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CONVOY SERVICING COMPANY v. TRAILMOBILE TRAILER

December 12, 2002

CONVOY SERVICING COMPANY, D/B/A, THERMO KING OF DALLAS, PLAINTIFF
V.
TRAILMOBILE TRAILER, LLC, TRANSPORT INDUSTRIES, L.P., EDWARD I. WANANDI, BRUCE R. BLACK, BYRDELL C. GOLDSMITH II AND WILLIAM C. DAILEY, DEFENDANTS.



The opinion of the court was delivered by: Robert W. Gettleman, United States District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Convoy Servicing Company filed an eleven count complaint against Trailmobile Trailer LLC ("Trailmobile"), Transport Industries, L.P. ("T.I."), Bridgeford Foods (Bridgeford and T.I. together, the "end users"), and Trailmobile's officers, Edward I. Wanandi, Bruce R. Black, Byrdell C. Goldsmith, II and William C. Dailey. All counts arise out of an agreement under which plaintiff supplied refrigeration units to trailers sold by Trailmobile to T.I. and Bridgeford. Trailmobile has moved to dismiss Count I (Texas' Constitutional Materialman's Lien) and Count VI (unjust enrichment) arguing that the Materialman's Lien does not apply to proceeds as a matter of law, and that the unjust enrichment count cannot survive because an express contract defined the parties' relationship. For the reasons set forth below, the motion to dismiss is granted as to Count I and denied as to Count VI.

Allegations

For nearly forty years, plaintiff, a refrigeration unit supplier in Dallas, Texas, collaborated with Trailmobile in the manufacturing of refrigerated trailers. Trailmobile, headquartered in Northbrook, Illinois, manufactures trailers for commercial buyers. In the spring and summer of 2001, plaintiff contracted with T.I., a Texas trucking company, to supply 30 refrigeration units for trailers manufactured by Trailmobile. In the summer of 2001, plaintiff contracted with Bridgeford, a Texas food distributor, to supply three units for trailers manufactured by Trailmobile.

For tax purposes, industry practice is that the refrigeration unit supplier contracts directly with the end user, the end user pays the trailer manufacturer directly, and the trailer manufacturer then remits payment to the refrigeration unit supplier. Under this arrangement, plaintiff's payment is entrusted to Trailmobile by the end users. The complaint alleges that, "[a]s an accommodation to the end users, invoices reflecting the cost of the trailers, with the refrigeration units included, were issued to the end users by [Trailmobile] and payments were made by the end users to [Trailmobile]." It is unclear from the complaint whether this arrangement is solely implied based on industry practice or was expressed in a written contract. While the complaint describes contracts between plaintiff and the end users, it describes only "arrangements" and "agreements" between plaintiff and Trailmobile. The only invoices mentioned in the complaint are invoices sent from Trailmobile to the end users.

Trailmobile delivered the trailers to Bridgeford and T.I. in the summer and fall of 2001. Plaintiff alleges on information and belief that both T.I. and Bridgeford made full payments to Trailmobile for all trailers. Trailmobile paid plaintiff for one of T.I.'s trailers, and one of Bridgeford's trailers. On December 12, 2001, Trailmobile voluntary filed for Chapter 11 bankruptcy.

Discussion

For purposes of a motion to dismiss, the court accepts the factual allegations of the complaint as true and draws all reasonable inferences in favor of plaintiff. See Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423 (7th Cir. 1996). When ruling on a motion to dismiss for failure to state a claim, the court considers, "whether relief is possible under any set of facts that could be established consistent with the allegations." Bartholet v. Reishauer A.G., 953 F.2d 1073, 1078 (7th Cir. 1992). A claim may be dismissed only if it is beyond doubt that under no set of facts would plaintiffs allegations entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The purpose of a motion to dismiss is to test the sufficiency of complaint. not to decide its merits. See e.g., Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990).

Trailmobile argues that: (1) Count I fails as a matter of law because Texas' Constitutional Material Men's Lien does not apply to proceeds; and (2) Count VI fails because under both Texas and Illinois law unjust enrichment cannot exist when there is an express contract.

Count I—Texas' Constitutional Materialman's Lien

In Count I, plaintiff claims a materialman's lien on the proceeds held by Trailmobile from the sale of the refrigeration units. Trailmobile argues that plaintiffs fail to allege a claim because: (1) no case has granted the constitutional lien on proceeds; and (2) the plain language of the Texas Constitution does not expressly include proceeds. Because the Texas courts have interpreted the constitutional materialman's lien narrowly, and Art. 16 § 37 does not expressly include proceeds, defendants motion to dismiss Count I is granted.

When this court exercises supplemental jurisdiction it must apply state law to substantive issues. Timmerman v. Modem Indus., Inc., 960 F.2d 692, 696 (7th Cir. 1992). The court must determine the content of state law as that state's supreme court would determine it. Allstate Ins. Co. v. Menards, Inc., 285 F.3d 630, 636 (7th Cir. 2002) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). Without clear guidance from the Texas Supreme Court, this court must use its best judgment to make this determination, and may consider the decisions of lower Texas courts and courts of other jurisdictions. Stephan v. Rocky Mountain Chocolate Factory, Inc., 129 F.3d 414, 417 (7th Cir. 1997). This court is not bound, however, by the decision of any particular Texas appellate court; the issue is the content of state law at the "state, not the local, level." Allstate Ins. Co. 285 F.3d at 636. Therefore, this court, sitting in diversity in the Northern District of Illinois, must attempt to predict how the Texas Supreme Court would interpret a unique state constitutional provision. Specifically, Article 16 § 37 of the Texas Constitution provides:

Mechanics, artisans and material men of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon, or material furnished therefore and the legislature shall provide by law for the speedy and efficient enforcement of said liens.

While this is one of seven constitutional liens in the country, it is the only self-executing such lien. A & M Operating Company, Inc. v. South Coast Supply Company, Inc., 182 B.R. 997, 1000 (E.D. Texas 1995). Under the Texas ...


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