Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-00414/USCOURTS-azd-2_09-cv-00414-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

The Armored Group, LLC, a Nevada

Limited Liability Company, 

Plaintiff, 

vs.

Supreme Corporation, a Texas

corporation; and Supreme Corporation of

Texas, a Texas corporation, 

Defendants. 

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No. CV 09-414-PHX-NVW

ORDER

Defendant Supreme Corporation and Supreme Corporation of Texas move to

dismiss Plaintiff The Armored Group, LLC’s (“Armored Group”) First Amended

Complaint under Fed. R. Civ. P. 12(b)(2), 12(b)(3), 12(b)(6), and 9(b). (Doc. #37.) In

the alternative, they move to transfer the case to a more convenient forum under 28

U.S.C. § 1404(a). 

I. Background

Armored Group markets and sells armored trucks, armored SUVs, armored vans,

cash in transit vehicles, mobile check cashing and mobile ATM vehicles. At all times

relevant to the allegations in the amended complaint, it was headquartered and had its

principal place of business in Phoenix, Arizona. Armored Group alleges that from 2004

to 2006 it contracted with Robert Wilson, President of Supreme Corporation, to be the

exclusive sales representative for all armored vehicle products sold by it or its sister

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company, Supreme Corporation of Texas. During the life of that written contract,

Armored Group frequently communicated with both Supreme Corporation and Supreme

Corporation of Texas from its Phoenix office. Armored Group alleges that upon

expiration of the written agreement it entered into an oral agreement with both companies

to continue performing their sales and marketing on a nonexclusive basis. Defendants

orally agreed to pay Armored group a 10% commission on (1) the gross sales price of all

armored vehicles sales brought to Defendants, and (2) the gross sales price of all armored

vehicle products sold to customers under any vendor contract that resulted from Armored

Group’s past and future work efforts. Robert Wilson and James Bandy, Vice President of

Supreme Corporation of Texas, agreed to these terms in telephone conversations with

Armored Group’s CEO, Robert Pazderka, on or about December 31, 2006. 

Thereafter, Armored Group alleges that it continued to maintain office space and

business cards at Supreme Corporation of Texas’s facility and that Defendants in fact

payed the agreed upon 10% commissions on new sales. Armored Group also continued

working to secure a lucrative vendor contract with the U.S. State Department for

Defendants, which it had begun pursuing while the original written agreement was in

effect. On or about June 2007, Defendants learned that they were going to be awarded

the vendor contract. Before the contract was officially awarded, Robert Wilson allegedly

terminated the oral agreement with Armored Group to avoid paying it commissions for

securing the vendor contract. Supreme Corporation of Texas has since sold at least

$500,000 worth of armored vehicle products under the vendor contract. Armored Group

alleges that Defendants never intended to pay the agreed upon commission for the vendor

contract, but orally agreed to do so to induce Armored Group to continue working to

close the deal. Additionally, the amended complaint alleges that, in an effort to damage

Armored Group, Defendants have contacted at least one of Armored Group’s customers

and induced it to terminate a purchase order. Based upon all of these allegations, the

amended complaint asserts that Defendants breached the oral agreement, committed

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fraud, have been unjustly enriched, and have tortiously interfered with Armored Group’s

business relationships.

II. Personal Jurisdiction and Venue

The Court dismissed Armored Group’s original complaint because it had not

clearly alleged, much less provided any evidence, that an agent of the Defendants

participated in the alleged oral agreement. It therefore could not rely on that agreement to

establish specific jurisdiction over Defendants. “A court may exercise specific

jurisdiction where the suit ‘arises out of’ or is related to the defendant’s contacts with the

forum and the defendant ‘purposefully avails itself of the privilege of conducting

activities within the forum state, thus invoking the benefits and protections of its laws.’”

Tuazon v. R.J. Reynolds Tobacco Co., 433 F.3d 1163, 1169 (9th Cir. 2006) (quoting

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). Only Supreme Corporation

of Texas now asserts that the Court lacks personal jurisdiction. 

The amended complaint corrects all of the deficiencies noted in the Court’s

previous order. It clearly alleges that James Bandy entered into the oral agreement on

behalf of Supreme Corporation of Texas in telephone conversations with Armored

Group’s CEO, Robert Pazderka, on or about December 31, 2006. Furthermore, the

amended complaint alleges that Armored Group served as the exclusive sales

representative for Supreme Corporation of Texas from 2004 to 2006. Armored Group

was headquartered and maintained its principle place of business in Phoenix, Arizona at

all relevant times and frequently communicated with Supreme Corporation of Texas from

that location. Supreme Corporation of Texas therefore knew that it was affiliating with a

business operating out of Arizona and that its agreement would create continuing contacts

with Arizona that could result in being haled into court here. The allegations in the

amended complaint arise out of or are related to Armored Group’s performance of sales

activities pursuant to its contractual relationship with Supreme Corporation of Texas. 

Consequently, this Court has specific jurisdiction over Supreme Corporation of Texas. 

See, e.g., Burger King, 471 U.S. at 473 (“[P]arties who reach out beyond one state and

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create continuing relationships and obligations with citizens of another state are subject to

regulation and sanctions in the other State for the consequences of their activities.”).

Defendants reply that Armored Group has not supplied prima facie evidence in

support of the existence of personal jurisdiction over Supreme Corporation of Texas. In

context of a motion to dismiss for lack of personal jurisdiction, “[a]lthough the plaintiff

cannot ‘simply rest on the bare allegations of its complaint,’ uncontroverted allegations in

the complaint must be taken as true.” Menken v. Emm, 503 F.3d 1050, 1056 (9th Cir.

2007) (citations omitted). Defendants did not specifically controvert the aforementioned

factual allegations, so Armored Group had no obligation to supply extrinsic evidence to

bolster its complaint. Apparently “in for a penny, in for a pound,” Defendants also stretch

their prima facie evidence argument to their motion to dismiss. The standard on such a

motion should be familiar; the Court must accept all well-pleaded facts as true and may

only dismiss the complaint if the complaint does not allege facts sufficient “to raise a

right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007). Prima facie evidence of liability is not required at the pleadings stage. 

Defendants also assert that venue is not proper in Arizona because the written

agreement that governed the parties’ business relationship from 2004 to 2006 specified

that Indiana would be the forum for all legal disputes. However, Armored Group has not

sued for breach of the written agreement. It has sued for breach of the oral agreement that

the parties concluded after the terms of the written agreement expired. Defendants have

provided no evidence that the oral agreement specified the forum for any future legal

disputes. According to the uncontradicted allegations of the amended complaint, no

forum selection clause applies to this dispute. 

Defendants also move to transfer venue under 28 U.S.C. § 1404(a), which provides

that “[f]or the convenience of parties and witnesses, in the interest of justice, a district

court may transfer any civil action to any other district or division where it might have

been brought.” “The defendant must make a strong showing of inconvenience to warrant

upsetting the plaintiff’s choice of forum.” Decker Coal Co. v. Commonwealth Edison

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Co., 805 F.2d 834, 843 (9th Cir. 1986). “As part of this inquiry, the court should consider

private and public interest factors affecting the convenience of the forum.” Id. (detailing

the private and public interest factors to be considered). 

Regarding private factors, Defendants’ motion simply points out that it would be

more convenient to litigate where their employees and files are located, in either Indiana

or Texas. Alternatively, they suggest that Washington, D.C., would be more convenient

because State Department witnesses may be necessary. Defendants provide only vague

generalizations about the witnesses that will be required, which is insufficient to meet

their burden on this issue. See, e.g., Amini Innovation Corp. v. JS Imps., Inc., 497 F.

Supp. 2d 1093, 1111 (C.D. Cal. 2007) (“The movant is obligated to clearly specify the

key witnesses to be called and make at least a generalized statement of what their

testimony would have included.”); 15 C. Wright, A. Miller & E. Cooper, Federal

Practice and Procedure § 3581, at 227–28 (3d. ed. 2007) (“If the moving party merely

has made a general allegation that necessary witnesses are located in the transferee forum

. . . the application for transferring the case should be denied.”). Moreover, even if venue

was transferred to one of the states that Defendants propose, witnesses and documents

from the other states, including Arizona, would then be inconvenienced. The location of

witnesses and documents therefore does not weigh in favor of transfer. 

Defendants note only one public factor favoring transfer; namely, that Supreme

Corporation has filed suit against Armored Group in Indiana alleging breach of the

written agreement. They therefore argue that this case should be transferred to Indiana in

the interests of judicial economy. The Indiana suit involves a different dispute. 

Moreover, even if it addressed the same claim, Supreme Corporation filed the Indiana suit

only after Armored Group had filed suit in Maricopa County Superior Court. Under the

first-to-file rule, this Court has priority. See Cedars-Sinai Medical Ctr. v. Shalala, 125

F.3d 765, 769 (9th Cir. 1997) (“[W]hen cases involving the same parties and issues have

been filed in two different districts, the second district court has discretion to transfer,

stay, or dismiss the second case in the interest of efficiency and judicial economy.”). 

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Defendants have provided no reason that the first-to-file rule should be disregarded in this

case. See Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d 622, 625 (9th Cir. 1991)

(“The circumstances under which an exception to the first-to-file rule typically will be

made include bad faith . . . anticipatory suit, and forum shopping.” (citations omitted)).

In light of the factors outlined in Decker, neither the convenience of the parties and

witnesses nor the interests of justice require transfer of this case to Washington, D.C.,

Indiana, or Texas. 

III. Motion to Dismiss Claims 

A. Breach of Contract

Defendants move to dismiss Armored Group’s breach of contract claim for failure

to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). They assert

that the amended complaint does not specify the circumstances surrounding the formation

of the alleged oral agreement in enough detail. They also assert that the amended

complaint does not allege that each individual defendant was a party to the oral

agreement. “[T]o state a claim in contract, the complaint must disclose an agreement, a

right thereunder in the party seeking relief and a breach by the defendant.” City of

Tucson v. Super. Ct., 116 Ariz 322, 324, 569 P.2d 264, 266 (Ct. App. 1977). The facts

outlined above amply meet this standard. Defendants provide no legal authority that

more detail is needed to successfully plead this breach of contract claim. They also

completely ignore the amended complaint’s specific allegation that officers of both

Defendants were parties to the oral agreement. Defendants’ legally unsupported and

factually disingenuous arguments merit little attention. 

B. Fraud

Regarding Armored Group’s fraud claim, the amended complaint plainly states

“the time, place and specific content of the false representations as well as the identities

of the parties to the misrepresentation.” Misc. Serv. Workers, Drivers, & Helpers v.

Philco-Ford Corp., 661 F.2d 776, 782 (9th Cir. 1981). Defendants arguments to the

contrary strain credulity. For example, Defendants argue that the amended complaint

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does “not assert that Mr. Wilson fraudulently misrepresented any fact in . . . entering the

alleged oral contract.” (Doc. # 37 at 10). Paragraphs 62 and 63 of the amended

complaint allege that at the time Mr. Wilson (and Mr. Bandy) orally agreed to pay a 10%

commission on any vendor contract secured by Armored Group, he had no intention of

actually doing so. (Doc. # 27.) Even more boldly, Defendants assert that the amended

complaint “also fails to plead that Plaintiff relied on any misrepresentation of fact, that

any such reliance was reasonable, and that Plaintiff was damaged in material respect.” 

(Doc. # 37 at 10.) To quote the amended complaint, “Armored Group reasonably relied 

on Defendants’ false representations,” (doc. # 27 ¶ 65); “Defendants made each

misrepresentation . . . with knowledge that the misrepresentations and omissions were

false, with the intent that Armored Group would rely on such misrepresentations and

omissions,” (id. ¶ 66); “Armored Group was unaware of the falsity of Defendants’

representations and/or omissions,” (id. ¶ 67); and “As a result of Armored Group’s

reliance upon the misrepresentations and omissions alleged herein, Armored Group has

been damaged by the loss of its anticipated commissions . . . ,” (id. ¶ 68). Defendants’

apparent ignorance of the allegations in the amended complaint is sincerely troubling.

C. Tortious Interference With Contract

 To state a claim for tortious interference with contract, a plaintiff must show 1) the

existence of a valid contractual relationship or business expectancy; 2) the interferer’s

knowledge of the relationship of expectancy; 3) intentional and improper interference

inducing or causing a breach or termination of the relationship or expectancy; and 4)

resulting damage to the party whose relationship or expectancy has been disrupted. 

Miller v. Hehlen, 209 Ariz. 462, 471, 104 P.3d 193, 202 (App. 2005). The amended

complaint alleges that Defendants solicited one of Armored Group’s customers, the

Livonia Police Department, to cancel a purchase order and instead purchase directly from

Defendants. 

Defendants argue that the amended complaint fails to identify the specific

employee at Supreme Corporation or Supreme of Texas who solicited Armored Group’s

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customer. They cite this Court’s previous order dismissing the original complaint to

support their assertion that Armored Group must identify the specific employee in

question. The statement that Defendants quote was made in context of their motion to

dismiss for lack of personal jurisdiction; it did not address the level of specificity needed

to state a claim for tortious interference. Defendants cite no legal authority indicating that

a heightened pleading standard, such as that applicable to claims of fraud, should apply to

tortious interference claims. It is enough for Armored Group to allege that an employee

or employees of Supreme Corporation or Supreme Corporation of Texas induced

cancellation of the purchase order, even if the identity of the employee or employees is

not yet certain. 

Defendants also contend that the amended complaint alleges nothing more than

lawful competition. “[T]here is ordinarily no liability [for tortious interference] absent a

showing that defendant’s actions were improper as to motive or means.” Wagenseller v.

Scottsdale Memorial Hosp., 147 Ariz. 370, 387, 710 P.2d 1025, 1042 (1985), superseded

by statute in other respects, A.R.S. § 23-1501. According to the Restatement, often cited

by Arizona courts on this subject, see, e.g., id. at 387–88, “[t]he fact that one is a

competitor of another for the business of a third person does not prevent his causing a

breach of an existing contract with the other from being an improper interference if the

contract is not terminable at will,” Restatement (Second) of Torts § 768 (1979). 

Furthermore, one of the factors to consider when determining whether interference was

improper is “the interests of the other with which the actor’s conduct interferes.” § 767. 

The comments provide as follows,

Usually the actor's interest will be economic, seeking to acquire business for

himself. An interest of this type is important and will normally prevail over a

similar interest of the other if the actor does not use wrongful means. (See §

768). If the interest of the other has been already consolidated into the binding

legal obligation of a contract, however, that interest will normally outweigh the

actor's own interest in taking that established right from him.

§ 767 cmt. d; see also cmt. c (“[I]nterference would be improper if it involved persuading

the third party to commit a breach of an existing contract . . . due in part to the greater

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definiteness of the other's expectancy and . . . the lesser social utility of the actor’s

conduct.”). 

The amended complaint does not allege whether the Livonia Police Department’s

purchase order was legally binding or could be canceled. Counsel for Armored Group

stated at oral argument that, in fact, the Livonia Police Department could terminate the

purchase order at its discretion. Since the purchase order was terminable at will, the

solicitation itself evidences nothing more than lawful competition. The solicitation was

unlawful only if it was improper “as to motive or means.” Wagenseller, 147 Ariz. at 387,

710 P.2d at 1042. Nothing in the amended complaint indicates that an improper motive

existed or improper means were used. Although Armored Group alleges that Defendants

acquired its customer and pricing information by virtue of their business relationship, it

does not allege that Armored Group kept its customer or pricing information confidential

from Defendants, or that Defendants somehow improperly accessed that information. 

Armored Group cites no authority that competing for customers using information freely

made available by a business associate constitutes an improper means of competition. 

The amended complaint also fails to allege that the interference actually caused the

breach or termination of any contract. It alleges only that Defendants solicited the

Livonia Police Department to cancel a purchase order. (Doc. # 27 ¶¶ 75–77.) It never

alleges that the Livonia Police Department actually did cancel the purchase order.

Counsel for Armored Group demonstrated at oral argument that it can allege

additional facts to remedy the deficiencies in its tortious interference claim. Leave to

amend will therefore be granted.

IT IS THEREFORE ORDERED that Defendants’ motion to dismiss (doc. # 37) is

granted with respect to Count Four of the First Amended Complaint and is denied in all

other respects.

IT IS FURTHER ORDERED that Plaintiff is granted leave to amend its complaint

at to Count Four by August 21, 2009.

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IT IS FURTHER ORDERED that Defendants’ motion to transfer venue (doc. #

37) is denied.

DATED this 17th day of August, 2009.

 

 

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