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Jem Accessories, Inc. v. D&H Distributing, Co.

United States District Court, M.D. Pennsylvania

July 26, 2018

JEM ACCESSORIES, INC., Plaintiff
v.
D&H DISTRIBUTING, CO., Defendant

          MEMORANDUM

          CHRISTOPHER C. CONNER, CHIEF JUDGE UNITED STATES DISTRICT COURT

         Plaintiff Jem Accessories Inc (“Jem”) commenced this action against defendant D&H Distributing Co (“D&H”) asserting claims for breach of contract unjust enrichment and quantum meruit and breach of the duty of good faith and fair dealing (Doc 1) D&H moves to dismiss Jem's complaint in part pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc 7)

         I. Factual Background & Procedural History

         Jem manufactures and distributes various electronic products (Doc 1 ¶ 6) D&H distributes certain of these products (Id. ¶ 7) D&H purchases products from Jem pursuant to a supplemental vendor purchase agreement (Id. ¶¶ 7-8; Doc 8-1) According to the allegations set forth in plaintiff's complaint Jem provided electronics to D&H in reliance on the parties' agreed upon price and D&H failed to pay for the products (Doc 1 ¶¶ 10-12) By way of explanation representatives of D&H allegedly admitted that it ordered more products than could be sold (Id. ¶ 13) However Jem contends that D&H neglected to use its best efforts in selling the electronics and purchasing the appropriate quantities (Id. ¶¶ 14-15) D&H purportedly owes Jem in excess of $700 00000 plus interest (Id. ¶ 16)

         Jem commenced this action advancing claims of breach of contract (Count I) unjust enrichment and quantum meruit (Count II) and breach of the duty of good faith and fair dealing (Count III) D&H moves to dismiss Counts II and III of the complaint under Federal Rule of Civil Procedure 12(b)(6) The motion is fully briefed and ripe for disposition

         II. Legal Standard

         Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of complaints that fail to state a claim upon which relief may be granted. FED. R. CIV. P. 12(b)(6). When ruling on a motion to dismiss under Rule 12(b)(6), the court must “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. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (quoting Pinker v. Roche Holdings, Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). In addition to reviewing the facts contained in the complaint, the court may also consider “matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case.” Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994); Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).

         Federal notice and pleading rules require the complaint to provide “the defendant fair notice of what the claim is and the grounds upon which it rests” Phillips 515 F.3d at 232 (alteration in original) (quoting Bell Atl Corp v Twombly 550 U.S. 544 555 (2007)) To test the sufficiency of the complaint the court conducts a three-step inquiry See Santiago v Warminster Township 629 F.3d 121130-31 (3d Cir 2010) In the first step “the court must 'tak[e] note of the elements a plaintiff must plead to state a claim” Id. at 130 (alteration in original) (quoting Ashcroft v Iqbal 556 U.S. 662 675 (2009)) Next the factual and legal elements of a claim must be separated; well-pleaded facts are accepted as true while mere legal conclusions may be disregarded Id. at 131-32; see Fowler v UPMC Shadyside 578 F.3d 203 210-11 (3d Cir 2009) Once the court isolates the well-pleaded factual allegations it must determine whether they are sufficient to show a “plausible claim for relief” Iqbal 556 U.S. at 679 (citing Twombly, 550 U.S. at 556); Twombly, 550 U.S. at 556 A claim is facially plausible when the plaintiff pleads facts “that allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged” Iqbal, 556 U.S. at 678

         III Discussion

         D&H moves to dismiss the unjust enrichment claim because a valid contract governs the parties' dispute D&H further argues that Jem may not plead breach of the duty of good faith and fair dealing as a separate cause of action independent of its breach of contract claim Jem rejoins that it may plead both claims as alternatives to breach of contract because D&H's position on the contract is unknown The court will address each count in turn

         A Unjust Enrichment

         Federal Rule of Civil Procedure 8 permits a party to plead multiple “statements of a claim” in the alternative Fed R Civ. P 8(d)(2) A party may plead a quasi-contractual claim of unjust enrichment as an alternative to breach of contract when (1) a contract encompasses only a portion of the parties' relationship or (2) the contract's existence or validity is in dispute Vantage Learning (USA) LLC v Edgenuity Inc., 246 F.Supp.3d 1097 1100 (ED Pa 2017) (collecting cases); AmerisourceBergen Drug Corp. v. Allscripts Healthcare, No. 10-6087 2011 WL 3241356 at *3 & n4 (ED Pa July 29 2011) (same) A party may not maintain an unjust enrichment claim when the parties do not dispute the existence of a governing contract that covers the same subject matter as the pending dispute Wayne Moving & Storage of N.J. Inc v Sch Dist. of Phila, 625 F.3d 148 154 n.1 (3d Cir 2010) (quoting In Re Penn Cent Transp Co., 831 F.2d 12211230 (3d Cir 1987); Wilson Area Sch. Dist. v Skepton, 895 A.2d 1250 1254-55 (Pa 2006))

         D&H posits that Jem may not plead unjust enrichment as both parties concur that an express contract governs the present dispute (Doc 20 at 1-3) We agree Jem brought the claim as an alternative to breach of contract because D&H's position on the existence and validity of the purchase agreement was unclear (Doc 17 at 4) D&H now acknowledges that the purchase agreement is valid and applicable to the current dispute but reserves the right to argue the contract's terms (Doc 20 at 3 & n.2)[1] Moreover Jem concedes that the unjust enrichment claim “may be moot” if D&H agrees to the contract's existence (Doc. 17 at 4-5) In light of these circumstances Jem may not advance an unjust enrichment claim in light of the governing contract

         B. Breach of the Duty of Good ...


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