2:21-cv-01540
E.D. La.Feb 4, 2022Background:
- Plaintiffs Tara Shaw and Tara Shaw Designs entered a 2014 written license with Restoration Hardware (RH) for certain designs; plaintiffs disclosed identities of their factories and artisans to RH.
- RH allegedly obtained plaintiffs’ factories/artisans to manufacture products and orally promised to seek plaintiffs’ permission before using them to make any unlicensed goods (with compensation to be addressed in a later, separate agreement).
- Plaintiffs learned in 2020 that RH had used their factories/artisans to make unlicensed décor without contacting or compensating them and sued for breach of contract, detrimental reliance, and unjust enrichment.
- RH moved to dismiss, arguing the alleged oral agreement was an unenforceable “agreement to agree,” plaintiffs failed to plead detrimental reliance (no pleaded detriment or specific promise), and unjust enrichment is unavailable where another remedy exists.
- The court granted RH’s motion to dismiss the amended complaint as to RH (finding the oral promise was a nonbinding agreement to negotiate and plaintiffs failed to plead required elements for detrimental reliance and unjust enrichment) and allowed a limited extension only for adding additional parties, finding amendment against RH futile.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of alleged oral contract (breach) | Oral promise to seek permission created contractual obligation to obtain permission before using factories/artisans | Promise was conditional and left essential terms (compensation) for future negotiation = unenforceable agreement to agree | Dismissed — oral promise was an unenforceable agreement to negotiate, not a binding contract |
| Detrimental reliance | Plaintiffs relied on RH’s promise and suffered unpaid compensation | Plaintiffs did not plead any detrimental change in position or that RH promised compensation (promise was only to seek permission) | Dismissed — plaintiffs failed to plead required damages/change in position and promise was insufficiently specific |
| Unjust enrichment | RH was enriched by using plaintiffs’ factories/artisans without paying for information or services | Unjust enrichment is unavailable when another adequate remedy at law exists | Dismissed — plaintiffs cannot prove absence of another remedy; unjust enrichment unavailable here |
| Amendment / futility | Plaintiffs sought additional time to amend pleadings after discovery to add parties | No basis shown for further amendment as to RH; claims against RH are futile | Court granted limited extension to add parties but denied further amendment as to RH; dismissal as to RH affirmed |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must contain sufficient facts to state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (courts need not accept legal conclusions as factual allegations)
- McNeely v. Town of Vidalia, 102 So. 422 (La. 1924) (an agreement to agree is unenforceable)
- Dumas v. First Federal Savings & Loan Ass'n, 654 F.2d 359 (5th Cir. 1981) (a letter agreement to "seek to agree" is not a final contract)
- APS Cap. Corp. v. Mesa Air Grp., Inc., 580 F.3d 265 (5th Cir. 2009) (terms left open for future negotiation negate meeting of the minds)
- Wooley v. Lucksinger, 961 So.2d 1228 (La. App. 2007) (elements required to prove detrimental reliance under Louisiana law)
- Baker v. Maclay Properties Co., 648 So.2d 888 (La. 1995) (five-element test for unjust enrichment)
- Walters v. MedSouth Rec. Mgmt., LLC, 38 So.3d 243 (La. 2010) (unjust enrichment unavailable when another legal remedy exists)
- Bank of Abbeville & Tr. Co. v. Commonwealth Land Title Ins. Co., [citation="201 F. App'x 988"] (5th Cir. 2006) (unjust enrichment requires absence of another remedy)