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Prime Foods for Processing and Trading v. Greater Omaha Packing Co., Inc.

United States District Court, D. Nebraska

June 4, 2019




         This matter is before the Court on the Motion to Dismiss, ECF No. 7, filed by Defendant Greater Omaha Packing Co., Inc. For the reasons stated below, the Motion will be granted, and Counts I and II of the Complaint, ECF No. 1, will be dismissed, with prejudice.


         The following facts are those alleged in the Complaint and assumed true for purposes of the pending Motion to Dismiss.

         Plaintiff Prime Foods for Processing and Trading (Prime Foods) is an Egyptian retail seller of beef products that purchased beef from Defendant Greater Omaha Packing Co., Inc. (Omaha Packing) on multiple occasions. Each of the transactions was completed in the following manner: Prime Foods placed an order by email; Omaha Packing emailed Prime Foods an invoice with wire-transfer instructions; and Prime Foods wire-transferred its payment in accordance with the instructions and banking information provided by Omaha Packing.

         On September 12, 2017, Hatim Badawi, chairman of Prime Foods, emailed Mark Spengler, an Omaha Packing sales representative, to confirm an order and the amount of payment due. Spengler then sent an email to Carol Mesenbrink, an Omaha Packing account manager, instructing her to email Badawi the order invoices along with wire-transfer instructions. Badawi did not receive the invoices from Mesenbrink. Instead, on September 13, 2017, a third-party identity thief using a fraudulent email address nearly identical to Mesenbrink's email address[1] interfered in the transaction by sending Badawi invoices that accurately reflected the details of Prime Foods' order but directed the wire-transfer to a fraudulent Bank of America bank account owned by Greater Omaha Packing Inc.-a name nearly identical to Defendant Omaha Packing's official business name, Greater Omaha Packing Co., Inc. Compl. ¶ 27, ECF No. 1, Page ID 5.

         On September 14, 2017, in accordance with the directions in the fraudulent email, Prime Foods wired $104, 572.50 to the fraudulent Bank of America bank account. That same day, Badawi sent email attachments to the fraudulent email address that confirmed Prime Foods' wire transfer. He also forwarded this communication to Spengler. In his response, Spengler notified Badawi that Mesenbrink's email address was misspelled, and Badawi re-sent the attachments to Mesenbrink's correct email address. Badawi also explained to Mesenbrink that her email address was misspelled in the email he received on September 13, 2017. On September 26, 2017, Mesenbrink emailed Omaha Packing's customers notifying them that Omaha Packing had become aware of an attempt by a third party to redirect wire-transfer payments using a fraudulent email address.

         Ultimately, Omaha Packing and Prime Foods discovered that the $104, 572.50 wire transfer was fraudulently directed to the account established by the identity thief, and the parties have not recovered the money. Prime Foods paid the $104, 572.50 to Omaha Packing and brought this action against it[2] on February 13, 2019. “Count I” of the Complaint is titled “Negligence” and alleges Omaha Packing failed to “safeguard Prime Foods' information and inside company information regarding pending transactions . . . .” Compl. ¶ 62, ECF No. 1, Page ID 10. “Count II” is also titled “Negligence” and alleges Omaha Packing failed to “notify [Prime Foods] or [ ] Bank of America immediately about the fraudulent transactions in order to intercept the wire transfers . . . .” Id. at ¶ 67, Page ID 11.[3] Counts III and IV allege breaches of the implied warranties of merchantability and fitness for a particular purpose regarding other, unrelated orders. Omaha Packing moves the Court to dismiss Counts I and II because it owed Prime Foods no legal duty.


         A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). To satisfy this requirement, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Corrado v. Life Inv'rs Ins. Co. of Am., 804 F.3d 915, 917 (8th Cir. 2015) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Barton v. Taber, 820 F.3d 958, 964 (8th Cir. 2016) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Zink v. Lombardi, 783 F.3d 1089, 1098 (8th Cir. 2015) (quoting Iqbal, 556 U.S. at 678), cert. denied, 135 S.Ct. 2941 (2015). The complaint's factual allegations must be “sufficient to ‘raise a right to relief above the speculative level.'” McDonough v. Anoka Cty., 799 F.3d 931, 946 (8th Cir. 2015) (quoting Twombly, 550 U.S. at 555). The Court must accept factual allegations as true, but it is not required to accept any “legal conclusion couched as a factual allegation.” Brown v. Green Tree Servicing LLC, 820 F.3d 371, 373 (8th Cir. 2016) (quoting Iqbal, 556 U.S. at 678). Thus, “[a] pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Ash v. Anderson Merchandisers, LLC, 799 F.3d 957, 960 (8th Cir. 2015) (quoting Iqbal, 556 U.S. at 678), cert. denied, 136 S.Ct. 804 (2016).

         On a motion to dismiss, courts must rule “on the assumption that all the allegations in the complaint are true, ” and “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.'” Twombly, 550 U.S. at 555 & 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). “Determining whether a complaint states a plausible claim for relief . . . [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Mickelson v. Cty. of Ramsey, 823 F.3d 918, 923 (8th Cir. 2016) (alternation in original) (quoting Iqbal, 556 U.S. at 679).


         “The threshold issue in any negligence action is whether the defendant owes a legal duty to the plaintiff.” Bell v. Grow With Me Childcare & Preschool LLC, 907 N.W.2d 705, 713 (Neb. 2018).[4] “A ‘duty' is an obligation, to which the law gives recognition and effect, to conform to a particular standard of conduct toward another.” Olson v. Wrenshall, 822 N.W.2d 336, 341 (Neb. 2012). “The question whether a legal duty exists for actionable negligence is a question of law dependent on the facts in a particular situation.” Bell, 807 N.W.2d at 713. It is the plaintiff's burden to show the existence of a legal duty. See Rodriguez v. Catholic Health Initiatives, 899 N.W.2d 227, 235 (Neb. 2017).

         Prime Foods' negligence claim is based on Omaha Packing's alleged failure to prevent economic harm intentionally inflicted by a third-party. The Nebraska Supreme Court has not addressed the legal duty, if any, a commercial seller like Omaha Packing owes a commercial customer like Prime Foods to prevent such harm, and “[w]hen a state's highest court has not spoken on an issue, a federal court must predict what the state court would do if it were called upon to decide the issue.” Qwest Commc'ns Corp. v. Free Conferencing Corp., 837 F.3d 889, 898 (8th Cir. 2016) (citing Nw. Mut. Life Ins. Co. v. Weiher, 809 F.3d 394, 397 (8th Cir. 2015)). Federal courts “may consider ‘relevant state precedent, analogous decisions, considered dicta, . . . and any other reliable ...

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