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Century M Recycling Private Limited v. M Worldwide, Inc.

United States District Court, Fourth Circuit

September 10, 2013

M WORLDWIDE, INC., et al. Defendants


JAMES K. BREDAR, District Judge.

I. Background

The complaint in this case was filed in the District of Connecticut on July 5, 2011, by Century M Recycling Private Limited ("Century Metal") against M Worldwide, Inc. ("MWI"), Sachin Chhabra ("Chhabra"), R.K. Enterprises USA, Inc. ("RKE"), Worldwide M LLC ("Worldwide"), and Tarun Chhabra ("T. Chhabra"). (Compl., ECF No. 1.) Century M subsequently filed an amended complaint that added another count against RKE. (ECF No. 56.) All Defendants filed motions to dismiss on various grounds including lack of personal jurisdiction. (ECF Nos. 57-63, 66.) On August 2, 2012, the motions to dismiss for lack of personal jurisdiction were granted but, rather than dismissing the case, the court transferred it to the District of Maryland; all Defendants except RKE did not object to this Court's jurisdiction, and as to RKE, the transferring court determined that RKE would be subject to personal jurisdiction in Maryland based on its lease of office space here. (Ruling 22-23, ECF No. 96.) Following transfer to this Court, the case was stayed for several months pending a bankruptcy filing by RKE and settlement negotiations. The bankruptcy proceeding has been concluded and the parties are ready to have this Court address the remainder of their motions to dismiss. No Defendant has renewed any argument pertaining to personal jurisdiction, and the Court finds that all Defendants have conceded the issue.

Also pending before the Court is Century Metal's motion for joinder and for leave to amend the amended complaint to add a new defendant and new counts against all defendants that include statutory theft under Connecticut law, unjust enrichment, conversion, and civil conspiracy. (ECF No. 118.) All Defendants except RKE (which, apparently at the time, had already filed its bankruptcy petition) filed a response to Century Metal's motion requesting that the Court rule first on the pending motions to dismiss before they are required to respond in substance to Century Metal's motion for leave to file a second amended complaint. (ECF No. 123.) The Court will grant Defendants' request and will set a briefing schedule in the order accompanying this memorandum opinion.

The issues remaining in the Defendants' motions to dismiss have been fully briefed (ECF Nos. 70, 72, 73, 76, 84, 86, 88, 90), and no hearing is necessary, Local Rule 105.6 (D. Md. 2011). MWI's and Chhabra's motion will be granted in part and denied in part, Worldwide's motion will be denied, T. Chhabra's motion will be granted, and RKE's motion will be granted in part and denied in part.

II. Standard of Dismissal for Failure to State a Claim

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 Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. An inference of a mere possibility of misconduct is not sufficient to support a plausible claim. Id. at 679. As the Twombly opinion stated, "Factual allegations must be enough to raise a right to relief above the speculative level." 550 U.S. at 555. "A pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.'... Nor does a complaint suffice if it tenders naked assertion[s]' devoid of further factual enhancement.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555, 557). Although when considering a motion to dismiss a court must accept as true all factual allegations in the complaint, this principle does not apply to legal conclusions couched as factual allegations. Twombly, 550 U.S. at 555.

Additionally, a fraud claim must be pleaded with particularity. Under Federal Rule of Civil Procedure 9(b), a party alleging fraud "must state with particularity the circumstances constituting fraud...." However, "[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Id. The "circumstances constituting fraud" include time, place, and contents of the fraudulent representation, the identity of the person making the misrepresentation, and what that person obtained. Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783-84 (4th Cir. 1999).

III. Allegations of the Complaint

Century M is a foreign corporation registered in India with factories in India and its principal United States offices in Connecticut. (Am. Compl. ¶ 1, ECF No. 56.) It alleges that it entered into a series of contracts with MWI, which is a Florida corporation with its principal place of business in Florida. In these contracts, MWI was to provide and Century M was to purchase containers of Zorba, an aluminum scrap metal. ( Id. ¶ 11.)[1] In furtherance of these contracts, Century M made advanced payments of $2, 901, 159 to MWI. ( Id. ¶ 14.) In return, MWI provided containers of Zorba totaling $2, 136, 881, but did not provide any Zorba for the remaining $764, 278 balance. ( Id. ¶ 15.) MWI refunded $137, 800 to Century Metal, leaving an outstanding balance of $626, 478 retained by MWI but for which Century M did not receive the contracted Zorba. ( Id. ) In addition to the outstanding balance due, Century M claims it continues to be damaged because it lost at least $100, 000 by way of interest and market price fluctuation. ( Id. ¶ 16.)

On April 4, 2011, Chhabra, president of MWI, delivered to Century M a letter with the subject line, "Balance Due on M Worldwide Inc." (Substitute Ex. B, ECF No. 64.) In the letter, Chhabra confirmed that $600, 000 was the outstanding balance due to Century M on the date of the letter. Further, the letter stated:

We undertake to pay this amount as, $250, 000 by 15th April, 2011, $250, 000 by 15th May 2011 and $100, 000 by 30th May, 2011. It is further agreed that [Century Metal] has lost $100, 000 by way of interest and market price difference due to non performance of contracts by us. It is agreed that we will further pay $50, 000 by 30th June 2011 as compensation to [Century Metal] in full and final settlement.
In case we default in any of the payments, then [Century Metal] shall be entitled to receive full compensation of $100, 000$ 600, 000 priciple [ sic ]詻庭 @ 15% pa compunded [ sic ] montthly [ sic ] from 1st April 2011 to the date of payment.

( Id. ) Century M alleges this letter was signed by Chhabra in the presence of Century Metal's representative, Rajiv Kaushal, who was at all relevant times in the complaint located in Connecticut. (Am. Compl. ¶¶ 12, 13, 18.)

On April 8, Connecticut counsel for Century M responded with a letter:

Please be advised that my client accepts the terms of your offer, as relayed in that correspondence [referring to the letter of April 4, 2011], to pay the outstanding balance due. Notwithstanding, my clients reiterate that such acceptance does not constitute any waiver, express or implied, of any of its [ sic ] rights to collect the full balance due, in addition to interest and costs, in the event of any default in your obligations or failure to make payments when due, without further notice. To the extent that any such default occurs, my client will fully exercise all available legal rights, including with respect ...

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