Siokas v. Ironstone Capital Holdings LLC
| Decision Date | 11 January 2022 |
| Docket Number | 21-cv-236 (DRH)(SIL) |
| Parties | DEAN SIOKAS, Plaintiff, v. IRONSTONE CAPITAL HOLDINGS LLC doing business as IRONSTONE SUPPLIES and ERIC IRONS, ESQ., Defendants. |
| Court | U.S. District Court — Eastern District of New York |
REPORT AND RECOMMENDATION
Presently before the Court in this diversity-breach of contract action on referral from the Honorable Denis R. Hurley for Report and Recommendation, are: (1) Defendants' Eric Irons, Esq. (“Irons”) and Ironstone Capital Holdings LLC (“Ironstone, ” and together with Irons “Defendants”) motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure (“Fed. R. Civ. P.”) as to Plaintiff Dean Siokas's (“Plaintiff” or “Siokas”) second cause of action for failure to pay Siokas sales commissions in a timely manner, see Defendants' Notice of Motion for Judgment on the Pleadings (“Defendants' Motion” or “Def. Mot.”), Docket Entry (“DE”) [29]; and (2) Plaintiff's letter motion to strike certain arguments first raised in Defendants' reply memorandum in support of their motion. See Plaintiff's Letter Motion to Strike (“Plaintiff's Motion” or “Pl Mot.”), DE [32]. By way of Complaint dated December 30 2020, later modified by an Amended Complaint dated February 24, 2021, Plaintiff commenced this action against Defendants for: (1) breach of contract; (2) failure to timely pay earned sales commissions in violation of the New York Labor Law (“NYLL”); (3) quantum meruit; and (4) unjust enrichment. See Complaint (‘Compl.”), DE [1-3] (attached to Defendants' Notice of Removal from Supreme Court of the State of New York, Nassau County to the United States District Court, Eastern District of New York (”Notice of Removal”), DE [1]); Amended Complaint (“AC”), DE [9]. Defendants deny liability. See Answer and Counterclaim (“Ans.”), DE [2]; Amended Answer and Counterclaim (“AA”), DE [8]; Answer to Amended Complaint and Counterclaim (“ACA”), DE [10]. For the reasons set forth below, the Court respectfully recommends that: (1) Defendants' Motion be granted in part and denied in part; (2) Plaintiff's Motion be denied in its entirety; and (3) Plaintiff's second cause of action be dismissed without prejudice and with leave to replead.
Unless otherwise indicated, the facts set forth herein are taken from the Amended Complaint, and accepted as true for purposes of the instant Report and Recommendation.
Plaintiff is a New York domiciliary, residing in Nassau County. See AC ¶ 4. Defendant Irons is a Florida resident who, until on or about March 31, 2020, was admitted to practice law in Florida and was the sole owner of his Miami-based law practice, the Irons Law Group.[1] Id. at ¶¶ 7-8. At all relevant times, Irons also solely owned Defendant Ironstone, a Florida limited liability company with its principal place of business located at 1000 Brickell Avenue, Suite 920, Miami, FL 33131 (“Brickell Ave. Office”) that conducted business throughout the United States, including New York State. Id. at ¶¶ 5-6. Ironstone was in the business of selling large quantities of Personal Protective Equipment (“PPE”) products, such as masks and gowns, to individual states, municipalities, and other large-scale customers during the COVID-19 pandemic. Id. at ¶ 10. For the duration of the facts outlined herein, Irons utilized the Brickell Ave. Office as the principal place of business for both Ironstone and Irons Law Group, and both entities shared the same internet and web server, and professional support staff. See Id. at ¶¶ 12-13. Irons also used his law firm email address to communicate with Ironstone customers, and allegedly comingled funds between Irons Law Group's, Ironstone's, and his own personal bank accounts, and used funds from each account to fund Ironstone's operations described below. See Id. at ¶¶ 14-15.
In or about April 2020, Irons recruited Siokas to work for Ironstone as an independent contractor-sales representative, where Plaintiff would locate buyers for PPE sourced and sold wholesale by Ironstone.[2] See Id. at ¶ 18. During this solicitation, Irons promised Siokas that he (Plaintiff) would be compensated via commission equaling a percentage of Siokas's successfully completed sales. See id.
Plaintiff and Irons discussed the terms of Siokas's employment via email and text message, before finalizing an agreement (“Sales Commission Contract”) containing the following material terms: (i) upon the completion of a sale, Irons would first be repaid the cost incurred to purchase and deliver the PPE to the customer; (ii) Defendants would then receive 20% of the profit of the sale “to account for the cost of capital to finance the purchase of the PPE products as well as the overhead”; and (iii) the remaining profit would be split evenly between Defendants, Siokas, and the individual who procured the PPE (the “Procurer”)[3]. See Id. at ¶ 22. According to Plaintiff, the overhead costs for which Defendants were reimbursed under the Sales Commission Contract included “the cost of using Irons Law Group's employee(s), rent for the Brickell Ave. Office used by both Ironstone and [the] Irons Law Group, the web server used by both in their daily operations, and overnight mail.” Id. at ¶ 23. Siokas agreed to work for Defendants, and thereafter solicited business in New York and engaged in transactions for PPE with customers in New York and other states. See Id. at ¶¶ 11, 22. Notwithstanding the parties' agreement, Defendants failed to both provide Plaintiff with a signed copy of the Sales Commission Contract and obtain a signed receipt of the contract from him. See Id. at ¶ 32.
Also around April 2020, Irons hired the Procurer to work for Defendants in sourcing and procuring the PPE products that Siokas sold (on behalf of Ironstone) to Ironstone's customers. Id. at ¶ 19. Irons allegedly pledged to the Procurer that he, like Plaintiff, would be paid a commission equaling a percentage of the completed sales of the PPE products he (the Procurer) obtained. Id. at ¶ 20. Irons promised both Siokas and the Procurer that he would provide the financing that the Procurer used to acquire the PPE inventory, which Plaintiff sold to states and other customers. Id. at ¶ 21.
In reliance on the Sales Commission Contract, Siokas arranged and consummated numerous profitable PPE sales to several states, the revenue from which was transferred to bank accounts controlled by Defendants. See Id. at ¶ 24. Plaintiff performed his duties by, among other things, soliciting customers both within and outside of New York State and making sales by phone and email while working from his home in Nassau County, New York. Id. at ¶ 25. In or about July 2020, after Siokas had performed under the agreement as a commission-compensated sales representative, Defendants attempted to change the agreed-upon terms and refused to pay Plaintiff any of the commission compensation he was owed for previously completed sales. See Id. at ¶ 26. At that point, Siokas was owed approximately $525, 760.90 in commission revenue in accordance with the terms of the Sales Commission Contract. Id. at ¶ 27. As of the date the parties' motions were submitted, Defendants had not paid Plaintiff any of these commissions. Id.
Based on the above facts, Siokas commenced this action against Defendants on December 30, 2020, in the Supreme Court of the State of New York, Nassau County. See Compl.; AC. The Amended Complaint alleges that Defendants withheld $525, 760.90 in sales commission earned by Siokas on sales of PPE to Ironstone customers consummated between April and July 2020 in breach of the parties' Sales Commission Contract, and that Defendants became unjustly enriched as a result. See AC ¶¶ 17-27. Plaintiff seeks: (1) compensatory damages in a minimum amount of $525, 760.90; (2) attorneys' fees; and (3) costs. See Id. at 8-9. On January 15, 2021, Defendants removed the matter to this Court, see Notice of Removal, and filed their Answer and Counterclaim. See Ans. Defendants amended their Answer and Counterclaim on February 3, 2021. See AA. Plaintiff filed his Amended Complaint on February 24, 2021, see AC, in response to which Defendants filed another Answer and Counterclaim. See ACA.
The parties appeared before Magistrate Judge A. Kathleen Tomlinson[4] for an Initial Conference on May 7, 2021, after which point discovery commenced. See DE [13]. On referral from Judge Hurley, see June 7, 2021 Electronic Order, Defendants moved for a judgment on the pleadings as to Plaintiff's second cause of action on July 8, 2021, see Def. Mot., which Siokas opposed on July 22, 2021, see generally Plaintiff's Opposition to Defendants' Motion for Judgment on the Pleadings (“Plaintiff's Opposition” or “Pl. Opp.”), DE [30], and against which he moved to strike certain arguments first raised in Defendants' reply papers in support of their motion on August 3, 2021. See Pl. Mot. Defendants opposed Plaintiff's Motion on August 4, 2021. See generally Defendants' Opposition to Plaintiff's Motion to Strike (“Defendants' Opposition” or “Def. Opp.”), DE [33]. For the reasons set forth below, the Court respectfully recommends that: (1) Defendants' Motion be granted in part and denied in part; (2) Plaintiff's Motion be denied in its entirety; and (3) Plaintiff's second cause of action be dismissed without prejudice and with leave to replead.
Pursuant to Fed.R.Civ.P. 12(c), “[a]fter the pleadings are closed - but early enough not to delay trial - a party may move for judgment on the pleadings.” Fed.R.Civ.P 12(c). The standard for...
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