MIZRAHI v. CHECKOLITE INTERNATIONAL, INC. et al
OPINION. Signed by Judge Jose L. Linares on 7/15/2015. (anr)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
EDDY TURKIEH MIZRAHI,
Civil Action No. 14-cv-7987-JLL-JAD
CHECKOLITE INTERNATIONAL, INC. and
LINARES, District Judge.
This matter comes before the Court on Defendant’s Motion to Dismiss the Fifth,
Sixth, Seventh, Eighth, Ninth, and Tenth counts of Plaintiff’s Complaint, as well as all
claims against Defendant Leon Bibi, pursuant to 12(b)(6) of the Federal Rules of Civil
Procedure. The Court has considered the parties’ submissions and decides this matter
without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons
set forth below, Defendants’ Motion to Partially Dismiss is denied.
Defendant, Checkolite International, Inc. (“Checkolite”) is a New Jersey based
company that manufactures lamps and lighting fixtures, which are sold to retailers in
Mexico. Compl. ¶¶ 3, 10-11, Dec. 23, 2014, ECF No. 1. Defendant Leon Bibi (“Bibi”)
operates as the Chief Executive Officer of Checkolite and is a resident of New Jersey. Id.
¶ 4. Plaintiff Eddy Turkieh Mizrahi (“Mizrahi”) is a citizen of Mexico. Id. ¶ 2.
On January 1, 2010, Mizrahi and Checkolite entered into a Manufacturer’s Sales
Representative Agreement, which appointed Mizrahi as the exclusive sales representative
for Checkolite in Mexico. Id. ¶ 12. The contract provided that Mizrahi was allotted the
exclusive right to sell Checkolite products in Mexico in exchange for a commission. Id.
Mizrahi was then responsible for the promotion and expansion of existing and potential
accounts. This agreement was set to terminate on December 31, 2012, with a provision
that allowed for early termination with 120 days notice. Id. On January 1, 2013, Mizrahi
and Checkolite entered into a nearly identical contract, but with a larger scope of
products to be sold by Mizrahi and no option to terminate the contract prior to its
December 31, 2015 expiration. Id. ¶ 13-14.
Mizrahi alleges that in February 2013, Bibi informed Mizrahi that a client was to
be removed from his exclusive territory. He then refused to pay Mizrahi his commissions.
Id. ¶ 17. Mizrahi claims that at that time he was owed $127,679.85 for sales made in
2012, and $46,344.50 for sales made in 2013. Id. ¶ 18. Mizrahi also states that Bibi
requested that Mizrahi refrain from initiating legal proceedings to collect this debt
provided that Mizrahi would be paid $5,000 weekly until the debt was fulfilled. Id. ¶ 20.
Between May 6, 2013 and June 6, 2013, $5,000 payments were made in weekly
installments to Mizrahi. However, after June 6, 2013 no other payments were received.
Id. ¶¶ 22-23. Mizrahi also claims that Checkolite deprived him of an unascertained
amount of commission by violating his contractual right to exclusively sell specified
products in Mexico. Defs.’ Mot. Dismiss 2, June 12, 2015, ECF No. 19.
Mizrahi commenced arbitration proceedings on August 1, 2013 against
Checkolite to recover the remaining $154,024.35 balance on his commission. Compl. ¶
25. Mizrahi states that around the same time as this filing, Checkolite fraudulently
transferred its assets to a third party so that the assets were beyond the reach of
Checkolite’s creditors. Id. ¶¶ 45-46. In turn, Mizrahi no longer responded to arbitration
requests. Id ¶ 26.
On December 23, 2013 Mizrahi commenced this action asserting 10 claims,
including breach of contract, fraud, and equitable relief against both Checkolite and Bibi.
Compl. ¶ 1. Currently before the Court is Defendants’ 12(b)(6) motion to partially
dismiss certain counts of the Complaint.
II. LEGAL STANDARD
For a complaint to survive dismissal, it “must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
“Federal Rule of Civil Procedure 8(a)(2) requires ‘a short and plain statement of the
claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair
notice of what the . . . claim is and the grounds upon which it rests.’” Twombly, 550 U.S.
at 545 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
In evaluating the sufficiency of a complaint, a court must accept all well-pleaded
factual allegations as true and draw all reasonable inferences in favor of the non-moving
party. See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). “Factual
allegations must be enough to raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555. Further, “[a] pleading that offers ‘labels and conclusions’ or
‘a formulaic recitation of the elements of a cause of action will not do.’” Iqbal, 556 U.S.
at 678 (citing Twombly, 550 U.S. at 555, 557). “Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not suffice.” Id. Thus,
legal conclusions draped in the guise of factual allegations may not benefit from the
presumption of truthfulness. Id. Additionally, in evaluating a plaintiff's claims, generally
“a court looks only to the facts alleged in the complaint and its attachments without
reference to other parts of the record.” Jordan v. Fox, Rothschild, O'Brien & Frankel, 20
F.3d 1250, 1261 (3d Cir. 1994).
A. Defendant’s Motion to Dismiss Plaintiff’s Fraud and NJUFTA Claims
Defendants argue that Plaintiff’s fraud claim is duplicative of the breach of
contract claims and must be dismissed. Defendants further assert that the fraud and New
Jersey Uniform Fraudulent Transfer Act (“NJUFTA”) claims should be dismissed for
lack of specificity.
To state a claim for fraud in accordance with New Jersey law, a plaintiff must
allege (1) a material misrepresentation of fact; (2) knowledge or belief by the defendant
of its falsity; (3) intention that the other person rely on it; (4) reasonable reliance thereon;
and (5) resulting damage. Kassin v. Compucom, Inc., 2012 WL 893097, at *3 (D.N.J.
March 15, 2012) (citing Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007)
(citation omitted)). The alleged misrepresentation of fact cannot be based solely on an
unfulfilled promise to perform. Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1186
(3d Cir. 1993) (citing Anderson v. Modica, 73 A.2d 49, 53 (N.J. 1950)).
Additionally, fraud allegations are measured under the heightened pleading
standard of Fed. R. Civ. P. 9(b). Lum v. Bank of Am., 361 F.3d 217, 220 (3d Cir. 2004)
(analyzing Fed. R. Civ. P. 9(b) to state that all claims based on fraud are subject to the
heightened pleading requirement). Under this standard, fraud allegations “must state with
particularity the circumstances constituting fraud.” FED. R. CIV. P. 9(b). Alleging details
in the complaint regarding the time, date, or place of the fraud, who made the
misrepresentation, to whom it was made, and the general content of the
misrepresentations will usually satisfy the particularity standard. See, e.g., Lum, 361 F.3d
at 224 (citing Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791
(3d Cir. 1984)).
Here, Plaintiff adequately pleads the fraud and violation of UFTA claims. The
Complaint alleges that Defendants never had any intention of repaying Mizrahi and
structured Checkolite’s insolvency to deliberately block Mizrahi from securing his
commission payments. Plaintiff further points to specific circumstances during which the
misrepresentations allegedly took place. The Court will deny the motion to dismiss the
fraud claims against both Defendants Checkolite and Bibi.
B. Defendant’s Motion to Dismiss Promissory Estoppel, Unjust Enrichment
and Quantum Meruit Claims
Defendants assert that Plaintiff’s quasi-contractual claims cannot stand when a
written and signed contract is the nexus of the dispute and when the claims fully overlap
with the breach of contract claims. See Clark-Fitzpatrick, Inc. v. Long Island R. Co., 70
N.Y.2d 382, 288-89, 516 N.E.2d 190, 193 (1987). See also Shapiro v. Solomon, 126 A.2d
654, 658-59 (N.J. Super. Ct. App. Div. 1956). Defendants further recite this Court’s past
ruling, which stated that Plaintiff’s quasi-contract claims “arise out of --- or, at a
minimum, relate to --- the terms of the parties’ Agreements, and in particular, monies that
Plaintiff believes he is owed pursuant to work he performed under the Agreements.”
(Mar. 31, 2015 Order at 3-4). To be sure, Plaintiff’s claims have common roots, but at
this stage, Plaintiff’s quasi-contract pleadings are sufficient.
Plaintiff is not barred from offering alternative or inconsistent theories of
recovery arising out of the same facts. Kancor Americas, Inc. v. Atc Ingredients, Inc., No.
14–cv–4107, 2015 WL 1530740, at *3 (D.N.J. Apr. 6, 2015) (denying defendant’s
motion to dismiss plaintiff’s unjust enrichment claim despite a concurrent breach of
contract claim because plaintiffs may plead alternative causes of action); Simonson v.
Hertz Corp., Civ. No. 10-1585, 2011 WL 1205584, at *7 (D.N.J. Mar. 28, 2011) (stating
that unjust enrichment claims and breach of contract claims are regularly both allowed to
proceed at the pleading stage because dismissal of one of the claims could be premature).
At least until the scope and understanding of the governing contract between
Plaintiff and Defendants comes into sharper focus, the Court will deny Defendants’
12(b)(6) motion as it relates to the quasi-contract claims.
C. Defendant’s Motion to Dismiss Plaintiff’s Claims Against Individual
Defendants argue that Bibi signed the agreements only in his capacity as an
officer of the corporation and is therefore not an individual party to those contracts. Defs.
Mot. Dismiss 9. As a general principle, individuals are not held liable for a contract that
she or he signed. See, e.g. Sciamarelli v. Semet, No. A-0448-09T2, 2010 WL 1924717, at
*4 (N.J. Super. Ct. App. Div. May 10, 2010); Macysyn v. Hensler, 748 A.2d 591, 597
(N.J. Super. Ct. App. Div. 2000).
Here, Plaintiff’s allegations include accusations that individual Defendant Bibi
attempted to negotiate a separate agreement after the initial contract was signed and
fraudulently shifted funds to avoid payment to Mizrahi. The exact contours of the
individual Defendant’s role in the alleged subsequent agreements must be further
explored before this Court can find individual Defendant not liable. Thus, Plaintiff’s
claims are plausible and the 12(b)(6) motion is denied.
For the reasons set forth above, Defendant’s Motions to Dismiss Counts Six,
Seven, Eight, Nine, and Ten against Defendant Checkolite and all Counts against
Defendant Bibi are DENIED. An appropriate Order accompanies this Opinion.
DATED: July 15, 2015
s/ Jose L. Linares
JOSE L. LINARES
U.S. DISTRICT JUDGE
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