Polaris Experience, LLC v. 3 Wheel Rentals Tampa LLC

Background

Polaris Experience, LLC, doing business as Polaris Adventures, sued 3 Wheel Rentals Tampa LLC, 3 Wheel Rentals LLC, Michael Bobo, and Reginald Bobo. The defendant companies had entered Premium Program Services Agreements with Polaris in 2019 and 2020 to participate in the Polaris Adventures Program and rent Polaris Slingshots. Polaris alleged that the defendants missed payments, failed to return vehicles, and continued using Polaris trademarks. The court previously granted Polaris a preliminary injunction on the trademark claim and later denied the defendants’ motion seeking to compel arbitration and dismiss several claims.

The defendants then filed four counterclaims. They alleged that Polaris failed to provide late-model replacement vehicles after renewing a 2021 agreement, failed to provide required program support, and did not perform as promised despite receiving lump-sum payments totaling more than $100,000. The counterclaims alleged breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent inducement, and unjust enrichment.

Legal standard

The court considered Polaris’s motion under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a pleading does not state a legally sufficient claim. At this stage, the court accepted the counterclaim’s factual allegations as true and viewed them in the defendants’ favor. But conclusory statements and a bare recitation of legal elements were not enough; the counterclaims had to include facts making relief plausible. Fraudulent-inducement allegations also had to meet Federal Rule of Civil Procedure 9(b)’s heightened requirement to identify the who, what, when, where, and how of the alleged fraud.

Breach of contract

The defendants argued that Polaris breached the agreements by failing to provide replacement Slingshots and programmatic support. The court noted that the written agreements did not use the phrase “programmatic support” and that the counterclaim did not identify the contractual provisions Polaris allegedly breached.

The defendants’ opposition brief described various services that Polaris allegedly failed to provide, including reservation and payment software, customer and fleet-management systems, marketing, and risk-management tools. But the counterclaim itself did not include those allegations. The court held that the defendants could not use a legal memorandum to add facts missing from their pleading. This part of the breach-of-contract counterclaim was dismissed without prejudice to repleading the alleged breach more specifically.

The defendants also relied on separate Program Agreements to support their claim that Polaris had to replenish the vehicles. The court found that the relevant agreement allowed Polaris to cancel the order, in whole or in part, at any time because fulfillment was subject to vehicle availability. The copy submitted by the defendants was signed only by Reginald Bobo, not Polaris. The court held that, even assuming the agreement was part of the parties’ contract, it did not require Polaris to provide the replacement vehicles. This part of the breach-of-contract claim was dismissed with prejudice.

Polaris also argued that Michael Bobo could not bring a breach-of-contract claim because she was not a party to the contracts. The court stated that Michael Bobo signed only personal guaranties and that the guaranties did not give her contractual rights or duties beyond guaranteeing payment. The court therefore concluded that she could not sue for breach of contracts to which she was not a party.

Good faith and fair dealing

The court explained that Minnesota law implies a duty of good faith and fair dealing in every contract. The defendants relied on the same alleged failures to provide replacement vehicles and program support. The court held that those allegations did not plausibly show that Polaris unjustifiably hindered the defendants’ performance or acted in the required bad faith. It dismissed this counterclaim.

Fraudulent inducement

The defendants alleged that Polaris promised the vehicles would be replaced annually with current-model vehicles, had no intention of keeping that promise, and induced them to enter the agreements. The court held that the defendants did not plead the alleged fraud with the particularity required by Rule 9(b). The defendants argued that discovery was needed before they could provide more detail, but the court rejected that argument because the defendants themselves were parties to the alleged communications and could describe what was said and when. The fraudulent-inducement counterclaim was dismissed without prejudice.

Unjust enrichment

The defendants alleged that Polaris received and kept financial benefits without providing the promised vehicles and support. The court held that the counterclaim did not identify a specific benefit that Polaris unjustly received. The defendants acknowledged that they had not made all required payments, and they did not explain why Polaris’s retention of partial payments was unjust. They also did not provide specific information about the alleged oral agreements, including who made them or what was promised. The unjust-enrichment counterclaim was dismissed without prejudice.

Disposition

The court granted Polaris’s motion to dismiss the defendants’ counterclaims. The order dismissed the Counterclaim without prejudice. The order separately stated that the replacement-vehicle portion of the breach-of-contract claim was dismissed with prejudice, while the alleged program-support breach could be repleaded more specifically.