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Hongtai Trading Inc. v. Yan

United States District Court, E.D. New York

March 27, 2014

HONGTAI TRADING INC., ZHIHAO YUAN, and ZHIQIN YUAN, Plaintiffs,
v.
MINGSHENG YAN, BILL YU, YING KOU TAIYANG PACKING PRODUCTS CO., LTD. and, U.S. TAIYANG PACKING PRODUCTS CO., LTD. Defendants. YING KOU TAIYANG PACKING PRODUCTS CO. LTD., Third-Party Plaintiff,
v.
YYT EMPIRE, INC., and WT EMPIRE, INC., Third-Party Defendants.

MEMORANDUM & ORDER

DORA L. IRIZARRY, District Judge.

Third-party plaintiff Ying Kou Taiyang Packing Products Co., Ltd. ("YKT") filed the instant action against third-party defendants YYT Empire, Inc. ("YYT"), and WT Empire, Inc. ("WT") (collectively, "Third-Party Defendants"), asserting state law claims for breach of contract and fraud. ( See Amended Third-Party Complaint ("Amended 3P Compl."), Dkt. Entry No. 31 ¶¶ 69-86.) The Third-Party Defendants move, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the instant action in its entirety ( see Third-Party Defendants' Memorandum of Law in Support of Dismissal ("3P Defs.' Mem."), Dkt. Entry No. 34), which YKT opposes ( see Third-Party Plaintiff's Memorandum in Opposition to Dismissal ("3P Pl.'s Opp'n"), Dkt. Entry No. 37). For the reasons set forth more fully below, the Third-Party Defendants' Motion to Dismiss is denied. YKT is a foreign corporation whose conduct in interstate commerce is outside of the jurisdictional bar of New York Business Corporations Law § 1312(a).

BACKGROUND

The facts are taken from the Amended Third-Party Complaint and are assumed true solely for purposes of the resolution of this motion. Additionally, portions of the facts are taken from other pleadings in this action, such as the underlying complaint ( see Complaint, Dkt. Entry No. 1) and the joint Answer to the Complaint filed on behalf of defendants Mingsheng Yan, Bill Yu, YKT, and U.S. Taiyang Packing Products Co., Ltd. (collectively, the "Defendants") ( see Answer ("Ans."), Dkt. Entry No. 6).

YKT is a Chinese corporation, with its principal place of business in Yin Kou, China. (Amended 3P Compl. ¶ 3.) Mingsheng Yan ("Yan") is the principal and owner of YKT, and is a citizen and domiciliary of China. (Ans. ¶ 73.) YKT manufactures plastic shopping bags at its factory in China. ( Id. ¶ 12.) In 2008, YKT sold its plastic shopping bags to Zhihao Yuan ("York") and Zhiquan Yuan ("Alex") for resale to customers in the United States. ( Id. ¶ 78.) This sales relationship between York, Alex, and YKT persisted for more than one year. ( Id. ¶¶ 11-14.)

On January 8, 2009, York, Alex, and Yan formed Hongtai Trading, Inc. ("Hongtai") to import and distribute YKT's plastic shopping bags to customers in New York. ( Id. ¶¶ 77-80, 82.) Hongtai is a New York corporation, with a principal place of business in Whitestone, New York. (Compl. ¶ 4.) In October 2010, U.S. Customs and Border Protection detained a shipment of plastic shopping bags sent from YKT to Hongtai for violating anti-dumping regulations. (Ans. ¶¶ 26, 87.) Subsequently, York and Alex formed two companies, YYT and WT, to continue importing plastic bags from YKT. ( Id. ¶ 88.) Both YYT and WT owe YKT payment for shipments of plastic shopping bags already received. ( Id. ¶¶ 91-92, 95.)

On July 25, 2012, Hongtai, York, and Alex filed the instant action against the Defendants, asserting claims under the Lanham Trademark Act of 1946, 15 U.S.C. §§ 1051 et seq. ("Lanham Act") and New York law. (Compl. ¶¶ 36-69.) The Defendants filed an Answer and Counterclaim and, subsequently, YKT filed its Original Third-Party Complaint against YYT and WT. In the Original Third-Party Complaint, YKT alleged state law claims of breach of contract and fraud. (Original 3P Compl. ¶¶ 12-21.) YKT pleaded "ancillary and pendant jurisdiction." ( Id. ¶ 11.) The Third-Party Defendants moved to dismiss the Original Third-Party Complaint. On April 26, 2013, this Court issued a Decision and Order granting the Third-Party Defendants' motion to dismiss YKT's Original Third-Party Complaint, with leave to reinstate within thirty days upon compliance with New York Business Corporations Law § 1312(a). (Apr. 26, 2013 Memorandum & Order, Dkt. Entry No. 29.)

Rather than directly comply with the Court's Order, YKT filed a "letter motion" and a proposed Amended Third-Party Complaint on May 26, 2013, based upon the same claims, but including previously undisclosed facts about the interstate nature of YKT's operations. (Amended 3P Compl.) Without passing on the merits of YKT's claim, this Court granted the YKT's motion to amend the Third-Party Complaint on May 28, 2013. Presently before the Court is the Third-Party Defendants' Motion to Dismiss YKT's Amended Third-Party Complaint.

DISCUSSION

I. Legal Standard for Dismissal

Under Rule 8(a) of the Federal Rules of Civil Procedure, pleadings must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Pleadings are to give the defendant "fair notice of what the claim is and the grounds upon which it rests." Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 346 (2005) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957), overruled in part on other grounds by Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)). "The pleading standard Rule 8 announces does not require detailed factual allegations, ' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). "A pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.'" Id. (quoting Twombly, 550 U.S. at 555)).

Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant may move, in lieu of an answer, for dismissal of a complaint for "failure to state a claim upon which relief can be granted." To resolve such a motion, courts "must accept as true all [factual] allegations contained in a complaint, " but need not accept "legal conclusions." Iqbal, 556 U.S. at 678. For this reason, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to insulate a claim against dismissal. Id. "[A] complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570). Notably, courts may only consider the complaint itself, documents that are attached to or referenced in the complaint, documents that the plaintiff relied on in bringing suit and that are either in the plaintiff's possession or that the plaintiff knew of when bringing suit, and matters of which judicial notice may be taken. See, e.g., Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007).

II. Suits by Unregistered Foreign Corporations Doing Business in New York

The Third-Party Defendants assert that YKT is a foreign corporation doing business in New York without proper authority. (Defs.' Mem. at 3-4.) ...


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