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Hirschbach Motor Lines, Inc. v. Smarttruck Undertray Systems, LLC

United States District Court, N.D. Iowa, Eastern Division

January 3, 2018

HIRSCHBACH MOTOR LINES, INC., et al., Plaintiffs,


          Leonard T. Strand, Chief Judge.


         This case is before me on a motion (Doc. No. 20) to dismiss filed by defendants SmartTruck Undertray Systems, LLC (SmartTruck), Stephen S. Ingham, Jr., Mitchell Greenberg, Steve Wulff and Mike Henderson. Plaintiffs Hirschbach Motor Lines, Inc. (Hirschbach) and Brad Pinchuk have filed a resistance (Doc. No. 23) and defendants have replied (Doc. No. 28). I find that oral argument is not necessary. See N.D. Iowa L.R. 7(c).


         On August 11, 2017, plaintiffs filed a complaint (Doc. No. 1) asserting thirteen claims for breach of contract, breach of various warranties, fraud and negligent misrepresentation. Defendants responded on September 21, 2017, by filing a pre-answer motion (Doc. No. 10) to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). Instead of resisting that motion, plaintiffs filed an amended complaint (Doc. No. 14) on October 12, 2017. The amended complaint substitutes current defendant Mitchell Greenberg for former defendant Ron Pope and proceeds to assert 26 counts[1] against the defendants. Plaintiffs invoke this court's diversity jurisdiction, asserting no claims that arise under federal law. Defendants filed their present motion to dismiss the amended complaint on November 3, 2017.


         Defendants seek dismissal of all of plaintiffs' claims. They argue that the court lacks personal jurisdiction over the individual defendants and that plaintiffs fail to state claims upon which relief can be granted.

         A. Rule 12(b)(2) - Lack of Personal Jurisdiction

         The Federal Rules of Civil Procedure permit a pre-answer motion to dismiss for “lack of personal jurisdiction.” Fed.R.Civ.P. 12(b)(2). Personal jurisdiction refers to the power of a court to hear and determine a lawsuit involving a defendant by virtue of the defendant's having some contact with the place where a court is located. To properly allege personal jurisdiction, “a plaintiff ‘must state sufficient facts in the complaint to support a reasonable inference that the defendant[ ] can be subjected to jurisdiction within the state.'” Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004), cert. denied, 543 U.S. 1147 (2005) (quoting Block Indus. v. DHJ Indus., Inc., 495 F.2d 256, 259 (8th Cir. 1974)). In resisting a Rule 12(b)(2) motion, the plaintiff has the burden of proving facts supporting such jurisdiction. Wells Dairy, Inc. v. Food Movers Int'l, Inc., 607 F.3d 515, 518 (8th Cir.), cert. denied, 131 S.Ct. 472 (2010). The court may consider the allegations of the complaint along with any affidavits and exhibits submitted by the parties. Id. The plaintiff's burden, in the absence of an evidentiary hearing, is to make a “minimal” prima facie showing of personal jurisdiction. K-V Pharm. Co. v. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th Cir. 2011). The court “must view the evidence in the light most favorable to the plaintiff and resolve all factual conflicts in its favor in deciding whether the plaintiff has made the requisite showing.” Id.

         In a diversity case, such as this, personal jurisdiction exists “only to the extent permitted by the long-arm statute of the forum state and by the Due Process Clause.” Dever, 380 F.3d at 1073 (internal quotation marks omitted). Iowa Rule of Civil Procedure 1.306 authorizes the exercise of personal jurisdiction to the full extent allowed by the United States Constitution, meaning the court's inquiry is limited to whether the exercise of personal jurisdiction comports with due process. Wells Dairy, 607 F.3d at 518 (citing Hammond v. Fla. Asset Fin. Corp., 695 N.W.2d 1, 5 (Iowa 2005)).

         In general, due process requires that a nonresident defendant have at least “certain minimum contacts” with the forum state to support the exercise of personal jurisdiction. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Those contacts must be sufficient that requiring the defendant to litigate in the forum state would not “offend traditional notions of fair play and substantial justice.” Id. at 316 (internal quotations marks and citation omitted). They “must come about by an action of the defendant purposefully directed toward the forum State.” Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 112 (1987) (internal citations omitted).

         This “‘purposeful availment' requirement ensures that a defendant will not be hauled into a jurisdiction solely as a result of ‘random, ' ‘fortuitous, ' or ‘attenuated' contacts, ” or due to “the ‘unilateral activity of another party or a third person.'” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (citations omitted). If the defendant made the deliberate choice to “engage[ ] in significant activities within a State, ” or to create “‘continuing obligations' between himself and residents of the forum, ” then “it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well.” Id. at 475-76 (citations omitted). Thus:

By requiring that individuals have “fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign, ” the Due Process Clause “gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit[.]”

Id. at 472-73 (1985) (citations omitted).

         The Eighth Circuit applies a five-factor test to determine whether a defendant's contacts with the forum state are sufficient to establish personal jurisdiction. Myers v. Casino Queen, Inc., 689 F.3d 904, 911 (8th Cir. 2012). Those factors are: (1) the nature and quality of the contacts with the forum state; (2) the quantity of those contacts; (3) the relationship of those contacts with the cause of action; (4) the forum state's interest in providing a forum for its residents; and (5) the convenience or inconvenience to the parties. Id. (citing Precision Const. Co. v. J.A. Slattery Co., 765 F.2d 114, 118 (8th Cir. 1985)). The first three factors are considered to be of primary importance. Precision Const., 765 F.2d at 118.

         Personal jurisdiction can be either general or specific. General jurisdiction arises when a nonresident maintains “continuous and systematic” contacts with the forum state. Helicopteros Nacionales de Colom., S.A. v. Hall, 466 U.S. 408, 415-16 (1984). Under those circumstances, jurisdiction over the nonresident is appropriate even when the claims at issue do not arise out of or relate to its activities in the forum state. Id. at 414-15. Specific jurisdiction arises “when the defendant purposely directs its activities at the forum state and the litigation ‘result[s] from injuries . . . relating to [the defendant's] activities [in the forum state.]'” Myers, 689 F.3d at 912-13 (quoting Steinbach v. Cutler, 518 F.3d 580, 586 (8th Cir. 2008)). Specific jurisdiction “requires a relationship between the forum, the cause of action, and the defendant. Id. at 912 (citing Helicopteros Nacionales, 466 U.S. at 414). The third factor of the five-factor test “distinguishes between specific and general jurisdiction.” Id. at 911 (citing Johnson v. Arden, 614 F.3d 785, 794 (8th Cir. 2010).

         B. Rule 12(b)(6) - Failure to State a Claim

         The Federal Rules of Civil Procedure authorize a pre-answer motion to dismiss for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). The Supreme Court has provided the following guidance in considering whether a pleading properly states a claim:

Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” As the Court held in [Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)], the pleading standard Rule 8 announces but does not require “detailed factual allegations, ” but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. Id., at 555, 127 S.Ct. 1955 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A pleading that offers “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” [Twombly, ] 550 U.S. at 555. Nor does a complaint suffice if it tenders “naked assertion[s]” devoid of “further factual enhancement.” Id., at 557.
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.” Id., at 570. 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., at 556. The plausibility standard is not akin to a “probability requirement, ” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Id. Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.'” Id., at 557 (brackets omitted).

Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009).

         Courts assess “plausibility” by “‘draw[ing] on [our own] judicial experience and common sense.'” Whitney v. Guys, Inc., 700 F.3d 1118, 1128 (8th Cir. 2012) (quoting Iqbal, 556 U.S. at 679). Courts “‘review the plausibility of the plaintiff's claim as a whole, not the plausibility of each individual allegation.'” Id. (quoting Zoltek Corp. v. Structural Polymer Grp., 592 F.3d 893, 896 n.4 (8th Cir. 2010)). While factual “plausibility” is typically the focus of a Rule 12(b)(6) motion to dismiss, federal courts may dismiss a claim that lacks a cognizable legal theory. See, e.g., Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013); Commonwealth Prop. Advocates, L.L.C. v. Mortg. Elec. Reg. Sys., Inc., 680 F.3d 1194, 1202 (10th Cir. 2011); accord Target Training Int'l, Ltd. v. Lee, 1 F.Supp.3d 927, 937 (N.D. Iowa 2014).


         The amended complaint (Doc. No. 14) includes the following allegations:

         A. The Parties

         Hirschbach is an Iowa corporation with its principal place of business in Dubuque, Iowa. Doc. No. 14 at ¶ 1. Prior to 2015, Hirschbach was headquartered in East Dubuque, Illinois.[2] Hirschbach is an interstate motor carrier offering semi-tractor transportation services. Id. at ¶ 12. Pinchuk is the president and CEO of Hirschbach. Id.

         SmartTruck is a South Carolina limited liability company with its principal place of business in Greenville, South Carolina. Id. at ¶ 3. SmartTruck designs, builds, markets and sells aerodynamic design components to be affixed to semi-tractor trailers in order to reduce the size of high air flow drag-wake, resulting in fuel savings. Id. at ¶ 13. Each of the individual defendants are employees and agents of SmartTruck: Ingham is the president, Wulff is the senior vice president of product development, Henderson is the chief scientist and Greenberg was a former president. Id. at ¶¶ 4-7. None of the individual defendants are Iowa residents. Id. at ¶ 8.

         B. The Claims

         In 2011, the parties negotiated for Hirschbach's purchase and installation of 2, 000 SmartTruck products for Hirschbach's fleet. Id. at ¶ 14. Over the course of various meetings and conversations in 2011, prior to Hirschbach's purchase of SmartTruck products, defendants Ingham, Greenberg, Wulff and Henderson verbally represented that Hirschbach would see improved fuel efficiency of 10% at highway speeds using SmartTruck products. Id. at ¶ 16. One of these meetings between Pinchuk, Greenberg and Wulff occurred in Greenville, South Carolina, while another meeting occurred in East Dubuque, Illinois. Id. at ¶¶ 15(b), 15(o). Plaintiffs assert that while Pinchuk, Greenberg and Wulff were meeting in East Dubuque, Greenberg and Wulff stayed at hotels and ate in restaurants in Dubuque, Iowa. Id. at ¶ 16. One sales meeting was held over lunch at a restaurant in Dubuque, Iowa. Id. Greenberg disputes that he ever travelled to Iowa or Illinois to visit Pinchuk. Doc. No. 20-7 at 3. Although plaintiffs allege that Wulff travelled to Iowa on six occasions, Wulff contends that he only travelled to Hirschbach's headquarters once. Doc. No. 20-6 at 3. Plaintiffs do not allege that Ingham or Henderson ever travelled to Iowa.

         As part of the negotiation process, SmartTruck offered Hirschbach a discount in exchange for Pinchuk providing a testimonial for SmartTruck to use in its advertising materials. Doc. No. 14 at ¶¶ 25-26. Hirschbach purchased SmartTruck products and installed them on its fleet between 2011 and 2013. Id. at ¶ 27. Plaintiffs do not identify a particular written, integrated agreement governing Hirschbach's purchase of SmartTruck's products. Instead, it contends that an agreement was formed and that Hirschbach then placed written purchase orders “in reliance upon Smart Truck's prior written and oral representations.” Id. at ¶ 35.

         In support of its motion to dismiss, SmartTruck relies on three documents that, it contends, control the scope of its obligations to Hirschbach. SmartTruck claims that Exhibits A and B are “the 2011 and 2013 Product Manuals with the operative limited warranty during the 2011-2017 time period, ” while Exhibit C is “the SmartTruck limited warranty from 2015 through the present.” Doc. No. 20-1 at 4 (referencing Doc. No. 20-2 at 4, Doc. No. 20-3 at 2 and Doc. No. 20-4 at 2). Collectively, I will refer to these documents as the Limited Warranty Documents. Details concerning the contents of the Limited Warranty Documents will be described as necessary below.

         In 2014, Pinchuk became aware of independent testing of SmartTruck's products by a Canadian engineering company. Id. at ¶ 30. Those results showed that SmartTruck's products were not as effective as claimed. Id. Plaintiffs conducted their own testing in 2016 and 2017, which revealed no meaningful difference in fuel efficiency as a result of installing SmartTruck products. Id. at 31. Plaintiffs assert that they have been damaged by defendants' failure to improve the fuel efficiency of their semi-trucks to the extent promised. The 26 counts set forth in the amended complaint are based on these representations, and the parties' agreement, as follows:

Count I Breach of Contract (Hirschbach v. SmartTruck)
Count II Breach of Written Contract due to Poor Performance (Hirschbach v. SmartTruck)
Count III Breach of Implied Warranty of Fitness for Particular Purpose (Hirschbach v. SmartTruck)
Count IV Breach of Express Warranty (Hirschbach v. SmartTruck)
Count V Fraud (Hirschbach v. Greenberg)
Count VI Fraud (Hirschbach v. Wulff)
Count VII Fraud (Hirschbach v. Henderson)
Count VIII Fraud (Hirschbach v. Ingham)
Count IX Constructive Fraud (Hirschbach v. Greenberg)
Count X Constructive Fraud (Hirschbach v. Wulff)
Count XI Constructive Fraud (Hirschbach v. Henderson)
Count XII Constructive Fraud (Hirschbach v. Ingham)
Count XIII Negligent Misrepresentation (Hirschbach v. SmartTruck)
Count XIV Intentional Misrepresentation (Hirschbach v. SmartTruck)
Count XV Detrimental Reliance/Promissory Estoppel (Hirschbach v. SmartTruck)
Count XVI Unjust Enrichment (Hirschbach v. SmartTruck)
Count XVII Unjust Enrichment (Pinchuk v. SmartTruck)
Count XVIII Fraud (Pinchuk v. Greenberg)
Count XIX Fraud (Pinchuk v. Wulff)
Count XX Fraud (Pinchuk v. Henderson)
Count XXI Fraud (Pinchuk v. Ingham)
Count XXII Constructive Fraud (Pinchuk v. Greenberg)
Count XXIII Constructive Fraud (Pinchuk v. Wulff)
Count XXIV Constructive Fraud (Pinchuk v. Henderson)
Count XXV Constructive Fraud (Pinchuk v. Ingham)
Count XXVI Civil Conspiracy (Hirschbach v. All Defendants)

See Doc. No. 14. Plaintiffs seek monetary damages, punitive damages, attorneys' fees and any other relief deemed equitable.

         V. ...

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