Delaware Business Litigation Report

Federal Court Dismisses Delaware-Based Deceptive Trade Practices Claim But Denies Dismissal Of Contract, Conversion And Enrichment Claims For Motor Yacht Charter

Worldspan, L.P. v. Ultimate Living Group, LLC., 390 F.Supp.2d 412 (D.Del. 2005). This action was brought under the Admiralty jurisdiction of the Federal Court. It claimed breach of a single-day maritime contract for charter of a motor yacht, unjust enrichment, conversion and violation of Delaware's Deceptive Trade Practices Act ("DTPA"). The Court denied defendant's motion to dismiss with respect to all but the DTPA claim which did not survive for lack of consumer standing against the seller of the chartered motor yacht services. Plaintiff, a Delaware limited partnership filed this lawsuit in 2003. Defendant is a Delaware limited liability corporation. The Complaint also alleged that the second defendant ("Lassiter") was a Delaware resident. Lassiter brought the motions claiming that the breach of contract, unjust enrichment and conversion claims against him should be dismissed because plaintiff had failed to allege sufficient facts to establish that he was liable. He also contended that the plaintiff lacked standing to bring the DTPA claim against him under 6 Del. C. § 2531 et seq., because plaintiff was a consumer and defendant was the seller whereas the DTPA required standing as a competing business entity. Plaintiff claimed that all four claims were properly founded. The Court observed that the object of a motion to dismiss under Fed.R.Civ.P. 12(b)(6) was to test the sufficiency of a complaint and not to decide the merits or resolve disputed factual issues. Accordingly, the Court was required to accept all allegations in the complaint as true and draw reasonable inferences in a light most favorable to the plaintiff, while disregarding legal conclusions. The Court added that in such a motion, the movant bears the burden to show that the plaintiff had failed to state a claim upon which the court could grant relief. Applying the standard, the Court found that all but the DTPA count stated a claim by alleging sufficient facts upon which relief could be granted. Because the issue whether a contract existed was factually driven, it could not be resolved in a Rule 12(b)(6) motion. Similarly, the Court held that the claims of unjust enrichment and conversion presented factual disputes and survived the motion. However, the Court held that plaintiff lacked standing to bring the DPTA claim because the Delaware Supreme Court had held that "a litigant has standing under the DPTA only where such a person has a business or trade interest at stake which is the subject of interference by the unfair or deceptive trade practice of another" quoting from Grand Ventures, Inc. v. Whaley, 632 A.2d 63, 70 (Del. 1993). The Court distinguished Delaware's Consumer Fraud Act, 6 Del. C. § 2511, et seq., and Section 2533 of the DPTA: the former provided remedies for vertical violations of a consumer-seller of services relationship, while the latter redressed unfair or unreasonable violations with the horizontal relationship between businesses. Because the Court found plaintiff's relationship with defendant as that of one between a seller of services and his customer, plaintiff lacked standing to assert a claim under the DPTA. Authored by: Raj Srivatsan 302-888 6831 rsrivatsan@morrisjames.com Share