The opinion of the court was delivered by: Hurley, District Judge.
Pending before the Court is the motion of Defendant Domino's
Pizza, Inc. ("DPI") to dismiss the Complaint for failure to state
a claim, pursuant to Federal Rule of Civil Procedure ("Rule")
12(b)(6), or, alternatively, to dismiss the Complaint for
Plaintiff's failure to serve timely the Complaint, pursuant to
New York Civil Practice Law and Rules Section 3012(b). For the
reasons that follow, the motion is denied without prejudice.
Between July 1988 and March 1990, Plaintiff G.G.G. Pizza, Inc.,
a New York corporation, entered into five Domino's Pizza, Inc.
Standard Franchise Agreements (the "Franchise Agreements") with
DPI, a Michigan corporation. (Compl. ¶¶ 3, 5, 8, 11, 14, 17, 20.)
Pursuant to the Franchise Agreements — which are identical in all
material respects — Plaintiff was granted the right to operate
DPI stores in East Northport, Brentwood, East Islip, Smithtown
and Commack, New York.*fn1 (Id. ¶¶ 8, 11, 14, 17, 20.)
According to the Complaint, prior to entering into the
Franchise Agreement with respect to the Smithtown store, DPI had
represented to Plaintiff that "that store was doing $5,500.00 per
week," when it "was actually doing approximately $2,000.00 per
week." (Compl. ¶¶ 24-25.) As a result of the alleged
misrepresentations, in August 1990, Plaintiff ceased making
certain royalty payments to DPI. (Id. ¶ 32.) In November 1990,
Plaintiff met with a DPI representative "to discuss the matter
and to work out a plan for the plaintiff to pay the defendant
certain monies which the defendant claimed it was due." (Id. ¶
33.) Plaintiff realized it would need to reduce its debt in order
to pay to DPI the monies it allegedly owed; Patrick Kelly
("Kelly"), a DPI director acting on behalf of DPI, allegedly
offered to purchase Plaintiff's East Northport and Brentwood
stores for $180,000 and $110,000, respectively, and further
agreed to keep DPI's offer open "while plaintiff made efforts" to
get better offers. (Id. ¶ 34, 36-38.)
On or about January 10, 1991, Plaintiff entered into an
agreement with Jeffrey Goodman for the purchase of the East
Northport store for the sum of $265,000. (Id. ¶ 39.) In March
1991, (1) DPI approved Goodman's purchase of the East Northport
store and (2) Defendant T.S.M. Leasing Corp. ("TSM"), allegedly
an "affiliate" of DPI, approved Goodman for financing in the
amount of $140,230.29. (Id. ¶ 48.) Plaintiff "expressed concern
and disappointment" with TSM's financing offer, and "defendants
assured plaintiff that it would review the situation and
reevaluate [their] position." (Id. ¶ 49.) On or about March 17,
1991 — for reasons not apparent from the Complaint — TSM advised
plaintiff that it would not finance Goodman's proposed purchase
of the East Northport store. (Id. ¶ 50.)
At a meeting on April 4, 1991 between Kelly — again acting on
behalf of DPI — and Gregory Gustavson ("Gustavson"), Plaintiff's
sole shareholder, DPI "reneged" on its offer to purchase the East
Northport and Brentwood stores. (Id. ¶ 53.) Kelly further
handed Gustavson a notice of termination, advising him that
Plaintiff's five franchises were officially terminated. (Id. ¶
54.) DPI then took ownership of Plaintiff's five franchise
locations. (Id. ¶ 58.)
Plaintiff commenced the instant action in Suffolk County
Supreme Court by filing a Summons with Notice on April 1, 1997.
The Summons was served upon DPI on July 24, 1997. By Notice dated
August 13, 1997, DPI removed the action to this Court. On January
6, 1998, Plaintiff filed and served its Complaint upon DPI.
In the Complaint, Plaintiff brings claims against DPI for (1)
breach of the franchise agreements, (2) breach of its oral
agreement to purchase the East Northport and Brentwood stores,
(3) unjust enrichment, (4) fraud, (5) breach of fiduciary duty
and the implied covenant of good faith and (6) punitive damages.
I. Plaintiff's Late Service of the Complaint
DPI moves, pursuant to New York Civil Practice Law and Rules
Section 3012(b), to dismiss the Complaint for failure to serve
timely the Complaint. Although both Plaintiff and DPI apparently
agree that CPLR Section 3012(b) should be applied by this Court
in determining the propriety of Plaintiff's service of the
Complaint, it is well-settled that the Federal Rules of Civil
Procedure "apply to civil actions removed to the United States
district courts and govern procedure after removal."*fn2
Fed.R.Civ.P. 81(c); see Mroz v. City of Tonawanda, 999 F. Supp. 436,
449 (W.D.N.Y. 1998) ("[A]fter removal questions of procedure
are governed by federal law."); Wright v. Central States,
Southeast and Southwest Areas, Health and Welfare Fund,
440 F. Supp. 1235, 1236 (D.S.C. 1977) ("[S]tate law does not control a
case removed; where the state law conflicts with federal law, in
removal cases, the latter applies. Once removal occurs, the
federal rules take over. . . ."); 14C Charles Alan Wright, Arthur
R. Miller & Mary Kay Kane, Federal Practice and Procedure §
3738, at 390-91 (1998) ("After the removal of an action from
state court, . . . [t]he case will proceed as if it had been
brought in the federal court originally. Thus, it has been
settled by numerous cases that the removed case will be governed
according to the Federal Rules of Civil Procedure and all other
provisions of federal law relating to procedural matters.").
More particularly, while state law governs the sufficiency of
service of process before removal, see, e.g., Marshall v.
Warwick, 155 F.3d 1027, 1033 (8th Cir. 1998), "Rule 4(m) . . .
applies to removed cases after the date of removal." Eccles v.
National Semiconductor Corp., 10 F. Supp.2d 514, 519 (D.Md.
1998). See generally Com/Tech Communication Techs., Inc. v.
Wireless Data Sys., Inc., 163 F.3d 149, 150-51 (2d Cir. 1998)
(per curiam) ("Classifying a rule as substantive or procedural is
sometimes a subtle undertaking. But where the matter in question
is one covered by the Federal Rules of Civil Procedure, `it is
settled that . . . the Federal Rule applies regardless of
contrary state law.'" (quoting Gasperini v. Center for
Humanities, Inc., 518 U.S. 415, 427 n. 7, 116 S.Ct. 2211, 135
L.Ed.2d 659 (1996) (internal citation omitted))). Moreover, "Rule
4(m)'s 120-day period for service begins to run on the date of
removal." Eccles, 10 F. Supp.2d at 519; accord Randolph v.
Hendry, 50 F. Supp.2d 572, 579-80 (S.D.W.Va. May 11, 1999) ("When
no defendant has been served, in an action removed to federal
court from state court, Rule 4(m) of the Federal Rules of Civil
Procedure requires the plaintiff to serve the summons and
complaint upon the defendant within 120 days from filing of the
Notice of Removal in the federal court."); Alber v. Illinois
Dep't of Mental Health and ...