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Kelomar, Inc. v. Kulow

November 12, 2009

KELOMAR, INC., A CALIFORNIA CORPORATION, PLAINTIFF,
v.
DARRELL KULOW, DEFENDANT.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER GRANTING MOTION FOR JUDGMENT ON THE PLEADINGS

Defendant Darrell Kulow ("Defendant" or "Kulow") has filed a motion for judgment on the pleadings. For the reasons discussed below, Defendant's motion is GRANTED.

I. BACKGROUND

Plaintiff Kelomar, Inc., commenced this action in the Superior Court of the State of California, County of Imperial. On February 24, 2009, Defendant removed the action to federal court.

During the 2007 Imperial Valley spring melon season, Plaintiff was a grower, packer, and shipper of organic cantaloupes and honeydews. (Compl. ¶ 5.) Prior to the 2007 melon harvest, Plaintiff entered into agreements with supermarket chains to sell organic cantaloupes and honeydews. (Compl. ¶ 6.) Under the agreements, Plaintiff was required to attach a label on each organic cantaloupe or honeydew that identified the melon as organic and included the product look-up code ("PLU") number 94050 for cantaloupe and 94034 for honeydew. (Id.) These numbers corresponded to a higher price for the organic produce. (Id.)

Plaintiff alleges that in or around April or May 2007, it entered into an oral agreement with Hebberd-Kulow Enterprises, Inc. ("HKE"), pursuant to which HKE agreed to sell Plaintiff cartons, labels, and other harvesting and packing materials for conventional and organic melons. (Compl. ¶ 9.) With respect to the organic cantaloupes and organic honeydew, HKE agreed to provide labels containing the organic PLU codes. (Id.)

Plaintiff alleges that HKE delivered labels for the organic melons that were incorrectly printed with the PLU code numbers for non-organic cantaloupe and honeydew (i.e., the PLU code numbers were missing the first "9" digit). (Compl. ¶ 10.) Plaintiff did not realize that the labels were printed with the wrong PLU codes until informed by its customers. (Id.) At that point, the melons were already in the stores and being sold for conventional prices. (Id.)

Plaintiff alleges that its customers rejected the organic melons, resulting in melons being sold at lower prices or going bad. (Compl. ¶¶ 13-14.) Plaintiff also incurred costs in connection with the re-labeling and re-packing of some of its melons. (Compl. ¶ 15.) In addition, Plaintiff claims that it lost the supermarket chains as customers due to the mislabeling. (Compl. ¶ 16.)

According to the Complaint, Kulow was an officer, director, and employee of HKE. (Compl. ¶ 4.) Plaintiff alleges: "Defendant, in his capacity as an officer, director and employee of HKE, and either alone or with others, consented to, approved, and actively participated in the design, selection, manufacture, delivery, and supplying of the labels ordered by Kelomar. Based on his prior business experience, Defendant could foresee the harms to Kelomar, described below, that would be caused if HKE failed to provide Kelomar labels with the correct PLU code number." (Compl. ¶ 11.)

Plaintiff asserts a single claim of negligence against Kulow.

In 2007, HKE filed a lawsuit against Plaintiff in state court for its alleged failure to pay 33 invoices in the amount of $259,630.50 for agricultural-packing supplies. In 2008, Plaintiff filed counterclaims against HKE for breach of contract, breach of warranty, strict liability, negligence, and negligent misrepresentation. (Pl.'s Ex. 3.) Plaintiff's claims against HKE arise out of the same facts that form the basis of this action. The state litigation is still pending.

II. STANDARD

"After the pleadings are closed -- but early enough not to delay trial -- a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). Judgment on the pleadings is proper "when the moving party clearly establishes on the face of the pleadings that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law." Hal Roach Studios, Inc. v. Richard Feiner & Co, Inc., 896 F.2d 1542, 1550 (9th Cir. 1989). All allegations of fact by the party opposing the motion are accepted as true, and construed in the light most favorable ...


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