BL Restaurant Operations, LLC v. 701 America, Inc.
1:11-cv-06285
S.D.N.Y.Feb 14, 2012Background
- BL Restaurant Operations, LLC purchased Bar Louie assets for about $35.8 million, acquiring restaurants across twelve states and DC.
- PL plaintiff asserted breach of contract/covenants (Count I), breach of indemnity obligations (Count II), declaratory judgment (Count III), and breach of contract relating to a Transition Services Agreement (Count IV).
- Defendants (701 America, related entities, and individuals) counterclaimed for employment breaches (Greenfield and Kasemir), breach of the APA (Counterclaim III), fraudulent inducement (Counterclaim IV), tortious interference with contract (Counterclaim V), and breach of the Note (Counterclaim VI).
- Two at-will employment agreements with Greenfield and Kasemir were incorporated into the dispute; both agreements contained merger clauses linking them to the broader transaction documents.
- Defendants moved to dismiss Count III or strike Counts II and III; plaintiff/counterdefendant moved to dismiss Counterclaims IV and V. The court denied in part, granted in part, and sua sponte dismissed some counterclaims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Count II duplicative of Count I, or may it proceed as an alternative claim? | BLRO | 701 America | Count II survives as an alternative claim. |
| Is Count III ripe/appropriate for declaratory relief given currently indefinite obligations? | BLRO | 701 America | Count III survives; some aspects may mature later. |
| Do Counterclaims I and II state at-will employment claims actionable against BLRO? | Greenfield, Kasemir | BLRO | Counterclaims I and II survive as to severance/benefits. |
| Does merger clause bar Counterclaim IV (fraudulent inducement) and Counterclaim III (good faith/ fair dealing) linking to APA? | BLRO | 701 America | Counterclaims III and IV dismissed due to merger clauses and lack of contractual interdependence. |
| Is Counterclaim V (tortious interference with the Note) or Counterclaim VI (breach of the Note by BLRH) viable? | 701 America | BLRO/BLRH | Both Counterclaims V and VI dismissed. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for pleading a claim survives)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (motion-to-dismiss standard; plausibility required)
- North Atlantic Instruments, Inc. v. Haber, 188 F.3d 38 (2d Cir. 1999) (enforceability of merger clauses and contract interpretation rules)
- Olin Corp. v. Consolo Aluminum Corp., 5 F.3d 10 (2d Cir. 1993) (environment of declaratory relief and interim relief considerations)
- Seiden Assocs., Inc. v. ANC Holdings, Inc., 754 F. Supp. 37 (S.D.N.Y. 1991) (liberal pleading rules and Rule 8(e)(2) latitude)