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Jermax, Inc. v. AK Steel Corp.

June 24, 2010

JERMAX, INC. D/B/A GULF & NORTHERN TRADING CORP., PLAINTIFF,
v.
AK STEEL CORPORATION DEFENDANT.



The opinion of the court was delivered by: Hillman, District Judge

OPINION

Plaintiff, Jermax, Incorporated ("Jermax")*fn1 and defendant, AK Steel Corporation ("AK Steel"), entered into contractual agreements for the sale and purchase of stainless steel products.

After AK Steel ceased its sale of steel to Jermax, however, Jermax filed suit in the Superior Court of New Jersey, alleging breach of contract and breach of the covenant of good faith and fair dealing. The matter was removed to this Court. Meanwhile, AK Steel brought its own case in the Federal District Court for the Southern District of Ohio. Jermax now moves before this Court to enjoin AK Steel's Ohio action. At the same time, AK Steel cross-moves to dismiss Jermax's complaint for failure to state a claim.

For the following reasons expressed, Jermax's Motion to Enjoin the Ohio Action is denied, and AK Steel's Cross-motion to Dismiss is denied.

I. JURISDICTION

This Court exercises subject matter jurisdiction over the underlying claim pursuant to 28 U.S.C. § 1332. There is complete diversity between the parties in the underlying action. Plaintiff, Jermax, is incorporated in the State of New Jersey with its principal place of business in Camden, New Jersey. Defendant, AK Steel, is incorporated in the State of Delaware with its principal place of business in West Chester, Ohio. The amount in controversy may reasonably exceed $75,000.*fn2

II. BACKGROUND

In or around 2006, Jermax, a stainless steel processor and reseller, began to purchase stainless steel products from AK Steel, a producer and wholesaler of stainless steel.*fn3 To effectuate these sales, Jermax would send purchase orders, specifying terms and conditions, to AK Steel, who then would confirm the orders by way of order acknowledgments, enunciating its own terms and conditions. During December 2008 and January 2009, however, Jermax defaulted on its payments to AK Steel. Nevertheless, AK Steel agreed to continue its business dealings with Jermax, but by virtue of Jermax's defaults on previous payments, AK Steel demanded that Jermax pay the purchase prices for stainless steel orders on a "cash in advance" basis.*fn4 Jermax accepted the condition.

In light of this new agreement, Jermax continued to place orders with AK Steel. AK Steel filled a number of these orders, and consistent with its contractual obligations, Jermax paid for the purchases with "cash in advance." However, in 2009, Jermax placed orders with AK Steel for more than 500,000 pounds of stainless steel products. Although AK Steel initially accepted and acknowledged Jermax's offers of purchase, it later refused to fill the orders. Moreover, AK Steel refused to continue to sell its stainless steel products to Jermax altogether.*fn5

On or around July 31, 2009, Jermax filed suit in the Superior Court of New Jersey, alleging breach of contract and breach of the covenant of good faith and fair dealing. Within a month, AK Steel removed Jermax's suit to this Court on the grounds of diversity jurisdiction. Further, AK Steel filed a suit in the Federal District Court for the Southern District of Ohio on or about August 24, 2009, seeking, among other things, $2,980,026.47, the amount allegedly owed by Jermax for the stainless steel products it received. In the complaint, AK Steel set forth causes of action for breach of contract, action on account, action for goods sold, unjust enrichment, and fraudulent transfer.

As a result of AK Steel's suit, Jermax moves this Court to enjoin the Ohio action. Conversely, AK Steel seeks to dismiss Jermax's claims against it.

Presently before this Court are both Jermax's Motion to Enjoin the Ohio Action and AK Steel's Cross-motion to Dismiss.

III. DISCUSSION

A. Standard for Motion to Dismiss

When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. Evancho v. Fisher, 423 F.3d 347, 350 (3d Cir. 2005). It is well settled that a pleading is sufficient if it contains "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Under the liberal federal pleading rules, it is not necessary to plead evidence, and it is not necessary to plead all the facts that serve as a basis for the claim. Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977). However, "[a]lthough the Federal Rules of Civil Procedure do not require a claimant to set forth an intricately detailed description of the asserted basis for relief, they do require that the pleadings give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Baldwin County Welcome Ctr. v. Brown, 466 U.S. 147, 149 n.3 (1984) (citation and internal quotation marks omitted).

A district court, in weighing a motion to dismiss, asks "'not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claim.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563 n.8 (2007) (quoting Scheuer v. Rhoades, 416 U.S. 232, 236 (1974)); see Ashcroft v. Iqbal, 129 S.Ct. 1937, 1953 (2009) ("Our decision in Twombly expounded the pleading standard for 'all civil actions' . . . ." (citation omitted)). Under the Twombly/Iqbal standard, the Third Circuit has instructed a two-part analysis. First, a claim's factual and legal elements should be separated; a "district court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions." Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (citing Iqbal, 129 S.Ct. at 1950).

Second, a district court "must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.'" Id. at 211 (quoting Iqbal, 129 S.Ct. at 1950). "[A] complaint must do more than allege the plaintiff's entitlement to relief." Id.; see Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008)

("The Supreme Court's Twombly formulation of the pleading standard can be summed up thus: 'stating . . . a claim requires a complaint with enough factual matter (taken as true) to suggest' the required element. This 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element." (quoting Twombly, 550 U.S. at 556)). The ...


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