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Laboratory Synergy, LLC v. LMVAC

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK


December 1, 2008

LABORATORY SYNERGY, LLC, AND VISCAL, LLC, PLAINTIFFS,
v.
ILMVAC, USA AND ILMVAC, DEFENDANTS.

The opinion of the court was delivered by: Gerard E. Lynch, District Judge

OPINION AND ORDER

Laboratory Synergy, LLC, and its predecessor company, Viscal, LLC (collectively, "Viscal"), bring this action against ILMVAC GmbH ("I-GmbH"), a German corporation, and its American affiliate ILMVAC, LP ("I-LP"),*fn1 alleging breach of contract and various other causes of action. Defendants move to dismiss the action for lack of in personam jurisdiction and failure to state a claim. The motion to dismiss for lack of jurisdiction will be denied, and the motion to dismiss for failure to state a claim will be granted in part and denied in part.*fn2

BACKGROUND

Plaintiff Viscal, a New York company with headquarters in Orange County, New York, imports scientific equipment from Europe and distributes it in the United States. I-GmbH manufactures such equipment. In March 2001, Viscal and I-GmbH entered an oral distributorship agreement, under which Viscal would be the North American distributor for IGmbH's products.*fn3 According to plaintiffs, the agreement specifically provided that I-GmbH products sold by Viscal would be shipped from Germany to JFK Airport in New York, where Viscal would be responsible for clearing U.S. customs, after which the goods would be shipped to Viscal's warehouse in Orange County, New York, for further distribution to customers. Representatives of I-GmbH met with Viscal's principal several times in New York in 2002 and 2003 to further this relationship. While Viscal's performance as a distributor was apparently disappointing to I-GmbH, it is undisputed that Viscal sold I-GmbH products worth approximately 75,000 euros through August 2003.

On September 1, 2003, I-GmbH terminated its distributorship relationship with Viscal. Plaintiffs allege, however, that I-GmbH nevertheless agreed to continue to recognize Viscal/Laboratory Synergy as its exclusive distributor with respect to the relationship with Sigma-Aldrich ("Sigma"), a Wisconsin chemical manufacturer, and the Austin Group, an Illinois contractor building laboratories for Sigma.*fn4 According to plaintiffs, both before and after the termination of the overall distributorship, Viscal did substantial work to develop Sigma as a customer for I-GmbH products. However, when plaintiffs ultimately bid on the Sigma project according to the distributorship's terms, which included a mark-up for Viscal, I-GmbH bid the project directly at the price at which it had previously sold the products to Viscal. Needless to say, Sigma accepted the I-GmbH bid, and when Sigma finally purchased I-GmbH products through I-LP in January 2005, Viscal was left with nothing.

Viscal's complaint charges that I-GmbH's actions breached the alleged agreement to extend its distributorship in connection with the Sigma project, and constituted fraud and tortious interference with Viscal's business relationships with Sigma.

DISCUSSION

I. In Personam Jurisdiction

Noting that defendant I-GmbH is a German corporation that has little or no ongoing business in New York, defendants move to dismiss the case for lack of in personam jurisdiction. Plaintiffs counter that jurisdiction exists under New York's long-arm statute, CPLR § 302(a)(1), which provides for jurisdiction over any person who "contracts anywhere to supply goods or services in the state" with respect to any "cause of action arising from" such contract.*fn5 Plaintiffs are correct.

I-GmbH argues that plaintiffs allege a breach not of a contract for the sale of goods into New York, but rather for breach of the alleged limited extension of the distributorship arrangement with respect to the Sigma relationship, which I-GmbH characterizes as simply an "agreement . . . for Plaintiffs to perform services for [I-GmbH], not for I-GmbH to supply goods in New York." (D. Mem. 11; emphasis in original.) But this mischaracterizes Viscal's allegations. Viscal alleges that the extension provided that it would continue to be I-GmbH's agent for the sale of its products to Sigma, and that it "would receive its regular commission on the sale or be allowed to buy the products needed to fill the order at the standard terms and conditions existing" under the original distributorship agreement. (Verified Compl. ¶ 15; emphasis added.) As noted above, the complaint alleges that those terms contemplated the sale of products through JFK Airport and Viscal's facilities in New York State.

It will of course be for a jury to determine whether any such contracts actually existed, what their terms were, and whether I-GmbH breached the contract. But it is unquestionably the case that Viscal alleges the breach of a contract that throughout its life, and continuing into the alleged extension with respect to Sigma, called for the sale of goods to Viscal in New York for resale to its North American customers. I-GmbH's effort to subdivide its agreements with Viscal into two distinct agreements, under which goods would be sold into New York only under the first, is unpersuasive. Viscal alleges in a verified complaint, and proffers an affidavit supporting its allegations, that I-GmbH knowingly entered a distributorship contract with a New York-based company; required that company as part of that contract to maintain an inventory in New York; sold goods into New York for three years under that contract; sent representatives to New York to further that relationship; and then extended the relationship with respect to a particular customer, only to breach the agreement by selling goods directly to that customer. Such allegations provide a classic basis for long-arm jurisdiction. I-GmbH's argument that its ultimate agreement with Sigma called for the shipment of goods directly to Wisconsin is a red herring. That I-GmbH breached the contract by sending goods to Wisconsin does not defeat jurisdiction; the claim still arises from breach of what Viscal alleges was a "contract[ ] . . . to supply goods" in New York.*fn6

Accordingly, defendants' motion to dismiss for lack of in personam jurisdiction must be denied.

II. Failure to State a Claim

Defendants next argue that the complaint fails to state any claim against I-LP upon which relief can be granted, and fails to state a claim for fraud or tortious interference against I-GmbH. In deciding this motion, the Court must accept the allegations of the complaint as true, see Int'l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 71 (2d Cir. 1995); Goonewardena v. New York, 475 F. Supp. 2d 310, 320 (S.D.N.Y. 2007), and may grant the motion only if the plaintiff has not alleged "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007). A court must apply a "flexible plausibility standard, which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible." Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007) (internal quotation marks omitted).

The discussion above makes clear that the complaint states a claim for breach of contract against I-GmbH, in that it specifically alleges that I-GmbH agreed to extend an exclusive distributorship agreement with respect to the Sigma relationship, under which Viscal would be entitled to purchase I-GmbH products and re-sell them for a profit to Sigma (or receive a commission on any sale by I-GmbH), and that I-GmbH breached that agreement by selling the products to Sigma directly without paying any compensation to Viscal. The complaint also states an alternative claim for quantum meruit. The complaint alleges that Viscal provided substantial services, both before and after the termination of the original distributorship arrangement, toward the end of convincing Sigma and its contractor Austin to purchase I-GmbH products; that I-GmbH profited from those services in achieving a substantial sale to Sigma; and that justice requires compensation to Viscal for its services in this regard.

With respect to I-LP, the complaint is sparse and confusing. As defendants point out, the complaint does not specifically allege any agreement between Viscal and I-LP. Defendants proffer evidence that I-LP was not even formed until May 2004, some nine months after the termination of Viscal's original distributorship with I-GmbH. (D. Mem. 3; Askew Decl. ¶ 2.) At this stage of the case, however, plaintiffs' allegations must be taken as true, and defendants' proffer of evidence refuting those allegations must be disregarded. While plaintiffs' allegations are less than clear with respect to I-LP, the complaint (which misnames both defendants) refers to both "ILMVAC" and "ILMVAC, USA" without clear distinction as the singular "defendant," and thus appears, albeit murkily, to allege the facts supporting its breach of contract and quantum merit claims with respect to both companies.*fn7 As plaintiffs acknowledge (P. Mem. 15), the complaint is vague because plaintiffs lacked specific knowledge as to the corporate relationships involved. Upon proper clarification of the record -- as plaintiffs also candidly acknowledge (id.) -- the claims against I-LP likely will be dismissed. At the bare pleading state, however, the motion will be denied.

The case stands differently with respect to plaintiffs' tort claims. Plaintiffs' fraud claim amounts to nothing more than the allegation that I-GmbH "represented and promised that the Plaintiffs, would still be its agent for the sale of its products to Sigma Aldrich and Plaintiffs would receive its regular commission on the sale or be allowed to buy the products needed to fill the order at the standard terms and conditions existing with Plaintiff VISCAL, INC." (Verified Compl. ¶ 15.)*fn8 This statement does not allege any misrepresentation of fact. Rather, it alleges a promise by I-GmbH that it would do certain things in exchange for certain undertakings on Viscal's part. The claim thus merely duplicates plaintiffs' claim for breach of contract, and must therefore be dismissed. See, e.g., Papa's-June Music v. McLean, 921 F. Supp. 1154, 1162 (S.D.N.Y. 1996) (dismissing fraud claim where "the only fraud alleged arises out of the same facts that serve as the basis for the breach of contract claim"); Locascio v. Aquavella, 185 A.D.2d 689, 690 (N.Y. App. Div. 4th Dep't 1992) (same.)

As for plaintiffs' duplicative claims for tortious interference with a "business relationship" and with "prospective business advantage," plaintiffs' brief in opposition to defendants' motion entirely fails to defend these claims, which must therefore be deemed abandoned, and accordingly dismissed.

CONCLUSION

Accordingly, for the reasons stated above, plaintiffs' claims for fraud and tortious interference are dismissed for failure to state claims on which relief can be granted, and defendants' motion to dismiss for lack of personal jurisdiction and failure to state a claim is denied in all other respects.

SO ORDERED.


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