Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

VALJEAN MANUFACTURING INC. v. MICHAEL WERDIGER

September 1, 2004.

VALJEAN MANUFACTURING INC., et al., Plaintiffs,
v.
MICHAEL WERDIGER, INC., et al., Defendants. MICHAEL WERDIGER, INC., et al., Counterclaim Plaintiffs, v. VALJEAN MANUFACTURING, INC., et al., Counterclaim Defendants.



The opinion of the court was delivered by: HAROLD BAER, JR., District Judge[fn1] [fn1] Graham O'Donoghue, a summer 2004 intern in my Chambers and a second-year law student at Columbia Law School, provided substantial assistance in the research and drafting of this Opinion.

OPINION & ORDER

Defendant Michael Werdiger, Inc. ("MWI") moves pursuant to Federal Rule of Civil Procedure ("Fed.R. Civ. P.") 12(b)(6) to dismiss Counts II, III, and IV of plaintiff Valjean Manufacturing, Inc.'s ("Valjean") first amended complaint and requests return of all goods held by plaintiff pursuant to Count IV (Valjean's artisan's lien claim). Defendant contends that all of plaintiff's claims are either expressly prohibited by the language of the contract between the parties, or are duplicative of a breach of contract claim, and thus all fail to state viable causes of action. Specifically, MWI argues that Valjean's alleged artisan's lien (Count IV) would be inconsistent with the terms of the contractual agreement between the parties, that Valjean is not entitled to an artisan's lien under New York common law, and, that its claim for such a lien should be dismissed. Further, MWI contends that Valjean has not shown that a fiduciary relationship ever existed between the parties, and therefore Valjean's claim for breach of fiduciary duty (Count II) should be dismissed. Finally, MWI argues that Valjean's claim of fraudulent misrepresentation (Count III) is merely duplicative of its claim for breach of contract and should also be dismissed. MWI's motion is granted with respect to the dismissal of Counts II, III, and IV, but is denied with respect to its request for affirmative relief in the manner of an order directing Valjean to return all goods held under the purported artisan's lien.

I. BACKGROUND

  A. Factual Background

  This case arises out of dispute over the contractual manufacturing and security agreement ("MSA") between two entities who for years operated amicably to manufacture and sell jewelry. Valjean is a California corporation "engaged in the business of designing, manufacturing, and selling jewelry." (First Amend. Compl. ¶ 9.) MWI is a New York corporation "engaged in the business of, among other things, marketing and selling high-end finished jewelry products manufactured by Valjean or contractors developed by Valjean." (Id. ¶ 8.) On October 3, 1994, the parties entered into the MSA, where, among other things, Valjean agreed to manufacture jewelry using diamonds and precious metals provided by MWI, and MWI agreed to act as the exclusive marketer and seller of any finished products manufactured by Valjean. Throughout the late 1990's, the parties periodically met to settle disagreements arising out of the MSA. (Id. ¶¶ 14-20.) Valjean repeatedly made requests to MWI for the accountings due to it under the MSA, but, despite repeated assurances from MWI, the accountings were never produced. (Id. ¶ 22.) In early 2003, MWI first claimed that it did not owe money to Valjean, but rather that Valjean owed money to MWI. After discussions between the parties broke down, MWI gave written notice of termination of the MSA on June 30, 2003. (Id.) The current dispute between the parties centers around the proper distribution of proceeds. Each party believes that he has received a shortfall and relies on a proper accounting to uncover the accurate allocation.

  B. Procedural History

  Valjean, after attaining new counsel, moved on March 17, 2004, to amend its complaint. With the Court's endorsement, Valjean filed a four count amended complaint (hereinafter "complaint") on April 21, 2004, alleging that MWI breached the MSA, breached its fiduciary duty to Valjean, and made fraudulent representations to Valjean. The complaint also asserts that Valjean is entitled to an artisan's lien. Valjean seeks, inter alia, compensatory damages and equitable relief stemming from these allegations. On May 17, 2004, MWI moved to dismiss all of the claims but for Valjean's breach of contract claim and submitted its motion fully-briefed on June 18, 2004. II. DISCUSSION

  A. Standard of Review

  When ruling on a motion to dismiss pursuant to Fed.R. Civ. P. 12(b)(6), the Court must construe all factual allegations in the complaint in favor of the non-moving party. Allen v. Westpoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991). The Court's consideration is limited to facts stated on the face of the complaint and in documents appended to the complaint or incorporated in the complaint by reference, as well as to matters of which judicial notice may be taken. Id. Dismissal of a claim is proper only where "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

  B. Valjean's Artisan's Lien Claim

  MWI moves to dismiss Valjean's artisan's lien claim, on the basis that, inter alia, the payment structure established by the MSA does not allow for Valjean's purported artisan's lien as a matter of law. I find that MWI is correct and therefore dismiss Valjean's artisan's lien claim.*fn2 An artisan's lien is, by its nature, inconsistent with a contract that sets the time for payment after the time at which goods are to be delivered by the artisan, and no right to an artisan's lien exists under an agreement of this type. Wiles Laundry Co. v. Hahlo, 105 N.Y. 234, 242 (1887) ("If, by the terms of the contract, possession of the property is to be surrendered before payment, no right of lien exists."). Section 5.1 of the MSA provides that MWI will make monthly payments to Valjean based on sales proceeds received by MWI during the preceding month. (Werdiger Decl. Ex. 5 § 5.1.) Thus, the MSA establishes a system of payment whereby Valjean first delivers all finished jewelry to MWI and then, only after the sale is complete, does Valjean receive payment for its manufacture. Indeed, Valjean is not entitled to any payment at all for goods produced and delivered to MWI if MWI keeps the Valjean-manufactured goods in inventory for more than 360 days and proceeds to scrap the jewelry and sell the component parts. (Id. Ex. 5 § 5.2.) Given the payment structure established by and agreed to by the parties in the MSA, Valjean possesses no right to an artisan's lien. Therefore, Valjean's claim for an artisan's lien is dismissed. Valjean mistakenly analogizes the agreement in the present case to the contractual arrangements at issue in United States v. Toys of the World Club Inc., 288 F.2d 89, 95 (2d Cir. 1961) (citing the principle discussed above, but finding that because the party asserting the lien had a "right to refuse to deliver and cease work if these amounts were not paid," the principle was inapplicable) and In re Tele King Corp., 137 F. Supp. 633, 634 (S.D.N.Y. 1955) (also citing the principle discussed above but finding such a structure to be lacking because there was no agreement to deliver goods before payment). In those cases, the agreements between the parties were not inconsistent with the artisan's right to withhold goods and demand payment. The MSA, on the other hand, is inconsistent with any such right because it conditions MWI's payment to Valjean on the final sale of the manufactured goods, and sale of the goods necessarily requires that Valjean surrender them. Valjean has not suggested that any payment system existed apart from that established by the MSA, and thus has not pled facts sufficient, as a matter of law, to succeed on its artisan's lien claim.

  C. MWI's Request for Return of Goods Held by Valjean

  In addition to moving for dismissal of Valjean's artisan's lien claim, MWI also requests that this Court order Valjean to return all goods held under the purported lien. MWI's request for affirmative injunctive relief, which is what such an order would represent, must demonstrate that irreparable harm would result in the absence of relief granted by this Court. "[A] party must make a showing of (a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief." Bell & Howell: Mamiya Co. v. Masel Supply Co., 719 F.2d 42, 45 (2d Cir. 1983) (internal citations omitted). MWI has failed to establish irreparable harm. Despite MWI's alarm over being "compelled" to disassemble the goods if returned after the MSA's 360 day cut-off date, the MSA in no way compels MWI to do so — it merely provides MWI with the option to scrap the goods. (Werdiger Decl. Ex. 5 § 5.2.) MWI also has the option to sell the goods, as assembled, once they are returned by Valjean. In fact, Valjean is the only party who would potentially be hurt by a delay in the return of the goods. If MWI chooses to scrap the jewelry, Valjean is entitled to no payment whatsoever. In any scenario, the value of the jewelry in Valjean's possession will not be lost if the jewelry is not returned to MWI before the MSA cut-off date. Therefore, since MWI ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.