Polaris Experience, LLC v. 3 Wheel Rentals Tampa LLC

Background

In 2019 and 2020, 3 Wheel Rentals LLC and 3 Wheel Rentals Tampa LLC entered agreements with Polaris Experience, LLC to participate in the Polaris Adventures Program. The program allowed the companies to rent Polaris Slingshot vehicles to customers. Michael Gena Bobo and Reginald Bobo were alleged to be the members, owners, and operators of the two companies. Polaris provided more than 45 vehicles.

Polaris alleged that defendants failed to make required payments, including more than $100,000 in fees, and that Polaris therefore declined to renew the agreements and demanded the return of the vehicles. Polaris further alleged that defendants continued renting the vehicles, using Polaris trademarks, and threatened to auction some vehicles. In an earlier order, the court required defendants to return the vehicles and barred them from using or renting the vehicles and from using Polaris trademarks. Polaris represented that defendants complied with those requirements.

The complaint asserted breach of contract, conversion, trademark infringement, and unjust enrichment. It also alleged that defendants’ continued use and rental of the vehicles constituted civil theft. The contract claim was brought against the companies and Michael Bobo, who signed personal guaranties. The other claims were brought against all defendants.

Motion to Dismiss

Michael and Reginald Bobo initially sought dismissal of all claims against them individually. They withdrew their request as to trademark infringement, leaving arguments concerning the contract, conversion, unjust-enrichment, and civil-theft claims. Defendants also raised an arbitration provision in the guaranties, although they first mentioned it late in their briefing and initially sought dismissal rather than an order compelling arbitration.

Court’s Analysis

The court applied the standard for a motion to dismiss for failure to state a claim. At that stage, the court accepts well-pleaded factual allegations as true and asks whether the complaint plausibly supports relief.

For the contract claim against Michael Bobo, the court held that piercing the corporate veil was unnecessary because the claim was based on Michael’s personal guaranties. The court also held that the allegations could support liability for the individuals’ own tortious conduct without piercing the corporate veil.

Defendants argued that Minnesota’s independent-duty rule barred the conversion and unjust-enrichment claims because the alleged duties arose from the contracts. The court explained that the rule generally limits tort damages when a contract defines the parties’ relationship, unless the alleged breach also involves an independent tort. The court concluded that the rule did not bar claims against Reginald Bobo because he was not a party to the contracts. As to Michael Bobo, the court found that more factual development was needed to determine whether the alleged continued use of the vehicles, profits from that use, and threat to auction the vehicles involved conduct outside the contracts. The court therefore denied this part of the motion without prejudice.

The court also declined to dismiss the unjust-enrichment claim. Under Minnesota law, unjust enrichment generally is unavailable when an enforceable contract applies, but a plaintiff may plead unjust enrichment as an alternative theory. The court stated that Polaris might eventually have to choose between proceeding under an unjust-enrichment theory or a breach-of-contract theory, but dismissal at this stage was not appropriate.

Finally, the court treated defendants’ arbitration argument as a request to compel arbitration. It concluded that defendants knew about the arbitration clause, defended against the preliminary injunction without invoking arbitration, and sought dismissal of the claims rather than promptly seeking arbitration. Because that conduct was inconsistent with relying on arbitration, the court held that defendants waived the right to compel arbitration.

Disposition

The court denied the Motion to Dismiss. The court specifically denied without prejudice the independent-duty argument concerning the tort claims against Michael Bobo and denied the arbitration request. The challenged claims therefore were not dismissed at this stage.