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Lemonis v. A. Stein Meat Products Inc.

United States District Court, E.D. New York

March 6, 2015

MARCUS LEMONIS, Plaintiff,
v.
A. STEIN MEAT PRODUCTS INC., HOWARD MORA, ALAN BUXBAUM, and KING SOLOMON FOODS, INC. Defendants.

MEMORANDUM AND ORDER

DORA L. IRIZARRY, District Judge.

Plaintiff Marcus Lemonis ("Lemonis") filed the instant action against defendants A. Stein Meat Products Inc. ("A. Stein Meat"), Howard Mora ("Mora"), Alan Buxbaum ("Buxbaum") (collectively, the "A. Stein Meat Defendants"), and King Solomon Foods, Inc. ("King Solomon"), asserting a variety of state law claims arising out of a failed business dealing between Lemonis and the A. Stein Meat Defendants. ( See Compl., Dkt. Entry No. 1.) Both the A. Stein Meat Defendants and King Solomon move, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the instant action in its entirety ( see Mem. of L. in Supp. of the A. Stein Meat Defs.' Mot. to Dismiss ("A. Stein Meats Mem."), Dkt. Entry No. 18; Mem. of L. in Supp. of King Solomon's Mot. to Dismiss ("King Solomon Mem."), Dkt. Entry No. 23), which Lemonis opposes (Lemonis Mem. in Opp'n ("Lemonis Opp'n"), Dkt. Entry No. 26). For the reasons discussed below, the A. Stein Meat Defendants' motion to dismiss is granted in part and denied in part and King Solomon's motion to dismiss is granted.

BACKGROUND[1]

Lemonis is an entrepreneur and host of the television show "The Profit." (Compl. ¶ 1.) "The Profit" is a reality show broadcasted on CNBC that focusses on saving small businesses. (Id. ¶ 6.) A. Stein Meat is a wholesale meat supplier operating in Brooklyn, New York, that sells various food products, including its trademarked Brooklyn Burger brand of hamburger products. (Id. ¶ 7.) Mora and Buxbaum each own a 50% interest in A. Stein Meat. (Id. ¶¶ 8-9.)

In 2013, A. Stein Meats was struggling financially. (Id. ¶ 17.) Lemonis evaluated A. Stein Meat's business structure and spent considerable time observing its operations, studying its finances, and speaking with its employees and owners. (Id. ¶ 18.) On March 4, 2014, CNBC aired an episode of "The Profit" featuring the A. Stein Meat Defendants. (Id. ¶ 17.) Initially, Lemonis offered to pay Mora and Buxbaum $1 million for a 50% ownership interest in A. Stein Meat. (Id. ¶ 19.) However, Lemonis uncovered significant undisclosed financial problems, particularly, that A. Stein Meat only had enough cash to remain in business for approximately two more weeks. (Id ¶¶ 20-21.) Lemonis withdrew his original offer. (Id. ¶ 21.) Instead, Lemonis offered to purchase the trademarked Brooklyn Burger hamburger brand for $200, 000. (Id. ) As transcribed from that episode, the parties discussed the following:

Mora: We need money for payroll and for our working capital. That's very important at this point because we want to be here tomorrow.
Lemonis: How much do you need?
* * *
Lemonis: You know I can't just give you the money. I can't just write you a check and give you a gift, as much as I like you guys. I'm not a consultant. I do things to save jobs and to make money. I don't just hand money out. And so in order for me to give you that money I'm gonna need to get a return on my money. And the only thing that I can think of is that I buy Brooklyn Burgers from you. And I'll repackage it and I'll get it back on its feet.
Mora: We're willing to do whatever it takes.

(Id. ) Ultimately, at some point off camera, the parties agreed to $190, 000. (Id. ¶ 23.)

Prior to the airing of this episode, Lemonis wired a total of $190, 000 to A. Stein Meat in two separate transfers: $100, 000 on November 20, 2013; and $90, 000 on January 8, 2014. (Id. ¶ 24.) A. Stein Meat accepted both of the wire transfers. (Id. ¶ 25.) At the time this action was filed, A. Stein Meat had not transferred any intellectual property rights associated with Brooklyn Burger to Lemonis. (Id. ¶ 26.) The A. Stein Meat Defendants offered to repay Lemonis the $190, 000, which he rejected because, according to Lemonis, the money was not a loan subject to repayment but, rather, payment for the purchase of intellectual property rights. (Id. ¶ 27.)

Notably, ownership of the two Brooklyn Burger trademarks at issue has changed during the course of this litigation. At the Court's request, the parties provided supplemental briefing to address any potential mootness of Lemonis's claims. ( See A. Stein Meat Defs. Supp. Mem., Dkt. Entry No. 33; Lemonis Supp. Opp'n, Dkt. Entry No. 37.)

In 2008, A. Stein Meat obtained a trademark for the Brooklyn Burger character and, in 2009, obtained a second trademark for the Brooklyn Burger logo.[2] ( See Exs. A, B attached to the Decl. of Michelle Mufich, Dkt. Entry No. 19.) On November 12, 2012, long before "The Profit" featured A. Stein Meat, A. Stein Meat granted FCC, LLC, d/b/a First Capital ("First Capital"), its primary lender, a security interest in the two Brooklyn Burger trademarks pursuant to a Patent and Trademark Security Agreement ("Security Agreement") filed with the United States Patent and Trademark Office ("U.S.P.T.O.").[3] ( See Security Agreement, attached as Ex. C to the Mulfich Decl.; Decl. of Buxbaum ("Buxbaum Decl.") ¶ 2, Dkt. Entry No. 35.) In the Security Agreement, A. Stein Meat stated that it would not "assign, transfer, encumber, or otherwise dispose" of its Brooklyn Burger trademarks, "or any interest therein, " ...


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