PROformance Vend USA Incorported v. Jones Lang LaSalle Incorporated

• Court: District Court, D. Arizona
• Decided: February 5, 2025
• Docket: 2:24-cv-02013
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 PROformance Vend USA Incorported, No. CV-24-02013-PHX-ROS

10 Plaintiff, ORDER

11 v.

12 Jones Lang LaSalle Incorporated, et al.,

13 Defendants. 14 15 Plaintiff PROformance Vend USA, Inc. (“PROformance” or “Plaintiff”) filed a 16 Second Amended Complaint (“SAC”) against Defendant Jones Lang LaSalle Americas, 17 Inc. (“JLL” or “Defendant”) alleging breach of contract, promissory estoppel, negligent 18 misrepresentation, intentional misrepresentation, and breach of the covenant of good faith 19 and fair dealing, in connection with an agreement to provide food and beverage vending 20 services at several Amazon facilities. (Doc. 12, “SAC”). Defendant seeks dismissal of all 21 five claims (Doc. 15, “Mot.”) arguing the claims fail because no valid four-year contract 22 was formed, nor was a four-year promise or representation ever made. Plaintiff responded 23 (Doc. 16, “Resp.”), and Defendant replied (Doc. 19, “Reply”). Because Plaintiff 24 adequately pled facts to support all claims, the motion will be denied. 25 I. BACKGROUND 26 The following facts are derived from the SAC, along with the Request for Proposal 27 (“RFP”) and subsequent communications by the parties attached to the Motion.1

28 1 Although Plaintiff did not attach the RFP and accompanying communications between the parties to the SAC, the Court can consider them when ruling upon this Motion because 1 On March 1, 2022, Defendant sent Plaintiff and other interested parties a Request 2 for Information (“RFI”) leading to an RFP regarding food vending services at several 3 Amazon facilities in Arizona. (SAC ¶ 4). In April 2022, Defendant prepared and sent to 4 Plaintiff the RFP for Food Services. (Id. ¶ 7). The RFP stated the “Anticipated Contract 5 Term” was for a period of “Four (4) years.” (Id. ¶ 9; Doc. 15-1, Ex. 1, “RFP” § 6, 6 Anticipated Contract Term). The RFP also stated, 7 This RFP documentation does not constitute and should not be interpreted as 8 a legal contract between JLL and your company. The submission of a proposal to JLL and the evaluation of the proposal by JLL does not represent 9 any kind of legal contract, even if all the required services, functions and 10 features stated in the RFP are fully met. (RFP § 6, Non-Disclosure). It further provided, 11 12 This RFP has been prepared by Jones Lang LaSalle and is being furnished so that potential Suppliers might prepare a Proposal to address the business 13 requirements. The information contained in this RFP has been prepared to 14 guide interested parties in making their own evaluation and does not purport to contain all information that a Supplier may desire. While every attempt 15 will be made to provide thorough, accurate information, Jones Lang LaSalle 16 and/or AMAZON shall have no liability for any inaccuracies that may be contained in this RFP, or any accidental omissions from this RFP. Much of 17 the information is based on historical trends, which may or may not repeat 18 themselves. Nothing contained in this RFP can be relied upon as a commitment, guarantee or representation regarding future events of 19 performance. 20 (RFP § 6, RFP Information). Proposals submitted in response to the RFP were to 21 be “considered [as] an offer to contract by the Supplier.” (RFP § 6, Supplier 22 Responsibility). However, the RFP granted Defendant discretion to “[d]epart from or 23 modify the proposed framework and/or any other procedures in relation to the RFP.” (RFP 24 § 6, Disclaimers). 25 On September 8, 2022, Defendant sent Plaintiff an email containing a letter of intent 26 to award Plaintiff “full Vending/Kitchenette operations” for eight Amazon facilities. (SAC 27

28 “plaintiff refers extensively to the document[s] or the document[s] form[] the basis of the plaintiff’s claims.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). 1 ¶ 13; Doc. 15-1, Ex. 3, “LOI”). The letter stated, in relevant part, 2 Our District 4 Food Program Manager will be working in conjunction with 3 myself and the BB/YB FM to align on an install schedule. The goal would be to have all sites under the PROformance umbrella by the end of 2022. 4 5 Your interest in supporting Jones Lang LaSalle and AMAZON is greatly appreciated and we look forward to a successful long-term business 6 relationship. We will be sending you the necessary contract forms for 7 execution and contacting your [sic] shortly to establish a transition meeting. 8 (LOI). The parties corresponded in September and October regarding equipment and 9 installation plans. (SAC ¶¶ 16–20). Plaintiff twice emailed Defendant inquiring about the 10 status of the contract. (Id. ¶¶ 17, 21). 11 On October 24, 2023, Defendant’s agent emailed Plaintiff stating, “I want to ensure 12 you will have all the equipment ready for install in January.” (Id. ¶ 22). And on November 13 21, 2022, another of Defendant’s agents emailed Plaintiff to ensure certain items were on 14 Plaintiff’s product list to order. (Id. ¶ 23). Relying on these instructions, Plaintiff secured 15 financing to fund the project in order to meet the January and February 2023 deadlines with the understanding that it would have a four-year term to recoup its overhead and expenses. 16 (Id. ¶¶ 24–25). Throughout this time, Plaintiff was unaware the contract term would be 17 less than four years and would contain a provision allowing for a 30-day notice of 18 termination without cause provision. (Id. ¶ 27). 19 Plaintiff completed its install work and began providing food and beverage vending 20 services at various Amazon locations in November 2022 and thereafter. (SAC ¶ 28). In 21 late November 2022, Defendant, for the first time, provided Plaintiff a draft of a Service 22 Contract Agreement with an effective date of November 21, 2022. (Id. ¶ 30). The 23 Agreement contained a termination date three years later (instead of the “anticipated” term 24 of four years stated in the RFP), along with a provision allowing Defendant to terminate 25 the contract at any time upon 30-days’ written notice and without any cause. (Id. ¶¶ 30– 26 31). 27 After reviewing the contract draft, Plaintiff insisted on a four-year term without the 28 30-day termination provision but was told by Defendant that it could not offer a four-year 1 term because Defendant’s contract with Amazon ended before then and Defendant did not 2 know whether it would continue being Amazon’s property manager. (Id. ¶ 32). However, 3 Plaintiff was told by Defendant’s employees to “keep moving forward with the installs and 4 not to worry the written contract wasn’t signed yet because they would get the contract that 5 was promised by the RFP.” (Id. ¶ 33). Nevertheless, Defendant continuously refused to 6 provide a contract on the terms insisted by Plaintiff in reliance on the RFP, all while 7 Plaintiff proceeded to secure financing and provide vending services at the Amazon 8 locations. (Id. ¶ 36–37). On July 1, 2024, after 18 months of providing vending services, 9 Plaintiff received a letter from Defendant stating, “this letter will serve as JLL’s 10 termination notice of our business relationship with PROformance for the Amazon 11 account.” (Id. ¶ 39). 12 II. MOTION TO DISMISS 13 A complaint must set forth a “short and plain statement of the claim showing that 14 the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “To survive a motion to dismiss, 15 a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to 16 relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 17 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted)). If “the 18 well-pleaded facts do not permit the court to infer more than the mere possibility of 19 misconduct, the complaint” has not adequately shown the pleader is entitled to relief. Id. 20 at 679. Although federal courts ruling on a motion to dismiss “must take all of the factual 21 allegations in the complaint as true,” they “are not bound to accept as true a legal 22 conclusion couched as a factual allegation.” Id. at 678 (quoting Twombly, 550 U.S. at 555) 23 (internal quotations omitted). 24 A. Breach of Contract (Count I) 25 Defendant asserts Plaintiff’s breach of contract claim fails because the parties never 26 formed a four-year contract. Plaintiff contends a valid and enforceable contract was 27 formed because Plaintiff’s response to the RFP incorporating the terms of the RFP served 28 as an offer, and Defendant’s letter of intent to award vending operations to Plaintiff served 1 as an acceptance of that offer. The Court finds the parties formed a valid and enforceable 2 contract despite a formal, written agreement, based on the parties’ performance pursuant 3 to the terms in the RFP. 4 “To state a claim for breach of contract under Arizona law, a plaintiff must allege 5 (1) the existence of a contract between the parties; (2) defendant’s breach of the contract; 6 and (3) plaintiff’s resulting damages.” Synder v. HSBC Banks, USA, N.A., 873 F. Supp. 2d 7 1139, 1148 (D. Ariz. 2012). In order to establish the existence of a contract, “there must 8 have been an offer, acceptance of the offer, and consideration … and [the parties] must 9 have intended to be bound by the agreement.” Goodman v. Physical Res. Eng’g, Inc., 270 10 P.3d 852, 855 (Ariz. Ct. App. 2011) (internal citations omitted). A binding agreement 11 “must be definite and certain so that the liability of the parties may be exactly fixed.” Rogus 12 v. Lords, 804 P.2d 133, 136 (Ariz. App. Ct. 1991); see AROK Const. Co. v. Indian Const. 13 Services, 848 P.2d 870, 877 (Ariz. App. Ct. 1993) (“Only ‘[i]f the essential terms are so 14 uncertain that there is no basis for deciding whether the agreement has been kept or broken’ 15 does a contract not exist.” (citing RESTATEMENT (SECOND) OF CONTRACTS § 33 (1981)). 16 Generally, agreements to agree such as letters of intent do not form enforceable 17 contracts where all essential elements of the future contract are not set forth. T. D. Dennis 18 Builder, Inc. v. Goff, 418 P.2d 367, 370 (Ariz. 1966). However, “[a] contract may be 19 formed, even if not formally executed, if it is clear the parties intended to bind themselves 20 to the terms.” Johnson Intern., Inc. v. City of Phoenix, 967 P.2d 607, 611 (Ariz. App. Ct. 21 1998) (citing AROK, 174 Ariz. at 297). “A court may look to surrounding circumstances 22 and the conduct of the parties to determine the parties’ intent.” Id. (citing Burkett v. 23 Morales, 626 P.2d 147, 148 (Ariz. App. Ct. 1981). 24 The circumstances alleged here make clear the parties intended to bind themselves 25 to an informal agreement. Indeed, the parties maintained a business relationship under the 26 terms of the RFP without ever effectuating a formal agreement. Before Defendant 27 presented Plaintiff with a draft of the formal agreement, Defendant requested Plaintiff order 28 equipment and prepare for installation to meet certain deadlines—tasks that required 1 Plaintiff to obtain financing and act expediently without waiting for a formal agreement— 2 to which Plaintiff complied. The termination provisions of the formal draft agreement 3 differed significantly from the expectations created under the RFP, to Plaintiff’s detriment. 4 Despite assurances from Defendant that the requested terms would be implemented and 5 Defendant’s ultimate failure to do so, Plaintiff performed services for 18 months until 6 Defendant allegedly sought to unilaterally terminate the parties’ business relationship 7 pursuant to terms explicitly rejected by Plaintiff. The conduct of the parties indicates 8 performance was not predicated on the reaching of a formal agreement, and thus, the letter 9 of intent was sufficient to create an enforceable contract. Finding otherwise would 10 contravene Arizona’s “policy of the law to uphold agreements.” AROK, 848 P.2d at 875. 11 The AROK court eloquently explained this paradigm: 12 The enforcement of incomplete agreements is a necessary fact of economic 13 life. Business people are not soothsayers, and can neither provide in advance for every unforseen contingency nor answer every unasked question 14 regarding a commercial agreement ... [P]arties may want to bind themselves 15 and at the same time desire to leave some matters open for future resolution in order to maintain flexibility. Thus, courts are often presented with 16 incomplete bargains when the parties intend and desire to be bound ... 17 Refusing the enforcement of obligations the parties intended to create and that marketplace transactions require hardly seems the solution. 18 AROK, 848 P.2d at 876. Plaintiff has sufficiently pled a claim for breach of contract, 19 and Defendant’s motion is denied as to Count I. 20 B. Promissory Estoppel (Count II) 21 “The need for a particular remedy may sometimes become apparent as a result of 22 part performance or other action in reliance on an indefinite agreement, even though the 23 original uncertainty remains. The appropriate remedy may be non-contractual.” 24 RESTATEMENT (SECOND) OF CONTRACTS § 34 cmt. d (1981). Defendant argues it did not 25 promise Plaintiff a four-year contract. But the SAC alleges otherwise. 26 “A promissory estoppel claim allows a plaintiff to recover for detrimental reliance 27 on a promise.” Satamian v. Great Divide Insurance Co., 545 P.3d 918, 926 (Ariz. 2024). 28 Under Arizona law, a promissory estoppel claim “requires ‘a promise, which the promissor 1 should reasonably foresee would cause the promisee to rely, upon which the promisee 2 actually relies to his detriment.’” Id. (quoting Contempo Constr. Co. v. Mountain States 3 Tel. & Tel. Co., 736 P.2d 13, 16 (Ariz. Ct. App. 1987). 4 The alleged assurances of a four-year term made by employees of Defendant serve 5 as the basis for a promissory estoppel claim. Plaintiff alleges that after learning about 6 Defendant’s unwillingness to enter into a four-year contract and raising the issue with 7 Defendant, several of its employees “told Plaintiff to keep moving forward with the installs 8 and not worry the written contract wasn’t signed yet because they would get the contract 9 that was promised by the RFP.” (SAC ¶ 33). Plaintiff allegedly relied on the promise of a 10 four-year term without the 30-day termination provision in continuing to perform the 11 obligations requested by Defendant, to its detriment. (Id. ¶¶ 53–57). Thus, Plaintiff 12 sufficiently pled a claim for promissory estoppel, and Defendant’s motion is denied as to 13 Count II. 14 C. Negligent and Intentional Misrepresentation (Counts III and IV) 15 Defendant asserts Plaintiff inadequately pled its claims for negligent and intentional 16 misrepresentation. The Court finds both claims were adequately pled. 17 In Arizona, the elements of negligent misrepresentation are: (1) the defendant 18 provided false information in a business transaction; (2) the defendant intended for the 19 plaintiff to rely on the incorrect information or knew that it reasonably would rely; (3) the 20 defendant failed to exercise reasonable care in obtaining or communicating the 21 information; (4) the plaintiff justifiably relied on the incorrect information; and (5) 22 resulting damage. KB Home Tucson, Inc. v. Charter Oak Fire Ins. Co., 340 P.3d 405, 412 23 n.7 (Ariz. Ct. App. 2014). An omission of a fact may also serve as the basis for a negligent 24 misrepresentation claim. McAlister v. Citibank, 829 P.2d 1253, 1261 (Ariz. Ct. App. 25 1992). 26 Defendant argues the anticipated contract term of four years stated in the RFP 27 cannot form the basis of a negligent misrepresentation claim because “[a] promise of future 28 conduct is not a statement of fact capable of supporting a claim for negligent 1 misrepresentation.” (Mot. at 6) (quoting McAlister, 829 P.2d at 1261. While this is true, 2 Plaintiff adequately alleges Defendant made a misrepresentation by omission by not 3 disclosing, before Plaintiff began arranging for performance, that Defendant’s contract 4 with Amazon was set to lapse in three years, rendering impossible a four-year term between 5 the parties. The SAC alleges the anticipated contract term in the RFP “was included to 6 induce bidders to respond to the RFP knowing they would have at least four years to recoup 7 their substantial investments.” (SAC ¶ 63). Thus, Plaintiff sufficiently alleges that 8 Defendant failed to exercise reasonable care in not disclosing to Plaintiff that such a 9 material term was not possible before Plaintiff began relying on this omission to its 10 detriment. Plaintiff also sufficiently alleges that, at relevant times before it completed its 11 install work and began providing food and beverage vending services at various Amazon 12 locations, Defendant failed to disclose the 30-day termination provision it intended to 13 include in the parties’ formal agreement. According to the SAC, Defendant therefore knew 14 Plaintiff had no other information to rely on when beginning performance besides the 15 contents of the RFP and omitted material facts during that time. 16 Relatedly, but distinctly, the elements of intentional misrepresentation in Arizona 17 are: “(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of 18 its falsity or ignorance of its truth; (5) his intent that it should be acted upon by the person 19 and in a manner reasonably contemplated; (6) the hearer’s ignorance of its falsity; (7) his 20 reliance on its truth; (8) his right to rely thereon, and (9) his consequent and proximate 21 injury.” Wagner v. Casteel, 663 P.2d 1020, 1022 (Ariz. Ct. App. 1983). The analysis here 22 is substantially similar to the negligent misrepresentation claim. In addition to pleading 23 the requisite elements above, Plaintiff alleges Defendant acted intentionally in omitting 24 information about the impossibility of a four-year term and the inclusion of a 30-day 25 termination provision. (SAC ¶ 70). Thus, Plaintiff sufficiently pled claims for negligent 26 and intentional misrepresentation, and Defendant’s motion is denied as to Counts III 27 and IV. 28 / / / 1 D. Breach of the Covenant of Good Faith and Fair Dealing (Count V) 2 Count V of the SAC alleges Defendant breached the implied covenant of good faith 3 and fair dealing by “refusing to give a four-term and by including a right of Defendant to 4 cancel the contract even for no reason, simply by giving 30 days’ notice, and then by 5 outright cancelling the agreement after 18 months.” (SAC ¶ 77). “The law implies a 6 covenant of good faith and fair dealing in every contract.” Rawlings v. Apodaca, 726 P.2d 7 565, 569 (Ariz. 1986). “The essence of that duty is that neither party will act to impair the 8 right of the other to receive the benefits which flow from their agreement or contractual 9 relationship.” Id. While a breach of the implied covenant is not dependent on a breach of 10 an express contractual term, Bike Fashion Corp. v. Kramer, 46 P.3d 431, 434–35 (Ariz. Ct. 11 App. 2002), it is dependent on the existence of a valid contract. 12 Defendant argues Plaintiff failed to plead a viable breach of the covenant of good 13 faith and fair dealing claim because the claim merely realleges Plaintiff’s breach of contract 14 claim. But both claims are not mutually exclusive, and they were not pled as such. See 15 Wells Fargo Bank v. Ariz. Laborers, Teamsters and Cement Masons Local No. 395 Pension 16 Trust Fund, 38 P.3d 12, 29 (2002) (“A party may breach an express covenant of a contract 17 without breaching the implied covenant of good faith and fair dealing. Conversely, ... a 18 party may ... breach its duty of good faith without actually breaching an express covenant 19 in the contract.”). 20 Plaintiff alleges under the contract formed the parties, Defendant had a duty to act 21 fairly and in good faith which required that it not do anything that would prevent Plaintiff 22 from receiving the benefits of the agreement. And “by refusing to agree to the terms of the 23 contract, by refusing to give a four-year term and by including a right of [Defendant] to 24 cancel the contract even for no reason, simply by giving 30 days’ notice, and then by 25 outright cancelling the agreement after 18 months, [Defendant] breached its duty of good 26 faith and fair dealing.” (Reply at 16). Thus, Plaintiff sufficiently pled a claim for breach 27 of the covenant of good faith and fair dealing, and Defendant’s motion is denied as to Count 28 V. 1 * ** ** 2 Accordingly, 3 IT IS ORDERED Defendant’s Motion to Dismiss Second Amended Complaint 4|| (Doc. 15) 1s DENIED. 5 Dated this 4th day of February, 2025. 6 fo . 7 ‘ —— .

9 Senior United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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