Murray Eng'g P.C. v. Charles Christopher Remke, Joseph Craig Blockno, Mark Line Indus. LLC
| Decision Date | 09 August 2018 |
| Docket Number | 17 Civ. 6267 (KPF) |
| Parties | MURRAY ENGINEERING P.C., Plaintiff, v. CHARLES CHRISTOPHER REMKE, JOSEPH CRAIG BLOCKNO, MARK LINE INDUSTRIES LLC, and MOSAIC CAPITAL GROUP LLC, Defendants. |
| Court | U.S. District Court — Southern District of New York |
This civil action, as many before and since, stems from a failed business relationship, this one between Plaintiff Murray Engineering P.C. ("Murray") and Defendants Mosaic Capital Group LLC, Mark Line Industries LLC ("Mark Line"), Joseph Blockno, and Charles Remke (together with Blockno, the "Individual Defendants," and together with Blockno and Mark Line, the "Moving Defendants").1 Plaintiff alleges that Defendants Remke and Blockno persuaded Plaintiff to provide engineering services in connection with four construction projects in New York and New Jersey for which Defendant Mark Line served as general contractor. Plaintiff further alleges that Defendants failed to pay Plaintiff for any of the work performed.
From this broken relationship, Plaintiff discerns fifteen causes of action: breach of contract; alter ego liability; goods sold and delivered; account stated; unjust enrichment; promissory estoppel; breach of fiduciary duty; breach of constructive trust; conversion; fraudulent inducement; violation of the "Prompt Payment Law" under Article 35-E of New York's General Business Law ("GBL"), N.Y. GBL §§ 756-758; and violations of Sections 273, 274, 275, and 276 of New York's Debtor and Creditor Law ("DCL"), N.Y. Debt. & Cred. Law §§ 1-291. In total, Plaintiff seeks $239,654 in damages, of which $120,000 constitutes punitive damages.
Moving Defendants seek dismissal of all claims. They advance the following arguments: First, that the Court lacks personal jurisdiction over Defendants Blockno and Remke; second, that Plaintiff's factual allegations are insufficient to state a claim for breach of contract or alter ego liability; third, that the claims for account stated, unjust enrichment, breach of fiduciary duty, breach of constructive trust, conversion, and promissory estoppel are duplicative of Plaintiff's breach of contract claim; fourth, that the fraudulent inducement, unjust enrichment, and DCL § 276 claims do not meet the heightened pleading standard of Rule 9(b); fifth, that Plaintiff's fraudulent conveyance claims under DCL §§ 273, 274, and 275 are inadequately pleaded; and sixth, that Plaintiff's GBL 35-E claim fails because the alleged agreements between Plaintiff and Defendant Mark Line do not qualify as "construction contracts" under the statute.
While Moving Defendants overstate the inadequacies in Plaintiff's pleadings, they are correct that certain causes of action fail to state a claim, generally because they are duplicative of other claims or lack the specificity required by the Federal Rules of Civil Procedure. For the reasons set forth below, the Court grants in part and denies in part the pending motion to dismiss.
In 2016 and 2017, Defendant Mark Line entered into construction contracts with owners of four properties in New York City and in Asbury Park and Newark, New Jersey. (FAC ¶ 10). In connection with those projects, Mark Line also entered into subcontracts with Plaintiff Murray Engineering (the "Subcontracts"), according to which Plaintiff was to provide "certain [engineering] services, equipment[,] and materials[.]" (Id. at ¶ 11). Periodically, Murray and Mark Line also entered into supplemental agreements that adjusted the scope of work under the Subcontracts. (Id. at ¶ 12).
Plaintiff alleges that it began to perform under the Subcontracts as early as June 29, 2016. (FAC ¶ 13). It states that, "[a]t all times ... Plaintiff was in full compliance with and had not breached the terms of the [Subcontracts andsupplemental agreements] and duly performed all of its duties [there]under[.]" (Id. at ¶ 14). Plaintiff further asserts that, though Mark Line received payments from the property owners, it failed to pay its subcontractors, including Murray. (Id. at ¶¶ 15-16). Plaintiff sent Mark Line invoices, account statements, and other payment demands relating to work that Plaintiff had performed under the Subcontracts, but Mark Line did not pay. (Id. at ¶¶ 18-19).
Plaintiff alleges that Defendants Remke and Blockno were instrumental in convincing the four property owners to hire Mark Line, as well as in persuading Plaintiff and other subcontractors to perform work on the projects. Remke and Blockno were "the sole shareholders and[ ] were[ ] in exclusive control of Mark[ L]ine and over all of Mar[k L]ine's significant business decisions." (FAC ¶ 20). They also maintained "exclusive control" over Mark Line's "profits[,] ... books and records[, and] ... checking accounts," and failed to capitalize the company properly. (Id. at ¶ 21). They "caused Plaintiff and the [property owners] to rely on statements relating [to] Mar[k L]ine's financial strength and security, which Remke and Blockno knew to be untrue when ... made[.]" (Id. at ¶ 22).
Plaintiff further alleges that the Individual Defendants made "false statements" with "specific intent to cause Plaintiff and the [property owners] to detrimentally rely thereon, as part of [the Individual Defendants'] scheme for Mar[k L]ine to collect the Project Trust Funds, which funds [the Individual Defendants] could then convert for their own use, rather than paying Plaintiff." (FAC ¶ 22). Plaintiff "detrimentally relied upon [the Individual Defendants']false statements[.]" (Id. at ¶ 23). And after the property owners paid the Defendants for work performed by subcontractors, including Plaintiff, the Individual Defendants caused Mark Line "to close and shut its doors and to cease conducting any business operations," and, further, "caused the Project Trust Funds to be misappropriated and wrongfully [used] ... in violation of [Moving Defendants'] statutory and fiduciary duties." (Id. at ¶ 24). As a result, Mark Line has been "stripped ... of all of its assets" and "become judgment-proof[.]" (Id. at ¶ 26). The Individual Defendants "fraudulently conveyed the assets of Mar[k L]ine in an attempt to escape ... Mar[k L]ine's obligations to its creditors, including the Plaintiff." (Id. at ¶ 27).
Plaintiff filed this action on August 18, 2017, seeking, inter alia, compensation for goods and services rendered in the amount of $119,654. (See Dkt. #1). The parties appeared for a pre-motion conference with the Court on November 30, 2017. (See Dkt. #19). Later that day, the Court issued a scheduling order, requiring Plaintiff to file an amended complaint, if any, by January 5, 2018. (Id.). Plaintiff timely filed its amended complaint. (Dkt. #20). Moving Defendants thereafter filed their motion to dismiss — pursuant to the Court's scheduling order — on February 20, 2018. (Dkt. #21, 23). On March 23-24, 2018, Plaintiff filed its opposition brief and supporting papers, including the Declaration of Eric P. Schutzer, attached to which was an exhibit containing some, if not all, of the Subcontracts at issue in this litigation. (Dkt.#24, 25). Moving Defendants filed their reply brief on April 6, 2018. (Dkt. #28).
When a defendant brings a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2), "the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant." DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001) (citation omitted); accord In re Terrorist Attacks on Sept. 11, 2001, 714 F.3d 659, 673 (2d Cir. 2013). Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84-85 (2d Cir. 2013) (per curiam) (citation omitted). All jurisdictional allegations "are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor[.]" A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993). However, the court "will not draw argumentative inferences in the plaintiff's favor" and need not "accept as true a legal conclusion couched as a factual allegation[.]" In re Terrorist Attacks, 714 F.3d at 673 (citations omitted); see also Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 59 (2d Cir. 2012).
District courts deciding a motion to dismiss for lack of personal jurisdiction must engage in a two-part analysis. First, the court must assess whether there is "a statutory basis for exercising personal jurisdiction." Marvel Characters, Inc. v. Kirby, 726 F.3d 119, 128 (2d Cir. 2013). In making this determination, the court "applies the forum state's personal jurisdiction rules" unless a federal statute "specifically provide[s] for national service of process." PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997) (internal quotation marks and citations omitted). Second, if there is a statutory basis for personal jurisdiction, the court must decide whether the exercise of jurisdiction comports with due process. Sonera Holding B.V. v. Çukurova Holding A.Ş., 750 F.3d 221, 224 (2d Cir. 2014) (per curiam).
When a court considers a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), it must "draw all reasonable inferences in Plaintiff['s] favor, assume all well-pleaded factual allegations to be true, and determine whether they plausibly give rise to an entitlement to relief." Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011) (internal quotation marks omitted) (quoting Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 88 (2d Cir. 2009)). A plaintiff will...
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