Posner v. Minnesota Min. & Mfg. Co., Inc.

• Decision Date: 19 May 1989
• Docket Number: No. 87 CV 4067.,87 CV 4067.
• Citation: 713 F. Supp. 562
• Parties: Frances POSNER and Sari Posner, Plaintiffs, v. MINNESOTA MINING & MANUFACTURING CO., INC. a/k/a 3M Co., Defendant.
• Court: U.S. District Court — Eastern District of New York

713 F. Supp. 562

Frances POSNER and Sari Posner, Plaintiffs, v. MINNESOTA MINING & MANUFACTURING CO., INC. a/k/a 3M Co., Defendant.

No. 87 CV 4067.

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

May 19, 1989.

Frances Posner and Sari Posner, pro se.

Joseph H. Lessem, Cowan, Liebowitz & Latman, P.C., New York City, for defendant.

MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

In this action based on diversity of citizenship, 28 U.S.C. § 1332(a), defendant moves to dismiss the amended complaint for failure to state a claim. Fed.R.Civ.P. 12(b)(6). Defendant also makes the now obligatory application for sanctions under Fed.R.Civ.P. 11.

FACTS

1. The Amended Complaint

Assuming all allegations in the amended complaint are true, the facts are as follows. For purposes of diversity jurisdiction, plaintiffs, Frances and Sari Posner, are New York citizens and defendant, Minnesota Mining and Manufacturing Co. ("3M") is a Minnesota corporation with its principal place of business in a state other than New York. The amount in controversy exceeds $10,000. The plaintiffs appear pro se.

Richard Posner, the father of plaintiff Sari Posner and then husband of plaintiff Frances Posner, owned and worked for Plastronics, Inc. ("Plastronics") from 1982 to 1984. In 1982, defendant contracted with Plastronics whereby Plastronics agreed to import intercoms for distribution by 3M. The defendant, through its representative Donald Conlin, spoke with plaintiffs on the telephone and in person at various times during the period from 1982 to 1984. Through these efforts, defendant encouraged plaintiffs to fund Plastronics, which was a new corporation.

During these conversations and meetings, Mr. Conlin orally assured plaintiffs that defendant would guarantee any funds plaintiffs lent to Plastronics. Additionally, Mr. Conlin assured plaintiffs that, if necessary, 3M would assist Plastronics with supplemental funding. Mr. Conlin also indicated that 3M would order sufficient merchandise to keep Plastronics operating successfully.

As a result of those statements, each plaintiff lent $10,000 to Plastronics. Defendant, however, never supplied Plastronics additional funding and subsequently, Plastronics became insolvent and ceased doing business.

The loans by plaintiffs to Plastronics remain unpaid.

Both counts of the amended complaint allege breach of contract by defendant. Count I demands $20,000 in damages representing the loans made by plaintiffs. Count II demands $150,000 representing Richard Posner's lost income for the 1982-1984 period.¹

2. Procedural Background

In December 1987, plaintiffs Frances and Sari Posner brought the instant action alleging fraud by 3M. Defendant moved to dismiss the complaint for failure to plead fraud with particularity. The motion was granted but plaintiffs were given leave to replead, 697 F.Supp. 122 (E.D.N.Y.1988). Plaintiffs then served an amended complaint switching from fraud to breach of contract. Defendant moves to dismiss the amended complaint on three grounds: 1) the amended complaint fails to state a claim for which relief may be granted; 2) the breach of contract claim is barred by the New York Statute of Frauds; and 3) plaintiffs claim damages that are not recoverable in an action for breach of contract.

Defendant also moves for sanctions under Fed.R.Civ.P. 11, asserting that this action is frivolous and has been brought solely for harassment.

DISCUSSION

The key elements for a breach of contract claim are: (1) the formation of an agreement; (2) performance by one party; (3) breach of the agreement by the other party; and (4) damages. See Stratton Group Ltd. v. Sprayregen, 458 F.Supp. 1216 (S.D.N.Y.1978). It is not necessary for each factor to be pleaded individually so long as plaintiff has submitted "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R.Civ.P. 8(a)(2). See Nordic Bank PLC v. Trend Group, Ltd., 619 F.Supp. 542, 561 (S.D.N.Y.1985).

However, in asserting a breach of contract claim, the complaint must plead the terms of the agreement upon which defendant's liability rests. See id. at 561-62; Chrysler Capital Corporation v. Hilltop Egg Farms, Inc., 129 A.D.2d 927, 929, 514 N.Y.S.2d 1002, 1003 (3rd Dep't 1987).

Plaintiffs' amended complaint fails to meet these criteria. Plaintiffs' amended complaint refers to an oral suretyship agreement with defendant. Plaintiffs claim that defendant's assurances induced them to lend money to Plastronics and that this conduct resulted in a contract between the parties. Although the existence of a contract is alleged, plaintiffs fail to set forth any specific information as to when the agreement was made, the terms of the agreement upon which liability is predicated, or any other evidence supporting the formation of an agreement. Consequently, plaintiffs complaint fails to adequately state a claim upon which relief may be granted.

Because plaintiffs appear pro se, however, their complaint may be viewed with greater leniency than pleadings drafted by an attorney. See Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 595, 30 L.Ed.2d 652 (1972). Nonetheless, this is the second time plaintiffs have filed their complaint. In an order dated September 16, 1988, this Court granted plaintiffs leave to amend their original complaint. At that time, plaintiffs were advised that the Court would not tolerate further vague and conclusory pleadings. It is obvious that plaintiffs did not follow this instruction. Consequently, they have once again failed to state a valid claim before this Court.

Furthermore, even if plaintiffs were again granted leave to amend the complaint, this claim for breach of contract would not survive. The alleged agreement fails to satisfy the Statute of Frauds. New York Gen.Oblig.Law § 5-701(a)(2) (McKinney 1989).²

Based on the facts set forth in plaintiffs' complaint, the agreement was that defendant would guaranty repayment of the loans made by plaintiffs to Plastronics. As such, the agreement was squarely within the ambit of § 5-701(a)(2) and thus a writing was required. In the present case, the alleged agreement was oral. Consequently, unless circumstances are such that the agreement falls within one of the exceptions to the rule, the agreement is void by virtue of the Statute of Frauds.

A guarantee or surety agreement need not be in writing if "the promisee had no reason to know that the promisor was acting as a surety, or when the duties of the principal and surety are joint, or where the promise is made to the principal." Martin Roofing, Inc. v. Goldstein, 60 N.Y.2d 262, 264, 457 N.E.2d 700, 701, 469 N.Y.S.2d 595, 596 (1983). None of these exceptions apply here.

Plaintiffs acknowledge defendant's role as surety. In paragraphs 4 and 8 of the complaint, plaintiffs state that defendant was to guarantee the funds lent to Plastronics, the principal. Thus, it is clear that Plastronics and not the defendant, was the primary debtor. Furthermore, there is no indication that Plastronics and defendant's duties were joint, nor is there an indication that defendant promised Plastronics that it would assume the debt as its own.

Finally, an oral suretyship agreement may be enforceable under the Statute of Frauds if plaintiffs can show that the promise is supported by new consideration and represents an independent duty to pay. See Martin Roofing, 60 N.Y.2d at 267, 457 N.E.2d at 703, 469 N.Y.S.2d at 597. In order to create the promisor's independent duty to pay, the original debtor's obligation must be excused. See Hawley Fuel Coalmart, Inc. v. Steag Handel GMBH, 796 F.2d 29 (2d Cir.1986).

In this case, plaintiffs have not alleged that Plastronics' debt to them has been discharged. Consequently, defendants have not become the primary debtor. Therefore, the agreement does not come within...