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Jofran Sales, Inc. v. Watkins and Shepard Trucking, Inc.

United States District Court, D. Massachusetts

November 2, 2016

JOFRAN SALES, INC. Plaintiff,
v.
WATKINS AND SHEPARD TRUCKING, INC., Defendant,

          MEMORANDUM AND ORDER ON MOTION TO DISMISS

          F. DENNIS SAYLOR IV UNITED STATES DISTRICT JUDGE

         This matter arises out of a contract dispute between a wholesale furniture supplier and a trucking and freight management company. Plaintiff Jofran Sales, Inc., has brought suit against defendant Watkins and Shepard Trucking, Inc. In 2015, plaintiff and defendant entered into a contract for defendant to process and store plaintiff's furniture inventory at a warehouse in California. Plaintiff contends that defendant failed to store inventory properly, failed to send needed notifications and reports concerning incoming and outgoing inventory, and sent improper invoices. The verified complaint alleges seven claims, including claims for breach of contract, negligence, tortious interference with business relations, and violations of consumer protection statutes under Massachusetts, Montana, and California law.

         Defendant has filed a motion to dismiss on the basis of forum non conveniens, or, in the alternative, to dismiss Counts Five and Six of the verified complaint, which allege violations of the Massachusetts and Montana Consumer Protection Acts, respectively. For the following reasons, defendant's motion to dismiss will be denied in part and granted in part.

         I. Factual Background

         The following facts are presented as stated in the complaint with all inferences construed in plaintiff's favor. In addition, the Court will consider all documents whose contents are alleged and the authenticity no party questions as “effectively merge[d] into the pleadings.” Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 17 (1st Cir. 1998).

         Plaintiff, Jofran Sales, Inc., is a wholesale seller of furniture, much of which is imported. Defendant Watkins and Shepard Trucking, Inc. manages warehouses and ships furniture. Jofran is based in Massachusetts, while Watkins is based in Montana.

         From 2008 to 2015, Jofran received furniture cargo at the port in Tacoma, Washington. Pursuant to a Storage Pricing Agreement between the parties, Watkins was responsible for handling and storing the cargo when it arrived at port. Jofran's larger customers ordered furniture and sent their own shippers to the Watkins's warehouse to pick it up. Watkins handled arrangements for the pick-up, including staging the inventory, confirming scheduled pick-up appointments, and notifying Jofran when pick-ups occurred. Watkins and Jofran had a separate shipping contract, pursuant to which Watkins shipped inventory to smaller customers that did not do their own pick-up. Watkins was responsible for providing Jofran with notifications and reports about the inventory so that Jofran could know what inventory was available to sell or ship to customers, and what was available for pick-up.

         By the end of 2014, Jofran was beginning to outgrow the Washington warehouse. Watkins suggested that Jofran move its inventory to a larger facility in southern California. In May 2015, Watkins showed Jofran a warehouse on Beech Avenue in Fontana, California, that Jofran determined would suit its needs. Although the warehouse was not yet set up, Watkins confirmed that it would be ready by September 2015.

         The parties entered into a new two-year Storage Pricing Agreement (the “2015 Agreement”), under which Watkins agreed to provide similar notifications, reports, and services as under the old agreement, and further provided that all inventory would be placed on racks in order to prevent damage. Jofran signed the 2015 Agreement at its offices in Norfolk, Massachusetts. Watkins signed the Agreement at its offices in Missoula, Montana. The 2015 Agreement became effective on September 1, 2015.

         Problems with the new warehouse began almost immediately. In September 2015, Jofran began shipping inventory from the Washington warehouse to the Beech Avenue warehouse. Contrary to the parties' agreement, the Beech Avenue warehouse was not prepared to receive the shipments on September 1, so the containers sat unemptied on the lot. Watkins began moving the inventory into the warehouse during the last week of September. The late opening caused a backlog that significantly delayed Watkins' first shipments of Jofran's inventory.

         In October 2015, Watkins informed Jofran that it planned to move Jofran's inventory from the Beech Avenue warehouse to a different facility located on Hemlock Avenue in Fontana. Jofran later learned that it was Watkins' sole customer at the Hemlock Avenue warehouse. The Hemlock Avenue warehouse did not contain racks to properly store the inventory, so some furniture was damaged.

         In addition to the problems with the Hemlock Avenue warehouse, Jofran had problems receiving accurate information about the status of its inventory. In early November 2015, a Jofran representative traveled from Massachusetts to visit the Hemlock Avenue warehouse in order to try to resolve the notification issues. While at the warehouse, the representative observed that Watkins lacked the necessary technology to scan inventory as it was unloaded from containers, which prevented Jofran from receiving the reports and notifications it needed to manage customer orders. She also observed that inventory was not in the proper location, inventory was not correctly labeled, and numerous orders had not been shipped.

         Jofran continued to have problems with Watkins' inventory management, including failure to put out orders for pick-up, failure to generate proper paperwork for orders, and failure to ship orders. Those problems caused delays, cancellations, orders to be sent with the wrong inventory, and orders to go missing.

         Beginning in October 2015, Jofran also started having issues with the invoices issued by Watkins. Jofran contends that Watkins backdated invoices and then claimed they were overdue; charged fees for storage based on inflated inventory levels; and claimed that invoices had been sent that Jofran never received. Watkins did not respond to Jofran's repeated requests for documentation to support what it viewed as inaccuracies in the invoices. As a result, Jofran did not pay the invoices.

         On January 8, 2016, Watkins sent Jofran a letter by e-mail at its Massachusetts office claiming an arrearage of $250, 728.33, the majority of which was more than twenty days past due. The letter stated that, “[b]ecause of this sizable and persistent arrearage, it is clear that Jofran has no intention of performing its obligations . . . .” The letter further stated that Watkins considered the arrearage a “material breach” of the parties' agreement, that it was rescinding the agreement, and that it would not ship any Jofran inventory until the account was paid in full.

         On January 11, 2016, Jofran and Watkins entered into an agreement under which Jofran agreed to pay $150, 000 and provide Watkins with an itemized list by January 22, 2016, of all invoices that it disputed or had never received. The parties agreed to “work in good faith and with best efforts to resolve their mutual disputes regarding the Contracts.”

         Jofran wired Watkins $150, 000 the following day. On January 22, it sent a letter detailing the invoice issues and requesting additional information. Watkins did not respond to the letter. Instead, on January 25, 2016, Watkins sent Jofran a letter stating that it still considered Jofran to be in material breach, and that it would move forward with the relationship only if Jofran agreed to a new “simplified” pricing arrangement that was more expensive than the existing contract terms. Four days later, Jofran responded that it had sustained damages caused by Watkins' warehousing issues and that it would not move forward with a new arrangement until the parties resolved the existing dispute over invoices.

         On February 3, 2016, Watkins informed Jofran that it was “no longer interested in salvaging any business relationship, ” and served Jofran with a complaint that ...


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