G.L.M. Security & Sound, Inc. v. Lojack Corporation, No. 2:2010cv04701 - Document 24 (E.D.N.Y. 2011)

Court Description: MEMORANDUM AND ORDER denying as moot 14 Motion to Dismiss; granting in part and denying in part 17 Motion to Amend/Correct/Supplement; granting in part and denying in part 18 Motion to Amend/Correct/Supplement. For the foregoing reasons, Pla intiff's motion for leave to file an Amended Complaint is GRANTED AND PART AND DENIED IN PART. Within twenty-one (21) days from the date of this Order, Plaintiff shall file its Amended Complaint, which may assert the breach of contract and breac h of the covenant of good faith and fair dealing claims that were part of its Proposed Amended Complaint. In addition, the Amended Complaint may re-plead Plaintiff's tortious interference with business relations and Robinson-Patman Act claims. L eave to amend Plaintiff's misrepresentation, New York Franchise Sales Act, Massachusetts General Law Chapter 93A claims and breach of fiduciary duty claims is denied as futile. Defendant's pending motion to dismiss Plaintiff' s original Complaint (Docket Entry 14) is DENIED as moot. So Ordered by Judge Joanna Seybert on 9/30/2011. C/ECF (Valle, Christine)

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G.L.M. Security & Sound, Inc. v. Lojack Corporation Doc. 24 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ---------------------------------------x G.L.M. SECURITY & SOUND, INC., Plaintiff, MEMORANDUM & ORDER 10-CV-04701(JS)(ARL) -againstLOJACK CORP., Defendant. ---------------------------------------X APPEARANCES: For Plaintiff: Arthur L. Pressman, Esq. Nixon Peabody LLP 100 Summer Street Boston, MA 02110 Daniel J. Hurteau, Esq. Nixon Peabody LLP 677 Broadway, 10th Floor Albany, NY 12207 For Defendant: James C. Rubinger, Esq. Plave Koch PLC 12355 Sunrise Valley Drive, Suite 230 Reston, VA 20191 Rachel H. Prindle, Esq. Robert J. Harrington, Esq. Law Offices of Robert W. Harrington, P.C. 1 Washington Mall Boston, MA 02108 SEYBERT, District Judge: Plaintiff GLM Security & Sound, Inc. (“Plaintiff”) sued Defendant LoJack Corp. (“Defendant”) in a case arising out of a dispute over an agreement to distribute automobile security systems. Pending before the Court is Plaintiff’s motion for leave to amend its Complaint. For the reasons that follow, Plaintiff’s motion is GRANTED IN PART AND DENIED IN PART. Dockets.Justia.com BACKGROUND The following facts are taken from Plaintiff’s Proposed Amended Complaint (in citations, the “PAC”). Plaintiff is a Lynbrook, New York corporation that sells, among other things, car security systems to car dealers in New York City and the suburbs. (PAC ¶ 5.) Defendant is a Delaware corporation that manufactures and distributes car security systems. principal place of business is Massachusetts. In 2002, Plaintiff and Defendant Its (Id. ¶¶ 6-7.) entered into a “Distributorship and Installation Agreement” (the “Agreement”), which provided, in general terms, that Defendant would sell its (Id. ¶¶ 8-12.) security systems to Plaintiff. Plaintiff and Defendant eventually negotiated additional deals, including oral modifications of the Agreement and contracts concerning items (Id. ¶ 15.) outside the Agreement’s scope. For example, the parties agreed to extend the Agreement’s “Net 60 Days” payment term, extending it first to 90 days and then to 120, “as long as [Plaintiff] paid up to 90 days at the end of certain quarters.” (PAC ¶¶ 18, 19.) disregarding the The parties also developed a practice of Agreement’s sales expectations term. “The performance requirements in the Agreement were never reached-not even in the first three months--and they were thereafter never reset--with [Defendant].” no objection (Id. ¶ 22.) 2 or other action taken by According to Plaintiff, its Defendant was really a partnership. supposed partnership in a letter relationship with Defendant announced the to approximately 120 car dealers in the New York area, and the partnership was further manifested in correspondence, marketing materials, and Defendant’s representatives’ consistent presence on Plaintiff’s premises. with Further, Defendant’s Plaintiff’s logo Defendant’s insignia. and employees carried wore work identification (PAC ¶¶ 28-30, 33-34.) clothing cards with In furtherance of this “partnership,” Defendant exercised significant control over Plaintiff’s operations. (Id. ¶ 36.) During the course of their relationship, Defendant and Plaintiff freely traded customers, customers in the New York area. and jointly (Id. ¶ 29.) serviced Defendant both helped Plaintiff sell Defendant’s products to Plaintiff’s car dealership-clients and sold its security systems directly to car dealers. Defendant knew the prices that both it and Plaintiff were charging for its security systems and, under the Agreement, dealer pricing should have been consistent getting [Defendant’s] lowest prices.” “with [Plaintiff] (Id. ¶¶ 30-32.) Instead, Plaintiff claims, Defendant sold its security systems to car dealers more cheaply than it sold them to Plaintiff. (Id. ¶ 31.) Plaintiff confronted Defendant about the pricing discrepancy, but Defendant assured Plaintiff that it was not 3 offering its direct-sales customers a better price than what Plaintiff was receiving. (PAC ¶¶ 51.) Plaintiff, in turn, reassured its dealership customers that they were getting the same price Defendant. as those dealerships (Id. ¶¶ 52-54.) who bought straight from At some point, however, an unnamed employee of Defendant sought out Joe Melso, Defendant’s Director of Sales for New York and New Jersey. (Id. ¶¶ 57-59, 62.) The employee, who had been selling security systems directly to car dealers for a lower price than what Plaintiff was required to charge to dealers in the same geographic area, complained to Melso that Defendant’s business tactics were injuring Plaintiff. “F*ck [Plaintiff],” Melso replied. (Id. ¶¶ 57-60.) Defendant’s business strategy, calculated “to increase sales at virtually any price,” continued with its October 2008 roll-out of the Lease Pilot Program. (Id. ¶ 61.) Under this initiative, Defendant lowered the price it charged its direct dealerships. dealership program. (Id. ¶ 64.) customers (Id.) were Neither Plaintiff nor Plaintiff’s offered participation in the new Plaintiff eventually secured a price reduction, but the new price was still $25 per unit more than Defendant charged its direct-sales customers. (Id. ¶ 65.) Defendant was selling units to direct-sales customers for $150, installation included. Plaintiff, on the other hand, was paying $175 for uninstalled units. (Id.) 4 In early 2010, Plaintiff again complained to Defendant about the pricing discrepancies. Melso denied that Defendant was selling its security systems directly to dealerships for $150, but it admitted that it offered “special” pricing to large national chains of automobile dealers. (Id. ¶ 68.) The very same day, however, Melso offered the $150 price to a local car dealer who was not part of a national chain. (Id. ¶ 69.) Plaintiff and Defendant’s business relationship fell apart after that. Plaintiff demanded that Defendant compensate Plaintiff for the difference between the price Plaintiff and the price charged its direct it it charged dealership customers, plus extra to reimburse the labor cost of installing the security systems. (Id. ¶ 70.) Defendant refused and informed Plaintiff that it would not sell Plaintiff any security systems except on a “pre-paid” basis and only after Plaintiff’s account, which had previously been payable on 120-day terms, had been paid in full. (Id. ¶¶ 71-72.) Plaintiff interpreted this as a material breach, and it terminated the Agreement. (Id. ¶¶ 75-76.) Plaintiff also alleges that Defendant post-termination obligations under the Agreement. breached its Specifically, Plaintiff claims that Defendant was required to pay Plaintiff for each of Defendant’s security systems that Plaintiff returned to Defendant, plus a $50 fee for each unit that Defendant sold 5 to a car dealer within Plaintiff’s exclusive territory for six (Id. ¶¶ 75-77.) months after the Agreement’s end. In its Proposed Amended Complaint, Plaintiff asserts the following eight claims: (1) breach of contract; (2) breach of the covenant of misrepresentation; good (4) faith tortious and fair dealing; interference with (3) business relations; (5) violation of the New York Franchise Sales Act; (6) violation of the Massachusetts General Law Chapter 93A; (7) price discrimination under the federal Robinson-Patman Act; and (8) breach of fiduciary duty. DISCUSSION Under Federal Rule of Civil Procedure 15(a), the Court should freely grant parties leave to amend their pleadings “when justice so requires.” FED. R. CIV. P. 15(a)(2). Defendant argues that Plaintiff should not be permitted to amend its Complaint because the Proposed Amended Complaint is futile. course, is one circumstance under which Futility, of courts may deny plaintiffs leave to amend their complaints. E.g., Silverman Partners, 2d L.P. v. First Bank, 687 F. Supp. 269, 277-78 (E.D.N.Y. 2010). I. Legal Standard To determine whether an amended claim is futile, courts analyze whether the proposed pleading would withstand a motion to 12(b)(6). dismiss under Federal Rule of Civil Procedure E.g., Steel Institute of N.Y. v. City of N.Y., No. 6 09-CV-6539, 2010 WL 5060682, at *6 (S.D.N.Y. Dec. 2, 2010). survive a sufficient claim Rule 12(b)(6) factual [for] motion, allegations relief that is in a plaintiff the must complaint plausible on its to To plead “state face.” a Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974, 167 L. Ed. 2d 929, 949 (2007). The complaint does not need “detailed factual allegations,” but it demands “more than labels and conclusions, and a formulaic recitation the Id. at 555. elements of a cause of action will not do.” of In addition, the facts pleaded in the complaint “must be enough to raise a right Determining to relief whether a above the plaintiff speculative has met his level.” burden Id. is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” 572 F.3d 66, 72 (2d Cir. 2009). Harris v. Mills, On a motion to dismiss, a plaintiff gets the benefit of all reasonable inferences, see, e.g., Litwin v. Blackstone Group, L.P., 634 F.3d 706, 711 n.5 (2d Cir. 2011), but “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). As will become relevant later, when evaluating whether a complaint states a plausible claim, courts may consider “any written instrument statements or attached documents to it incorporated 7 as in an it exhibit by or any reference." Int'l. Audiotex Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995) (per curiam) (quoting Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991)). Further, “[e]ven where a document is not incorporated by reference, the court may nevertheless consider it where the complaint ‘relies heavily upon its terms and effect,’ which renders the document Int'l Audiotex, 62 F.3d at 72. ‘integral’ to the complaint.” II. Application to Plaintiff’s Proposed Amended Compliant After briefly addressing the governing law and a threshold issue concerning certain of Plaintiff’s allegations that are contradicted by the Agreement, the Court considers each claim in Plaintiff’s Proposed Amended Complaint. A. Governing Law Massachusetts contract dealing law governs and the covenant breach claims of because the Massachusetts law governs. Plaintiff’s Agreement of good faith expressly (Agreement 10.) breach of and fair provides that Absent allegations of fraud related to that choice-of-law provision or a violation of public policy, the Court will honor that clause. See Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 393 (2d Cir. 2001). Massachusetts law also governs Plaintiff’s claim under Massachusetts General Law Chapter 93A. Whether New York or Massachusetts law Plaintiff’s tort claims requires further discussion. governs “Under New York law . . . tort claims are outside the scope of contractual 8 choice-of-law provisions that specify what construction of the terms of the contract.” law governs Fin. One Pub. Co. v. Lehman Bros. Special Fin., Inc., 414 F.3d 325, 335 (2d Cir. 2005). A federal court exercising diversity jurisdiction must apply the choice of law analysis of the forum state. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 1021, 85 L. Ed. 1477 (1941); Dargahi v. Honda Lease Trust, 370 Fed. Appx. 172, 174 (2d Cir. 2010). The first step in New York’s conflict of laws approach is determining “whether there is an actual conflict between the laws of the jurisdictions involved.” 1993). In re All State Ins. Co., 613 N.E.2d 936, 937 (N.Y. If no actual conflict of laws “dispenses with the choice of law analysis.” exists, New York Intellivision v. Microsoft Corp., No. 07-CV-4079, 2008 U.S. Dist. LEXIS 63564 at *10 (S.D.N.Y. Aug. 20, 2008) (citing Curley v. AMR Corp., 153 F.3d 5, 12 (2d Cir. 1998). Where a conflict exists, New York employs two “choice of law analyses, one for contract claims, another for tort claims.” Fieger, 251 F.3d at 394. If there is no conflict, and “if New York law is among the relevant choices, New York courts are free to apply [New York law].” Int’l Bus. Mach. Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir. 2004). New York courts implement the “interest analysis” choice of law in tort claims. to Globalnet Financial.com, Inc. v. Frank Crystal & Co., 449 F.3d 377, 384 (2d Cir. 2006) (citing 9 Schultz v. Boy Scouts of Am., Inc., 480 N.E.2d 679 (N.Y. 1985)). New York’s torts choice of law analysis distinguishes torts that regulate conduct from those that involve loss allocation. “If conflicting conduct-regulating laws are at issue, the law of the jurisdiction because where that regulating the tort jurisdiction behavior within occurred has its will the generally greatest borders.” apply interest Cooney Mach., Inc., 612 N.E.2d 277, 280 (N.Y. 1993). v. in Osgood For conflict involving the “allocation of losses, the site of the tort is less important, and the parties’ domiciles are more important.” Globalnet Financial.com, Inc., 449 F.3d at 384-85. The applicable law for the misrepresentation, tortious interference with business relations, and breach of fiduciary duty claims will be each discussed, in turn. 1. Misrepresenation As to the misrepresentation claim, there is an actual conflict between New York and Massachusetts law. recognizes the torts of As misrepresentation. sounds in both fraudulent Plaintiff’s fraudulent inducement New York law and fraudulent misrepresentation inducement and claim fraudulent misrepresentation, each claim is subject to conflict of laws analysis. Under New York law, fraudulent inducement has four elements: “(i) representation, the (ii) defendant the defendant made a intended material to false defraud the plaintiff thereby, (iii) the plaintiff reasonably relied upon 10 the representation, and (iv) the plaintiff suffered damage as a result of such reliance.” Holdings, Inc., 690 F. Maxim Group LLC v. Life Partners Supp. (internal citation omitted). 2d 293, 306 (S.D.N.Y. 2010) New York law also requires that a fraud claim raised in a case stemming from breach of contract be “sufficiently distinct from the breach of contract claim.” Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 20 (2d Cir. 1996) (quoting Papa's-June Music, Inc. v. McLean, 921 F. Supp. 1154, 1162 (S.D.N.Y. 1996)). More specifically, under New York law, “where a fraud claim arises out of the same facts as plaintiff's breach of contract claim, with the addition only of an allegation that defendant never intended to perform the precise promises spelled out in the contract between the parties, the fraud claim is redundant and plaintiff's sole remedy is for breach of contract.” See Sudul v. Computing Outsourcing Servs., 868 F. Supp. 59, 62 (S.D.N.Y. 1994) (discussing a line of New York cases). In order to preserve its claim of fraud in such a situation, a plaintiff must either: “(i) demonstrate a legal duty separate from the duty to perform fraudulent under the misrepresentation contract; or collateral or (ii) demonstrate extraneous to a the contract; or (iii) seek special damages that are caused by the misrepresentation and Bridgestone/Firestone, unrecoverable 98 F.3d omitted). 11 at as 20 contract damages.” (internal citations Massachusetts’ elements. There, a allegedly fraudulent equivalent plaintiff statement tort, must was deceit, has plead: “(1) knowingly false; similar that (2) the that defendant made the false statement with intent to deceive; (3) that the statement was material to plaintiff's decision to sign the contract; (4) that plaintiff reasonably relied on the statement; and (5) that plaintiff was injured as a result of its reliance.” Cheng v. Sunoco, Inc., No. 09-40041-FDS, 2010 U.S. Dist. LEXIS 135576, at *9 (D. Mass. Dec. 22, 2010) (citing Kenda Corp., Inc. v. Pot O’Gold Money Leagues, Inc., 329 F.3d 216, 225 (1st Cir. 2003)). However, a survey of Massachusetts law does not turn up a similar bar of fraudulent inducement claims where a breach of contract claim is asserted. Therefore, as to a fraudulent inducement claim, New York and Massachusetts law have an actual conflict. Under New York law, a plaintiff asserting fraudulent misrepresentation must plead five elements: "(1) a material misrepresentation or omission of fact, (2) made with knowledge of its falsity, reasonable (3) reliance on with the an part causes damage to the plaintiff." intent of to the defraud, plaintiff, and (5) (4) that Gladstone Bus. Loan, LLC v. Randa Corp., No. 09-CV-4225, 2009 U.S. Dist. LEXIS 72575, at *9 (S.D.N.Y. Aug. 17, 2009) (quoting Schlaifer Nance & Co. v. Estate of Andy Warhol, 119 F.3d 91, 98 (2d Cir. 1997)). claim is considered intentional 12 misrepresentation This in Massachusetts, which requires: “1) the defendants knowingly made a false statement of material fact, 2) the defendants intended that it be relied on by [plaintiff] and 3) [plaintiff] actually and reasonably relied on the statement.” United Air Lines, Inc. v. Gregory, 716 F. Supp. 2d 79, 84 (D. Mass. 2010) (referencing Zimmerman v. Kent, 575 N.E.2d 70, 74 (Mass. App. Ct. 1991)). While titled differently, New York and Massachusetts law for fraudulent misrepresentation have common elements and present no actual conflict of law. No matter the flavor, Plaintiff’s misrepresentation claim is a conduct-regulating tort. See Mark Andrew of the Palm Beaches, Ltd. v. GMAC Commercial Mortg. Corp., 265 F. Supp. 2d 366, 378 (S.D.N.Y. 2003) (noting fraud rules are conduct regulating), aff'd, 96 Fed. Appx. 750 (2d Cir. 2004); La Luna Enterp., Inc. v. CBS Corp., 74 F. Supp. 2d 384, 389 (S.D.N.Y. 1999) (same). As such, “[a] cause of action for fraud arises where the loss is sustained and that loss from fraud is deemed to be suffered where its economic impact is felt, normally, the plaintiff’s residence.” Intellivision, 2008 U.S. Dist. LEXIS 63664, at *16 (quoting Sack v. V.T. Low, 478 F.2d 360, 366 (2d Cir. 1973). So, even if Defendant made any of the alleged misrepresentations from its Massachusetts offices, because their economic impact was suffered Plaintiff’s misrepresentation “fraudulent inducement,” New by Plaintiff claim York 13 is law in New construed controls as the York, one if for analysis. Cantor Fitzgerald v. Lutnick, 313 F.3d 704, 710 (2d Cir. 2002). Because there is no actual conflict of law if Plaintiff’s misrepresentation claim is considered as one for “fraudulent” or “intentional” misrepresentation, and New York is a relevant jurisdiction, the Court will apply New York law to that claim. Int’l Bus. Mach. Corp., 363 F.3d at 143. 2. Tortious Interference As to the tortious interference with business relations claim, no actual conflict between the laws of New York and Massachusetts exists. Under New York law, a claim for tortious interference with business relations requires: (1) “[A] business relationship between the plaintiff and a third party; (2) the defendant, knowing of that relationship, intentionally interferes with it[;] (3) the defendant acts with the sole purpose of harming the plaintiff, or, failing that level of malice, uses dishonest, unfair, or improper means; and (4) the relationship is injured.” Discover Group, Inc. v. Lexmark Int'l, Inc., 333 F. Supp. 2d 78, 86 (E.D.N.Y. 2004) (citing Goldhirsh Grp. v. Alpert, 107 F.3d 105, 108-09 (2d Cir. 1997)). Improper means include “physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure; they do not, however, include persuasion alone interference Fleet/Norstar with Fin. although the it is contract.” Group, 664 14 N.E.2d knowingly NBT 492, directed Bancorp, 497 Inc. (N.Y. at v. 1996) (quoting Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 406 N.E.2d 445, 449 (N.Y. 1980)). Massachusetts’ equivalent tort, tortious interference with advantageous business relationships, has four elements: “(1) the plaintiff was involved in a business relationship defendant or knew anticipated about the involvement relationship, in one, (3) the (2) the defendant intentionally interfered with the relationship for an improper purpose or by an improper means and (4) the plaintiff suffered damages as a result.” Int'l Floor Crafts, Inc. v. Adams, 477 F. Supp. 2d 336, 339 (D. Mass. 2007) (citing Pembroke Country Club, Inc. v. Regency Sav. Bank, F.S.B., 815 N.E.2d 241, 245 (Mass. App. Ct. 2004)). The elements identical in both states. for the tort are virtually As there is no actual conflict of law, and given that Plaintiff is a New York business and filed suit here, the Court will apply New York law. See Int’l Bus. Mach. Corp., 363 F.3d at 143. 3. Breach of Fiduciary Duty As to breach of fiduciary duty, there is no conflict between New York and Massachusetts law. Under New York law, to prevail on a breach of fiduciary duty claim, “a plaintiff must prove the existence of a fiduciary relationship, misconduct by the defendant, and damages that were directly caused by the defendant's misconduct.” Guarino v. No. Country Mortg. Banking Corp., 79 A.D.3d 805, 807, 915 N.Y.S.2d 84 (2d Dep’t 2010). Similarly, under Massachusetts 15 law, a claim for breach of fiduciary duty requires “1) existence of a fiduciary duty arising from a relationship between the parties, 2) breach of that duty, 3) damages and 4) a causal relationship between the breach and the damages." Qestec, Inc. v. Krummenacker, 367 F. Supp. 2d 89, 97 (D. Mass. 2005) (citing Hanover Ins. Co. v. Sutton, 705 N.E.2d 279, 288-89 (Mass. App. Ct. 1999)). elements are identical. Thus, consistent with the The tortious interference with business relations claim, the Court will apply New York law. See Int’l Bus. Mach. Corp., 363 F.3d at 143. So, to summarize, the torts evaluated by conflict of laws analysis: misrepresentation, tortious interference with business relations, and breach of fiduciary duty will be evaluated under New York law, which also controls Plaintiff’s Franchise Sales Act claim. Federal law applies to Plaintiff’s Robinson-Patman Act claim. B. Contradictory Allegations At the outset, the Court addresses Defendant’s argument that certain of Plaintiff’s allegations contradict the plain language disregarded. of the (Def. Agreement Opp. 4-7.) and must Defendant therefore advances be five arguments under this theory. First, Defendant maintains that Plaintiff’s allegations concerning oral modifications to the Agreement must be ignored because they are expressly 16 contradicted by the Agreement, which provides that the “Agreement may be amended or modified only by written instrument signed by the Distributor and by a duly (Agreement authorized 10.) modifications provisions Massachusetts to Cambridgeport Sav. (Mass. (“[A] amended orally necessarily to Bank oral however, by [Defendant].” permits notwithstanding such Boersner, v. only of prohibit 597 provision but bar law, contracts purporting 1992) Distributor that a an modification of contractual changes. N.E.2d agreement written See 1017, may instrument the oral 1022 not does contract.”); be not accord Josef Gartner USA LP v. Consigli Constr. Co., Civ. No. 10-40072FDS, 2011 U.S. Dist. LEXIS 62492, at *21-22 (D. Mass. 2011) (citing Cambridgeport Sav. Bank). “The evidence of a subsequent oral modification must be of sufficient force to overcome the presumption that the integrated and complete agreement, which requires written consent to modification, expresses the intent of the parties.” Cambridgeport Sav. Bank, 597 N.E.2d at 1022, n.10; see also Wells Fargo Bus. Credit v. Environamics Corp., 934 N.E.2d 283, 287 (Mass. App. Ct. 2010). In light of Cambridgeport, the Court also rejects Defendant’s argument that the Agreement’s modification waiver of waiver allegations. any provision provision That shall prohibits clause be 17 provides effective writing and signed by the waiving party.” Plaintiff’s that unless oral “[n]o made (Agreement § 15.) in Second, Defendant argues that the Court must reject Plaintiff’s because “partnership” the Agreement contentions, provides (PAC that ¶¶ “[i]t 24-29, is 148), expressly understood and agreed by the parties that the Distributor is an independent contractor . . . and nothing contained in this Agreement is intended, or shall be construed, to constitute the Distributor as the . . . partner . . . of LoJack” (Agreement § 4.1). (Def. Opp. 6.) “If the documents referenced in the complaint contradict the facts alleged by the plaintiff, the documents control and the court need not accept as true the plaintiff's allegations.” Mazza Consulting Grp., Inc. v. Canam Steel Corp., No. 08-CV-0038 (NGG), 2008 U.S. Dist. LEXIS 32670, at *3 (E.D.N.Y. Apr. 21, 2008); see also Cortec Indus., Inc. v. Sum Holding allegations L.P., of a 949 F.2d 42, partnership 47 are (2d Cir. expressly 1991). precluded Since in the Agreement, the Court will ignore that allegation. Third, Defendant argues that Plaintiff’s claims regarding “best price” (PAC ¶¶ 10, 79, 83-84, 87, 91, 102-03, 109, and 119), “lowest price” (PAC ¶¶ 32, 44, 51, 73, and 79), or its explaining changes in price (PAC ¶ 148) should all be disregarded as contradictory of Section 6.1 of the Agreement. This section states the initial price for each unit ($200), size of each order, and payment terms, and it grants Defendant the right to change written notice. the price after a certain time period with The Agreement in its entirety is silent as to 18 qualitative aspects of the price term. Therefore, the Court will consider GLM’s allegations as to contract modification as it relates to the quality of the price. Fourth, Defendant argues that allegations concerning oral statements that were made prior to the execution of the Agreement, (PAC ¶¶ 24, 26), must be ignored in light of the Agreement’s integration clause (Def. Opp. 7). Section 17 provides that the Agreement “constitute[d] the entire agreement between the parties and supersedes all prior agreements, whether written or oral,” and the Court here agrees that Plaintiff cannot now rely on statements allegedly made prior to signing the Agreement. In Massachusetts, “[w]here the writing shows on its face that it is the entire agreement of the parties and ‘comprises all that is necessary to constitute a contract, it is presumed that they have placed the terms of their bargain in this form to prevent misunderstanding and dispute, intending it to be a complete and final statement of the whole transaction.’” Bendetson v. Coolidge, 390 N.E.2d 1124, 1127 (Mass. App. Ct. 1979) (quoting Glackin v. Bennett, 115 N.E. 490, 491 (Mass. 1917)); (D. Agri-Mark, Inc. v. Niro, Inc., 233 F. Supp. 2d 200, 208 Mass. 2002) (quoting Elias Bros. Rests., Inc. v. Enterp., Inc., 831 F. Supp. 920, 927 (D. Mass. 1993)). Acorn As Massachusetts enforces integration clauses, all references to discussions prior to the execution of the Agreement must be disregarded. See Agri-Mark, 233 F. Supp. 2d at 208. 19 Fifth, Defendant argues that Plaintiff’s allegations that Defendant controlled Plaintiff’s business operations, (PAC ¶¶ 33-36) must be discounted (Def. Opp. 7). The Court agrees. Section “nothing 4.1 Agreement of is the Agreement intended, or states shall that be construed . in . this . as constituting the exercise by LoJack of control or direction over the manner or method by which Distributor performs the services which are the subject of this Agreement.” Further, Section 5 of the Agreement provides that LoJack would give GLM organizational and sales training, and assist GLM in selling its product to dealers. first This category of statements is different from the category of contradictory statements in that Plaintiff makes no allegations in the PAC of after-the-fact discussions, written or oral, that demonstrate that Defendant would control Plaintiff. Those provisions that Plaintiff characterizes as Defendant’s control over it are merely obligations Defendant had undertaken already as part of the Agreement. To summarize, the Court will ignore allegations concerning (i) Plaintiff’s partnership with Defendant; (ii) preAgreement statements relating to that alleged partnership; and (iii) Defendant’s purported control over Plaintiff’s business operations. It will consider, and assume to be true for the purposes of this motion, Plaintiff’s allegations concerning oral modifications to the Agreement aspects. 20 and the qualitative price C. Plaintiff’s Claims Below, the Court addresses each of Plaintiff’s eight claims. 1. Breach of Contract Plaintiff Under has Massachusetts stated law, a breach plaintiffs of must contract allege claim. (1) the existence of a valid and binding agreement; (2) the defendant's breach; and (3) damages resulting from the breach. Coll v. PB Diagnostic Sys., Inc., 50 F.3d 1115, 1122 (1st Cir. 1995). The parties do not contest the existence of the Agreement, but they dispute whether the oral modifications that comprise the grounds for breach were made. Here, Plaintiff asserts that Defendant breached the Agreement by failing to provide its “best price” to GLM; refusing to provide GLM with product unless it paid in advance; and, after the Agreement was terminated, not crediting its account for returned product and failing to pay it $50 per unit sold to dealers in Plaintiff’s territory for six months post termination. And, although they are not quantified in the Proposed Amended Compliant, Plaintiff’s damages include harm to Plaintiff’s goodwill. Defendant argues that the proposed amendment is futile for two reasons. post-termination First, it rejects the notion that it had any obligations to Plaintiff. Defendant claims that it, by a October 22, 2010 letter, validly terminated the Agreement for cause because Plaintiff’s 21 substantial overdue balance was a material breach. (Def. Opp. 8.) Defendant maintains that, because it terminated the Agreement for cause, it had no post-termination obligations under Section 12.5 of the contract. parties (Id.) had In light of Plaintiff’s allegations that the extended Plaintiff’s credit terms to 120 days, however, it is not clear whether Plaintiff had an outstanding balance and thus whether Agreement for cause. did not Defendant validly terminated the Accordingly, Defendant’s October 22 letter necessarily absolve it of its post-termination obligations, and Plaintiff’s breach of contract claim cannot be called futile on this ground. Second, Defendant relies on the arguments it made in its motion to dismiss Plaintiff’s original Complaint. Opp. 9.) (Def. These arguments principally concern those allegations that supposedly contradict the Agreement and should be ignored. The Court addressed the thrust of this argument, supra at 11, and need not do so again. Suffice it to say here that Plaintiff alleges that Defendant orally agreed to lower its pricing and extend Plaintiff’s credit terms, and that Defendant payments that reflected these modifications. accepted (See supra at 3- 4.) 2. Breach of Covenant of Good Faith and Fair Dealing Plaintiff has also stated a claim for breach of the covenant of good faith and fair dealing. faith and fair dealing is implied 22 in “The covenant of good every contract.” Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 805 N.E.2d 957, 964 (Mass. 2004). The covenant requires that "neither party shall do anything that will have the effect of destroying or injuring the right of the other party to the fruits of the contract." Anthony's Pier Four, Inc. v. HBC Assocs., 583 N.E.2d 806, 820 (Mass. 1991) (quoting Drucker v. Roland Wm. Jutras Assocs., 348 N.E.2d 763, 765 (Mass. 1976)). There is no requirement that bad faith be shown; instead, plaintiffs have the burden of proving a lack of good faith. N.E.2d 1153, 1160 (Mass. 2000). Nile v. Nile, 734 The Court looks to the party's manner of performance and can infer a lack of good faith from the totality of the circumstances. See Ayash v. Dana-Farber Cancer Inst., 822 N.E.2d 667, 684 (Mass. 2005), cert. denied sub nom. Globe Newspaper Co. v. Ayash, 546 U.S. 927, 126 S. Ct 397, 163 L. Ed. 2d 275 (2005). Here, Plaintiff claims that Defendant did not sell Plaintiff its SVRU product at its “best price,” was dishonest in telling Plaintiff that it was, and sold their SVRUs at cheaper prices to other dealers. (PAC ¶ 91.) Plaintiff further alleges that upon hearing that its tactics may be hurting Plaintiff’s business, Defendant’s Director of Sales for New York and New Jersey commented, “F*ck GLM.” that the proposed amendment (PAC ¶ 60.) is futile for Defendant argues the same reasons discussed and rejected already: that the plain language of the 23 Agreement forecloses allegations of oral modifications. (Def. Opp. 11-12.) 3. Misrepresentation Plaintiff alleges that Defendant knowingly misrepresented that it would charge and was charging Plaintiff its “best price” for the SVRU products and that Plaintiff relied on those representations, reducing its business relationships with other Defendant manufacturers cumulative was not effect and assuring undercutting of Defendant’s its customers Plaintiff’s alleged prices. behavior Plaintiff’s business reputation and relationships. 107.) that The injured (PAC ¶¶ 104- Whether characterized as one for fraudulent inducement or fraudulent misrepresentation, Plaintiff’s claim fails as a matter of law. a. “Under Fraudulent Inducement New York law, in order to prove fraudulent inducement, a plaintiff must show that: ‘(i) the defendant made a material false representation, (ii) the defendant intended to defraud the plaintiff thereby, (iii) the plaintiff reasonably relied upon the representation, and (iv) the plaintiff suffered damage as a result of such reliance.’” Xcellence, Inc. v. Arkin Kaplan Rice LLP, No. 10-CV-3304, 2011 U.S. Dist. LEXIS 26533, at *10-11 (S.D.N.Y. Mar. 15, 2011) (quoting Maxim Grp. LLC v. Life Partners Holdings, Inc., 690 F. Supp. 2d 293, 306 (S.D.N.Y. 2010)). Additionally, Rule 9(b) requires that when “alleging 24 fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. knowledge, and other alleged generally.” conditions of a Malice, intent, person's FED. R. CIV. P. 9(b). mind may be Under the heightened pleading standard of Rule 9(b), a plaintiff “‘must (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.’” Watral v. Silvernails Farm LLC, 51 Fed. Appx. 62, 65 (2d Cir. 2002) (quoting Anatian v. Coutts Bank (Switz.) Ltd., 193 F.3d 85, 88 (2d Cir. 1999)). New York law distinguishes between "a claim based on fraudulent inducement of a contract" and a breach of contract claim. Merrill Lynch & Co. Inc. v. Allegheny Energy, Inc., 500 F.3d 171, 184 (2d Cir. 2007). “Merely falsely indicating an intent to perform under a contract [in the future] ‘is not sufficient to support a claim of fraud under New York law.’” AXA Versicherung AG v. N.H. Ins. Co., 708 F. Supp. 2d 423, 429 (S.D.N.Y. 2010) (quoting Plaintiff Bridgestone/Firestone, 98 F.3d at 19. cannot state a claim for fraudulent inducement because, to the extent it claims that Defendant’s assurance reason it that it entered would into enjoy the Defendant’s Agreement, “best Plaintiff’s precluded by the Agreement’s integration clause. forecloses Plaintiff’s reliance 25 on price” statements theory was is That clause outside the Agreement that were made prior to the Agreement. alleged statements, then, were representations Defendant’s of a future intent to perform.1 b. Fraudulent Misrepresentation Even if Plaintiff’s claim were construed as a fraudulent misrepresentation claim, its proposed amendment is still futile. As discussed earlier, in New York, fraudulent misrepresentation has five elements: “(1) a material misrepresentation or omission of fact, (2) made with knowledge of its falsity, reasonable (3) reliance on with the an intent part of to the defraud, plaintiff, and (5) (4) that Gladstone Bus. Loan, LLC, 2009 causes damage to the plaintiff.” U.S. Dist. LEXIS 72575, at *9 (citation omitted). The Second Circuit has noted that, under New York law, allegations of breach of contract covenants do not sound in fraud. and their related implied Rodriguez v. It’s Just Lunch, No. 07-CV-9927, 2010 U.S. Dist. LEXIS 16622, at *13 (S.D.N.Y. Feb. 23, 2010) (referencing Telecom Int'l Am., Ltd. v. AT&T Corp., 280 F.3d 175, 196 (2d Cir. 2001), adding “the fraud claim is redundant and plaintiff's sole remedy is for breach of contract.”); see also J.M. Bldrs. & Assocs., Inc. v. Lindner, 67 A.D.3d 738, 741-742, 889 N.Y.S.2d 60 (N.Y. App. Div. 2d Dep’t 1 Nor do any of the allegations in the PAC suggest that Defendant represented to Plaintiff that it would receive its “best price” when the alleged oral modifications to the Agreement (starting in 2008) took place. 26 2009). To state a fraud claim apart from the parties’ contract, a plaintiff must either “(i) demonstrate a legal duty separate from the duty to perform under the contract, . . . or (ii) demonstrate a fraudulent misrepresentation extraneous to the contract.” 20; collateral or Bridgestone/Firestone, 98 F.3d at see also TVT Records v. Island Def Jam Music Grp., 412 F.3d 82, 91 (2d Cir. 2005). Plaintiff meets neither of these requirements. First, Plaintiff pegs its hopes on an external fiduciary duty resulting from a partnership discussed misrepresentation contract one of case alleged Defendant infra, from the contract. Second, as owed the PAC, Plaintiff but no for duties reasons separate Nor does Plaintiff allege any fraudulent collateral the is in central that or extraneous claims Defendant, of under to the Plaintiff’s an contract. breach amendment to Agreement, failed to charge Plaintiff its “best price.” of the Under New York law, “[a] cause of action alleging fraud does not lie where the only fraud claim relates to a breach of contract.” J.M. Bldrs. & Assoc., 67 A.D.3d 738 at 741-742 (quoting WIT Holding Corp. v. Klein, 282 A.D.2d 527, 528, 724 N.Y.S.2d 66 (1st Dep’t 2001)); see also Bridgestone/Firestone, 98 F.3d at 19-20. Plaintiff cannot allegations into a tort. morph its breach of contract Contemporary Mission, Inc. v. Bonded Mailings, Inc., 671 F.2d 81, 85 (2d Cir. 1982) (“If the only 27 interest involved, however, is holding a party to a promise, a plaintiff will not be permitted to transform the contract claim into one for tort.”) Thus, the misrepresentation claim is redundant of the breach of contract claim, and amendment is denied as futile. 4. Tortious Interference with Business Relations Plaintiff also fails to state a claim for tortious interference with business relations. Plaintiff’s theory is that Defendant interefered with Plaintiff’s relationships with its dealership customers by, among other things, misrepresenting its pricing policies to Plaintiff knowing that Plaintiff would in turn misrepresent those policies to Plaintiff’s customers. (See PAC ¶¶ 94-100.) Stated earlier, tortious interference with business relations has four elements: “(1) . . . a business relationship between the plaintiff and a third party; (2) the defendant, knowing of that relationship, intentionally interferes with it; (3) the defendant acts with the sole purpose of harming the plaintiff, or, failing that level of malice, uses dishonest, unfair, or improper means; and (4) the relationship is injured.” Discover Group, Inc., 333 F. Supp. 2d at 86. Examples of improper means are: “physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure; they do not, however, include persuasion alone although it interference with the contract.” 28 is knowingly directed at NBT Bancorp, 664 N.E.2d at 497 (quoting Guard-Life, 406 N.E.2d at 449.) “Even if the interference was intended, if defendant acted in part to advance his own interests the claim must fail.” H & R Kirshner, 899 F. Supp. 995, 1009 (E.D.N.Y. 1995); Indus. v. see also, RFP, LLC v. SCVNGR, Inc., No. 10-CV-8159, 2011 U.S. Dist. LEXIS 50730 (S.D.N.Y. May 12, 2011). The Court agrees with Defendnat that Plaintiff has not adequately alleged that its customers would have continued to do business with it but for Defendant’s See M.J. & K. Co., Inc. v. Matthew alleged misrepresentation. Bender and Co., Inc., 220 A.D.2d 488, 490, Dep’t 1995). 631 N.Y.S.2d 938 (2d Plaintiff will be permitted to replead this claim. 5. Violation of the New York Franchise Sales Act Plaintiff’s proposed amended New York Franchise Sales Act (the statute “FSA”) are claim subject to is a futile, because three-year N.Y. GEN. BUS. L. § 691(4). claims statute of under this limitations. A franchise is an agreement “either expressed or implied, whether oral or written . . .” that grants the franchisee the right to offer, sell, or distribute goods or services “under a marketing plan” or “substantially associated with the franchisor’s trademark . . . trade name . . . logotype, advertising, or other commercial symbol designating the franchisor . . . and the franchise is required to pay, directly or indirectly, a franchise fee.” Id. § 681(3)(a)-(b). In connection with the sale of any franchise, the FSA prohibits employing any “device, scheme or artifice to defraud,” making 29 “any untrue statement of” or failing to state “a material fact,” and engaging “in any [fraudulent or deceitful] act, practice, or course of business.” Id. § 687(2)(a)-(c). In an attempt to characterize its FSA claim as timely, Plaintiff argues that the 2002 Agreement blossomed into a franchise in 2008 when Plaintiff discovered that Defendant was charging Plaintiff a higher price than what it was charging Defendant’s direct dealer customers. (Pl. Reply 8.) The price differential, according to Plaintiff, was a “hidden franchise fee.” (Id.) Plaintiff offers no authority in support of this novel theory and the Court has found none. The alleged “hidden fee” without more--e.g., a franchise agreement or registration-is insufficient to state a claim under the FSA. Accordingly, See United Magazine leave to amend is denied as to this claim. Co. v. Murdoch Magazines Distrib., Inc., 146 F. Supp. 2d 385, 407 (S.D.N.Y. 2001) (“The Court concludes, consistent with the majority of the cases . . ., that the statute of limitations begins to run at the time that the parties first enter into the franchise agreement.”) aff’d 279 Fed. Appx. 14 (2d Cir. 2008). 6. Massachusetts Geneneral Law Ch. 93A Plaintiff’s sixth claim is for unfair trade practices under Massachusetts General Law Chapter 93A (“Chapter 93A”). This statute provides in relevant part that “[n]o action shall be . . . maintained . . . unless the actions and transactions constituting the alleged . . . 30 unfair or deceptive act or practice occurred [Massachusetts].” primarily and substantially (Chapter 93A § 11.) within Defendant argues that Plaintiff cannot satisfy this requirement. Three competition elements claim. comprise plaintiff “[A] a Chapter must 93A establish unfair that the alleged offending act was (1) within at least the penumbra of common law, statutory law or other established concepts of unfairness, (2) is immoral or otherwise unscrupulous, and (3) inflicted injury on another business.’” Rohm & Haas Elec. Materials, LLC v. Elec. Circuits Supplies, Inc., 759 F. Supp. 2d 110, 123 (D. Mass. 2010) (quoting Franklin v. Ciroli, 865 F. Supp. 940, 947 n.18 (D. Mass. 1994)); see also PMP Assocs., Inc. v. Globe Newspaper Unfairness is Co., determined 321 by N.E.2d 915, 917 Massachusetts’ (Mass. 1975). “rascality” test: “[t]he objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble world of commerce.” Wellons, Inc., 246 F.3d St.-Gobain Indus. Ceramics, Inc. v. 64, 73 (1st Cir. 2001) (quoting Cambridge Plating Co. v. Napco, Inc., 85 F.3d 752, 769 (1st Cir. 1996)). Plaintiff’s claim under Chapter 93A is derivative of the breach of contract and misrepresentation claims. Plaintiffs do not identify a single fact critical to their Chapter 93A claim that is not also central to the breach of contract, its implied covenant of good faith 31 and fair dealing, and misrepresentation claims. Breach of a contract alone (and its implied covenant of good faith and fair dealing) is insufficient to maintain a claim under section Massachusetts General Laws. 759 F. Supp. 2d at 123. matter of law. Chapter 93A of Chapter 93A of the Rohm & Haas Elec. Materials, LLC, The misrepresentation claim fails as a See supra at 28. claims 2 are based “To the extent a party's only on failed common law or statutory grounds, several courts have refused to find Chapter 93A liability.” Prof’l Servs. Grp., Inc. v. Town of Rockland, 515 F. Supp. 2d 179, 194 (D. Mass. 2007). offending act within “at least the Absent a baseline penumbra of common law, statutory law or other established concepts of unfairness,” the Chapter 93A claim fails, as well. Plaintiff’s proposed amended claim is denied as futile. 7. The Robinson-Patman Act Plaintiff’s state a claim for proposed a price Robinson-Patman act. To plaintiff allege that must allegations do survive (i) a a motion suffice claim discrimination not under to dismiss, “commodity” was sold to the a in interstate commerce to at least two buyers; (ii) the commodity sold to the disfavored purchaser was of “like grade and quality” to that sold to the favored purchaser; (iii) the seller “discriminate[d] in price between” the favored and disfavored purchaser; and (iv) that discrimination had a prohibited effect 32 on competition. 15 U.S.C. § 13(a); Texaco v. Hasbrouck, 496 U.S. 543, 556, 110 S. Ct. 2535, 110 L. Ed. 2d 492 (1990). “Price discrimination claims brought pursuant Section 2(a) ‘generally fall into three categories.’” to Dayton Superior Corp. v. Marjam Supply Co., No. 07-CV-5215, 2011 U.S. Dist. LEXIS 17221, at *13-*14 (E.D.N.Y. Feb. 22, 2011) (quoting George Haug Co., Inc. v. Rolls Royce Motor Cars Inc., 148 F.3d 136, 141 claims n.2 arise (2d Cir. “when a 1998)). seller's Primary-line price discrimination discrimination competition with the seller's competitors.” harms George Haug, 148 F.3d at 141 n.2; (citing Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 220, 113 S. Ct. 2578, 125 L. Ed. 2d 168 (1993). Secondary-line discrimination claims arise when a seller's discrimination impacts competition among the seller's customers--i.e., purchasers. the favored purchasers and disfavored Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 176, 126 S. Ct. 860, 163 L. Ed. 2d 663 (2006). Tertiary-line claims arise “when the seller's price discrimination harms competition between customers of the favored and disfavored purchasers, even though the favored and disfavored purchasers do not compete directly against another.” George Haug, 148 F.3d at 141 n.2 (citing Falls City Indus., Inc. v. Vanco Beverage, Inc., 460 U.S. 428, 436, 103 S. Ct. 1282, 75 L. Ed. 2d 174 (1983)). 33 Here, Plaintiff’s allegations sound in secondary- and tertiary-line price discrimination, but it has not adequately alleged a discriminatory effect on competition. Plaintiff’s theory is seemingly that Defendant favored its direct dealership customers with lower prices for its security systems, and that the higher prices Defendant charged Plaintiff in turn inhibited Plaintiff’s re-sales to Plaintiff’s dealership customers. Plaintiff’s tertiary-line theory appears to be that as a result of the price discrepancies Defendant put Plaintiff’s dealer customers at a disadvantage vis-a-vis Defendant’s direct dealer customers. Plaintiff’s customers lost automobile sales due to the substantially higher price they had to pay for Defendant’s security systems. (See PAC ¶ 138.) in turn, lost business. Plaintiff contends that it, (PAC ¶ 136.) “A hallmark of the requisite competitive injury . . . is the diversion of sales or profits from a disfavored purchaser to a favored purchaser.” Volvo, 546 U.S. at 175 (citing FTC v. Sun Oil Co., 371 U.S. 505, 518-19, 83 S. Ct. 358, 9 L. Ed. 2d 466 (1963)). come up short. (1) Plaintiff Plaintiff’s allegations of discriminatory effect For example, there are no facts suggesting that tried to sell to any of Defendant’s direct dealers; (2) Plaintiff’s dealers and Defendant’s direct dealers were in competition for the same customers; (3) automobile dealers charge different prices for Defendant’s security systems based on the prices the dealers must pay; or (4) the different 34 prices paid by the dealerships had a meaningful impact on automobile sales. As set forth in its Proposed Amended Complaint, Plaintiff’s Robinson-Patman claim would not survive a motion to dismiss. The Court will afford Plaintiff one more chance to re- plead it. 8. Breach of Fiduciary Duty Plaintiff’s Proposed Amended Complaint adds a claim for breach of fiduciary duty. Specifically, Plaintiff alleges that it and Defendant “by their words and deeds were or became partners” and that Defendant breached its duty of loyalty under that partnership by lying about its pricing, undercutting its agreed price, disparaging Plaintiff, disregarding its own code of ethics, and elevating its own interests above the interest of GLM. (PAC ¶¶ 148.) To plaintiff state must Leave to amend to add this claim is denied. a allege claim 1) for the breach existence of of fiduciary a duty, fiduciary a duty arising from a relationship between the parties, 2) a breach of that duty, 3) damages, and 4) causation. See Regan v. Conway, 768 F. Supp. 2d 401, 410 (E.D.N.Y. 2010) (citing Ozelkan v. Tyree Bros. Envtl. Servs. Inc., 29 A.D.3d 877, 879, 815 N.Y.S.2d 265 (2d Dep’t 2006) and Fitzpatrick House III L.L.C. v. Neighborhood Youth & Family Services, 55 A.D.3d 664, 664, 868 N.Y.S.2d 212 (2d Dep’t 2008)). Plaintiff contends that “by their words and deeds were or became partners.” 35 (PAC ¶ 148.) Any suggestion that the Agreement created a partnership obligation is foreclosed by language of the Agreement itself. See supra at 18. Nor can Plaintiff assert a “partnership by estoppel” claim. arise where partnership (1) Under New York law, partnerships by estoppel . a . . defendant to presents constitute indicia representation a “sufficient that of the partnership exists” and (2) “injured party must have relied on this representation to his or her detriment.” First Am. Corp. v. Price Waterhouse LLP, 988 F. Supp. 353, 358 (S.D.N.Y. 1997). Here, the “words partnership Agreement, and were, which deeds” for the explicitly Plaintiff most relies part, disavowed a on to required claim under partnership. a the (E.g., Agreement §§ 3.1 (stating that “[o]nly those employees of the Distributor [Plaintiff] and its Affiliates who have been trained . . . are authorized to install [Defendant’s] SVRU), 3.2 (providing that Defendant “may perform or have performed in its behalf background investigation checks on the employees of the Distributor [Plaintiff]); 3.6 (“[Defendant] will provide initial and ongoing training and technical support to Distributor during the term of this Agreement”); 5 (“[Defendant] shall assist Distributor in organizational and sales training, development matters and [Defendant’s] shall work with products to (permitting, generally, the advertising, while clearly the Distributor automobile use of 36 dealers”), Defendant’s delineating in selling and trademarks ownership of such 10 in as Defendant’s and requiring distributors to return to Defendant all sales materials and business papers trademark upon Agreement termination)). bearing Defendant’s To the extent Plaintiff relies on Defendant’s announcing a new “partnership” in a letter to car dealers in the New York area, this allegation does not raise a plausible claim of justifiable reliance because the letter was sent “immediately” after the parties executed the Agreement, which included explicit “no partnership” language. ¶ 25.)2 (PAC CONCLUSION For leave to the file an DENIED IN PART. foregoing Amended reasons, Complaint Plaintiff’s is GRANTED motion AND for PART AND Within twenty-one (21) days from the date of this Order, Plaintiff shall file its Amended Complaint, which may assert the breach of contract and breach of the covenant of good faith and fair dealing Proposed Amended Complaint. may re-plead relations Plaintiff’s and Plaintiff’s claims tortious Act misrepresentation, New General Law Chapter interference claims. York part 93A with Leave Franchise claims fiduciary duty claims is denied as futile. 2 were of its In addition, the Amended Complaint Robinson-Patman Massachusetts that and business to amend Sales Act, breach of Defendant’s pending The Court would reach the same result under Massachusetts law. See Andrews v. Elwell, 367 F. Supp. 2d 35, 39-42 (D. Mass. 2005) (listing elements to a partnership-by-estoppel). 37 motion to dismiss Plaintiff’s original Complaint (Docket Entry 14) is DENIED as moot. SO ORDERED. /s/ JOANNA SEYBERT______ Joanna Seybert, U.S.D.J. Dated: September 30 , 2011 Central Islip, New York 38

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