Case 2:21-cv-10983-SFC-APP ECF No. 19, PageID.171 Filed 10/22/21 Page 1 of 10
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
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`Plaintiff,
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`IPS Contracting, Inc.,
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`v.
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`Rivian Automotive, LLC,
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`Defendant.
`______________________________/
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`Civil Case No. 21-10983
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`Sean F. Cox
`United States District Court Judge
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`OPINION AND ORDER
`GRANTING DEFENDANT’S PARTIAL MOTION TO DISMISS
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`This is a civil dispute arising out of a demolition contract. Plaintiff, IPS Contracting, alleges
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`that they are entitled to scrap material, which Defendant, Rivian Automotive, LLC, has failed to
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`provide them. Plaintiff alleges that Defendant: (1) breached a contractual agreement; (2) was
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`unjustly enriched; (3) is liable for promissory estoppel; (4) made an innocent misrepresentation;
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`and (5) is liable for conversion and statutory conversion. (Am. Compl., ECF No. 6, at PageID 38-
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`45).
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`Currently, the matter before the Court is Defendant’s Partial Motion to Dismiss (ECF No.
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`10). The motion has been fully briefed, and the Court concludes that oral argument is not
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`necessary. Thus, the Court orders that the motions will be decided without a hearing. See E.D.
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`Mich. LR 7.1(f).
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`For the following reasons, the Court GRANTS Defendant’s motion and DISMISSES
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`Counts II - VI.
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`1
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`Case 2:21-cv-10983-SFC-APP ECF No. 19, PageID.172 Filed 10/22/21 Page 2 of 10
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`BACKGROUND
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`On March 29, 2021, Plaintiff initiated this action against Defendant in Wayne County
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`Circuit Court. (ECF No. 1-1). Plaintiff alleges the following claims: breach of contract (Count
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`One); quantum meruit/unjust enrichment (Count Two); promissory estoppel (Count Three);
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`innocent misrepresentation (Count Four); conversion (Count Five); and statutory conversion
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`(Count Six). (Am. Compl., at PageID 38-45).
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`On May 1, 2021, Defendant removed the matter to this Court pursuant to 28 U.S.C. §§
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`1332(a), 1441, and 1446. (ECF No. 1). On June 29, 2021, Defendant filed a Partial Motion to
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`Dismiss pursuant to FED. R. CIV. P. 12(b)(6) requesting the Court dismiss Counts II through VI for
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`failure to state a claim. (ECF No. 10).
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`Because this matter comes before the Court on a motion to dismiss the Amended
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`Complaint, the following allegations in Plaintiff’s Amended Complaint are taken as true. Ashcroft
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`v. Iqbal, 556 U.S. 662, 678 (2009).
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`In January 2017, Defendant “purchased a Plant in order to manufacture its new fleet of
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`electric vehicles.” Id. at ¶ 7. To produce the electric vehicles, Defendant needed to “demolish,
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`strip-out and massively reconfigure the Plant, which when purchased, had been filled with paint
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`booths, multiple assembly line conveyors and other equipment . . . .” Id. at ¶ 8.
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`On January 16, 2019, Plaintiff submitted a bid to perform the demolition work. Id. at ¶ 10.
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`Plaintiff alleges that the bid not only stated that the total cost would be “$6,596,920” but it also
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`“expressly stated” that said bid was contingent upon Plaintiff “receiving title to all scrap and
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`equipment (i.e., robots, conveyors, panels, scrap metal, etc.).” Id.
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`Case 2:21-cv-10983-SFC-APP ECF No. 19, PageID.173 Filed 10/22/21 Page 3 of 10
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`Defendant accepted Plaintiff’s proposal and “issued a purchase order on January 31, 2019,
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`in the amount of $6,596,920.” Id. at ¶ 18. Throughout the course of the demolition, Defendant
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`submitted subsequent purchase orders to the Plaintiff. Id. at ¶ 12-13. The “same language”
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`regarding the scrap equipment was used in each subsequent purchase order. Id. at ¶ 13. Plaintiff
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`further alleges that “[t]he inclusion of the transfer of title of the scrap and equipment . . . is
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`significant and was a material component of [Plaintiff’s] bid estimate.” Id. at ¶ 15. Plaintiff alleges
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`that “the scrap and equipment . . . has a substantial economic value.” Id. at ¶ 16.
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`Once Plaintiff initiated the demolition work, it:
`began to notice that volume of scrap and equipment it had intended to harvest from
`the Plant was substantially less than expected. For example, thousands of tons of
`copper wire were missing, robots that were intended to be removed by [Plaintiff]
`were not present and air filtering equipment had vanished.
`Id. at ¶ 18. The “scrap and equipment” at issue were allegedly going to be used by Plaintiff to
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`offset the “costs to perform the work in question.” Id. at ¶ 39. The unexplained removal of the
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`“scrap and equipment was continuous and systematic throughout the life of the project.” Id. at ¶
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`19.
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`When Plaintiff told Defendant about the situation, “Defendant’s . . . representatives
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`responded . . . with feigned concern, or . . . told [Plaintiff] that Plaintiff was not entitled to the
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`scrap material and equipment.” Id. at ¶ 20. Plaintiff alleges that they were able to “generate some
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`revenue from the recovery of scrap and equipment” but “it was millions of dollars less than what
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`was reasonably anticipated.” Id. at ¶ 21. Furthermore, Plaintiff alleges “that several Rivian
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`employees working at the Plant were actually stealing the scrap and equipment.” Id. at ¶ 22.
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`Plaintiff has asked Defendant to be reimbursed “for the value of the scrap, material and equipment
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`that it was denied as a result of [Plaintiff’s] and its employees’ theft and misappropriation.” Id. at
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`Case 2:21-cv-10983-SFC-APP ECF No. 19, PageID.174 Filed 10/22/21 Page 4 of 10
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`¶ 23. Defendant has refused to reimburse Plaintiff. Id. Plaintiff filed this matter in response. (ECF
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`No. 1).
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`STANDARD OF REVIEW
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`A motion to dismiss tests the legal sufficiency of the plaintiff’s complaint. To survive a
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`motion to dismiss, the complaint must state sufficient “facts to state a claim to relief that is
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`plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Claims comprised
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`of “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not
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`do.” Id. at 555. “A claim has facial plausibility when the plaintiff pleads factual content that allows
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`the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
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`Ashcroft v. Iqbal, 556 U.S. 662 (2009).
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`Although the Court must accept all well-pleaded factual allegations as true for purposes of
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`a motion to dismiss, the Court is “not bound to accept as true a legal conclusion couched as a
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`factual allegation.” Twombly, 550 U.S. at 555. Thus, to avoid dismissal, “a complaint must contain
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`sufficient factual matter,” accepted as true, to state a claim for relief that is plausible on its face.
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`Id. at 678. In practice, a complaint must contain either direct or inferential allegations respecting
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`all the material elements to sustain recovery under some viable legal theory. Lillard v. Shelby
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`County Bd. of Educ., 76 F.3d 716, 726 (6th Cir. 1996).
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`“A complaint should not be dismissed for failure to state a claim unless it appears beyond
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`doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to
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`relief.” Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993). “The fundamental purpose of pleadings
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`under the Federal Rules of Civil Procedure is to give adequate notice to the parties of each side’s
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`Case 2:21-cv-10983-SFC-APP ECF No. 19, PageID.175 Filed 10/22/21 Page 5 of 10
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`claims and to allow cases to be decided on the merits after an adequate development of the facts.”
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`Id.
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`“When a court is presented with a Rule 12(b)(6) motion, it may consider the Complaint
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`and any exhibits attached thereto, public records, items appearing in the record of the case and
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`exhibits attached to defendant’s motion to dismiss so long as they are referred to in the Complaint
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`and are central to the claims contained therein.” Weiner v. Klais & Co., 108 F.3d 86, 89 (6th Cir.
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`1997).
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`ANALYSIS
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`Because this Court sits in diversity, the substantive law of Michigan governs the claims of
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`in this case. Armisted v. State Farm Mut. Auto. Ins. Co., 675 F.3d 989, 995 (6th Cir. 2012).
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`Defendant argues that Plaintiff’s allegations (Counts II-VI) should be dismissed because
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`Plaintiff has failed to state plausible claims for: (1) unjust enrichment/quantum meruit; (2)
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`promissory estoppel; (3) innocent misrepresentation; (4) statutory conversion; and (5) conversion.
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`(Def’s Br., at PageID.81). The Court will address each claim in turn.
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`I. Unjust Enrichment/Quantum Meruit (Count II)
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`In Count II, Plaintiff alleges a quantum meruit/unjust enrichment claim, in the alternative
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`to its breach of contract claim in Count I pursuant to FED. R. CIV. P. 8(d).
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`For a plaintiff to succeed on an unjust enrichment claim, a plaintiff must show that there
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`was (1) “receipt of a benefit by the defendant from the plaintiff” and (2) “an inequity resulting to
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`plaintiff because of the retention of the benefit by defendant.” Barber v. SMH (US), Inc., 509
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`N.W.2d 791, 796 (Mich. App. 1993). If the elements of unjust enrichment are met, the court will
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`“imply a contract in order to prevent unjust enrichment.” Id. “However, a contract will be implied
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`Case 2:21-cv-10983-SFC-APP ECF No. 19, PageID.176 Filed 10/22/21 Page 6 of 10
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`only if there is no express contract covering the same subject matter. Id. See also Martin v. East
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`Lansing School Dist., 483 N.W.2d 656, 658 (Mich. App. 1992).
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`“Alternatively pleading an express contract and implied contract (whether styled as unjust
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`enrichment or quantum meruit) is allowed when, for instance, there is a dispute between the parties
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`as to whether an express agreement exists.” Llwellyn-Jones v. Metro Property Group, LLC, 22 F.
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`Supp. 3d 760, 793 (E.D. Mich. 2014) (citing Cascade Elec. Co. v. Rice, 70 Mich. App. 420, 426-
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`27 (1976)). “A party is not required to elect to proceed under one theory or the other, but could
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`seek recovery on the basis either of an express contract, or an implied contract if the trier of fact
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`found that the express contract did not exist.” Id. Additionally, “the plaintiff also may bring a
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`breach of contract claim and an unjust enrichment claim in cases where the defendant has ‘kept its
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`options open, and may deny the existence of the contract.’” Id. (citing Terry Barr Sales Agency,
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`Inc. v. All-Lock Co., Inc., 96 F.3d 174, 182 (6th Cir. 1996)).
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`Here, this is not the case. Plaintiff concedes that there is an express agreement that governs
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`the subject matter in question: “the parties acknowledge the existence of the Demolition Purchase
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`Agreements, the claim asserted by [Plaintiff] is for the value of the scrap and equipment that it was
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`to receive as part of its work.” (Pl’s Br., at PageID 134). Therefore, Plaintiff’s unjust
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`enrichment/quantum meruit claim must be dismissed. “If the parties admit that a contract exists,
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`but dispute its terms or effect, an action will not also lie for quantum meruit or implied contract.
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`In other words, alternative pleading of an implied contract claim is only allowed in a contract
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`setting where a party doubts the existence of a contract.” Advanced Plastics Corp. v. White Consol.
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`Indus., Inc., 828 F. Supp. 484, 491 (E.D.Mich.1993) (citations omitted).
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`Plaintiff tries to rely on Son v. Coal Equity, Inc., 122 Fed. App’x 797, 802 (6th Cir. 2004)
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`to argue that “the course of litigation is unpredictable” and therefore Plaintiff should be allowed
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`Case 2:21-cv-10983-SFC-APP ECF No. 19, PageID.177 Filed 10/22/21 Page 7 of 10
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`to plead both breach of contract and quantum meruit claims. (Pl’s Br., at PageID 135-136).
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`However, in Son, the facts surrounding the contractual dispute were very different than those at
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`issue here. Id. In Son, there was an issue as to whether plaintiff was a third-party beneficiary on
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`the contract. Id. The plaintiff in Son pled both a breach of contract claim and a quantum meriut
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`claim in the alternative, if it was found that plaintiff was not a third-party beneficiary. Id. The Sixth
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`Circuit permitted the plaintiff to plead both claims because it acknowledged that the defendant
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`may later repudiate its concession on the issue. Id. There is no such dispute here. Both parties agree
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`that Plaintiff and Defendant are parties to the contract and that the contract covers the subject
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`matter of the dispute.
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`Therefore, the Court GRANTS Defendant’s motion as to the quantum meruit/unjust
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`enrichment claim and DISMISSES Count II of the Amended Complaint.
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`II. Promissory Estoppel (Count III)
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`For a defendant to be found liable for promissory estoppel, there must be “a promise that
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`the promisor should have reasonably expected to induce action . . . on the part of the promisee . . .
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`which in fact produces reliance . . . under circumstances such that the promise must be enforced if
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`injustice is to be avoided.” Barber v. SMH (US), Inc., 509 N.W.2d 791, 797 (Mich. App. 1993).
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`However, “where ... the performance which is said to satisfy the detrimental reliance requirement
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`of the promissory estoppel theory is the same performance which represents consideration for the
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`written contract, the doctrine of promissory estoppel is not applicable.” Gen. Aviation, Inc. v.
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`Cessna Aircraft Co., 915 F.2d 1038, 1042 (6th Cir. 1990).
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`In this case, Plaintiff claims to have detrimentally relied on a promise made by Defendant.
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`(Am. Comp. at PageID 41-42). Here, Defendant promised to transfer title of the scrap material in
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`question to Plaintiff in exchange for the completion of the demolition work. (Am. Comp. at PageID
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`Case 2:21-cv-10983-SFC-APP ECF No. 19, PageID.178 Filed 10/22/21 Page 8 of 10
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`41). At a glance, Plaintiff’s promissory estoppel claim appears valid: Defendant did promise to
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`transfer title of the scrap material in question to the Plaintiff, and Plaintiff did rely on that promise
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`when Plaintiff began the demolition work. Id. However, the performance of the demolition work
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`represents the consideration written in the express agreements between Plaintiff and Defendant:
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`“[Defendant] represented and promised that it would pay [Plaintiff] for the labor and materials
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`utilized in the demolition component of the work Plaintiff performed at the Plant.” (Am. Compl.
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`at PageID 41). Therefore, the doctrine promissory estoppel is not applicable in this matter. Gen.
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`Aviation, Inc., 915 F.2d at 1042.
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`Therefore, the Court GRANTS Defendant’s motion as to the promissory estoppel claim
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`and DISMISSES Count III of the Amended Complaint.
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`III. Innocent Misrepresentation (Count IV)
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`“A claim of innocent misrepresentation is shown if a party detrimentally relies upon a false
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`representation in such a manner that the injury suffered by that party injures to the benefit of the
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`party who made the representation.” Unibar Maint. Serv., Inc. v. Saigh, 283 Mich. App. 609, 769
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`N.W.2d 911 (Mich. Ct. App. 2009). A party alleging innocent misrepresentation “is not required
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`to prove that the party making the misrepresentation intended to deceive or that the other party
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`knew it was false.” M&D, Inc. v. W.B. McConkey, 231 Mich. App. 22, 28 (1989) (citing United
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`States Fidelity & Guaranty Co. v. Black, 412 Mich. 99, 118 (1981)). “In order to prevail on an
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`innocent misrepresentation claim, a plaintiff must also show that the plaintiff and defendant were
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`in privity of contract.” M&D, 231 Mich. App. at 28. “The misrepresentation must relate to a past
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`or existing fact and not be promissory in nature.” Derderian v. Genesys Health Care Sys., 689
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`N.W.2d 145, 157 (Mich. App. 2004).
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`Here, Plaintiff alleges that Defendant made a false statement of fact when Defendant
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`Case 2:21-cv-10983-SFC-APP ECF No. 19, PageID.179 Filed 10/22/21 Page 9 of 10
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`“represented to [Plaintiff] that it would be paid in full, or in the alternative, that [Plaintiff] would
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`be entitled to receive possession and title to all of the scrap and equipment . . . .” (Am. Comp. at
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`PageID.42). Plaintiff goes on to allege that this false statement caused Plaintiff to enter into the
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`agreement at their detriment. Id. This representation refers to a future act (compensating Plaintiff)
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`that Defendant promised Plaintiff they would do. Therefore, the alleged false statement is
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`“promissory in nature” and Plaintiff has failed to state a claim of innocent misrepresentation.
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`Derderian, 689 N.W.2d at 157.
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`Therefore, the Court GRANTS Defendant’s motion as to the innocent misrepresentation
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`claim and DISMISSES Count IV of the Amended Complaint.
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`IV. Statutory Conversion/Conversion (Count V and VI)
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`Conversion is “any distinct act of dominion wrongfully exerted over another's personal
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`property in denial of or inconsistent with his rights therein.” Aroma Wines & Equip, Inc. v.
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`Columbian Distrib. Services, Inc., 871 N.W.2d 136, 141 (Mich. 2015). Moreover, statutory
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`conversion is “[a]nother person’s stealing or embezzling property or converting property to the
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`other person’s own use.” M.C.L. § 600.2919a.
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`A conversion claim “cannot be brought where the property rights alleged to have been
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`converted arises entirely from the [plaintiff's] contractual rights.” CH Novi, LLC v. Sun Valley,
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`Ltd., 16-10297, 2016 WL 1732747, at *2 (E.D. Mich., May 2, 2016). However, it “is possible for
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`a party’s conduct to result in both a breach of contract and a tort for common law conversion[,] so
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`long as the defendant’s conduct constituted a breach of duty separate and distinct from the breach
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`of contract.” Id.
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`In this case, Plaintiff alleges that Defendant took “wrongful dominion and control” over
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`the scrap material in question. (Am. Comp. at PageID.44). However, Plaintiff’s rights to the scrap
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`Case 2:21-cv-10983-SFC-APP ECF No. 19, PageID.180 Filed 10/22/21 Page 10 of 10
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`material in question arise only out of Plaintiff’s contractual rights. Furthermore, besides the
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`contractual duty Defendant had to plaintiff, Plaintiff’s Amended Complaint does not allege any
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`other separate and distinct duty between Plaintiff and Defendant. (Am. Comp. at PageID.33-46).
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`“The law in Michigan is well-settled that an action in tort requires a breach of duty separate and
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`distinct from a breach of contract.” Brock v. Consol. Biomedical Laboratories, 817 F.2d 24, 25
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`(6th Cir. 1987). Given that Defendant has no separate and distinct duty, outside of the contractual
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`duty, to transfer title of the scrap material to Plaintiff, Plaintiff has failed to state a conversion
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`claim.
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`Therefore, the Court GRANTS Defendant’s motion as to the conversion claims and
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`DISMISSES Counts V and VI of the Amended Complaint.
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`CONCLUSION
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`For the reasons outlined above, the Court GRANTS Defendant’s Partial Motion to Dismiss
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`and DISMISSES Counts II-VI of the Amended Complaint.
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`IT IS SO ORDERED.
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`Dated: October 22, 2021
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`s/Sean F. Cox
`Sean F. Cox
`U. S. District Judge
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