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ICM of America, Inc. v. Leica Geosystems, Inc.

United States District Court, E.D. Arkansas, Western Division

July 26, 2016




         Plaintiff ICM of America, Inc. (“ICM”) brings this diversity action against Defendants Leica Geosystems, Inc. (“Leica”), Stribling Equipment LLC (“Stribling”), and Jerry Swanson (“Swanson”), asserting multiple claims including intentional interference with business expectancies. Before the Court are (1) Leica’s motion to dismiss, pursuant to Fed.R.Civ.P. 12(b)(6) (ECF Nos. 22, 23) and ICM’s response in opposition (ECF Nos. 38, 39) and (2) Swanson’s motion to dismiss, pursuant to Fed.R.Civ.P. 12(b)(2) and 12(b)(6) (ECF Nos. 48, 49), ICM’s response in opposition (ECF Nos. 52, 53), and Swanson’s reply (ECF No. 55). After careful consideration, and for reasons that follow, the motions to dismiss are denied.

         I. Complaint Allegations

         The following facts are taken from the second amended complaint. Plaintiff ICM sells construction equipment in Arkansas and Oklahoma, and Defendant Leica manufactures machine control (“MC”) products, which are used in the operation of heavy construction equipment. In 2013, ICM and Leica entered an oral agreement (the “Agreement”) that granted ICM a nonexclusive license to use the Leica trade name, trademark and related characteristics and to sell Leica MC products in Arkansas and Oklahoma. Subsequently, ICM purchased inventory from Leica and devoted significant time developing a customer base for Leica’s products. Before and after the Agreement, Leica’s representative David Rowlett (“Rowlett”) told ICM that Leica did not grant exclusive licenses to sell the company’s MC products.

         In 2014, Defendant Stribling, a Mississippi LLC that sells construction equipment, became a Leica dealer. Defendant Swanson, a Mississippi resident, is Stribling’s CEO. In December 2014, an Arkansas excavating contractor requested and verbally accepted a sales quote from ICM to replace stolen MC equipment, which he had purchased from Stribling. Leica’s Rowlett demanded that ICM provide him a copy of the quote, claiming that Stribling had accused ICM of giving the MC equipment away. After Rowlett reviewed ICM’s quote, he agreed that ICM’s price was fair.

         In early 2015, Rowlett demanded that ICM provide him a list of the company’s top twenty sales prospects, and he requested similar information from Stribling in order to “police any prospective deals that both ICM and Stribling were working on.”[1]

         In July 2015, ICM provided a sales quote for MC equipment to a long-time Arkansas customer, Arco Excavating of Pea Ridge, Arkansas (“ARCO”). Following orders from Swanson, Rowlett demanded that ICM rescind the quote because Stribling was also pursuing a sale to ARCO. Rowlett informed ICM’s representative Bruce McFadden (“McFadden”) that “if ICM and Stribling were pursuing the same customer[, ] Stribling would always prevail[, ] and if ICM received the order, Leica would not ship the order.”[2] Rowlett also told McFadden that “Stribling was about to make a large stock order from Leica and that Leica would not under any circumstance risk losing the Stribling stock order.”[3]

         Based on Rowlett’s statements to McFadden, ICM ceased efforts to sell to ARCO. Subsequently, Swanson demanded that Leica terminate its agreement with ICM, and on January 12, 2016, Leica cancelled ICM’s license to sell Leica equipment. In connection with this cancellation, Rowlett told ICM representatives that “Stribling wanted to be the exclusive [Leica] dealer in Arkansas and insisted that Leica cancel ICM’s . . . franchise for Arkansas.”[4]

         With its second amended complaint, ICM brings civil conspiracy and tortious interference claims against Leica, Stribling, and Swanson. Additionally, ICM sues Leica for breach of contract and violation of the Arkansas Franchise Practices Act and seeks to recover under the theory of promissory estoppel.

         II. Leica’s Motion to Dismiss

         On April 11, 2015, Leica filed a motion to dismiss ICM’s original complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. On May 2, 2016, twenty-one days later, ICM filed an amended complaint as permitted under Rule 15(a)(B), [5] and on May 11, 2016, ICM filed a second amended complaint with leave of Court, to correct a typographical error contained in the amended complaint. The second amended complaint eliminates certain parties and claims, which renders moot several of Leica’s arguments in support of dismissal. Accordingly, the Court will address Leica’s motion only to the extent that the asserted grounds for dismissal remain applicable.

         When ruling on a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court must take as true the alleged facts and determine whether they are sufficient to raise more than a speculative right to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). The Court does not, however, accept as true any allegation that is a legal conclusion. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint must set forth “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         Count II - Tortious Interference

         Under Arkansas law, [6] the elements of tortious interference are as follows: (1) the existence of a valid contractual relationship or a business expectancy; (2) knowledge of the relationship or expectancy on the part of the interfering party; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted. Vowell v. Fairfield Bay Community Club, 58 S.W.3d 324, 329 (Ark. 2001). Arkansas also requires that the conduct of the interfering party be at least “improper, ” and the following factors set forth in the Restatement (Second) of Torts provide guidance as to what is improper in this context:

(a) the nature of the actor’s conduct, (b) the actor’s motive, (c) the interests of the other with which the actor’s conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other, (f) the proximity or remoteness of the actor’s conduct to the interference and the relations between the parties.

See Baptist Health v. Murphy, 2010 Ark. 358, 15-16, 373 S.W.3d 269, 281-82 (2010)(citing K.C. Props. of N.W. Ark., Inc., 373 Ark. at 26-27, 280 S.W.3d at 11-12 (2008)).

         If a plaintiff establishes the foregoing elements, a defendant may still prevail if it can show that its conduct was justified or privileged. See Conway Corp. v. Construction Engineers, Inc., 300 Ark. 225, 782 S.W.2d 36, 40 (1989). This affirmative defense permits the defendant to “show that the interference is privileged by reason of the interests furthered by his conduct, but the burden rests upon him to do so.” Stebbins & Roberts, Inc. v. Halsey, 265 Ark. 903, 906, 582 S.W.2d 266, 267 (1979). The defendant’s economic interest may qualify as the basis for a privilege, but that interest must be more than mere business expectation:

Where the defendant acts to further his own advantage, other distinctions have been made. If he has a present, existing economic interest to protect, such as the ownership or condition of property, or a prior contract of his own, or a financial interest in the affairs of the person persuaded, he is ...

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