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A&M M S Processing, LLC v. Stericycle, Inc.

United States District Court, M.D. Florida, Tampa Division

March 31, 2017

A&M M S PROCESSING, LLC, Plaintiff,
v.
STERICYCLE, INC., Defendant.

          ORDER

          STEVEN D. MERRYDAY, UNITED STATES DISTRICT JUDGE.

         In October 2013, Stericycle agreed to provide Scrap King with several thousand pounds of “recycleable material” each month. (Doc. 2 at 7-11, the Stericyle-Scrap King contract) Under the contract, “recycleable material” excludes “regulated medical waste.” (Doc. 2 at 7) Alleging that Stericyle furnished regulated medical waste, A&M M s Processing sued Stericyle in state court for breach of contract, fraudulent inducement, and negligence. Stericycle removes (Doc. 1) the action and invokes diversity jurisdiction. Arguing that A&M “lacks standing” to sue Stericycle for breach of contract and fraudulent inducement and arguing that the “independent tort rule” bars the negligence and fraudulent inducement claims, Stericyle moves (Doc. 8) to dismiss “the complaint” with prejudice under Rule 12(b)(6), Federal Rules of Civil Procedure.

         DISCUSSION

         1. Breach of contract

         Despite moving under Rule 12(b)(6) to dismiss the complaint, Stericycle argues that A&M is not the real party in interest to this action. (Doc. 8 at 5, for example, stating that “A&M does not have standing to sue Stericycle for breach of contract”) Rule 17 requires prosecution of an action by the “real party in interest, ” that is, the owner of the right “enforced through the litigation.” Moore's Federal Practice, Vol. 4 § 17.10 (Matthew Bender 3d ed.). In a diversity action, state law determines the real party in interest. United States v. 936.71 Acres of Land, More or Less, in Brevard Cty., 418 F.2d 551, 556 (5th Cir. 1969).

         Under Illinois law, which governs the claim for breach of contract (Doc. 2 at 9), a contracting party, a third-party beneficiary, or an assignee can sue for breach of contract.[1] Neither a contracting party nor a third-party beneficiary, A&M can sue only if an assignee. A contractual assignment clause states:

This Agreement shall be binding upon and inure solely to the benefit of the parties and their permitted assigns. . . . .
Neither party shall assign this Agreement without the other party's prior written consent.

(Doc. 2, the Stericyle-Scrap King contract at 3) Because the complaint contains no allegation that Scrap King assigned the contract to A&M and that Stericyle consented in writing to the assignment, A&M fails to state a claim for breach of contract and cannot sue Stericycle for breach of the Stericycle-Scrap King contract.

         2. Fraudulent inducement

         The parties agree that Florida law governs a tort claim in this action. Under Florida law, a defendant fraudulently induces a plaintiff to contract by knowingly misrepresenting a material fact on which the defendant intended the plaintiff to rely and on which the plaintiff reasonably relied in contracting. Johnson v. Davis, 480 So.2d 625, 627 (Fla. 1985). Because Scrap King, not A&M, contracted with Stericyle, A&M fails to state a claim for fraudulent inducement and cannot sue Stericycle for fraudulent inducement.

         3. Amount in controversy

         To establish that the amount in controversy exceeds $75, 000, Stericycle's notice of removal appears to rely exclusively on damages attendant to A&M's claims for breach of contract and fraudulent inducement. (Doc. 1 at 4-7) Because A&M is not the real party in interest to the claims for breach of contract and fraudulent inducement, Stericycle cannot rely on damages from those claims to establish the amount in controversy. Ryan v. Flame Refractories, Inc., 759 F.Supp. 774, 777-78 (S.D. Ala. 1991) (Butler, J.) (citing Myers v. Long Island Lighting Co., 623 F.Supp. 1076 (E.D.N.Y. 1985) (Wexler, J.)). No later than APRIL 21, 2017, Stericycle must submit a memorandum that shows the amount in controversy from A&M's negligence claim more likely than not exceeded $75, 000 on February 2, 2017, the day of removal. The memorandum, supported by a record showing of fact, must not exceed ten pages. Determination of Stericycle's motion to dismiss the negligence claim is DEFERRED until Stericyle proffers evidence sufficient to invoke diversity jurisdiction. The failure to timely proffer evidence that the amount in controversy from the negligence claim exceeded $75, 000 on February 2, 2017, will result in the remand of this action without further notice. If Stericycle's memorandum warrants a response, an order will direct A&M to respond.

         4. Motion to ...


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