Providence Metallizing Co. v. Tristar Products, Inc.

• Court: U.S. District Court — District of Rhode Island
• Writing for the Court: WILLIAM E. SMITH
• Citation: Providence Metallizing Co. v. Tristar Products, Inc., 717 F.Supp.2d 227 (D. R.I. 2010)
• Decision Date: 11 June 2010
• Docket Number: C.A. No. 09-450
• Parties: PROVIDENCE METALLIZING CO., Plaintiff, v. TRISTAR PRODUCTS, INC., New Products International, Inc., and Baruch Tamir, individually and in his corporate capacity as an officer of New Products International, Inc., Defendants.

717 F.Supp.2d 227

PROVIDENCE METALLIZING CO., Plaintiff,

v.TRISTAR PRODUCTS, INC., New Products International, Inc., and Baruch Tamir, individually and in his corporate capacity as an officer of New Products International, Inc., Defendants.

C.A. No. 09-450.

United States District Court, D. Rhode Island.

June 11, 2010.

Peter P.D. Leach, Esq., Peter P.D. Leach, Esq., Attorney at Law, Providence, RI, Christine M. Curley, Esq., North Kingstown, RI, for Plaintiff.

Kevin J. Holley, Esq., Gunning & LaFazia, Inc., Warwick, RI, Mary Ellen R. Himes, Esq., Venable LLP, Washington, DC, for Defendants.

OPINION AND ORDER

WILLIAM E. SMITH, District Judge.

I. Introduction

Plaintiff, Providence Metallizing Co. ("PMC") filed suit against Defendants, Tristar Products, Inc. ("Tristar"), New Products International, Inc. ("New Products"), and Baruch Tamir ("Tamir") for breach of contract, breach of the implied covenant of good faith and fair dealing, and promissory and equitable estoppel. PMC alleges that it struck a deal with Tamir, an alleged agent of Tristar and New Products, to provide gold plating and printing services on U.S. coins to commemorate President Obama's inauguration and election. Defendants, according to PMC, reneged on the deal and hired another company instead. Unhappy with this sleight of hand, PMC turned to the Court for redress. For the reasons that follow, the Court denies Defendant's motion to dismiss.

II. Factual and Procedural Background

On November 17, 2008, Tamir contacted Plaintiff's agent, Richard Sugerman, allegedlyrepresenting that he was an agent of Tristar and New Products. Tamir claimed he was seeking metal finishing and plating services for an immediate rush order. The next day Sugerman emailed Tamir a Price Quotation ("PQ") with a production schedule to run from November 24, 2008, to December 23, 2008. The email noted that a five percent commission was added to the prices "as agreed." (Pl.'s Am. Compl. Ex. 3 Doc. 17-3.) The PQ also provided that "a commitment should be made by 5 PM today 11/18" and that "[s]ignature by customer constitutes agreement to the above." (Pl.'s Am. Compl. Ex. 2 Doc. 17-2.) Keith Mirchandani, a managing director and agent of Tristar, then called PMC on the telephone and confirmed receipt of the PQ. Plaintiff also alleges that Mirchandani confirmed Tristar's intention to contract, and that Tamir would follow up. According to Plaintiff, Tamir accepted the contract. On November 19th and 20th, Tamir and Sugerman exchanged more emails, which allegedly confirmed the contract. Thereafter, in reliance of these exchanges, PMC alleges that it began to ready its plant for production by securing necessary materials and incurring over 470 hours in labor costs.

On November 21, 2008, Tamir and Keith Mirchandani arrived at the PMC plant in Rhode Island to meet with Sugerman and to tour and observe the plant. During the tour, it appears that Sugerman continued to assume that a contract was in place and was not told otherwise. PMC further alleges that it was led to believe by Tamir and Mirchandani that a deal was made. PMC was later informed that Tristar would not be using its services.

Tristar initially moved to dismiss the Complaint for failure to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6).¹ Tristar argued that (1) the statute of frauds bars Plaintiff's claims; (2) no contract formed because there was no acceptance by Tamir; and (3) Plaintiff fails to state a claim for promissory and equitable estoppel.²

After oral arguments, the Court granted Plaintiff an opportunity to amend the complaint.³ Plaintiff filed a First Amended Complaint and Defendant renewed its motion to dismiss with supplemental memoranda. In its renewed motion, Tristar addressed choice of law concerns that the Court had raised by text order, repeated its original argument, and argued for the first time that any authority Tamir allegedly had was terminated because Tamir breached his fiduciary duty toward Tristar. Tamir and New Products did not join in the motion.

III. Analysis

At this stage in the proceedings, the Court must accept as true the factual allegations in Plaintiff's First Amended Complaint and draw all reasonable inferences in its favor. Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996) (citingLeatherman v. Tarrant County N.I. & C. Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993)) and Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir.1990) (overruled on other grounds by Educadores Puertorriqueños en Acción v. Hernández, 367 F.3d 61, 64 (1st Cir.2004)). A claim will survive a motion to dismiss when it "has facial plausibility ... that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). The First Amended Complaint must supply enough to push Plaintiff's claims past the "sheer possibility" threshold to actually probable or plausible. Iqbal, 129 S.Ct. at 1949-50.

The choice of law provisions of the forum state, Rhode Island, apply. ⁴ See Crellin Techs., Inc. v. Equipmentlease Corp., 18 F.3d 1, 4 (1st Cir.1994). To the extent New York and Rhode Island law are consistent however, a choice of law analysis is unnecessary.⁵ See Levin v. Dalva Brothers, Inc., 459 F.3d 68, 73-74 (1st Cir.2006) (initial task is to determine whether an actual conflict exists).

After reviewing both New York and Rhode Island law, it appears there is no conflict with respect to the central issues, namely whether the statute of frauds applies to service contracts and/or what constitutes acceptance. See Theta Products, Inc. v. Zippo Mfg. Co., 81 F.Supp.2d 346, 349 (D.R.I.1999) (Pennsylvania and Rhode Island both adopted the UCC and there are no substantive differences in contract law, therefore, no choice of law analysis is necessary). Moreover, any difference on the other issues are minor and of little consequence at this stage, and until it is established that a contract actually formed. Therefore, the Court is satisfied that no choice of law analysis is necessary at this time and will simply refer to Rhode Island law.

A. Statute of Frauds

As a threshold matter Tristar argues that PMC's claim fails because "the Statute of Frauds ... provides that a contract for the sale of goods for a price greater than $500 is not enforceable without some writing to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought." Siesta Sol, LLC v. Brooks Pharmacy, Inc., 617 F.Supp.2d 38, 43 (D.R.I.2007). This rule, however, only applies to contracts for the sale of goods and does not apply to services contracts. Siesta Sol, 617 F.Supp.2d at 51 ("the Statute of Frauds was inapplicable because the defendant's obligation was fundamentally not for the purchase of goods but for payment for [the plaintiff's] services") (internal quotations and citation omitted).

The documents and allegations contained in the First Amended Complaintindicate that this was primarily a contract for services. When a contract encompasses both services and goods, the First Circuit will apply the UCC provisions if the dominant purpose behind the contract reflects a sales transaction of goods.⁶See Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 17 (1st Cir.1996).

PMC specializes in the application of various types of coatings to objects. Moreover, the complaint alleges that Tamir contacted PMC in order to obtain quotes to have Plaintiff "provide gold plating and printing" on coins that would be supplied. (Pl.'s Am. Compl. Ex. 1 Doc. 17-1.) New Products, allegedly, was to supply the coins to Tristar, who would then ship them to Plaintiff to have finished. Significantly, the coins were neither produced nor owned by Plaintiff, and title to the coins never passed between the parties.

Because this was not a contract for the sale of goods and PMC's role was limited to gold plating,⁷ Tristar's argument that the UCC applies must be rejected; therefore, the Statute of Frauds does not mandate dismissal of Plaintiff's claims.

B. Contract Formation

Next, Tristar contends that even if Tamir was an agent of Tristar, no contract formed for two reasons: (1) Tamir's email does not constitute a "definite and seasonable expression of acceptance," see Superior Boiler Works, Inc. v. R.J. Sanders, Inc., 711 A.2d 628, 633 (R.I.1998) (defining acceptance per the UCC in the context of a sale of goods contract); and (2) Tamir's alleged authority terminated once he breached the duty he owed to Tristar.

Tristar argues for a narrow characterization of PMC's allegations of contract formation, one that is limited to analyzing whether Tamir's email is valid acceptance. But this constrained reading of the First Amended Complaint, in effect, asks the Court to draw inferences in favor of the Defendant, which, of course, the Court may not do. "To form a valid contract, each party to the contract must have the intent to promise or be bound." Smith v. Boyd, 553 A.2d 131, 133 (R.I.1989) (citing J. Koury Steel Erectors, Inc. v. San-Vel Concrete Corp., 120 R.I. 360, 387 A.2d 694, 697 (1978)). In general, in determining whether a contract has been formed, this Court "shall look to an external interpretation of the party's or parties' intent as manifested by action." Id. "[S]o long as the evidence does not point unerringly in a single direction but is capable of supporting conflicting inferences, the question of whether a contract has been formed between two parties is a question of fact to be determined by the factfinder." Crellin, 18 F.3d at 7 (applying Rhode Island law).

Simply put, the question of whether the parties conduct formed a contract cannot be resolved upon a motion to dismiss because there are plausible conflicting inferences that may be drawn from the alleged facts. Plaintiff claims that after receiving the price quotation, "Tamir accepted the...