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ESI, INC. v. COASTAL POWER PROD. CO.

July 8, 1998

ESI, INC., Plaintiff, against COASTAL POWER PRODUCTION COMPANY a/k/a COASTAL POWER COMPANY, LA CASA CASTRO, S.A. de C.V. and LATIN AMERICAN ENERGY DEVELOPMENT, INC. d/b/a DESARROLLOS ENERGETICOS LATINO AMERICANOS, S.A., Defendants.

William C. Conner, Senior United States District Judge.


The opinion of the court was delivered by: CONNER

OPINION AND ORDER

Conner, Senior D.J.:

 This diversity action arises out of a dispute as to the parties' relative ownership interests in an electrical generating power plant located in El Salvador. Presently before the Court is a Rule 12(b)(6) motion to dismiss brought by defendant La Casa Castro, S.A. de C.V. ("La Casa Castro"). La Casa Castro seeks dismissal of the Sixth Claim (for breach of fiduciary duty) and the Tenth Claim (for tortious interference with contractual relations) of the Amended Complaint. Plaintiff ESI, Inc. ("ESI") cross-moves for leave to amend the Amended Complaint in the event that the tortious interference claim is dismissed. For the reasons discussed below, La Casa Castro's motion is denied, and ESI's cross-motion is denied as moot.

 BACKGROUND

 This Court has already set out the complex factual background of this case in ESI, Inc. v. Coastal Power Prod. Co., 995 F. Supp. 419 (S.D.N.Y. 1998) (hereinafter "ESI I "), which involved a motion to dismiss brought by defendant Coastal Power Production Co. ("Coastal"). For purposes of the instant motion, the Court assumes familiarity with that opinion and hereby incorporates its factual discussion.

 DISCUSSION

 When faced with a Rule 12(b)(6) motion to dismiss, "a court's task in determining the sufficiency of a complaint is 'necessarily a limited one.'" Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton College, 128 F.3d 59, 62 (2d Cir. 1997) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974)). The issue is not whether a plaintiff will or might ultimately prevail on its claim, but whether it is entitled to offer evidence in support of the allegations in the complaint. Id. Dismissal is warranted under Rule 12(b)(6) only if it appears beyond doubt that the plaintiff can prove no set of facts, consistent with its complaint, in support of its claim that would entitle it to relief. See 128 F.3d at 62-63 (citing Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)). In ruling on such a motion, the Court must accept as true all factual allegations in the complaint, and must draw all reasonable inferences in favor of the plaintiff. 128 F.3d at 63 (citing Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 740, 48 L. Ed. 2d 338, 96 S. Ct. 1848 (1976)).

 However, "if the allegations of a complaint are contradicted by documents made a part thereof, the document controls and the court need not accept as true the allegations of the complaint." Sazerac Co. v. Falk, 861 F. Supp. 253, 257 (S.D.N.Y. 1994) (citing Feick v. Fleener, 653 F.2d 69, 75 & n.4 (2d Cir. 1981)); accord Barnum v. Millbrook Care Ltd. Partnership, 850 F. Supp. 1227, 1232-33 (S.D.N.Y.), aff'd, 43 F.3d 1458 (2d Cir. 1994). Moreover, "[a] complaint which consists of conclusory allegations unsupported by factual assertions fails even the liberal standard of Rule 12(b)(6)." De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir.), cert. denied, 519 U.S. 1007, 136 L. Ed. 2d 399, 117 S. Ct. 509 (1996).

 I. Sixth Claim: Breach of Fiduciary Duty

 In the Sixth Claim of the Amended Complaint, ESI alleges that it shared with the defendants "a fiduciary and confidential relationship as joint venturers in the Project, under the Three-Party Agreement." (Am. Compl. P 108.) ESI further alleges that defendants "breached their fiduciary duties of loyalty, good faith and fair dealing toward ESI by unlawfully and intentionally excluding and ejecting ESI from the Project, by entering into secret negotiations and sharing agreements concerning the Project, and by converting ESI's 2.5% interest in the Project and the Plant's income for themselves." ( Id. P112.)

 As this Court noted in ESI I, a joint venture gives rise to fiduciary duties. See Gramercy Equities Corp. v. Dumont, 72 N.Y.2d 560, 534 N.Y.S.2d 908, 912, 531 N.E.2d 629, 633 (1988). Presently at issue is whether the language of the Three-Party Agreement belies ESI's allegation that ESI and the defendants were joint venturers.

 "A joint venture is a 'special combination of two or more persons where in some specific venture a profit is jointly sought.'" 534 N.Y.S.2d at 911, 531 N.E.2d at 632 (citation omitted); see also USAirways Group, Inc. v. British Airways PLC, 989 F. Supp. 482, 492 (S.D.N.Y. 1997) ("Under New York law, a joint venture 'has been variously defined as an association to carry out a single business enterprise for profit; a common enterprise for mutual benefit; [and] a combination of property, efforts, skills and judgment in a common undertaking.'") (citation omitted). It is not a status created by law, but a voluntary relationship arising out of contract. Id. at 493; Shore Parkway Assocs. v. United Artists Theater Circuit, Inc., 1993 U.S. Dist. LEXIS 12663, No. 92-8252, 1993 WL 361646, at *2-3 (S.D.N.Y. Sept. 14, 1993) (citing cases).

 To constitute a joint venture, the following five elements must be present: (1) a specific agreement between two or more parties to carry on an enterprise for profit; (2) the agreement must evidence the parties' intent to be joint venturers; (3) each party must make a contribution of property, financing, skill, knowledge, or effort; (4) each party must have some degree of joint control over the venture; and (5) there must be a provision for the sharing of both profits and losses. See Itel Containers Int'l Corp. v. Atlanttrafik Express Serv. Ltd., 909 F.2d 698, 701 (2d Cir. 1990); Independent Energy Corp. v. Trigen Energy Corp., 944 F. Supp. 1184, 1201 (S.D.N.Y. 1996) (WCC); Tilden of New Jersey, Inc. v. Regency Leasing Sys., Inc., 230 A.D.2d 784, 785-86, 646 N.Y.S.2d 700, 701 (2d Dep't 1996). *fn1"

 La Casa Castro argues that the language of the Three-Party Agreement controverts ESI's allegation that the parties engaged in a joint venture. In particular, La Casa Castro points to Paragraph 11 of ...


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