United States District Court, W.D. Kentucky, Louisville Division
UNITED PARCEL SERVICE CO., et al. PLAINTIFFS
DNJ LOGISTIC GROUP, INC., et al. DEFENDANTS
MEMORANDUM OPINION & ORDER
N. STIVERS, JUDGE
matter is before the Court upon Defendants' Motion to
Dismiss (DN 12), which is ripe for adjudication. For the
reasons discussed below, the motion is GRANTED IN PART and
DENIED IN PART.
action arises out of a billing dispute between Plaintiff
United Parcel Service Co. (“UPS”), Plaintiff UPS
Worldwide Forwarding (“Worldwide Forwarding”),
Defendant DNJ Logistic Group, Inc. (“DNJ”), and
DNJ's CEO, Defendant Ralph Nabavi
(“Nabavi”).Worldwide Forwarding contracted with UPS
to transport Worldwide Forwarding's packages. (Compl.
¶ 19, DN 1). To move certain of those packages across
international routes that it did not fly, in September 14,
2010, UPS entered into a Small Package Cargo Handling
Services Agreement (“the Agreement”) with DNJ, a
provider of freight forwarding services. (Compl. ¶¶
2, 18-19). Among other things, the Agreement obligated DNJ to
“provide personnel and equipment for the movement of
UPS small package cargo . . . .” (Compl. Ex. 1, at 2,
DN 1-2 [hereinafter Agreement]; Compl. ¶ 4). UPS shipped
packages from its Louisville airport hub to its operations at
Miami, Newark, and Dulles airports where it tendered the
packages to DNJ. DNJ then placed the packages into its own
vehicles and delivered them to common carrier airlines for
shipment to certain international destinations. (Compl.
Section 2.2 of the Agreement, UPS was required “to pay
[DNJ] the price set forth in the attachment(s)” to the
Agreement for services performed and to “forward
payments to [DNJ] no later than thirty (30) days after
receipt of a [DNJ] invoice.” (Agreement 5). The parties
executed a number of attachments to the Agreement, which
provided that DNJ would charge a designated “rate per
kilo” for particular routes, also known as
“lanes.” (Agreement 12; Compl. ¶ 6). For
example, the parties agreed to certain rates per kilo for
flights from Miami to Lima, Peru, and different rates per
kilo for flights from Newark to Tel Aviv, Israel. (Agreement
10-11; Compl. ¶ 6).
to Plaintiffs, at Nabavi's direction, DNJ employees sent
weekly invoices to Plaintiffs seeking payment for DNJ's
services. (Compl. ¶ 44). Despite the terms of the
Agreement, Worldwide Forwarding, not UPS, paid these invoices
until June 2016. (Compare Agreement 5, with
Compl. ¶ 49). In June 2016, Plaintiffs determined that
they were being overbilled by DNJ-they contend DNJ was
supposed to multiply the “actual weight” of the
packages tendered to DNJ by the applicable “rate per
kilo” and invoice UPS for the product, but DNJ did not
do so. Instead, DNJ allegedly used “inflated”
package weights to compute the amounts it invoiced
Plaintiffs, which caused Worldwide Forwarding to pay DNJ more
than UPS owed under the Agreement. (Compl. ¶¶
34-35, 45, 69). Upon discovery of this practice, Plaintiffs
confronted DNJ and demanded remuneration. (Compl.
¶¶ 51-52). DNJ balked; it returned packages,
refused to further perform and, ultimately, terminated the
Agreement. (Compl. ¶¶ 52-54).
brought this lawsuit to recover from Defendants for the
alleged overbillings. UPS and Worldwide Forwarding each
assert breach of contract claims against DNJ. Worldwide
Forwarding asserts separate claims against DNJ for negligent
misrepresentation and unjust enrichment, and it asserts a
claim for negligent representation against Nabavi personally,
premised on the notion that he directed DNJ's employees
to send the false invoices. Defendants have moved to dismiss
all claims under Fed.R.Civ.P. 12(b)(6).
Court has jurisdiction over Plaintiffs' claims because
there is diversity of citizenship among the parties and the
amount in controversy exceeds $75, 000, exclusive of interest
and costs. 28 U.S.C. § 1332(a)(1).
STANDARD OF REVIEW
complaint must contain “a short and plain statement of
the claim showing that the pleader is entitled to relief,
” and is subject to dismissal if it “fail[s] to
state a claim upon which relief can be granted.”
Fed.R.Civ.P. 8(a)(2); Fed. R. Civ. P 12(b)(6). When
considering a motion to dismiss, courts must presume all
factual allegations in the complaint to be true and make all
reasonable inferences in favor of the non-moving party.
Total Benefits Planning Agency, Inc. v. Anthem Blue Cross
& Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008)
(citing Great Lakes Steel v. Deggendorf, 716 F.2d
1101, 1105 (6th Cir. 1983)). To survive a motion to dismiss
under Rule 12(b)(6), the plaintiff must allege “enough
facts to state a claim to relief that is plausible on its
face.” Traverse Bay Area Intermediate Sch. Dist. v.
Mich. Dep't of Educ., 615 F.3d 622, 627 (6th Cir.
2010) (internal quotation marks omitted) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A
claim becomes plausible “when the plaintiff pleads
factual content that allows 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) (citing Twombly, 550 U.S. at 556).
Breach of Contract
Kentucky law, Plaintiffs must support their claim for breach
of contract with sufficient facts to establish the existence
of “the contract, the breach, and . . . the loss or
damage by reason of the breach.” Fannin v.
Commercial Credit Corp., 249 S.W.2d 826, 827 (Ky. 1952)
(citations omitted). Plaintiffs allege that the Agreement
required DNJ to bill Plaintiffs for the actual weight of the
packages tendered; that DNJ breached the Agreement by instead
billing Plaintiffs for weights in excess of the actual weight
of the packages tendered, which “artificially increased
the amounts charged to Plaintiffs”; and that
“[a]s a direct consequence of DNJ's breach of the
Agreement, Plaintiffs have been damaged in an amount to be
determined at trial.” (Compl. ¶¶ 64-70).
Defendants take issue with Plaintiffs' claim that the
Agreement required DNJ to bill based upon actual weight, but
that is not the basis of their motion.
first argue that the Court must dismiss UPS's breach of
contract claim because Plaintiffs failed to allege that UPS
suffered damages as a result of DNJ's alleged breach of
the Agreement. At first glance, Defendants' argument has
some appeal, as the Complaint alleges-and Plaintiffs
admit-that Worldwide Forwarding, not UPS, paid DNJ's
invoices. The Complaint, however, also alleges that when
confronted with accusations of overbilling DNJ stopped
performing under the Agreement and returned shipments to UPS
which “resulted in service failures for UPS (i.e.,
missing shipping deadlines for its customers).” (Compl.
¶ 59). Considering this allegation, along with
Plaintiffs' general allegation that they were
“damaged in an amount to be determined at trial[,
]” (Compl. ¶ 70), Plaintiffs have sufficiently
alleged that UPS incurred damages as a result of DNJ's
failure to perform its contractual obligations to UPS.
Defendants point out, Plaintiffs did not specifically allege
what monetary damages UPS incurred as a result of the missed
shipping deadlines. Yet, only special damages need be pleaded
with specificity and, as explained below, those kinds of
damages are not recoverable in this case. See Fed.
R. Civ. P. 8(a), 9(g). Plaintiffs were merely required to
allege “enough facts to state a claim to relief that is
plausible on its face, ” which they have done.
Traverse Bay Area Intermediate Sch. Dist., 615 F.3d
at 627 (6th Cir. 2010) (internal quotation marks omitted)
(quoting Twombly, 550 U.S. at 570). In their
opposition to Defendants' motion to dismiss, Plaintiffs
explain that “UPS  inevitably suffered damages as a
result [of the returned shipments], including the cost of
finding other vendors to tender the packages.” While
the Court cannot look to arguments made in briefs to
determine whether the Complaint states a claim for relief,
see Guzman v. U.S. Dep't of Homeland Sec'y,
679 F.3d 425, 429 (6th Cir. 2012), the Court can (indeed,
must) make reasonable inferences in favor of Plaintiffs.
See Total Benefits Planning Agency, 552 F.3d at 434
(6th Cir. 2008) (citing Great Lakes Steel, 716 F.2d
at 1105). Given that Plaintiffs have alleged that DNJ
returned packages to UPS and UPS was damaged as a result, it
is reasonable to infer that UPS incurred damages in securing
alternative transportation for the packages.
next contend that Section 10.1 of the Agreement negates any
damages that UPS incurred as a result of the returned
packages because those damages would be classified as
consequential or special. Section 10.1 provides, “[i]n
no event shall UPS or [DNJ] be liable for any reason for
special, incidental, or consequential damages, including but
not limited to lost revenue or lost profit, resulting from
performance or failure to perform under this
Agreement.” (Agreement 6).
terms consequential and special damages are not defined in
the Agreement, but Kentucky courts have explained the
difference between those types of damages and so called
“general damages.” Consequential and special damages
are those that “do not naturally or necessarily result
from the breach but are, nevertheless, recoverable if caused
by the breach and are foreseeable.” See Dennis
Anderson Park Lake Apartments, LLC v. Louisville &
Jefferson Cty. Metro. Sewer Dist., No.
2012-CA-000288-MR, 2014 Ky. App. Unpub. LEXIS 822, at *15
(2014) (citing McCracken & McCall v. Bolton, 200
S.W.2d 923 (Ky. 1947)). General damages, which are not
excluded by Section 10.1, are “usually the cost of
remedying the breach or defective performance . . . .”
See Id. (citing State Prop. & Bldgs.
Comm'n v. H.W. Miller Constr. Co., 385 S.W.2d 211
Court disagrees with Defendants' blanket contention that
all of UPS's potential damages are barred by the
Agreement; at this point, it is too early to tell if the
damages alleged by UPS fall under Section 10.1, or if they
fall outside Section 10.1 as general damages. As indicated
above, it is reasonable to infer from allegations in the
Complaint that UPS suffered damages in arranging alternative
transportation for the packages after DNJ refused to deliver
them. Such damages would be merely a cost of remedying
DNJ's alleged breach. Therefore, to the extent the