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Lori Schlessinger and Brenda Pianko v. Valspar Corporation

September 23, 2011


The opinion of the court was delivered by: Hurley, Senior District Judge:


Plaintiffs, on behalf of themselves and others similarly situated, bring this diversity action*fn1 alleging breach of contract and violations of New York's General Business Law ("GBL") § 349. (Complaint ("Compl.") ¶¶ 33-40.) Defendant moves to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the motion is granted.


The following factual allegations are taken from the complaint and presumed true for the purposes of this motion.

This dispute arises from defendant's allegedly premature termination of maintenance agreements known as "Guardsman" service contracts. In order to insure against the possibility of damage to newly purchased furniture, each plaintiff entered into a separate contract with defendant at the time they bought furniture from the Fortunoff Department Store.*fn2 According to the agreements, if any damage to plaintiffs' furniture is incurred during the contract period, defendant will endeavor to repair or replace the items.

Contained within those agreements is what plaintiffs term the "store closure provision," which reads as follows. "If the particular store location where you originally purchased your furniture [ ] has closed, no longer carries Guardsman as a supplier, changed ownership, or has stopped selling new furniture since your purchase, Guardsman will give you a refund of the original purchase price of this Protection Plan." (Compl. ¶ 19.) At some point after plaintiffs purchased their furniture and entered into the agreements, Fortunoff went bankrupt. (Compl. ¶¶14-15, 20.) By the time plaintiff Brenda Panko submitted a claim to defendant on April 14, 2010, Fortunoff had gone out of business and the claim was denied. (Compl. ¶¶ 22-23.)

Plaintiffs allege that a New York consumer law, GBL § 395-a, prohibits the inclusion of the store closure provision (compl. ¶¶ 22-23), rendering it "ineffective and not part of the agreement," (Compl. ¶ 35). Therefore, by denying claims based on that contract provision, defendant breached the agreement. (Compl. ¶ 36.) Plaintiffs further claim that defendant engaged in "deceptive practices," as defined in GBL § 349, by selling maintenance agreements which contain the purportedly illicit store closure provision. (Compl. ¶¶ 38-40.)

This suit is also brought on behalf of two putative classes of individuals with addresses in New York: (1) those "who currently have or will purchase Guardsman furniture protection plans," and (2) those "whose claims under a Guardsman furniture protection program were denied on the ground of the store closure provision at any time [six months prior to the filing of the instant complaint.]" (Compl. ¶¶ 25-26.) Plaintiffs seek, inter alia, an order requiring that all claims denied under the store closure provision be reprocessed, as well as statutory damages in the amount of $50 in for each individual who purchased a Guardsman plan containing the provision.



a.Motion To Dismiss Pursuant To 12(b)(6)

Rule 8(a) provides that a pleading shall contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The Supreme Court has clarified the pleading standard applicable in evaluating a motion to dismiss under Rule 12(b)(6).

First, in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), the Court disavowed the well-known statement in Conley v. Gibson, 355 U.S. 41, 45-46 (1957) that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." 550 U.S. at 562.

Instead, to survive a motion to dismiss under Twombly, a plaintiff must allege "only enough facts to state a claim to relief that is plausible on its face." Id. at 570.

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).

Id. at 555 (citations and internal quotation marks omitted).

More recently, in Ashcroft v. Iqbal, -- U.S. --, 129 S. Ct. 1937 (2009), the Supreme Court provided further guidance, setting a two-pronged approach for courts considering a motion to dismiss. First, a court should "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." 129 S. Ct. at 1950. "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. Thus, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 1949 (citing Twombly, 550 U.S. at 555).

Second, "[w]hen there are well-pleaded factual allegations a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. "Determining whether a complaint states a plausible claim for relief [is] . . . a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950. The Court defined plausibility as follows:

A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of 'entitlement to relief.'"

Id. at 1949 (quoting and citing Twombly, 550 U.S. at 556-57) (internal citations omitted). In other words, "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - - but it has not ...

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