitute
nothing more than “legal conclusions” or
“naked assertions.” Twombly, 550 U.S. at
555, 557. Such allegations are “not entitled to the
assumption of truth” and must be disregarded for
purposes of resolving a 12(b)(6) motion to dismiss.
Iqbal, 556 U.S. at 679. Next, the district court
must identify “the ‘nub' of the …
complaint - the well-pleaded, nonconclusory factual