UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Fujifilm North America Corporation et al.
v. Civil No. 20-cv-492-LM Opinion No. 2021 DNH 040 P M&R Printing Equipment, Inc. et al.
ORDER
Plaintiffs Fujifilm North America Corporation, Fujifilm Speciality Systems
Ltd. and Fujifilm India Pvt. Ltd. (collectively “Fujifilm”), bring this action against
defendants M&R Printing Equipment, Inc. (“M&R Printing”), Novus Printing
Equipment, LLC (“Novus Printing”), and NI Holdings, Inc., f/k/a Novus Imaging,
Inc. (“Novus Holdings”). Plaintiffs assert claims for breach of contract and for
violation of the New Hampshire Consumer Protection Act (“CPA”), RSA ch. 358-A.
Defendants filed two motions for judgment on the pleadings1 (doc. nos. 16 and 26).
Plaintiffs object and move to amend the complaint (doc. no. 32), to which defendants
object. The court resolves these motions as outlined below.
STANDARD OF REVIEW
Because allowing plaintiffs’ proposed amended complaint would moot the
defendants’ motions for judgment on the pleadings, the court must first consider the
motion to amend. Donlon v. Hillsborough Cnty., Civ. No. 18-cv-549-LM, 2019 WL
1 Novus Holdings did not join M&R Printing and Novus Printing in the first
motion for judgment on the pleadings (doc. no. 16). 2062436, at *1 (D.N.H. May 9, 2019); see LR 15.1(c); Frappier v. Countrywide Home
Loans, Inc., 750 F.3d 91, 96 (1st Cir. 2014). A court should “freely give leave [to
amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). However, this liberal
standard does not require a court to grant every motion to amend. Donlon, 2019
WL 2062436, at *1. Rather, a request to amend “is appropriately denied when . . .
‘the request is characterized by undue delay, bad faith, futility, or the absence of
due diligence on the movant’s part.’” Manning v. Boston Med. Ctr. Corp., 725 F.3d
34, 60-61 (1st Cir. 2013) (brackets omitted) (quoting Calderón-Serra v. Wilmington
Tr. Co., 715 F.3d 14, 19 (1st Cir. 2013)).
Defendants object to the requested amendment on futility grounds. “A ‘futile’
amendment is one that ‘would fail to state a claim upon which relief can be
granted.’” Donlon, 2019 WL 2062436, at *1 (quoting Glassman v. Computervision
Corp., 90 F.3d 617, 623 (1st Cir. 1996)). When, as here, a plaintiff files a motion to
amend in response to one or more motions for judgment on the pleadings and
discovery is not yet complete, the futility inquiry mirrors the analysis applied under
Federal Rule of Civil Procedure 12(b)(6). See id.; Frappier, 750 F.3d at 96
(explaining that the “standard of review for a motion for judgment on the pleadings
under Federal Rule of Civil Procedure 12(c) is the same as that for a motion to
dismiss under Rule 12(b)(6)” (quoting Marrero-Gutierrez v. Molina, 491 F.3d 1, 5
(1st Cir. 2007))).
Under Rule 12(b)(6), the court must accept the factual allegations in the
complaint as true, construe reasonable inferences in the plaintiffs’ favor, and
2 “determine whether the factual allegations in the . . . complaint set forth a plausible
claim upon which relief may be granted.” Foley v. Wells Fargo Bank, N.A., 772 F.3d
63, 71, 75 (1st Cir. 2014) (citation and internal quotation marks omitted). The court
may also consider documents attached to the complaint and documents expressly
incorporated in the complaint. See id. at 71-72. A claim is facially 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).
BACKGROUND
I. Factual Background
The following facts are drawn from the plaintiffs’ proposed amended
complaint and its attachments (doc. no. 32-1). The three plaintiffs in this action are
corporations organized under the laws of New York (Fujifilm North America), Great
Britain (Fujifilm Speciality), and India (Fujifilm India). Each plaintiff operates its
principal place of business in the jurisdiction in which it is incorporated. Defendant
M&R Printing is incorporated in Delaware with a principal place of business in
Illinois. Defendants Novus Printing and Novus Holdings each have a principal
place of business in New Hampshire, but Novus Printing is incorporated in
Delaware whereas Novus Holdings is incorporated in New Hampshire. Novus
Printing is an LLC, the sole member of which is M&R Printing.
3 Plaintiffs are in the business of distributing photographic and graphic arts
equipment. Defendants manufacture printers. In October 2015, Fujifilm entered
into a “Distributor Agreement” with Novus Holdings to become a distributor and
reseller of Novus Holdings’ “Synergia” Printer (the “Printer”). The Distributor
Agreement contained a clause stating that Novus Holdings would indemnify
Fujifilm for “all actions, suits, claims, demands, losses, damages, or other liabilities
. . . arising out of or related to [Novus Holdings’] manufacture, storage, packaging,
and shipment” of Printers. Doc. no. 32-1 at 25. Fujifilm and Novus Holdings also
entered into a “Global Service Level Agreement,” (the “Service Agreement”)
pursuant to which Novus Holdings agreed to provide support services for
malfunctioning Printers.
Fujifilm purchased eleven Printers from Novus Holdings between April 2015
and May 2018. All eleven Printers exhibited substantial malfunctions. Although
Fujifilm informed Novus Holdings of these defects, Novus Holdings failed to repair
or replace the Printers or to refund Fujifilm. In addition, in April 2016, Fujifilm
provided Novus Holdings with the purchase price for an additional Printer as well
as $408,192 in down payments for four other Printers. Novus Holdings failed to
deliver any of these Printers.
By letter dated December 16, 2016, Novus Holdings informed Fujifilm of a
“proposed transaction that [it] . . . is contemplating with M&R Group Holdings.”
Doc. no. 32-1 ¶ 28. Although the letter seemingly contained no details of the
proposed transaction, the letter did state Novus Holdings’ “understanding that the
4 plan is for NOVUS or the surviving entity to continue to supply Fujifilm . . . and its
affiliates with product in accordance with our Distributor Agreement dated October
1, 2015.” Id.
On April 18, 2017, Novus Holdings entered into an “Asset Purchase
Agreement” (the “Asset Agreement”) with M&R Printing and Novus Printing.
Under the Asset Agreement, Novus Holdings transferred substantially all of its
tangible and intangible property, including its: real property; inventory; machinery;
computers; intellectual property; corporate name; goodwill; legal claims regarding
any acquired asset; and contractual rights under approximately twenty contracts—
including the Distributor Agreement.
Officers for all three defendants signed the Asset Agreement. Michael Mills
signed on Novus Holding’s behalf as its president. Subsequent to the Asset
Agreement’s signing, Mills sent multiple letters to Fujifilm on Novus Holdings’
letterhead. Mills signed the letters as “President, Novus Division, an M&R
Company,” and listed Novus Holdings’ New Hampshire business address, which
Novus Holdings had sold in the Asset Agreement. Novus Holdings thereafter
operated as part of M&R Printing, with Mills continuing to work from Novus
Holdings’ prior business address as the company’s President along with Novus
Holdings’ former employees.
On April 18, 2017, Novus Holdings issued two “Credit Memos” to Fujifilm.
The memos indicate that Novus Holdings held two credits from Fujifilm totaling
$580,142. A notation next to the credits indicated that they had been “sold to
5 M&R.” Doc. no. 32-1 at 82-83. Finally, according to a balance sheet for Novus
Holdings dated April 30, 2017, Novus Holdings had virtually no assets as of that
date; it possessed only limited bank deposits, accounts receivable, and prepaid
expenses.
II. Procedural Background
Fujifilm subsequently brought this action against Novus Holdings, M&R
Printing, and Novus Printing. Count I of the proposed amended complaint brings a
breach of contract claim against all defendants, alleging that defendants breached
the Distributor Agreement and Service Agreement by, among other things, failing
to repair the malfunctioning Printers and failing to deliver Printers. Count II
specifically alleges that defendants breached the indemnification clause of the
Distributor Agreement by failing to indemnify Fujifilm for the losses it suffered
from defendants’ other breaches. Count III alleges that defendants violated the
CPA by misrepresenting the Printers’ quality and characteristics.
Defendants filed two motions for judgment on the pleadings. In the first
motion (doc no. 16), M&R Printing and Novus Printing argue that Fujifilm fails to
state contractual or CPA claims against them because such claims rely on theories
of successor liability, which Fujifilm failed to adequately plead. They further argue
that judgment on the pleadings is warranted because Fujifilm has failed to allege
facts sufficient to pierce Novus Printing’s corporate veil. In the second motion (doc.
no. 26), all three defendants argue that plaintiffs’ CPA claims should be dismissed
6 because they do not comply with the statute’s territoriality requirement and
because they are not alleged with the specificity required by Federal Rule of Civil
Procedure 9(b). Finally, defendants argue that any claim arising from printers
purchased before April 2016 should be dismissed because such claims are barred by
the relevant statute of limitations.
Fujifilm objects to both motions and seeks leave to amend the complaint to
“add factual allegations based upon recently produced information.” Doc. no. 32 at
1. Fujifilm primarily seeks to add information about the Asset Agreement, which it
has only recently received from Novus Holdings in discovery and did not have at the
time it filed its original complaint. M&R Printing and Novus Printing (but not
Novus Holdings) object to the proposed amendment on futility grounds, arguing
that the proposed amended complaint would still fail to plead sufficient facts for
successor liability or to pierce Novus Printing’s veil. In addition, M&R Printing and
Novus Printing assert that the proposed amended complaint is futile because it fails
to address any of the deficiencies identified in the second motion for judgment on
the pleadings.
DISCUSSION
I. The Proposed Amended Complaint Adequately Pleads Successor Liability
As the parties’ futility arguments are primarily addressed to whether
Fujifilm has adequately pled a theory of successor liability, the court begins with
successor liability. Here, as noted, Fujifilm brings breach of contract and CPA
7 claims against all three defendants. Although it appears to be undisputed that
M&R Printing and Novus Printing were not parties to either the Distributor
Agreement or Service Agreement, Fujifilm alleges that M&R Printing is liable as
Novus Holdings’ successor-in-interest to those agreements. Fujifilm also alleges
that Novus Printing conducts no business of its own and is a “mere instrumentality”
used “to effect a de facto merger” of Novus Holdings and M&R Printing. Doc. no.
32-1 ¶ 39.
Before addressing the merits of the parties’ successor liability arguments, the
court notes defendants’ argument that Delaware successor liability law applies in
this case because both M&R Printing and Novus Printing are incorporated in
Delaware. M&R Printing and Novus Printing assert that there is an actual conflict
between Delaware and New Hampshire successor liability law in that Delaware law
is “more rigorous and clear-cut than New Hampshire’s.” Doc. no. 16 at 6. However,
the court need not resolve, at this time, whether New Hampshire or Delaware law
governs this issue. Even assuming Delaware successor liability law applies and is
more stringent than New Hampshire’s, for the reasons that follow Fujifilm has
plausibly alleged successor liability under Delaware law.
Delaware adheres to the general principle of corporate law that, “when one
company sells or otherwise transfers all of its assets to another company, the buyer
generally is not responsible for the seller’s liabilities.” Magnolia’s at Bethany, LLC
v. Artesian Consulting Eng’rs, Inc., C.A. No. S11 C-04-013-ESB, 2011 WL 4826106,
at *2 (Del. Super. Ct. Sept. 19, 2011). Thus, an allegation that M&R Printing and
8 Novus Printing entered into an agreement to purchase substantially all of Novus
Holdings’ assets would ordinarily fail to show that M&R Printing and Novus
Printing are responsible for Novus Holdings’ liabilities. However, in “some limited
situations where an avoidance of liability would be unjust, a purported sale of
assets . . . may be found to transfer liabilities of the predecessor corporation.”
AJZN, Inc. v. Yu, Civ. No. 13-149 GMS, 2015 WL 331937, at *15 (D. Del. Jan. 26,
2015) (quoting Fehl v. S.W.C. Corp., 433 F. Supp. 939, 945 (D. Del. 1977)). These
situations include: “(1) the buyer’s assumption of liability; (2) de facto merger or
consolidation; (3) mere continuation of the predecessor under a different name; or
(4) fraud.” Magnolia’s at Bethany, 2011 WL 4826106, at *2 (italics omitted); accord,
e.g., Ross v. Desa Holdings Corp., C.A. No. 05C-05-013 MMJ, 2008 WL 4899226, at
*4 (Del. Super. Ct. Sept. 30, 2008).
Fujifilm’s proposed amended complaint alleges that M&R Printing is subject
to successor liability for Novus Holdings’ actions under all four of these theories.
M&R Printing and Novus Printing argue that Fujifilm’s claims against them must
be dismissed because the proposed amended complaint fails to adequately allege
that they bear successor liability pursuant to any of these theories.
However, the court declines to evaluate the extent to which each of these four
theories are adequately pled in the proposed amended complaint. As noted, Counts
I and II of the proposed amended complaint bring breach of contract claims, and
Count III brings CPA claims. While Fujifilm may seek to hold Novus Printing and
M&R Printing liable for these claims pursuant to theories of successor liability,
9 Fujifilm is not required to prove that each of the four recognized exceptions applies
in order to demonstrate successor liability. It need only show that one applies. “A
motion to dismiss under Rule 12(b)(6) doesn’t permit piecemeal dismissals of parts
of claims; the question at this stage is simply whether the complaint includes
factual allegations that state a plausible claim for relief.” BBL, Inc. v. City of
Angola, 809 F.3d 317, 325 (7th Cir. 2015) (emphasis omitted). At this early stage,
Fujifilm need only allege a set of facts “showing . . . that a theory exists upon which
[Fujifilm] may be able to hold defendants liable.” AJZN, 2015 WL 331937, at *16
(emphasis added; quotation omitted). Thus, if the court is satisfied that the
proposed amended complaint plausibly alleges one of the four theories of successor
liability highlighted above, that would demonstrate that Fujifilm’s claims against
M&R Printing and Novus Printing are plausible to the extent they rely on successor
liability. See id.
The court concludes that the proposed amended complaint plausibly alleges a
mere continuation theory of successor liability. “Mere continuation requires that
that the new company be the same legal entity as the old company.” Magnolia’s at
Bethany, 2011 WL 4826106, at *3. “The test is not the continuation of the business
operation; rather, it is the continuation of the corporate entity.” Fountain v.
Colonial Chevrolet Co., 1988 WL 40019, at *9 (Del. Super. Ct. Apr. 13, 1988). “The
‘primary elements’ of being the same legal entity . . . include ‘the common identity of
the officers, directors, or stockholders of the predecessor and successor corporations,
and the existence of only one corporation at the completion of the transfer.’” Spring
10 Real Estate, LLC v. Echo/RT Holdings, LLC, C.A. No. 7994-VCN, 2013 WL
6916277, at *5 (Del. Ch. Dec. 31, 2013) (quoting Magnolia’s at Bethany, 2011 WL
4826106, at *3). “Imposition of successor liability is appropriate only where the new
entity is so dominated and controlled by the old company that separate existence
must be disregarded.” Ross, 2008 WL 4899226, at *4.
Here, it is undisputed that Novus Holdings sold virtually all of its assets
pursuant to the Asset Agreement and that all three defendants were parties to the
Asset Agreement. The Asset Agreement provides that Novus Holdings agreed to
transfer, with limited exceptions, all of its “tangible property,” including its
building, inventory, machinery, equipment, tools, furniture, computers, and books
and records. Novus Holdings also sold virtually all of its “intangible property,”
including its corporate name, intellectual property, goodwill, and rights under
approximately twenty contracts—including the Distributor Agreement. After the
Asset Agreement’s execution, Novus Holdings’ only assets consisted of bank
deposits, accounts receivable, and prepaid expenses. Novus Holdings’ President,
Michael Mills, sent correspondence to Fujifilm on Novus Holdings’ letterhead
following the Asset Agreement’s execution, and represented that he was the
President of the “Novus Division” of M&R Printing. In addition, the proposed
amended complaint alleges that Novus Holdings operated as part of M&R Printing
after the Asset Agreement’s execution, with M&R Printing continuing to employ all
of Novus Holdings’ employees, and with Mills continuing both to fill the same role
as Novus Holdings’ President and to work from Novus Holdings’ building (which
11 Novus Holdings sold in the Asset Agreement). In light of the foregoing, and
construing all facts and reasonable inferences in the light most favorable to
Fujifilm, the court concludes that the proposed amended complaint plausibly alleges
a mere continuation theory of successor liability. See Corp. Prop. Assocs. 8 v.
Amersig Graphics, Inc., Civ. A. No. 13241, 1994 WL 148269, at *1, *4-5 (Del. Ch.
Mar. 31, 1994). Thus, Fujifilm’s claims against M&R Printing and Novus Printing
are plausible to the extent they rely on such a theory.
II. The Proposed Amended Complaint Plausibly Alleges a Veil-Piercing Theory under New Hampshire Law
As previously noted, Novus Printing is an LLC, and the LLC’s sole member is
M&R Printing. The Asset Agreement states that Novus Printing is the “Buyer” of
Novus Holdings’ assets, and that M&R Printing is Novus Printing’s owner as well
as its operating company.2 Doc. no. 32-1 at 38, 44. For these reasons, M&R
Printing and Novus Printing argue that Fujifilm’s claims against M&R Printing
require the piercing of Novus Printing’s corporate veil. They further argue that the
proposed amended complaint fails, under Delaware law, to allege sufficient facts to
pierce Novus Printing’s veil. For the reasons that follow, the court cannot conclude,
at this time, that Delaware veil-piercing law governs Fujifilm’s claims.
2 The Asset Agreement uses the word “Opco,” rather than “operating
company,” in referring to M&R Printing. See, e.g., doc. no. 32-1 at 38, 44. The court uses the phrase “operating company” since “Opco” is a common abbreviation for that phrase. To the extent further motions are filed in this case where that term becomes relevant, the parties should clarify its meaning.
12 “A federal court sitting in diversity jurisdiction, as here, applies the forum
state’s choice-of-law rules.” Petersen v. Atrium Med. Corp., Civ. No. 18-cv-212-LM,
2019 WL 4261822, at *2 (D.N.H. Sept. 9, 2019) (citing Klaxon Co. v. Stentor Elec.
Mfg. Co., 313 U.S. 487, 496 (1941)). Under New Hampshire choice-of-law
principles, the party asserting that another state’s law applies has the burden of
demonstrating that the relevant substantive New Hampshire law is in actual
conflict with that of the other interested state. See id. at *2-4 & n.6; SIG Arms, Inc.
v. Emp’rs Ins. of Wasau, 122 F. Supp. 2d 255, 259 (D.N.H. 2000). If the moving
party does not so demonstrate, the court applies New Hampshire law. See
Aftokinito Props., Inc. v. Millbrook Ventures, LLC, Civ. No. 09-cv-415-JD, 2010 WL
3168295, at *3 (D.N.H. Aug. 9, 2010). If the moving party does so demonstrate, the
court ordinarily proceeds to a five-factor “choice-of-law influencing considerations”
test to determine which state’s law applies. Bartlett v. Commerce Ins. Co., 167
N.H. 521, 526 (2015).
As is apparent from this brief overview, demonstrating that the substantive
law of another state ought to apply is often a difficult task under New Hampshire
law. However, although M&R Printing and Novus Printing’s motion for judgment
on the pleadings asserts that Fujifilm fails to state a claim to pierce Novus
Printing’s veil under Delaware law, the defendants fail to make a choice-of-law
argument with respect to Delaware veil-piercing law in their motion. For reasons
that are unclear, the motion simply assumes that Delaware veil-piercing law
applies.
13 In M&R Printing and Novus Printing’s reply, where their veil-piercing
choice-of-law argument first appears, they make only a limited attempt to
demonstrate the applicability of Delaware veil-piercing law. For example, M&R
Printing and Novus Printing assert in their reply that the court need not even
conclude Delaware veil-piercing law is in actual conflict with New Hampshire veil-
piercing law in order to apply Delaware veil-piercing law. This assertion is
unsupported by citation to authority—New Hampshire or otherwise—and the court
is unaware of any New Hampshire authority for this proposition. The court is
reluctant to conclude that Delaware veil-piercing law is an actual conflict with New
Hampshire law, or that New Hampshire’s five-factor choice-of-law influencing
considerations test points to Delaware veil-piercing law, based on the limited
arguments before it. See Rivera v. Body Armor Outlet, LLC, Civ. No. 17-cv-512-LM,
2018 WL 1732154, at *2 (D.N.H. Apr. 10, 2018) (declining to resolve choice-of-law
question because, in part, “the parties do not fully explain how Nevada and New
Hampshire law . . . conflict”); Knightly v. Gula, Civ. No. 16-cv-124-AJ, 2016 WL
4401996, at *1 (D.N.H. Aug. 18, 2016) (declining to resolve choice-of-law question
“[w]ithout discovery and only the benefit of a five-page complaint and some
briefing”); see also Picone v. Shire PLC, No. 16-cv-12396, 2017 WL 4873506, at *15
(D. Mass. Oct. 20, 2017) (noting it was “premature to conduct the choice-of-law
analysis at the motion to dismiss stage prior to discovery” given the complex nature
of the case at hand).
14 Although choice-of-law questions cry out for fully-developed argument in even
an ordinary case, the choice-of-law questions presented by this case are far from
ordinary. First, as Fujifilm notes, the Distributor Agreement contains a choice-of-
law clause stating that, in “any legal action arising between the Parties in
connection with this Agreement, . . . [t]his Agreement and performance hereunder
shall be governed by and interpreted under the laws of the jurisdiction in which [the
action] is filed.” Doc. no. 32-1 at 30. Although M&R Printing and Novus Printing
assert—in their reply—that this clause does not require the court to apply New
Hampshire veil-piercing law to Fujifilm’s claims for breach of the Distributor
Agreement, they fail to cite supporting New Hampshire or First Circuit authority in
so arguing. This court has previously discussed, at length, the complex
considerations involved in determining whether a contractual choice-of-law clause
governs claims that relate to, but do not necessarily arise from, the contract which
contains the clause. See Stonyfield Farm, Inc. v. Agro-Farma, Inc., No. 08-CV-488-
JL, 2009 WL 3255218, at *4-6 & n.8 (D.N.H. Oct. 7, 2009). The court is reticent to
wade into these murky waters without the benefit of briefing on controlling law.
In addition, Fujifilm’s claims against M&R Printing and Novus Printing may
be subject to the internal affairs doctrine. Under this conflict of laws principle,
issues implicating a corporation’s internal affairs are resolved under the law of the
state of incorporation. See Edgar v. MITE Corp., 457 U.S. 624, 645 (1982);
Mariasch v. Gillette Co., 521 F.3d 68, 72 (1st Cir. 2008). Some courts have held that
veil-piercing issues implicate a corporation’s internal affairs and therefore are
15 resolved under the incorporating state’s laws. See, e.g., Matson Logistics, LLC v.
Smiens, Civ. No. 12-400 ADM/JJK, 2012 WL 2005607, at *5-6 (D. Minn. June 5,
2012).
New Hampshire has adopted the internal affairs doctrine. See In re
Fryeburg Water Co., 106 A. 225, 226-27 (N.H. 1919). However, M&R Printing and
Novus Printing’s briefing leaves unanswered whether New Hampshire’s internal
affairs doctrine governs veil-piercing issues. In New Hampshire, “the corporate veil
may be pierced by finding that the corporate identity has been used to promote an
injustice or fraud on the plaintiffs.” Terren v. Butler, 134 N.H. 635, 639 (1991). But
in Fryeburg Water the New Hampshire Supreme Court seemed to hold that the
internal affairs doctrine does not apply to “suits against [a corporation] . . . for fraud
practiced by it in the conduct of its business.” Fryeburg Water, 106 A. at 226-27.
M&R Printing and Novus Printing’s briefing fails to resolve—or even note—this
tension between the veil-piercing and internal affairs doctrines in New Hampshire.
For these reasons, the court finds that defendants have not met their burden
of showing that Delaware veil-piercing law governs Fujifilm’s claims. This ruling is
without prejudice to raising a fully developed veil-piercing choice-of-law argument
at a later time or in a motion for summary judgment. See Knightly, 2016 WL
4401996, at *1. Because M&R Printing and Novus Printing have not demonstrated
that Delaware veil-piercing law applies, the court will analyze whether the
proposed amended complaint states sufficient facts to pierce Novus Printing’s veil
under New Hampshire law. See Petersen, 2019 WL 4261822, at *2-4 & n.6.
16 Under New Hampshire law, a “limited liability company, like a corporation,
is treated as a separate legal entity” from its members, “and its liabilities are not
attributable to its owners and managing members.” In re Gilbert, Bankr. No. 06-
10119-JMD, 2007 WL 397018, at *3 (Bankr. D.N.H. Feb. 1, 2007) (citing RSA 304-
C:25). However, as with a corporation, a plaintiff may seek to hold the members of
an LLC liable for the LLC’s debts under a veil-piercing theory. See Mbahaba v.
Morgan, 163 N.H. 561, 568-70 (2012) (reversing grant of summary judgment to LLC
defendant on veil-piercing grounds because the evidence permitted “a finding that
the limited-liability identity was used to promote an injustice upon the plaintiff”);
see also Martinez v. Petrenko, 792 F.3d 173, 181 n.6 (1st Cir. 2015) (noting the
defendant’s concession that “veil-piercing can apply to limited liability companies
. . . under New Hampshire law”).
“In New Hampshire, ‘the doctrine of piercing the corporate veil is an
equitable remedy.’” Michnovez v. Blair, LLC, 795 F. Supp. 2d 177, 185 (D.N.H.
2011) (brackets omitted) (quoting Lamontagne Bldrs., Inc. v. Bowman Brook
Purchase Grp., 150 N.H. 270, 274 (2003)); see also Terren, 134 N.H. at 639-40
(“New Hampshire courts do not ‘hesitate to disregard the fiction of the corporation’
when circumstances would lead to an inequitable result.” (brackets omitted)
(quoting Ashland Lumber Co. v. Hayes, 119 N.H. 440, 441 (1979))). A plaintiff
states sufficient facts to pierce an LLC’s veil when the allegations in the complaint
make it plausible that the LLC’s members have used the LLC’s corporate form “to
promote an injustice or fraud on the” plaintiff. Norwood Grp., Inc. v. Phillips, 149
17 N.H. 722, 724 (2003). “Evidence of a lack of sufficient separation between” an LLC
and its members “is an important sign that the [members have] abused the
corporate form.” In re Gilbert, 2007 WL 397018, at *4. Lack of sufficient separation
between an LLC and a member may be shown by, among other things,
demonstrating that the member exercised “sole and exclusive control over” the LLC.
Antaeus Enters., Inc. v. Davidson, 774 F. Supp. 2d 409, 416 (D.N.H. 2011). It may
also be shown by demonstrating that the LLC “intermingled its affairs” with the
member by, for example, sharing employees. Id.
Here, the proposed amended complaint alleges facts which permit the
inference that M&R Printing used Novus Printing’s corporate form to promote an
injustice on Fujifilm. Although Novus Printing is deemed the “Buyer” of Novus
Holdings’ assets in the Asset Agreement, the Asset Agreement refers to Novus
Printing and M&R Printing collectively as the “Buyer Parties.” Doc. no. 32-1 at 44.
The Asset Agreement also states that M&R Printing—the LLC’s only member—is
Novus Printing’s “owner” as well as its operating company. Id. at 38, 44. The
proposed amended complaint alleges that, following the Asset Agreement’s
execution, Novus Holdings represented itself to be “an M&R [Printing] Company”
rather than a Novus Printing Company. Id. ¶ 32. It further alleges that all of
Novus Holdings’ employees—including its President, who made the representation
regarding Novus Holdings’ newfound place within M&R Printing—became M&R
Printing employees rather than Novus Printing employees. And the credit memos
18 attached to the proposed amended complaint show that, despite the Asset
Agreement’s structuring, Novus Holdings sold Fujifilm’s credits to M&R Printing.
In sum, the factual allegations in the proposed amended complaint, construed
in a light most favorable to Fujifilm, plausibly allege a veil-piercing theory under
New Hampshire law. See Antaeus Enters., 774 F. Supp. 2d at 416; In re Gilbert,
2007 WL 397018, at *4. Thus, defendants have failed to demonstrate that the
claims against M&R Printing in the proposed amended complaint are futile to the
extent they require the piercing of Novus Printing’s veil.
III. The Proposed Amended Complaint Fails to State CPA Claims
Count III of the proposed amended complaint alleges that defendants
violated the CPA by misrepresenting the Printers’ “characteristics, uses, and
benefits” as well as their “standard, quality, or grade.” Doc. no. 32-1 ¶¶ 57-60; see
RSA 358-A:2, V, VII. It further alleges that defendants’ misrepresentations violated
the CPA under the general “rascality” standard set forth by the New Hampshire
Supreme Court.3 See, e.g., Axenics, Inc. v. Turner Constr. Co., 164 N.H. 659, 675-76
(2013). Defendants argue that the proposed amended complaint is futile because
the misrepresentation claims raised in Count III fail as a matter of law, insofar as
3 Although it is not altogether clear from the proposed amended complaint
itself whether Fujifilm’s “rascality” claim is based upon defendants’ purported misrepresentations or some other conduct, Fujifilm’s objection to defendants’ second motion for judgment on the pleadings makes clear that its rascality claim, both in the original complaint and in the proposed amended complaint, relates to alleged misrepresentations. See doc. no. 28 at 9-11.
19 Fujifilm does not allege that it received the purported misrepresentations “within”
New Hampshire as required by the CPA.4 RSA 358-A:2.
The CPA provides: “It shall be unlawful for any person to use any unfair
method of competition or any unfair or deceptive act or practice in the conduct of
any trade or commerce within this state.” RSA 358-A:2 (emphasis added). “The
New Hampshire Supreme Court has not specifically addressed how the ‘within this
state’ requirement applies to misrepresentation claims under [RSA] 358-A:2.” Ortiz
v. Sig Sauer, Inc., 448 F. Supp. 3d 89, 107 (D.N.H. 2020). However, this court has
held that “the locus of the conduct proscribed by [the CPA] is the place where the
misrepresentation is received.” BAE Sys. Inf. & Elecs. Sys. Integration Inc. v.
SpaceKey Components, Inc., No 10-cv-370-LM, 2011 WL 1705592, at *6 (D.N.H.
May 4, 2011). Phrased differently, a misrepresentation is made “within this state”
for purposes of the CPA “whenever a person receives a misrepresentation in the
State of New Hampshire.”5 Ortiz, 448 F. Supp. 3d at 107; see also Environamics
4 Defendants argue in the alternative that the CPA claims in the proposed
amended complaint are not pled with the specificity required by Federal Rule of Civil Procedure 9(b), and that any CPA claim stemming from Printers purchased before April 22, 2016 is time-barred.
5 Fujifilm alleges that requiring the misrepresentation to be received in New
Hampshire violates the Privileges and Immunities Clause in Article IV, Section 2 of the United States Constitution because it affords the CPA’s protections to New Hampshire citizens while denying them to noncitizens. Fujifilm lacks standing to assert this argument because the Privileges and Immunities Clause of Article IV does not apply to corporations. See Western & Southern Life Ins. Co. v. State Bd. of Equalization of Cal., 451 U.S. 648, 656 (1981); Kowalski v. Tesmer, 543 U.S. 125, 129 (2004). However, even if the Clause did apply to corporations, Fujifilm is simply incorrect in arguing that the CPA distinguishes between citizens and
20 Corp. v. Ferguson Enters., Inc., No. Civ. 00-579-JD, 2001 WL 1134727, at *4
(D.N.H. Sept. 24, 2001).
For example, in BAE Systems, the plaintiff and defendant contracted for the
defendant to identify buyers for plaintiff’s products. See BAE Sys., 2011 WL
1705592, at *1, *3. The plaintiff operated an office out of New Hampshire, and the
defendant operated out of Virginia. Id. at *2. One of the plaintiff’s products was a
“field programmable gate array . . . which it called the RH1280B.” Id. at *3. The
plaintiff issued a press release regarding the RH1280B which stated that the
product’s “total dose radiation-hardness” was “in excess of 300K rads.” Id. In
addition, the RH1280B’s product specifications stated that it “would meet all the
performance specifications of its predecessor.” Id. The defendant located customers
for the RH1280B in Connecticut, Maryland, and Virginia, and submitted purchase
orders to the plaintiff in accordance with their contract. See id. However, the
RH1280B ultimately failed to meet several of the promised specifications. See id.
When the plaintiff later sued the defendant for breach of contract, the defendant
brought a counterclaim alleging that the plaintiff’s misrepresentations regarding
the RH1280B violated the CPA. See id. at *1, *3.
This court granted the plaintiff’s motion to dismiss the defendant’s CPA
claim. Id. at *6. Although the defendant “allege[d] that it was misled by
advertising directed toward it from New Hampshire,” it made “no allegation that
noncitizens of New Hampshire. A noncitizen of New Hampshire is as capable of receiving a misrepresentation in this state as a citizen is.
21 [plaintiff’s] conduct involved commercial activities directed toward New Hampshire,
or that [plaintiff’s] conduct adversely affected [defendant’s] ability to do business in
New Hampshire.” Id. at *5-6. Rather, the gravamen of defendant’s CPA claim was
that it experienced the harm from the plaintiff’s alleged misrepresentations in
Virginia, where it operated its business. See id. at *6. Because the “locus” of the
CPA’s territoriality requirement “is the place where the misrepresentation is
received,” the defendant’s CPA claim involving misrepresentations received in
Virginia failed as a matter of law. Id.
Here, Fujifilm’s proposed amended complaint does not allege that it received
the complained-of misrepresentations in New Hampshire. Indeed, it fails to specify
where Fujifilm experienced the misrepresentations. Given that plaintiffs neither
operate their principal places of business in New Hampshire nor allege any physical
presence here, the court cannot reasonably infer from the allegations in the
proposed amended complaint that Fujifilm would have received any alleged
misrepresentations within New Hampshire.
Fujifilm contends that defendants’ misrepresentations occurred “within this
state” for CPA purposes because Novus Holdings signed the Distributor Agreement
in New Hampshire and manufactured Printers in New Hampshire. However, even
assuming Novus Holdings misrepresented the Printers’ quality or characteristics in
the Distributor Agreement or, somehow, in manufacturing the Printers, Fujifilm’s
contentions would only show that such misrepresentations originated in New
Hampshire. They would not show that Fujifilm received or experienced a
22 misrepresentation in New Hampshire, as required to state a claim under the CPA.
See BAE Sys., 2011 WL 1705592, at *5-6; see also Ortiz, 448 F. Supp. 3d at 107
(rejecting the argument that the CPA “reaches any misrepresentations . . .
originating from a place of business in New Hampshire”). “[A]n out-of-state entity
complaining about conduct originating in New Hampshire that has [only] an
extraterritorial effect” fails to state a claim under the CPA. BAE Sys., 2011 WL
1705592, at *5-6.
For the foregoing reasons, the court concludes that the CPA claims in Count
III of the proposed amended complaint fail as a matter of law.6 Thus, the proposed
amended complaint is futile to the extent it seeks to raise such claims.
IV. Defendants Have Not Demonstrated that Fujifilm’s Contract Claims Relating to Printers Purchased Before April 2016 Are Time-Barred
Finally, defendants argue that the proposed amended complaint is futile
insofar as the breach-of-contract claims relating to Printers purchased before April
2016 are time-barred. Although a Rule 12(b)(6) analysis ordinarily tests the
sufficiency of a plaintiff’s complaint, “it is sometimes permissible to grant a motion
to dismiss based on an affirmative defense, such as the statute of limitations.”
Centro Medico del Turabo, Inc. v. Feliciano de Melecio, 406 F.3d 1, 6 (1st Cir. 2005).
A motion to dismiss based upon a statute-of-limitations defense may be granted
6 In light of this conclusion, the court need not address defendants’
alternative arguments that Fujifilm’s CPA claims fail to comport with Federal Rule of Civil Procedure 9(b), or that its CPA claims relating to Printers purchased before April 2016 are time-barred.
23 “when the pleader’s allegations leave no doubt that an asserted claim is time-
barred.” Id. (quoting LaChapelle v. Berkshire Life Ins. Co., 142 F.3d 507, 509 (1st
Cir. 1998)).
The statute of limitations for contract actions in New Hampshire is three
years. See RSA 508:4. The limitations period begins running at the time of the
breach unless the plaintiff could not reasonably have discovered the breach at the
time of its occurrence. See id. In that case, the limitations period begins running
when “the plaintiff knows, or reasonably should have known, both that the
defendant breached the agreement and that the plaintiff suffered harm as a result.”
Archdiocese of San Salvador v. FM Intern., LLC, No. 05-CV-237-JD, 2006 WL
437493, at *4 (D.N.H. Feb. 23, 2006) (citing Coyle v. Battles, 147 N.H. 98, 101
(2001)).
Defendants contend that Fujifilm’s breach of contract claims all stem from a
warranty contained in the Service Agreement. Specifically, the Service Agreement
contained a one-year warranty that the Printers would be of merchantable quality
and would be “free from defects in material, workmanship, and design.” Doc. no.
26-2 at 52.7 Defendants assert that, because the warranty was for only one year, if
any breaches occurred with respect to a particular Printer they must have occurred
7 Although Fujifilm did not attach the Service Agreement to either the
original complaint or the proposed amended complaint, the defendants submitted it with their second motion for judgment on the pleadings. See doc. no. 26-2. Because Fujifilm’s contract claims depend on the Service Agreement, the court may consider it in its Rule 12(b)(6) analysis. See Ironshore Specialty Ins. Co. v. United States, 871 F.3d 131, 135 (1st Cir. 2017).
24 within one year of that Printer’s purchase. Thus, because this action was filed April
22, 2020, the defendants assert that any contract claims related to Printers
purchased before April 22, 2016—the last date that a Printer could have been
purchased with a warranty lasting until April 22, 2017 (three years before Fujifilm
filed suit)—are not timely.
The court does not agree that Fujifilm’s breach of contract claims are
dependent upon the warranty contained in the Service Agreement. “Under New
Hampshire law, ‘a breach of contract occurs when there is a failure without legal
excuse to perform any promise which forms the whole or part of a contract.’” Pro
Done, Inc. v. Basham, 172 N.H. 138, 142-43 (2019) (brackets omitted) (quoting
Lassonde v. Stanton, 157 N.H. 582, 588 (2008)). Count I of the proposed amended
complaint asserts that defendants breached the Distributor Agreement and Service
Agreement by, among other things, failing to remedy or repair defects in the
Printers, failing to accept the return of the Printers, failing to deliver Printers paid
for by Fujifilm, failing to indemnify Fujifilm, failing to honor its warranty
obligations under the Service Agreement, and failing to return Fujifilm’s deposits.
See doc. no. 32-1 ¶ 47. Only one of these theories of breach relates to the warranty
upon which defendants rely.
For example, the proposed amended complaint highlights Section 7(b) of the
Distributor Agreement, which provides that: “If the [Printers] or the tender of
delivery fails in any material respect to conform to specifications of [Fujifilm’s] . . .
25 purchase order, or if the [Printers] are defective or unsuitable upon delivery, . . .
[Novus Holdings] shall, at its election, either repair or replace the non-conforming
[Printers].” Doc. no. 32-1 at 23. Fujifilm alleges that defendants breached their
contract with Fujifilm by violating this provision—which is not subject to a one-year
window, and which does not depend on the warranty contained in the Service
Agreement. Nor do Fujifilm’s claims that defendants breached the contract by
failing to deliver printers altogether or to return Fujifilm’s deposits relate to the
time-limited warranty contained in the Service Agreement. In short, defendants
have not shown that Fujifilm’s breach of contract claims relating to Printers
purchased before April 22, 2016, are time-barred beyond all doubt. See Centro
Medico, 406 F.3d at 6. Thus, the court does not conclude that the proposed
amended complaint is futile to the extent it seeks to raise such claims.
CONCLUSION
Fujifilm’s motion to amend (doc. no. 32) is granted in part and denied in part.
It is denied as to Count III of the proposed amended complaint, as the CPA claims
alleged in Count III fail as a matter of law. The motion to amend is otherwise
granted. On or before March 10, 2021, Fujifilm shall file an amended complaint
that conforms with this order (i.e., asserting paragraphs 1 through 53 and Counts I
and II of doc. no. 32-1, but not asserting paragraphs 54 through 66 or Count III).
26 Once the amended complaint is filed, the court will deny as moot the pending
motions for judgment on the pleadings (doc. nos. 16 and 26).
SO ORDERED.
________________________ Landya McCafferty United States District Judge
February 24, 2021
cc: Counsel of Record