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Master International Co. Ltd. v. Blackstone International, Ltd.

United States District Court, Fourth Circuit

June 18, 2013

MASTER INTERNATIONAL CO. LTD. et al., Plaintiffs,
v.
BLACKSTONE INTERNATIONAL, LTD. et al., Defendants.

MEMORANDUM

JAMES K. BREDAR, District Judge.

Master International Co. Ltd. and HwaJan International Lighting Ltd. ("Plaintiffs") brought this suit against Blackstone International, Ltd. ("Blackstone") and John F. Black ("Defendants") asserting claims for breach of contract, account stated, unjust enrichment, quantum meruit, detrimental reliance, fraud, fraudulent misrepresentation, fraudulent inducement, tortious interference with prospective advantage and violations of other provisions of Maryland law. Now pending before the Court is Defendants' motion to dismiss the complaint and for a more definite statement (ECF No. 16). The issues have been briefed and no hearing is required. Local Rule 105.6. For the reasons set forth below, Defendants' motion to dismiss the complaint and for a more definite statement will be DENIED.

I. BACKGROUND[1]

Master International "is a foreign company organized and existing under the laws of Brunei, with its principal place of business located in [Brunei]." (Compl. ¶ 2.) HwaJan International Lighting "is a foreign company organized under the laws of China, with its principal place of business located in [China]." ( Id. ¶ 3.) Plaintiffs are "family owned and operated export businesses, [which] have developed an international reputation specializing in the manufacture and shipment of a wide-variety [ sic ] of lighting and mirror products." ( Id. ¶ 9.)

Blackstone "is a corporation duly organized and existing under the laws of the State [of] Maryland, with its principal place of business" in Baltimore, Maryland. ( Id. ¶ 4.) John Black is Blackstone's president and a resident of Phoenix, Maryland. ( Id. ¶ 5.) Blackstone acted as "a distributor of products manufactured... by Plaintiffs... to retail companies in the United States. ( Id. ¶ 10.)

During 2010 and 2011, Plaintiffs designed, manufactured and shipped custom-built lighting and mirror products at Defendants' request, pursuant to a series of purchase orders. ( Id. ¶¶ 9, 11.) Plaintiffs allege that Defendants have failed to pay Plaintiffs money to which they are entitled under some of those purchase orders. ( Id. ¶ 11.) In Exhibit A to the complaint, Plaintiffs list 96 outstanding invoices, totaling $4, 714, 820, that they sent to Blackstone "following shipment of the goods in accordance with the [purchase order] terms." Plaintiffs allege that under the terms of their agreement, "payment for the full amount of the goods delivered to Blackstone was due within 30 days." ( Id. ¶ 13.) For each outstanding invoice, Plaintiffs identify the Blackstone purchase order number, payment due date and remaining balance. ( Id. Ex. A.)

Plaintiffs allege that Blackstone has received payments from the retailers for the goods they delivered, despite Defendants' statements to the contrary, which were made "in an effort to conceal from Plaintiffs that Defendants have, in essence, pocketed millions of dollars that belong to Plaintiffs." (Compl. ¶ 15.) Plaintiffs further allege that "Defendants' conduct herein is part of a regular course of fraudulent conduct, " through which Defendants manipulate and defraud foreign manufacturers. ( Id. ¶ 16.) "As part of Defendants' scheme, on multiple occasions Black promised to remit to Plaintiffs large sums of money [as] payments [for] previously manufactured and shipped goods by a date certain, to induce Plaintiffs to continue to manufacture and ship goods for Blackstone." ( Id. ¶ 19.)

Plaintiffs allege that, during "a November 2, 2011 conference call between Black and Plaintiffs' representatives, Black promised Plaintiffs a $1.5 million payment before November 20, 2011." ( Id. ¶ 21.) "Relying on Black's promise... Plaintiffs shipped an additional [quantity] of goods... for which, to date, Blackstone has failed to make any payment." ( Id. ) According to the complaint, "Black made the promise knowing, at the time, that Blackstone had no intention of making the $1.5 million payment, and that his representation would induce Plaintiffs into shipping more goods for Blackstone." ( Id. )

Separately, Plaintiffs allege that in April 2010, Black suggested that the parties should agree "on a large order for thousands of vanity floor and desk-side lamps and other custom-made products (the Large Order') for Wal-Mart." ( Id. ¶ 23.) "Black represented that once Plaintiffs manufactured and shipped the Large Order for Blackstone, Plaintiffs would be paid for all outstanding invoice payments." ( Id. ) In April 2010, Blackstone sent Plaintiffs ten purchase orders concerning this Large Order, and Plaintiffs began the time-consuming process of manufacturing the custom goods. ( Id. ¶¶ 23-24.) Due to a problem with Wal-Mart's internal ordering issues, Plaintiffs were forced to delay the shipment date for some portion of the custom goods. ( Id. ¶¶ 25-26.) At some point during this process, Plaintiffs concluded that they had very little chance of receiving payment from Defendants for the goods that they had already shipped. ( Id. ¶ 26.) Plaintiffs decided not to deliver the balance of the Large Order, and they have $5, 466, 522 worth of custom-made goods warehoused in China which they have been unable to sell to other buyers. ( Id. ¶ 27.)

In order to manufacture goods, Plaintiffs must purchase raw materials from vendors. ( Id. ¶ 9.) During the course of their relationship with Defendants, Plaintiffs were in a "precarious financial position, " which was exacerbated by Defendants' failure to pay Plaintiffs for the goods they manufactured. ( Id. ¶ 19.) Plaintiffs allege that their "relationships with [] suppliers ha[ve] been destroyed due to Plaintiffs' inability to make payments to their suppliers for goods ordered by Defendants." ( Id. ¶ 29.) "Defendants were well aware of Plaintiffs' supplier issues because Plaintiffs repeatedly expressed concerns that Defendants' failure to pay Plaintiffs would directly cause material disruption and business interference with Plaintiffs' suppliers." ( Id. ¶ 30.)

"Defendants' actions also irreparably harmed Plaintiffs' standing and credibility with Wal-Mart and Costco." ( Id. ¶ 31.) They did this by falsely blaming Plaintiffs for failures of quality and timeliness, "disparag[ing] Plaintiffs to Wal-Mart employees, " and misleading Costco about Plaintiffs' financial condition and product quality. ( Id. ¶¶ 31, 33, 35.) Plaintiffs allege that this has "irreparably tarnished" Plaintiffs' relationship with the retailers.

II. LEGAL STANDARD

A motion to dismiss under FED. R. CIV. P. 12(b)(6) is a test of the legal sufficiency of a complaint. Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). To pass this test, a complaint need only present enough factual content to render its claims "plausible on [their] face" and enable the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The plaintiff may not, however, rely on naked assertions, speculation, or legal conclusions. Bell Atl. v. Twombly, 550 U.S. 544, 556-57 (2007). In assessing the merits of a motion to dismiss, the court must take all well-pled factual allegations in the complaint as true and construe them in the light most favorable to the plaintiff. Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. ...


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