Product Solutions International Inc v. PB Products LLC
2:19-cv-12790-BAF-DRG
| E.D. Mich. | Jun 12, 2020Background
- PSI alleges it acted as intermediary with a Chinese factory under a January 25, 2016 Purchase Order from Orgo for "100,000 pieces" (Orgo bags) to be released in sea-container quantities.
- Over two years Orgo only issued/releases supporting four invoices totaling 32,297 bags, which Orgo paid in full; PSI claims defendants never ordered the remaining bags, leaving PSI liable to the manufacturer.
- PSI sued Orgo, individual members Diane Copek and Michael Byrne, and shipper Aldez for breach of contract (Count I), promissory estoppel (Count II), multiple fraud/negligent/innocent misrepresentation claims (Counts III–VI), and UCC non-acceptance (Count VII).
- Defendants moved to dismiss under Rule 12(b)(6), arguing: (1) tort claims are barred by the economic loss doctrine; (2) the 100,000 PO was a non-binding "blanket" PO requiring separate release orders; and (3) allegations are insufficient as to Copek, Byrne, and Aldez.
- The court dismissed Counts III–VI and all claims against Copek, Byrne, and Aldez; it denied dismissal as to Counts I (breach), II (promissory estoppel pleaded alternatively), and VII (UCC non-acceptance), which proceed against Orgo only.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether tort claims (fraud, negligent/innocent misrepresentation, silent fraud) survive | Defendants made misrepresentations inducing performance; tort claims plead fraud | Economic loss doctrine bars tort claims arising from purely contractual/economic harm | Dismissed: economic loss doctrine applies because alleged wrongs arise from contract (Counts III–VI dismissed) |
| Whether individual defendants (Copek, Byrne) can be liable | Individuals participated in communications and signed or authorized documents; thus personally liable | Allegations show only corporate acts; no wrongful conduct separate from Orgo | Dismissed: allegations only tie them to corporate acts; no separate tort duty pleaded |
| Whether Aldez (shipper) is liable | Named as party; involved in shipments | Complaint alleges only that Aldez is a shipping company; no contract or duty alleged | Dismissed: no plausible claim or alleged duty by Aldez |
| Whether the 100,000 PO created an enforceable obligation (blanket PO issue) | PO for 100,000 created an express contract obligating Orgo to purchase those units | PO was a blanket order; enforceable obligations arise only upon release/shipment orders | Not resolved on motion to dismiss: court finds PSI plausibly alleged a breach and declines to resolve factual blanket-PO issue at this stage (Count I survives) |
| Whether promissory estoppel may be pleaded alternatively | Promissory estoppel is pled in the alternative to breach of contract for the 100,000 units | If an express contract governs, promissory estoppel may be improper | Allowed at this stage: Rule 8 permits alternative pleading; Count II survives for now |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: plausibility required)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must show more than conclusory allegations)
- Neibarger v. Universal Coops., Inc., 486 N.W.2d 612 (Mich. 1992) (economic loss doctrine limits tort recovery for purely economic harms)
- Cargill, Inc. v. Boag Cold Storage Warehouse, Inc., 71 F.3d 545 (6th Cir. 1996) (application of economic loss doctrine)
- Detroit Radiant Prods. Co. v. BSH Home Appliances Corp., 473 F.3d 623 (6th Cir. 2006) (explaining blanket purchase order vs. release/order distinction)
- Wright Tool Co. v. Chemchamp N. Am. Corp., 185 F. Supp. 2d 781 (E.D. Mich. 2002) (fraud-in-the-inducement exception limited to misrepresentations extraneous to contract)