RIACHI v. THE PROMETHEUS GROUP et al

Filing 16

LETTER OPINION. Signed by Judge Susan D. Wigenton on 6/6/17. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

CHAMBERS OF

MARTIN LUTHER KING COURTHOUSE
50 WALNUT ST.
NEWARK, NJ 07101
973-645-5903

SUSAN D. WIGENTON
UNITED STATES DISTRICT JUDGE

June 6, 2017

Ronal T. Nagle
52 South Street
Morristown, NJ 07960
Attorney for Plaintiff
Susan C. Cassell
419 Lucille Court
Ridgewood, NJU 07450
Attorney for Defendant
LETTER OPINION FILED WITH THE CLERK OF THE COURT
Re:

Riachi v. The Prometheus Group
Civil Action No. 17-00811 (SDW) (LDW)

Counsel:
Before this Court is the Motion to Dismiss of Defendant The Prometheus Group
(“Defendant”), for failure to state a claim upon which relief can be granted pursuant to Federal
Rule of Civil Procedure (“Rule”) 12(b)(6). (Dkt. No. 7.) On October 25, 2016, this Court issued
an Opinion dismissing nearly identical claims Plaintiff Labib Riachi (“Plaintiff”) brought against
Defendant in another case. See Riachi v. Prometheus Grp., No. 16-CV-2749-SDW-LDW, 2016
WL 6246766 (D.N.J. Oct. 25, 2016). As the parties are therefore familiar with the factual issues
in this case, this Court will reference only those facts relevant to the current Motion.
As in his previous Complaint, Plaintiff now contends that Defendant is liable under the
following theories: breach of contract (“Count I”), breach of the implied covenant of good faith
and fair dealing (“Count II”), violation of the New Jersey Consumer Fraud Act, N.J. Stat. Ann.

(“N.J.S.A.”) § 56:8-1, et seq. (“Count III”), common-law fraud (“Count IV”), negligent
misrepresentation (“Count V”), negligence (“Count VI”), and unjust enrichment (“Count VII”).
Defendant filed its Motion to Dismiss now before this Court on March 26, 2017. (Dkt. No. 7.)
Plaintiff filed a brief in opposition to Defendant’s Motion on May 15, 2017, (Dkt. No. 14), and
Defendant filed its brief in reply on May 30, 2017.
For the reasons stated herein, Defendant’s Motion to Dismiss is GRANTED in part and
DENIED in part.
DISCUSSION
A. Legal Standard for Motion to Dismiss Under Fed. R. Civ. P. 12(b)(6)
The adequacy of pleadings is governed by Fed. R. Civ. P. 8(a)(2), which requires that a
complaint allege “a short and plain statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a)(2). This Rule “requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do. Factual allegations must be
enough to raise a right to relief above the speculative level[.]” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (internal citations omitted); see also Phillips v. Cty. of Allegheny, 515 F.3d
224, 231 (3d Cir. 2008) (stating that Rule 8 “requires a ‘showing,’ rather than a blanket assertion,
of an entitlement to relief”).
In considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a court must “accept all
factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and
determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to
relief.” Phillips, 515 F.3d at 231 (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7
(3d Cir. 2002)) (internal quotation marks omitted). However, “the tenet that a court must accept
as true all of the allegations contained in a complaint is inapplicable to legal conclusions.
Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,
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do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Determining whether the allegations
in a complaint are “plausible” is “a context-specific task that requires the reviewing court to draw
on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. If the “well-pleaded facts
do not permit the court to infer more than the mere possibility of misconduct,” the complaint
should be dismissed for failing to “show[] that the pleader is entitled to relief” as required by Rule
8(a)(2). Id.
B. Count I- Breach of Contract
In Count I of the Complaint, Plaintiff alleges Defendant breached a contract, which “was
renewed several times from 2005 to 2012,” by improperly training and advising Plaintiff both as
to the operation of the equipment Defendant sold Plaintiff and as to the proper billing procedures
related to such equipment. (Compl. ¶¶ 26-31.) In order to adequately state such a claim under New
Jersey law, a plaintiff must allege: “(1) the existence of a valid contract between the parties; (2)
failure of the defendant to perform its obligations under the contract; and (3) a causal relationship
between the breach and the plaintiff’s alleged damages.” Sheet Metal Workers Int’l Ass’n Local
Union No. 27, AFL-CIO v. E.P. Donnelly, Inc., 737 F.3d 879, 900 (3d Cir. 2013) (citing Coyle v.
Englander’s, 488 A.2d 1083, 1088 (N.J. Super. Ct. App. Div. 1985)).
In seeking dismissal of Count I, Defendant contends Plaintiff failed to sufficiently allege
both that Defendant breached the terms of a contract, and also, that such breach caused Plaintiff to
suffer damages. However, this Court is satisfied that, although Plaintiff will eventually be required
to prove each element of his breach of contract claim, at this point in the proceedings, he has
provided sufficient factual matter to allege a plausible claim for breach of contract. Moreover,
although Defendant contends that Count I is untimely, the Complaint does not specify when
Defendant last purportedly acted in violation of a contract between the parties. Therefore, a

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determination as to whether Count I is barred by the statute of limitations is premature at this time.
See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1385 n.1 (3d Cir. 1994)
(explaining that a statute of limitations defense may only be raised in a motion to dismiss under
Rule 12(b)(6) “where the complaint facially shows noncompliance with the limitations period and
the affirmative defense clearly appears on the face of the pleading”). Accordingly, Defendant’s
Motion to Dismiss is denied as to Count I.
C. Count II- Breach of the Implied Covenant of Good Faith and Fair Dealing
“[E]very contract in New Jersey contains an implied covenant of good faith and fair
dealing.” Sons of Thunder, Inc. v. Borden, Inc., 690 A.2d 575, 587 (N.J. 1997) (citations omitted).
To sufficiently state a claim for breach of such an implied covenant, a plaintiff must allege a
defendant, acting in bad faith or with a malicious motive, “engaged in some conduct that denied
the benefit of the bargain originally intended by the parties.” Brunswick Hills Racquet Club, Inc.
v. Route 18 Shopping Ctr. Associates, 864 A.2d 387, 396 (N.J. 2005) (quoting 23 Williston on
Contracts § 63:22 (4th ed.)) (internal quotation marks omitted). Moreover, “[p]roof of ‘bad motive
or intention’ is vital to an action for breach of the covenant.” Brunswick Hills Racquet Club, 864
A.2d at 396 (quoting Wilson v. Amerada Hess Corp., 773 A.2d 1121, 1130 (N.J. 2001)) (citation
omitted).
In Count II of the Complaint, Plaintiff alleges Defendant’s representations and omissions
breached the covenant of good faith and fair dealing implied in “the contracts” between the parties.
(Compl. ¶¶ 32-36.) However, dismissal of Plaintiff’s implied covenant claim is appropriate for
the same reasons this Court initially dismissed this claim. See Riachi, 2016 WL 6246766, at *3.
Specifically, Plaintiff still fails to adequately allege that Defendant acted with bad faith or motive.
In addition, because of the limited information Plaintiff provides as to the terms of the contract(s)

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between the parties, it is impossible for this Court to reasonably infer that Defendant’s conduct
denied Plaintiff a benefit intended by the parties to such contract(s). As a result, the Complaint
fails to allege a plausible claim for breach of the implied covenant of good faith and fair dealing.
D. Counts III, IV, and V
In Counts III, IV, and V of the Complaint, respectively, Plaintiff alleges Defendant is liable
for its misrepresentations under the New Jersey Consumer Fraud Act (“CFA”), N.J.S.A. § 56:8-1,
et seq., and under theories of fraud and negligent misrepresentation. (Compl. ¶¶ 37-59.) As this
Court explained in its initial Opinion, these claims must satisfy the heightened pleading standard
of Federal Rule of Civil Procedure 9(b). See Riachi, 2016 WL 6246766, at *3-5. Although Plaintiff
appears to have made an effort to conform its Complaint to this standard by providing additional
information as to what misrepresentations were allegedly made, (see Compl. ¶¶ 18-19), the
Complaint still fails to plead with specificity who made each of the representations, when the
representations were made, and how each of the representations were made. See In re Advanta
Corp. Sec. Litig., 180 F.3d 525, 534 (3d Cir. 1999) (holding that Rule 9(b) “requires plaintiffs to
plead ‘the who, what, when, where, and how: the first paragraph of any newspaper story.’”
(quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990))). Accordingly, Counts III,
IV, and V are dismissed.
E. Count VI- Negligence
In Count VI of the Complaint, Plaintiff alleges Defendant is liable under a theory of
negligence as a result of the “negligent and reckless advice” Defendant provided to Plaintiff.
(Compl. ¶¶ 60-67.) In seeking dismissal of this claim, Defendant argues that Count VI is barred
by the economic loss doctrine. In response, Plaintiff contends, without citation to any authority,
that “[u]nder theories of alternative pleading, Plaintiff may assert his claims for negligence without

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regard to the economic loss doctrine.” (Pl.’s Br. Opp. at 18.) However, under the economic loss
doctrine, Courts in this District regularly dismiss negligence claims which are based on purely
economic losses (i.e., not physical injury to person or property). See, e.g., Rao v. Anderson Ludgate
Consulting, LLC, No. CV153126SRCCLW, 2016 WL 3647998, at *2 (D.N.J. July 7, 2016)
(dismissing a negligence claim under the economic loss doctrine). As in those cases, Plaintiff’s
negligence claim here is based on the purely economic loss he allegedly suffered as the result of
Defendant’s misrepresentations. Count VI must, therefore, be dismissed pursuant to the economic
loss doctrine.
F. Count VII- Unjust Enrichment
In Count VII of the Complaint, Plaintiff alleges Defendant is liable under a theory of unjust
enrichment because “[i]n performing under the Agreement with Prometheus, Prometheus received
the benefits of Dr. Riachi’s payment but did not reciprocally benefit Dr. Riachi.” (Compl. ¶ 69.)
“To establish unjust enrichment, a plaintiff must show both that defendant received a benefit and
that retention of that benefit without payment would be unjust.” VRG Corp. v. GKN Realty Corp.,
641 A.2d 519, 526 (N.J. 1994). However, a claim for unjust enrichment, “cannot be maintained
where a valid contract fully defines the parties’ respective rights and obligations.” Jones v. Marin,
No. CIV. 07-0738, 2009 WL 2595619, at *6 (D.N.J. Aug. 20, 2009) (first citing St. Matthew's
Baptist Church v. Wachovia Bank Nat'l Assoc., No. 04–4540, 2005 WL 1199045, *7 (D.N.J. May
18, 2005); then citing Winslow v. Corporate Express, Inc., 834 A.2d 1037 (N.J. Super. Ct. App.
Div. 2003)); Van Orman v. Am. Ins. Co., 680 F.2d 301, 310 (3d Cir. 1982) (holding that “recovery
under unjust enrichment may not be had when a valid, unrescinded contract governs the rights of
the parties”).

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Although Plaintiff contends that Count VII is pled in the alternative, the Complaint plainly
states that Count VII is, in fact, based on the existence of “the Agreement” between the parties.
(Compl. ¶ 69.) Dismissal of Count VII is therefore appropriate.
CONCLUSION
For the reasons set forth above, Defendant’s Motion to Dismiss is GRANTED in part and
DENIED in part. Specifically, the Motion is Granted as to Counts II through VII and Denied as
to Count I. An appropriate order follows.
s/ Susan D. Wigenton
SUSAN D. WIGENTON
UNITED STATES DISTRICT JUDGE

Orig:
cc:

Clerk
Leda D. Wettre, U.S.M.J.
Parties

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