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Richard Janssen GmbH v. Sacramento Packing, Inc.

United States District Court, E.D. California

November 6, 2019

RICHARD JANSSEN GmbH, a German limited liability company, Plaintiff,
SACRAMENTO PACKING, INC., a California corporation Defendant.



         Plaintiff Richard Janssen GmbH (“Janssen”) brings this action against Defendant Sacramento Packing, Inc., (“SacPac”) alleging that defendant failed to deliver thirty-five containers of walnuts in breach of three separate contracts. Plaintiff also alleges that defendant fraudulently induced plaintiff into the contracts because defendant never intended to perform. Before the court is defendant's Motion to Dismiss and Request for Judicial Notice (Docket No. 7.)

         I. Factual Background

         Janssen is a German company and worldwide marketer of dried fruit, nuts, and fruits and vegetables. (Compl. at 1, ¶ 1.) SacPac is a California corporation that, among other things, processes, packages, and distributes agricultural commodities, including walnuts. (Compl. at 1-2, ¶ 2.)

         Janssen sought to purchase walnuts from SacPac to fulfill orders Janssen had procured from Lidl, a large German supermarket chain. (Compl. at 2, ¶ 7.) Prior to agreeing to any sale, the parties allegedly discussed the walnut specifications Lidl sought, “as well as the materiality of Lidl's specifications to any transaction.” (Compl. at 2-3, ¶ 7.) Plaintiff allegedly informed defendant that “if the walnuts did not meet Lidl's specifications, Lidl would reject the deliveries.” (Id.)

         The parties thereafter allegedly entered into three separate purchase contracts for the purchase of walnuts. (Compl. at 3, ¶ 8). Under the first purchase order (“First Contract”), identified as RJ-2018-14, defendant was to ship ten container loads of light, 40% pieces and halves, light color Chandler U.S. No 1. (Compl. at 3, ¶ 8(a).) Under the second purchase order (“Second Contract”), identified as RJ-2018-22, defendant was to ship fifteen containers of the same product after completion of the first shipment. (Compl. at 3, ¶ 8(b).) Under the third purchase order, identified as RJ-2018-24, defendant was to ship ten containers of the same product after completion of the second shipment. (Compl. at 3, ¶ 8(c).)

         Each of the purchase order agreements was subject to the following “Terms & Conditions”:

Quality of the goods must be in accordance with USDA/DFA terms and the product specifications attached. If Lidl's test results are out of spec., seller will have 3rd party analyze 2 more library samples. If analysis is still out of spec., seller has to pay EUR 0, 30/kg for pasteurization.
Seller must provide all analyses prior to shipment. BL's must be issued to Lidl Stiftung & Co. Requirements outlined in appendices must be fulfilled.

(Compl. Exs. A (“First Contract”), B (“Second Contract”), C (“Third Contract”).) The specifications list attached included, among other things, limits on the concentration of shell pieces, as well as color and appearance parameters. (Id.)

         Plaintiff alleges that defendant shipped to plaintiff ten containers of walnuts. (Compl. at 4, ¶ 10.) Janssen then delivered the containers to Lidl. (Compl. at 4, ¶ 11.) Lidl proceeded to reject the containers for failing to conform to the specifications in the purchase agreement. (Compl. at 4, ¶ 12.) According to plaintiff, the walnuts had an excess of shell fragments, and did not meet the color and appearance requirements listed under the specifications. (Compl. Ex. D at 4 (Docket No. 1-4).) After plaintiff notified defendant of the rejection, plaintiff allegedly conducted an inspection of the containers and concluded that the walnuts indeed were nonconforming. (Compl. at 4-5, ¶ 13.) Defendant allegedly has not delivered any more walnuts to Janssen. (Compl. at 5, ¶ 14.)

         Plaintiff alleges that it had to pay a third party to clean, repackage, and re-deliver six of the ten containers it received from SacPac to get Lidl to accept the containers. (Compl. at 5, ¶ 15-16.) Plaintiff also alleges that it sold the other four containers delivered under the First Contract on the secondary market. (Compl. at 5, ¶ 15(b).)

         Because Janssen has shipped only nine of the thirty-five containers it expected to ship under the three purchase orders, Lidl has allegedly covered for seventeen of the missing containers. (Compl. at 6, ¶¶ 23, 24.) Lidl has allegedly informed Janssen that it intends to backcharge Janssen for the difference in cost acquisition. (Compl. at 6-7, ¶ 24.)

         Janssen's damage allegations under the First Contract include the cost to store, clean, re-pack, and redeliver six containers, the Lidl backcharges for the four container Lidl covered, and lost profits on those four containers. (Compl. at 8, ¶ 34.) Under the Second and Third Contracts, Janssen alleges damages equal to the Lidl backcharges for containers covered by Lidl and lost profits on those containers. (Compl. at 9, ¶ 40; 10, ¶ 47.)

         Janssen alleges that defendant behaved fraudulently because defendant represented that it “would provide walnuts which met the agreed upon specifications, ” but “never intended” to do so. (Compl. at 11, ¶¶ 50-51.) According to plaintiff, the false representations were made knowingly or “recklessly and without regard for its truth, ” and defendant “intended that Janssen would rely on the representations.” (Compl. at 11, ¶ 52-53.)

         Janssen alleges four causes of action: three for breach of contract, ...

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