OPINION AND ORDER
National Gear & Piston, Inc. (“Plaintiff’) brings this action against Cummins Power Systems, LLC (“CPS”) and Cummins Inc. (“Cummins”) (collectively, “Defendants”). Plaintiff alleges breach of contract, breach of the duty of good faith and fair dealing, tortious interference with contract, tortious interference with business relations, and violation of Section 340(1) of the New York General Business Law (“the Donnelly Act”). Defendants separately each move to dismiss all of Plaintiffs claims pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons explained herein, Defendants’ motions are granted.
I. Background
A. Plaintiffs Allegations
For purposes of deciding the instant motions, the Court assumes the truth of Plaintiffs allegations in its Amended Complaint. Plaintiff is a New York corporation which supplies and services “essential automotive components” for public agencies, including the New York State Department of Transportation (“NYSDOT”), Metropolitan Transit Authority (“MTA”), and the New York City Transit Authority (“NYC-TA”). (Am. Compl. ¶ 6.) A major part of its business is the sales of engines and engine parts manufactured by Cummins, which allegedly manufactures the only mass transit bus engines that comply with EPA regulations. (Id. ¶¶ 9, 24.) Plaintiff has sold these engines since 1998 as an authorized Cummins dealer, first under the territory distributor Cummins Metro-power, Inc. (“CMP”), then under its successor, CPS.
Cummins is an Indiana corporation and “a major provider of automotive components utilized in the general purpose truck and revenue transit sectors.” (Id. ¶7.) CPS is a Delaware limited liability company that is a territory distributor for Cummins. (Id. ¶ 8.) CPS, and before it CMP,
In November 2007, CMP provided Plaintiff with a written agreement (“Agreement”), “setting out the respective rights and obligations of CMP as Distributor and [Plaintiff] as Dealer.” (Id. ¶ 10.) The Agreement was allegedly originally formulated by Cummins, as the standard form used by all Cummins distributors. (Id. ¶ 11.) The Agreement states that it is effective “upon the date fully executed.” (Id. Ex. A, § 7.1.) It may be terminated (1) without cause “upon 60 days’ prior written notice to the other party” (pursuant to Section 7.2 of the Agreement), or (2) “at any time, without further notice, if [Plaintiff] is in breach of this Agreement, or other good cause for termination exists, and [Plaintiff] fails to cure the breach or cause within 30 days of written notification thereof from [CMP]” (pursuant to Section 7.4 of the Agreement). (Id. §§ 7.2, 7.4.) If the Agreement is terminated, any prior orders “shall not in any way be affected.” (Id. § 7.6(c).)
The Agreement was never executed, and remains unsigned by either party. (Am. Compl. ¶ 17.) Plaintiff claims that the Agreement “memorialized the terms and practices of the business relationship as it had existed between the parties since 1999,” and asserts that the parties “performed generally pursuant to the terms set forth in the un-executed contract.” (Id.)
In April 2008, CPS acquired CMP. (Id. ¶ 21.) Plaintiff alleges that initially CPS and Plaintiff “continued on the terms and practices of the business relationship previously established,” with CPS acting as a distributor and Plaintiff acting as its authorized dealer. (Id.)
The first alleged change was the imposition on Plaintiff of a non-published price structure for certain components in October 2009, which allegedly impaired Plaintiffs ability to submit meaningful and actionable offers of sale in reply to customers’ requests for bids. (Id. ¶27.) The second change was in December 2009, when CPS representatives allegedly instructed Plaintiff and other dealers that they were “prohibited from bidding on all MTA and NYCTA Requests for Bids covering machine components for buses.” (Id. ¶¶ 34, 36.) According to Plaintiff, CPS representatives explained that the purpose of the prohibition was to let CPS maintain this business for itself, “at improved margins, and ultimately at greater cost for end use consumers.” (Id. ¶ 35.) Since this prohibition, Plaintiff “has observed the overall bid activity” on MTA and NYCTA requests for bids “to be
The third alleged change occurred in January 2010, and concerned a different NYCTA bid. In October 2009, Plaintiff was the winning bidder on NYCTA’s bid number 76037 for reconditioned Cummins engine parts. (Id. ¶¶ 28-29.) The bid request specified that all responses quote a discount from list price, which Plaintiff claims it did. (Id. ¶ 28.) CPS was allegedly the only bidder other than Plaintiff. (Id.) In January 2010, CPS allegedly communicated to NYCTA that the bid was inappropriate, “because there was no list price for reconditioned [Cummins] engine parts.” (Id. ¶ 30.) Plaintiff claims that this information “contradicted the procedures that [Plaintiff] had used for many years in responding to [similar] Requests for Bid,” and that in any case such information would customarily be provided immediately after the Request for Bid was issued, not after NYCTA had determined the low bidder. (Id. ¶ 31.) NYCTA then cancelled the bid, allegedly because of the information it learned from CPS. (Id. ¶¶ 32-33.)
The fourth alleged change occurred “[i]mmediately after the NYCTA awarded [Plaintiff] the contract for the Bosch injectors.” (Id. ¶ 45.) In January 2010, CPS “unilaterally and without reason” altered Plaintiffs payables status “from preferred credit to COD fulfillment only.” (Id.) Plaintiff claims that it was not “delinquent or untimely in paying its bills,” and alleges that CPS changed Plaintiffs credit status as punishment for bidding on the Bosch injectors contract, despite CPS’s bidding prohibition. (Id. ¶ 46.)
On April 14, 2010 Plaintiff received a letter from CPS proposing to terminate their distributor-dealer relationship (“Termination Letter”). (Id. ¶49.) Plaintiff claims that this letter was sent because of Plaintiffs “continued bidding on requests for proposal from its long time customers.” (Id.) The Termination Letter stated that “[a]fter careful review” of Plaintiffs compliance with CPS’s territory and customer support requirements, CPS would terminate Plaintiffs “independent dealer relationship ... effective May 16, 2010.” (Id. Ex. B.) The stated reasons were: (1) Plaintiff violated the requirement that authorized Cummins dealers use only Cummins products for repairs when Cummins warranties are in effect; (2) Plaintiff violated the requirement that dealers in the New York City area have technicians qualified to repair midrange Cummins engines; (3) Plaintiff took “unilateral, unauthorized discounts and deductions” from CPS invoices, in “direct violation of dealer and company policies”; and (4) Plaintiff did not comply with CPS’s payment terms. (Id.) As a result of the termination, Plaintiff would no longer be eligible for “any Dealer programs or policies,” and would have to purchase Cummins parts “at Retail parts’ price levels.” (Id.)
Cummins is alleged to be “the beneficial owner of eighty-two percent (82%) of the voting shares of [CPS].” (Id. ¶ 4.) The Agreement provides that Cummins is a third-party beneficiary “of the provisions of [the] Agreement that refer to Cummins,” states that the Agreement may be assigned to Cummins upon written notice to Plaintiff, and includes an appendix entitled “Cummins Inc.: Minimum Insurance Requirements.” (Id. ¶¶ 12-14; Id. Ex. A, §§ 9.3, 10.5.) However, the Agreement also states that “Dealer acknowledges that Distributor is independently incorporated
B. Procedural History
This case was commenced on May 14, 2010 in New York Supreme Court, Westchester County. (Notice of Removal (Dkt. No. 1).) On the same day, Plaintiff filed an Order to Show Cause seeking a temporary restraining order and a preliminary injunction against CPS. (Id.) The state court signed the Order to Show Cause and issued an ex parte temporary restraining order against CPS until the Parties could appear for argument on May 17, 2010. (Id.) The case was removed to this Court by CPS on May 20, 2010. (Id.)
This Court continued the temporary restraining order until June 21, 2010. (Dkt. No. 9.) On June 10, 2010, Plaintiff moved for a preliminary injunction. (Dkt. No. 10.) While awaiting the hearing on the preliminary injunction, the Court extended the temporary restraining order through July 19, 2010. (Dkt. No. 17.) On July 19, 2010, the Court held a hearing on the preliminary injunction and on July 20, 2010 denied Plaintiff’s request to continue the temporary restraining order. (Dkt. No. 20.) On August 11, 2010, with the consent of the Parties, the Court ordered CPS not to violate the Donnelly Act by conspiring with Plaintiff, and not to “instruct or request Plaintiff to cease bidding on revenue-side mass transit contracts put to bid” by NYCTA. (Order of Aug. 11, 2010 (Dkt. No. 30).) In doing so, the Court did not make any finding that Defendants had, in fact, violated the Donnelly Act.
Plaintiff brings six causes of action, against both CPS and Cummins. The first cause of action alleges that CPS wrongfully terminated “the 2007 Agreement and [Plaintiffl’s status as a Dealer.” (Am. Compl. ¶ 70.) The second cause of action alleges that CPS breached the Agreement by failing to advise Plaintiff that it was entitled to an opportunity to cure the alleged breaches, and failing to give Plaintiff sufficient information to allow it to cure any breaches. (Id. ¶ 79.) The third cause of action alleges that CPS breached its duty of good faith and fair dealing underlying the Agreement. (Id. ¶ 88.) The fourth cause of action alleges that CPS tortiously interfered with Plaintiffs contract with NYCTA, and with Plaintiffs “open, unfulfilled orders from third parties.” (Id. ¶¶ 92-102.) The fifth cause of action alleges that CPS tortiously interfered with Plaintiffs prospective business opportunities by “institutfing] increasingly onerous and unnecessary business constraints.” (Id. ¶ 108.) The sixth cause of action alleges that CPS violated New York’s Donnelly Act, Section 340(1) of the New York General Business Law. (Id. ¶ 121.) In all six causes of action, Plaintiff alleges that Cummins “has both the corporate and contractual authority to control the actions of CPS,” knew of CPS’s wrongful activity, and therefore participated in CPS’s wrongful activity “[b]y its activity or failure to act.” (Id. ¶¶ 72-73, 80-81, 89, 103-104,114-15,124-25.)
Plaintiffs Amended Complaint was filed on February 14, 2011. (Dkt. No. 42.)
II. Discussion
A. Standard of Review
1. Rule 12(b)(6) Motion to Dismiss
“On a Rule 12(b)(6) motion to dismiss a complaint, the court must accept a plaintiffs factual allegations as true and draw all reasonable inferences in [the plaintiffs] favor.” Gonzalez v. Caballero,
Generally, “[i]n adjudicating a Rule 12(b)(6) motion, a district court must confine its consideration to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken.” Leonard F. v. Isr. Disc. Bank of N.Y.,
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly,
2. Governing State Law
Because federal jurisdiction in this case is based on diversity of citizenship, the conflict-of-law rules of the forum state, New York, determine which state’s law governs. See Cantor Fitzgerald Inc. v. Lutnick,
B. First and Second Causes of Action: Breach of Contract
Plaintiffs first and second causes of action allege that CPS breached its contract with Plaintiff: (1) when it wrongfully terminated “the 2007 Agreement and [Plaintiffl’s status as a Dealer”; (2) when it failed to provide sufficient detail or information about Plaintiffs alleged breaches in the Termination Letter to permit Plaintiff to attempt to cure the breaches; and (3) when it failed to advise Plaintiff that it was entitled to an opportunity to cure the alleged breaches. (Am. Compl. ¶¶ 70, 77-79.) Under New York law, to make out a claim for breach of contract a plaintiff must allege: “the existence of a contract, the plaintiffs’ performance under the contract, the defendants’ breach of that contract, and resulting damages.” JP Morgan Chase v. J.H. Elec. of N.Y., Inc.,
1. Existence of a Contract
The Court must first examine whether a contract existed between the Parties. Plaintiff argues that the Agreement was a binding contract, and, in the alternative, that an implied-in-fact contract existed. “[A]lthough the theories of express contract and of contract implied in fact are mutually exclusive, the federal rules do not require consistency in pleadings, and therefore [Plaintiff] may claim alternatively on an express contract and on an implied contract.” Sharp v. Patterson, No. 03-CV-8772,
The unsigned Agreement states that it is effective “upon the date fully executed.” (Am. Compl. Ex. A, § 7.1.) “Under New York law, ordinarily, where the parties contemplate further negotiations and the execution of a formal instrument, a preliminary agreement does not create a binding contract,” but in some circumstances “preliminary agreements can create binding obligations.” Vacold LLC v. Cerami,
Tribune sets out two types of binding preliminary agreements. Type I agreements are fully binding, and are preliminary “only in the sense that the parties desire a more elaborate formalization of the agreement.” Adjustrite,
To determine whether parties have reached a Type I preliminary agreement, courts consider: “(1) whether there has been an express reservation of the right not to be bound in the absence of writing; (2) whether there has been partial performance of the contract; (3) whether all of the terms of the alleged contract have been agreed upon; and (4) whether the agreement at issue is the type of contract that is usually committed to writing.” Learning Annex Holdings, LLC v. Whitney Educ. Grp., Inc.,
The first factor is “frequently the most important,” and “is frequently determined by explicit language of commitment or reservation.” Brown,
Here, the Agreement explicitly states that it is effective “upon the date fully executed.” (Am. Compl. Ex. A, § 7.1.) The Agreement ends with “IN WITNESS WHEREOF, the parties have executed this Agreement ... by their undersigned, duly authorized agents,” with a space for the signature of both the “Dealer” and CMP, “Distributor.” (Am Compl. Ex. A.) No party argues that the Agreement has been fully executed, as it remains unsigned. Further, the Agreement contains a merger clause, which states that the Agreement “constitutes the entire agreement between Dealer and Distributor, superseding all prior” agreements and understandings, and “may be amended only by a writing signed by both parties hereto.” (Id. § 10.1.) “The presence of such a merger clause is persuasive evidence that the parties did not intend to be bound prior to the execution of a written agreement.” Ciaramella,
As to the second factor, Plaintiff alleges that there has been partial performance, noting that it “performed generally pursuant to the terms set forth in the unexecuted contract.” (Am. Compl. ¶ 17.) However, since Plaintiff had been performing as a Cummins dealer “for many months prior to the alleged agreement ... the fact that [Plaintiff] continued performing after that point does not strongly indicate the existence of an agreement.” Kargo,
As to the third factor, there is no indication that there were any terms yet to be agreed upon. The Agreement was the standard contract used for Cummins distributors, (id. ¶ 11), and does not reference any further negotiations or steps to be taken (indeed, neither Party alleges that any additional negotiating was done). The fact that there are no further issues to negotiate “appears to be a prerequisite for enforcing an unexecuted contract,” but “does not foreclose a holding that a proposed agreement is unenforceable because the parties did not intend to be bound until it was in writing and signed.” Kargo,
The fourth factor, whether the agreement at issue is the type of contract that is usually committed to writing, cuts both for and against Plaintiff. On the one hand, Plaintiff alleges that the Agreement is the standard contract used by Cummins for all its dealers. (Am. Compl. ¶ 11.) On the other hand, Plaintiff by its own admission functioned as a dealer for eight years prior without any sort of written agreement. (Id. ¶¶ 7,10.)
While courts are “often reluctant to rule on the issue of intent to form a binding agreement in a judgment on the pleadings, and must be cautious in making such determinations,” Spencer Trask,
Apart from the Agreement, Plaintiff also alleges that an implied-in-fact contract governed its relationship with CPS, and before it CMP, the terms of which were memorialized by the Agreement. “[A]n implied-in-fact contract arises ‘when the agreement and promise have simply not been expressed in words,’ but ‘a court may justifiably infer that the promise would have been explicitly made, had attention been drawn to it.’ ” Nadel,
Plaintiff alleges that the “pattern and practice of [the] business relationship” between Plaintiff and Defendants “amounted] to a valid, enforceable contract between the parties,” (Pl.’s Opp’n to CPS’s Mot. to Dismiss (“Opp’n to CPS”) 8), and that “[i]n material effect, the 2007 Agreement proffered to [Plaintiff] by CMP memorialized the terms and practices of the business relationship as it had existed between the parties since 1999,” (Am. Compl. ¶ 17). While an implied-in-fact contract may arguably have governed the Parties’ business relationship between 1999 and 2007, it appears that CMP intended to be bound by the specific terms of the Agreement only upon execution, as discussed above. “A contract may not be implied in fact from the conduct of the parties where it appears that they intended to be bound only by a formal written agreement.” Valentino v. Davis,
2. Plaintiff’s Performance Under the Contract
Plaintiff alleges that it performed “generally pursuant” to the terms set forth in the Agreement, (Am. Compl. ¶ 17), and that it “complied in all respects with the terms of its relationship with CPS,” (id. ¶ 53). While the statement that Plaintiff performed “generally pursuant” to the Agreement, standing alone, might be construed to mean that Plaintiff did not fully perform, Plaintiffs later statement that it “complied in all respects” with the Agreement clarifies that Plaintiff alleges that it fully performed under the Agreement. Plaintiff states that pursuant to the Agreement, it “functioned as an authorized dealer representative” of Defendants, and “developed customer relationships; offered for sale components and materials required by customers; set pricing and payment terms for such sales; acquired from [Defendants] inventory to fulfill orders actually placed, and provided after-sale service and information to customers.” (Id. ¶ 18.) This is sufficient to allege due performance. See Oberstein v. SunPower Corp., No. 07-CV-1155,
However, even if Plaintiff has alleged that it had a contract with Defendants (whether in writing or implied-in-fact) and that it performed under that contract, Plaintiff has failed to allege that Defendants breached any such contract. Plaintiff alleges that CPS breached the Agreement: (1) when it wrongfully terminated its working relationship with Plaintiff; (2) when it failed to provide sufficient detail or information about Plaintiffs alleged breaches in the Termination Letter, so as to permit Plaintiff to attempt to effect a cure of any breaches; and (3) when it failed to advise Plaintiff that it was entitled to an opportunity to cure the alleged violations. (Am. Compl. ¶¶ 70-71, 77-79.)
a. Termination Requirements
Plaintiff alleges that CPS breached the Agreement when it wrongfully terminated it. (Id. ¶¶ 70-71.) Section 7.2 of the Agreement permits CPS to terminate the Agreement “at any time, for any or no reason, upon 60 days’ prior written notice to the other party.” (Id. Ex. A § 7.2.) Section 7.4 permits CPS to terminate the Agreement “at any time, without further notice, if [Plaintiff] is in breach of this Agreement, or other good cause for termination exists,” and Plaintiff “fails to cure the breach or cause within 30 days” of written notice. (Id. § 7.4.)
CPS moves to dismiss Plaintiffs claim, arguing that it complied with the termination requirements contained in Section 7.2. (Mem. of Law in Supp. of CPS’s Mot. to Dismiss (“CPS’s Mem.”) 8-9.) CPS argues, in the alternative, that it complied with Section 7.4 of the Agreement, and that Plaintiff has not alleged “that CPS terminated the relationship prior to the expiration of the 30-day period.” (Id.) The Termination Letter does not reference the Agreement, nor does it refer to either of the termination provisions. It is dated April 14, 2010, and states that Plaintiffs “independent dealer relationship shall terminate effective May 16, 2010,” (Am. Compl. Ex. B), thus providing 32 days notice of termination.
While the date of the Termination Letter is undisputed, Plaintiff has not specified in its Complaint when exactly CPS actually ended the relationship. Plaintiff merely states that “since the date of the CPS termination letter” it has “encountered significant difficulties in fulfilling orders under customer contracts existing prior to the termination action.” (Am. Compl. ¶ 56.) Plaintiff also cites “operational difficulties encountered ... since the date of the termination action,” without specifying when the termination action took place. (Id. ¶ 59.)
The date that CPS terminated the relationship is important, because even if it did not have good cause to terminate pursuant to Section 7.4, if it terminated the Agreement 60 days after Plaintiff received
b. Failing to Provide Sufficient Detail
Plaintiff also alleges that Defendant breached the Agreement by failing in its Termination Letter to “provide [Plaintiff] with sufficient detail or information to attempt to effect a cure.” (Am. Compl. ¶ 79.) However, the Second Circuit has declined “to construe the notice provision as if it were a common law pleading requirement under which every slip would be fatal.” Contemporary Mission, Inc. v. Famous Music Corp.,
The Termination Letter set out four clear and specific “reasons for ... termination with notice”: (1) Plaintiffs practice of quoting “Cummins’ customers non-genuine Cummins’ parts when Cummins’ warranties are still in effect ... [in] direct violation of dealer policy”; (2) Plaintiffs failure to employ “qualified technicians trained for current or past midrange Cummins engines,” in contravention of dealer policy; (3) Plaintiffs “unilateral, unauthorized discounts and deductions from [CPS] invoices ... [in] direct violation of dealer and company policies”; and (4) Plaintiffs noncompliance with CPS’s payment terms. (Am. Compl. Ex. B.) Courts have routinely found termination notices with such detail to be sufficient. See, e.g., Carvel Corp. v. Diversified Mgmt. Grp., Inc.,
Additionally, Plaintiff acknowledged in its May 11, 2010 reply letter that the Termination Letter “purport[ed] to set out legitimate operational and administrative reasons underlying this decision.” (Am. Compl. Ex. C.) Plaintiff then stated that it “rejected] each and every reason for termination presented in [the] letter, and [stood] ready to demonstrate the misstatement of fact contained in each.” (Id.) Given these statements, it is implausible for Plaintiff to now deny that it “had sufficient detail or information regarding to alleged breaches” to “attempt to effect a cure.” (Am. Compl. ¶ 78.)
c. Failing to Advise of Opportunity to Cure
Plaintiff further claims that CPS breached the contract by failing to provide Plaintiff “with explicit notice of an opportunity to cure the alleged breaches.” (Id. ¶ 79.) Specifically, Plaintiff claims that the Agreement required CPS to advise Plaintiff that it was entitled to an opportunity to cure any alleged breaches prior to termination. CPS did not once use the word “cure” in its Termination Letter, but merely stated that the relationship would terminate “with notice” effective May 16, 2010, for the four reasons discussed above. (Am. Compl. Ex. B.)
The law does not require any more notice than that provided by CPS. See Cawel,
Therefore, the Court grants Defendants’ motion to dismiss the first and second causes of action.
C. Third Cause of Action: Breach of Duty of Good Faith and Fair Dealing
In its third cause of action, Plaintiff alleges that CPS breached its duty of good faith and fair dealing underlying the Agreement by: (1) asking Plaintiff to “engage in conduct which [CPS] knew to be both anti-competitive and illegal” (presumably referring to the alleged bidding prohibition); (2) changing Plaintiffs credit status from preferred credit to COD only to punish Plaintiff for its continued bidding; (3) attempting to terminate the Agreement for “invalid, groundless reasons”; (4) failing to provide Plaintiff with notice that it was entitled to an opportunity to cure the alleged breaches; and (5} causing Plaintiff to lose a NYCTA contract (presumably bid number 76037). (Am. Compl. ¶ 88.)
“Under New York law, implicit in all contracts is a covenant of good faith and fair dealing in the course of the contract performance.” DBT Gmbh v. J.L. Mining Co.,
neither party to a contract shall do anything which has the effect of destroying or injuring the right of the other party to receive the fruits of the contract. However, this covenant only applies where an implied promise is so interwoven into the contract as to be necessary for effectuation of the purposes of the contract. For this to occur, a party’s action must directly violate an obligation that may be presumed to have been intended by the parties. However, the implied covenant does not extend so far as to undermine a party’s general right to act on its own interests in a way that may incidentally lessen the other party’s anticipated fruits from the contract.
Thyroff v. Nationwide Mut. Ins. Co.,
Plaintiffs claim that Defendants breached their duty of good faith by failing to provide Plaintiff with notice to cure is identical to its breach of contract claim, discussed above, and is dismissed as redundant. “Under New York law, parties to an express contract are bound by an implied duty of good faith, but breach of that duty is merely a breach of the underlying contract,” and a claim for breach of the implied covenant “will be dismissed as redundant where the conduct allegedly violating the implied covenant is also the predicate for breach of covenant of an express provision of the underlying contract.” Harris v. Provident Life & Accident Ins. Co.,
Equally non-viable is Plaintiffs claim that CPS’s decision to change Plaintiffs credit status to COD violated the duty of good faith and fair dealing. The Agreement’s Terms and Conditions of Sale provide that CPS “reserves the right to suspend all credit terms and to require full or partial payment in advance before shipment.” (Mem. of Law in Supp. of Mot. for Prelim. Inj. (“Prelim. Inj. Mem.”) Ex. A (Dkt. No. 10).)
Defendants’ bid prohibition and acts related to NYCTA bid number 76037 could form the basis of a claim for breach of the duty of good faith and fair dealing, but, for the reasons discussed above, Plaintiff has not adequately alleged the existence of a contract. “[T]here can be no covenant of good faith and fair dealing implied where there is no contract.” Lakeville Pace Mech., Inc. v. Elmar Realty Corp.,
D. Fourth Cause of Action: Tortious Interference with Contract
The fourth cause of action alleges that CPS tortiously interfered with Plaintiffs contract with NYCTA when CPS told NYCTA that Plaintiffs bid number 76037 was inappropriate, leading NYCTA to cancel Plaintiffs bid. (Am. Compl. ¶¶ 92-97.) Plaintiff also alleges that CPS tortiously interfered with Plaintiffs “open, unfulfilled orders from third parties,” of which CPS was allegedly aware, by terminating the Agreement and imposing “operational impediments,” and “fail[ing] or refusing] to process orders.” (Id. ¶¶ 98-102.)
“Under New York law, the elements of tortious interference with contract are (1) ‘the existence of a valid contract between the plaintiff and a third party’; (2) the ‘defendant’s knowledge of the contract’; (3) the ‘defendant’s intentional procurement of the third-party’s breach of the contract without justification’; (4) ‘actual breach of the contract’; and (5) ‘damages resulting therefrom.’ ” Kirch v. Liberty Media Corp.,
1. NYCTA Bid Number 760S7
Plaintiff alleges that CPS interfered with Plaintiffs contract with NYCTA when CPS communicated to NYCTA that Plaintiffs bid number 76037 “was inappropriate because there was no list price for reconditioned [Cummins] engine parts.” (Am. Compl. ¶ 94.)
First, the Court must examine whether an accepted bid is considered a valid contract.
Plaintiff, if it wishes to prosecute this cause of action, must therefore amend the Complaint to properly allege that the accepted bid was a contract, and that the contract was breached when NYCTA can-celled the bid. In the meantime, this cause of action is dismissed without prejudice.
2. Unspecified Third Party Contracts
[27] Plaintiffs other claim, that CPS interfered with unspecified “outstanding contracts that [Plaintiff] has with third parties,” of which CPS was allegedly aware, (Am. Compl. ¶ 99), fails. First, Plaintiff has not adequately alleged the existence of a specific contract between itself and a particular third party, simply by stating that it has “open, unfulfilled orders” and “outstanding contracts” with unspecified third parties, (id. ¶¶ 98-99). See Bose v. Interclick, Inc., No. 10-CV-9183,
These deficiencies are fatal to Plaintiffs claim of tortious interference with contract, and the claim is dismissed. See Dune Deck Owners Corp. v. Liggett,
E. Fifth Cause of Action: Tortious Interference with Existing Business Relationships
The fifth cause of action alleges that CPS tortiously interfered with Plaintiffs business relations by “institut[ing] increasingly onerous and unnecessary business constraints.” (Am. Compl. ¶ 108.) Plaintiff alleges that these operational constraints, including the bidding prohibition and alteration of Plaintiffs payables status to COD fulfillment only, were “done with malice, in an attempt to drive [Plaintiff] and other competitors from the municipal marketplace.” (Id. ¶¶ 109-13.)
To state a claim for tortious interference with business relations, Plaintiff must allege that: “(1) the plaintiff had
There are several fatal deficiencies in Plaintiffs cause of action for tortious interference with existing business relationships. First, Plaintiff has not adequately alleged any specific existing business relationships with which Defendant interfered, but only its business relationships in general. Such a generic claim does not suffice. See AIM Int’l Trading, L.L.C. v. Valcucine S.p.A., No. 02-CV-1363,
Second, Plaintiff only alleges conduct directed at itself, not conduct directed at its customers. For example, Plaintiff alleges that CPS “instituted increasingly onerous and unnecessary business constraints” on Plaintiff, (Am. Compl. ¶ 108), but other than its communications with NYCTA over bid number 76037, Plaintiff does not allege any actions directed towards Plaintiffs customers. This also is fatal to Plaintiffs Complaint. See Noonan,
Further, Plaintiff has not pleaded interference with business relations based on CPS’s communications with NYCTA regarding bid number 76037. While Plaintiff does incorporate all previous paragraphs into the section stating a tortious interference with business relations cause of action, (Am. Compl. ¶ 106), several of which discuss CPS’s communications with NYCTA, (id. ¶¶ 30-33), the cause of action section itself actually focuses on CPS’s
The Court notes that it appears from the Complaint that Plaintiff could have plausibly alleged that it had business relations with NYCTA in the form of bid number 76037, that CPS interfered with those business relations, that CPS’s acts injured the relationship, and that CPS did so “for the sole purpose of inflicting intentional harm on [Plaintiff].” Noonan,
F. Sixth Cause of Action: Donnelly Act
The sixth cause of action alleges that CPS violated the Donnelly Act. (Am. Compl. ¶ 121.) Specifically, Plaintiff alleges that in the fall of 2009, “CPS undertook a scheme to eliminate the bulk of its competition with respect to revenue based transit contracts in the municipal marketplace,” by instructing Plaintiff and several other key dealers to cease bidding on contracts in this marketplace. (Id. ¶ 119.) Plaintiff alleges that the purpose of this arrangement was “to permit CPS to eliminate competition and/or restrain trade in the municipal marketplace” with respect to revenue based contract for its engines and engine parts. (Id. ¶ 122.) Plaintiff claims that these actions have subjected Plaintiffs customers to unfair practices, and forced the public and its agencies “to incur unnecessary cost burdens.” (Id. ¶ 123.)
“A party asserting a violation of the Donnelly Act must (1) identify the relevant product market, (2) describe the nature and effects of the purported conspiracy, (3) allege how the economic impact of that conspiracy is to restrain trade in the market in question, and (4) show a conspiracy or reciprocal relationship between two or more entities.” Yankees Entm’t & Sports Network, LLC v. Cablevision Sys. Corp.,
To survive a motion to dismiss, a Donnelly Act claim must “include specific, factual allegations as to the identities of the co-conspirators, the nature of their conspiracy, how the participants attempted to accomplish their objectives, and what overt acts they performed. Unspecified contracts with unnamed other entities to achieve unidentified anticompetitive effects [do] not meet the minimum standards of pleading a conspiracy” under the antitrust laws. Tese-Milner v. Diamond Trading Co., Ltd., No. 04-CV-5203,
Plaintiff has not plausibly alleged a Donnelly Act conspiracy between Defendants and other companies, because it has not “include[d] specific, factual allegations as to the identities” of the other alleged co-conspirators. Tese-Milner,
However, Plaintiff also has alleged a conspiracy between itself and CPS. Specifically, Plaintiff has alleged that after CPS told it to stop bidding, Plaintiff “thought that it had no alternative but to comply ... and did, in fact, refrain from bidding on a select number of contracts as CPS had directed.” (Am. Compl. ¶ 38.) While “[sjhortly thereafter” Plaintiff “once again began bidding,” (id. ¶ 39), it has nonetheless alleged a conspiracy between Defendants and itself for that brief period of time. “The fact that the only parties to the alleged illegal activity in this case are the plaintiff and the defendant does not preclude an action under” the Donnelly Act, George Miller Brick Co. v. Stark Ceramics, Inc.,
However, to survive Defendants’ motion to dismiss, Plaintiff must adequately allege a relevant product market. The Second Circuit has described this burden as follows:
The relevant market must be defined as all products reasonably interchangeable by consumers for the same purposes, because the ability of consumers to switch to a substitute restrains a firm’s ability to raise prices above the competitive level. Where the plaintiff fails to define its proposed relevant market with reference to the rule of reasonable interchangeability and cross-elasticity of demand, or alleges a proposed relevant market that clearly does not encompass all interchangeable substitute products even when all factual inferences are granted in plaintiffs favor, the relevant market is legally insufficient.
City of New York v. Group Health Inc.,
In its Amended Complaint, Plaintiff has failed to adequately allege the relevant product market. At one point in its
Given these unclear allegations, Plaintiff has neither adequately defined a relevant product market, nor provided “a plausible explanation as to why a market should be limited in a particular way.” Todd v. Exxon Corp.,
Furthermore, Plaintiff has not identified which particular engines or engine components are at issue, let alone whether there are any interchangeable alternatives or why the market should be as narrow as Plaintiff (in the alternative) suggests. See AF Gloenco Inc. v. Ushers Mach. & Tool Co., No. 10-CV-1128,
And, finally, Plaintiff has said nothing about the geographic boundaries of the product market. While reference is made in the Amended Complaint to various New York State city and state agencies, Plaintiff has made no particular claim about what geographic region is at issue. See Mathias v. Daily News, L.P.,
Therefore, for the aforementioned reasons, this cause of action is dismissed without prejudice. See Polargrid LLC,
G. Causes of Action against Cummins
Plaintiff alleges that it has apprised Cummins of CPS’s actions, and Cummins has failed “to direct that CPS enter into a
1. Direct Liability
Plaintiff claims that it has adequately alleged in its Amended Complaint that Cummins “actively participated in an intentional scheme with CPS to convert the business relationships of National and others into a monopolistic, conspiratorial and anti-competitive model.” (Id. at 12-13). However, the referenced paragraphs in the Amended Complaint merely allege that Cummins failed “to direct that CPS enter into a proper conduct of [ ] business” with Plaintiff. (Am. Compl. ¶ 67). Nowhere does the Amended Complaint allege any unlawful conduct by Cummins, other than this “failure or refusal” to act. (Id. ¶¶ 63-68, 117-28.) The Court therefore has only Plaintiffs conclusory statements in its Memorandum of Law that Cummins “actively participated in an intentional scheme.” (Opp’n to Cummins 12.) Without any supporting facts, this claim is not “plausible on its face,” and must be dismissed. Twombly,
2. Alter Ego/Veil Piercing Theory
Plaintiffs claims against Cummins under the alter ego theory fail as well.
“To prevail on an alter ego claim under Delaware law, a plaintiff must show (1) that the parent and the subsidiary operated as a single economic entity and (2) that an overall element of injustice or unfairness” is present. Fletcher v. Atex, Inc.,
whether the corporation was adequately capitalized for the corporate undertaking; whether the corporation was solvent; whether dividends were paid, corporate records kept, officers and directors functioned properly, and other corporate formalities were observed; whether the dominant shareholder siphoned corporate funds; and whether, in general, the corporation simply functioned as a facade for the dominant shareholder.
NetJets,
Plaintiff doe's' not allege a single fact that addresses these factors, thus mortally wounding its claims against Cummins. See Pampillonia v. RJR Nabisco, Inc.,
III. Conclusion
For the foregoing reasons, CPS’s motion to dismiss Plaintiffs claims against it is granted, and the claims are dismissed without prejudice. See Stern v. Gen. Elec. Co.,
For the foregoing reasons, Cummins’ motion to dismiss Plaintiffs claims against it is granted, and the claims as to Cummins are dismissed without prejudice as well.
The Clerk is respectfully requested to terminate the pending motions. (Dkt. Nos. 47, 49.) If Plaintiff wishes to file a Second Amended Complaint, it must do so within thirty days.
SO ORDERED.
Notes
. CMP was acquired by CPS in April 2008. (Am. Compl. ¶ 21.)
. Plaintiff alleges that CPS never tendered a written agreement to Plaintiff different from the Agreement proffered by CMP. (Am. Compl. ¶ 21.)
. The Termination Letter reads, in relevant part:
After careful review by Cummins Power Systems, LLC of its territory and customer support requirements, and National Gear and Piston’s compliance with such requirements, Cummins Power Systems has determined that it is no longer able to maintain National Gear and Piston as an independent dealer. As a result and therefore, National Gear and Piston’s independent dealer relationship shall terminate effective May 16, 2010. The reasons for such termination with notice include:
1. National Gear and Piston has quoted Cummins’ customers non-genuine Cummins' parts when Cummins’ warranties are still in effect. In these situations, and as you know, authorized Cummins dealers are required to use genuine Cummins products only. This is a direct violation of dealer policy.
2. National Gear and Piston does not have any qualified technicians trained for current or past midrange Cummins engines. Because of the increased midrange engine population in the immediate area of New York City and surrounding boroughs, it is required that Cummins' dealers supporting these customers are certified in midrange engines and specifically have the qualifications to repair midrange transit engines (along with supplying parts and service).
3. National Gear and Piston has taken, and continues to take, unilateral, unauthorized discounts and deductions from Cummins Power Systems invoices. This is a direct violation of dealer and company policies.
4. National Gear and Piston has not complied with Cummins Power Systems’ payment terms (as noted in previous documents, discussions and emails).
As a result of the termination effective May 16, 2010, you will no longer be eligible for any Dealer programs or policies and any purchases of Cummins, ReCon, Filtration, and Onan parts thereafter shall be at Retail parts’ price levels.
(Am. Compl. Ex. B.)
. This Court has diversity jurisdiction over the action, as Plaintiff is a New York corporation with its primary place of business in New York, CPS is a Delaware corporation with its primary place of business in Pennsylvania, (Notice of Removal ¶¶ 7, 9), and Cummins is an Indiana corporation with its principal place of business in Indiana, (Am. Compl. ¶ 3). Also, Plaintiff seeks $10 million in damages. (Notice of Removal ¶ 8.)
. In its opposition papers, Plaintiff attaches the affidavit of Karl Gontkof, Vice President of CPS’s Engine Business, which states that "[pjrior to April 2008, CMP had a distributor-dealership type of relationship with Plaintiff. After it ... purchased ... CMP, CPS continued the relationship with Plaintiff pursuant to the terms of an unsigned Cummins Engine Dealership Agreement.” (PL's Opp'n to CPS's Mot. to Dismiss Ex. 1, ¶ 5.) This type of evidence can be used to show a party’s intent to be bound by a Type I preliminary agreement. See Bitumenes Orinoco, S.A. v. New Brunswick Power Holding Corp., No. 05-CV-9485,
. Cases dismissing breach of contract claims for failure to allege due performance have involved complaints that "failed to make even a general allegation that [plaintiff] had performed its obligations under the contract.” Conergy AG v. MEMC Elec. Materials, Inc.,
. CPS states in its motion papers that Plaintiff was on notice of the termination "well past the 60 days,” but does not specify when it terminated the relationship. (CPS’s Mem. 8 n. 4.)
. While Plaintiff did not attach the Terms and Conditions of Sale to its Amended Complaint, it was attached to Plaintiff's motion for a preliminary injunction. (Prelim. Inj. Mem. Ex. A.) “Where a plaintiff has relied on the terms and effect of a document in drafting the complaint, and that document is thus integral to the complaint, [the Court] may consider its contents even if it is not formally incorporated by reference." Broder v. Cablevision Sys. Corp.,
. Courts in different jurisdictions have come out both ways on whether a binding contract is formed when a bid is accepted, but before the formal contract documents are fully executed. Compare Ry-Tan Constr., Inc. v.
. The Court also notes that Plaintiff did not explicitly allege that the NYCTA bid was a contract in its Complaint, but only in its opposition papers.
. It is clear that MTA and NYCTA are not the only municipal agencies in the marketplace, as Plaintiff states that its customers also “includ[ed] public agencies such as [NYSDOT].” (Am. Compl. ¶ 6.)
. The Court looks to Delaware law to address the alter ego/veil piercing theory, as CPS is a Delaware limited liability company. See Kalb, Voorhis & Co. v. Am. Fin. Corp.,
. At oral argument, for the first time, Plaintiff argued that Paragraph B of the Agreement’s Preamble shows that Cummins had complete control and domination over CPS. This is a surprising claim, given that Paragraph A of the Agreement states that CPS is "an independent corporation.” (Am. Compl. Ex. A, ¶ A.)
. The fact that CPS is a limited liability company does not change the analysis. See NetJets Aviation, Inc. v. LHC Commc’ns, LLC,
. The Court also notes Section 9.2 of the Agreement: "[CPS] and Cummins are Independent. [Plaintiff] acknowledges that [CPS] is independently incorporated with different ownership than Cummins and without the authority to speak for or legally bind Cummins.’’ (Am. Compl. Ex. A, § 9.2.)
. The Court notes that Plaintiff neglected to cite in its Complaint, or incorporate by reference, many documents that it included in its papers filed in relation to its motion for a preliminary injunction, such as the affidavit of Karl F. Gontkof, Vice President of CPS’s Engine Business. (Pl.'s Mem. of Law in Supp. of its Mot. for a Prelim. Inj. Ex. A (Dkt. No. 10).) In it, Gontkof states that "[p]rior to April 2008, CMPS had a distributor-dealership type of relationship with Plaintiff,” which CPS then continued "pursuant to the terms of an unsigned Cummins Engine Dealership Agreement.” (Id.) Another example is the affidavit of Pat Luongo, Plaintiff's Comptroller, which includes transcripts of recorded telephone conversations where CPS employees discussed the alleged bidding prohibition. (Aff. of Pat Luongo in Supp. of Pl.'s Mot. for a Prelim. Inj. (Luongo Aff.) (Dkt. No. 14).) An excerpt from the transcript of a November 30, 2009 recorded telephone conversation between Luongo and Rick Kisylia, Automotive Sales Manager of CPS, reveals the following:
Pat: Uhh, okay, but now your [sic] telling me that I’m not supposed to quote the transit authority at all.
Ricky: Rew, the the revenue side of the business, new parts and recon parts, we don’t want you bidding.
Pat: New parts or recon parts, what other parts are there, there are none, no.
Ricky: Uhh um I’m just sayin that that’s the two things that we are trying to grow our profits on so that we can afford to do things.
Pat: Yeah, yeah but Ricky I busted my chops building this up.
Ricky: I'm just telling you we got new players and we got new vice president, we have a new owner, and their philosophy is, an and we’re just listen, and we're tying [sic] to get there, and we’re getting there uhhh, but that business is is uhh for us, and that’s what's going to support the New York City bus business, now.
Pat: But ok, like last Thursday last Wednesday there were 4 bids that I was ready to bid on, an and because of what you told, I didn’t bid on them now.
Ricky: Thanks you, I appreciate it.
Pat: But, now, there.
Ricky: It went a long way with two guys tha that you met with because I shared with them that uh, you got, you and a couple of other people were not bidding it, and youknow something, none of you bidded, so you did what you said you were gonna do, and that, that goes a long way.
(Luongo Aff., Ex. A.)
Also of note is a March 30, 2010 recorded telephone conversation between Luongo and Kristy Kibler of CPS:
Pat: ... uhh there's a bid for Cummins parts, you, you don’t want us to bid on that one.
Kristy: The recon.
Pat: Yeah, I think so, you you going in on that uhh.
Kristy: I uhh for New York City.
Pat: Yeah, no.
Kristy: Yeah, yeah.
Pat: For the transit.
Kristy: Yes.
Pat: Okay, alright then, so you want us to stay out of it ...
Pat: Now, now on the other, on the huhh I, I keep getting a call that they want us to quote for sure, so I, I’m going to go in at list price.
Kristy: Youu [sic], okay, that’s fine, I mean, you, you do it, do what you have to do that’s fine.
Pat: Alright, I’ll go in at list price and huhh, okay, huhh, that’s what you want us to do I presumed.
Kristy: I can’t tell ya, I mean, I know you meet [sic] with Scott and Karl and uhhh, I mean, you know, I think, that umm you know how we want that business to run, but I can’t tell you over the phone, so I know, I mean, to be honest with you, umm, you know I, I just know what our company policy is right, but you know I, Its [sic], you do what you need to do, I, I think that its [sic]. in your best interest to you know, remember what they talked to you about, you know what I mean, but I, I don’t know what to say besides that ...