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Safe Step Walk In Tub Co. v. CKH Industries Inc.

Fraud Counterclaims Plausibly Stated in Action Over Nonpayment of Marketing Fees

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OPINION & ORDER Plaintiff Safe Step Walk In Tub Co. (“Plaintiff” or “Safe Step”) manufactures walk-in bathtubs and purportedly holds trademarks for the marketing of such tubs. Through a series of agreements executed by the parties, Defendant CKH Industries, Inc. (“Defendant” or “CKH”), was able to use those trademarks when marketing, selling, and installing Safe Step’s tubs in particular geographic areas. Safe Step initiated this action claiming nonpayment of certain marketing and related fees by CKH, and CKH counterclaimed — alleging that Safe Step was violating the franchise laws of various states, breaching the agreements between the parties, and engaging in other unfair business practices including fraud. Safe Step now seeks to dismiss CKH’s counterclaims pursuant to Federal Rules of Civil Procedure 12(b)(6) for failure to state a claim and Rule 9(b) for failure to state the circumstances of the alleged fraud with particularity. Plaintiff also moves and for summary judgment under Federal Rules of Civil Procedure Rule 56 on Plaintiffs breach of contract claim. For the following reasons, the motion to dismiss is GRANTED in part and DENIED in part, and the motion for summary judgment is DENIED.BACKGROUNDI. OverviewPlaintiff initiated this action on September 23, 2015, for non-payment of fees associated with one of the agreements entered into between the parties, which was attached to Plaintiff’s complaint (“Complaint”). (See Compl., Ex. A (“Marketing Addendum”), ECF No. 1.) The agreement at issue, an addendum related to marketing, purports to modify a pre-existing “Dealership/License Agreement” between the parties, which was not attached to the Complaint but is referenced therein. (Compl.

9-10, 12-13.) Plaintiff presents the business relationship between itself and Defendant as a licensor-licensee, or supplier-dealer, arrangement: Plaintiff granted Defendant license to use its trademarks and to deal in its bathtub products. (Id.

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