Ritani, LLC v. Harout Aghjayan, Harout R, LLC

• Decision Date: 09 September 2013
• Docket Number: No. 11 CIV. 8928.,11 CIV. 8928.
• Citation: 970 F.Supp.2d 232
• Parties: RITANI, LLC, Plaintiff, v. Harout AGHJAYAN, Harout R, LLC; H. Ritani, Inc.; H. Ritani, LLC; H. Ritani, Corp., and Amazing Settings, LLP, Defendants.
• Court: U.S. District Court — Southern District of New York

970 F.Supp.2d 232

RITANI, LLC, Plaintiff,

v.Harout AGHJAYAN, Harout R, LLC; H. Ritani, Inc.; H. Ritani, LLC; H. Ritani, Corp., and Amazing Settings, LLP, Defendants.

No. 11 CIV. 8928.

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

Sept. 9, 2013.

Leason Ellis LLP, by: Peter S. Sloane, Esq., Cameron S. Reuber, Esq., Jonathan W. Thomas Esq., White Plains, NY, for Plaintiff.

Meyer, Suozzi, English & Klein, P.C., by: Erica B. Garay, Esq., Lynn M. Brown, Esq., Garden City, NY, for Defendants.

OPINION

SWEET, District Judge.

There are several motions currently pending in this action between plaintiff Ritani, LLC (“Ritani” or the “Plaintiff”) and defendants Harout Aghjayan (“Aghjayan” or the “Defendant”), Shawndria Aghjayan (“Mrs. Aghjayan”), Harout R, LLC (“Harout R”), H. Ritani, Inc. (“HR Inc.”), H. Ritani, LLC (“HR LLC”), H. Ritani, Corp. (“HR Corp.”) and Amazing Settings, LLP (“Amazing Settings”) (collectively, the “Defendants”).

Ritani and counter-claim defendants Julius Klein Diamonds, LLC (“JKD”), Joseph Manber (“Manber”), and Abraham D. Klein (“Klein”) (collectively, the “Counter–Defendants”) have moved to dismiss certain counter-claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, including: (1) defendant and counter-claim plaintiff HR Corp.'s counterclaims for fraud, negligent misrepresentation, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty; (2) defendant and counter-claim plaintiff Mrs. Aghjayan counterclaim for aiding and abetting a breach of fiduciary duty; (3) defendants and counter-claim plaintiffs Amazing Settings and Harout R's counterclaim for conversion.

Individual defendants then moved to dismiss certain counts from Plaintiff's first amended complaint (the “First Amended Complaint” or “FAC”) including: (1) Aghjayan's motion to dismiss Plaintiff's claims for tortious interference with prospective advantage (Count IX) and misappropriation of trade secrets (Count VII) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure; (2) Mrs. Aghjayan's motion to dismiss the aiding and abetting claims (Counts VII and XI) pursuant to Rule 9(b) and 12(c) of the Federal Rules of Civil Procedure; (3) Amazing Settings and Harout R's motion to dismiss the misappropriation of trade secrets claim (Count VIII) pursuant to Rule 12(c) of the Federal Rules of Civil Procedure.

While those motions to dismiss were sub judice, Defendants Aghjayan, Harout R and Amazing Settings filed a motion for attorney's fees as the prevailing party on the copyright infringement claim.

Upon the facts and conclusions set forth below, (1) the Counter–Defendants' motions to dismiss are granted; (2) Defendants' motions to dismiss are denied in part and granted in part; and (3) Defendants' motion for attorney's fees is denied.

I. Prior Proceedings

The Plaintiff filed its initial complaint on December 7, 2011 against the Defendant and his companies (the “Defendants Companies”), alleging (1) federal copyright infringementpursuant to 17 U.S.C. §§ 101 and 501 et seq.; (2) federal trademark infringement under the Lanham Act, 15 U.S.C. § 1114(1)(a); (3) unfair competition, false designation of origin and false and misleading representations in commerce under the Lanham Act, 15 U.S.C. § 1125(a); (4) false advertising under the Lanham Act, 15 U.S.C. § 1125(a); (5) state false advertising under N.Y.G.B.L. § 350; (6) common law trademark infringement under state law; (7) state unfair competition; (8) state trademark dilution under N.Y.G.B.L. § 360–1; (9) deceptive practices under N.Y.G.B.L § 349; (10) common law misappropriation of trade secrets; (11) tortious interference with business relationships under state law; (12) breach of implied covenant not to solicit business and reduce goodwill under state law; (13) breach of contract and common law non-competition; (14) unjust enrichment; (15) common law breach of the duty of loyalty and breach of fiduciary duty; (16) breach of the implied duty of good faith and fair dealing; and (17) imposition of a constructive trust (the “Initial Complaint” or “IC”).

Invoking Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, the Defendants moved to dismiss the entirety of the Initial Complaint on February 6, 2012. That motion was heard and marked fully submitted on March 15, 2012.

On May 30, 2012, Plaintiff filed a motion seeking preliminary injunctive relief due to the alleged irreparable harm caused by the culmination of the Defendants' conduct. On June 11, 2012, the Court issued an opinion from the bench, denying the Plaintiffs motion for a preliminary injunction for failure to establish a prima facie case.

On May 30, 2012, Plaintiff concurrently made a motion to amend the Initial Complaint and for leave to file the proposed amended complaint (the “PAC” or “Proposed Amended Complaint”). The PAC sought to add certain factual details, to add a new Defendant, Aghjayan's wife, “Mrs. Aghjayan”, and to remove certain state causes of action. The PAC alleged the following causes of action against all Defendants, unless otherwise specified: (1) federal copyright infringement pursuant to 17 U.S.C. §§ 101 and 501 et seq., against Aghjayan, Amazing Settings and Harout R (Count I); (2) federal trademark infringement under the Lanham Act, 15 U.S.C. § 1114(1)(a) (Count II); (3) unfair competition, false designation of origin and false and misleading representations in commerce under the Lanham Act, 15 U.S.C. § 1125(a) (Count III); (4) false advertising under the Lanham Act, 15 U.S.C. § 1125(a) (Count IV); (5) state false advertising under N.Y.G.B.L. § 350 (Count V); (6) common law trademark infringement under state law (Count VI); (7) state unfair competition (Count VII); (8) state trademark dilution under N.Y.G.B.L. § 360–1 (Count VIII); (9) common law misappropriation of trade secrets (Count IX); (10) tortious interference with business relationships under state law against Aghjayan and his companies (Count X); (11) breach of implied covenant not to solicit business and reduce goodwill under state law against Aghjayan and HR Corp. (Count XI); (12) breach of contract and common law non-competition against Aghjayan, Mrs. Aghjayan and HR Corp. (Count XII); and (13) common law breach of the duty of loyalty and breach of fiduciary duty against Aghjayan and Mrs. Aghjayan (Count XIII).

Defendants' counsel requested an extension of time to respond to Plaintiff's motion to amend, which was granted. (Dkt. No. 33). On June 27, 2012, Defendants submitted a response to Defendants' motion to amend referring the Court to “Defendants' motion to dismiss the original complaint (Docket Nos. 10–12 and 15) and the transcripts of the hearing on Plaintiff's motion for a preliminary injunction (Docket Nos. 40, 42, and 44) and the Court's decision of June 11, 2012.” (Dkt. No. 47).

By opinion, dated July 18, 2012, this Court granted the Defendant's motion to dismiss the claims in Counts I, V, X and XI, denied Counts II–IV, VI–VII and VIII as to Aghjayan, HR LLC, HR Corp. and Harout R; denied Counts IX and XIII as to Aghjayan and Mrs. Aghjayan; and denied Count XII as to Aghjayan. See Ritani v. Aghjayan, 880 F.Supp.2d 425, 455 (S.D.N.Y.2012) (the “July 18 Opinion”). The Plaintiff's motion to amend was granted. Id. However, due to the unusual procedural posture of the case and because Defendants referred the Court to their previous arguments, the motion to amend was granted subject to the causes of action dismissed in the July 18 Opinion. Plaintiff was also granted leave to replead with 20 days.

On August 9, 2012, Plaintiff filed its first amended complaint (the “FAC” or “First Amended Complaint”) (Dkt. No. 54). On August 27, 2012, individual defendants Harout R. Amazing Settings, HR Corp., and HR LLC submitted their answers to the First Amended Complaint and asserted certain counterclaims. ( See Dkt. Nos. 59, 60, 61, 62).

On October 1, 2012, Plaintiff and Counter–Defendants filed three motions to dismiss, including (1) a motion to dismiss the counterclaims of HR Corp.; (2) a motion to dismiss the counterclaims of Mrs. Aghjayan; and (3) a motion to dismiss the counterclaims of Amazing Settings and Harout R (the “Plaintiff's Motions to Dismiss”) (Dkt. Nos. 77, 79, 81). The Plaintiff's Motions to Dismiss were heard and marked fully submitted on November 28, 2012.

On November 7, 2012, certain individual defendants moved to dismiss claims from the First Amended Complaint, including: (1) Aghjayan's motion to dismiss Plaintiff's claims for tortious interference with prospective advantage (Count IX) and misappropriation of trade secrets (Count VII); (2) Mrs. Aghjayan's motion to dismiss the aiding and abetting claims (Counts VII and XI); (3) Amazing Settings and Harout R's motion to dismiss the misappropriation of trade secrets claim (Count VIII) (the “Defendants' Motions to Dismiss”) (Dkt. Nos. 96, 98, 100). The Defendants' Motions to Dismiss were originally scheduled to be heard on January 16, 2013.

The parties, however, stipulated to adjourn the adjudication of Plaintiffs' Motions to Dismiss and Defendants' Motions to Dismiss pending the outcome of settlement conferences held before Magistrate Judge Gabriel Gorenstein. After settlement talks failed, the Defendants' Motions to Dismiss were heard and marked fully submitted on March 27, 2013.

On March 19, 2013, Plaintiff Ritani and Counter–Defendants JKD, Manber, and Klein substituted their counsel from the law firm of Edwards Wildman Palmer LLP to their current counsel, Leason Ellis LLP.

On April 1, 2013, Defendants made a motion for attorneys' fees as the prevailing party on the copyright infringement claim (the “Defendants' Motion for Fees”) (Dkt. No. 136). The Defendants' Motion for Fees was fully submitted and heard on May 1, 2013.

II. Facts

The facts underlying this action were previously set forth in this Court's July 18 Opinion. See Ritani, 880 F.Supp.2d 425. Accordingly, the general background of this case and...