United States District Court, N.D. Indiana.
OPINION AND ORDER
THERESA L. SPRINGMANN UNITED STATES DISTRICT COURT.
matter is before the Court on the Defendant’s Motion to
Dismiss Plaintiff’s Complaint [ECF No. 12], filed on
April 20, 2016. On January 21, 2016, the Plaintiff, Starin
Marketing, Inc., filed a two-count Complaint [ECF No. 4]
against the Defendant, Swift Distribution, Inc., d/b/a
Ultimate Support Systems. On February 23, 2016, the case was
removed to federal court, pursuant to 28 U.S.C. §§
1332, 1441, and 1446. The Defendant then moved to dismiss the
Complaint, pursuant to Federal Rules of Civil Procedure
12(b)(1) and 12(b)(6), asserting that the Court lacks subject
matter jurisdiction over the claim for declaratory judgment
and the Complaint fails to state a claim upon which relief
may be granted. On May 18, 2016, the Plaintiff filed its
Response to the Defendant’s Motion to Dismiss [ECF No.
22]. On May 31, 2016, the Defendant filed its Reply in
Support of its Motion to Dismiss [ECF No. 24]. On July 19,
2016, the Court heard oral argument on the Defendant’s
Motion to Dismiss. With this matter now being fully briefed,
the Defendant’s Motion to Dismiss is granted in part
and denied in part.
Plaintiff is an Indiana corporation that markets and
delivers, among other things, audio systems and equipment
through its brand development services and procurement
programs. (Compl. ¶ 1, ECF No. 4.) The Defendant is a
California corporation “in the business of wholesaling
sound systems and equipment.” (Id. ¶ 2.)
Given the compatibility of their businesses, the parties
entered into an Amended and Restated Fulfillment and
Distribution Agreement (the “Agreement”) on
August 7, 2014. (Id. ¶ 3.)
the Agreement, the Plaintiff “purchase[d] goods from
[the Defendant], and [was] responsible for warehousing the
goods, managing the inventory of the goods, [and] fulfillment
of orders from [the Defendant’s] customers.”
(Id. ¶ 4.) The Defendant “reconcile[d]
and reimburse[d] [the Plaintiff] for costs of the goods sold
to [the Defendant’s] customers, together with interest
thereon” and paid the Plaintiff a fixed monthly fee
based on the value of monthly commissioned sales.
(Id. ¶ 5.) Section 2.A.i.d., located in the
portion of the Agreement titled “[Plaintiff]
Obligations, ” stated that the Plaintiff shall:
Maintain sufficient operating capital via dedicated credit
facility, or otherwise, in order to support [the
Plaintiff’s] purchasing and inventory obligations for
this Agreement. The Parties acknowledge that, as of the
Effective Date, such obligations may not exceed Four Million
Two Hundred Thousand Dollars ($4, 200, 000). If, at any time
during the Term, [the Defendant] requests that [the
Plaintiff] increase operating capital and overall inventory
levels to support [the Defendant’s] sales growth, but
[the Plaintiff] is unable or unwilling to accommodate such
request, [the Defendant] may terminate this Agreement upon
written notice to [the Plaintiff], and without penalty.
(Compl. Ex. A, at 4, ECF No. 4)
January 21, 2016, the Plaintiff filed a lawsuit against the
Defendant alleging two counts: First, that after entering
into the Agreement, the Defendant allegedly breached Section
2.A.i.d. when it “shipped goods to [the Plaintiff],
without [the Plaintiff’s] consent, in an amount which .
. . exceeded the $4.2 million limitation on purchasing and
inventory obligations” and forced the Plaintiff to
purchase those excess shipments, (Compl. ¶ 11), and when
it “failed to make timely reimbursement and interest
payments to” the Plaintiff. (Id. ¶¶
11-12.) Second, that the Plaintiff seeks a declaratory
judgment because it “retains significant inventory
which [the Plaintiff] has purchased from [the Defendant] in
conformity with [the Plaintiff’s] fulfillment
obligations under the Agreement, and which [the Plaintiff]
desires to re-label and resell in order to mitigate the
damages resulting from [the Defendant’s] breaches of
the Agreement.” (Id. ¶¶ 13-17.)
12(b)(1) provides that a party may assert the defense of lack
of subject matter jurisdiction by motion. Fed.R.Civ.P.
12(b)(1). “Subject-matter jurisdiction is the first
question in every case, and if the court concludes that it
lacks jurisdiction it must proceed no further.”
Illinois v. City of Chi., 137 F.3d 474, 478 (7th
Cir. 1998). When considering a motion to dismiss for lack of
subject matter jurisdiction, a court must accept as true all
well-pleaded factual allegations and draw all reasonable
inferences in favor of the plaintiff. Alicea-Hernandez v.
Catholic Bishop of Chi., 320 F.3d 698, 701 (7th Cir.
when reviewing a complaint attacked by a Rule 12(b)(6)
motion, a court must accept all of the factual allegations as
true and draw all reasonable inferences in favor of the
plaintiff. Erickson v. Pardus, 551 U.S. 89, 93
(2007). The complaint need not contain detailed facts, but
surviving a Rule 12(b)(6) motion “requires more than
labels and conclusions . . . . Factual allegations must be
enough to raise a right to relief above the speculative
level.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007). “A claim has facial plausibility when
the pleaded factual content allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at
party seeking dismissal under Rule 12(b)(6) submits documents
with its motion to dismiss, courts can either ignore the
documents or convert the motion to one for summary judgment.
Fed.R.Civ.P. 12(d); Tierney v. Vahle, 304 F.3d 734,
738 (7th Cir. 2002); Venture Ass’n Corp. v. Zenith
Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993).
Here, both Parties filed affidavits from various company
employees and exhibits of company emails, but questions exist
regarding the validity and scope of those documents on issues
unrelated to the Agreement. Therefore, the Court does not
find it appropriate to convert the Defendant’s Motion
to Dismiss to one for summary judgment at this time. The
Court disregards those additional documents submitted by the
Parties and confines its analysis to the Complaint and the
documents referenced in and attached to the Complaint.
See Fed. R. Civ. P. 10(c) (“A copy of a
written instrument that is an exhibit to a pleading is a part
of the pleading for all purposes.”).
Court has subject matter jurisdiction over the case because
the matter in controversy exceeds the sum or value of $75,
000.00 and is between citizens of different states. 28 U.S.C.
§ 1332. This Court has the authority to grant
declaratory relief pursuant to 28 U.S.C. § 2201.