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Crescent Electric Supply Company v. Coates Electric LLC

United States District Court, E.D. Wisconsin

May 23, 2019




         1. INTRODUCTION

         On December 6, 2018, Plaintiff Crescent Electric Supply Company (“Crescent”) filed this action alleging that Defendants Coates Electric LLC and its principal Brody Coates (collectively, “Coates”), breached the statutorily-based fiduciary duty that exists between a contractor and a supplier under Wis.Stat. §§ 799.05(2) and/or 799.16. (Docket #1).

         Now before the Court is Coates' motion to dismiss for failure to state a claim. (Docket #4). For the reasons explained below, it will be denied.


         Coates has moved to dismiss Crescent's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a viable claim for relief. Fed.R.Civ.P. 12(b)(6). To state a viable claim, a complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In other words, the complaint must give “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted).

         In reviewing Crescent's complaint, the Court is required to “accept as true all of the well-pleaded facts in the complaint and draw all reasonable inferences in [Plaintiff's] favor[.]” Kubiak v. City of Chicago, 810 F.3d 476, 480-81 (7th Cir. 2016) (citation omitted). Ultimately, dismissal is only appropriate “if it appears beyond doubt that the plaintiff could prove no set of facts in support of his claim that would entitle him to the relief requested.” Enger v. Chicago Carriage Cab Corp., 812 F.3d 565, 568 (7th Cir. 2016).


         The factual allegations of this case are few and straightforward. Coates performed work as a subcontractor on three projects in Wisconsin. The Court presumes these were building projects and that the work occurred in or around 2018, but the complaint does not specify. Over several months in 2018, Coates purchased certain supplies for these projects from Crescent, including electrical supplies, equipment, and fixtures. Coates has allegedly been paid in full for its work as a subcontractor on the Wisconsin projects. However, despite having been paid in full, it has not, in turn, paid Crescent for the supplies Crescent provided for the projects.

         Crescent brings a single cause of action for theft by contractor under Wis. Stats. § 779.02(5) and/or § 779.16. (Docket #1 at 3).[1]

         4. DISCUSSION

         Coates' only argument for dismissal of Crescent's claim is based on the choice-of-law provision in Crescent's terms and conditions, which are referenced on its invoices to Coates. That provision provides that “[t]he validity, construction, and performance of any agreement will be governed by the laws of the State of Iowa without regard to conflicts of laws principles thereof.” See (Docket #5-1).[2] Coates argues that because the parties chose Iowa law to govern their agreement, Crescent's claim for nonpayment of its invoices is subject to Iowa law, and Crescent therefore cannot bring a claim under a Wisconsin statute.

         Crescent counters that the choice-of-law provision in its terms and conditions does not apply to its claim in this case because civil theft by contractor pursuant to Wis.Stat. § 779.02(5) is an intentional tort. Simple nonpayment-i.e. breach of contract-is not the issue here, Crescent says; the issue before the Court involves trust funds held in Wisconsin for Wisconsin-based projects and theft of those funds by Coates, a Wisconsin-based contractor.

         The parties agree that this Court should apply Wisconsin's choice-of-law rules to determine the law governing this case, because a court sitting in diversity must apply the choice-of-law rules of the state in which it sits. See Assembly Component Sys., Inc. v. Platinum Equity, L.L.C., No. 09-CV-778, 2010 WL 2719978, at *6 (E.D. Wis. July 7, 2010). In Wisconsin, courts use different choice-of-law methodologies for contract cases and for tort cases. Glaeske v. Shaw, 661 N.W.2d 420, 427 (Wis. Ct. App. 2003). In contract cases, courts apply the law of the jurisdiction with which the contract has its most significant relationship. Id. In tort cases, courts begin with the presumption that the law of the forum applies unless nonforum contacts are of greater significance. Id. If neither potential forum has clearly more significant contacts, the court moves on to analyze five “choice influencing factors, ” including predictability of results, maintenance of interstate and international order, simplification of the judicial task, advancement of the forum's governmental interests, and application ...

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