JOAN N. ERICKSEN, United States District Judge.
Genz-Ryan Plumbing and Heating Co. ("Genz-Ryan") sued Weyerhaeuser NR Company ("Weyerhaeuser") in Minnesota state court, bringing breach of contract, promissory estoppel, and unjust enrichment claims. Weyerhaeuser removed to federal court, counterclaimed for declaratory relief, and moved to dismiss Genz-Ryan's equitable claims under Federal Rule of Civil Procedure 12(b)(6). Genz-Ryan opposed Weyerhaeuser's Motion to Dismiss and moved for sanctions under Federal Rule of Civil Procedure 11. This matter is before the Court on Weyerhaeuser's Motion to Dismiss and Genz-Ryan's Motion for Sanctions.
Weyerhaeuser is a timber and wood products company. In or around July 2017, Weyerhaeuser discovered that one of its
Genz-Ryan alleges that two contracts govern the remediation work. First, on December 7, 2017, Weyerhaeuser, Genz-Ryan, BlueSky, and CalAtlantic supposedly entered into an Oral Agreement ("Oral Agreement"),
Compl. ¶ 13. Genz-Ryan alleges Weyerhaeuser has not paid Genz-Ryan for services rendered under either contract, totaling $5,056,518.10 as of January 11, 2018, despite Genz-Ryan performing the remediation services in accordance with the accelerated schedule contemplated in the December 7, 2017 Oral Agreement. Compl. ¶¶ 12, 14. Genz-Ryan sued Weyerhaeuser for breach of contract, and in the alternative,
To survive a motion to dismiss under Rule 12(b)(6), "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 pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do." Id. Plausibility is assessed by "draw[ing] on ... judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. When reviewing a motion under Rule 12(b)(6), the Court "accept[s] as true the factual allegations contained in the complaint and draw[s] all reasonable inferences in favor of the nonmoving party." Drobnak v. Andersen Corp., 561 F.3d 778, 781 (8th Cir. 2009).
Weyerhaeuser argues that Genz-Ryan failed to state a claim for promissory estoppel. To state a claim for promissory estoppel, the complaint must allege that: (1) a clear and definite promise was made; (2) the promisor intended to induce reliance and the promisee in fact relied to his or her detriment; and (3) the promise must be enforced to prevent injustice. Martens v. Minn. Min. & Mfg. Co., 616 N.W.2d 732, 746 (Minn. 2000). Promissory estoppel works to "imply a contract in law where none exists in fact." Grouse v. Group Health Plan, Inc., 306 N.W.2d 114, 116 (Minn. 1981). When the facts are undisputed, such as on a motion to dismiss where courts accept the facts alleged in the complaint as true, the question of "whether they rise to the level of promissory estoppel presents a question of law." Martens, 616 N.W.2d at 746.
Weyerhaeuser argues that the existence of an enforceable contract precludes Genz-Ryan from recovering under a theory of promissory estoppel. See U.S. Fire Ins. Co. v. Minn. State Zoological Bd., 307 N.W.2d 490, 497 (Minn. 1981) ("[E]quitable relief cannot be granted where the rights of the parties are governed by a valid contract."); see also Reisdorf v. i3, LLC, 129 F.Supp.3d 751, 771-72 (D. Minn. 2015) (dismissing promissory estoppel claim at summary judgment stage). There is no dispute that Genz-Ryan's promissory estoppel claim is inconsistent with its contract claim under the Oral Agreement.
However, "[t]he Federal Rules of Civil Procedure expressly permit a party to plead alternative or inconsistent claims or defenses." Mono Advert., LLC v. Vera Bradley Designs, Inc., 285 F.Supp.3d 1087, 1091 (D. Minn. 2018) (citing Fed. R. Civ. P. 8(d)(2)-(3)); see also Turley Martin Co. v. Gilman Paper Co., 905 F.2d 235, 237 (8th Cir. 1990). At the motion to dismiss stage, courts "routinely permit the assertion of contract and quasi-contract claims together." Cummins Law Office, P.A. v. Norman Graphic Printing Co., 826 F.Supp.2d 1127, 1130 (D. Minn. 2011). Genz-Ryan is permitted to plead a promissory estoppel claim in the alternative, as it did in its Complaint.
Weyerhaeuser argues that even when pled in the alternative, Genz-Ryan's promissory estoppel claim lacks plausibility because the parties' relationship is governed by contract. According to Weyerhaeuser, Genz-Ryan's promissory estoppel claim can only be sustained in the absence of a contract and Genz-Ryan does not dispute the existence of governing contracts. This argument does not persuade the Court. It is possible that no contract controls the subject matter underlying Genz-Ryan's promissory estoppel claim for at least two reasons.
First, the Indemnification Agreement does not necessarily address the subject matter of Genz-Ryan's promissory estoppel claim: namely, it does not address Weyerhaeuser's alleged promise to pay Genz-Ryan lost business opportunities and profits to induce Genz-Ryan to accelerate its schedule.
Second, the Oral Agreement might not amount to a valid contract. Although the alleged Oral Agreement covers the same subject matter as Genz-Ryan's promissory estoppel claim,
The Court will not opine further on the merits of the Genz-Ryan's promissory estoppel claim because Weyerhaeuser only challenges its plausibility on the grounds that a valid contract governs the dispute.
For these reasons, Weyerhaeuser's Motion to Dismiss Count II of the Complaint is denied.
Weyerhaeuser also moves the Court to dismiss Genz-Ryan's "unjust enrichment/quantum meruit" claim,
Under Minnesota law, "to prevail on a claim of unjust enrichment, a claimant must establish an implied-in-law or quasi-contract in which the defendant received a benefit of value that unjustly enriched the defendant in a manner that is illegal or unlawful." Ventura v. Kyle, 825 F.3d 876, 887 (8th Cir. 2016), cert. denied, ___ U.S. ___, 137 S.Ct. 667, 196 L.Ed.2d 525 (2017) (quoting Caldas, 820 N.W.2d at 838)). "An action for unjust enrichment may be founded upon failure of consideration, fraud, or mistake, or situations where it would be morally wrong for one party to enrich himself at the expense of another." Holman v. CPT Corp., 457 N.W.2d 740, 745 (Minn. Ct. App. 1990) (citation omitted). Like promissory estoppel, unjust enrichment is an equitable claim that "does not apply when there is an enforceable contract that is applicable." Caldas, 820 N.W.2d at 838. Yet plaintiffs "may plead their unjust-enrichment claim in the alternative
This Court has repeatedly allowed plaintiffs to plead unjust enrichment claims in the alternative to contract claims. See, e.g., Mono Advert, 285 F.Supp.3d at 1091 (permitting alternative pleading of unjust enrichment and contract claims); Toomey v. Dahl, 63 F.Supp.3d 982, 999 (D. Minn. 2014) (same). The Court similarly permits Genz-Ryan to plead unjust enrichment in the alternative to its breach of contract claim.
Furthermore, Genz-Ryan's unjust enrichment claim is sufficiently plausible to survive Weyerhaeuser's Motion to Dismiss. Genz-Ryan claims that "[a]t Weyerhaeuser's request, Genz-Ryan accelerated its schedule to complete the remediation work for the Minnesota homes incorporating the Product and relinquished other business opportunities to do so. Compl. ¶ 30. And further, "Weyerhaeuser has been unjustly enriched at Genz-Ryan's expense because Weyerhaeuser has unjustifiably failed and wrongfully refused to pay Genz-Ryan for its past and continuing costs, losses, and damages as well as it lost business opportunities and profits arising from — or related to — the remediation work." Compl. ¶ 31. Although Weyerhaeuser asserts that Genz-Ryan fails to plausibly allege the absence of a controlling contract, a valid contract does not necessarily control the dispute.
For these reasons, Weyerhaeuser's Motion to Dismiss Count III of the Complaint is denied.
Genz-Ryan moves for sanctions under Rule 11. See Pl.'s Motion for Sanctions, ECF No. 20. Weyerhaeuser opposed Genz-Ryan's motion and argued Genz-Ryan's motion was itself sanctionable under Rule 11. See Def.'s Resp. in Opp. re Pl.'s Motion for Sanctions, ECF No. 25. The Court declines to sanction either party for the following reasons.
Rule 11(b) requires an attorney to certify that a pleading or motion (1) "is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation" and (2) includes "claims, defenses, and other legal contentions [that] are warranted by existing law or by a nonfrivolous argument." Fed. R. Civ. P. 11(b)(1)-(2). In deciding whether an attorney is liable for sanctions for violating Rule 11, "the standard is ... whether the attorney's conduct, `viewed objectively, manifests either intentional or reckless disregard of the attorney's duties to the court.'" Adams v. USAA Cas. Ins. Co., 863 F.3d 1069, 1077 (8th Cir. 2017) (citation omitted). "If, after notice and a reasonable opportunity to respond, the court determines Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation." Fed. R. Civ. P. 11(c)(1).
Genz-Ryan asserts that Weyerhaeuser does not "cite any binding authority to justify its contention that Genz-Ryan is precluded from pleading a claim for breach of contract along with inconsistent equitable claims." Pl.'s Motion for Sanctions
Contrary to Genz-Ryan's assertions, Weyerhaeuser's Motion to Dismiss cites enough support to avoid Rule 11 sanctions. The Court therefore denies Genz-Ryan's Motion for Sanctions.
In its response to Genz-Ryan's Motion for Sanctions, Weyerhaeuser, in turn, asked the Court to sanction Genz-Ryan for filing its Motion for Sanctions. Because Genz-Ryan failed to cite any cases where a court sanctioned a party for filing a motion to dismiss like Weyerhaeuser's, Weyerhaeuser argues that Genz-Ryan had no "objectively reasonable" basis for believing its motion would be successful on the merits. Although Genz-Ryan's Motion for Sanctions is itself not clearly warranted under existing law, the Court declines to impose Rule 11 sanctions against Genz-Ryan at this time.
Based on the files, records, and proceedings herein, and for the reasons stated above, IT IS ORDERED THAT: