Fire Tech & Safety of New England, Inc. v. Scott Tech, Inc.

• Court: Superior Court of Maine
• Decided: October 7, 2009
• Docket: KENcv-09-159
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT KENNEBEC, ss CIVIL ACTION DOCKET NO. CV-09-159 'J/ /,

FIRE TECH & SAFETY OF NEW ENGLAND, INC.,

Plaintiff

v. ORDER

SCOTT TECHNOLOGIES, INC. d/b / a SCOTT HEALTH & SAFETY a subsidiary of Tyco International, Ltd., and PIERRE DESROCHERS

Defendants

Before the Court is defendant Pierre Desrochers's motion to dismiss Count

VI of the Amended Complaint. For the following reasons, defendant

Desrochers's motion is GRANTED.

Facts

In the Amended Complaint, the plaintiff alleges the following facts. For

over 24 years, plaintiff Fire Tech & Safety of New England, Inc. (Fire Tech) has

been a regional distributor of defendant Scott Technologies, Inc. (Scott) products

in Maine, Massachusetts, New Hampshire, and Vermont. Scott manufactures

safety devices used primarily by fire and rescue services, government/military,

law enforcement, light industry, manufacturing, energy and utilities, marine,

and oil and gas. In New England, Scott controls 85-90% of the market share for

self-contained breathing apparatus. Defendant Desrochers is a former Fire Tech

employee who now works as a zone manger for Scott. Defendant Desrochers insisted that Scott distributors submit bids on

projects in Maine, Massachusetts, New Hampshire, and Vermont that were no

lower than the "Mass State Bid"l for Scott products. Fire Tech complied with

Scott's instructions in some instances, but also submitted bids on occasion that

were lower than the Mass State Bid. As a result, Scott would not permit Fire

Tech to sell certain products, gave Industrial Protection Services (IPS), Fire Tech's

primary competitor, a competitive advantage on certain projects, and allocated

projects to prevent competitive bidding between Fire Tech and IPS.

In March 2008, Fire Tech's vice president, Larry Guerette, met with Mike

Ryan, the general manager of Scott. Defendant Desrochers later accused Mr.

Guerette of "going over his head" and stated that he "could not trust Guerette."

Defendant Desrochers next stated that Fire Tech's distributorship agreement

would be renewed only if Mr. Guerette specially appointed two Fire Tech

employees, William Shrader and David Harrison, to be in charge of the

distributorship agreement with Scott. After complying with this request, Fire

Tech's distributorship was extended until March 31, 2009.

In December 2008 and January 2009, Mr. Shrader and Mr. Harrison

resigned from Fire Tech. Mr. Shrader cited Fire Tech's hostile relationship with

defendant Desrochers as a reason for the resignation. William Burk, another Fire

Tech employee, resigned in February 2009. Fire Tech alleges that these

resignations are the result of defendant Desrochers representing to each

employee that Fire Tech's distributorship with Scott was going to be canceled.

At a March 31, 2009 meeting with defendant Desrochers and Brandson Millan,

I In Massachusetts, a governmental discount on products sold to the Commonwealth is recognized. For Scott self-contained breathing apparatus, that price is the list price minus 20%. List price minus 20% is referred to as the "Mass State Bid."

2 Fire Tech was informed that, effective the following day, Fire Tech would no

longer be a Scott distributor, and that it had until May 1 to wind up its Scott

business. Fire Tech was also informed that its service center agreements were

being terminated. Scott did not provide any good cause for the termination.

After March 31, defendant Desrochers allegedly met with numerous Fire

Tech customers, including fire department representatives in Boston, Springfield,

Nashua, and South Paris, ME. At these meetings, defendant Desrochers

instructed Fire Tech customers that Fire Tech would no longer be authorized to

sell or service Scott Products, and that they should contact IPS for future orders

or service needs.

Fire Tech filed suit against Scott and alleged, among other things, that the

Maine Power Equipment, Machinery and Appliance Act expressly prohibits a

manufacturer from canceling or failing to renew a distributorship agreement

without good cause and a reasonable opportunity to correct any performance

issues. 10 M.R.S.A. § 1363. Fire Tech also filed suit against defendant Desrochers

individually, and alleged that he tortiously interfered with Fire Tech's business

relations with Fire Tech's employees and customers through fraud and

intimidation.

Standard of Review

A motion to dismiss pursuant to M. R. Civ. P. 12(b)(6) "tests the legal

sufficiency of the allegations in a complaint, not the sufficiency of the evidence

the plaintiffs are able to present." Barnes v. McGough, 623 A.2d 133, 145 (Me.

1993). In ruling on a 12(b)(6) motion to dismiss, the court should "consider the

material allegations of the complaint as admitted and review the complaint in the

light most favorable to the plaintiffs to determine whether it sets forth elements

3 of a cause of action or alleges facts that would entitle the plaintiffs to relief

pursuant to some legal theory." Bussell v. City of Portland, 1999 ME 103, 11, 731

A.2d 862, 862 "A dismissal is appropriate only when it appears beyond doubt

that a plaintiff is entitled to no relief under any set of facts that he might prove in

support of his claim." Dexter v. Town of Norway, 1998 ME 195, 1 7, 715 A.2d

169, 171 (quotations omitted).

Discussion

Defendant Desrochers challenges two aspects of count VI of the amended

complaint. He argues first that the complaint does not allege sufficient facts for a

finding of tortious interference with business relations based on fraud or

intimidation. Second, he argues that the complaint is insufficient under the

heightened pleading requirements for fraud under M. R. Civ. P. 9(b).

The elements of tortious interference are "a valid contract or prospective

economic advantage, interference with that contract through fraud or

intimidation, and damages proximately caused by the interference." Sherbert v.

Remmel, 2006 ME 116, n.3, 908 A.2d 622, 623 (citing Petit v. Key Bank of Me., 688

A.2d 427, 430 (Me. 1996)). Fire Tech alleges that defendant Desrochers interfered

with its business relationship with its employees and customers through both

fraud and intimidation, resulting in the employee resignations and customers

ceasing to do business with Fire Tech. Defendant Desrochers challenges whether

Fire Tech has pleaded facts sufficient for a finding he engaged in fraud or

Fraud

When claiming fraud, the plaintiff must allege that the defendant "(1)

[made] a false representation (2) of a material fact (3) with knowledge of its

4 falsity or in reckless disregard of whether it is true or false (4) for the purpose of

inducing another to act or to refrain from acting in reliance on it, and (5) the

other person justifiably relies on the representation as true and acts upon it to the

damage of the plaintiff." Id. at en 4, 908 A.2d at 623 (quoting Grover v. Minette­

Mills, Inc., 623 A.2d 712, 716 (Me. 1994)). Defendant Desrochers allegedly told

certain customers and employees that Fire Tech was no longer an authorized

Scott dealer and would not continue to sell or service Scott products.

Defendant Desrochers claims that his statements were made in reliance of

the terms of the Distributorship Agreement and cites Rutland v. Mullen for the

premise that "the assertion of a legal right is insufficient as a matter of law to

support a finding of interference by fraud," even if the "claim of right was later

proven invalid." Rutland v. Mullen, 2002 11E 98 en IS, 798 A.2d 1104, 1111. The

defendants in Rutland owned a parcel of land that was subject to an easement

relating to a path over their property. Id. at enen 2-4, 798 A.2d at 1107-08. They

alleged, however, that they owned the path because they believed that the

easement had been extinguished or abandoned. Id. The defendants had

reasonable arguments supporting the truthfulness of their allegations.

The plaintiff alleges that defendant Desrochers made statements

regarding abrupt termination of plaintiff's distributorship agreement without

cause, which is expressly prohibited under Maine Law. See 10 M.R.S.A. § 1363.

Even assuming that defendant Desrochers's statements regarding the

termination were "false misrepresentations . . . as the statements were

unreasonable and unlawful under the statute," Smith v. Underwood Spring &

Bottling Co., CUMCV-03-539, 2004 Me. Super. LEXIS 156, at *6-7 (July IS, 2004)

(Humphrey, J.), the plaintiffs have not alleged knowledge of the falsity of the

5 representation or reckless disregard of whether the representation was true or

false. Romani v. Shearson Lehman Hutton, 929 F.2d 875, 878 (1st Cir. 1991). In

Smith, the court concluded that the allegations inferentially suggested that the

defendant's owner knew the statements were unlawful because he applied a

different rule to the sale of another mobile home. 2004 Me. LEXIS 156, at *7.

There is no such inference to be drawn from the allegations in this case.

Intimidation

Intimidation is not restricted to "frightening a person for coercive

purposes." Pombriant v. Blue Cross/Blue Shield of Maine, 562 A.2d 656, 659

(Me. 1989). Rather, intimidation may be established by a showing that the

defendant has made it "clear to the party with which the plaintiff had contracted

that the only manner in which that party could avail itself of a particular benefit

of working with defendant would be to breach its contract with plaintiff." Currie

v. Industrial Security, Inc., 2007 ME 12, <]I 31, 915 A.2d 400, 408 (internal

quotations omitted). Interference by intimidation involves "unlawful coercion or

extortion." Rutland, 2002 ME at <]I 16, 798 A.2d at 1111.

Defendant Desrochers allegedly told Fire Tech employees that Fire Tech's

distributorship with Scott was to be canceled. He allegedly told Fire Tech's

customers that Fire Tech would no longer be authorized to sell or service Scott

Products, and that they should contact IPS for future orders or service needs.

Once again, a person who "claims to have, or threatens to lawfully protect" a

right has not unlawfully coerced or extorted another. Id. 2

2 The defendant argues further that the plaintiff has failed to comply with Rule 9(b). M.R. Civ. P. 9(b). Rule 9(b) provides that when pleading matters involving fraud, the complaint shall set forth the circumstances constituting fraud "with particularity." "This standard means that a complaint 'must specify the time, place, and content of an alleged false representation.'" United States ex

6 The entry is

Defendant Scott Technologies, Inc. d/b/ a Scott Health & Safety's Motion to Dismiss is GRANTED. Count VI of the Amended Complaint is DISMISSED.

-- Date: October 7, 2009 Nancy Mills Justice, SuperIor Court

~NN-CV-09-159

reI. Gagne v. City of Worcester, 565 F.3d 40, 45 (1st Cir. 2009) (lluoting United States ex reI. Rost v. Pfizer, Inc., 507 F.3d 720, 731 (1st Cir. 2007». The Law Court as held that "Maine's Rules 8(a) and 9(b) are practically identical to the comparable federal rules." Bean v. Cummings, 2008 ME 18, 111, 939 A.2d 676, 680. Here, plaintiff has identified the time, place, and content of the alleged fraud. The content of the fraud related to defendant Desrochers's statements that Fire Tech would no longer be an authorized distributor. These statements were made at meetings held in early Spring 2009. See United Fish Co. v. Barnes, 627 F. Supp. 732, 734 (D. Me. 1986) (holding an approximate time frame in which the fraudulent conduct was alleged to have occurred is sufficient under the rule). Plaintiff further referenced letters from customers during that time frame in the Amended Complaint, providing a factual basis for the allegations. See Romani v. Shearson Lehman Hutton, 929 F.2d 875, 878 (lst Cir. 1991). The fraud claims as to the customers are sufficient under Rule 9(b). Fire Tech has failed to identify adequately the circumstances of the alleged fraudulent statements with regard to the employees. The fraud claim as to the employees appears to be based on no more than the fact that three employees terminated their employment, despite strong sales, within three months of Scott's termination of plaintiff as a distributor, and that defendant Desrochers was increasingly outraged with Fire Tech during that time period. Fire Tech cannot rest on vague allegations and must instead allege the time, place, and content of an allegedly fraudulent misrepresentation. See Iohnson v. Gahagan, CUMSC-CV-00-576, 2001 Me. Super. LEXIS 53, at *8 (Apr. 5, 2001) (Crowley, J.).

7 STATE OF MAINE SUPERIOR COURT KENNEBEC, ss CIVIL ACTION Docket No. CV-09-159

Plaintiff ORDER ON MOTION TO COMPEL ARBITRATION v.

SCOTT TECHNOLOGIES, INC. d/b/a SCOTT HEALTH & SAFETY a subsidiary of Tyco International, Ltd., and PIERRE DESROCHERS,

The defendant Scott Technologies, Inc. d/b/ a Scott health & Safety moves

to compel arbitration. The defendant argues correctly that pursuant to the

Federal Arbitration Act and Buckeye Check Cashing, Inc. v. Cardegna, this

dispute must be submitted to arbitration.

The Act provides that "[a] written provision in any maritime transaction

or a contract evidencing a transaction involving commerce to settle by arbitration

a controversy thereafter arising out of such contract or transaction, or the refusal

to perform the whole or any part thereof, or an agreement in writing to submit to

arbitration an existing controversy arising out of such contract, transaction or

refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as

exist at law or in equity for the revocation of any contract." 9 USCS § 2. The

Supreme Court has explained that absent a challenge to the arbitration clause

itself, the arbitrator decides in the first instance the issue of the contract's

validity. Buckeye, 546 U.s. at 445-46 (2006). Fire Tech challenges the legality of the contract as a whole under Maine

Power Equipment, Machinery and Appliance Act and not the contract's

arbitration provisions. Id. at 446. Accordingly, the parties' arbitration requires

that the plaintiff's challenge go to the arbitrator. Id. at 449.

The entry is

Defendant Scott Technologies, Inc. d/b/ a Scott Health & Safety's Motion to Compel Arbitration is GRANTED.

Date: October 6, 2009