J&L Am. Enters., Ltd. v. DSA Direct, LLC, 2006 NY Slip Op 50101(U) (NY 1/27/2006)
| Decision Date | 27 January 2006 |
| Docket Number | 401937/05. |
| Parties | J&L AMERICAN ENTERPRISES, LTD., Plaintiff, v. DSA DIRECT, LLC, Defendant. |
| Court | New York Court of Appeals Court of Appeals |
(Joseph O. Giaimo), Giaimo Associates, LLP, Kew Gardens, New York, for Plaintiff.
(Eric Lindquist, Ariel D. Jasie), Fox Horan & Camerini, LLP, New York, NY, for Defendants.
In this action for breach of contract, tortious interference with contract, breach of fiduciary duty and misappropriation of trade secrets, defendant DSA Direct, LLC moves, pursuant to CPLR 3211 (a) (7), for an order dismissing the amended complaint for failure to state a cause of action. For the reasons set forth below, the motion to dismiss the amended complaint is granted.
Accepting the allegations of the complaint as true (Leon v. Martinez, 84 NY2d 83 [1994]), the following facts emerge: defendant is a wholesale distributor of newspapers and magazines which distributes those publications to dealers, such as delis, newsstands, supermarkets and drugstores (the Dealers), in Manhattan, Brooklyn, Staten Island, the Bronx, Connecticut, New Jersey, and other locations (Amended Complaint, ¶ 4). Plaintiff J&L American Enterprises, Ltd., as a subcontractor, distributes newspapers and other publications to retail customers (id., ¶ 3).
In February 1999, plaintiff began working as defendant's sub-distributor in the Bronx (id., ¶ 7). On April 3, 2000, plaintiff and defendant signed a "requirements contract" (the Contract), dated December 1999, pursuant to which plaintiff was required to purchase from defendant its required amount of the publications listed in Schedule A for resale to plaintiff's customers in the Bronx (id., ¶ 8; see Exh A).
Under the Contract, plaintiff paid defendant weekly for the purchased products and, by separate oral agreement, a "service charge" for services rendered by defendant, including the use of defendant's computers for billing purposes, and a rental payment for space leased by plaintiff from defendant (id., ¶ 26).
Plaintiff contends that it created a list of its Bronx customers and their identifying information, such as names, locations, and volumes of purchases (the Lists), to aid in the servicing and billing of these customer (id., ¶¶ 12-14). Plaintiff further contends that the Lists are trade secrets owned by plaintiff (id., ¶ 20).
Paragraph 2 (c) of the Contract provides that, upon termination of the Contract, plaintiff must provide defendant with "copies of all records of Distributor relating to this Agreement, including but not limited to obligations and payments due to and received from [Dealers], including those appropriate to the post-termination period and copies of order regulation records and dealer lists of Distributor relating to this Agreement" (id., Exh A, ¶ 2 [c] [emphasis added]). Thus, upon termination of the Contract, the Lists were to be turned over to defendant. Moreover, the Contract included no confidentiality, non-use, non-circumvention, or any other provisions limiting defendant's use of the Lists.
Beginning in February 2005, Roy Newman and Keith Pothoff, defendant's general manager, and an employee of Newsday, notified James Thompson, plaintiff's president and sole stockholder, that the Tribune Company, the owner of Newsday and defendant, had offered to sell defendant to Pothoff and Newman (id., ¶ 28). In connection with the proposed sale, Pothoff and Newman requested that plaintiff convey to defendant its entire operation in the Bronx, including the Lists, as well as plaintiff's separate and unrelated requirements contract with Newsday, from whom plaintiff directly purchased newspapers (id., ¶ 29).
In March 2005, plaintiff refused Pothoff's and Newman's request. Plaintiff contends that Pothoff and Newman, however, continued to harass him, and Pothoff, in his role as an executive of the Tribune Company, Newsday and defendant, threatened to terminate plaintiff's separate and unrelated home delivery sales agents agreement with Newsday (id., ¶ 32). As a result, by letter dated March 11, 2005, plaintiff terminated the Contract but, in accordance with the 90-day notice provision contained in the Contract, continued to purchase its requirements for publication for its Bronx customers from defendant until June 10, 2005 (id.).
Plaintiff alleges that, on June 13, 2005, defendant began interfering with its business and its customers by delivering publications to plaintiff's customers, despite the fact that such publications, which plaintiff now purchases from wholesale sources, are delivered by plaintiff to its customers (id., ¶ 35). Plaintiff further alleges that defendant has notified those customers that plaintiff has no right to collect payment for the products delivered to them by plaintiff, and has directed the customers to pay defendant (id.).
In addition, plaintiff alleges that it has had independent contractor agreements with drivers who, for a fee, deliver plaintiff's publications to its Bronx customers, as well as collect payments from such customers (id., ¶ 36). Plaintiff further alleges that, beginning on June 10, 2005, defendant induced five of plaintiff's 11 drivers to terminate their independent contractor relationship with plaintiff, and enter into an independent contractor relationship with defendant, by offering them a signing bonus, and 20% increase in delivery fees (id., ¶¶ 39-40).
Defendant now moves to dismiss the amended complaint for failure to state a cause of action.
Although on a motion to dismiss, "the pleading is to be afforded a liberal construction," and "the facts as alleged in the complaint [are presumed] as true" (Leon v. Martinez, 84 NY2d at 87; see also Rovello v. Orofino Realty Co., 40 NY2d 633 [1976]), a complaint should be dismissed if the facts alleged do not fit within any cognizable legal theory (see e.g. 219 Broadway Corp. v. Alexander's, Inc., 46 NY2d 506 [1979]; Callaghan v. Goldsweig, 7 AD3d 361 [1st Dept 2004]). Here, construing the complaint in the generous matter to which it is entitled, I nevertheless conclude that plaintiff has failed to state a cause of action with respect to its causes of action against defendant, and that thus, the amended complaint must be dismissed.
In its first and second causes of action of the amended complaint, plaintiff seeks a permanent injunction and $1,500,000 in damages, on the ground that the "solicitation of plaintiff's customers, drivers, and continued use of plaintiff's customer list which is a trade secret, and [defendant's] contact with plaintiff's customers, is in violation of the [Contract] and constitutes a [tortious] interference with plaintiff's contractual relationship with its customers" (Amended Complaint, ¶ 42).
To state a claim for tortious interference with contract, a plaintiff must allege (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional interference with that contract; and (4) resulting breach and damages (Lama Holding Co. v. Smith Barney, Inc., 88 NY2d 413 [1996]; accord Foster v. Churchill, 87 NY2d 744 [1996]; Vigoda v. DCA Productions Plus Inc., 293 AD2d 265 [1st Dept 2002]). All of the elements of the theory must be pleaded in order to avoid dismissal (Bonanni v. Straight Arrow Publs., 133 AD2d 585 [1st Dept 1987]).
The primary consideration for a tortious interference with contract claim is the defendant's knowledge at the time that a breach of a valid contractual obligation is induced (Bogoni v. Friedlander, 197 AD2d 281 [1st Dept], lv denied 84 NY2d 803 [1994]). Although plaintiff alleges the existence of oral contracts with the Dealers, and it refers to the drivers servicing the Dealers as being independent contractors of plaintiff, plaintiff does not allege that defendant was aware of any contracts between plaintiff and the Dealers or drivers.
Plaintiff also fails to allege that any such contracts were breached, or the terms of any such contracts between plaintiff and the Dealers or drivers. In order to claim tortious interference with contract, a breach of the contract must be shown (Foster v. Churchill, 87 NY2d 744 , supra; see also Jack L. Inselman & Co. v. FNB Financial Co., 41 NY2d 1078 [1977]). The Court of Appeals has specifically observed:
Ever since tortious interference with contractual relations made its first cautious appearance in the New York Reports ... our Court has repeatedly linked availability of the remedy with a breach of contract. Indeed, breach of contract has repeatedly been listed among the elements of a claim for tortious interference with contractual relations.
NBT Bancorp Inc. v. Fleet/Norstar Fin. Group, Inc., 87 NY2d 614, 620-621 (1996) (citations omitted). Plaintiff makes no allegation that either the Dealers or the drivers have breached any contract with plaintiff.
In addition, to make out a breach of contract claim, the complaint must "set forth the terms of the agreement upon which [the breach] is predicated, either by express reference or by attaching a copy of the contract" (Chrysler Capital Corp. v. Hilltop Egg Farms, Inc., 129 AD2d 927, 928 [3d Dept 1987] [citations omitted]; see also Caniglia v. Chicago Tribune-New York News Syndicate, Inc., 204 AD2d 233 [1st Dept 1994]; Sylmark Holdings Ltd. v. Silicone Zone Intl. Ltd., 5 Misc 3d 285 [Sup Ct, NY County 2004]). Plaintiff has not attached a copy of any contract with its customers, nor has it expressly referred to any specific terms that have been breached.
In its opposition to the motion to dismiss, plaintiff contends that defendant must have been aware of the agreements that it had with its customers "by virtue of the fact that delivery of publications to J&L's customers was the underlying purpose for its agreement with DSA" (Pl Opp, at 8). Defendant does not deny that it...
To continue reading
Request your trial