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Googla Home Decor LLC v. Uzkiy

September 8, 2009

GOOGLA HOME DECOR LLC, GENE KRUGLYAK, PETER PAPAYIANNIS, AND MARIANNA RAY, PLAINTIFFS,
v.
IGOR UZKIY, ACE DECORE INTERNATIONAL, AND ORDER INC., ANNA SHAMRAY, NICK FANDA, IGOR STAPANOV, JON DOE(S), AND DEITSCH REALTY CO., DEFENDANTS.



The opinion of the court was delivered by: Sifton, Senior Judge.

MEMORANDUM OPINION

On March 13, 2009, plaintiffs Gene Kruglyak, Peter Papayiannis, Marianna Ray, and Googla Home Décor, LLC ("Googla") commenced this action against defendants Igor Uzkiy, Ace Decore International Inc. ("Ace"), Anna Shamray, Nick Fanda, Igor Stapanov, Deitsch Realty Co. ("Dietsch Realty"), and other asyet-unknown defendants. Plaintiffs assert claims of (1) false designation of origin and/or false descriptions pursuant to 15 U.S.C. § 1125(a); (2) false designation of origin and/or false descriptions leading to trademark dilution pursuant to 15 U.S.C. § 1125(c); (3) common law trademark infringement; (4) trademark and trade name violations of §§ 133, 392-b, and 396-396t of New York's General Business Law; (5) trademark dilution and injury to business reputation pursuant to § 360-l of New York's General Business Law; (6) violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq.; (7) breach of fiduciary duty; (8) injurious falsehood; (9) interference with contract and/or inducing breach of contract; (10) interference with prospective economic advantage; (11) misappropriation; (12) forcible or unlawful entry and/or wrongful eviction; (13) fraud; (14) negligent misrepresentation; (15) trespass to land; (16) trespass to chattels; and (17) conversion and/or wrongful taking. Plaintiffs seek (but have not moved for) a preliminary injunction, eviction of defendants, the immediate return of plaintiffs' property, compensation for lost and damaged property, an accounting and payment of gains, punitive damages, treble damages under RICO, attorney's fees, costs, and interest. Presently before this Court is defendants' motion to dismiss this action, or in the alternative, to stay this action and compel arbitration of plaintiffs' claims, pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 3 and 4. For the reasons that follow, the motion is granted.

BACKGROUND

The following facts are taken from the complaint. For purposes of this motion, the allegations of the complaint are assumed to be true. See Marcus v. Masucci, 118 F. Supp. 2d 453, 454 (S.D.N.Y. 2000) (citing Cargill Intern. S.A. v. M/T PAVEL DYBENKO, 991 F.2d 1012, 1019 (2d Cir. 1993)).

Plaintiff Googla is a limited liability company formed and organized under New York law, with its principal place of business in Brooklyn, New York. Compl. ¶ 17. Plaintiff Gene Kruglyak is a New York resident who currently holds a 50% stake in Googla and serves as Googla's "executive officer." Id. ¶ 18. Plaintiff Peter Papayiannis is a New York resident and a holder of 25% of Googla's shares, who formerly served as Googla's President and Director of Management Information Systems. Id. ¶ 19. Plaintiff Marianna Ray, also a New York resident, was a 25% Googla shareholder until she transferred her 25% share to plaintiff Kruglyak in the beginning of 2007. Id. ¶ 20.

Defendant Igor Uzkiy is a Russian citizen who maintains a residence in Brooklyn, New York, and is authorized to work and conduct business in the United States. Id. ¶ 21. Defendant Uzkiy wholly owns Defendant Ace. Defendant Ace is a domestic business corporation formed and organized under New York law, with the same principal place of business as plaintiff Googla in Brooklyn, New York. Id. ¶ 22. Defendant Anna Shamray is a New York resident who serves as Ace's Operating Manager and holds a power of attorney to act on Ace's behalf. Id. ¶ 23. Defendant Nick Fanda, also a New York resident, works as a sales manager for Ace, but has represented himself to be a Googla sales manager on at least one occasion. Id. ¶ 24. Defendant Igor Stapanov is a New York resident and an Ace employee. Id. ¶ 25. Defendant Deitsch Realty is a corporation formed under New York law, with its principal place of business located in Brooklyn, New York. Defendant Deitsch Realty is the landlord or owner of plaintiff Googla's principal place of business. Id. ¶ 26.

In April 2005, plaintiffs Kruglyak, Papayiannis, Ray, and defendant Uzkiy formed Googla. Id. ¶¶ 17, 28. According to the complaint, at formation, Googla's shares were split evenly between each of plaintiffs Kruglyak, Papayiannis, Ray, and defendant Uzkiy. Id. ¶ 30. At the beginning of 2007, plaintiff Ray transferred her shares to plaintiff Kruglyak. Id. ¶ 30. As a result of the transfer, plaintiffs allege that the current apportionment of Googla shares is as follows: plaintiff Kruglyak, 50%; plaintiff Papayiannis, 25%; plaintiff Ray, 0%; defendant Uzkiy, 25%. Id.

According to the complaint, Googla's Operating Agreement requires the agreement of a majority of shares to commit Googla to any action. Id. ¶ 33. At no time did defendant Uzkiy control a majority of shares. Id. ¶ 38. Thus, defendant Uzkiy could not take actions on behalf of Googla without the consent of any of the individual plaintiffs. Id. The individual plaintiffs did not grant defendant Uzkiy any operational control of Googla. Id. ¶ 34. The arrangement between the individual plaintiffs and defendant Uzkiy was that the individual plaintiffs would be responsible for the day-to-day operations of Googla, while defendant Uzkiy would remain in Russia and provide capital. Id. ¶ 40.

From Googla's formation until October 2007, plaintiff Papayiannis was charged with "executive decision making" power. Id. ¶ 35. In October 2007, plaintiff Papayiannis resigned his position, and plaintiff Kruglyak assumed executive authority. Id. ¶¶ 19, 35. Plaintiff Kruglyak is currently the sole Googla shareholder with this authority. Id. ¶ 36.

At some point in time, the individual plaintiffs created certain trade names, trade dress, service marks, logos and emblems, including the trade names "Googla Home Décor" and "Googla," as well as a "Googla" logo. Id. ¶¶ 41-42; see also id. Ex. A. (copy of "Googla" logo). According to the complaint, in New York, the name "Googla" has become closely associated with and identified by the public as plaintiff Googla. Id. ¶ 44. While the individual plaintiffs did not register Googla's trademarks and service marks with the United States Patent and Trademark Office, they allege they own a common law trademark for the Googla mark and variations thereof. Id. ¶ 46.

In June 2008, defendant Uzkiy began "operating" Ace, an entity existing at the same location as Googla and wholly owned and controlled by defendant Uzkiy, allegedly for the purpose of seizing Googla's assets. Id. ¶¶ 57, 64. Defendant Uzkiy represented to the individual plaintiffs that defendant Ace would function under Googla's control either as a subsidiary or an associated corporation. Id. ¶¶ 57, 59, 62. At defendant Uzkiy's urging in the fall of 2008, plaintiff Kruglyak hired defendant Shamray to be Googla's office assistant, unaware that defendant Shamray possessed power of attorney to act on defendant Ace's behalf. Id. ¶¶ 67, 68. Under the guise of providing secretarial services, defendant Shamray observed and reported on Googla's and plaintiff Kruglyak's activities to defendant Uzkiy on a near-hourly basis on her cell phone. Id. ¶¶ 70, 71. Shortly thereafter, plaintiff Kruglyak terminated defendant Shamray's employment because of her constant phone calls and failure to perform substantive work for Googla. Id. ¶ 72. Defendant Shamray then began working for defendant Ace as its secretary and manager. Id. ¶ 73. During this time, some or all of the defendants took stock from Googla's inventory, copied its corporate records and client contact lists, and misappropriated Googla's confidential and proprietary information for defendant Ace's benefit without plaintiffs' knowledge or permission. Id. ¶ 74.

In October 2008, defendant Ace began selling items from Googla's inventory, representing itself as an agent of Googla, without plaintiffs' knowledge or authorization and without compensating plaintiffs. Id. ¶¶ 92, 108-09. Defendants appear to have to sold at least $13,188 of Googla's furniture and inventory in October 2008, at least $8,264 in November 2008, at least $36,226 in December 2008, and at least $40,000 in each of January and February 2009. Id. ¶¶ 93-95, 97. Defendants continue to sell Googla's inventory in other states and overseas. Id. ¶¶ 96, 98-99. The amount sold appears to be increasing from month to month. Id. ¶ 96. To facilitate sale of Googla's inventory, defendant Ace has also provided business cards to its employees indicating that they work for Googla. Id. ¶ 105.

On or about October 27, 2008, some or all of the defendants entered into a side deal with defendant Deitsch Realty to transfer Googla's lease to defendants. Id. ¶ 81. Prior to the side deal, plaintiffs Kruglyak and Googla were renting Googla's business premises from defendant Deitsch Realty, with the lease terminating on or about June 30, 2008. Id. ¶ 75. Plaintiffs Kruglyak and Googla negotiated a lowered monthly rent of $9,000 to continue the rental relationship. Id. ¶ 76. While waiting to execute an updated lease memorializing the rent reduction, plaintiffs believed the lease was in effect and continued making rental payments for the warehouse and office premises. Id. ¶¶ 78, 79. However, pursuant to the terms of the side deal between defendant Ace and defendant Deitsch Realty, defendant Deitsch Realty transferred possession of Googla's premises to defendant Ace for the period starting in November 2008 through September 2009 for a monthly rent of $15,000. Id. ¶ 82. Defendant Deitsch Realty also transferred the benefit of Googla's $42,000 security deposits to defendant Ace. Id. ¶ 83. Plaintiffs never agreed to the side agreement between defendant Ace and defendant Deitsch Realty. Id. ¶ 85.

On January 27, 2009, defendants sent out one or more mass mailings to Googla's entire client list, including false statements indicating that defendant Ace was now "performing" the work that Googla had contracted for and directions to contact defendant Igor Stepanov, an Ace "kitchen representative," "in order to negotiate future work, contract and financial matters at your project." Id. ¶¶ 129, 131-32, 137. Through these mailings, defendants sought to leverage half-completed projects to force clients to pay more for services already contracted for with Googla. Id. ¶ 136. These letters, all issued under the name of ...


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