United States District Court, M.D. Pennsylvania
D MARIANI UNITED STATES DISTRICT JUDGE
before the Court is a Report and Recommendation
("R&R") (Doc. 17) by Magistrate Judge Martin
Carlson in which he recommends that the Court grant Defendant
Letourneau Enterprises' Motion to Dismiss for Failure to
State a Claim (Doc. 2) as to Plaintiff Frank Krammes Timber
Harvesting, Inc.'s ("Krammes") Complaint (Doc.
1-1). Krammes has filed Objections to the Magistrate
Judge's R&R (Doc. 18) and a brief in support of those
Objections (Doc. 19), to which Defendant has filed a brief in
opposition to Plaintiffs Objections (Doc. 20). Additionally,
Plaintiff has filed a reply brief. (Doc. 21). For the reasons
that follow, upon de novo review of Magistrate Judge
Carlson's R&R, the Court will overrule Plaintiffs
Objections and adopt as modified the pending R&R.
Defendant's motion will be granted. Count I of Plaintiffs
Complaint will be dismissed with prejudice and Counts II and
III of Plaintiffs Complaint will be dismissed without
prejudice. Plaintiff will be granted leave to amend those
Counts dismissed without prejudice.
District Court may "designate a magistrate judge to
conduct hearings, including evidentiary hearings, and to
submit to a judge of the court proposed findings of fact and
recommendations for the disposition" of certain matters
pending before the Court. 28 U.S.C. § 636(b)(1)(B). If a
party timely and properly files a written objection to a
Magistrate Judge's Report and Recommendation, the
District Court "shall make a de novo
determination of those portions of the report or specified
proposed findings or recommendations to which objection is
made." Id. at § 636(b)(1)(C); see
also, Brown v. Astrue, 649 F.3d 193, 195 (3d Cir. 2011);
M.D. Pa. Local Rule 72.3.
operative complaint is the Complaint filed in the Court of
Common Pleas of Schuylkill County and removed to this Court
on October 1, 2018, by Defendant Letoumeau Enterprises, LLC.
(Doc. 1). The Complaint contains three counts: Count I -
Declaratory Relief as to the parties' relationship
embodied in a contract; Count II - Promissory Estoppel; and
Count III - Unjust Enrichment. (Doc. 1-1). Thereafter,
Letoumeau filed a Motion to Dismiss for Failure to State a
Claim (Doc. 2), which the Court referred to Magistrate Judge
Carlson for the preparation of an R&R. In August 2019,
the Magistrate Judge issued the R&R (Doc. 17) presently
before this Court.
R&R, Magistrate Judge Carlson recommends that this Court
grant Letourneau's motion to dismiss with respect to
Krammes' breach of contract claim because "a
contract which clearly provides that the plaintiff will
receive no minimum number of loads cannot be read as
requiring the delivery of some minimum quantity of
loads" and thus the "breach of contract fails as a
matter of law and should be dismissed." (Doc. 17, at 1).
Magistrate Judge Carlson concluded that the agreement between
the parties "did not amount to an output contract"
(id. at 16) and that the agreement between the
parties (Doc. 1-1, at 31) was a completely integrated and
unambiguous agreement that precluded the introduction of any
parol evidence to establish that the agreement otherwise
amounted to an output contract (Doc. 17, at 13-16).
Additionally, Magistrate Judge Carlson recommends that this
Court grant Letoumeau's motion to dismiss with respect to
the promissory estoppel and unjust enrichment claims because
the existence of a written agreement precludes both claims.
(Id. at 17-20).
objects to the R&R's recommendation that
Letoumeau's motion to dismiss be granted with respect to
its breach of contract claim on the grounds that Magistrate
Judge Carlson erred "in finding that the September 11,
2017 Commitment for Plaintiff to take all of the
Defendant's output was not part of the agreement between
the parties and was parol evidence that could not be
considered." (Doc. 19, at 6). Further, "the
Magistrate Judge erred in interpreting in isolation the term
'no minimum/maximum number of loads' as meaning that
Defendant had no obligation to bring any loads at all, under
Pennsylvania law" and in concluding that no output
contract exists. (Id. at 9). Additionally, Krammes
contends that "if the Magistrate's logic is the
contract really was not a contract, " then it should not
be precluded from asserting alternative claims of promissory
estoppel and unjust enrichment. (Doc. 19, at 17). The Court
will address Krammes' objections with respect to the
breach of contract claim and the promissory estoppel and
unjust enrichment claims separately.
Breach of Contract
asserts that Magistrate Judge Carlson "erred in
interpreting the September 13, 2017 agreement (Doc. 1-1, at
4) as not being an output contract and in finding Defendant
had no obligation to bring any loads of materials to
Plaintiff under the contract." (Doc. 19, at 13). The
Court finds that Plaintiffs objection is without merit and
cannot conclude that the contract between the parties
amounted to an output contract.
extent that Krammes advances arguments under the Pennsylvania
Uniform Commercial Code ("Pennsylvania UCC"), 13
Pa. Cons. Stat. §§ 2101-2107, that the agreement
involved in this matter is an output contract, the Court will
assess Krammes' arguments assuming that the Pennsylvania
UCC applies. Under the Pennsylvania UCC, an output contract
is a type of contract that "measures the quantity by the
output of the seller... as may occur in good faith, except
that no quantity unreasonably disproportionate to any stated
estimate or in the absence of a stated estimate to any normal
or otherwise comparable prior output... may be tendered or
demanded." 13 Pa. Cons. Stat. § 2306(a). Put
differently, based on the statutory language, an output
contract, by definition, "measures the quantity by the
output of the seller." Id.
as the Magistrate Judge noted, nothing in the agreement (Doc.
1-1, at 4) suggests that Letoumeau agreed to provide for
purchase by Krammes any output in its entirety or any other
specified amount. Indeed, the agreement only specifies an
obligation to accept "any and all loads of timber...
brought... by Letourneau Enterprises, LLC."
(Id.). The agreement is clear that an obligation
exists for Krammes to accept what Letourneau brings, but the
agreement lacks any indication that Letourneau was required
to supply Krammes with any amount of "timber, wood
chips, and stump grindings." (Doc. 1-1, at 4). Thus, the
Court cannot conclude that the agreement is an output
contract when it does not identify any output - a crucial
element to an output contract.
relies on the September 11, 2017, letter (Doc. 1-1, at 5) to
establish that the agreement is an output contract, which it
argues the Magistrate erred in failing to admit (Doc.19, at
6-8). The Court disagrees. As Magistrate Judge Carlson noted:
In order to determine whether a writing is the parties'
complete expression of their agreement, the court must
examine the writing and "if it appears to be a contract
complete within itself, couched in such terms as import a
complete legal obligation without any uncertainty as to the
object or extent of the [parties'] engagement, it is