United States District Court, S.D. Indiana, Evansville Division
egged on by its lack of success in Rexing Quality Eggs v.
Rembrandt Enterprises, Inc. (Rexing I), 360
F.Supp.3d 817 (S.D. Ind. 2018), also pending before the
undersigned under cause number 3:17-cv-00141-JMS-MPB,
Plaintiff Rexing Quality Eggs (“Rexing”)
has brought this follow-on suit against Rembrandt
Enterprises, Inc. (“Rembrandt”). In this
suit, to which the Court will refer as Rexing II,
Rexing brings what it characterizes as distinct and separate
claims for conversion and deception after Rembrandt allegedly
failed to return certain egg packing materials, collectively
called EggsCargoSystem. The problem, according to Rembrandt,
is that these claims should have been brought, if at all, in
Rexing I. Rexing scrambled that opportunity, and the
prohibition on claim splitting means that Rexing cannot put
the yolk back in the shell via this separate lawsuit.
Therefore, for the reasons described below, the Court
GRANTS Rembrandt's Motion to Dismiss.
[Filing No. 20.]
Federal Rule of Civil Procedure 12(b)(6), a party may move to
dismiss a claim that does not state a right to relief.
Ordinarily, defenses such as res judicata (of which claim
preclusion and claim splitting are “component[s],
” see Alvear-Velez v. Mukasey, 540
F.3d 672, 678 (7th Cir. 2008)) need not be anticipated in a
complaint and cannot be resolved until after the close of
pleadings. See, e.g., Parungao v. Cmty. Health
Sys., Inc. 858 F.3d 452, 457 (7th Cir. 2017); Carr
v. Tillery, 591 F.3d 909, 913 (7th Cir. 2010). But
where, as here, everyone agrees that the Court has all the
information “needed in order to be able to rule on the
defense, ” it may do so without unnecessarily
prolonging matters by waiting until after the defendant has
filed an answer. Carr, 591 F.3d at 913.
the sufficiency of a complaint under Rule 12(b)(6) requires
the Court to accept all well-pled facts as true and draw all
permissible inferences in favor of the plaintiff.
See Active Disposal Inc. v. City of Darien,
635 F.3d 883, 886 (7th Cir. 2011). In addition to such
factual allegations, the Court may also consult facts that
are properly the subject of judicial notice under Federal
Rule of Evidence 201. Parungao, 858 F.3d at 457. In
general, this includes “court filings and other matters
of public record when the accuracy of those documents
reasonably cannot be questioned.” Id. See
generally In re Lisse, 905 F.3d 495 (7th Cir.
2018) (Easterbrook, J., in chambers) (describing the proper
procedure for and subjects of judicial notice). “When
it is clear from the face of the complaint, and matters of
which the court may take judicial notice, that the
plaintiff's claims are barred as a matter of law,
dismissal is appropriate.” Parungao, 858 F.3d
at 457 (internal quotation omitted).
background of Rexing and Rembrandt's commercial
relationship (predominantly as egg buyers and sellers,
respectively) is detailed at length in Rexing I, 360
F.Supp.3d at 822-32. In short, Rexing and Rembrandt reached a
deal for Rembrandt to supply Rexing with 12 loads of cage
free eggs per week for at least one year. See
id.; [Filing No. 1-3 at 6-7; Filing No.
22-1 at 8- 14 (purchase agreement)]. That
relationship soured approximately eight months into the deal,
when Rexing repudiated the agreement and refused to accept
any further loads of eggs. [Filing No. 1-3 at 6-7];
Rexing I, 360 F.Supp.3d at 828-30. In this case,
Rexing seeks damages for Rembrandt's alleged failure to
return the plastic flats, dividers, and pallets that
Rembrandt used (and Rexing purchased) to load eggs for Rexing
to pick up. [Filing No. 1-3 at 6.] These materials
are known as “EggsCargoSystem.” [Filing No.
1-3 at 6.]
played a role in Rexing I. For starters, the
purchase agreement between Rexing and Rembrandt required
Rembrandt to “supply all required materials (i.e.,
without limitation, all pallets, flats, boards) necessary to
packing and shipping the Shell Eggs for Purchaser
hereunder.” [Filing No. 22-1 at 10.] In its
Rexing I Complaint, filed in state court on August
16, 2017, Rexing alleged that its continued performance was
excused by force majeure and that Rembrandt breached the
express warranties in the Purchase Agreement. [Filing No.
22-1 at 4-5 (Rexing I Complaint).] Rexing
sought damages, including consequential and incidental
damages, suffered as a result of Rembrandt's breach.
[Filing No. 22-1 at 5-6.] In its summary judgment
response brief, Rexing argued that the purchase
agreement's remedies clause was unenforceable in part
because it failed to compensate Rexing for its
“substantial upfront costs in preparation for its
obligations under the Purchase
Agreement.” [Rexing I, Filing No. 90 at 34.]
In support, Rexing cited to the declaration of Dylan Rexing,
[Rexing I, Filing No. 89-10 at 1-8], which, in turn,
cited what the declaration described as accurate evidence of
its expenses. One such spreadsheet appended to the
declaration listed “EggsCargoSystem” under a
“Material Investment” heading. [Rexing I,
Filing No. 89-10 at 10.] Another spreadsheet, offered by
Rexing to support its claim of commercial impracticability,
[Rexing I, Filing No. 90 at 19], included
EggsCargoSystem as a “Start-up Cost, ” along
with a “Diamond Loader/Preloader” and other
expenses, [Rexing I, Filing No. 72-6 at 1]. Finally,
in response to an interrogatory asking Rexing to
“[s]tate the factual basis for [y]our claim . . . that
Rembrandt is liable to [y]ou for ‘start-up costs
incurred' in the amount of $997, 650, ” Rexing
responded that it “incurred preparation expenses in
reliance of the terms of Supply Agreement, which, most
importantly, were necessary for Rexing Eggs to incur in order
to meet its obligations under the Supply Agreement . . . .
Specifically, Rexing Eggs made the following purchases: . . .
2) the ‘EggsCargoSystem' . . . .” [Filing
No. 30-2 at 20.]
I remains ongoing. On December 21, 2018, the Court
entered summary judgment for Rembrandt on Rexing's claims
for excusal and breach of express warranties, as well as
partial summary judgment on Rembrandt's breach of
contract counterclaim. 360 F.Supp.3d 817. No partial final
judgment has issued, and trial remains set for October 2019.
[See Rexing I, Filing No. 123.]
II was filed on January 29, 2019, just a month after the
Court's summary judgment entry in Rexing I and
just days before the Rexing I parties convened for
what proved to be an unfruitful settlement conference.
[Rexing I, Filing No. 121.] In relevant part, Rexing
alleges that it purchased the EggsCargoSystem to facilitate
its contractual relationship with Rembrandt.
No. 1-3 at 6-7.] Rembrandt would load the eggs onto the
EggsCargoSystem, and Rexing then retrieved the eggs.
[Filing No. 1-3 at 7.] According to Rexing,
Rembrandt retained possession of “thousands of”
the EggsCargoSystem materials, even after the relationship
ended. [Filing No. 1-3 at 7.] The timeline of the
end of the relationship, as articulated in the Rexing
I and Rexing II pleadings, is as follows:
• No later than June 5, 2017, Rexing told Rembrandt it
would no longer take egg loads. [Filing No. 22-1 at
4; Filing No. 1-1 at 3]; Rexing I, 360
F.Supp.3d at 830.
• Rexing made unqualified demands for return of the
EggsCargoSystem on June 8 and June 12, 2017. [Fili ...