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Gas Products Corp. v. BTU Marketing, LLC

United States District Court, D. Colorado

February 7, 2017



          Michael E. Hegarty, United States Magistrate Judge.

         Before the Court is Defendants' Motion to Dismiss Plaintiff's Amended Complaint for Failure to State a Claim Pursuant to F.R.C.P. 12(b)(6) [filed December 29, 2016; ECF No. 30]. The Motion is fully briefed, and the Court finds that oral argument, which the parties did not request, will not assist in the adjudication of the Motion.[1] The Court holds that Plaintiff's first, second, and fourth causes of action sufficiently allege a claim for relief. However, Plaintiff's third cause of action fails to state a claim. Accordingly, Defendants' Motion is granted in part and denied in part.


         I. Facts

         The following are factual allegations (as opposed to legal conclusions, bare assertions, or merely conclusory allegations) made by Plaintiff in its Amended Complaint, which are taken as true for analysis under Fed.R.Civ.P. 12(b)(6) pursuant to Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         Plaintiff is a wholesale distributor of heating equipment. Am. Compl. ¶ 6, ECF No. 24. Defendant Montigo Del Ray Corporation (“Montigo”) is a designer and manufacturer of custom gas fireplaces, gas inserts, stoves, and related products. Id. at ¶ 7. Defendant BTU Marketing, LLC (“BTU”) is Montigo's representative. Id. at ¶ 17. Plaintiff was the exclusive distributor of Montigo's products for Colorado, New Mexico, Wyoming, Utah, and Idaho. Id. at ¶ 8. Plaintiff developed comprehensive customer lists, which included past, current, and potential purchasers of Montigo's products. Id. at ¶¶ 10-11. To maintain the secrecy of its customer list, Plaintiff stored it in a secure location and prohibited employees from disseminating the information other than as required during the normal course of business. Id. at ¶ 14. When Plaintiff's customers ordered fireplaces, Plaintiff would disclose the customers' information to Montigo for shipping purposes. Id. at ¶ 15. Montigo represented to Plaintiff that it would not disseminate the disclosed information to third parties. Id. at ¶ 16.

         During the course of the parties' business relationship, Plaintiff began to notice a significant decrease in its annual sales of Montigo products. Id. at ¶ 19. As a result, Plaintiff contacted many of its customers, who informed Plaintiff that Defendants had been calling Plaintiff's customers to market and sell Montigo products directly. Id. at ¶ 21. Additionally, Plaintiff learned through a BTU employee that Montigo provided Plaintiff's customer list to BTU and instructed BTU to appropriate Plaintiff's current and prospective customers. Id. at ¶ 18. As a result of Defendants' scheme to appropriate Plaintiff's customer information, Plaintiff has lost approximately $1, 000, 000 in annual sales. Id. at ¶ 24.

         II. Procedural History

         Based on these factual allegations, Plaintiff initiated this lawsuit in Colorado state court on August 25, 2016. See Compl., ECF No. 2. Defendants removed the case to this Court on November 9, 2016. Notice of Removal, ECF No. 1. Thereafter, Plaintiff filed an Amended Complaint. ECF No. 24. Plaintiff alleges four causes of action: (1) Misappropriation of Trade Secrets, (2) Civil Conspiracy, (3) Interference with Existing Contractual Relationships, and (4) Interference with Prospective Contractual Relationships. Id. at ¶¶ 26-50.

         Defendants responded to Plaintiff's Amended Complaint by filing the present Motion. Defs.' Mot. to Dismiss, ECF No. 30. First, Defendants argue Plaintiff fails to state a misappropriation claim, because Plaintiff fails to allege wrongful means by which Defendants misappropriated its customer list. Id. at 4-5. According to Defendants, the only restriction Plaintiff placed on Montigo's use of the customer list was that Montigo could not disclose the information to a third party. Id. at 4. Because BTU is Montigo's representative, Defendants contend Montigo did not violate this restriction. Id. Next, Defendants assert the Court should dismiss Plaintiff's civil conspiracy claim, because Plaintiff does not allege a wrongful act to which the Defendants conspired. Id. at 6-7. Third, Defendants argue that Plaintiff's claim for interference with existing contractual relations fails, because Plaintiff does not allege Defendants committed a wrongful action that caused Plaintiff's customers to breach an existing contract. Id. at 7-8. Lastly, Defendants contend Plaintiff does not state a claim for tortious interference with prospective business advantage, because Plaintiff fails to allege Defendants committed any underlying tortious conduct. Id. at 8.

         Plaintiff responded to Defendants' Motion on January 19, 2017. Pl.'s Resp. to Defs.' Mot. to Dismiss, ECF No. 31. Plaintiff argues it alleges a misappropriation claim, because Montigo disclosed Plaintiff's customer information under circumstances where it had a duty to keep the information secret or limit the information's use. Id. at 4-5. As to Plaintiff's claims for civil conspiracy and interference with prospective business relations, Plaintiff argues that Defendants committed the wrongful acts of misappropriating Plaintiff's customer lists and making statements to customers regarding Plaintiff's inability to pay bills. Id. at 5-6, 8-9. Plaintiff also argues it has alleged an interference with existing contractual relations claim, because Defendants contacted Plaintiff's existing customers “in an effort to interfere with [Plaintiff's] ongoing business relations.” Id. at 8. Defendants filed a Reply on January 27, 2017. ECF No. 32.


         “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.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility, in the context of a motion to dismiss, means that the plaintiff pleaded facts which allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Twombly requires a two prong analysis. First, a court must identify “the allegations in the complaint that are not entitled to the assumption of truth, ” that is, those allegations which are legal conclusions, bare assertions, or merely conclusory. Id. at 679-80. Second, the Court must consider the factual allegations “to determine if they plausibly suggest an entitlement to relief.” Id. at 681. If the allegations state a plausible claim for relief, such claim survives the motion to dismiss. Id. at 680.

         Plausibility refers “to the scope of the allegations in a complaint: if they are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs ‘have not nudged their claims across the line from conceivable to plausible.'” Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir. 2012) (quoting Robbins v. Oklahoma,519 F.3d 1242, 1247 (10th Cir. 2008)). “The nature and specificity of the allegations required to state a plausible claim will vary based on context.” Kan. Penn Gaming, LLC v. Collins,656 F.3d 1210, 1215 (10th Cir. 2011). Thus, while the Rule 12(b)(6) standard does not require that a plaintiff establish a ...

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