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Miller v. IBM World Trade Corp.

March 8, 2007

RALPH I. MILLER, AN INDIVIDUAL, AND AS SUCCESSOR-IN-INTEREST TO BEST-OF- CHINA.COM, INC., A CALIFORNIA CORPORATION, PLAINTIFF,
v.
IBM WORLD TRADE CORPORATION, IBM/CHINA COMPANY, LTD., AND IBM ENGINEERING TECHNOLOGY (SHANGHAI) CO., LTD., DEFENDANTS.



The opinion of the court was delivered by: Denise Cote, District Judge

OPINION & ORDER

Plaintiff Ralph I. Miller ("Miller") brings this diversity action for breach of contract, fraud, and related claims against various IBM entities, following dissolution of Miller's corporation Best-of-China.com, Inc. ("BCC"). This action follows on the heels of a related action in the Northern District of California (the "California Action"), where the claims against the three defendants named in this action were dismissed for lack of personal jurisdiction. After this action was filed in the Southern District of New York, the remaining defendant in the California Action was granted summary judgment.

Defendant IBM World Trade Corporation ("IBM-WTC") moves to dismiss under Rule 12(b)(6), Fed. R. Civ. P., for failure to state a claim upon which relief can be granted.*fn1 IBM-WTC argues that Miller's claims are barred by the statute of limitations.*fn2

For the following reasons, IBM-WTC's motion is granted.

Background

The following facts are undisputed or taken from the complaint. Miller was the Chairman and Chief Executive Officer of BCC, a California corporation, from its founding on October 1, 1999 to its dissolution on May 15, 2002. This case arises from efforts by BCC to establish a web portal and e-commerce site for internet users in China and worldwide. According to the Complaint, before BCC's formation, Charles Wu ("Wu"), the General Manager of International Business Machines ("IBM") offices in Shanghai, China, agreed, on behalf of IBM-WTC and other IBM entities, to form a strategic partnership with BCC, whereby the IBM entities would provide support, including machinery, to BCC. Wu proposed a series of agreements, and based on these representations, Miller proceeded to form BCC and to secure funding. Wu repeatedly represented that even if everything else failed, the value of the investment was in the machinery and could be recouped long after the purchase of the machinery.

BCC entered into a series of contracts with IBM-WTC, its parent company IBM, and its subsidiaries IBM/China Company, Ltd. ("IBM-China") and IBM Engineering Technology (Shanghai) Co., Ltd. ("IBM-Shanghai"). Under the contracts, the IBM entities were to provide BCC with development support, consulting services, software, and hardware to set up BCC's site, in exchange for cash and stock in BCC. The agreements included the two contracts at issue here: the Subscription Agreement which was signed on December 31, 1999, and the Services Agreement which was signed on January 16, 2000. The Subscription Agreement was negotiated on behalf of IBM and IBM-WTC by Wu, and just prior to signing, IBM asked that the subscribing party be designated IBM-WTC. Subsequently, IBM-WTC's rights were assigned to IBM following an October 2, 2000 amendment ("Amended Subscription Agreement"). Pursuant to the Subscription Agreement, IBM-WTC agreed to furnish BCC certain discounts and credits to be applied toward purchase of certain IBM hardware, software, and services, in exchange for issuance of BCC stock. The Services Agreement was negotiated by Wu and William Hui on behalf of IBM-WTC and IBM-Shanghai, and provided that defendants would provide certain products and services to BCC in exchange for cash payments and BCC shares, in furtherance of the Subscription Agreement.

Miller claims that defendants failed to deliver the products and services as contracted for, and that defendants had misrepresented facts in order to induce BCC to enter into the agreements. Miller first asserted these and other additional claims pro se against IBM, IBM-WTC, IBM-China, and IBM-Shanghai in the Northern District of California on April 30, 2002. The complaint was dismissed for lack of standing, and an amended complaint was filed. On December 2, the California court granted IBM-WTC's motion to dismiss for lack of personal jurisdiction and IBM's motion to dismiss for lack of standing and for failure to state a claim. On January 8, 2003, Miller as a pro se plaintiff and BCC as a plaintiff-in-the-alternative filed a second amended complaint, but on May 23, the California court again granted IBM's motion to dismiss for failure to state a claim, this time without leave to amend. On August 7, the California court dismissed the claims against IBM-China and IBM-Shanghai because they had not been served, and dismissed the case in its entirety.

Miller appealed the August 7 decision, and on May 27, 2005, the Ninth Circuit affirmed the dismissal of IBM-WTC for lack of personal jurisdiction but reversed the dismissals of IBM, IBM-China, and IBM-Shanghai. Miller v. Int'l Bus. Machs. Corp., 138 Fed. Appx. 12 (9th Cir. 2005). In subsequent proceedings in the Northern District of California on remand, Miller was represented by present counsel. On February 14, 2006, the Northern District of California granted IBM-China and IBMShanghai's motion to dismiss for lack of personal jurisdiction. Miller then filed this action in the Southern District of New York on June 13, against the three defendants who had been dismissed for lack of personal jurisdiction from the California Action. On September 26, the Northern District of California granted summary judgment in favor of IBM on all claims and denied Miller's Rule 56(f), Fed. R. Civ. P., request for leave to take additional discovery. Miller v. Int'l Bus. Mach. Corp., No. C02-2118 MJJ, 2006 WL 2792416 (N.D. Cal. Sept. 26, 2006) ("IBM Opinion").*fn3

Discussion

IBM-WTC moves to dismiss for failure to state a claim under Rule 12(b)(6) on the ground that each of the claims against it is barred by the statute of limitations.*fn4 When considering a motion to dismiss under Rule 12(b)(6), a trial court "must accept as true all the factual allegations in the complaint and draw all reasonable inferences in plaintiffs' favor." In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 200 (2d Cir. 2006) (citation omitted). It may "dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations" set forth therein. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002) (citation omitted); see also Twombly v. Bell Atl. Corp., 425 F.3d 99, 106 (2d Cir. 2005). Motions to dismiss based on the statute of limitations are properly brought under Rule 12(b)(6). McKenna v. Wright, 386 F.3d 432, 436 (2d Cir. 2004) (citing Ghartey v. St. John's Queens Hosp., 869 F.2d 160, 162 (2d Cir. 1989)).

I. Applicable Law

In diversity cases, "state statutes of limitations govern the timeliness of state law claims." Schermerhorn v. Metro. Transp. Auth., 156 F.3d 351, 354 (2d Cir. 1998) (citation omitted); see also Guaranty Trust Co. v. York, 326 U.S. 99, 109-12 (1945). "To determine which state's law applies, a federal court sitting in diversity must apply the conflict-of-laws rules of the state in which the federal court sits." Cantor Fitzgerald Inc. v. Lutnick, 313 F.3d 704, 710 (2d Cir. 2002) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). New York applies a "borrowing statute" for actions accruing outside of the state, and where the plaintiff is a nonresident of New York, New York applies the shorter of the statute of limitations between New York and the place where the cause of action accrued:

An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a ...


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