Nasso v. Bio Reference Labs., Inc.

• Decision Date: 24 September 2012
• Docket Number: No. 11–CV–3480 (JFB)(ETB).,11–CV–3480 (JFB)(ETB).
• Citation: 892 F.Supp.2d 439
• Parties: Vincent NASSO, Plaintiff, v. BIO REFERENCE LABORATORIES, INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

892 F.Supp.2d 439

Vincent NASSO, Plaintiff,

v.BIO REFERENCE LABORATORIES, INC., Defendant.

No. 11–CV–3480 (JFB)(ETB).

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

Sept. 24, 2012.

John C. Digiovanna, John C. Digiovanna & Associates, Saint James, NY, for Plaintiff.

Ivan R. Novich, Littler Mendelson, Neward, NJ, John C. Digiovanna, John C. Digiovanna & Associates, Saint James, NY, for Defendant.

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge:

Vincent Nasso (“Nasso” or “plaintiff”) filed this action against Bio Reference Laboratories, Inc. (“Bio Reference” or “defendant”) alleging that his former employer, Bio Reference, owes him unpaid commissions on sales accounts that he generated while he was employed at Bio Reference from 1989 to 2002. Specifically, plaintiff alleges that he and defendant had an agreement that plaintiff would continue to receive 10% of all revenues generated from any accounts plaintiff referred to defendant, as well as from accounts generated from accounts originally referred to defendant by plaintiff, for “as long as those accounts and referred accounts continued to pay defendant.” (Amended Complaint at ¶ 13.) In 2002, plaintiff was indicted on federal charges, and alleges that the principal officer at Bio Reference told plaintiff that Bio Reference could no longer pay plaintiff commissions “until [p]laintiff's criminal case was completely resolved,” but that Bio Reference would pay plaintiff all accrued commissions after the criminal process ended. ( Id. ¶ 17.) Defendant ceased paying plaintiff commissions in 2002. Plaintiff brings three causes of action against Bio Reference: (1) an accounting, (2) breach of contract, and (3) conversion.

Defendant moves to dismiss the Amended Complaint, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, on the grounds that (1) the oral contract is incapable of being performed within one year and is therefore barred by the Statute of Frauds, (2) New York law does not permit post-termination claims that are unlimited and indefinite in nature, (3) Nasso's claims are barred by the statutes of limitations, and (4) Nasso cannot plausibly argue equitable estoppel.

As discussed below, the motion to dismiss is granted in its entirety. Plaintiff's claim for breach of contract is barred by the Statute of Frauds, and no defense or exception to the Statute of Frauds applies. Plaintiff's claim for an accounting is barred because plaintiff and defendant were not in a fiduciary or confidential relationship. Plaintiff's claim for conversion is dismissed as it merely recasts plaintiff's breach of contract claim, and is barred by the statute of limitations.

I. Background

The following facts are taken from the Amended Complaint filed on August 25, 2011, ECF No. 9 (“AC”), and are not findings of fact by the Court. Instead, the Court will assume the facts in the complaint to be true and, for purposes of the pending 12(b)(6) motion to dismiss, will construe them in a light most favorable to plaintiff, the non-moving party.

In 1987, Nasso was an officer and shareholder of Bio Dynamics, a New York corporation that provided “blood laboratory work up” and “medical diagnostic results” for medical facilities and others. (AC ¶¶ 4–5, 8.) In 1989, Bio Reference purchased Bio Dynamics, including all of Bio Dynamics' accounts. ( Id. ¶ 10.) In consideration for the sale of Bio Dynamics, defendant agreed to pay Nasso in Bio Reference stock and stock options, and agreed to hire and employ Nasso as a sales person and consultant for the purpose of soliciting and referring medical facilities and others who required diagnostic testing results. ( Id. ¶ 12.) At the time, Bio Reference and Nasso agreed that Nasso would receive “10% of all monies defendant earned from accounts [p]laintiff referred to defendant as well as from accounts generated or referred to defendant from accounts originally referred to defendant by plaintiff.” ( Id. ¶ 13.) It was further agreed “that plaintiff would receive said 10% of said monies earned by defendant as long as those accounts and referred accounts continued to pay defendant for the services defendant provided to them.” ( Id.)

Between 1989 and 2002, plaintiff obtained and referred numerous accounts to defendant, and accounts originally referred to defendant by plaintiff then referred other accounts to defendant. ( Id. ¶¶ 14–15.) In 2002, plaintiff was indicted for violating certain federal laws, and was charged with federal crimes. ( Id. ¶ 16.) The indictment and charges “compelled plaintiff to leave his employment with defendant.” ( Id.)

The Principal Officer of Bio Reference, Dr. Mark Grudman (“Grudman”), allegedly told plaintiff that, because plaintiff was under federal indictment, and Bio Reference was a publicly held company, defendant could no longer pay plaintiff his earned commissions until plaintiff's “criminal case was completely resolved.” ( Id. ¶ 17.) Grudman allegedly stated, however, that “all monies and commissions” that plaintiff was entitled to “would be held by defendant for plaintiff's benefit until such time as [p]laintiff's criminal case was completely resolved and when plaintiff was released from prison.” ( Id.) Upon plaintiff's release, Grudman would pay plaintiff the commissions “he was entitled to while the criminal process was unveiling[,]” as well as “commissions earned through accounts referred to defendant which remained with defendant after plaintiff's criminal case was resolved and which commissions would continue so long as those accounts (accounts generated by and through [p]laintiff) remained and continued to remain defendant's ‘account.’ ” ( Id.) Plaintiff allegedly agreed to these terms and conditions and suspended payment of commissions due to him. ( Id. ¶ 18.)

Plaintiff alleges that defendant has, since 2002, continued to maintain and profit from numerous accounts obtained by and through the plaintiff and referred to defendant while plaintiff was employed by defendant. ( Id. ¶ 19.) Plaintiff lists the New York Hotel Trade Council account as an example of one such account. ( Id.) Plaintiff notes that he still holds a retirement (401K) account with Fidelity Investments, wherein defendant lists plaintiff as an “employee.” ( Id. ¶ 20.) Plaintiff further alleges that his relationship with defendant “was and is a fiduciary one and one of trust” because defendant has “custodyand access to its books and records relating to commissions it agreed to hold for plaintiff's benefit.” ( Id. ¶ 24.)

Plaintiff's criminal proceedings “concluded” in 2006. ( Id. ¶ 21.) Defendant “has heretofore been advised” that the proceedings “resolved and concluded” in 2006. ( Id. ¶ 22.) Although plaintiff has demanded payment from Bio Reference, defendant has failed to and refused to pay plaintiff any commissions on monies defendant received from accounts referred to it from the time of plaintiff's employment until the present. ( Id.)

II. Procedural History

Plaintiff filed this action against Bio Reference in Supreme Court of the State of New York, County of Nassau, in June 2011. On July 19, 2011, defendant filed a notice of removal to federal court on the grounds that the United States District Court for the Eastern District of New York has subject matter jurisdiction based on diversity jurisdiction. Plaintiff filed an Amended Complaint on August 25, 2011. Defendant filed its motion to dismiss on October 12, 2011. Plaintiff's counsel filed an Affirmation in Opposition on November 6, 2011, to which he attached an Affidavit from Nasso.¹ Defendant filed a reply on November 21, 2011. Plaintiff filed a surreply on December 1, 2011. On December 6, 2011, defendant filed a motion to strike Nasso's sur-reply, and addressed the arguments Nasso made in his sur-reply. The Court held oral argument on the motion on December 16, 2011 and reserved decision. On May 18, 2012, the Court conducted a telephone conference with the parties and requested supplemental briefing. On June 29, 2012, defendant filed a supplemental letter brief in further support of its motion to dismiss. On July 24, 2012, plaintiff filed a supplemental opposition, and on August 15, 2012, defendant filed a supplemental reply. The Court has fully considered the arguments and submissions of the parties.

III. Standard of Review

In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the plaintiff. See Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir.2006); Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir.2005). “In order to survive a motion to dismiss under Rule 12(b)(6), a complaint must allege a plausible set of facts sufficient ‘to raise a right to relief above the speculative level.’ ” Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86, 91 (2d Cir.2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). This standard does not require “heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955.

The Supreme Court clarified the appropriate pleading standard in Ashcroft v. Iqbal, setting forth a two-pronged approach for courts deciding a motion to dismiss. 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The Court instructed district courts to first “identify[ ] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” 129 S.Ct. at 1950. Though “legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. Second, if a complaint contains “well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id.

Claims concerning fraud are subject to heightened...