NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

GLOBAL FRESH PRODUCE, INC.,

ETAL.,

CECCHI, District Judge.

This matter comes before the Court on the motion

(“Epicure”) and J.B. Laverdure, Inc. (“Laverdure”)

(“Complaint”). The Court has considered the submissions

to the instant motion. No oral argument was heard. Fed.

that follow, Defendants’ motion to dismiss is granted and

Plaintiffs’ Complaint is dismissed without prejudice. To the extent that Plaintiffs can

amend their Complaint in accordance with this decision, Plaintiffs are granted fourteen (14) days

in which to file an Amended Complaint which cures the pleading deficiencies discussed below.

I. FACTS AND PROCEDURAL HISTORY

Plaintiff Global Fresh Produce, Inc. (“Global”), Plaintiff Al Finer Co., Inc. (“Finer”)

(collectively, “Plaintiffs”), and Defendant Epicure are corporations engaged in the interstate

produce business and hold licenses under the Perishable Agricultural Commodities Act, 7 U.S.C.

§ 499 (“PACA”). (Compl. ¶J 3, 4,5.) Laverdure is a Canadian corporation dealing in the

Plaintiffs, Civil Action No, 11-01270 (CCC)

V.

OPINION

EPICURE TRADING, INC., ET AL.,

Defendants.

of Defendants Epicure Trading, Inc.

to dismiss Plaintiffs’ Complaint

made in support of and in opposition

R. Civ. P. 78. Based on the reasons

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wholesale importing and distributing of fresh fruits and vegetables. (Compi. ¶ 6.) According to

the Complaint, Laverdure also manages and oversees Epicure. (Compi. ¶ 6.)

From September 2009 to May 2010, Plaintiffs received and resold shipments of fruit,

which had been imported into New Jersey by Defendants. (Compl. ¶ 8.) Plaintiffs claim that the

shipments were placed with them on “open price, Price-After-Sale (‘PAS’) terms,” (Id.) After

receiving the fruit from Defendants, Plaintiffs would sell it on the wholesale market, obtaining

the best available prices. (Compi. ¶ 9.) Upon selling the lots and obtaining the final sales prices,

Plaintiffs reported the sales and settled the final price to be paid with an Epicure salesman.

(Compl. ¶ 10.) In October 2010, Epicure’s counsel sent a letter to each Plaintiff seeking USDA

inspection certificates justifying a price reduction and seeking additional payments of more than

$90,000 from Global and more than $40,000 from Finer should the documents not be provided. 1

(Compl. ¶ 12; Mandell Declaration, Aug. 22, 2011, ECF No. 25, Ex. A.) Epicure sent follow-up

letters to Plaintiffs in January 2011, again requesting additional sums. (Mandell Deci,, Aug. 22,

2011, ECF No. 25, Ex. B.) In its follow-up letter addressed to Global, Epicure offered to settle

the matter for $50,000. (Id.) According to Plaintiffs, Defendants argue that the underlying

transactions were fixed-price sales and that the original sales prices were only adjusted

temporarily. (Compl. ¶ 14.) Furthermore, Plaintiffs claim that Defendants have threatened

litigation if Global and Finer do not pay the additional sums. (Id.) Plaintiffs contend, however,

that they performed all of their duties, finalized the sales prices with Epicure’s salesman, and

properly paid Epicure for each lot. (Compl. ¶ 13.)

1 Plaintiffs submitted these letters with their opposition to Defendants’ motion to dismiss. The

letters do not convert this motion to dismiss to a motion for summary judgment pursuant to Rule

56, even though the Court has considered them in its decision. See Oshiver v. Levin, Fishbein,

Sedran & Berman, 38 F.3d 1380, 1394 n. 2 (3d Cir. 1984) (in addition to reviewing the

pleadings, courts “may also consider matters of public record, orders, exhibits attached to the

complaint and items appearing in the record ofthe case” when deciding a motion to dismiss).

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Defendants argue that there is no ongoing relationship between Plaintiffs and Epicure;

that Plaintiffs have not sustained any damages related to their prior contractual relationship; that

they have not pursued any formal action related to their “demands” for additional payments; and

that Laverdure was not a party to the contractual “agreements” between Plaintiffs and Epicure.

(DeE Br. 3, ECF No, 23)

On March 7, 2011, Plaintiffs filed a declaratory judgment action against Defendants in

this Court pursuant to 28 U.S.C. § 2201. (Compi. ¶{ 1, 19.) Plaintiffs seek an order from this

Court declaring that “all sums due Defendants for the subject commodities have been paid in

full, and that Defendants have no cause of action against Plaintiffs. . . for any additional funds.”

(Compi. ¶ 19.) On August 5, 2011, Defendants Epicure and Laverdure filed a Motion to Dismiss

Plaintiffs’ Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6).

IL STANDARD OF REVIEW

For a complaint to survive dismissal pursuant to Federal Rule of Civil Procedure

12(b)(6), it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that

is plausible on its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell At!. Corp.

v. Twombly, 550 U.S. 544, 570 (2007)). In evaluating the sufficiency of a complaint, the Court

must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable

inferences in favor of the non-moving party. See Phillips v. County ofAllegheny, 515 F.3d 224,

234 (3d Cir. 2008). “Factual allegations must be enough to raise a right to relief above the

speculative level.” Twombly, 550 U.S. at 555. Furthermore, “[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,129 S. Ct. at 1949.

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The burden of proof for showing that no claim has been stated is on the moving party.

Hedges v. US., 404 F.3d 744. 750 (3d Cir. 2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc.,

926 F.2d 1406, 1409 (3d Cir. 1991)). During a court’s threshold review, “[t]he issue is not

whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to

support the claims.” In re Rockefeller Ctr. Props., Inc., 311 F.3d 198, 215 (3d Cir. 2002). In

general, the Federal Rules of Civil Procedure should be construed liberally so as to encourage

ruling on the merits instead of technicalities: “This liberality is expressed throughout the Federal

Rules of Civil Procedure and is enshrined in a long and distinguished history . . . . An

inadvertant mistake in pleading will not be held against the pleader if another party has not been

misled by the mistake or otherwise prejudiced.” Lundy v. Adamar ofNew Jersey, 34 F.3d 1173,

1186 (3d Cir. 1994). Further, courts will not dismiss for failure to state a claim merely because

the complaint miscategorizes legal theories or does not point to an appropriate statute or law to

raise a claim for relief. See Lujan v. National Wildlife Fed’n, 497 U.S. 871, 909 n. 10 (1990).

III. DISCUSSION

Defendants have filed a motion to dismiss Plaintiffs’ Complaint, pursuant to Federal Rule

of Civil Procedure 1 2(b)(6). Defendants first argue that Plaintiffs have failed to demonstrate a

“justiciable case or controversy” in support of their claim for declaratory relief. (Def. Br. 4.)

Second, Defendants argue that Plaintiffs have failed to state a claim against Laverdure in

particular because it was not a party to the underlying contracts between Plaintiff and Epicure.

(Def. Br. 12,) The Court will address each ofthese arguments in turn.

A. Declaratory Judgment

In Count I, Plaintiffs seek a declaration from the Court that they do not owe Defendants

any additional sums of money. (Compl. ¶ 19.) “The Declaratory Judgment Act, 28 U.S.C. §

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2201 and 2202, . * . provides that a court ‘may declare the rights. . . of any interested party,’ and

contemplates that district courts will exercise discretion in determining whether to entertain such

actions.” State Auto Ins. Companies v, Summy, 234 F.3d 131, 133 (3d Cir, 2000) (internal

citations omitted). The Act has been characterized as “an enabling Act, which confers a

discretion on the courts rather than an absolute right upon the litigant.” Wilton v, Seven Falls

Co., 515 U.S. 277, 287 (1995) (internal quotations omitted).

A district court may render a declaratory judgment only when an “actual controversy”

exists. Aetna Lifi Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937). The “actual controversy”

requirement under the Declaratory Judgment Act corresponds with the “case or controversy”

requirement of Article III of the United States Constitution. Id. A “controversy” “must be

definite and concrete, touching the legal relations of parties having adverse legal interests.” Id.

at 240—41. In determining whether a case satisfies the case-or-controversy requirement, courts

consider “whether the facts alleged, under all the circumstances, show that there is a substantial

controversy, between parties having adverse legal interests, of sufficient immediacy and reality

to warrant the issuance of a declaratory judgment.” Medlmmune, Inc. v. Genentech, Inc., 549

U.S. 118, 127, (2007) (internal quotation omitted)(emphasis added).

“[T]he Supreme Court has emphasized that a fear offuture harm that is only subjective is

not an injury or threat of injury caused by the [d]efendant that can be the basis of an Article III

case or controversy.” Prasco, 537 F,3d at 1338—39 (citing Los Angeles v. Lyons, 461 U.S. 95

(1983)); see also Indium Corp. ofAm. v. Semi—Alloys, Inc., 781 F.2d 879, 883 (Fed, Cir, 1985)

(“A purely subjective apprehension of an infringement suit is insufficient to satisfy the actual

controversy requirement,”). Instead, “it is the reality of the threat of. . . injury that is relevant to

the standing inquiry, not the [p]laintiff’s subjective apprehensions.” Id. (citing Lyons, 461 U.S.

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at 107 n. 8; Laird v. Tatum, 408 U.S. 1. 13—14 (1972)). “In making its determination as to

whether declaratory relief should be granted, the court “must ask whether the requested

declaratory judgment will (1) clarify and settle legal relations in issue and (2) terminate and

afford greater relief from the uncertainty, insecurity, and controversy giving rise to the present

action.” Delaware State University Student Housing Foundation v. Ambling Management Co.,

556 F. Supp. 2d 367, 373 (D. Del, 2008).

Here, Plaintiffs allege that Defendants have demanded additional payments pursuant to

a contract between Plaintiffs and Epicure, which has been terminated. (Compi. ¶ 8; Def. Br. 6.)

In support ofthis allegation, Plaintiffs provided several letters to the Court in which Defendants’

counsel sought USDA inspection certificates in order to justify Plaintiffs’ request for a price

reduction and Defendants sought $96,011.24 from Global Fresh and $48,300.98 from Finer if

Plaintiffs did not provide those documents. (Mandel Decl., ECF Doe. No. 10, Ex. A.) In the

letter to Global Fresh, Defendants’ counsel offered to settle for $50,000, “with a view of

obviating costly legal proceedings.” (Letter from Gordon Zelman, Jan. 28, 2011, Mandel Deci.,

ECF Doe. No. 10, Ex. B.) Plaintiffs claim that these letters are evidence that Defendants are

threatening imminent litigation and therefore, there is an actual controversy at issue. (Plaintiff’s

Brief 6, ECF Doc. No. 26.)

Defendants argue that an “actual controversy” does not exist because Plaintiffs have not

sustained any damages related to their contractual relationship. (Def. Br. 3-4, 5, 6-1 1.) They

further claim that they have not instituted any action or proceeding against Plaintiffs for the

additional sums, nor have they threatened litigation. (Def. Br. 3, 5.) Defendants also assert that

Plaintiffs’ claims relate to a prior contractual relationship, which has since been terminated.

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(Def. Br. 5.) As such, declaratory relief would not affect their current or future behavior and

therefore, it should not be granted. (Def Br. 7-8.)

In support of their argument, Defendants cite to Delaware State University Student

Housing Foundation v. Ambling Management Co., 556 F. Supp. 2d 367 (D. Del. 2008). In that

case, plaintiff sought a declaration from the court stating that plaintiff properly terminated its

contract with defendant. Delaware State, 556 F, Supp. 2d at 372. The court declined to grant

declaratory relief because “there [was] no present behavior . . . to affect as [the] contracts

ha[d] been terminated.” Id. at 375. The court found that ultimately, plaintiff’s question would

be answered with the resolution of its breach of contract claim. Id. The court in Delaware State

stated that “although . . . declaratory judgment may be sought in order for the court the interpret

a written contract,” courts will not grant a declaratory judgment unless the parties have an

ongoing “contractual relationship[] in which declaratory relief could affect the then-present

behavior of the contracting parties.” Id. at 374. Here, Epicure’s contracts with Plaintiffs have

been terminated. As such, the parties do not have an ongoing relationship and declaratory relief

will not affect the Defendants’ present behavior. See id. at 375.

Plaintiffs also contend that Defendants have threatened imminent litigation in their letters

requesting additional payment. Declaratory relief is warranted in cases where litigation is

“imminent and ‘inevitable.” See lOB C. Wright, A. Miller, & M. Kane, Federal Practice &

Procedure § 2751 (3d ed. 2010). However, the threat of litigation must be more than

speculative. See Japan Gas Lighter Ass’n v. Ronson Corp., 257 F. Supp. 219 (D.N.J. 1966)

(“{T]he plaintiff’s fearful conjecture that at some future time the defendant may initiate . .

proceedings will not support the suit.”). Here, the court finds that litigation is not “imminent and

inevitable.” The letters sent by Defendants sought payment to the extent documentation

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justifying a price adjustment, USDA inspection certificates, was not provided. While

Defendants offered to settle in order to “obviat[e] costly legal proceedings,” this language does

not rise to the level of “imminent” litigation. Therefore, Defendants’ motion to dismiss is

granted. To the extent that Plaintiffs can amend their Complaint in accordance with this

Opinion, they are granted fourteen (14) days in which to file an amended Complaint which cures

the pleading deficiencies.

B. Claims against J.B. Laverdure, Inc.

Defendants’ second argument in support of its motion to dismiss is that Plaintiffs have

not made any valid claims against Laverdure, in particular. (Def. Br. 12.) Plaintiffs claim that

Laverdure oversaw, controlled, and managed Epicure, so that “any difference or separation

between them was a fiction.” (Compi. ¶ 7.) Defendants claim, however, that Laverdure was not

a party to the contract between Epicure and Global and therefore, it is not liable for Epicure’s

contractual obligations. (Def. Br. 12.) Furthermore, Defendants argue that even if Laverdure

were liable for Epicure’s contractual obligations, Plaintiffs have not made any breach of contract

claims against Epicure, nor have they asserted that they sustained any damages. (Id. at 12-13.)

While it is not entirely clear, Plaintiffs appear to characterize the allegations against

Laverdure as being sufficient to pierce its corporate veil. A plaintiff may state a claim for

piercing the corporate veil by establishing that: “(1) one corporation is organized and operated as

to make it a mere instrumentality of another corporation, and (2) the dominant corporation is

using the subservient corporation to perpetrate fraud, to accomplish injustice, or to circumvent

the law.” Rd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 171-

72 (3d Cir. 2002) (citing Craig v. Lake Asbestos of Quebec, Ltd., 843 F.2d 145, 149 (3d Cir.

1988)); see also Pearson v. (‘omponent Tech. Corp., 247 F.3d 471, 484 (3d Cir.2001) (piercing

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the veil is appropriate “when the court must prevent fraud, illegality, or injustice, or when

recognition of the corporate entity would defeat public policy or shield someone from liability

for a crime ... or when the parent so dominated the subsidiary that it had no separate existence.”)

(internal quotation marks omitted)).

In order to pierce the corporate veil, a plaintiff must allege that the parent “completely

dominate[sj the finances, policy, and business practice with respect to the subject transaction” to

such a degree that the subsidiary has “no separate mind, will, or existence of its own.” Craig,

843 F.2d at 150. The relevant factors include:

Gross undercapitalization . . . failure to observe corporate formalities, non

payment of dividends, the insolvency of the debtor corporation at the time,

siphoning of the funds of the corporation by the dominant stockholder, nonfunctioning of other officers or directors, absence of corporate records, and the

fact that the corporation is merely a façade for the operations of the dominant

stockholder or stockholders.

Id. (quoting American Bell, Inc. v. Fed’n of Tel. Workers, 736 F.2d 879, 886 (3d Cir. 1984));

Foodtown, 296 F.3d at 172. It is well-established that “mere ownership of a subsidiary does not

justify the imposition of liability on the parent.” See Pearson, 247 F.3d at 484; Marzano v.

Computer Sci. Corp., 91 F.3d 497, 513 (3d Cir. 1996) (citing New Jersey Dep ‘t ofEnvtl. Prot. v.

Ventron Corp., 94 N.J. 473, 468 (1983)); see also Craig, 843 F.2d at 150 (a plaintiff must allege

control by a parent over a subsidiary which is more than a “mere majority or complete stock

control”).

For instance, in Rd. of Trs, of Teamsters Local 863 Pension Fund v. Foodtown, Inc., the

complaint alleged that a corporation and its alleged alter ego: “failed to maintain formal barriers

between the management structures;” “commingled funds and other assets;” “failed to observe

other corporate formalities;” “shared twelve of thirteen common directors;” shared the same

shareholders, the same principal office, and registered office; and were structured such that the

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Board of Directors of one corporation “was dominated and controlled” by the alter ego’s Board.

Bd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 172 (3d Cir.

2002) (internal citations omitted). The Third Circuit found these allegations sufficient to meet

the first prong of the veil-piercing test.

Plaintiffs allege that their claims against Laverdure are based on the following facts: (1)

both companies list the same principal officer, Jean-Francois Laverdure; (2) the salesperson

whom they dealt with, Eric Lacasse, was an employee of Laverdure; and (3) while Epicure was a

California corporation and had a mailing address in Florida, it also operated out of one of

Laverdure’s offices in Canada. (Mandell Dccl., ECF Document No. 10, ¶ 4.)

The Court finds that the Complaint does not contain allegations sufficient to suggest that

Laverdure “completely dominated” Epicure or used Epicure to perpetrate a fraud or to avoid

liability. According to the invoice provided by Plaintiffs, Plaintiffs only had a contract with

Defendant Epicure and Epicure lists an address in Philadelphia. (Mandel Dccl., ECF Document

No. 25, Ex. D.) Furthermore, all letters from Defendant Epicure’s counsel refer only to Epicure.

(See Mandel Dccl., ECF Doc. No, 10, Exs. A, B.) Even if Laverdure has the same principal

officer as Epicure and used the same salesperson, Plaintiff has not alleged that Laverdure failed

to maintain appropriate boundaries between Epicure and Laverdure. Therefore, the Court finds

that Plaintiff cannot pierce the corporate veil under this set of facts.

While it is again unclear, Plaintiff’s claims may also be construed as claiming that

Laverdure is liable for Epicure’s actions because Epicure was acting as Laverdure’s agent.

Under an agency theory, “the issue of liability rests on the amount of control the parent

corporation exercises over the actions of the subsidiary. The parent corporation will be held

liable for the activities of the subsidiary only if the parent dominates those activities.” Phoenix

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Canada Oil Co. v. Texaco, Inc., 658 F. Supp. 1061, 1084 (D. Del. 1987); Heniy v. St. Croix

Alumina, LLC, No. 1999-0036, 2007 WL 6030275, at *9 (D. Vi. Aug. 10, 2007).

Even ifthis Court were to construe the allegation that Laverdure oversaw, controlled, and

managed Epicure, so that “any difference or separation between them was a fiction” as

establishing an agency theory, the claim fails, (Compl. ¶ 7.) That allegation, and the others

related to Laverdure’s operations, do not set forth “enough facts to raise a reasonable expectation

that discovery will reveal evidence of’ an agency relationship. See Phillips, 515 F.3d at 234.

Because the Complaint fails to set forth an adequate basis for Laverdure’s liability, Laverdure is

dismissed without prejudice. In an effort to cure their pleading deficiencies, Plaintiffs may

replead as to Laverdure within fourteen (14) days.

IV. CONCLUSION

Based on the reasons set forth above, Defendants’ motion to dismiss is granted without

prejudice. Plaintiffs are granted fourteen (14) days in which to file an Amended Complaint

which cures the pleading deficiencies in accordance with this decision. An appropriate Order

accompanies this Opinion.

DATED: March 1 ,2012

7 ,_j

CLAIRE C. CECCHI, U.S.D.J,

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