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Steuben Foods, Inc. v. International Dispensing Corp.

July 19, 2010

STEUBEN FOODS, INC., PLAINTIFF,
v.
INTERNATIONAL DISPENSING CORPORATION AND GREGORY ABBOTT, DEFENDANTS.



The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court

DECISION AND ORDER

I. INTRODUCTION

On November 16, 2009, Plaintiff Steuben Foods, Inc. commenced this civil action by filing a complaint in the United States District Court for the Western District of New York. Therein, Plaintiff requests a declaratory judgment and an award of compensatory damages for anticipatory breach of contract in violation of state law. Presently before this Court is Defendants' Motion to Dismiss Plaintiff's complaint and request for sanctions. For the reasons discussed below, Defendants' motion is granted in part and denied in part.

II. BACKGROUND

A. Facts

In adjudicating Defendants' Motion to Dismiss, this Court assumes the truth of the following factual allegations contained in the complaint. See Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 740, 96 S.Ct. 1848, 1850, 48 L.Ed.2d 338 (1976); see also Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton Coll., 128 F.3d 59, 63 (2d Cir. 1997).

Plaintiff is a New York corporation and maintains a place of business at 1150 Maple Road in Elma, New York. (Compl., ¶¶ 15, 28.) Plaintiff manufactures and markets aseptically-processed foods and beverages, including certain "bag-in-box" products.*fn1 (Compl., ¶ 28.)

Plaintiff alleges that Defendant International Dispensing Corporation ("IDC") is a Delaware corporation and "maintains a place of business at 5818 South Elm Street in Hinsdale, Illinois." (Compl., ¶ 15.) Plaintiff further alleges that Defendant Abbott is a resident of the County of Pitkin, Colorado. (Compl., ¶ 16.) Defendant Abbott founded Defendant IDC several years ago. (Compl., ¶ 1.)

Defendant IDC developed a "Fresh Flow Tap" aseptic valve (the "Valve") that permits storage and dispensation under commercial conditions of low acid products in a non-refrigerated state when used with aseptic "bag-in-box" processing technology. (Compl., ¶ 1.) Plaintiff alleges that in or about June 2006, Defendants entered into an Exclusivity and Marketing Agreement ("Agreement") with Plaintiff. (Compl., ¶ 2.) Under the Agreement's terms, Plaintiff received the exclusive right to use the Valve in certain product categories to market it to its customers. (Compl., ¶ 2.)

Plaintiff asserts that at or about the same time the parties entered into the Agreement, Defendants also offered Plaintiff an Astepo brand aseptic filling machine (the "Filler") at no additional charge. (Compl., ¶ 4.) Plaintiff maintains that receipt of the Filler was conditioned on its use for marketing purposes pursuant to the Agreement. (Compl., ¶ 5.) Plaintiff further maintains that it accepted Defendants' offer and subsequently took possession and ownership of the Filler. (Compl., ¶¶ 7-9.) Plaintiff contends that during the ensuing 18 months, Defendants never claimed that they retained title to the Filler. (Compl., ¶ 9.) Plaintiff admits that it did not have the opportunity to market the Filler during this time. (Compl., ¶ 8.)

Plaintiff alleges that Defendants now claim ownership of the Filler and intend to repossess it, unless Plaintiff agrees to purchase, lease, or lease-to-buy it at a price "substantially in excess" of its current market value. (Compl., ¶ 11.) In its complaint, Plaintiff requests a declaratory judgment that it is the "sole owner of the Filler" and compensatory damages in excess of $2 million, plus interest, attorneys' fees, costs, and any other relief this Court deems just and proper. (Compl., ¶ 13.)

B. Procedural History

Plaintiff commenced this action on November 16, 2009, by filing a complaint in the United States District Court for the Western District of New York. Defendants filed the instant Motion to Dismiss on December 10, 2009, supported by the Declaration of Gregory P. Vidler ("Vidler Decl.") and the exhibits thereto, the Affidavit of Gregory Abbott ("Aff. Abbott") and the exhibits thereto, and a memorandum of law ("Defendants' Memorandum"). Plaintiff filed the Declaration of Frank V. Balon in ...


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