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Little Distributors, Inc. v. RTM Operating Company, LLC

United States District Court, E.D. Kentucky, Central Division, Lexington

October 20, 2017



          Danny C. Reeves United States District Judge

         This case concerns a Travel Plaza that was operated on state land along the Western Kentucky Parkway until January 201');">1');">1');">1');">1');">1');">1');">17. Plaintiff Little Distributors, Inc. (“LDI”) supplied the fuel operation and Defendant RTM Operation Company, LLC (“RTM”) operated an Arby's restaurant pursuant to RTM's lease with the Kentucky Transportation Cabinet (“Cabinet”). After the Travel Plaza closed, the plaintiff filed suit alleging that the defendant had failed to protect its ownership interest in the fuel equipment and that RTM remained indebted for fuel. The plaintiff also demanded an accounting. The defendant has filed a motion to dismiss Counts 1');">1');">1');">1');">1');">1');">1');">1, 2, and 4 of the Complaint. [Record No. 9] For the reasons that follow, the defendant's motion to dismiss will be granted.

         I. Background

         The Cabinet issued a Request for Proposal (“RFP”) for “the design, development, construction and operation of food and fuel facilities” on the Western Kentucky Parkway in 1');">1');">1');">1');">1');">1');">1');">1995. W.I.T., LLC (“WIT”) submitted a written bid proposal under which it would operate an Arby's restaurant and LDI would install a fuel operation. [Record No. 1');">1');">1');">1');">1');">1');">1');">1-1');">1');">1');">1');">1');">1');">1');">1, p. 3 ¶ 7] The Cabinet issued a Notice of Award in November 1');">1');">1');">1');">1');">1');">1');">1995, indicating that WIT had been awarded “A Contract and Property Lease Agreement for Design, Development, Construction and Operation of Food and Fuel Service Facilities.”

         Following the Notice of Award, the Cabinet and WIT entered into a Lease Agreement for Service Area Restaurants, Food Operation, and Service Station at Beaver Dam (the “Lease.”) The Lease period was from December 1');">1');">1');">1');">1');">1');">1');">1995 to December 201');">1');">1');">1');">1');">1');">1');">15. Id. p. 5 ¶ 9. “[A]t the request and direction of both WIT and the Cabinet, LDI installed certain equipment specifically designed for the sale of petroleum products.” Id. at p. 5 ¶ 1');">1');">1');">1');">1');">1');">1');">10. LDI bore the cost of installation, which was $442, 000.00. Id. Additionally, LDI and WIT entered into a supply agreement whereby LDI would maintain ownership of the Fuel Installation and would be the sole and exclusive supplier of fuel to the Travel Plaza. Id. at pp. 5-6 ¶ 1');">1');">1');">1');">1');">1');">1');">11');">1');">1');">1');">1');">1');">1');">1. Pursuant to the Notice of Award, at the end of the contract term, the Commonwealth “receive[d] the right to procure the facilities/improvements based upon the Kentucky statutes that exist[ed] at the time for state government's procurement of real property.” Id. at pp. 22-23.

         Defendant RTM Operating Company, LLC (“RTM”) succeeded WIT as lessee of the Travel Plaza in 2001');">1');">1');">1');">1');">1');">1');">1. RTM and LDI entered into a new supply agreement dated May 25, 2001');">1');">1');">1');">1');">1');">1');">1, which provides that the Fuel Installation “is owned by [LDI]” and that “[RTM] has the right to use said equipment for the Term of this Agreement.” Id. at p. 34. The supply agreement gave RTM the ability to terminate the agreement under certain circumstances. In the event of early termination, RTM was required to pay LDI the initial cost of the equipment, less depreciation. Id. at p. 39. The agreement makes no provision for the equipment upon the supply agreement's natural expiration.

         The Cabinet notified RTM that it would not renew the option on the Lease at the expiration of the initial term in December 201');">1');">1');">1');">1');">1');">1');">15.[1');">1');">1');">1');">1');">1');">1');">1" name="FN1');">1');">1');">1');">1');">1');">1');">1" id= "FN1');">1');">1');">1');">1');">1');">1');">1">1');">1');">1');">1');">1');">1');">1');">1] Id. at p. 7 ¶ 1');">1');">1');">1');">1');">1');">1');">14. Accordingly, the Cabinet indicated that it intended to open a new bidding process. In the meantime, the Cabinet and RTM agreed to three short-term extensions of the initial term, extending the lease period to May 201');">1');">1');">1');">1');">1');">1');">16, August 201');">1');">1');">1');">1');">1');">1');">16, and finally, to January 2, 201');">1');">1');">1');">1');">1');">1');">17. Id. at p. 7 ¶ 1');">1');">1');">1');">1');">1');">1');">15.

         LDI contends that from early 201');">1');">1');">1');">1');">1');">1');">16 through January 2, 201');">1');">1');">1');">1');">1');">1');">17, and thereafter, it made repeated efforts to communicate with RTM and the Cabinet to learn the future plans for the Travel Plaza. Id. at pp. 7-8 ¶ 1');">1');">1');">1');">1');">1');">1');">16. LDI maintains that it did not receive any substantive responses from the Cabinet or RTM. However, LDI also alleges that in September through December 201');">1');">1');">1');">1');">1');">1');">16, LDI and RTM had “extensive and ongoing communications in a joint effort to submit a joint bid to the Cabinet for the continued or renewed food and fuel operation at the Travel Plaza.” Id. at pp. 8-9 ¶ 20. Additionally, LDI contends that in November 201');">1');">1');">1');">1');">1');">1');">16, both parties met with representatives of the Cabinet to discuss the Travel Plaza. For a number of weeks before and after that meeting, representatives of LDI and RTM corresponded concerning the bid for continued operation of services at the Travel Plaza. Id.

         LDI executed a UCC filing with the Kentucky Secretary of State in August 201');">1');">1');">1');">1');">1');">1');">16. Id. at p. 8 ¶ 1');">1');">1');">1');">1');">1');">1');">17. The fixture filing indicated that LDI had an interest in the pumps, canopies, and other equipment designated for the sale of petroleum products. Id. at p. 45. LDI notified the Cabinet of its UCC filing and its ownership in the Fuel Installation the following month. [Record No. 1');">1');">1');">1');">1');">1');">1');">1-1');">1');">1');">1');">1');">1');">1');">1, p. 8 ¶ 1');">1');">1');">1');">1');">1');">1');">18] The Commonwealth issued a letter in September 201');">1');">1');">1');">1');">1');">1');">16, advising LDI that it had not reviewed or agreed to any assignment of RTM's duties under the Lease Agreement. Id. at pp. 53-54. The Commonwealth also reminded LDI that the existing Lease was set to expire on January 1');">1');">1');">1');">1');">1');">1');">1, 201');">1');">1');">1');">1');">1');">1');">17. It further advised that, in the event the Lease was not renewed, LDI was responsible for removing all of its movable equipment from the Travel Plaza. Id. at p. 54. And any items that could not be moved without damaging the Commonwealth's property would “remain with the Commonwealth upon expiration of the Lease.” Id. LDI was notified on January 2, 201');">1');">1');">1');">1');">1');">1');">17, that the Travel Plaza would be closed effective that date and that all items at the Travel Plaza would be deemed property of the Commonwealth. Id. at p. 7 ¶ 1');">1');">1');">1');">1');">1');">1');">15.

         II. Standard of Review

         To survive a motion to dismiss, a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Co. v. Twombly, 550 U.S. 544, 570 (2007). In ruling on a motion to dismiss, the plaintiff's allegations are presumed to be true, and the complaint is construed in the light most favorable to the plaintiff. Hill v. Blue Cross & Blue Shield of Mich., 1');">1');">1');">1');">1');">1');">1');">10');">409 F.3d 71');">1');">1');">1');">1');">1');">1');">10, 71');">1');">1');">1');">1');">1');">1');">16 (6th Cir. 2005). While the court may not grant a Rule 1');">1');">1');">1');">1');">1');">1');">12(b)(6) motion because it does not believe the allegations, “conclusory allegations or legal conclusions masquerading as factual allegations will not suffice.” Bishop v. Lucent Techs., Inc., 1');">1');">1');">1');">1');">1');">1');">16');">520 F.3d 51');">1');">1');">1');">1');">1');">1');">16, 51');">1');">1');">1');">1');">1');">1');">19 (6th Cir. 2008). Although the court accepts the complaint's factual allegations as true, the court “need not accept as true legal conclusions or unwarranted factual inferences.” Morgan v. Church's Fried Chicken, 1');">1');">1');">1');">1');">1');">1');">10');">829 F.2d 1');">1');">1');">1');">1');">1');">1');">10, 1');">1');">1');">1');">1');">1');">1');">12 (6th Cir. 1');">1');">1');">1');">1');">1');">1');">1987).

         The court generally may not consider matters outside the pleadings without converting the motion to dismiss into one for summary judgment under Rule 56. See Tackett v. M & G Polymers, USA, LLC, 1');">1');">1');">1');">1');">1');">1');">1 F.3d 478');">561');">1');">1');">1');">1');">1');">1');">1 F.3d 478, 487 (6th Cir. 2009). However, the court may consider any exhibits attached to the complaint, public records, and items appearing in the record of the case, “so long as they are referred to in the complaint and are central to the claims contained therein.” Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008).

         III. Discussion

         The parties have differing views of their relationship, to say the least. They place a great deal of emphasis on whether they were engaged in a joint venture and whether RTM owed fiduciary duties to LDI. LDI contends that, in 1');">1');">1');">1');">1');">1');">1');">1995, it worked in partnership with WIT to submit a bid to provide services at the Travel Plaza. RTM argues that WIT entered into the Lease with the Cabinet and that WIT “separately contracted” with LDI to supply fuel. [Record No. 9-1');">1');">1');">1');">1');">1');">1');">1, p. 3] The parties agree that, in 2001');">1');">1');">1');">1');">1');">1');">1, RTM acquired WIT's interest in the Travel Plaza, including WIT's interest as the Cabinet's tenant under the Lease.

         A. ...

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