United States District Court, W.D. Virginia, Lynchburg Division
K. MOON SENIOR UNITED STATES DISTRICT JUDGE.
case concerns wood. Cremium, LLC sold it. Defendant Eastern
Shore Forest Products, Inc. (“Eastern Shore”)
buys it. Eastern Shore, during peak demand for firewood in
the winter of 2017-18, convinced Cremium to switch from
supplying Eastern Shore's top competitor to supplying
Eastern Shore. But when the weather turned unexpectedly warm,
Eastern Shore allegedly balked at its purchase commitments to
Cremium. Consequently, Cremium filed this lawsuit for
fraudulent inducement, breach of contract, quantum
meruit, and tortious interference with contract. Eastern
Shore has moved to dismiss all but the breach of contract
claim, and the parties have submitted the motion on the
briefs. The motion will be granted.
motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests the
legal sufficiency of a complaint to determine whether the
plaintiff has properly stated a claim. Although a complaint
“does not need detailed factual allegations, a
plaintiff's obligation to provide the ‘grounds'
of his entitle[ment] to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (citations omitted). A
court does not “accept the legal conclusions drawn from
the facts.” Eastern Shore Markets, Inc. v. J.D.
Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir.
2000). “Factual allegations must be enough to raise a
right to relief above the speculative level, ”
Twombly, 550 U.S. at 555, with all allegations in
the complaint taken as true and all reasonable inferences
drawn in the plaintiff's favor. Chao v. Rivendell
Woods, Inc., 415 F.3d 342, 346 (4th Cir. 2005).
produced packaged firewood and bulk firewood in the eastern
United States. (Complaint ¶ 1). It had a long-standing
business relationship with Custis Farms, Inc. (Id.
¶ 7). For instance, during 2016 and 2017, Cremium
supplied Custis Farms with 642 pallets of firewood, with
which Custis Farms was “very pleased, ” according
to a letter from its president. (Id. ¶ 7). In
2017, defendant Eastern Shore acquired Custis Farms and
continued selling firewood under its own brand, Custis
Farms' brand, or both. (Id. ¶ 9).
also supplied firewood through a third-party company called
RMS. (Complaint ¶ 11). Eastern Shore communicated to
Cremium that Eastern Shore viewed RMS as its top competitor.
(Id. ¶ 12). In spring 2017, while Cremium and
RMS were in business negotiations for the 2017-18 season,
Eastern Shore allegedly falsely informed RMS that Eastern
Shore had an exclusive contract with Cremium, for the purpose
of interfering with the Cremium-RMS negotiations.
(Id. ¶¶ 12-13).
early January 2018, the president of Custis asked Cremium to
help Eastern Shore provide firewood to meet customer demand
for the ongoing severe winter. (Complaint ¶15). Cremium
declined because of its commitments to RMS. (Id.
¶16). The president pressed further, asking what it
would take for Cremium to exclusively supply to Eastern
Shore, thus both helping Eastern Shore and harming its
competitor, RMS, in the future. (Id. ¶17).
Cremium again declined the overtures because it was unwilling
to damage its relationship with RMS. (Id. ¶
president of Custis remained persistent. Eventually, Cremium
relayed that it would be willing to supply Eastern Shore if
Eastern Shore committed to (A) buying Cremium's full
production through mid-March 2018 at $0.45/bundle over what
RMS paid and (B) picking up Cremium's firewood by Friday
every week. (Id. ¶ 19). The parties agreed to
terms as represented in a short commitment letter dated for
January 16, 2018.
the contract, Eastern Shore committed to buying 7, 200
bundles of firewood per week between January 20 and March 17,
2018. (Dkt. 1-1). The price was $3.15 per bundle. Quality
control provisions were not included in the contract.
(Complaint ¶¶ 22-23). Cremium allegedly notified
Eastern Shore that, to meet the demand, it would have to
shorten its drying time for the wood, although USDA standards
would still be met. (Id. ¶ 26). Eastern Shore
allegedly accepted Cremium's proposed drying time and
drying process. (Id. ¶ 28).
weather became unseasonably warm in February 2018. (Complaint
¶ 29). Demand for firewood therefore dropped off.
Eastern Shore stopped taking delivery of Cremium's
firewood and stopped paying Cremium. (Id. ¶
30). Cremium notified Eastern Shore of its breach, and
Eastern Shore allegedly knew the failure to timely pick up
the firewood caused Cremium to run out of warehouse space.
(Id. ¶ 31). The president of Custis nonetheless
asked Cremium to return to the standard, longer drying cycle,
and Cremium agreed to do so for future product. (Id.
February 4, 2018, two men (including the president of Custis)
who were “officers and agents” of Eastern Shore,
visited Cremium's plant and “for the first time
expressed dissatisfaction with the” firewood,
specifically the moisture content and consistency of the
bundle size. (Complaint ¶¶ 32-33). Cremium alleges
that moisture content was not part of the contract, not a
USDA requirement, and not an industry norm. (Id.
¶ 32). Cremium also offered to “break down”
any pallets with which Eastern Shore was dissatisfied, but
Eastern Shore replied that was not necessary. (Id.).
February 16, 2018, Eastern Shore informed Cremium that 12
previously-delivered pallets were being returned because of
mold. (Complaint ¶ 33). Cremium offered to inspect and
replace the pallets, but Eastern Shore declined and refused
to return the pallets to Cremium's facility for
inspection. (Id. ¶ 34). Eastern Shore has
refused to continue to purchase firewood as required under
the agreement. Based on these facts, Cremium advances four
in a fraudulent inducement claim, Cremium contends Eastern
Shore purposely induced Cremium to enter into the agreement,
with no intent to perform, in order to harm Eastern
Shore's competitor, RMS. (Complaint ¶¶ 37-38).
The inducement allegedly forced Cremium to furlough staff and
cease operations, thus causing ...