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Tyler Fire Equipment, LLC v. Oshkosk Corp.

United States District Court, W.D. New York

June 16, 2015

TYLER FIRE EQUIPMENT, LLC, AND TYLER FIRE EQUIPMENT SERVICE CORP., Plaintiffs,
v.
OSHKOSK CORP., PIERCE MANUFACTURING, INC., HIGH PEAKS FIRE APPARATUS, LLC, ANTHONY M. MASTROBATTISTA individually and as President of High Peaks Fire Apparatus, LLC, DAVID MCALICE, individually and as Regional Vice President of Pierce Manufacturing, Inc., and DANIEL A. OLSZANSKI, individually and as Vice President of High Peaks Fire Apparatus, LLC, Defendants; DAVID McALICE, individually and as Regional Vice President of Pierce Manufacturing, Inc., and PIERCE MANUFACTURING, INC., Counter-Claimants,
v.
TYLER FIRE EQUIPMENT, LLC, AND TYLER FIRE EQUIPMENT SERVICE CORP., Counter-Defendants.

Robert Zarco, Esq., Gabriel Estadella, Esq., Himanshu M. Patel, Esq., Zarco Einhorn Salkowski & Brito, P.A., Miami, FL.

Donald W. O'Brien, Jr., Esq., Woods Oviatt Gilman LLP, Rochester, NY. for Plaintiffs/Counter-Defendants.

Carl J. Chiappa, Esq., John J. Sullivan, Esq., Hogan Lovells U.S. LLP, New York, NY. for Defendants/Counter-Claimants Pierce Manufacturing, Inc.; David McAlice, individually and as Regional Vice President of Pierce Manufacturing, Inc.:

Jeffrey A. Siegel, Esq., O'Connell & Aronowitz, P.C., Albany, NY.

Paul A. Feigenbaum, Esq., Mazzotta Siegel & Vagianelis, P.C., Albany, NY. for Defendant High Peaks Fire Apparatus. LLC; Anthony M. Mastrobattista individually and as President of High Peaks Fire Apparatus, LLC:

DECISION AND ORDER

CHARLES J. SIRAGUSA, District Judge.

INTRODUCTION

This breach of contract case is before the Court on two motions: (1) A motion seeking partial dismissal filed on January 23, 2015, ECF No. 35, by Pierce Manufacturing, Inc. ("Pierce") and David McAlice ("McAlice") (collectively the "Pierce defendants"); and (2) A motion to dismiss the first amended complaint filed on January 22, 2015, ECF No. 33, by High Peaks Fire Apparatus, LLC ("High Peaks"), Anthony M. Mastrobattista ("Mastrobattista"), and Daniel A. Olszanski ("Olszanski") (collectively the "High Peaks defendants").

A motion seeking partial dismissal of the original September 5, 2014, complaint, filed on November 17, 2014, ECF No. 18, by the Pierce defendants, is dismissed as moot. For the reasons stated below, the two pending motions are granted, Counts III and IV are dismissed with prejudice, Counts VII and VIII are dismissed without prejudice and Plaintiffs may move to amend Counts VII and VIII.

BACKGROUND

Tyler Fire Equipment, LLC and Tyler Fire Equipment Service Corp. ("Tyler"), commenced this action by filing a complaint on September 5, 2014, ECF No. 1, alleging a violation of the Automobile Dealers' Day in Court Act, 15 U.S.C. §§ 1221-26 (2014); a breach of fiduciary duty; a breach of contract; a breach of implied covenant of good faith and fair dealing; fraudulent misrepresentation; negligent misrepresentation; tortious interference with existing contractual relations; and tortious interference with prospective business relations. Compl. ¶ 1. Subsequently, The Pierce defendants filed their motion to dismiss, November 17, 2014, ECF No. 18, along with an answer to the original complaint and a counterclaim, ECF No. 22. The Court issued a schedule for briefing, ECF No. 23. On December 8, 2014, 21 days after Pierce's and McAlice's response was filed, Tyler filed what it titled as a First Amended Complaint ("first amended complaint"). 1st Am. Compl., Dec. 8, 2014, ECF No. 24; see Fed.R.Civ.P. 15(a)(1)(B) (a plaintiff may file an amended complaint 21 days after service of a responsive pleading or motion). The following day, Tyler voluntarily dismissed its claims against Oshkosh Corp. without prejudice. Notice of Voluntary Dismissal, Dec. 9, 2014, ECF No. 25. On January 5, 2015, Tyler answered the counterclaim. Answer to Counterclaim, Jan. 5, 2015, ECF No. 29. High Peaks, The Pierce defendants then filed their motions.

The first amended complaint, containing 152 paragraphs, is now the operative pleading in the case. The following information is taken selectively from that complaint (footnotes and some parenthetical information have been omitted).

12. In or around June 1977, Wayne and Victoria Tyler (the "Tylers") founded a fire equipment sales and service business in Elmira, New York after having worked in the sales department at Pierce in Appleton, Wisconsin. Upon returning to Elmira, the Tylers operated the new business out of their home. The Tylers became a Pierce dealer upon their return to Elmira in 1977, and at that time began selling and servicing Pierce products in New York and Pennsylvania....
15. On or about May 27, 2000, Tyler Fire Equipment entered into a Dealership Agreement with Pierce, which was effective May 1, 2000 (the "Dealership Agreement"). As reflected in Paragraph 6.1 of the Dealership Agreement, the Dealership Agreement had an initial term beginning May 1, 2000 and ending April 30, 2010 (the "Term"), but could be "renewed, extended or otherwise continued as the parties may agree in writing, or as may be provided otherwise by applicable law in the state in which [Tyler Fire Equipment] has its principal place of business, " i.e., New York State....
17. Pursuant to Paragraph 3.1 of the Dealership Agreement, Pierce appointed Tyler Fire Equipment as Pierce's exclusive independent marketing, sales and service representative for the solicitation of orders for Pierce-manufactured custom and commercial fire apparatuses for a territory comprised of 34 counties in New York State, including the Counties of Albany, Broome, Cayuga, Chenango, Clinton, Columbia, Cortland, Delaware, Dutchess, Essex, Franklin, Fulton, Green, Hamilton, Herkimer, Jefferson, Lewis, Madison, Montgomery, Oneida, Onondaga, Orange, Oswego, Otsego, Putnam, Rensselaer, Rockland, St. Lawrence, Saratoga, Schenectady, Schoharie, Sullivan, Tioga, Tompkins, Ulster, Warren, Washington, and Westchester, and 11 counties in Pennsylvania, including the Counties of Bradford, Cameron, Centre, Lycoming, Pike, Potter, Sullivan, Susquehanna, Tioga, and Wayne (the "Territory")....
19. Pursuant to Paragraph 4.6 of the Dealership Agreement, Pierce is and was obligated to sell products to Tyler Fire Equipment and consult with Tyler Fire Equipment to assist Tyler Fire Equipment to achieve desired market share levels and to develop the potential of the Territory....
24. In or around December 2009, Pierce took five counties in lower New York (Dutchess, Orange, Putnam, Rockland, and Westchester) away from the Tyler Fire Companies, based on, according to Pierce, the Tyler Fire Companies' poor sales performance. This was despite Pierce having received letters from many customers specifically requesting to purchase items from the Tyler Fire Companies. Upon information and belief, Pierce denied those customer requests. The above counties were subsequently transferred by Pierce to dealer Firematic Supply Co., located at 10 Ramsay Road, East Yaphank, New York 11967.
25. Pierce told the Tyler Fire Companies that they would lose more territories if they did not withdraw from the five counties. It was at or around this time that Pierce began accusing the Tyler Fire Companies of not selling a sufficient number of apparatuses.
26. As a result of Pierce's actions with respect to lower New York, the Tyler Fire Companies were forced to cancel contracts with their customers, causing significant damage to the Tyler Fire Companies' sales and service operations.
28. In or around the first half of 2011, Pierce agreed to assist the Tyler Fire Companies in exploring the possibility of finding a third-party buyer to purchase the Tyler Fire Companies.
29. On or about May 12, 2011, in furtherance of this effort, the Tyler Fire Companies entered into a Confidentiality Agreement with Pierce and McAlice (the "Pierce Confidentiality Agreement"). The Tyler Fire Companies agreed to furnish to Pierce and McAlice certain confidential information relating to the operation and affairs of the Tyler Fire Companies ("Confidential Information") for the purpose of aiding McAlice and Pierce in their review of the Tyler Fire Companies.
30. In furtherance thereof, Pierce sought to, among other things, identify an employee of the Tyler Fire Companies who might be interested in establishing a new company to succeed the Tyler Fire Companies as a Pierce dealer and servicer. Pierce represented to Mr. Tyler that it had a succession plan in place....
34. In or around May 2011, the Tyler Fire Companies began discussing with non-party, Municipal Emergency Services, Inc. ("MES"), the possible acquisition of the Tyler Fire Companies by MES. However, Pierce blocked the deal without cause, resulting in significant harm to the Tyler Fire Companies. Non-party Daniel Peters ("Peters"), then Vice President of Sales and Marketing for Pierce, met with Mr. Tyler at the Tyler Fire Companies' Elmira office to discuss the acquisition. When Mr. Tyler identified the interested party as MES, Peters stated to Mr. Tyler that Pierce would entertain no proposals from that entity for the purchase of the Tyler Fire Companies....
37. In or around fall 2013, Mastrobattista and Olszanski began discussions with the Tyler Fire Companies regarding their possible acquisition of the Tyler Fire Companies.
38. On or about November 29, 2013, upon information and belief, Mastrobattista and Olszanski formed High Peaks, under New York law, in connection with their potential purchase of the Tyler Fire Companies through High Peaks.
39. On or about December 2, 2013, the Tyler Fire Companies entered into a Confidentiality Agreement with Olszanski and Mastrobattista (the "High Peaks Confidentiality Agreement")....
46. Upon information and belief, beginning in or around August 2013, in direct contravention of the Pierce Confidentiality Agreement and, later, in direct contravention of the High Peaks Confidentiality Agreement, Mastrobattista, Olszanski and McAlice, individually and as a representative of Pierce, and in concert with one another, began discussing the potential sale of the Tyler Fire Companies with one another and with the Tyler Fire Companies' customers, vendors and employees, and with other individuals, in violation of the Pierce Confidentiality Agreement and the High Peaks Confidentiality Agreement....
50. Upon information and belief, McAlice and Pierce, by and through McAlice, breached the Pierce Confidentiality Agreement to reduce the purchase price of the Tyler Fire Companies, through lost customers and otherwise, and to maximize their profits at the Tyler Fire Companies' expense, and Pierce and McAlice exercised that coercion in a bad faith attempt to use nonrenewal notices as a lever to pressure the Tyler Fire Companies into purchasing additional inventory and hiring additional employees, leading to the demise of the Tyler Fire Companies....
53. Upon information and belief, Mastrobattista, Olszanski and High Peaks unlawfully disclosed protected information to harm the Tyler Fire Companies in order to reduce the potential purchase price of the Tyler Fire Companies, and, once they realized that they would not be able to obtain the necessary financing to purchase the Tyler Fire Companies, to harm the Tyler Fire Companies knowing that High Peaks would soon be a direct competitor of the Tyler Fire Companies.
54. As a result of the impermissible disclosure of information by Defendants, many customers of the Tyler Fire Companies became alarmed and ceased purchasing products and services from the Tyler Fire Companies or otherwise ceased doing business with the Tyler Fire Companies, including, but not limited to those individuals identified in paragraph 56. Many of the Tyler Fire Companies' employees have also left the Tyler Fire Companies, including, but not limited to those identified in paragraphs 68, 69 and 74. All of this has been to the extreme detriment of the Tyler Fire Companies....
56. In fact, almost every customer of the Tyler Fire Companies has indicated its apprehension, and customers have in most cases either withdrawn their business from the Tyler Fire Companies entirely and/or have significantly reduced the goods and/or services that they purchase from the Tyler Fire Companies. Such customers include, but are not limited to, fire stations located in Ausable Forks, Lake Placid, Latham, Plattsburg (Stations 2 and 3), Round Lake, Salem and West Albany, New York, and in Clifford, Pennsylvania.

The first amended complaint details a number of email communications which Tyler claims violated the terms of the Confidentiality Agreements. The Court will not set out the details here, but will discuss them as relevant to the pending motions in the Analysis section of this decision and order. The following information also comes from the first amended complaint.

65. On or about January 21, 2014, the Tyler Fire Companies and High Peaks signed a Letter of Intent ("LOI") regarding the possible purchase of the Tyler Fire Companies by High Peaks....
71. On or about January 31, 2014, a customer of the Tyler Fire Companies, AuSable Forks, informed the Tyler Fire Companies that McAlice, Olszanski and another individual, had indicated to AuSable that High Peaks was the new Pierce dealer for the Territory. At or around that same time, the Tyler Fire Companies were receiving numerous calls from customers and suppliers, including, but not limited to, certain of ...

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