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Ramsey Hill Exploration, LLC v. JGS All American Construction, LLC

United States District Court, W.D. Wisconsin

July 1, 2019




         In its amended complaint, plaintiff Ramsey Hill Exploration, Inc., asserts breach of contract and unjust enrichment claims arising out of its agreement to supply frac sand to defendant JGS All American Construction, LLC, as well as tortious interference with a contract and theft/conversion claims against defendants Grant Gibbs and Rail Trusts Equipment, Inc. Before the court are defendants Gibbs and Rail Trusts' motions to dismiss under Federal Rules of Civil Procedure 12(b)(6) and to strike under Rule 12(f). (Dkt. ##12, 13.) For the reasons that follow, the court will grant in part and deny in part defendants' motions and direct plaintiff to file a second amended complaint consistent with this order.


         In July 2018, Ramsey Hill and JGS entered into a Sand Supply Agreement, which is attached as Exhibit A to the amended complaint. (Agreement (dkt. #8-3).) On or about August 13, 2018, Ramsey Hill delivered the first load of frac sand to the designated delivery point and loaded it into rail cars as required under the Agreement. However, the Agreement also provides that only “[a]fter the invoice is paid, [does Ramsey Hill] agree[] to release the sand in the loaded railcars.” (Agreement (dkt. #8-3) ¶ 7(a).) “Despite this express provision . . . Grant Gibbs either individually or as a representative of . . . JGS, Rail Trust[s] or another entity contacted Progressive Rail and demanded that shipment be released . . . in direct violation of the [Agreement].” (Am. Compl. (dkt. #8) ¶ 13.) Plaintiff further claims that its invoice on the first load remains unpaid, as does the invoice on a second load of frac sand sent to the delivery point on October 9, 2018.


         In sorting through the motions before the court, both parties share blame. Indeed, plaintiff's amended complaint and defendants' motions to dismiss highlight two common flaws in litigation: (1) sloppy pleading on the part of a plaintiff who asserts claims against “defendants” collectively without differentiating which claims actually apply to the individual defendants; and (2) overzealous motions to dismiss by defendants, who unreasonably demand more detailed factual allegations in the face of adequate notice pleading and reasonable supportive inferences.

         To comply with Rule 8, “a plaintiff has the obligation to provide the factual ‘grounds' of [her] entitlement to relief (more than ‘mere labels and conclusions'), and a ‘formulaic recitation of a cause of action's elements will not do, '” Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d 599, 602 (7th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 547 (2007)), but a complaint need only “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 566 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). Keeping this standard in mind, the court will address defendants' asserted grounds to dismiss in turn.

         I. Tortious Interference Claim

         Defendants first argue that plaintiff's allegations fail to state a claim for tortious interference of a contract. Specifically, defendants fault plaintiff for failing to allege: “(a) that Progressive Rail ‘released' the shipment as a result of Mr. Gibbs' purported demand, or (b) that JGS's refusal to pay for the sand was caused by Mr. Gibbs' purported demand on Progressive Rail.” (Def.'s Mot. (dkt. #13) ¶ 24.[3]) As for Rail Trusts, defendants further argue that the complaint contains no factual allegations “regarding Rail Trusts' direct interaction with JGS that caused JGS to refuse to pay for the two separate sand deliveries made by Ram[s]ey Hill almost two months apart.” (Id. at ¶ 27.)

         To prove intentional interference with an existing or prospective contract under Wisconsin law, a party must demonstrate that: “(1) the plaintiff had a contract or prospective contractual relationship with a third party; (2) the defendant interfered with the relationship; (3) the interference was intentional; (4) a causal connection exists between the interference and the damages; and (5) the defendant was not justified or privileged to interfere.” Burbank Grease Servs., LLC v. Sokolowski, 2006 WI 103, ¶ 44, 294 Wis.2d 274, 717 N.W.2d 781. Here, plaintiff's allegations that Gibbs “contacted Progressive Rail and demanded that shipment be released” raises a reasonable inference that Progressive Rail, which the court will presume for pleading purposes shipped plaintiff's sand to the delivery point, then released the shipment. If so, then Gibbs' interference caused the shipment to be released before payment of the invoice in violation of that Agreement's requirement, thus satisfying the causal connection requirement for purposes of pleading.

         As noted, defendants separately argue a lack of specific allegations disclosing defendant Rail Trusts' role in any tortious interference, an argument that has more traction and highlights the larger problem with plaintiff's pleading. Plaintiff alleges that “Gibbs, either individually or as a representative of Defendants JGS, Rail Trust[s] or another entity, contacted Progressive Rail.” (Am. Compl. (dkt. #8) ¶ 13.) If Gibbs was acting on his own behalf, then plaintiff may only pursue a claim against Gibbs, not Rail Trusts, and if he was acting as a representative of JGS -- the party with whom plaintiff has entered into a contract -- then as a matter of law, plaintiff cannot assert a tortious interference claim at all. See Joseph P. Caulfield & Assocs., Inc. v. Litho Prods., Inc., 155 F.3d 883, 889 (7th Cir. 1998) (under Wisconsin law, “a party cannot interfere tortiously with its own contract” (citing Wausau Medical Ctr. v. Asplund, 182 Wis.2d 274, 514 N.W.2d 34, 44 (1994))). On the other hand, if Gibbs was acting as a representative of Rail Trusts, then perhaps both Gibbs and Rail Trusts could be liable for tortious interference with JGS's Agreement with Ramsey Hill.[4]

         Because of the uncertainty on whose behalf Gibbs is alleged to have acted as currently pleaded, the court will grant defendants' motions to dismiss Count IV, while at the same time granting leave to plaintiff for the purpose of repleading its basis for asserting tortious interference claims against defendants Gibbs, Rail Trusts or both on or before Monday, July 15th.[5]

         One final note: plaintiff's amended complaint only contains factual allegations sufficient to state a tortious interference claim with respect to the August 13, 2018, shipment. If plaintiff intended for this claim to cover the October 9, 2018, shipment as well, then it must also include specific factual allegations tying defendants Gibbs, Rail Trusts or both to JGS's alleged failure to pay that invoice.[6]

         II. ...

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