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February 25, 2004.


The opinion of the court was delivered by: BARBARA JONES, District Judge


On or about August 27, 2002, Plaintiff's filed suit in the Supreme Court of the State of New York, County of New York, alleging common law claims of fraud, conversion, and breach of contract. Plaintiff's seek in excess of $300,000 damages for each of these claims and $1 million in punitive damages for the alleged fraudulent activities of Defendants. Pursuant to 28 U.S.C. § 1441, Defendants removed the action to this Court on October 23, 2002.*fn1 On October 30, 2002, Defendants filed a motion to dismiss Page 2

Plaintiff' Complaint against Defendants collectively, or against Defendants Diane Warga-Arias and Henry Arias individually, pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. For the reasons set forth below, this motion is GRANTED in part and DENIED in part.


  In early 2001, W.B. David began preliminary discussions with DWA Communications, Inc. ("DWA), regarding a potential business arrangement. (Compl. at ¶ 8). Dianne Warga-Arias, and Henry Arias are the alleged principals of DWA (collectively "Defendants"). (Compl. at ¶¶ 4-5). Under the alleged agreement, DWA would promote and market a trade marketing association to be operated under the name "The Lending Jewelers of the World" ("LJW"). Id.

  On February 26, 2001, DWA submitted a project proposal to W.B. David concerning the scope and anticipated costs of the promotion and marketing project, named the "Phoenix Project". (Compl. at ¶ 10). In connection with the proposal, Defendants made several alleged representations*fn2 to W.B. David and SJD (collectively "Plaintiff's"). Relying upon the representations made by Defendants, Plaintiff's accepted the proposal and engaged the Page 3 services of Defendants. (Compl. at ¶ 11).

  During the course of the engagement, SJD managed the day-today operations of LJW and owned the LJW trademark. (Compl. at ¶ 9). Until December 2001, W.B. David funded all the operations of LJW. (Compl. at ¶¶ 4-5). Defendants regularly billed Plaintiff's for expenses related to, and work performed for, the Phoenix Project. (Compl. at ¶ 12). Plaintiff's compensated Defendants for their services, and all outstanding invoices were paid in full through the end of 2001. Id.

  Between February and April of 2002, the Defendants submitted over $100,000 in invoices to Plaintiff's. Compl. at ¶ 13). Up until this point, $750,000 had been paid to Defendants under the Phoenix Project. (Compl. at ¶ 13). W.B. David became concerned that Defendants were overcharging for services allegedly rendered, and that Defendants had not performed several services claimed to have been provided. (Compl. at ¶ 14). Upon these suspicions, Plaintiff's hired an independent accountant to audit the Phoenix Project and the LJW account. (Compl. at ¶ 14).

  Allegedly, the accountant's report indicated a number of billing improprieties and inappropriate expenses.*fn3 Of particular concern, Defendants allegedly charged Plaintiff's for a substantial Page 4 number of services that were not performed or undelivered, including: conceptual design development, color print production, and web site development. (Compl. at ¶ 16). In May of 2002, Plaintiff's approached Defendants with the audited report, invited Defendants to respond to the report and demanded adjustment to their account. (Compl. at ¶ 17). To date, there has been no response to the substance of the audited report. (Compl. at ¶ 18). As a result, Plaintiff's brought suit for breach of contract, fraud and conversion.


  When ruling on a Rule 12(b)(6) motion, a District Court must limit its inquiry to the "facts stated in the complaint." High View Fund, LP v. Hall, 27 F. Supp.2d 420, 424 (S.D.N.Y. 1998). The Court must "accept all allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party." Sheppard v. Beerman, 18 F.3d 147, 150 (2d Cir. 1994). However, "conclusory allegations of the legal status of the defendants' acts need not be accepted as true for the purposes of ruling on a motion to dismiss." Frontier-Kemper Constructors, LLC v. American Rock Salt Co. 244 F. Supp.2d 520, 525 (W.D.N.Y. 2002). The Court's function is to assess the legal feasibility of the complaint, but not to assay the weight of the evidence that may be offered in support of the claim. American Arbitration Association, Page 5 Inc. v. Defonseca, 1996 U.S. Dist. LEXIS 9160 at *6 (S.D.N.Y. 1996). The motion shall not be granted unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which will entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

 A. Breach of Contract

  To state a claim for breach of contract under New York law, the complaint must allege (1) the existence of a contract, (2) the plaintiff's performance of his obligations thereunder, (3) the defendant's failure to perform his obligations, and (4) resulting damages to the Plaintiff. See Keady v. Nike, Inc., 116 F. Supp.2d 428, 438 (S.D.N.Y. 2000); Coastal Aviation, Inc. v. Commander Aircraft Co., 937 F. Supp. 1051 (S.D.N.Y. 1996). Defendants contend that the Complaint fails to identify any of the specific provisions of the parties' agreement which Defendants allegedly breached, and that the Complaint fails to allege that Plaintiff complied with their contractual obligations. (Def. Mem. at 4-7; Reply Mem. at 10-11). The Court finds these arguments unpersuasive, and denies Defendants' 12(b)(6) motion to dismiss Plaintiff's' breach of contract claim.

  First, the Complaint properly pleads sufficient facts to establish the existence of an implied-in-fact contract based upon the conduct of the parties. "`An agreement implied in fact is founded upon a meeting of [the] minds, which, although not embodied Page 6 in an express contract, is inferred, as a fact, from conduct of the parties showing, in light of the surrounding circumstances, their tacit understanding.'"Health & Community Living, Inc. v. Goldis Financial Group, Inc., 1998 U.S. Dist. LEXIS 3069 at *12-13 (March 13, 1998)(quoting Hercules Inc. v. United States, 516 U.S. 417, 424 (1996)). The Complaint alleges that the Defendants' agreed to promote and Market "LJW" by performing various services such as conceptual design development, color print production, and web site development. (Compl. at ¶¶ 10-12, 16). Furthermore, the Complaint alleges that ...

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