DeLuca v. AccessIT Group, Inc.

• Decision Date: 09 February 2010
• Docket Number: No. 08 Civ. 1699(PKL).,08 Civ. 1699(PKL).
• Citation: 695 F. Supp.2d 54
• Parties: Jeremy F. DeLUCA, Plaintiff, v. ACCESSIT GROUP, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

695 F. Supp.2d 54

Jeremy F. DeLUCA, Plaintiff, v. ACCESSIT GROUP, INC., Defendant.

No. 08 Civ. 1699(PKL).

United States District Court, S.D. New York.

February 9, 2010.

Sheps Law Group, P.C., Robert Charles Sheps, Melville, NY., for the Plaintiff.

Cozen O'Connor, Jennifer Fletcher Beltrami, New York, NY, for the Defendant.

OPINION AND ORDER

LEISURE, District Judge:

This is a diversity action for breach of employment agreement for unpaid commissions, violation of New York Labor Law § 191-c, and unjust enrichment. Defendant, AccessIT Group, Inc. ("AccessIT"), moves pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6) to dismiss plaintiff's, Jeremy F. DeLuca's ("DeLuca"), second cause of action for double damages under Section 191-c of the New York Labor Law. DeLuca cross-moves to amend his complaint pursuant to Rule 15(a). Additionally, AccessIT moves pursuant to Rule 12(b)(5) to dismiss the entire complaint for insufficient service of process. For the reasons stated below, defendant's motion to dismiss plaintiff's second cause of action pursuant to Rule 12(b)(6) is GRANTED, plaintiff's cross-motion to amend his complaint pursuant to Rule 15(a) is GRANTED, and defendant's motion to dismiss the entire complaint pursuant to Rule 12(b)(5) is DENIED.

BACKGROUND

I. The Parties' Agreement

DeLuca brings this diversity action against AccessIT for breach of an employment agreement (the "Agreement") for unpaid commissions. The following facts are taken from the pleadings and do not constitute the findings of the Court. DeLuca is a resident of New Jersey. (Compl. ¶ 1.) AccessIT is a corporation organized under the laws of Pennsylvania with its principal place of business in Pennsylvania. (Id. ¶ 2.) AccessIT conducts substantial business in New York and maintained an office in New York City during a portion of time at issue in the dispute. (Id. ¶ 4.) AccessIT "is in the business of hardware and software sales and technical support for the installation, maintenance, and upgrading of approval product line for Information Technology Security and Infrastructure Technologies." (Id. ¶ 3.)

On or about October 2001, DeLuca began to work for AccessIT "as a fulltime sic 1099 sales person." (Id. ¶ 7.) Around February 2003, DeLuca assumed the title of Regional Manager for AccessIT. (Id. ¶ 8.) DeLuca was to be paid a percentage of the net profits of AccessIT's New York operation and reimbursed for certain expenses. (Id. ¶ 9.) Beginning in June 2003, AccessIT "unilaterally removed" DeLuca's compensation, calling the proceeds "deferred income." (Id. ¶ 10.) On or about September 30, 2006, DeLuca provided AccessIT with notice of his intention to resign as Regional Manager. (Id. ¶ 11.) The next month, a meeting took place concerning, inter alia, the status of DeLuca's deferred income. (Id. ¶ 12.) Around the same time, October 2006, a new proposed agreement was exchanged between the parties, appointing DeLuca "senior account manager." (Id. ¶ 13.) On February 7, 2007, DeLuca terminated his representation of AccessIT's business. (Id. ¶ 14.)

On February 20, 2008, DeLuca initiated this action, alleging breach of contract, violation of New York Labor Law, and unjust enrichment for AccessIT's failure to pay commissions in the amount of $72,451.00 and deferred income in the amount of $45,000.00, for a total of $117,451.00 in damages. (Id. ¶ 21.)

II. The Instant Motions to Dismiss

AccessIT moves to dismiss on two grounds. First, AccessIT moves pursuant to Rule 12(b)(6) to dismiss DeLuca's second cause of action, which requests double damages for a violation of Section 191-c(3) of the New York Labor Law. (See Def.'s Mem. of Law in Supp. of Its Mot. to Dismiss ("Def.'s Mem.") 2.) AccessIT alleges that Section 191-c(3) permits an award of double damages only for claims by independent contractors. (Id. (citing N.Y. Labor Law § 191-c(3)).) Since DeLuca alleges that he is an employee, AccessIT contends that the complaint is deficient on its face. (Id.) AccessIT further states that curing this deficiency in an amended pleading would be futile because Section 191-c(3) only applies to manufacturers, and DeLuca has not, and cannot, allege that AccessIT is a manufacturer. (Id.)

Second, AccessIT moves to dismiss the entire complaint under Rule 12(b)(5) for insufficient service of process because it never was served with a summons. (Id.) AccessIT states that "on or about March 4, 2008, it was served with a Civil Cover Sheet, Complaint, and Rule 7.1 Statement" but that "no summons was included." (Id. 3.) In its reply brief, AccessIT emphasizes that DeLuca had three chances to effect service properly and has failed each time. (Def.'s Reply Mem. of Law in Further Supp. of Its Mot. to Dismiss ("Def.'s Reply") 5.) First, on March 4, 2008, DeLuca served AccessIT with a complaint but no summons. (Id.) Second, DeLuca had until June 19, 2008 (120 days after commencement of this action) to remedy this service defect by serving a summons but failed to do so. (Id. 5 n. 2.) Third, DeLuca attempted to serve the summons on July 3, 2008, fourteen days after the 120-day deadline, but the summons was missing both the court clerk's signature and the seal of the court, rendering it ineffective. (Id. 5.) AccessIT contests DeLuca's request for the Court to approve, nunc pro tunc, DeLuca's belated effort to serve the unsigned and unsealed summons and requests that the Court dismiss this action in its entirety. (Id. 6.)

DISCUSSION

The Court first addresses the standard for a motion to dismiss under Rule 12(b)(6) as well as the standard under Rule 12(d) for considering extrinsic documents submitted on a motion to dismiss. Next, the Court analyzes whether the complaint properly states a claim under Section 191-c(3) of the New York Labor Law and, if not, whether the Court should grant leave to amend. Finally, the Court addresses whether the complaint should be dismissed in its entirely under Rule 12(b)(5) for insufficient service of process.

I. Rule 12(b)(6) and Rule 12(d)

A. Rule 12(b)(6)

AccessIT moves to dismiss DeLuca's second cause of action for failure to state a claim upon which relief can be granted. (Def.'s Mem. 2.) To determine whether the pleadings state a claim under Section 191 of the New York Labor Law, the Court must address the standard for motions to dismiss, including what extrinsic evidence, if any, is appropriate for review on this motion. On a motion to dismiss, the Court considers "all `well-pleaded factual allegations' to be true to `determine whether they plausibly give rise to an entitlement to relief.'" Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 88 (2d Cir.2009) (quoting Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009)). In Iqbal, the Supreme Court set out a two-pronged analysis to determine whether pleadings meet this plausibility standard. First, a court "can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Iqbal, 129 S.Ct. at 1950; see also United States v. Lloyds TSB Bank PLC, 639 F.Supp.2d 326, 338-39 (S.D.N.Y.2009) (same). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal, 129 S.Ct. at 1950. Second, "when there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id.; see also Lloyds TSB, 639 F.Supp.2d at 339 (same). "Determining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1950; S. Cherry St., LLC v. Hennessee Group LLC, 573 F.3d 98, 110 (2d Cir.2009) (same).

Where a complaint fails to plead a plausible claim for relief, a Court may grant leave to amend. See Fed.R.Civ.P. 15(a)(2) ("The court should freely give leave to amend when justice so requires."); Holmes v. Grubman, 568 F.3d 329, 334 (2d Cir.2009). Leave to amend need not be granted, however, where the proposed amendment would be futile. Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 18 (2d Cir.1997) (Kearse, J.). Also, "a district court has discretion to deny leave for good reason, including futility, bad faith, undue delay, or undue prejudice to the opposing party." Holmes, 568 F.3d at 334 (internal quotation marks omitted) (quoting McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir.2007)).

B. Rule 12(d)

In conjunction with DeLuca's brief in opposition to AccessIT's motion to dismiss, DeLuca's counsel, Robert C. Sheps, submits an affidavit with four exhibits that were not presented to the Court previously ("Sheps Affidavit and Exhibits"). Exhibit A to the Sheps Affidavit is an e-mail between DeLuca and AccessIT, dated December 17, 2003, concerning DeLuca's status as an independent contractor. (Sheps Aff. Ex. A.) Exhibit B is a copy of a letter written by DeLuca to AccessIT, dated January 14, 2004, also regarding DeLuca's status as an independent contractor. (Id. Ex. B.) Exhibit C is a copy of AccessIT's webpage explaining the company's services. (Id. Ex. C.) Exhibit D is an e-mail between counsel for DeLuca and counsel for AccessIT concerning this litigation. (Id. Ex. D.) Pursuant to Rule 12(d) discussed below, these newly presented documents are not part of the pleadings and will be excluded in deciding this motion to dismiss.

"If, on a motion under Rule 12(b)(6) ..., matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56" and "all parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed.R.Civ.P. 12(d). However, if extrinsic evidence submitted on a motion to dismiss is deemed part of the pleadings, it may be considered in deciding the motion. See ...