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Ferolito v. Menashi

United States District Court, E.D. New York

January 15, 2013

John M. FEROLITO, Plaintiff,
v.
David K. MENASHI, Defendant.

Page 137

[Copyrighted Material Omitted]

Page 138

Nicholas A. Gravante, Jr., Boies, Schiller & Flexner LLP, New York, NY, Helen M. Maher, Olav A. Haazen, Rosanne C. Baxter, Boies, Schiller & Flexner LLP, Armonk, NY, for Plaintiff.

Claude M. Millman, Louis M. Solomon, Brian P. Ketcham, Colin Andrew Underwood, Michael Samuel Lazaroff, Cadwalader, Wickersham & Taft LLP, New York, NY, for Defendant.

MEMORANDUM AND ORDER

WEXLER, District Judge.

Plaintiff John M. Ferolito (" Ferolito" ) brings this diversity action against defendant David K. Menashi (" Menashi" ) for fraud, breach of fiduciary duty, and breach of contract. Menashi moves under Federal Rules of Civil Procedure 9(b), 12(b)(1), and 12(b)(6) to dismiss or stay this action. Ferolito opposes the motion.

I. BACKGROUND

For purposes of this decision, the relevant background can be summarized as follows:

A. The AriZona Entities

Ferolito and non-party Domenick Vultaggio (" Vultaggio" ) are the co-founders and co-owners of a group of companies that produce, bottle, market, and sell the AriZona Iced Tea brand of products, along with other related brands (" AriZona" or " AriZona Entities" ). Vultaggio and Ferolito entered into numerous agreements related to the management of the AriZona Entities, including, in 1998, an " Owners' Agreement."

B. Menashi and His Former Accounting Firm

Menashi is a certified public accountant and a former member of the accounting firm of Maier, Markey, and Menashi LLP (" MMM" ). In 1989, Vultaggio and Ferolito retained MMM for financial consulting and accounting services for a number of their businesses, including various AriZona Entities. At the time Menashi performed services for the AriZona Entities, he also performed certain personal advisory, accounting, and financial services for Ferolito, such as asset management and tax planning. He later provided financial and accounting services to various non-AriZona businesses owned bye Ferolito. In 2005 or 2006, Menashi became CEO of Beverage Marketing USA, Inc. (" BMU" )— the primary company of the AriZona Entities— but remained a partner of MMM until the end of 2007. By 2007, Menashi no longer performed services for Ferolito or any of his various non-AriZona business. Menashi

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remains the CEO of BMU and other AriZona Entities.

C. Ferolito's Federal and State Actions

Since February 2008, Ferolito has filed various actions in state supreme court in New York County and Nassau County against, among others, Menashi, Vultaggio, and the AriZona Entities (collectively, the " State Actions" ). In February 2008, Ferolito filed the first of these actions in New York County Supreme Court. See Ferolito, et al. v. Vultaggio, et al., Nos. 590967/08 & 600396/08 (the " New York County Action" ). As amended in October ...


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