United States District Court, D. Kansas
ENERGY CONSUMPTION AUDITING SERVICES, LLC, Plaintiff/Counterclaim Defendant,
BRIGHTERGY, LLC, Defendant/Counterclaimant,
KRISTENE CANADY, Counterclaim Defendant.
MEMORANDUM AND ORDER
DANIEL D. CRABTREE, District Judge.
Plaintiff/counterclaim defendant Energy Consumption Auditing Services, LLC ("ECAS") filed this lawsuit against defendant/counterclaimant Brightergy, LLC ("Brightergy") alleging various claims, including tortious interference and unfair competition arising from the business dealings between these two solar panel companies and the City of North Kansas City ("North Kansas City"). Brightergy filed an Answer and Counterclaim (Doc. 5) alleging four counterclaims against ECAS and Kristene Canady: (1) tortious interference with prospective business advantage or relationship; (2) common law unfair competition; (3) defamation; and (4) injurious falsehood. This matter comes before the Court on ECAS and Kristene Canady's ("Counterclaim Defendants") Motion to Dismiss Brightergy's Counterclaim (Doc. 18). After considering the arguments made by both parties, the Court denies the Counterclaim Defendants' Motion to Dismiss.
I. Factual Background
The following facts are taken from Brightergy's Answer and Counterclaim (Doc. 5) and viewed in the light most favorable to it. S.E.C. v. Shields, 744 F.3d 633, 640 (10th Cir. 2014) ("We accept as true all well-pleaded factual allegations in the complaint and view them in the light most favorable to the [plaintiff].") (quotation omitted). Brightergy is a full-service renewable energy provider, specializing in solar panel system design, installation, and maintenance. ECAS markets, sells, and installs solar panel systems manufactured by SolarWorld. Kristene Canady ("Canady") is a member and President and CEO of ECAS.
Beginning in March 2012, Brightergy entered into discussions with North Kansas City about leasing and installing solar panel systems on one or more of North Kansas City's government buildings. Brightergy identified over 20 opportunities to install solar panel systems, and Brightergy drafted plans and estimates for those projects and presented them to North Kansas City. After having these discussions, representatives from North Kansas City told Brightergy that it was not in a position to install solar panel systems that year, but it would be interested in doing business with Brightergy in 2013.
In June 2013, Brightergy contacted representatives of North Kansas City and restarted discussions with those representatives about leasing and installing solar panel systems. Afterwards, the Counterclaim Defendants began soliciting and contacting representatives of North Kansas City in an effort to dissuade North Kansas City from doing business with Brightergy and to convince it to do business with ECAS. In these communications, the Counterclaim Defendants allegedly made fraudulent misrepresentations to North Kansas City about the power and cost savings that ECAS's solar panels would generate.
On October 31, 2013, a Brightergy representative attended a meeting with representatives of North Kansas City and Canady. During that meeting, Canady allegedly made disparaging statements to North Kansas City representatives about Brightergy and its business, including telling the representatives that Brightergy's solar panels and equipment were overpriced and inferior to ECAS's panels. Canady also stated that Brightergy's solar panels were "essentially junk because they were made outside of the United States." Def.'s Answer and Countercl. at 16, ¶ 38 (Doc. 5).
Ultimately, North Kansas City decided not to do business with Brightergy. Brightergy alleges, as a result of the Counterclaim Defendants' actions, it has suffered damages including damage to its reputation and lost profits.
II. Legal Standard
Fed. R. Civ. P. 8(a)(2) provides that a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Although this Rule "does not require detailed factual allegations, '" it demands more than "[a] pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action'" which, as the Supreme Court explained, "will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. (quoting 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." Id. (citing Twombly, 550 U.S. at 556). "Under this standard, the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims.'" Carter v. United States, 667 F.Supp.2d 1259, 1262 (D. Kan. 2009) (quoting Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007)).
Although the Court must assume that the factual allegations in the complaint are true, it is "not bound to accept as true a legal conclusion couched as a factual allegation.'" Id. at 1263 (quoting Iqbal, 556 U.S. at 678). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice'" to state a claim for relief. Bixler v. Foster, 596 F.3d 751, 756 (10th Cir. 2010) (quoting Iqbal, 556 U.S. at 678).
The Counterclaim Defendants ask the Court to dismiss each of the four claims asserted in Brightergy's Counterclaim under Fed.R.Civ.P. 12(b)(6) for failing to state a claim. The parties agree that Missouri law governs the claims asserted by Brightergy in its Counterclaim. Here, the parties have invoked the Court's diversity jurisdiction. In diversity cases, the Court applies the law that would apply if the plaintiff had brought the suit in Kansas state court. Snyder v. Am. Kennel Club, 661 F.Supp.2d 1219, 1229-30 (D. Kan. 2009) (citing Klaxon Co. v. Stentor Elec. Mfg., Co., 313 U.S. 487, 496 (1941); Butt v. Bank of Am., N.A., 477 F.3d 1171, 1179 (10th Cir. 2007)). "In Kansas, tortious interference claims and defamation claims are governed by the law of the state where the wrong was felt." Snyder, 661 F.Supp.2d at 1230 (citing Ling v. Jan's Liquors, 703 P.2d 731, 735 (Kan. 1985)). In cases where the alleged wrong to plaintiffs involves financial harm, Kansas law requires the court to apply the law of the state where plaintiffs "felt" that financial injury. Id. (citations omitted). In this case, Brightergy is a Missouri company and the claims asserted by Brightergy in its Counterclaim arise out of projects in Missouri. The Counterclaim Defendants suggest that Missouri state law governs Brightergy's claims under the Kansas choice of law provisions. Brightergy agrees. Therefore, the Court applies Missouri law here.
A. The Counterclaim Defendants Did Not Waive Their Right to File a Motion to Dismiss.
Brightergy filed its Counterclaim on December 20, 2013. The Counterclaim Defendants filed their Answer to the Counterclaim on January 24, 2014. On March 13, 2014, Magistrate Judge Kenneth G. Gale held a scheduling conference with the parties and entered a Scheduling Order on March 20, 2014, which states: "The parties have stipulated that no motions to dismiss will be filed in this case." Doc. 16 at 8. Eight days later, on March 28, 2014, the Counterclaim Defendants filed their Motion to Dismiss Brightergy's Counterclaim. Doc. 18.
Brightergy argues that the Counterclaim Defendants waived their right to file their Motion to Dismiss because they expressly represented to the Court that it would file no motions to dismiss. The Counterclaim Defendants respond that they cannot confirm whether the parties addressed any specific deadline or posture about the contemplated filing of a motion to dismiss without a transcript from the scheduling conference with Judge Gale, but they explain that after the scheduling conference, they reviewed the allegations in the Counterclaim in light of the established state and federal case law and determined that the Counterclaim fails to state a claim for relief.
A party is generally bound by stipulations which it has voluntarily entered. Willett v. State of Kan., 942 F.Supp. 1387, 1393 (D. Kan. 1996). "Stipulations, however, are not absolute and will be set aside to prevent manifest injustice." Morrison Knudsen Corp. v. Ground Improvement Techniques, Inc., 532 F.3d 1063, 1075 (10th Cir. 2008) (citing United States v. Montgomery, 620 F.2d 753, 757 (10th Cir. 1980)). "The district court has broad discretion to determine whether a party should be held to a stipulation or whether justice requires the stipulation be set aside." Id. (citing Wheeler v. John Deere Co., 935 F.2d 1090, 1098 (10th Cir. 1991)). A court may grant relief from a stipulation if it is improvident to enforce it or when necessary to prevent manifest injustice. L.P.S. by Kutz v. Lamm, 708 F.2d 537, 540 (10th Cir. 1983). "A stipulation is improvidently entered into if it was the result of inadvertence or was based upon an erroneous understanding of the facts or law." McReynolds v. Bigler, No. 88-1343-C, 1990 WL 129454, at *4 (D. Kan. Aug. 6, 1990) (citing Graefenhain v. Pabst Brewing Co., 870 F.2d 1198, 1206 (7th Cir. 1989)).
Here, the Scheduling Order includes a stipulation that the parties would file no motions to dismiss. However, the Court will grant relief from this stipulation to allow the Counterclaim Defendants to file their Motion to Dismiss because the stipulation appears to result from inadvertence. However, the Court notes that "the scheduling order is an important part of the pretrial process" and cautions that in the future the "parties should carefully review each order to be certain that the order is an accurate statement of the facts and stipulations as agreed to by the parties" and if there are errors, the parties should file ...