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Horton Archery, LLC v. Farris Brothers, Inc.

United States District Court, S.D. Mississippi, Eastern Division

July 2, 2014

HORTON ARCHERY, LLC, Plaintiff,
v.
FARRIS BROTHERS, INC., Defendant.

MEMORANDUM OPINION AND ORDER

KEITH STARRETT, District Judge.

For the reasons stated below, the Court grants in part and denies in part Plaintiff's Motion to Dismiss [30] Defendant's counterclaim. The Court denies the motion as it pertains to Defendant's counterclaim for breach of contract, but the Court grants the motion as it pertains to Defendant's UCC counterclaims.

Defendant may file an amended counterclaim within fourteen days of the entry of this opinion to correct the pleading errors noted below. If Defendant does not file an amended counterclaim within fourteen days of the entry of this opinion, the UCC claims will remain dismissed without prejudice.

The Court also denies as moot Plaintiff's Motion to Strike [37] exhibits attached to Defendant's response.

I. BACKGROUND

This is a contract dispute. In February 2013, Plaintiff, a manufacturer, sold Defendant, a distributor, $229, 122.27 worth of hunting crossbows and related products. In the summer of 2013, Defendant noticed that an unusually high number of its retailers were experiencing customer returns on Plaintiff's crossbows, allegedly because they were defective. Defendant later learned that either Plaintiff or its secured creditors had liquidated Plaintiff's inventory at public auction. Accordingly, other distributors and online retailers were selling Plaintiff's crossbows for a substantially lower price than Defendant.

Plaintiff filed its Complaint [1] on November 25, 2013. Plaintiff claims that Defendant attempted to reject the entire order as defective in October 2013, and that it refused to pay for the crossbows, in breach of the sales contract. On March 28, 2013, Defendant filed its Counterclaim [26], asserting that Plaintiff breached certain terms of the sales contract. Plaintiff filed a Motion to Dismiss [30] Defendant's counterclaim, which the Court now addresses.

II. DISCUSSION

A. Standard of Review

To survive a motion to dismiss under Rule 12(b)(6), a counterclaim "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Great Lakes Dredge & Dock Co. LLC v. La. State, 624 F.3d 201, 210 (5th Cir. 2010) (punctuation omitted). "To be plausible, the [counterclaim's] factual allegations must be enough to raise a right to relief above the speculative level." Id. (punctuation omitted). The Court must "accept all well-pleaded facts as true and construe the [counterclaim] in the light most favorable to the [defendant]." Id. But the Court will not accept as true "conclusory allegations, unwarranted factual inferences, or legal conclusions." Id. Likewise, "a formulaic recitation of the elements of a cause of action will not do." PSKS, Inc. v. Leegin Creative Leather Prods., Inc., 615 F.3d 412, 417 (5th Cir. 2010) (punctuation omitted). Legal conclusions may provide "the [counterclaim's] framework, [but] they must be supported by factual allegations." Ashcroft v. Iqbal, 556 U.S. 662, 664, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868 (2009).

B. Breach of Contract

In Mississippi, a party asserting a breach of contract must prove 1) the existence of a valid and binding contract, and 2) that the opposing party has broken, or breached it. Business Communs., Inc. v. Banks, 90 So.3d 1221, 1224-25 (Miss. 2012). If a party seeks monetary damages as a remedy for a breach of contract, they also "must put into evidence, with as much accuracy as possible, proof of the damages being sought." Id. at 1225.

In its Counterclaim [26], Defendant alleged that Plaintiff offered it a "special price package" on the crossbows "with a full warranty, " which allowed Defendant to "pay ½ of the total invoice early and the other ½ in September of 2013." Defendant apparently alleges that Plaintiff breached the agreement by liquidating its inventory pursuant to bankruptcy and flooding the market with cheaper crossbows, depriving Defendant of the opportunity to sell its remaining stock. Defendant also alleges that Plaintiff promised to give it a five percent rebate, but failed to do so.

Plaintiff denies that the parties' agreement contained any "price protection, " warranty, or rebate. In support of this argument, Plaintiff attached copies of the invoices, [1] which it contends comprise the total written contract between the parties. Plaintiff argues that Defendant is foreclosed from arguing that any oral agreement existed because Mississippi law requires that the contract at issue be in writing, and that the invoices satisfy this requirement. See MISS. CODE ANN. § 75-2-201(1)-(2). Plaintiff further argues that Mississippi law prevents Defendant from arguing that the parties orally ...


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