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Hamilton Equipment, Inc. v. Danuser Machine Company, Inc.

United States District Court, E.D. Pennsylvania

October 7, 2019

HAMILTON EQUIPMENT, INC.
v.
DANUSER MACHINE COMPANY, INC.

          MEMORANDUM

          SCHMEHL, J.

         Plaintiff, a Pennsylvania corporation, brought this action, claiming the Defendant, a Missouri corporation, breached a distributor agreement it had entered into with Plaintiff when Defendant terminated the agreement without providing good cause and proper notice as required by Missouri law. In its Amended Complaint, Plaintiff asserts a claim against the Defendant for violations of the Missouri Farm Implement Dealership Agreements Act (Count One), and three breach of contract claims (Counts Two, Three and Four). Presently before the Court is the Defendant's motion to dismiss the Amended Complaint in its entirety pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, the motion is granted.

         STANDARD OF REVIEW

         In considering a motion to dismiss pursuant to Rule 12(b)(6), the district court should “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. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (internal quotation marks and citations omitted). “To survive a motion to dismiss, a complaint 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The plaintiff need not satisfy any “probability” requirement, but must set forth “more than a sheer possibility” that the defendant's actions give rise to the claim. Id.

         FACTUAL ALLEGATIONS

         The Amended Complaint alleges that Defendant is a manufacturer of farm equipment. (Am. Compl. at ¶ 7.) Plaintiff is a “farm equipment manufacturer and dealer.” (Id. at ¶ 8.) Plaintiff alleges that it “markets, advertises and sells [Defendant's] products to dealers and end-users” in Pennsylvania, West Virginia, Virginia, Maryland, Washington, D.C., Delaware and New Jersey (“Mid-Atlantic Territory”). (Id. at ¶¶ 9, 12.)

         Plaintiff's relationship with Defendant began in 1945 and Plaintiff was the first independent distributor and dealer to sell Defendant's products. (Id. at ¶¶ 10, 11.) Plaintiff alleges that since 1945, it has “purchased millions of dollars” of Defendant's products from Defendant, “extensively marketed and advertised” Defendant's products, “created and nurtured a market and customer base” for Defendant's products and “created, trained and sustained a sales force focused on the promotion and sale” of Defendant's products. (Id. at ¶¶ 13-16.) Plaintiff has increased its productivity as a distributor and dealer in recent years and Plaintiff's payments to Defendant for the fiscal year ending in October 2018 reached an “historic high.” (Id. at ¶¶ 18, 20). Over the years, Defendant has presented Plaintiff with several awards, recognizing Plaintiff as its “#1 distributor.” (Id. at ¶ 17.)

         On January 1, 2008, Plaintiff and Defendant entered into a “Distributor Agreement” (“the “Agreement”). (Am. Compl. at ¶ 21, Exh. A[1].) The Agreement specifically states that its purpose is for stating: (a) “the terms, discounts and conditions of sale and purchase of [Defendant's] products…”, (b) “territories covered by distributor”, and (c) “other coverages." (Id.) Plaintiff alleges that “[w]hile the written agreement between [Defendant] and [Plaintiff] is captioned ‘Distributor Agreement,' [Plaintiff] has continued throughout its 73-year relationship with [Defendant] to actually serve as both distributor and dealer of [Defendant's] products, including specifically sales of [Defendant's] products directly to end users.” (Id. at ¶ 22.)

         Plaintiff alleges that under the Agreement, Defendant agrees that Plaintiff is “the ‘primary' seller” of Defendant's products “‘within [Plaintiff's] territory.'” (Id. at ¶ 23.) Plaintiff further alleges that “[a]s the Agreement has been interpreted and carried out by the parties, the Agreement gives [Plaintiff] exclusive rights to sell Defendant's] products within [Plaintiff's] specified territory…” (Id. at ¶ 24.) Plaintiff also alleges that although the Agreement gives either party the right to cancel at any time up to 30 days written notice, the Agreement also specifically provides that it is ‘governed by Missouri Laws.'” (Id. at ¶ 25.)

         On December 4, 2018, Defendant delivered a letter to Plaintiff, informing Plaintiff that Defendant was terminating the Agreement. (Id. at ¶ 30.) According to Plaintiff, the letter did not provide ninety (90) days of notice as required by Missouri law. (Id. at ¶ 31.) The letter also did not state any reasons constituting good cause for termination or sixty days in which to cure any deficiency as required by Missouri law. (Id. at ¶ 32.)

         Plaintiff alleges that Defendant has recently appointed another entity, Cummings & Bricker, Inc. (“C & B), as a Distributor “for the same territory identified in the Agreement as [Plaintiff's] territory.” (Id. at ¶ 38.) Plaintiff further alleges that since 1945, it has been the “exclusive Distributor [for Defendant] in the Mid-Atlantic Territory.” (Id. at ¶ 39.) Finally, Plaintiff alleges that the Distributor Agreement, “as evidenced by their course of dealing and course of conduct, is that a Distributor assigned a territory is the exclusive Distributor for that territory.” (Id. at ¶ 40.)

         DISCUSSION

         In Count One, Plaintiff contends that Defendant's actions in terminating the Agreement violate the Missouri Farm Implement Dealership Agreements Act, Mo. Rev. Stat. 407.838, et seq. (the “Farm Dealer Act.”)

         At the outset, the Court notes that, according to Plaintiff's own allegations, Defendant has not actually terminated the Agreement. The Amended Complaint alleges that on January 4, 2019, Defendant issued to Plaintiff a 90-day “reinstatement” under the Distributor Agreement, which reinstated Plaintiff until April 3, 2019. On April 3, 2019, Defendant issued another extension of Plaintiff's appointment for an additional 180 days. (Id. at ¶ 36). In the April 3, 2019 extension, Plaintiff claimed that Plaintiff's appointment is “non-exclusive.” (Id. at ΒΆ ...


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