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Milton Abeles, Inc. v. Creekstone Farms Premium Beef

May 14, 2007

MILTON ABELES, INC., PLAINTIFF,
v.
CREEKSTONE FARMS PREMIUM BEEF, LLC, DEFENDANT.



The opinion of the court was delivered by: Joseph F. Bianco, District Judge

Memorandum and Order

Plaintiff Milton Abeles, Inc. ("Abeles"), brings this action in diversity against Creekstone Farms Premium Beef, LLC ("Creekstone"), asserting claims related to Creekstone's alleged breach of an agreement with Abeles. Specifically, Abeles asserts the following claims against Creekstone under New York law: (1) breach of a joint venture agreement, (2) breach of a fiduciary duty, (3) breach of contract, (4) breach of the implied covenant of good faith and fair dealing, (5) unfair competition, and (6) breach of a quasicontract.

Creekstone now moves to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, defendant's motion is granted in part and denied in part.

I. BACKGROUND

A. The Facts

The following facts are taken from the second amended complaint (the "complaint") and are not findings of fact by the Court, but rather are assumed to be true for purposes of deciding this motion and are construed in a light most favorable to plaintiff, the nonmoving party.

On June 4, 2003, plaintiff Abeles allegedly entered into an oral agreement (the "agreement"), whereby Abeles agreed to expend time, money, and effort to promote and to sell Creekstone's meat products to several customers, and to serve as the exclusive source of Creekstone products to such customers.*fn1 (Compl. ¶ 7.) Pursuant to the agreement, Abeles was to contribute its body of contacts, skill, knowledge, and reputation as a distributor of meat products to Creekstone's business (Id. ¶ 10); Creekstone agreed to aid Abeles' efforts by, among other things, timely and completely fulfilling any orders of its products placed by customers as a result of Abeles' work. (Id. ¶ 9.)

Under the agreement, Abeles was to assume the full risk of loss arising from a customer's failure to pay Abeles for Creekstone products that Abeles had purchased at the customer's request. (Id. ¶ 11.) Similarly, Creekstone was to assume the full risk of loss arising from non-payment by Abeles, and from any other expenses incurred as a result of demands made by one of the customers to whom Creekstone was introduced by Abeles. (Id.) According to plaintiff, the parties also agreed that Creekstone was to take the profit arising from the sale of its products to Abeles, and Abeles was to take the profit arising from the sale of such products to third-party customers. (Id. ¶ 12.)

Furthermore, plaintiff alleges that the parties shared management and control over their activities under the agreement. (Id. ¶ 13.) Specifically, plaintiff alleges that the parties jointly determined the following matters: (1) to which customers they would market Creekstone products; (2) where to advertise and market Creekstone products; (3) the manner in which they would present and market Creekstone products to prospective clients; (4) the forms of advertising media and payment of advertising fees; (5) the price of Creekstone products that would be sold to customers, so as to maximize the parties' profits; (6) the number and amount of payments and/or rebates to be made to Abeles in order to compensate Abeles for losses incurred as a result of lower prices offered by Abeles to new customers; and (7) the provision of certain rebates, rewards, coupons, credits, and discounts to customers under certain circumstances. (Id. ¶ 13.)

According to Abeles, on February 8, 2006, as a result of Abeles' efforts on behalf of Creekstone, Creekstone received purchase orders from a chain food store known as Wild by Nature, as well as other chain stores. (Id. ¶ 16.) However, Creekstone failed to timely and properly fulfill orders placed by Wild by Nature as a result of Abeles' efforts. (Id. ¶ 17.) Thereafter, in light of Creekstone's failure to fulfill such orders, Abeles made greater efforts to promote Creekstone's products and to convince Wild by Nature to continue to order Creekstone products. (Id. ¶ 18.)

On May 27, 2006, Abeles learned that Creekstone had been selling its products to Wild by Nature through another distributor. (Id. ¶ 20.) When Abeles brought this discovery to Creekstone's attention, Creekstone admitted that it was using another distributor and informed Abeles that Creekstone would no longer comply with its obligations under the agreement, including its obligation to sell its products to certain customers exclusively through Abeles. (Id. ¶¶ 21-22.) Thereafter, according to Abeles, Creekstone did not, in fact, comply with the terms of the agreement.

Abeles characterizes the agreement as a "Joint Venture Partnership" (Id. ¶ 7), or, in the alternative, as an "oral distribution agreement," whereby Abeles served as the exclusive distributor of Creekstone's products to certain customers. (Id. ¶ 23)

B. Procedural History

This case was originally filed in the Supreme Court of the State of New York, County of Nassau. On August 11, 2006, defendant removed the case to this Court. Plaintiff filed a second amended complaint on November 13, 2006. Defendant filed the instant motion on December 1, 2006. Oral argument was held on March 9, 2007.

II. STANDARD OF REVIEW

In reviewing a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted, the court must accept the factual allegations set forth in the complaint as true, and draw all reasonable inferences in favor of the plaintiff. See Cleveland v. Caplaw Enterp., 448 F.3d 518, 521 (2d Cir. 2006); Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir. 2005). A complaint should be dismissed under Rule 12(b)(6) "`only if it appears beyond doubt that the plaintiff can prove no set of facts in support of [her] claim which would entitle him to relief.'" Overton v. Todman & Co., CPAs, P.C., 478 F.3d 479, 483 (2d Cir. 2007) (quoting Rombach v. Chang, 355 F.3d 164, 169 (2d Cir. 2004) (internal quotation marks omitted)). The appropriate ...


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