Soroof Trading Dev. Co. v. GE Fuel Cell Sys. LLC

• Decision Date: 24 January 2012
• Docket Number: No. 10 Civ. 1391 (LTS)(JCF).,10 Civ. 1391 (LTS)(JCF).
• Citation: 842 F.Supp.2d 502
• Parties: SOROOF TRADING DEVELOPMENT COMPANY LTD., Plaintiff, v. GE FUEL CELL SYSTEMS LLC, GE Microgen, Inc. and Plug Power, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

842 F.Supp.2d 502

SOROOF TRADING DEVELOPMENT COMPANY LTD., Plaintiff,

v.GE FUEL CELL SYSTEMS LLC, GE Microgen, Inc. and Plug Power, Inc., Defendants.

No. 10 Civ. 1391 (LTS)(JCF).

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

Jan. 24, 2012.

James R. Lynch, Lynch Daskal Emery, LLP, New York, NY, Aaron W. Knights, Haig V. Kalbian, Mary M. Baker, Kalbian Hagerty LLP, Washington, DC, for Plaintiff.

Thomas Edward Healy, Pino & Associates, LLP, White Plains, NY, Jon A. Van Steenis, Michael David Fisse, Daigle Fisse & Kessenich, PLC, Covington, LA, Abigail Kaufman Hemani, Goodwin Procter, LLP, New York, NY, Dahlia S. Ferouh, Dahlia S. Fetouh, Lauren S. Kupersmith, Goodwin Procter, LLP, Boston, MA, for Defendants.

Memorandum Opinion and Order

LAURA TAYLOR SWAIN, District Judge.

Plaintiff Soroof Trading Development Company Ltd. (“Plaintiff” or “Soroof”) brings this action against GE Fuel Cell Systems, LLC (“GEFCS”), GE Microgen, Inc., and Plug Power, Inc. (collectively, “Defendants”), for breach of contract, misrepresentation, conversion, constructive trust, unjust enrichment and an accounting under New York state law. The claims arise from disputes regarding a contract that the parties entered into in 2000, under which Soroof was to have exclusive distribution rights in Saudi Arabia for a fuel cell product (the “Contract”). Soroof commenced this action, seeking an estimated three million dollars in compensatory damages, after GEFCS failed to produce the fuel cells. The Court has diversity jurisdiction of the action pursuant to 28 U.S.C. § 1332.

Defendants have moved for judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c). The parties have cross-moved for summary judgment, and Soroof has moved for sanctions. The Court has considered carefully all of the parties' arguments and submissions. For the reasons that follow, Defendants' motion for judgment on the pleadings will be granted and Plaintiff will be permitted to replead its claims for breach of contract and misrepresentation. Plaintiff's motion for sanctions and Defendants' application for attorneys' fees and costs will both be denied. Plaintiff's motion for partial summary judgment will be granted as to the request to pierce the veil of GEFCS and denied in all other respects. Defendants' summary judgment motion for dismissal of all claims will be granted with respect to GEFCS and denied with respect to GE Microgen and Plug Power.

Background

For the purposes of evaluating Defendants' motion for judgment on the pleadings, all of the non-conclusory factual allegations of Plaintiff's Complaint are assumed to be true. Soroof is a company organized under the laws of the Kingdom of Saudi Arabia. (Compl. ¶ 4.) Defendant GEFCS was a limited liability company made up of two members: GE Microgen and Plug Power. ( Id. ¶¶ 5–8.) GEFCS was dissolved in 2006. ( Id. ¶ 6.) On June 6, 2000, Soroof and GEFCS entered into a contract whereby Soroof was to distribute in Saudi Arabia GEFCS–produced Proton Exchange Membrane Fuel Cells, which were to meet specific contractual standards. (Compl., Ex. 1 (“Contract”) §§ 1–2.4.) Under the terms of the Contract,Soroof was required to pay GEFCS an up-front “non-refundable distributor fee” of one million U.S. dollars. ( Id. § 6.4.) Soroof was also required to use its “best efforts to sell, advertise and promote” the fuel cells in Saudi Arabia and to purchase a minimum number of fuel cells from GEFCS each year, including 100 units in the first year that commercial units became available, 300 units the second year and 500 units the third year. ( Id. §§ 6.1, 6.6.) GEFCS was not, however, obligated to fulfill every Soroof order. Rather, the Contract obligated GEFCS to “use reasonable efforts to supply” the fuel cells to Soroof and to satisfy any “firm purchase orders” that were “accepted by GEFCS.” ( Id. §§ 5.1, 5.2.) GEFCS was also obligated to “share promptly [with Soroof] relevant information, including but not limited to product performance, failure and liability issues.” ( Id. § 7.4.) The Contract specified further that GEFCS was not liable for any “incidental ... or consequential damages” that Soroof incurred, even in the event of tortious conduct or breach of contract and, also, that “[t]he total liability for GEFCS ... whether in contract, warranty, indemnity, tort (including negligence), strict liability, or otherwise, arising out of or related to this Agreement ... shall not exceed the amount that has been paid to GEFCS by [Soroof] under this Agreement.” ( Id. §§ 12.1–12.2.) In the Contract, both parties represented that they had the “full authority and capacity to enter into and perform [their] obligations” under the Contract. ( Id. §§ 10.1.2.)

The Contract includes a merger clause, providing that the written document “contains the entire and only agreement between [Soroof] and GEFCS.... Any representations or terms and conditions relating to transactions within the scope of this Agreement which are not incorporated or referenced herein shall not be binding upon either Party.” ( Id. § 22.1.) On December 31, 2005, the Contract expired on its own terms. ( Id. § 4.1.)

During discussions prior to the execution of the Contract, GEFCS officials told Soroof that they “stood ready to deliver the Product to Soroof within six months.” (Compl. ¶ 9.) However, no such delivery timetable was included in the Contract. In November of 2000, GEFCS informed Soroof that the fuel cells did not yet meet quality standards and thus were not ready for distribution. ( Id. ¶ 16.) Over the remaining years of the Contract, GEFCS continued to tell Soroof that the product was not yet ready but would nevertheless be forthcoming. ( Id. ¶¶ 17–18.) As a result, Soroof did not place any firm orders for the duration of the Contract ( id. ¶ 17), but maintained offices and employees and engaged in third-party negotiations in preparation for eventually distributing the fuel cells, spending an estimated two million U.S. dollars on these preparations ( id. ¶¶ 20, 26). In 2005, GEFCS informed Soroof that it was unable to make fuel cells meeting the Contract's specifications and, in 2006, GE Microgen and Plug Power dissolved GEFCS. ( Id. ¶¶ 6, 21, 27.).

On July 1, 2008, Soroof initiated arbitration proceedings against GEFCS, alleging that GEFCS had breached the Contract and misrepresented its ability to bring the fuel cells to market. (Pl.'s Mem. in Opp'n to Mot. for J. on the Pleadings 2.) Soroof moved to compel GE Microgen and Plug Power to join the arbitration. ( Id.) GEFCS moved to dismiss Soroof's claims, arguing that suit could not be brought against a dissolved LLC or its former member companies, that the terms of the Contract barred Soroof from recovering the consequential damages and one million dollar non-refundable payment, that GEFCS never breached the terms of the Contract and that the claims were, in any event, barred by New York's six-year statute of limitations. (Baker Decl., Exh. A (Mot. to Dismiss Claims.)) On November 9, 2009, the American Arbitration Association Panel (the “Arbitration Panel”) denied GEFCS's motion, stating: “Respondent's motion to dismiss the claims in this arbitration is denied without prejudice to the filing of a motion for summary disposition at the close of discovery on the issues raised in the motion to dismiss and the merits of the arbitration claims.” (Baker Decl., Exh. B (Prehr'g Order No. 2.))

Shortly thereafter, Soroof, GE Microgen and Plug Power entered into a Venue Agreement, discontinuing the arbitration and agreeing to litigate the controversy in this Court. (Baker Decl., Exh. C (“Venue Agreement”), Recitals ¶ C.) In its sanctions motion, Soroof alleges that GEFCS, GE Microgen and Plug Power breached certain terms of the Venue Agreement, which included a provision limiting the statute of limitations-based arguments that Defendants could assert in this Court and further alleges that Defendants misled the Court by failing to disclose the argument limitations and the existence of the Venue Agreement in their Rule 12(c) motion filings.

Discussion

Defendants' Rule 12(c) Motion for Judgment on the Pleadings

In considering a Federal Rule of Civil Procedure 12(c) motion for judgment on the pleadings, the Court applies the same standards used for the determination of a motion to dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Cortes v. City of New York, 700 F.Supp.2d 474, 480–81 (S.D.N.Y.2010); see also LaFaro v. New York Cardiothoracic Group, PLLC, 570 F.3d 471, 475–76 (2d Cir.2009). Thus, the Court accepts as true the non-conclusory factual allegations in the complaint and draws all inferences in the Plaintiff's favor. Roth v. Jennings, 489 F.3d 499, 501 (2d Cir.2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).

To survive a motion to dismiss, a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Under this standard, a pleader is obliged “to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible.” Boykin v. KeyCorp, 521 F.3d 202, 213 (2d Cir.2008) (internal quotation marks, citation and emphasis omitted). The Supreme Court has explained that “[d]etermining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.... But where the well-pleaded facts do not permit the court to infer more than a mere possibility of misconduct, the complaint has alleged—but it has not ‘show [n]’—‘that the pleader is entitled to relief.’ Fed.R.Civ.P. 8(a)(2).” Iqbal, 129 S.Ct. at 1950 (some internal citations omitted).

“The complaint is deemed to include any written instrument attached to it as an...