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Shanghai Hailian Electric Tools Co., Ltd. v. Home Depot U.S.A., Inc.

United States District Court, N.D. Texas, Dallas Division

September 12, 2017

SHANGHAI HAILIAN ELECTRIC TOOLS CO., LTD., Plaintiff,
v.
HOME DEPOT U.S.A., INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER, UNITED STATES DISTRICT JUDGE

         Defendant Home Depot U.S.A., Inc. (“Home Depot”) moves to dismiss plaintiff Shanghai Hailian Electric Tools Co., Ltd.'s (“SHETC's”) second amended complaint under Fed.R.Civ.P. 12(b)(6) and 9(b) for failure to state a claim on which relief can be granted and failure to plead fraud with particularity. For the reasons explained, the court grants the motion and dismisses this action with prejudice by judgment filed today.

         I

         The background facts of this case are set out in two prior memorandum opinions and orders and need not be repeated at length. See Shanghai Hailian Elec. Tools Co. v. Home Depot U.S.A., Inc., 2017 WL 588656, at *1-2 (N.D. Tex. Feb. 13, 2017) (“Shanghai II”); Shanghai Hailian Elec. Tools Co. v. Home Depot Int'l, Inc., 2016 WL 5815896, at *1-2 (N.D. Tex. Oct. 5, 2016) (Fitzwater, J.) (“Shanghai I”). Home Depot, through Brinkmann Corporation (“Brinkmann”) and Malibu Lighting Corporation (“Malibu”), ordered over $4.8 million in outdoor lighting products from SHETC in 2015. According to the second amended complaint, SHETC manufactured and shipped these products for and to Home Depot, allegedly expecting to be paid by Home Depot, but Home Depot has failed and refused to pay the amount SHETC claims is due and owing.[1]

         In Shanghai II the court dismissed SHETC's quantum meruit, unjust enrichment, and fraud claims against Home Depot, holding that SHETC had failed to plead a quantum meruit claim because it did not plausibly allege facts demonstrating that Home Depot was “reasonably notified” that SHETC expected to be paid by Home Depot, Shanghai II, 2017 WL 588656, at *4-5; that SHETC had failed to plead an unjust enrichment claim because it did not allege that Home Depot obtained a benefit from SHETC by fraud, duress, or the taking of an undue advantage, id. at *5-6; and that SHETC had failed to plead its fraud claim with the specificity required by Rule 9(b), id. at *6-7. The court, however, granted SHETC leave to amend.

         SHETC timely filed a second amended complaint, alleging claims for quantum meruit, unjust enrichment, fraud and civil conspiracy, and constructive trust. Home Depot moves under Rules 12(b)(6) and 9(b) to dismiss SHETC's second amended complaint with prejudice.

         II Under Rule 12(b)(6), the court evaluates the pleadings by “accept[ing] ‘all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)). To survive Home Depot's motion, SHETC's second amended complaint must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant[s] [are] liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “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.; see also Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise a right to relief above the speculative level[.]”). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘shown'-‘that the pleader is entitled to relief.'” Iqbal, 556 U.S. at 679 (brackets omitted) (quoting Rule 8(a)(2)). Furthermore, under Rule 8(a)(2), a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Although “the pleading standard Rule 8 announces does not require ‘detailed factual allegations, '” it demands more than “‘labels and conclusions.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). And “‘a formulaic recitation of the elements of a cause of action will not do.'” Id. (quoting Twombly, 550 U.S. at 555).

         III

         The court begins with SHETC's quantum meruit claim.

         A

         Home Depot moves to dismiss SHETC's quantum meruit claim on the ground that SHETC's second amended complaint does not cure the fatal deficiency the court identified in Shanghai II (i.e., SHETC did not allege facts demonstrating that Home Depot had notice that SHETC expected to be paid by Home Depot), or plausibly allege any facts that would put Home Depot on notice that SHETC expected to be paid directly by Home Depot for goods SHETC sold to Malibu and Brinkmann. It argues that although SHETC has added allegations relating to the delivery of its products directly to Home Depot, none of its newly-pleaded facts establishes that Home Depot was on notice that SHETC was looking to Home Depot (as opposed to Brinkmann, Malibu, or their bank) for payment. SHETC responds that it has pleaded sufficient facts to meet all of the elements of its quantum meruit claim.

         B

         As this court stated in Shanghai II, a quantum meruit claim requires that “the valuable services must have been rendered, or materials furnished, ‘under such circumstances as reasonably notified the person sought to be charged that the plaintiff in performing such services was expecting to be paid by the person sought to be charged.'” Shanghai II, 2017 WL 588656, at *4 (quoting Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990)). SHETC alleged in its amended complaint that Home Depot placed orders with SHETC through Malibu and Brinkmann, and that Home Depot, on receiving the goods in the United States, “would then issue payment to Brinkmann or Malibu, who would then use such proceeds to pay Plaintiff.” Am. Compl. ¶ 6. SHETC omits this allegation from its second amended complaint and instead asserts that “by accepting the FOB price provided by its supplier SHETC, Home Depot is well notified and knew that for all SHETC's direct import orders, SHETC expects to be paid by Home Depot after shipment.” 2d Am. Compl. ¶ 10. This conclusory allegation is insufficient to cure the pleading defect identified in Shanghai II because SHETC has still not plausibly pleaded that Home Depot knew that SHETC expected to be paid by Home Depot, as opposed to Brinkmann or Malibu. Although SHETC has omitted from its amended complaint its allegation that Home Depot would issue payment to Brinkmann and Malibu, who would then use such proceeds to pay SHETC, it now attaches Exhibit “B, ” in which Brinkmann's president states that Home Depot's bank “will pay both Malibu and ERA for the upcoming direct import orders, ” and that Home Depot's bank “will issue payment at the same time that Malibu gets paid by [Home Depot].” 2d Am. Compl. at Ex. B (emphasis added). It is unclear what entity “ERA” refers to, but even assuming that it refers to SHETC, there is no indication in the second amended complaint that Home Depot ever paid or intended to pay SHETC directly for any of the lighting products Home Depot ordered through Brinkmann and Malibu. Instead, Exhibit B makes clear that Home Depot was to pay Malibu. The court held in Shanghai II that

the amended complaint does not allege that Home Depot ever once paid SHETC directly. Combined with the amended complaint's allegation that Home Depot in fact paid Brinkmann or Malibu for products that SHETC manufactured, it would seem implausible that SHETC rendered valuable services or furnished materials under circumstances that reasonably notified Home Depot that SHETC was expecting to be paid by Home Depot. There is no apparent reason discernible from the amended complaint why a prudent business would under such circumstances pay SHETC rather than Brinkmann or Malibu.

Shanghai II, 2017 WL 588656, at *4. For the reasons explained in Shanghai II, the court dismisses SHETC's quantum meruit claim.

         IV

         The court next addresses SHETC's claim ...


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