C.H. ROBINSON WORLDWIDE, INC., Plaintiff,
U.S. SAND, LLC; JOSE ALBERTO GONZALEZ; and MERVIN PACKINEAU, Defendants.
Paul A. Sand, and Shawn M. Raiter, LARSON KING, LLP, for plaintiff.
Danielle Fitzsimmons, David A. Schooler, and Ellen A. Brinkman, BRIGGS & MORGAN, PA, for defendants.
MEMORANDUM OPINION AND ORDER ON DEFENDANTS' MOTION TO DISMISS
JOHN R. TUNHEIM, District Judge.
This case arises from two contracts between plaintiff C.H. Robinson ("CHR") and defendant U.S. Sand, in which CHR agreed to transport materials for U.S. Sand. CHR alleges that it performed its duties under the contract but that U.S. Sand has failed to pay. CHR brings this action for breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment, and quantum meruit against U.S. Sand and two of its officers, Jose Gonzalez and Mervin Packineau (collectively, "Sand"). Sand moves to dismiss each count in the complaint for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). The Court will deny Sand's motion to dismiss with regard to all of CHR's claims except for the claim for breach of the duty of good faith and fair dealing, which the Court will dismiss without prejudice. CHR's claim for breach of the duty of good faith and fair dealing lacks factual allegations, and fails to allege either bad faith or unjustifiable hinderance.
I. THE PARTIES
CHR is a corporation headquartered in Minnesota that provides third-party logistics, such as freight contracting and transportation. (Am. Compl. ¶¶ 1, 13 ("Compl."), June 3, 2013, Docket No. 6.) Sand is a corporation headquartered in Texas. ( Id. ¶ 2.) Defendant Gonzalez, a resident of Texas, holds himself out as the Managing Member and CEO of Sand and defendant Packineau, a resident of North Dakota, holds himself out as an owner of Sand. ( Id. ¶¶ 3-6.) The Court has jurisdiction under 28 U.S.C. § 1332(a).
II. THE AGREEMENTS
CHR alleges that, in 2012, representatives of Sand and CHR began discussing an arrangement under which CHR would transport products for Sand. ( Id. ¶¶ 16-18.) CHR and Sand (with Gonzalez acting on behalf of Sand), executed two Agency Agreements ("Agreements") on October 24, 2012. ( Id. ¶¶ 19, 27.) Under the first Agreement, CHR agreed to arrange for the shipping and transporting of 5, 500 tons of ceramic proppant from China to Hebron, North Dakota, to be used by Sand's customer Halliburton in the Bakken oil field in North Dakota. ( Id. ¶¶ 16, 19, 24.) The Agreement obligates Sand to pay CHR $180.91 per metric ton for the freight - both ocean and rail - costs of transporting the proppant and to pay for other applicable charges, such as storage, duties, and taxes. ( Id. ¶ 20.) According to CHR, the Agreement obligates Sand to pay CHR the amount due for the transportation "Net 60 days" upon the date of the invoice. ( Id. ¶ 23.) The full text of the payment term in the Agreement states:
Net 60 days upon issue date of invoice (upon signing). Interest on overdue amounts will be charged at 1% per month.
1 invoice for freight from at total volume shipped (min 5, 500MT)
Separate invoice(s) for private railcars (monthly lease & positioning charge)
Required is the implementation of an Escrow Account where Halliburton deposits funds and CHR can draw against its share as per this agreement.
(Aff. of Jose Gonzalez, Ex. A at 4, July 1, 2013, Docket No. 16.)
CHR alleges that, as required under the first Agreement, it "arranged and paid for the ocean shipment of the 5, 500 metric tons of ceramic proppant from China to Olympia, Washington" and "arranged and paid for the rail transportation of approximately 3, 000 metric tons of the ceramic proppant from Olympia, Washington to several locations in North Dakota as requested by U.S. Sand and its customer, Halliburton Energy Services." (Compl. ¶ 24.) Halliburton accepted the shipments and paid Sand more than $2 million, but Sand "has refused to pay C.H. Robinson anything it owes" under the Agreement. ( Id. ¶ 25.) CHR claims that Sand has not paid it for the cost of shipping of 5, 500 tons from China to Washington, transporting 3, 000 tons from Washington to North Dakota by rail, and storing 2, 500 tons in Washington. ( Id. ¶¶ 25-26.)
Under the second Agreement, CHR agreed to transport 1, 000 metric tons of silica sand from Marshfield, Wisconsin to Williston, North Dakota. ( Id. ¶ 27.) The second Agreement contains similar payment terms to the first Agreement: a dollar amount (here, $62) per metric ton for freight costs, duties and taxes, and other costs such as storage, and the same payment term stating that payment is due "Net 60 days" upon date of invoice. ( Id. ¶¶ 28, 31.)
Pursuant to the second Agreement, CHR alleges that it arranged for and paid for the shipment of the 1, 000 tons of sand from Wisconsin to North Dakota, but Halliburton rejected the shipments because they did not meet Halliburton's specifications. ( Id. ¶¶ 32-33.) As with the first Agreement, CHR claims that Sand has refused to pay CHR for the shipment costs it owes to CHR under the Agreement, which CHR alleges amounts to over $1 million between the two agreements. ( Id. ¶¶ 33-34.) Both Agreements ...