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Bruno v. Casella Waste Systems, Inc.

United States District Court, N.D. New York

September 29, 2014

JAMES R. BRUNO, Plaintiff,
v.
CASELLA WASTE SYSTEMS, INC., Defendant.

DECISION and ORDER

LAWRENCE E. KAHN, District Judge.

I. INTRODUCTION

Plaintiff James R. Bruno ("Plaintiff") commenced this action seeking a declaration of his rights under an escrow agreement he entered into with Defendant Casella Waste Systems, Inc. ("Defendant"), and various other parties. Dkt. Nos. 1-1 ("Complaint"); 8-2 ("Escrow Agreement"). Presently before the Court is Defendant's Motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6), 12(b)(7), and 19. Dkt. No. 8 ("Motion"). For the following reasons, the Court grants the Motion.

II. BACKGROUND[1]

Plaintiff is a resident of St. Lawrence County, New York. Compl. ¶ 1. Plaintiff, along with three other individuals (collectively, the "WS Principals"), collectively owned several business entities in New York (the "WS Entities"). Id . ¶¶ 3-4. On October 22, 1998, the WS Principals and the WS Entities executed a Merger and Reorganization Agreement with Defendant and several of its corporate subsidiaries. Id . ¶ 4; Dkt. No. 8-2 ("Merger Agreement"). The Merger Agreement provided that Defendant would issue a specified number of shares of its capital stock (the "Merger Shares") to the WS Principals as consideration. Compl. ¶ 5. Ten percent of the Merger Shares (the "Specific Escrow Shares") were required to be placed in escrow with an Escrow Agent pursuant to the Escrow Agreement. Id .; Merger Agreement § 1.7; Escrow Agreement.[2] The Merger Agreement provided that the Specific Escrow Shares were to serve as security for the WS Principals' indemnification of Defendant and the WS Entities (the "Indemnified Persons") for certain possible damages related to the Merger Agreement. Compl. ¶ 6. The Escrow Agreement was executed on October 29, 1998, and the Specific Escrow Shares were placed in escrow with the Escrow Agent. Compl. ¶ 7.

The Escrow Agreement provided that if an Indemnified Person incurred or suffered damages for which it was entitled to seek indemnification, it was required to give notice of its indemnification claim (a "Specific Escrow Claim Notice") to two specified WS Principals, and to the Escrow Agent, prior to the Specific Escrow Termination Date. Id . ¶ 8. The Specific Escrow Termination Date was defined as the fifth anniversary of the date of the Escrow Agreement-i.e., October 29, 2003. Id . The Escrow Agreement also required that any Specific Escrow Claim Notice include (1) a statement of the amount of claimed damages, (2) the basis of the claim, and (3) reasonably specific details of the individual items comprising the claimed damages. Id . ¶ 9.

The Escrow Agreement provided that no later than five business days after the Specific Escrow Termination Date, the Escrow Agent was required to distribute the Specific Escrow Shares to the WS Principals, except for that proportion of the Specific Escrow Shares for which a Specific Escrow Claim Notice had been given prior to the Specific Escrow Termination Date. Id . ¶ 10; Escrow Agreement § 5.a. Additionally, the Escrow Agreement provided that if a Specific Escrow Claim Notice was given but not resolved as of the Specific Escrow Termination Date, the Escrow Agent would retain the shares in escrow until the claim was resolved. Id . ¶ 11.

Pursuant to these provisions, Defendant sent a notice dated November 13, 2001, and sent a supplemental notice dated October 27, 2003. Compl. ¶ 14. The supplemental notice was, according to Plaintiff, untimely, and the notices failed to comply with the content requirements of the Escrow Agreement. Compl. ¶¶ 15-16. Plaintiff alleges that 57, 414.177 shares remain in escrow, and that he is entitled to one-third of these shares. Compl. ¶ 18.

Plaintiff commenced this action in St. Lawrence County Supreme Court on July 19, 2013, and Defendant removed it on November 8, 2013, based on diversity jurisdiction. Dkt. No. 1 ¶¶ 1, 5-12. Plaintiff seeks: (1) a declaration that no Specific Escrow Claim Notice was timely given prior to the Specific Escrow Termination Date; (2) alternatively, if a Specific Escrow Claim Notice was timely given, a declaration that, with the exception of 1, 892.83 Specific Escrow Shares, no valid Specific Escrow Claim Notice was given; and (3) a declaration that the Escrow Agent must release one-third of the remaining Specific Escrow Shares to Plaintiff. Compl.

Defendant filed its Motion on November 20, 2013, seeking dismissal based on, inter alia, statute of limitations grounds. Dkt. No. 8-7 ("Memorandum") at 9-10. Plaintiff filed a Response and Defendant filed a Reply. Dkt. Nos. 13-3 ("Response"); 14 ("Reply").

III. LEGAL STANDARD

To survive a motion to dismiss pursuant to Rule 12(b)(6), a "complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also FED. R. CIV. P. 12(b)(6). A court must accept as true the factual allegations contained in a complaint and draw all inferences in favor of a plaintiff. See Allaire Corp. v. Okumus, 433 F.3d 248, 249-50 (2d Cir. 2006). A complaint may be dismissed pursuant to Rule 12(b)(6) only where it appears that there are not "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. Plausibility requires "enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [the alleged misconduct]." Id. at 556. The plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). "[T]he pleading standard Rule 8 announces does not require detailed factual allegations, ' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id . (citing Twombly, 550 U.S. at 555). Where a court is unable to infer more than the mere possibility of the alleged misconduct based on the pleaded facts, the pleader has not demonstrated that she is entitled to relief and the action is subject to dismissal. See id. at 678-79.

IV. DISCUSSION

Defendant argues, inter alia, that Plaintiff's claims are time-barred because his right to release of the Specific Escrow Shares arose no ...


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