553 F. App'x 37
2d Cir.2014Background
- H & B (Hudson & Broad) designs and manufactures retail display fixtures; JC Penney approached H & B in 2011–2012 about a "Square" light fixture tied to a branding initiative.
- H & B alleges a meeting on Feb. 1, 2012 produced a "hybrid" agreement to design and/or manufacture large quantities of Squares and that H & B expected a purchase order.
- After an initial dismissal with leave to replead, H & B filed an amended complaint asserting breach of contract, misappropriation of an idea, unjust enrichment, and quantum meruit.
- The district court dismissed the amended complaint with prejudice under Fed. R. Civ. P. 12(b)(6); H & B appealed only the dismissal-with-prejudice order.
- The Second Circuit reviewed the 12(b)(6) dismissal de novo, accepted the amended-complaint allegations as true, and affirmed dismissal in full.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract — definiteness of terms | H & B contends a sufficiently definite "design and manufacture" agreement (or a hybrid) was formed at Feb. 1 meeting | JC Penney argues the alleged agreement was an agreement to agree and too indefinite to be enforceable | Held: Agreement was too indefinite; breach claim dismissed |
| Breach of contract — agent authority | H & B contends JC Penney employees who negotiated had authority to bind the company | JC Penney contends the employees lacked actual/apparent authority to bind the corporation | Held: Allegations fail to show actual or apparent authority; breach claim fails |
| Quantum meruit / Unjust enrichment — entitlement to payment | H & B asserts it provided valuable services/works and is entitled to equitable recovery | JC Penney contends H & B disclaimed design-fee recovery and performed preparatory work anticipating a manufacture order (no reasonable expectation of payment) | Held: H & B disclaimed design-fee recovery; preparatory work gave no reasonable expectation of payment; equitable claims dismissed |
| Misappropriation of idea — existence of legal relationship | H & B argues JC Penney misappropriated its Square idea after negotiations | JC Penney argues no contract/quasi-contract or fiduciary relationship existed to support misappropriation claim | Held: Because no contractual or quasi-contractual relationship is plausibly alleged, misappropriation claim fails |
Key Cases Cited
- Harsco Corp. v. Segui, 91 F.3d 337 (2d Cir. 1996) (elements of breach of contract under New York law)
- Cobble Hill Nursing Home v. Henry & Warren Corp., 74 N.Y.2d 475 (N.Y. 1989) (agreement must be reasonably certain in material terms)
- Martin Delicatessen v. Schumacher, 52 N.Y.2d 105 (N.Y. 1981) (agreements to agree are unenforceable)
- Arbitran, Inc. v. Tralyn Broadcasting, Inc., 400 F.3d 130 (2d Cir. 2005) (distinguishing enforceable contracts with objective mechanisms to fix terms from agreements to agree)
- Merrill Lynch Interfunding, Inc. v. Argenti, 155 F.3d 113 (2d Cir. 1998) (agent must have authority — actual, apparent, or implied — to bind principal)
- Mid-Hudson Catskill Rural Migrant Ministry, Inc. v. Fine Host Corp., 418 F.3d 168 (2d Cir. 2005) (analyzing unjust enrichment and quantum meruit as related quasi-contract claims)
- S.S. Silberblatt, Inc. v. East Harlem Pilot Block, 608 F.2d 28 (2d Cir. 1979) (elements of unjust enrichment)
- Doe v. Guthrie Clinic, Ltd., 710 F.3d 492 (2d Cir. 2013) (standard of review for Rule 12(b)(6) dismissal)