United States District Court, D. Minnesota
Jeffrey C. Thompson and Jacob R. Grassel, Howse & Thompson, PA, 3189 Fernbrook Lane North, Plymouth, MN 55447 (for Plaintiff); and
Sten-Erik Hoidal and Jessica L. Edwards, Fredrikson & Byron, PA, 200 South Sixth Street, Suite 4000, Minneapolis, MN 55402-1425 (for Defendant).
REPORT & RECOMMENDATION
TONY N. LEUNG, Magistrate Judge.
This matter is before the Court, United States Magistrate Judge Tony N. Leung, on Defendant's Motion for Partial Dismissal of Plaintiff's Amended Complaint and to Transfer Venue (ECF No. 16). This motion has been referred to the undersigned magistrate judge for a report and recommendation to the district court, the Honorable Michael J. Davis, Chief District Judge of the United States District Court for the District of Minnesota, under 28 U.S.C. § 636 and Local Rule 72.2(b).
A hearing was held. Jacob R. Grassel appeared on behalf of Plaintiff. (ECF No. 25.) Sten-Erik Hoidal and Jessica L. Edwards appeared on behalf of Defendant. ( Id. )
Based upon the record, memoranda, and the proceedings herein, IT IS HEREBY RECOMMENDED that Defendant's Motion for Partial Dismissal of Plaintiff's Amended Complaint and to Transfer Venue (ECF No. 16) be GRANTED IN PART and DENIED IN PART as set forth herein.
Plaintiff Dial Technology, LLC is a Minnesota company that provides telemarketing services. (Am. Compl. ¶¶ 1, 2, ECF No. 12.) Defendant Bright House Networks, LLC provides cable television services in Florida. ( Id. ¶ 3.)
In approximately June 2010, Defendant contacted Plaintiff about becoming a preferred vendor under Defendant's "Preferred Vendor Program, " which was intended to foster the relationship between Defendant and well-performing vendors. ( Id. ¶¶ 4, 7.) Defendant then "conducted a test campaign with three prospective vendors including Plaintiff." ( Id. ¶ 8.) "Plaintiff significantly outperformed the other prospective vendors...." ( Id. ) Defendant subsequently met with Plaintiff, toured Plaintiff's facilities, and "ma[de] certain representations to Plaintiff regarding Defendant substantially increasing call hours and call volume to be contracted to and through Plaintiff" as part of the Preferred Vendor Program. ( Id. ¶ 9.)
At some point between the summer of 2010 and January 1, 2011, the parties entered into an agreement wherein, beginning January 1, 2011, Plaintiff would provide services to Defendant at a discounted hourly rate of $24.00 per hour and Defendant "promised 8, 125 [call] hours per quarter and 32, 500 hour[s] for one-year to be contracted to and paid to Plaintiff." ( Id. ¶ 10; see id. ¶¶ 8, 9, 11, 13, 16.) Plaintiff discounted its hourly rate based upon Defendant's representations regarding call volume. ( Id. ¶10.) Beginning January 1, 2011, Plaintiff added additional office space and employees, "incurring additional overhead and other expense, " in order to provide the volume requested by Defendant. ( Id. ¶ 11.)
Defendant never provided the promised call volume. ( Id. ¶ 13.) In the first quarter, Plaintiff realized only $112, 000 of the expected $195, 000 in revenue based on the inadequate number of call hours. ( Id .; see id. ¶ 30.) Plaintiff incurred "significant losses and pecuniary damages... of more than $83, 000 in the first quarter and greater losses in subsequent quarters." ( Id. ¶ 13.) Plaintiff alleges that Defendant was instead giving Plaintiff's call hours to another company, Evergreen Marketing. ( Id. ¶ 17, 31.)
Plaintiff brings this action against Defendant for breach of contract, promissory estoppel, unjust enrichment/quantum meruit, and fraud/misrepresentation. Defendant has moved to dismiss Plaintiff's contract and fraud claims pursuant to Fed.R.Civ.P. 12(b)(6). (Def.'s Mem. in Supp. at 1, ECF No. 18.) Defendant also moves to have this matter transferred to the Middle District of Florida. ( Id. at 2.) Plaintiff opposes the 12(b)(6) challenges and the request to transfer. (Pl.'s Mem in Opp'n at 1-2, ECF No. 22.)
III. STATEMENT OF A CLAIM
"To withstand a Rule 12(b)(6) motion, a complaint must contain sufficient factual allegations to state a claim to relief that is plausible on its face.'" Smithrud v. City of St. Paul , 746 F.3d. 391, 397 (8th Cir. 2014) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 547 (2007)). "[A]lthough a complaint need not contain detailed factual allegations, ' it must contain facts with enough specificity to raise a right to relief above the speculative level.'" United States ex rel. Raynor v. Nat'l Rural Utils. Coop. Fin., Corp. , 690 F.3d 951, 955 (8th Cir. 2012) (quoting Twombly , 550 U.S. at 555); see also Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) ("[T]he pleading standard Rule 8 announces does not require detailed factual allegations, ' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation."). "A pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.'" Iqbal , 556 U.S. at 678. Similarly, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. "[T]he complaint should be read as a whole, not parsed piece by piece to determine whether each allegation, in isolation, is plausible." Braden v. Wal-Mart Stores, Inc. , 588 F.3d 585, 594 (8th Cir. 2009). "In deciding a motion to dismiss under Rule 12(b)(6), a court assumes all facts in the complaint to be true and construes all reasonable inferences most favorably to the complainant." Raynor , 690 F.3d at 955.
A. Contract Claim
Defendant asserts that Plaintiff's contract claim is barred by Minnesota's statute of frauds, Minn. Stat. § 513.01, because there is no writing and the alleged contract could not have been performed within one-year of its making. (Def.'s Mem. in Supp. at 12; see id. at 12-15.)
Under Minnesota law, "an agreement that by its terms is not to be performed within one year from the making thereof' is unenforceable unless such agreement, or some note or memorandum thereof, expressing the consideration, is in writing, and subscribed by the party charged therewith.'" Loftness Specialized Farm Equip., Inc. v. Twiestmeyer , 742 F.3d 845, 851 (8th Cir. 2014) (quoting Minn. Stat. § 513.01). "The test is simply whether the contract by its terms is capable of full performance within a year, not whether such occurrence is likely.'" Bolander v. Bolander , 703 N.W.2d 529, 547 (Minn.App. 2005) (quoting Eklund v. Vincent Brass & Aluminum Co. , 351 N.W.2d 371, 375 (Minn.App. 1984)).
The Amended Complaint does not allege that the parties' agreement was reduced to writing and, in her memorandum in opposition, Plaintiff describes the contract as a "verbal agreement." (Pl.'s Mem. in Opp'n at 6.) Similarly, Plaintiff agreed at the hearing that the parties' agreement was an "oral contract." Accordingly, "if the parties agreement is not in writing, ' then the agreement is enforceable only if it is capable of full performance within one year" of its making. Twistmeyer , 742 F.3d at 51. The one-year requirement applies to agreements which are to commence on a future date. See Borchardt v. Kulick , 48 N.W.2d 318, 321 (Minn. 1951) ("A contract for one year's services, commencing on the date of the contract, is not within the statute, but an oral contract for the performance of services for a term of one year, to begin in the future, is within the statue of frauds." (citation omitted)); Shaughnessy v. Eidsmo , 23 N.W.2d 362, 366 (Minn. 1946) ("An oral lease of real estate for a term of one year, to commence in future, is within the statute of frauds."); O'Donnell v. Daily News Co. of Minneapolis , 138 N.W. 677, 679 (Minn. 1912) ("For it is settled that a contract for services, which by its terms shows that it is not to be performed or is incapable of performance within one year from the making therefore, is within the statute while a contract for one year's services commencing on the date of the contract is not within the statute." (citations omitted)).
According to the Amended Complaint, the contract was to begin on January 1, 2011, and Defendant was to provide a certain volume of call hours per quarter for a one-year period. (Am. Compl. ¶¶ 11, 13, 16; see also id. ¶ 20.) Curiously, the Amended Complaint does not contain the date upon which the parties reached the alleged agreement. Plaintiff's President and CEO, Linda Baker, however, filed an affidavit in support of her opposition to Defendant's motion. (Aff. of Linda Baker, ECF No. 23.) Baker's affidavit states, "On September 13, 2010, [Defendant's employee] Anissa Crowder confirms for me that [Defendant] has agreed to the discounted hourly rate I had proposed, which was $24.00/hour based upon a volume of 8, 125 calls per quarter. At this point, we had reached an agreement. " ( Id. ¶ 19 (emphasis added).) For purposes of this motion, Defendant does not dispute that the alleged agreement was entered into on September 13, 2010. (Def.'s Mem. in Supp. at 12 n.7, 13.)
With September 13, 2010 as the date of the "making thereof, " the agreement had to be capable of full performance by September 13, 2011. See Minn. Stat. § 513.01; Bolander , 703 N.W.2d at 547. In a calendar year, the fourth quarter begins on October 1. The Court questions whether 8, 125 call hours could be performed in a 24-hour period, but, even if the fourth quarter's requirements could be met on October 1, 2011, the first day of the quarter, the agreement is not capable of full performance by the one-year deadline of September 13, 2011. Because the agreement is not capable of being fully performed within one year of its making and there is admittedly no writing, Plaintiff's contract claim is barred by the statute of frauds. Minn. Stat. § 513.01; Twistmeyer , 742 F.3d at 51.
Plaintiff contends that the parties' agreement could have been performed in one year and
was not for a specified period of time, whether it be one year, one month, or one day, but rather was an agreement arranged upon a yearly call volume of 32, 500 call hours, which was to be monitored and paid based upon quarterly hours serviced by Dial Tech as provided by Bright House.
(Pl.'s Mem. in Opp'n at 6.) Relatedly, at the hearing, Plaintiff described the parties' agreement as an indefinite contract based on a number of call hours per year. These arguments, however, are inconsistent with the facts pleaded in the Amended Complaint, which refer to an agreement wherein Defendant promised "8, 125 hours per quarter and 32, 500 hour[s] for one year to be contracted to and paid to Plaintiff." (Am. Compl. ¶ 10; accord id. ¶¶ 16 ("to provide 8, 125 call hours per quarter or 32, 500 call hours per year"); 20 ("Defendant promised to pay 8, 125 call hours per quarter and 32, 500 for the first year"); see id. ¶ 30 ("Defendant would provide that 8, 125 hours per quarter and 32, 500 hours per year call volume need to Plaintiff"). They are also contradicted by the statement immediately following the above passage in Plaintiff's memorandum:
The terms of the contract were clear: [Defendant] would provide, or pay for, 8, 125 hours each quarter resulting in 32, 500 hours of telemarketing service, in aggregate, provided to [Plaintiff] over the course of a year in exchange for a reduced hourly rate. The facts pled, if taken as true, are clear that this is a contract that is based upon a guaranteed quarterly call volume based upon annual projection.
(Pl.'s Mem. in Supp. at 6 (emphasis added); see also id. at 7 ("[Defendant] offered [Plaintiff] the opportunity to be a Preferred Vendor and to receive 8, 125 hours of work to perform quarterly, or alternatively to be paid for 8, 125 hours quarterly....").) Plaintiff states that the agreement was formed on September 13, 2010. Plaintiff cannot escape the fact that there are four quarters in one year. The agreement alleged in the Amended Complaint is incapable of performance within one year from its making because the fourth ...