FT Travel—N.Y., LLC v. Your Travel Ctr., Inc., Case No. CV 15–01065 MMM (MANx).

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
Writing for the CourtMARGARET M. MORROW, District Judge.
Citation112 F.Supp.3d 1063
Parties FT TRAVEL—NEW YORK, LLC, d/b/a Frosch Travel, Plaintiff, v. YOUR TRAVEL CENTER, INC.; YTC Travel, LLC ; and Colin Weatherhead, Defendants.
Decision Date26 June 2015
Docket NumberCase No. CV 15–01065 MMM (MANx).

112 F.Supp.3d 1063

FT TRAVEL—NEW YORK, LLC, d/b/a Frosch Travel, Plaintiff,
v.
YOUR TRAVEL CENTER, INC.; YTC Travel, LLC ; and Colin Weatherhead, Defendants.

Case No. CV 15–01065 MMM (MANx).

United States District Court, C.D. California.

Signed June 26, 2015.


112 F.Supp.3d 1067

Shaunt T. Arevian, Vincent J. Davitt, Meylan Davitt Jain Arevian and Kim LLP, Los Angeles, CA, Michael V. Rella, Soren E. Packer, Murphy and McGonigle PC, New York, NY, for Plaintiff.

Archana Ramma Acharya, Foley and Lardner LLP, Los Angeles, CA, Peter N. Wang, Yonaton Aronoff, Foley and Lardner LLP, New York, NY, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

MARGARET M. MORROW, District Judge.

On February 13, 2015, FT Travel New York, LLC, d/b/a Frosch Travel ("Frosch"), filed this breach of contract action against Your Travel Center, Inc. ("YTC"), YTC Travel, LLC ("LLC"), and Colin Weatherhead (collectively, "defendants").1 On April 10, 2015, defendants filed a motion to dismiss Frosch's complaint for failure to state a claim on which relief could be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure.2 Frosch opposes defendants' motion.3

112 F.Supp.3d 1068

Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7–15, the court finds this matter appropriate for decision without oral argument. The hearing calendared for June 29, 2015, is therefore vacated, and the matter is taken off calendar.

I. FACTUAL BACKGROUND

A. The Parties

Frosch is a travel management company that has headquarters in Houston, Texas and New York, New York.4 It was founded more than forty years ago and specializes in providing high-touch leisure and corporate travel services to individuals and companies by, among other things, selling air transportation.5 It purportedly employs more than 1,400 employees nationwide. Its current president and Chief Executive Officer ("CEO") is Bryan Leibman.6 During Leibman's tenure, Frosch has purportedly been ranked as one of the top ten travel management companies in the United States.7

YTC is an independent retail travel agency that is headquartered in Santa Barbara, California.8 Colin Weatherhead is YTC's current president and CEO.9 YTC allegedly provides services similar to those offered by Frosch; specifically, YTC sells air transportation and various other travel services to its clients.10 Unlike Frosch, however, YTC allegedly operates on a smaller scale—it maintains approximately seven offices and primarily serves clients in Southern California and Arizona.11 LLC is a non-existent entity that Frosch asserts was mistakenly named in a business contract between Frosch and defendants.12

B. Frosch's Relationship With YTC

Leibman purportedly first met Weatherhead in 2009; during the ensuing five years, the men developed a personal relationship.13 Frosch alleges that, on multiple occasions, Weatherhead professed admiration for Frosch's business model and Leibman's leadership, and conveyed an interest in entering into a business relationship with Frosch.14 To that end, Leibman and Weatherhead purportedly discussed a contractual arrangement pursuant to which YTC would report all of its airline sales through a Frosch Airlines Reporting Corporation ("ARC") branch office.15 The parties further purportedly contemplated that when Weatherhead decided to retire from the travel management business, he would sell YTC to Frosch for a price based on a formula set forth in a written sale agreement.16 As consideration for its

112 F.Supp.3d 1069

agreement to report airline sales through a Frosch ARC office and be purchased by Frosch, YTC was purportedly to receive, inter alia, access to Frosch's network of service providers and preferred relationships, and to benefit from Frosch's operating and technological expertise.17

The parties also purportedly contemplated that YTC would receive significant cash payments and credits in the form of "commissions" and "overrides" from airline companies as a result of reporting airline sales through Frosch's ARC office.18 The amount of these commissions and overrides is allegedly tied to the volume of sales reported by a travel agency through a particular ARC branch office.19 As a result, smaller travel agencies allegedly receive small commission or override payments because their air travel sales are generally on a small scale while large travel agencies purportedly receive large commissions and overrides due to the substantial volume of sales they report through ARCs.20 Frosch alleges that, under the agreement contemplated, YTC was likely going to receive larger overrides and commissions by reporting its sales through Frosch's ARC branch office than it otherwise would.21

At some point between 2009 and 2014, while Leibman and Weatherhead were purportedly negotiating a business agreement between Frosch and YTC, Leibman allegedly traveled to YTC's office in Arizona to meet with Weatherhead and YTC's other shareholders.22 Weatherhead also purportedly traveled to Frosch's Houston headquarters to meet with Leibman during the course of negotiations.23 Frosch alleges that during the parties' numerous discussions between 2009 and 2014, Weatherhead stated it was his intent to transfer YTC's business to Frosch and to have Frosch acquire YTC ultimately. At no time was severing the planned business relationship discussed.24

Unbeknownst to Frosch, YTC allegedly entered into an agreement with another travel management company, Tzell Travel LLC ("Tzell"), on August 26, 2009 (the "Tzell Agreement").25 Under the terms of the Tzell Agreement, Tzell was purportedly obligated to establish a joint ARC branch office with YTC (the "Tzell/YTC Branch") through which YTC was to report its airline and other travel services sales.26

C. Frosch's Purported Contract with YTC

In November 2014, Leibman and Weatherhead allegedly resumed their discussion of a business arrangement pursuant to which YTC would report all of its airline sales through Frosch's ARC branch office and Frosch would ultimately acquire YTC.27 On November 23, 2014, Frosch and YTC purportedly entered into an agreement

112 F.Supp.3d 1070

(the "Frosch Agreement" or "Agreement") reflecting Leibman's and Weatherhead's discussions.28

Frosch asserts that the Frosch Agreement was collectively negotiated and drafted by Leibman and Weatherhead.29 It names two parties: FT Travel–New York, LLC, d/b/a Frosch Travel ("Frosch"), and YTC Travel, LLC ("LLC").30 Frosch alleges that LLC is a non-existent entity that was erroneously identified by Robin Sanchez, YTC's COO, on October 21, 2014, when she filled in the name of Frosch's counter-party on the Frosch Agreement.31 The parties purportedly intended to name YTC as a party to the contract.32

The Frosch Agreement allegedly requires YTC to report airline sales through Frosch's ARC branch office.33 It states that "YTC shall transfer all of its business to an ARC ... branch office of FROSCH at the YTC location; and in this regard, shall process all its client requests for air transportation using ARC facilities contracted to FROSCH."34 So that YTC could report airline sales through a Frosch branch office, Frosch agreed to establish an ARC branch office at YTC's main office and transfer the address of its ARC office to that location.35 After this was done, YTC was required to "begin reporting all of its airline sales through the FROSCH ARC."36 The Agreement sets forth a payment structure under which YTC would receive a portion of the commissions and overrides generated by sales it reported through the ARC branch. Frosch was to receive the balance of the commissions and overrides.37

Frosch alleges that the Agreement required YTC to report airline sales through Frosch's ARC branch office until Weatherhead decided to sell YTC to Frosch.38 It also asserts the Agreement sets forth the process by which YTC would be sold to Frosch.39 The Agreement's "Succession" provision states, in relevant part:

"FROSCH and YTC wish to prepare for the following scenarios:

A) Colin Weatherhead. In the event Colin is no longer able to operate in his current capacity as CEO, the following will occur should Brenda [Weatherhead's wife] and YTC's Senior Management agree: 1) FROSCH will assume interim CEO responsibilities and work closely with YTC senior management including Brenda, Robin [YTC's COO], Jacki [YTC's CFO], Chris [YTC's CIO], and Shane [YTC's Implementation and Training Officer] for $100,000 annual fee; 2) FROSCH will have an option of first refusal to acquire all company shares except those of Robin Sanchez at the following formula (x5 trailing 12 months EBITDA with following adjustment for Colin's takeout) whenever Brenda chooses to sell; [and] 3) Grant Robin Sanchez an additional 5% of the company to vest 3 years from effective date of FROSCH ownership.
112 F.Supp.3d 1071
B) Jacki. In the event Jacki is no longer able to operate in her current capacity while Colin is still
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15 practice notes
  • Zaldivar v. City of San Diego, CASE NO. 15CV67-GPC(RBB)
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • September 21, 2016
    ...the first time on reply is improper and should not be considered by the Court. See FT Travel-New York, LLC v. Your Travel Ctr, Inc., 112 F. Supp. 3d 1063, 1079 (C.D. Cal. 2015); Kowalski v. Mommy Gina Tun Res., 574 F. Supp. 2d 1160, 1164 (D. Haw. 2008) (disregarding arguments made for the f......
  • Airbnb, Inc. v. City & Cnty. of S.F., Case No. 3:16–cv–03615–JD
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • November 8, 2016
    ...that reason alone. United States v. Romm , 455 F.3d 990, 997 (9th Cir. 2006) ; FT Travel–New York, LLC v. Your Travel Center, Inc. , 112 F.Supp.3d 1063, 1079 (C.D. Cal. 2015). The Court addresses it anyway for the sake of completeness and because the risk that plaintiffs have unfairly sandb......
  • Las Vegas Sun, Inc. v. Adelson, Case No.: 2:19-cv-01667-GMN-BNW
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Nevada
    • November 30, 2020
    ...sufficient factual allegations in support of that [alternative] request." FT Travel-New York, LLC v. YourPage 18 Travel Ctr., Inc., 112 F. Supp. 3d 1063, 1073 (C.D. Cal. 2015) (quoting Milo & Gabby, LLC v. Amazon.com, Inc., 12 F. Supp. 3d 1341, 1353-54 (W.D. Wash. 2014)); see also Holman v.......
  • DLN Holdings, LLC v. Guglielmo, 2021-CA-0640
    • United States
    • Court of Appeal of Louisiana (US)
    • June 29, 2022
    ...liability for fraud. We address this argument elsewhere in this opinion. [20] See FT Travel--New York, LLC v. Your Travel Ctr., Inc., 112 F.Supp.3d 1063, 1094-95 (C.D. Cal. 2015); see also Ruso v. Morrison, 695 F.Supp.2d 33, 51 (S.D.N.Y. 2010); Metro Kitchenworks Sales, LLC v. Continental C......
  • Request a trial to view additional results
15 cases
  • Zaldivar v. City of San Diego, CASE NO. 15CV67-GPC(RBB)
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • September 21, 2016
    ...the first time on reply is improper and should not be considered by the Court. See FT Travel-New York, LLC v. Your Travel Ctr, Inc., 112 F. Supp. 3d 1063, 1079 (C.D. Cal. 2015); Kowalski v. Mommy Gina Tun Res., 574 F. Supp. 2d 1160, 1164 (D. Haw. 2008) (disregarding arguments made for the f......
  • Airbnb, Inc. v. City & Cnty. of S.F., Case No. 3:16–cv–03615–JD
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • November 8, 2016
    ...that reason alone. United States v. Romm , 455 F.3d 990, 997 (9th Cir. 2006) ; FT Travel–New York, LLC v. Your Travel Center, Inc. , 112 F.Supp.3d 1063, 1079 (C.D. Cal. 2015). The Court addresses it anyway for the sake of completeness and because the risk that plaintiffs have unfairly sandb......
  • Las Vegas Sun, Inc. v. Adelson, Case No.: 2:19-cv-01667-GMN-BNW
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Nevada
    • November 30, 2020
    ...sufficient factual allegations in support of that [alternative] request." FT Travel-New York, LLC v. YourPage 18 Travel Ctr., Inc., 112 F. Supp. 3d 1063, 1073 (C.D. Cal. 2015) (quoting Milo & Gabby, LLC v. Amazon.com, Inc., 12 F. Supp. 3d 1341, 1353-54 (W.D. Wash. 2014)); see also Holman v.......
  • DLN Holdings, LLC v. Guglielmo, 2021-CA-0640
    • United States
    • Court of Appeal of Louisiana (US)
    • June 29, 2022
    ...liability for fraud. We address this argument elsewhere in this opinion. [20] See FT Travel--New York, LLC v. Your Travel Ctr., Inc., 112 F.Supp.3d 1063, 1094-95 (C.D. Cal. 2015); see also Ruso v. Morrison, 695 F.Supp.2d 33, 51 (S.D.N.Y. 2010); Metro Kitchenworks Sales, LLC v. Continental C......
  • Request a trial to view additional results

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