Elite Wheel Distributors, Inc. v. Wheel Pros, LLC

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

ELITE WHEEL DISTRIBUTORS,

INC.,

Plaintiff,

v. Case No. 8:23-cv-930-KKM-CPT

WHEEL PROS, LLC,

Defendant.

___________________________________

ORDER

Elite Wheel Distributors, Inc., and Wheel Pros, LLC, compete in the

automobile aftermarket industry for designer wheels. After Wheel Pros sued

Elite in state court for deceptive marketing and unfair competition, the parties

entered into a settlement agreement. Elite then brought four claims against

Wheel Pros relating to the settlement agreement: fraudulent

misrepresentation, negligent misrepresentation, breach of contract, and

breach of the implied covenant of good faith and fair dealing. Am. Compl. (Doc.

26). Wheel Pros moved to dismiss all four claims. (Doc. 27). Because Elite failed

to sufficiently allege its claims, I granted the motion with leave to amend. (Doc.

48).

Elite then amended its complaint, realleging the same four claims. Sec.

Am. Compl. (Doc. 53). Wheel Pros moves to dismiss again, arguing that Elite’s

revisions do not remedy the deficiencies from before and raising new grounds

for dismissal. MTD (Doc. 59). Elite opposes. Resp. (Doc. 62). For the reasons

explained below, I grant Wheel Pros’s motion in part and dismiss Elite’s

fraudulent and negligent misrepresentation claims with prejudice. But I deny

Wheel Pros’s motion as to Elite’s two contract claims, which may proceed.

I. BACKGROUND1

Elite’s underlying factual allegations remain largely the same as before.

Elite “is a Florida-based designer, manufacturer, and distributor of wheels and

wheel accessories, and a distributor of tires, in the automobile aftermarket

industry.” Sec. Am. Compl. ¶ 7. In 2017, Elite “premiered its XF Offroad line

of custom-designed, branded wheels, primarily marketed for and to truck

owners.” Id. ¶ 9. After realizing “strong and growing revenues,” Elite

“expand[ed] its XF Offroad line by creating the XF Flow Forged branded line

of wheels.” Id. ¶¶ 9–11. These specific wheels were “manufactured via a flow

forging process,” which uses a hybrid form of the traditional forging and

casting processes, the two industry-standard manufacturing methods. Id.

Flow-forged wheels “are lighter and stronger than traditional cast wheels,”

which specifically benefits trucks that need stronger wheels due to their

1 The Court accepts all the factual allegations in the complaint as true and construes

them in the light most favorable to the plaintiff. See Pielage v. McConnell, 516 F.3d

1282, 1284 (11th Cir. 2008).

heavier weight. Id. ¶ 12(a). Elite’s flow-forged line of wheels generated

revenues of “approximately $2.068 million in 2019, and $4.433 million in 2020.”

Id. ¶ 13.

On September 30, 2019, Wheel Pros—a competitor—sent Elite a letter

representing the following:

(1) [Wheel Pros] believed, in light of the view of a private industry

association, that there are two (and not three), wheel

manufacturing methods in the industry – “cast” and “forged”; (2)

[Wheel Pros] had concluded via testing that [Elite’s] XF Flow

Forged wheels “are manufactured by a casting process” such that

“[t]he representation that they are ‘forged’ is misleading, unfair,

and deceptive”; (3) [but that] “all wheels manufactured and

marketed by Wheel Pros as forged are truly forged aluminum alloy

products”; and (4) [Elite’s] misleadingly marketing its XF Flow

Forged wheels with the word “forged” has “clear commercial

implications” and causes consumers to be “misled.”

Id. ¶ 16 (quoting Sep. Letter (Doc. 53, Ex. A)). Wheel Pros contended that Elite

was engaging in an “unfair and deceptive marketing scheme” and requested

that Elite “[c]ease and desist from further promoting, advertising, and / or

marketing cast wheels as forged wheels.” Sec. Am. Compl. ¶ 16(a), (b); Sep.

Letter at 3. If Elite did not comply, Wheel Pros threatened “to take all actions

necessary to make itself whole and prevent” further unfair or deceptive

marketing. Sep. Letter at 4.

Wheel Pros then sued Elite in Florida state court, alleging that Elite

deceptively marketed its cast “XF Flow Forged” line of wheels as forged and

asserting claims for false advertising, unfair competition, and violations of the

Florida Deceptive and Unfair Trade Practices Act (FDUTPA). Sec. Am. Compl.

¶ 17; see also State Ct. Compl. (Doc. 53, Ex. B). The parties ultimately settled

the state court action in September 2020. See Sec. Am. Compl. ¶ 18; see also

Settlement Agreement (Doc. 53, Ex. D).

Under the settlement agreement, Elite agreed “to cease using the term

‘forged’ for its XF Flow Forged line of wheels” and in associated marketing

materials. Id. ¶ 20(c). Elite also agreed to use stickers to cover up the word

“forged” on relevant wheels already produced. Id. In turn, Wheel Pros

represented that the state case against Elite was “ ‘the first but not the only

action Wheel Pros is undertaking so as to eliminate the use of the term ‘forged’

in connection with wheels in the wheel industry that Wheel Pros believes were

not manufactured in a manner that conforms to . . . uniform nomenclature for

‘forged’ wheels.’ ” Id. ¶ 20(d) (quoting Settlement Agreement § 1(k)). The

settlement agreement gave Elite the right to “ ‘seek and secure reasonable

evidence and certification’ that [Wheel Pros] was still working in good faith to

eliminate the use of the word ‘forged’ in the marketing and sale of qualifying

wheels . . . in and across the industry.” Id. ¶ 20(d)(i) (quoting Settlement

Agreement § 1(k)). Elite also provided Wheel Pros with information “of other

specific industry participants and associated wheel lines” that were not

authentically forged wheels. Id. ¶ 20(e). That list included “TSW Alloy Wheels”

and its line of “rotary forged” wheels and “Black Rhino Hard Alloys” and its

line of “rotary forged” truck wheels. Id. (citing Settlement Agreement § 1(k)).

Around three months after the parties signed the settlement agreement,

Wheel Pros acquired Just Wheels & Tires Co., doing business as TSW, the

seller of Black Rhino’s line of “rotary forged” wheels. Id. ¶ 23. Wheel Pros then

“migrated the Black Rhino brand into [its] own collection of wheel brands” and

“directly marketed and sold Black Rhino ‘rotary forged’ wheels without

removing . . . the term ‘forged’ in the branding, marketing, and sale of that

wheel line.” Id.

Elite contends that Wheel Pros violated the settlement agreement, and

that Elite lost revenue and suffered reputational harm by honoring its

commitments under the agreement. Id. ¶ 27. As a result, Elite brings this

lawsuit, alleging four Florida-law causes of action, including fraudulent

misrepresentation, id. ¶¶ 33–40, negligent misrepresentation, id. ¶¶ 41–48,

breach of contract, id. ¶¶ 49–55, and breach of the implied covenant of good

faith and fair dealing, id. ¶¶ 56–66. Wheel Pros moves to dismiss all counts.

MTD at 1–2.

II. LEGAL STANDARD

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). This

standard “does not require ‘detailed factual allegations,’ but it demands more

than an unadorned, the-defendant-unlawfully-harmed-me accusation.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,

550 U.S. 544, 555 (2007)). “A pleading that offers ‘labels and conclusions’ or ‘a

formulaic recitation of the elements of a cause of action will not do.’ ” Id.

(quoting Twombly, 550 U.S. at 555). “Nor does a complaint suffice if it tenders

‘naked assertion[s]’ devoid of ‘further factual enhancement.’ ” Id. (alteration in

original) (quoting Twombly, 550 U.S. at 557).

To survive a motion to dismiss for failure to state a claim, a plaintiff must

plead sufficient facts to “state a claim to relief that is plausible on its face.” Id.

(quoting Twombly, 550 U.S. at 570). A claim is plausible “when the plaintiff

pleads factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Id. When considering

a motion to dismiss, the Court accepts all the factual allegations in the

complaint as true and construes them in the light most favorable to the

plaintiff. See Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008). But

“conclusory allegations, unwarranted factual deductions or legal conclusions

masquerading as facts will not prevent dismissal.” Davila v. Delta Air Lines,

Inc., 326 F.3d 1183, 1185 (11th Cir. 2003).

III. ANALYSIS

Wheel Pros moves to dismiss each claim against it, arguing that Elite’s

fraud and contract claims fail for several reasons.

First, Wheel Pros argues that Elite fails to state fraudulent and

negligent misrepresentation claims based on omissions in the September 2019

letter because Wheel Pros had no duty to disclose the nonfactual information

Elite claims it omitted. MTD at 11–15. Second, Wheel Pros argues that Elite

alleges neither how Wheel Pros’s affirmative statements were misleading nor

how it relied on those statements. MTD at 15–17. Third, Wheel Pros contends

that its statements in the 2019 cease-and-desist letter are immunized from tort

liability under the Noerr-Pennington doctrine. Id. at 17–19. Because the first

and second bases are enough to conclude that Elite fails to state a claim, I do

not address the third.2

As for Elite’s contract claims, Wheel Pros asserts that the breach of

contract claim fails because the settlement agreement provided it “sole

discretion” to take certain actions. Id. at 19–20. Wheel Pros also argues that

Elite failed to plead bad faith, warranting dismissal of its claim for breach of

the implied covenant of good faith and fair dealing. Id. at 21. Finally, Wheel

Pros maintains that both breach claims fail because Elite does not allege a

causal link to damages. Id. at 21–24. I disagree on each point and so deny the

balance of Wheel Pros’s motion.

2 Wheel Pros points to no Eleventh Circuit decision applying the Noerr-Pennington

doctrine (or the First Amendment right to petition more generally) to immunize

statements made in a pre-litigation letter from state-law claims of fraudulent and

negligent misrepresentation.

A. Despite Wheel Pros’s Purported Duty to Disclose, Elite

Does Not Allege a False Statement (or Omission) of Material

Fact

Elite alleges that the 2019 cease-and-desist letter misrepresented Wheel

Pros’s views on the propriety of marketing flow-forged wheels as “forged” and

omitted Wheel Pros’s long-term plan to buy TSW, a manufacturer of wheels

like Elite’s. On the latter point, Elite contends that Wheel Pros had a duty to

disclose its genuine views and one-and-a-half-year out business plans, which

Elite sees as “a matter of record” fact. Resp. at 6–9. Wheel Pros responds that,

in an arm’s-length negotiation, Florida law does not obligate a party to “reveal

its business plans (or more pertinently, its ‘beliefs’) to a competitor whom it

was threatening to sue.” MTD at 14. And in any event, Wheel Pros says those

plans and beliefs are not “objective fact[s].” Id. at 13. That point—not the

disputed duty to disclose—is fatal to Elite’s fraud claims. None of Wheel Pros’s

alleged misstatements or omissions concern a material fact on which Elite

could rely, and therefore Elite’s complaint fails to state a claim of negligent or

fraudulent misrepresentation.

Under Florida Law, “there are four elements of fraudulent

misrepresentation:3 “(1) a false statement concerning a material fact; (2) the

3 Although styled as a fraudulent misrepresentation claim, Elite’s theory likewise

resembles a fraudulent inducement claim. See Sec. Am. Compl. ¶ 37 (“In making each

of these false statements, [Wheel Pros] intended for [Elite] to rely on each such

statement, and [Elite] did in fact rely on each and all of these statements in entering

into the Agreement at all, and as drafted.”); see id. ¶ 47 (“[Elite] would not have

representor’s knowledge that the representation is false; (3) an intention that

the representation induce another to act on it; and (4) consequent injury by the

party acting in reliance on the representation.” Butler v. Yusem, 44 So. 3d 102,

105 (Fla. 2010); see also Arlington Pebble Creek, LLC v. Campus Edge Condo.

Ass’n, 232 So. 3d 502, 505 (Fla. 1st DCA 2017) (listing the same elements for

negligent misrepresentation, except “(2) that defendant should have known the

representation was false” and acted (4) “in justifiable reliance upon the

misrepresentation” (emphases added)).

In addition to an affirmative misstatement, “[a] defendant’s knowing

concealment or nondisclosure of a material fact may also support an action for

fraud where there is a duty to disclose.” Gutter v. Wunker, 631 So. 2d 1117,

1118 (Fla. 4th DCA 1994) (per curiam). Notably, “where a party in an arm’s

length transaction undertakes to disclose information, all material facts must

be disclosed.” Id. at 1118–19; see also Vokes v. Arthur Murray, Inc., 212 So. 2d

906, 909 (Fla. 2d DCA 1968) (“[W]here a party to a transaction owes no duty to

agreed to enter into and perform under the [Settlement] Agreement (either at all or

as drafted), and its resulting conduct undertaken herein, had [Elite] known the truth

regarding each of these actually false statements.”). Courts applying Florida law

disagree about whether fraudulent misrepresentation and inducement are the same

claim. See NorthStar Reg’l P.S.C. v. InSync Healthcare Sols., LLC, No. 8:23-CV-

02636-KKM-NHA, 2025 WL 1707205, at *4 n.4 (M.D. Fla. June 18, 2025) (collecting

cases). Courts viewing them as different claims have concluded that fraudulent

inducement requires a showing of justifiable reliance. Id. (citing Susan Fixel, Inc. v.

Rosenthal & Rosenthal, Inc., 842 So. 2d 204, 209 (Fla. 3d DCA 2003)). This case does

not require resolving the disagreement because Elite’s claim fails on an element

common to both claims.

disclose facts within his knowledge . . . , the law is if he undertakes to do so he

must disclose the [w]hole truth.”). But whether an affirmative statement or

omission, it still “must concern a past or existing fact in order to be actionable.”

Thor Bear, Inc. v. Crocker Mizner Park, Inc., 648 So. 2d 168, 172 (Fla. 4th DCA

1994) (per curiam). On the other hand, “[a] successful action for fraudulent

misrepresentation may not ordinarily be premised upon a [good faith] promise

of future action,” “a mere opinion,” or a misrepresentation of law. Id.; see Chino

Elec., Inc. v. U.S. Fid. & Guar. Co., 578 So. 2d 320, 323 (Fla. 1st DCA 1991)

(“[I]n the normal business transaction a person should not rely on such

ephemeral matters as an opposing party’s opinions, judgments, or legal

views.”). But when the representation “can be viewed as coming from one with

superior knowledge of the subject of the statement,” the representation should

be treated as a fact. Thor Bear, 648 So.2d at 172 (citations omitted).

Here, Elite alleges that Wheel Pros failed to disclose that its

“identification and acquisition of TSW and its lines of wheels (including . . . the

Black Rhino rotary forged wheels . . . marketed using the word ‘forged’ at the

time of the 2019 Letter) was, by its own circa December 2020 admission, a long-

term goal.” Sec. Am. Compl. ¶ 24. In Elite’s view, Wheel Pros needed to disclose

its planned acquisition because Wheel Pros “disclos[ed] some information

regarding its purported view of whether and how the term ‘forged’ can and

cannot be used in the marketing and sale of wheels in the 2019 Letter,” and

because Elite otherwise “did not have any access to [Wheel Pros’s] marketing

and revenue strategies for the flow forged wheel marketplace at the time.” Sec.

Am. Compl. ¶ 36(a). Ultimately, according to Elite, Wheel Pros’s omission

“rendered misleading” its purported views on the marketing of forged wheels.

Resp. at 7 (citing Sec. Am. Compl. ¶¶ 16, 23 n.13, 35). But none of Wheel Pros’s

representations or omissions constitute past or existing facts, let alone facts

material to the parties’ post-litigation settlement agreement.

To start, I look to the September 2019 letter at the center of Elite’s

allegations. See FED. R. CIV. P. 10(c) (“A copy of a written instrument that is an

exhibit to a pleading is a part of the pleading for all purposes.”); Gill ex rel.

K.C.R. v. Judd, 941 F.3d 504, 514 (11th Cir. 2019) (“[W]hen exhibits attached

to a complaint ‘contradict the general and conclusory allegations of the

pleading, the exhibits govern.’ ” (quoting Griffin Indus., Inc. v. Irvin, 496 F.3d

1189, 1206 (11th Cir. 2007))). In the letter, Wheel Pros stated that, after testing

Elite’s wheels, “[t]he representation that they are ‘forged’ is misleading, unfair

and deceptive” when compared to industry-standard nomenclature. Sep. Letter

at 2. And Wheel Pros expressed, “it is easy to see how these unfair acts and

deceptive practices have caused and continue to cause Wheel Pros damage by

way of decreased sales, lost profits, and lost opportunities” and ultimately

“may subject [Elite] to liability under [FDUTPA].” Id. at 3.

The first statement represents Wheel Pros’s view of whether certain

marketing tactics are appropriate, which—even if exaggerated—constitutes a

nonactionable opinion. See Wasser v. Sasoni, 652 So. 2d 411, 412 (Fla. 3d DCA

1995) (“[Defendant’s] statements that the building was ‘a very good building’

requiring ‘normal type of maintenance,’ and ‘an excellent deal,’ were clearly

statements of opinion.”). The same goes for Wheel Pros’s opinion that “it is easy

to see” how Elite’s unfair marketing tactics hurt its bottom line. To be fair,

whether Wheel Pros lost sales, profits, or opportunities constitutes a matter of

historical fact. But Elite does not allege Wheel Pros misrepresented those data

points. Instead, Elite claims Wheel Pros believed such marketing was

legitimate and withheld information about its go-forward “marketing and

revenue strategies for the flow forged wheel marketplace.” Sec. Am. Compl. ¶

36a. But again, Wheel Pros’s “statements of opinion and projections about

future events, . . . do not constitute statements of existing material fact, . . . a

prerequisite for actionable fraud.” Silver v. Countrywide Home Loans, Inc., 760

F. Supp. 2d 1330, 1343 (S.D. Fla. 2011), aff’d, 483 F. App’x 568 (11th Cir. 2012)

(per curiam). Finally, Wheel Pros’s statement that Elite may be liable under

FDUTPA represents “a debatable legal opinion on a complex legal matter,” and

therefore cannot serve as the basis for a fraud claim. Chino Elec., 578 So. 2d at

323.

As for Wheel Pros’s alleged omission—its plan to acquire TSW and its

line of flow-forged wheels—that too is not an actionable, material fact. Under

Florida law, “[a]n action for fraud generally may not be predicated on . . .

promises of future action” unless made “with no intention of performing or with

a positive intention not to perform.” Mejia v. Jurich, 781 So. 2d 1175, 1177 (Fla.

3d DCA 2001). But Wheel Pros made no promises, either express or implied.

So, Elite tries to circumvent this general rule by alleging that Wheel Pros’s

acquisition of TSW was “a long-term goal” predating the September 2019

letter. Sec. Am. Compl ¶ 24. But “a forward looking statement concerning a

person’s desire is no less the type of ‘ephemeral matter’ upon which

participants in a normal business transaction are not entitled to rely under

Florida law.” Barrett v. Scutieri, No. 06-21590-CIV, 2007 WL 9703152, at *2

(S.D. Fla. Mar. 19, 2007) (citation omitted), aff’d, 281 F. App’x 952 (11th Cir.

2008) (per curiam). And to the extent that Elite suggests Wheel Pros needed to

disclose its “true intentions,” that too fails because Elite “was not entitled to

rely on [Wheel Pros’s] stated ‘desire’ ” in the first place. Id.

Ultimately—and contrary to Elite’s suggestion that Wheel Pros had

superior knowledge about the sincerity of its own views—what matters is

whether Wheel Pros had superior knowledge about objectively verifiable facts.

But Elite does not allege that Wheel Pros was better positioned to know

whether Elite’s marketing of forged wheels violated Florida law. Simply put,

and in Elite’s own words, “the 2019 Letter expressly [took] a position that flow

forged wheels may not be marketed using the term ‘forged.’ ” Resp. at 10.

Regardless of whether Wheel Pros harbored different views, Wheel Pros’s

“position” cannot serve as the basis for Elite’s fraud claims.

B. Elite Fails to Allege how Wheel Pros’s Remaining

Affirmative Statements were False or Misleading

Along with Wheel Pros’s nonactionable “views” (what Elite refers to as

omissions), Elite references two affirmative factual statements in the 2019

letter that could theoretically support fraud. Elite says Wheel Pros

misrepresented that it “concluded via testing that [Elite’s] XF Flow Forged

wheels ‘[were] manufactured by a casting process’ ” and that “ ‘all wheels

manufactured and marketed by Wheel Pros as forged [were] truly forged

aluminum alloy products.’ ” Sec. Am. Compl. ¶ 16 (quoting Sep. Letter at 2–3).4

Wheel Pros argues that these allegations fall short of the particularity required

by Rule 9 because “nothing in the complaint supports a conclusion that these

statements were false,” or explains “how Elite relied to its detriment on those

statements.” MTD at 16. I agree with the first point.

4 If Elite’s fraudulent misrepresentation claim were treated as a fraudulent

inducement claim, any allegation attacking Wheel Pros’s affirmative statements

would be a nonstarter. “Florida courts have made clear that no action for fraud in the

inducement will lie where the alleged fraud contradicts the subsequent written

contract.” Eclipse Med., Inc. v. Am. Hydro-Surgical Instruments, Inc., 262 F. Supp.

2d 1334, 1342 (S.D. Fla. 1999). The parties’ Settlement Agreement, consistent with

the 2019 letter, recites the two affirmative statements that Elite claims were

fraudulent. See Settlement Agreement (Recitals) ¶¶ B, D.

Florida fraudulent and negligent misrepresentation claims sound in

fraud and so must satisfy Rule 9’s heightened pleading standard. See Wilding

v. DNC Servs. Corp., 941 F.3d 1116, 1127–28 (11th Cir. 2019). Among other

things, Rule 9(b) requires Elite to set forth the precise content of the

statements and how they were misleading. Ziemba v. Cascade Int’l, Inc., 256

F.3d 1194, 1202 (11th Cir. 2001). Elite does not do so, suggesting instead that—

when considered with Wheel Pros’s non-factual representations—the collective

thrust of the 2019 letter is misleading. Resp. at 11–12. In other words, Elite

claims Wheel Pros “may not silo individual misrepresentations in the 2019

Letter from one another . . . as part of an unavailing ‘technically true’ defense.”

Id. at 11. But that contention does not square with Rule 9’s heightened

standard, which requires a plaintiff to “identify specific facts and state how

they were false.” Collins v. Countrywide Home Loans, Inc., 680 F. Supp. 2d

1287, 1294 (M.D. Fla. 2010). Simply put, Elite never alleges that Wheel Pros

misrepresented either the results of its testing or the fact that, at least as of

September 2019, its wheels were “truly forged aluminum alloy products.” Sep.

Letter at 2–3.

Because Elite does not allege the false or misleading nature of either

factual statement, I need not address Wheel Pros’s suggestion that “Elite fails

to allege in any plausible manner that it relied upon any statements (or

omissions) in the September 2019 letter.” MTD at 16; see also id. at 16–17

(arguing that “the intervening lawsuit . . . forced Elite to change its marketing

practices, not anything said in the September 2019 letter”). In sum, with

respect to alleged affirmative misrepresentations of fact, Elite fails to plead its

fraud claims in conformity with Rule 9(b). See Wagner v. First Horizon Pharm.

Corp., 464 F.3d 1273, 1277 (11th Cir. 2006). And because Elite has

unsuccessfully attempted to plead its fraud claims three times, I dismiss them

with prejudice.

C. Elite Sufficiently Pleads a Breach of Contract Claim

Wheel Pros argues that Elite fails to state a claim for breach of contract

because the relevant Settlement Agreement provision gave Wheel Pros

discretion not just in how to root out improper marketing of “forged” wheels,

but necessarily whether to do so at all. MTD at 19–20. Because Wheel Pros’s

argument relies on a poor reading of the contractual provision, it fails.

In Florida, “[a] cause of action for breach of contract has three elements:

(1) a valid contract, (2) a material breach, and (3) damages.” Havens v. Coast

Fla., P.A., 117 So. 3d 1179, 1181 (Fla. 2d DCA 2013). “The intent of the parties

governs contract interpretation and that intent is to be determined from the

plain language of the agreement and the everyday meaning of the words used.”

Burlington & Rockenbach, P.A. v. L. Offs. of E. Clay Parker, 160 So. 3d 955,

958 (Fla. 5th DCA 2015) (collecting cases). When parties disagree about how

to interpret a contract term, and that term is ambiguous, “the Court ought not

decide which interpretation is correct at this motion-to-dismiss stage.” Legion

Sys., LLC v. Valiant Glob. Def. Servs., Inc., No. 820CV02321KKMCPT, 2021

WL 3633592, at *3 (M.D. Fla. Aug. 17, 2021); BioHealth Med. Lab’y, Inc. v.

Cigna Health & Life Ins. Co., 706 F. App’x 521, 524 (11th Cir. 2017) (holding

that “[i]t was improper for the district court to interpret the [ambiguous]

contract when considering the motion to dismiss”). But “where the contract or

settlement agreement terms are unambiguous, a court may properly consider

a motion to dismiss for failure to state a claim for breach.” Alhassid v. Bank of

Am., N.A., 60 F. Supp. 3d 1302, 1312 (S.D. Fla. 2014).

As relevant here, in Section 1(k) Wheel Pros “represents and/or agrees”

that “[t]he Complaint is the first but not the only action Wheel Pros is

undertaking so as to eliminate the use of the term ‘forged’ in connection with

wheels in the wheel industry that Wheel Pros believes were not manufactured

in a manner that conforms to” industry standards. Elite “may seek and secure

reasonable evidence . . . from Wheel Pros . . . that its efforts to eliminate the

use of the term ‘forged’ from the wheel industry are ongoing and directed at

multiple wheel industry participants besides [Elite].” Settlement Agreement

§ 1(k). However, “Wheel Pros shall take whatever course of action it deems

justified, in its sole discretion, to eliminate the misleading use of the term

‘forged’ in connection with wheels in the wheel industry that Wheel Pros

believes were not manufactured in a manner that conforms to SAE

International’s uniform nomenclature for ‘forged’ wheels.” Id.

Elite alleges that Wheel Pros “breached its performance obligations and

its representations . . . under Section 1(k) of the [Settlement] Agreement . . .

by not trying to eliminate or otherwise combat the use of the term ‘forged’ in

the marketing of flow forged wheels by other industry participants besides

[Elite].” Sec. Am. Compl. ¶ 53. Not only did Wheel Pros fail to take affirmative

steps, Elite says, but also “adopt[ed] the very marketing practice it had

represented it was trying to eliminate” by later purchasing TSW, “an entity

that manufactured, marketed, and sold multiple flow forged wheel lines using

the term ‘forged,’ ” and then by “continuing to market and sell those same flow

forged wheel lines . . . for years thereafter.” Id. ¶ 53(a). Wheel Pros responds

that because its obligations in Section 1(k) were discretionary, and because

Elite does not allege how Wheel Pros acted “unreasonably” in exercising that

discretion, Elite fails to state a breach of Section 1(k). MTD at 19. I disagree.

Under Section 1(k), Wheel Pros agreed and represented that it was

“undertaking” actions “so as to eliminate the use of the term ‘forged’ ” from

being deceptively marketed in the wheel industry. Settlement Agreement §

1(k). Wheel Pros’s discretion is necessarily qualified by this affirmative

representation and “the duty to act in good faith,” which “limits that party’s

ability to act capriciously to contravene the reasonable contractual

expectations of the other party.” Dep’t of Revenue v. Gen. Motors LLC, 104 So.

3d 1191, 1198 (Fla. 1st DCA 2012) (quoting Cox v. CSX Intermodal, Inc., 732

So. 2d 1092, 1098 (Fla. 1st DCA 1999)). Accordingly, Elite plausibly alleges

that it reasonably expected Wheel Pros’s efforts were “ongoing and directed at

multiple wheel industry participants,” Settlement Agreement § 1(k), especially

where the agreement provides that Elite may “secure reasonable evidence and

certification” to that effect. Id. At the motion to dismiss stage, “[i]t is not proper

. . . to read out such contractual language when [Elite] proffers an

interpretation reasonably giving import to that language.” BioHealth Med.

Lab’y, 706 F. App’x at 524; cf. Gherardi v. Citigroup Glob. Markets Inc., 975

F.3d 1232, 1239 (11th Cir. 2020) (“The ordinary rule in contract interpretation

is that an interpretation giving reasonable meaning to all provisions of a

contract is preferred to one which leaves a part useless or inexplicable.”

(citation and internal quotation marks omitted)). Elite has therefore

sufficiently pleaded what it would have to prove—that Wheel Pros took no

action (or took counterproductive action) to eliminate the mislabeling of forged

wheels.

Finally, to state a claim, Elite must plead damages flowing from the

breach. While a plaintiff must allege more than speculative damages, A.R.

Holland, Inc. v. Wendco Corp., 884 So. 2d 1006, 1008 (Fla. 1st DCA 2004) (per

curiam), ordinarily “[a] motion to dismiss under Rule 12(b)(6)—which is

concerned with pleading sufficiency under the Federal Rules of Civil

Procedure—is the wrong procedural posture through which to contest

damages.” Legion Sys., LLC v. Valiant Glob. Def. Servs., Inc., No.

820CV02321KKMCPT, 2021 WL 3633592, at *4 (M.D. Fla. Aug. 17, 2021).

On damages, Elite alleges that its “conduct in compliance with the

Agreement . . . including placing stickers atop the word ‘forged’ on its existing

inventory of XF Flow Forged wheels and associated packaging and marketing

materials; ceasing the manufacture of further XF Flow Forged wheels; and re-

purposing the XF Flow Forged brand as XFX Flow branded wheels,” paired

with Wheel Pros’s simultaneous marketing of flow forged wheels, caused Elite

to suffer “immediate and substantial drops in revenue” totaling over $4 million.

Sec. Am. Compl. ¶¶ 27–28; see id. ¶ 55 (“These breaches [of Section 1(k)]

directly and proximately damaged [Elite].”). Those allegations are sufficiently

specific and non-speculative. Additionally, and contrary to Wheel Pros’s

argument that none of Elite’s purported losses derived from “anything Wheel

Pros did or failed to do,” MTD at 22, Elite alleges it suffered reputational harm

because the marketplace perceived that it “rebranded its flow-forged wheel line

due to product quality issues” after “continuing to see several other

competitors, including [Wheel Pros], market and sell other flow-forged wheel

lines with the term ‘forged,’ ” id. ¶ 27(a). Elite thus alleges the requisite causal

link between Wheel Pros’s breach and its damages.

D. Elite’s Claim for Breach of the Implied Covenant of Good

Faith and Fair Dealing May Proceed

In Florida, every contract contains an implied covenant of good faith and

fair dealing that prevents a party from engaging in conduct that would

frustrate the other’s reasonable contractual expectations. Cox, 732 So.2d at

1097. When a party defeats those expectations “by a conscious and deliberate

act,” it violates the implied covenant. Tiara Condo. Ass’n v. March &

McLennan Cos., 607 F.3d 742, 747 (11th Cir. 2010) (quoting Shibata v. Lim,

133 F. Supp. 2d 1311, 1319 (M.D. Fla. 2000)). To properly plead a breach of the

implied covenant, a plaintiff must also “alleg[e] that an express term of the

contract has been breached.” Ins. Concepts & Design, Inc. v. Healthplan Servs.,

Inc., 785 So.2d 1232, 1234 (Fla. 4th DCA 2001) (per curiam). Once a plaintiff

alleges a breach of an express term, the duty of good faith attaches “even where

the contractual obligation is one subject to the ‘sole discretion’ of one of the

parties.” Gen. Motors, 104 So. 3d at 1198 (quoting Sepe v. City of Safety

Harbor, 761 So.2d 1182, 1184 n.2 (Fla. 2d DCA 2000)).

Here, Elite pleads Wheel Pros’s breach of an express term of the

Settlement Agreement. Elite further alleges that “[u]nder Section 1(k) of the

Agreement, [Wheel Pros] . . . agreed to take action in good faith to continue to

try to, ‘eliminate’ the use of the word ‘forged’ in connection with the marketing

of certain categories of wheel lines,” but “breached its implied covenant of good

faith and fair dealing relating to its discretionary powers under the

Agreement” by “exercis[ing] that discretion unreasonably and without a proper

motive, and in a manner inconsistent with [Elite’s] reasonable contractual

expectations generally and relating to [Settlement] Agreement Section 1(k)

particularly.” Sec. Am. Compl ¶¶ 60, 65. Finally, and contrary to Wheel Pros’s

response that such statements do not allege the requisite bad faith, see MTD

at 21, Elite alleges that Wheel Pros “directly marketed and sold Black Rhino

‘rotary forged’ wheels without removing, and in fact adopting/affirming, use”

of the disputed term, Sec. Am. Compl. ¶ 23.

Those allegations state a claim for breach of the implied covenant “by a

conscious and deliberate act,” Tiara Condo., 607 F.3d at 747, and for the

reasons explained above, Elite likewise sufficiently pleads damages flowing

from that breach, see Sec. Am. Compl. ¶¶ 57, 66. Its claim may move forward.

IV. CONCLUSION

Elite fails to sufficiently allege its fraudulent and negligent

misrepresentation claims but has sufficiently alleged claims for breach of

contract and breach of the implied covenant of good faith and fair dealing.

Accordingly, the following is ORDERED:

1. Wheel Pros’s Motion to Dismiss (Doc. 59) is GRANTED IN PART

and DENIED IN PART.

2. Counts I (Fraudulent Misrepresentation) and II (Negligent

Misrepresentation) of Elite’s Second Amended Complaint (Doc. 53)

are DISMISSED with prejudice.

3. This Matter will proceed only on Counts III (Breach of Contract)

and IV (Breach of the Implied Covenant of Good Faith and Fair

Dealing).

4. The parties are directed to file an amended Case Management

Report no later than September 30, 2025.

ORDERED in Tampa, Florida, on September 238, 2025.

athryn’Kimball Mizelle

United States District Judge

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