Commercial Lubricants, LLC v. Safety-Kleen Systems, Inc.

Filing 51

ORDER granting in part and denying in part 38 Motion for Summary Judgment; denying 39 Motion for Partial Summary Judgment. For the reasons discussed in the attached Memorandum and Order, the Court grants Defendant's motion for partial summa ry judgment in part as to Plaintiff's claims for the implied covenant of good faith and fair dealing (counts two and six), except to the extent they are based on Defendant's refusal to provide technical data for the MTA bid; and grants Defe ndant's motion for partial summary judgment as to Plaintiff's claims for promissory estoppel (count seven), equitable estoppel (count eight), fraud (count nine), tortious interference with contract and with prospective economic advantage (c ounts ten and eleven), and declaratory judgment (count twelve). In addition, the Court reserves judgment on count thirteen, for breach of the Waste Oil Agreement, and instructs Plaintiff to brief the issues explained in the Memorandum and Order with in ten days of this date, with Defendant's response due ten days thereafter. Finally, the Court denies Defendant's motion for summary judgment on Plaintiff's claims for breach of the exclusivity agreement (count one) and the implied exclusivity agreement (count five), as well as Defendant's motion for summary judgment on its counterclaims for breach of contract and unjust enrichment. Ordered by Judge Margo K. Brodie on 8/8/2017. (Haji, Sara)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------------------------------------COMMERCIAL LUBRICANTS, LLC,
Plaintiff,
v.

MEMORANDUM & ORDER
14-CV-7483 (MKB)

SAFETY-KLEEN SYSTEMS, INC.,
Defendant.
-------------------------------------------------------------MARGO K. BRODIE, United States District Judge:
Plaintiff and Counterclaim-Defendant Commercial Lubricants, LLC commenced the
above-captioned action against Defendant and Counterclaim-Plaintiff Safety-Kleen Systems,
Inc., alleging that Defendant breached certain contracts relating to the distribution of recycled
oil. (Compl., Docket Entry No. 1.) On August 13, 2015, Plaintiff filed the Second Amended
Complaint (“SAC”), asserting claims for breach of an exclusivity agreement, breach of an
implied exclusivity agreement, breach of a credit agreement, breach of the implied covenant of
good faith and fair dealing, promissory estoppel, equitable estoppel, fraud, tortious interference
with contract, tortious interference with prospective economic advantage, declaratory judgment
and breach of a contract to dispose of “waste oil.” (See generally SAC, Docket Entry No. 14.)
Defendant filed counterclaims on March 16, 2015, alleging that Plaintiff breached a contract
between the parties and was unjustly enriched by accepting Defendant’s recycled oil product
throughout 2014 without paying. (Counterclaim ¶¶ 22–35, Docket Entry No. 8.)

Defendant moves for partial summary judgment on Plaintiff’s claims, as described below,
and for summary judgment on its counterclaims. (Def. Mot. for Partial Summ. J. (“Def. Mot.”),
Docket Entry No. 39; Def. Mem. in Supp. of Def. Mot. (“Def. Mem.”), Docket Entry No. 39-1;
Def. Mot. for Summ. J. on Counter-claims (“Def. CC Mot.”), Docket Entry No. 38; Def. Mem.
in Supp. of Def. CC Mot. (“Def. CC Mem.”), Docket Entry No. 38-1.) For the reasons discussed
below, the Court grants Defendant’s motion for partial summary judgment in part as to
Plaintiff’s claims for breach of the implied covenant of good faith and fair dealing and grants
Defendant’s motion for partial summary judgment as to Plaintiff’s claims for promissory
estoppel, equitable estoppel, fraud, tortious interference with contract and with prospective
economic advantage, and declaratory judgment. The Court reserves judgment on the claim for
breach of the “waste oil” agreement. Finally, the Court denies Defendant’s motion for partial
summary judgment as to Plaintiff’s claims for breach of the exclusivity agreement and the
implied exclusivity agreement, as well as Defendant’s motion for summary judgment on its
counterclaims for breach of contract and unjust enrichment.
I.

Background
a.

Factual history
i.

The parties’ relationship and the Distributor Agreement

Defendant is a used oil re-refiner, and Plaintiff is a distributor of recycled oil products in
the New York metropolitan area. 1 (Def. 56.1 ¶¶ 1–2.) On April 11, 2012, Defendant and a

1

The facts are undisputed except as noted. For ease of reference, the Court refers to the
filings as follows: Def. Statement of Material Facts Pursuant to Local R. 56.1 in Supp. of Def.
Mot. for Partial Summ. J. (“Def. 56.1”), Docket Entry No. 39-2; Pl. Response to Def. 56.1 (“Pl.
56.1”), Docket Entry No. 45; Def. Statement of Material Facts Pursuant to Local R. 56.1 in
Supp. of Def. Mot. for Summ. J. on Counter-claims (“Def. CC 56.1”), Docket Entry No. 38-2;
Pl. Response to Def. CC 56.1 (“Pl. CC 56.1”), Docket Entry No. 46.
2

company called New York Commercial Lubricants (“NYCL”) entered into a contract governing
NYCL’s distribution of Defendant’s recycled oil product (the “Distributor Agreement”). (Id.
¶¶ 3, 11.) On July 17, 2013, through an asset purchase agreement (the “APA”), Plaintiff
purchased the assets of NYCL. (Aff. of Gary Stetz in Opp’n to Def. Mots. (“Stetz Aff.”) ¶ 2,
Docket Entry No. 43.) Under the terms of the APA, Plaintiff purchased many of NYCL’s
contractual rights, including the right to conduct business under NYCL’s commercial name,
“Metrolube.” (Def. 56.1 ¶ 5.) According to Plaintiff, it neither acquired nor was assigned the
Distributor Agreement in connection with the APA. 2 (Pl. 56.1 ¶¶ 8–10; Stetz. Aff. ¶¶ 4–6.)
According to Defendant, Plaintiff effectively “stepped into the shoes” of NYCL because it kept
the same employees, facility, equipment and website. (Def. CC 56.1 ¶ 5.)
Under the terms of the Distributor Agreement, NYCL was obligated to purchase an
annual minimum amount of Defendant’s product, together with such additional product as
NYCL may order. (Distributor Agreement ¶ 2.) The pricing for the products was set forth as an
attachment to the Distributor Agreement, but the Distributor Agreement further provided that
“[p]rices are subject to change at any time upon written notice.” (Id. ¶ 4.) Payment was due

2

Plaintiff directs the Court to the portion of the APA relating to contractual rights, which
is located within a section of the APA enumerating the “purchase and sale of assets.” (APA at 2,
annexed to Stetz Aff. as Ex. A.) According to the APA, Plaintiff purchased from NYCL (the
“Seller”):
Contractual rights. All rights of Seller, as of the Closing Date, in
and to all Contracts (as defined below) specifically identified on
Schedule 1.1(b). As used in this Agreement, “Contracts” means any
and all rights under any written contract . . . specifically identified
on Schedule 1.1(b).
(Id. at 3.) However, the copy of the APA provided to the Court does not include Schedule
1.1(b); therefore, the Court is unable to determine whether, as Plaintiff claims, the Distributor
Agreement was not transferred as part of NYCL’s asset sale to Plaintiff. Defendant does not
address whether the Distributor Agreement was transferred to Plaintiff, but appears to argue that
Plaintiff conducted business with Defendant as though it was aware of its obligations under the
Distributor Agreement. (Def. CC 56.1 ¶ 5.)
3

within thirty days of the date of Defendant’s invoice, and unpaid amounts would be subject to
interest at 1.5% per month. (Id. ¶ 13.) Both parties were entitled to “immediately terminate” the
Distributor Agreement if the other party failed to perform in accordance with the Distributor
Agreement or breached any provision of the Distributor Agreement and failed to correct the
breach within thirty days’ notice. (Id. ¶ 17.) Both parties were also permitted to terminate the
Distributor Agreement with ninety days’ notice. (Id.) No modifications to the Distributor
Agreement would be deemed binding on either party unless in writing and signed by both
parties. (Id. ¶ 25.)
The parties do not dispute that after Plaintiff purchased NYCL’s assets, Plaintiff supplied
Defendant’s oil to Plaintiff’s customers, including to the New York City Metropolitan
Transportation Authority (“MTA”). (Def. 56.1 ¶ 10; Deposition of Gary Stetz (“Stetz Dep.”)
250, 253–54, Docket Entry No. 39-4.) According to Plaintiff, the pricing for these products was
established through in-person, telephone and, rarely, e-mail negotiations between Plaintiff and
Defendant, rather than through form “pricing letters,” as the Distributor Agreement
contemplates. (Stetz Aff. ¶ 10.) In addition, “contrary to the express terms of the Distributor
Agreement,” Gary Stetz, the Managing Member of Commercial Lubricants, personally
negotiated with Defendant a sixty-day payment period on each invoice. (Id. ¶ 11.)
Plaintiff states that the preexisting relationship between NYCL and Defendant was “a
large part of the reason [Plaintiff] purchased the assets of NYCL.” (Id. ¶ 12.) Prior to and
following the execution of the APA, Stetz had many conversations with Defendant’s
representatives, “such as Curt Knapp and Steve Lewis,” 3 who assured him that the “strategic

3

In general, neither party explains the roles of the key representatives. It appears that
Curt Knapp was Defendant’s Executive Vice President of Marketing and Oil Re-refining Sales

4

partnership” would continue after the APA. (Id.) Plaintiff made “certain investments in its
operations” knowing that it would receive a return on its investment from Defendant’s guarantee
that the “strategic partnership” would continue, particularly through the “exclusive price
support,” or preferred pricing, that Defendant granted Plaintiff. 4 (See id. ¶ 13.) Plaintiff also
asserts that the course of dealing between the parties “included frequent in-person and over the
telephone negotiations of pricing terms, discounts and credits,” little of which was memorialized.
(Id. ¶ 15.)
Plaintiff alleges that in late 2013 and throughout 2014, Defendant stopped
communicating its strategy to Plaintiff and sought to avoid adhering to the “strategic
partnership” by sending Plaintiff “mixed messages.” 5 (Pl. Opp’n 4–5.)

and Steve Lewis was the Vice President of Sales. (See Email from Curt Knapp dated Sept. 23,
2013, Docket Entry No. 44-1.)
4

Although Plaintiff states in its papers that Defendant promised it preferred pricing in
connection with its distribution of Defendant’s re-refined oil, (see Stetz Aff. ¶ 13; Pl. Mem. of
Law in Opp’n to Def. Mot. (“Pl. Opp’n”) 3, Docket Entry No. 41.), it cites only to e-mail
correspondence that does not mention any preferred pricing and that appears to be part of
broader communications regarding exclusivity arrangements between the parties, (see Pl. Opp’n
3). Plaintiff does not explain the terms of what it refers to as the “exclusivity arrangement,” or
whether it was separate from the agreement to provide “exclusive price support.” (See Stetz Aff.
¶ 13.)
5

In support of this allegation, Plaintiff cites to an e-mail chain internal to Defendant’s
organization in which Defendant’s new management suggests it is time to “establish a different
relationship with [Plaintiff],” but also states, “I like what [Plaintiff is] doing and I think we can
do some things with them, but we don’t want to send them aggressive pricing without any
gallons.” (Email from Mike Smith dated Oct. 10, 2013, Docket Entry No. 44-4.) Plaintiff also
cites a line from another e-mail chain between Mike Smith and Curt Knapp of Safety-Kleen in
which Smith states that another of Defendant’s managers of the relationship with Plaintiff
“doesn’t understand how to manage a complex relationship like this [one with Plaintiff].”
(Email from Mike Smith dated May 24, 2013, Docket Entry No. 44-5.)

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ii. MTA bids
Plaintiff had a contract with the MTA for the sale of a line of Defendant’s oil product,
CJ-4+Lubrizol, 6 which arose from Plaintiff’s winning bid #5598 with the MTA. (Def. 56.1
¶ 11.) Defendant wanted the MTA to switch from using CJ-4+Lubrizol, an older product, to
CJ-4+Infineum, a new product, because it would be more profitable for both Plaintiff and
Defendant. (Id. ¶ 13.) In July of 2013, after Plaintiff acquired NYCL’s assets, Plaintiff
negotiated a new agreement with Defendant under which Plaintiff would receive a fifteen-centper-gallon discount on the CJ-4+Lubrizol needed to complete bid #5598 with the MTA. 7 (Stetz
Aff. ¶ 23.) According to Defendant, it agreed to provide Plaintiff with the discount only if
Plaintiff “[brought] about that change at the [MTA],” (id. ¶ 14) — namely, convinced the MTA
to switch to CJ-4+Infineum. According to Plaintiff, Defendant agreed to provide the discount if
Plaintiff simply facilitated a meeting with the MTA to discuss adding CJ-4+Infineum to the

6

CJ-4 is a type of natural gas engine oil (“NGEO”), and Lubrizol and Infineum are
additives. (Pl. Opp’n 2.)
7

The parties have not directed the Court to any documentation to support this agreement
except an e-mail from Gary Stetz to Steve Lewis, a representative at Defendant’s organization,
that reads, in relevant part:
First and in regard to the EcoPower CJ-4 with Lubrizol additive that
we are about to supply New York City Mass Transit Association
(“NYC/MTA”) under contract. It is my understanding that our price
for the duration of the contract will be $5.65 per gallon delivered.
Thus allowing us a $.49 per gallon gross margin before our delivery
and overhead costs until such time that we facilitate a meeting with
NYC/MTA regarding the adding of the EcoPower CJ-4 with
Infineum additive to their Qualified Product List (“QPL”). Upon
facilitating such meeting, our price on the EcoPower CJ-4 with
Lubrizol additive drops to $5.50 per gallon delivered. I have
initiated that process and will communicate with Mr. Knapp later
today as to the status.
(Email from Gary Stetz to Steve Lewis dated Sept. 9, 2013, Docket Entry No. 43-5.)

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MTA’s Qualified Product List. (Stetz Aff. ¶ 23; Pl. 56.1 ¶ 14.) The parties do not dispute that
Plaintiff did, in fact, facilitate the meeting with the MTA, and that Defendant did not provide the
fifteen-cent discount. 8 (Stetz Aff. ¶ 23.) Plaintiff states that as a result of Defendant’s failure to
issue the fifteen-cent discount per gallon on CJ-4+Lubrizol for the duration of the MTA bid
#5598, Defendant owes Plaintiff “tens of thousands of dollars.” (Id. ¶ 24.)
Plaintiff further contends that between September of 2013 and February of 2014, it
convinced the MTA to “consider” adding CJ-4+Infineum on its Qualified Products List and
requested from Defendant the data and information that the MTA “required to approve CJ4+Infineum and place that product on its Qualified Products List.” (Am. Compl. ¶¶ 41–42.)
Despite the repeated requests, Defendants allegedly failed to provide the requested data and
information. (Id. ¶ 43.) Plaintiff states that as a result of its efforts to persuade the MTA to
consider CJ-4+Infineum, the MTA put out a bid in January of 2014 for an NGEO without
specifying what additive was required. (Id. ¶ 45.) This allowed Plaintiff to submit a bid for oil
with Infineum; however, without the technical data that the MTA required and that was in

8

The parties do not provide the date of this meeting with the MTA. Although it is not
explicitly stated whether the MTA switched to CJ-4+Infineum, the Court understands from
various documents in the record that the MTA opened bids on a project that would have
permitted CJ-4+Infineum to be offered, provided that Plaintiff could first obtain approval to
place CJ-4+Infineum on the Qualified Products List. Plaintiff argues that when it attempted to
submit CJ-4+Infineum to the Qualified Products List so that Plaintiff could submit the new
formula for MTA bids, Defendant refused to provide the necessary technical and safety data to
secure the product’s position on the Qualified Products List, without which Plaintiff could not
bid with CJ-4+Infineum. (See Pl. Interrog. Responses at 18, annexed to Reynolds Decl. as Ex.
A; see also Am. Compl. ¶ 41 (alleging that Plaintiff “made significant progress” in discussions
with New York City officials to educate them about the Infineum additive and to “obtain
consideration of CJ-4+Infineum for the NYCMTA Qualified Product List”); id. ¶¶ 42–43
(alleging that Plaintiff “repeatedly asked Defendant to provide data and information that [the
MTA] required to approve CJ-4+Infineum and place that product on its Qualified Products
List”).)

7

Defendant’s exclusive possession, Plaintiff alleges that it was unable to submit the bid. (Id.
¶¶ 45–47.) The bidding period closed on February 26, 2014, and Plaintiff did not submit a bid
because it lacked the necessary technical data. (Id. ¶ 48.)
Plaintiff also asserts that Defendant agreed it would provide to Plaintiff “exclusive
pricing support for sales of Defendant’s re-refined oil” to New York City agencies, including the
MTA. (Id. ¶ 14.) That is, Defendant agreed that it would provide lower pricing to Plaintiff than
to Plaintiff’s competitors for the sale of re-refined oil that would be submitted in connection with
bids to New York City agencies. 9 (Id.) Plaintiff asserts, however, that it learned Defendant had
provided price support to GH Berlin, a rival distributor, which allowed GH Berlin to submit a bid
to the MTA and receive the contract. (Id. ¶ 49.) In July of 2014, the MTA put out a bid for CJ4+Lubrizol, which another distributor, Circle Lubricants, won. (Id. ¶ 50.) Plaintiff alleges that,
in breach of the parties’ exclusivity agreement, Defendant provided technical support to Circle
Lubricants, which won the bid. (Id.)
iii. Billing issues
Defendant extended a $750,000 line of credit to Plaintiff for the purchase of Defendant’s
products. 10 (Credit Appl., Docket Entry No. 44-4.)
Defendant states that after the APA, Plaintiff “continued to purchase and re-sell
[Defendant’s] products in accordance with the Distributor Agreement.” (Def. CC 56.1 ¶ 12.)

9

It is unclear to the Court whether this alleged agreement was in connection with a
particular line of product or relates to one of the other agreements at issue in the action.
10

The parties do not provide the date that this credit line was established. The credit
application before the Court is dated May 29, 2014, (see Credit Appl.), but the Amended
Complaint alleges that “beginning in late 2013, Defendant repeatedly overcharged Plaintiff for
product” and deducted it from Plaintiff’s line of credit, (see Am. Compl. ¶ 18), which suggests
that the line of credit was established prior to 2014.
8

Although Plaintiff disputes that it was ever a party to or an assignee of the Distributor
Agreement, Plaintiff does not dispute that throughout 2014, Defendant delivered product to
Plaintiff and Plaintiff accepted the product and resold it to customers. (See Def. CC. 56.1 ¶¶ 13–
16; Pl. CC 56.1 ¶¶ 13–16.)
On November 19, 2014, Defendant sent Plaintiff a final demand letter because Plaintiff
had failed to pay for several shipments of product. (Def. 56.1 ¶ 17.) Defendant asserts that
Plaintiff owed $1,056,383.57. (Id.) Plaintiff disputes the amount and asserts that Defendant
never delivered “credits,” amounting to $220,000 or the discounted pricing it promised. (Stetz
Aff. ¶ 13.) For example, Plaintiff states that Defendant incorrectly billed Plaintiff at $6.42 per
gallon on 11,724 gallons of a product known as “America’s Choice,” despite agreeing to charge
only $5.76 per gallon. (Id. ¶ 20.) Plaintiff also states that, throughout 2014, Defendant
incorrectly billed Plaintiff between $6.41 and $6.69 per gallon on 16,191 gallons of product
known as “EcoPower NGEO,” despite agreeing to charge $6.11 per gallon. 11 (Id. ¶ 21.)
Plaintiff asserts that it brought the pricing errors to Defendant’s attention, but the errors were
never remedied. (Id. ¶ 22.)
Plaintiff contends that as a result of its failure to pay incorrect invoices that Defendant
issued, Defendant deducted payment from Plaintiff’s line of credit and used this “artificial
overdraft” as a pretext to withhold credit from Plaintiff, which prevented Plaintiff from buying
Defendant’s product and following through on its contracts with customers. (Id. ¶ 18.)
iv. The Waste Oil agreement
On March 18, 2013, prior to Plaintiff’s purchase of NYCL’s assets, NYCL and
Defendant entered into a Used Oil Incentive Agreement (the “Waste Oil Agreement”) with an

11

The record contains no documentary evidence of these agreements.
9

expiration date of December 31, 2014. (Def. 56.1 ¶ 15; Waste Oil Agreement, Docket Entry No.
44-5.) As part of the Waste Oil Agreement, NYCL agreed to provide Defendant with waste oil
from various customers in exchange for payment. The Waste Oil Agreement consisted of two
main components: (1) a per-gallon commission paid to Plaintiff and (2) an “oil payment” paid
either directly to the customer or to Plaintiff. (See Waste Oil Agreement at 2.) The Waste Oil
Agreement permits either party to terminate the contract “upon [sixty] days[’] prior written
notice” and provides that during the sixty-day period, “both parties will maintain customer
services and billing.” (Id. at 1.) In addition, the Waste Oil Agreement provides that any disputes
arising under the contract will be referred to binding arbitration in Erie County, New York. (Id.
at 2.)
On December 16, 2014, Defendant terminated the Waste Oil Agreement effective
December 21, 2014, citing a downturn in global energy markets. (Def. 56.1 ¶ 20; Pay-For-Oil
Rate Reduction Letter dated Dec. 16, 2014, Docket Entry No 44-5.) Defendant’s letter,
addressed to “Dear Valued Customer,” states that “[e]ffective December 21st or as contracts
allow, all pay-for-oil rates will be moved to $0.00/gallon. Other terms and conditions of our oil
collection service are unchanged.” (Pay-For-Oil Rate Reduction Letter; Pl. 56.1 ¶ 20.)
Defendant states that this language terminated the Waste Oil Agreement, (Def. 56.1 ¶ 20);
Plaintiff states that the Waste Oil Agreement was not terminated because the letter expressly
states that “[o]ther terms and conditions of our oil collection service are unchanged,” (Pl. 56.1
¶ 20). Nevertheless, Stetz acknowledged that he understood the letter to terminate the Waste Oil
Agreement because Plaintiff would not refer its clients to Defendant without a per-gallon
commission. (Stetz Dep. 224–25.)
On January 21, 2015, the Department of Citywide Administrative Services of New York

10

(“DCAS”) contacted Defendant and inquired whether Plaintiff remained an authorized
distributor of Defendant’s products. (Def. 56.1 ¶ 23.) Defendant responded that Plaintiff was no
longer an authorized distributor. (Id. ¶ 24.) On January 30, 2015, after the Complaint was filed
in the instant action, Defendant’s counsel mailed Plaintiff a letter terminating the Distributor
Agreement. (Notice of Termination, Docket Entry No. 39-16.)
b.

Procedural history

Plaintiff filed the instant action on December 23, 2014, filed the Amended Complaint on
February 26, 2015, and filed the SAC on August 13, 2015. (See Compl; Am. Compl., Docket
Entry No. 7; SAC.) In the SAC, Plaintiff asserts claims for: (1) breach of the exclusivity
agreement, (2) breach of the implied covenant of good faith and fair dealing as to the exclusivity
agreement, (3) breach of the credit agreement, (4) breach of the implied covenant of good faith
and fair dealing as to the credit agreement, (5) breach of implied contract, (6) breach of the
implied covenant of good faith and fair dealing as to the implied contract, (7) promissory
estoppel, (8) equitable estoppel, (9) fraud, (10) tortious interference with contract, (11) tortious
interference with prospective economic advantage, (12) declaratory judgment and (13) breach of
the waste oil agreement. (See generally SAC.)
On March 16, 2015, Defendant filed counterclaims alleging that Plaintiff breached the
Distributor Agreement and was unjustly enriched as a result. (Counterclaim ¶¶ 22–35.)
II. Discussion
a.

Standard of review

Summary judgment is proper only when, construing the evidence in the light most
favorable to the non-movant, “there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); Davis v. Shah, 821 F.3d 231,

11

243 (2d Cir. 2016); see also Cortes v. MTA NYC Transit, 802 F.3d 226, 230 (2d Cir. 2015). The
role of the court “is not to resolve disputed questions of fact but only to determine whether, as to
any material issue, a genuine factual dispute exists.” Rogoz v. City of Hartford, 796 F.3d 236,
245 (2d Cir. 2015) (first quoting Kaytor v. Elec. Boat Corp., 609 F.3d 537, 545 (2d Cir. 2010);
and then citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50 (1986)). A genuine issue
of fact exists when there is sufficient “evidence on which the jury could reasonably find for the
plaintiff.” Anderson, 477 U.S. at 252. The “mere existence of a scintilla of evidence” is not
sufficient to defeat summary judgment. Id. The court’s function is to decide “whether, after
resolving all ambiguities and drawing all inferences in favor of the nonmoving party, a rational
juror could find in favor of that party.” Pinto v. Allstate Ins. Co., 221 F.3d 394, 398 (2d Cir.
2000).
b. Partial summary judgment on the SAC
Defendant moves for partial summary judgment on all claims in the SAC except for the
Breach of the Credit Agreement, count three, and Breach of the Implied Covenant of Good Faith
and Fair dealing as to the Credit Agreement, count four. 12 (Def. Mem. 5–14.)
i.

Breach of exclusivity agreement and implied exclusivity agreement

Plaintiff’s breach of the exclusivity agreement and breach of an implied agreement
claims, counts one and five of the SAC, rely on nearly identical allegations — that Defendant
breached its obligations under its agreement with Plaintiff to provide exclusive price support for
sales of Defendant’s product to New York City agencies and to sell CJ-4+Lubrizol to Plaintiff
for $5.50 per gallon for the duration of Plaintiff’s bid #5598. (SAC ¶¶ 56–58, 75–79.)

12

Because Plaintiff “consents to the voluntary dismissal” of count eight, for equitable
estoppel, (see Pl. Opp’n 2), the Court grants Defendant’s motion for summary judgment on count
eight and dismisses Plaintiff’s equitable estoppel claim.
12

Defendant argues that Plaintiff’s claims based on the “exclusivity agreement” fail as a
matter of law because Plaintiff and Defendant never reached a meeting of the minds with respect
to a material term of the exclusivity agreement and, even if they had, the contract was
unenforceable for lack of consideration because Plaintiff’s interpretation that it simply had to get
the MTA to consider adding CJ-4+Infineum imposed no obligation on Plaintiff. (Def. Mem. 5–
6.) Plaintiff argues that Defendant’s Vice President of Sales, Steve Lewis, stated at his
deposition that he understood the exclusivity agreement to operate in precisely the way Plaintiff
did, and that as a result, there is no dispute that Plaintiff was entitled to a fifteen-cent-per-gallon
discount on all CJ-4+Lubrizol distributed to the MTA for the duration of bid #5598. (Pl. Opp’n
13–14.) Plaintiff also argues that its responsibility under the contract to have the MTA consider
switching to CJ-4+Infineum constituted adequate consideration. (Id. at 14.)
Under New York law, a plaintiff alleging breach of contract must show “(1) the existence
of a contract, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by
the defendant, and (4) damages.” Hudson & Broad, Inc. v. J.C. Penny Corp., Inc., 553 F. App’x
37, 39 (2d. Cir. 2014) (internal quotation marks omitted) (citing Harasco Corp. v. Sequi, 91 F.3d
337, 348 (2d Cir. 1996)). A contract exists and is valid “if there is an offer and acceptance,
consideration, mutual assent, and an intent to be bound.” 13 McNamara v. Tourneau, Inc., 464 F.

13

The Court rejects Defendant’s argument that the contract is illusory for lack of
consideration. (See Def. Mem. 6.) In New York state, “[t]he law is well settled that in order for
a promise to be enforceable as a contract, the promise must be supported by valid consideration.
Consideration is defined as either a bargained for gain or advantage to the promisee or a
bargained for legal detriment or disadvantage to the promisor.” Greenberg v. Greenberg, 646
F. App’x 31, 31 (2d Cir. 2016) (quoting Startech, Inc. v. VSA Arts, 126 F. Supp. 2d 234, 236–37
(S.D.N.Y. 2000)); see also Beitner v. Becker, 824 N.Y.S.2d 155, 156 (2006) (“All contracts must
be supported by consideration, consisting of a benefit to the promisor or a detriment to the
promisee.” (citations omitted).

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Supp. 2d 232, 238 (S.D.N.Y. 2006) (citing Register.com v. Verio, 356 F.3d 393, 427 (2d Cir.
2004)).
“To create a binding contract, there must be a manifestation of mutual assent sufficiently
definite to assure that the parties are truly in agreement with respect to all material terms.” 14
Tractabel v. Energy Mktg, Inc. v. AEP Power Mktg, Inc., 487 F.3d 89, 95 (2d Cir. 2007). There
must be “an objective meeting of the minds sufficient to give rise to a binding and enforceable
contract.” Id. Under New York law, 15 “[i]f there is no meeting of the minds on all essential

“[T]raditional principles of contract law provide that parties are free to make their
bargain, even if the consideration exchanged is grossly unequal or of dubious value.” Nadel v.
Play-By-Play Toys & Novelties, Inc., 208 F.3d 368, 374 (2d Cir. 2000) (internal quotation marks
omitted) (quoting Apfel v. Prudential–Bache Sec., 81 N.Y.2d 470, 475 (1993)); see also
Coleman v. Sys. Dialing LLC, No. 15-CV-3868, 2016 WL 3387748, at *3 (S.D.N.Y. June 17,
2016) (“Courts do not weigh the relative value of the consideration exchanged because ‘[u]nder
the traditional principles of contract law, the parties to a contract are free to make their bargain,
even if the consideration exchanged is grossly unequal or of dubious value.’” (alteration in
original) (quoting Apfel, 81 N.Y.2d at 475)); Moezinia v. Ashkenazi, 26 N.Y.S.3d 192, 193
(App. Div. 2016) (Contracting parties “are free to make their bargain, ‘even if the consideration
exchanged is grossly unequal or of dubious value.’” (quoting Apfel, 81 N.Y.2d at 475)). So long
as a contracting party receives “something of value under [a] contract, the contract [will] not be
void for lack of consideration.” Nadel, 208 F.3d at 374 (internal quotation marks omitted)
(quoting Apfel, 81 N.Y.2d at 476); see also Moezinia, 26 N.Y.S.3d at 193 (“[A]bsent fraud or
unconscionability, the adequacy of consideration is not a proper subject for judicial review. It is
enough that something of real value was exchanged . . . .” (citing Apfel, 81 N.Y.2d at 476)).
Here, there is no dispute that Defendant wanted the MTA to place CJ-4+Infineum on its
Qualified Products List, and Defendant provides no support for its argument that having Plaintiff
attempt to convince the MTA to make that switch would provide no value to Defendant. (See
Def. Mem. 6.) Accordingly, the Court does not find the contract unenforceable for lack of
consideration.
14

The parties’ arguments assume that they intended to be bound by the exclusivity
agreement as orally reached and partly memorialized in September of 2013. (See Def. Mem. 5;
Pl. Opp’n 3.)
15

The parties assume without explicitly stating that New York law governs the
exclusivity agreement. Because the parties appear to have orally discussed the exclusivity
agreement at Plaintiff’s New York office, (see Deposition of Steve Lewis (“Lewis Dep.”) 116:2–
7, Docket Entry No. 44-9), and the parties cite New York law in their papers, the Court applies

14

terms, there is no contract.” Mayfield v. Asta Funding, Inc., 95 F. Supp. 3d 685, 696 (S.D.N.Y.
2015) (quoting Opals on Ice Lingerie v. Bodylines Inc., 320 F.3d 362, 372 (2d Cir. 2003)).
“Whether there has been a meeting of the minds on all essential terms is a question of fact that
must be resolved by analyzing the totality of the circumstances.” Benicorp Ins. Co. v. Nat’l Med.
Health Card Sys., Inc., 447 F. Supp. 2d 329, 337 (S.D.N.Y. 2006) (citing United States v. Sforza,
326 F.3d 107, 116 (2d Cir. 2003)); Bazak Int’l Corp. v. Tarrant Apparel Grp., 378 F. Supp. 2d
377, 389 (S.D.N.Y. 2005) (“To determine the presence of mutual assent, . . . [t]he totality of the
parties’ acts, phrases and expressions must be considered, along with the attendance
circumstances, the situation of the parties, and the objectives they were striving to attain.”); see
also Vacold LLC v. Cerami, 545 F.3d 114, 123 (2d Cir. 2008) (noting that where the evidence
“does not point unerringly in a single direction but is capable of supporting conflicting
inferences,” the question of whether a contract has been formed “is a question of fact” (citation
omitted)). This rule applies unless “the evidentiary foundation for determining the formation of
the parties’ contract is either undisputed or consists of writings,” in which case contract
formation is a question of law for the court. Vacold, 545 F.3d at 123 (alterations and citations
omitted).
Once a court determines that a contract exists, it construes that contract “in accordance
with the parties’ intent, which is generally discerned from the four corners of the document

New York law to the dispute over the exclusivity agreement. See Vacold LLC v. Cerami, 545
F.3d 114, 122–23 (2d Cir. 2008) (holding that New York law applies where a substantial amount
of the conduct at issue underlying the contract-formation dispute occurred in New York and the
defendant raised no objection to the application of New York law); see also Prince of Peace
Enters., Inc. v. Top Quality Food Market, LLC, 760 F. Supp. 2d 384, 396 (S.D.N.Y. 2011)
(stating that under New York’s choice-of-law rules, “the interpretation and the validity of
contracts are determined by the law of the place where the contract is made, while all matters
connected with its performance are regulated by the law of the place where the contract, by its
terms, is to be performed.” (quoting Auten v. Auten, 308 N.Y. 155, 160 (1954))).
15

itself.” Luitpold Pharm., Inc. v. Ed Geistlich Sohne A.G. Fur Chemische Industrie, 784 F.3d 78,
87 (2d Cir. 2015) (quoting MHR Capital Partners LP v. Presstek, Inc., 12 N.Y.3d 640, 645
(2009)); see also O’Brien v. Argo Partners, Inc., 736 F. Supp. 2d 528, 534 (E.D.N.Y. 2010).
“Only when a court finds ambiguity in the parties’ written agreement may it look to extrinsic
evidence to discern the parties’ intent.” Id. (quoting Schron v. Troutman Sanders LLP, 20
N.Y.3d 430, 436 (2013)).
“Whether a contract is ambiguous in the first place presents a question of law.” N.Y.
Univ. v. Galderma Labs, Inc., --- F. App’x ---, ---, 2017 WL 1491838, at *1 (2d Cir. Apr. 26,
2017) (quoting Luitpold Pharm., 784 F.3d at 88); see also Greenfield v. Philles Records, Inc., 98
N.Y.2d 562, 569 (2002). Courts “analyze the ambiguity of a provision under the normal rules of
contract interpretation: words and phrases should be given their plain meaning and a contract
should be construed so as to give full meaning and effect to all of its provisions.” Orchard Hill
Master Fund Ltd. v. SBA Commc’ns Corp., 830 F.3d 152, 157 (2d Cir. 2016) (internal quotation
marks omitted); see also Utica Mut. Ins. Co. v. Munich Reinsurance Am., Inc., 594 F. App’x 700,
702 (2d Cir. 2014) (“[I]f the court finds that the contract is not ambiguous it should assign the
plain and ordinary meaning to each term and interpret the contract without the aid of extrinsic
evidence.” (quoting Alexander & Alexander Servs., Inc. v. Certain Underwriters at Lloyd’s, 136
F.3d 82, 86 (2d Cir. 1998))).
“A contract is ambiguous when its terms could suggest ‘more than one meaning when
viewed objectively by a reasonably intelligent person who has examined the context of the entire
integrated agreement and who is cognizant of the customs, practices, usages and terminology as
generally understood in the particular trade or business.” Utica, 594 F. App’x at 703 (quoting
Lightfood v. Union Carbide Corp., 110 F.3d 898, 906 (2d Cir. 1997)). Because “facial

16

ambiguity” in a contract requires the factfinder to examine extrinsic evidence to determine the
contract’s effect, “and because such extrinsic evidence is most often mixed,” a court “generally
will not grant summary judgment on a contract claim when the operative language is
ambiguous.” Luitpold Pharm., 784 F.3d at 88 (citing Compagnie Financiere de CIC et de
L’union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153, 157–58 (2d
Cir. 2000)); see also Palmieri v. Allstate Ins. Co., 445 F.3d 179, 187 (2d Cir. 2006) (“Where
contractual language is ambiguous and subject to varying reasonable interpretations, intent
becomes an issue of fact and summary judgment is in appropriate. . . . Only where the language
is unambiguous may the district court construe it as a matter of law and grant summary judgment
accordingly.”). No genuine dispute of fact exists, however, where “the evidence presented about
the parties’ intended meaning is so one-sided that no reasonable person could decide the
contrary,” or “if the non-moving party fails to point to any relevant extrinsic evidence supporting
that party’s interpretation of the language.” Luitpold Pharm., 784 F.3d at 88 (citing Compagnie
Financiere, 232 F.3d at 158). “Rather, in order for the parties’ intent to become an issue of fact
barring summary judgment, there must also exist relevant extrinsic evidence of the parties’ actual
intent.” Mellon Bank, 31 F.3d at 116; see also Williams & Sons Erectors v. S.C. Steel, 983 F.2d
1176, 1183–84 (2d Cir. 1993) (“Ambiguity without the existence of extrinsic evidence of intent
presents not an issue of fact, but an issue of law for the court to rule on.”).
The Court finds that substantial ambiguity exists as to what the parties intended when
they agreed that Plaintiff would receive a fifteen-cent discount upon having the MTA “consider”
switching from CJ-4+Lubrizol to CJ-4+Infineum — namely, whether Plaintiff would receive a
fifteen-cent discount upon obtaining a meeting with the MTA to discuss switching to

17

CJ-4+Infineum or upon actually convincing the MTA to place CJ-4+Infineum on its Qualified
Products List.
The parties do not dispute that Plaintiff’s managing member, Gary Stetz, and another
principal, Joe Ioia, met with Curt Knapp and Steve Lewis, senior executives at Defendant’s
company, in or around September of 2013 to discuss the MTA contracts. (See Lewis Dep.
113:23–114:8, Docket Entry No. 44-9.) That meeting took place at Plaintiff’s offices in New
York. (Id.) A single email dated September 9, 2013, appears to memorialize the parties’ oral
agreement that day. (See Email dated Sept. 9, 2013 at 1, Docket Entry No. 44-4.) In it, Stetz
writes to Lewis that he wanted to “confirm a few items”:
First, and in regard to the EcoPower CJ-4 with Lubrizol additive that
we are about to supply [the MTA] under contract. It is my
understanding that our price for the duration of the contract will be
$5.65 per gallon delivered. Thus allowing us a $.49 per gallon gross
margin . . . until such time that we facilitate a meeting with [the
MTA] regarding the adding of the EcoPower CJ-4 with Infineum
additive to their Qualified Product List (“QPL”). Upon facilitating
such meeting, our price on the EcoPower CJ-4 with Lubrizol
additive drops to $5.50 per gallon delivered. I have initiated that
process and I will communicate with Mr. Knapp later today as to the
status.
(Id. at 2.) In response, Lewis tells Stetz that he will “need to discuss these points with Curt
Knapp and Mike Smith this week during our man[a]ger meetings in Dallas. . . . I will follow up
with you next week.” (Id. at 1–2.) Stetz thanks Lewis, and, as a follow-up, Knapp replies to the
group that his recollection is that Defendant gave Plaintiff “two options,” and that as part of one
of them, “[w]e would switch to Infineum for both [the MTA and other customer] once we got
[the MTA] to agree to switch. This would allow you to store and ship just one product for both
[the MTA] and [the other customer].” (Id. at 1.)
Nevertheless, the relevant executives from each party appear to remember the agreement
and how it was relayed to them in slightly different ways. In his deposition, Lewis
18

acknowledged that the oral agreement was accurately memorialized in Stetz’s email on
September 9, 2013. 16 (Lewis Dep. 114:9–12.) Separately, Stetz testified at his deposition that
the agreement was for Plaintiff to “get [the MTA] to consider the change, get a meeting, and
[Knapp] would give me [fifteen] cents retroactively a gallon rebate. Because I was paying 5.65,
he would retroactively reduce the price to 5.50 once I got the City to consider using Infineum.”
(Stetz Dep. 64:9–15.) In the same deposition testimony, however, Stetz acknowledges that on
June 7, 2013, Knapp wrote, “I’m thinking we go with 5.65 to you now, and we will drop it to
5.50 when we get Infineum approved (doesn’t need to be shipped; as long as we get a green light
to eventually convert.)” 17 (Id. at 74:20–75:5.) Stetz again refers to the agreement as having

16

Lewis testified:
Q: A few moments ago we talked about a [fifteen]-cent credit. Can
you explain to me how the [fifteen]-cent credit was going to be
applied?
A: It would be applied based on them obtaining the meeting, and
we would look at the gallons. It wasn’t going to be something, as I
understood, that was effective from the beginning of time, but it was
a credit that would be applied going forward.
Q: Is it accurate to say that the credit would apply from the date on
which the meeting with the MTA took place?
A: I’m not sure specifically. I know Curt — I don’t think it was
ever really clear, but I knew it wasn’t going back to the beginning
of time when we started . . . .
[ . . .]
Q: The credit would be due upon [Plaintiff] getting a meeting with
someone from the MTA to discuss Infineum, not getting it placed
on the [Qualified Products List]?

A: Correct.
(Lewis Dep. 118:10–25, 119:13–17.)
17

The parties do not appear to have provided the relevant email as part of the record on
summary judgment.
19

imposed on Plaintiff an obligation to have the MTA “consider” using CJ-4+Infineum in lieu of
CJ-4+Lubrizol. (Id. at 77:5–12.)
Knapp explained in his deposition that he intended that “if we got [CJ-4+Infineum]
approved by New York City to — if we got an Infineum formulation approved for future bids on
this specific product,” (Deposition of Curt Knapp (“Knapp Dep.”) 35:3–7, Docket Entry No. 3914), then Defendant would provide the fifteen-cent rebate or discount:
Q: And when you say ‘approved’ do you mean that the city of New
York would add . . . CJ-4+Infineum to its qualified products list?
A: Correct.
Q: Do you know if that ever happened?
Do you know if the agreement referenced in the email . . . regarding
the [fifteen]-cent credit was ever modified so that the obligation on
the part of [Plaintiff] would no longer be to place CJ-4+Infineum on
the [Qualified Products List] but instead to get a meeting with
representatives from the MTA to discuss adding CJ-4+Infineum on
the [Qualified Products List]?
A: That — in my mind, that was absolutely not the requirement.
The requirement was to get an approval for us to be able to bid it.
(Id. at 35:8–25.)
Consistent with Knapp’s interpretation of the oral agreement, an email from Defendant’s
executive Mike Smith to Stetz on April 24, 2014 reads, in relevant part:
You were to send Curt [Knapp] and I the documentation on his
commitment on the .15/gallon to get them to switch from Lubrizol
to Infineum. You and Curt were not in agreement on the .15/gallon
being retroactive back to Step. And he believes his commitment was
to provide the incentive to get the conversion done, so we could both
get improved margins on the business. The idea was to share the
benefit of our additive saving with you once the switch to Infineum
occurred. Do you have documentation stating otherwise? If not, the
.15/gallon will be paid once we get the formulation change savings
on gallons moving forward.
(Email dated Apr. 24, 2014 at 3, Docket Entry No. 44-7.)

20

Similarly, another email from Smith on May 1, 2014, to his colleagues, states, among
other things:
Curt [Knapp] agreed to the .15 but Gary [Stetz] told us the
conversion [from CJ-4+Lubrizol to CJ-4+Infineum] was happening.
If it hasn’t, then we shouldn’t pay it. Getting it converted for the
next bid and retroactively paying them for the entire period while
we lose was not Curt’s intention. At the end of the day, we will
consider paying this when the new bid specs come out and it doesn’t
require Lubrizol. Tell Gary this has to be the case before we pay
him.
(Email dated May 1, 2014 at 1, Docket Entry No. 44-9.) Earlier in the same email thread,
another Safety-Kleen employee attempts to document his understanding of the dispute with
Plaintiff by noting:
[Plaintiff] is claiming we committed to them that we would rebate
up to $0.15/gallon on the [MTA] volume if they tried to convert it
to the Infineum formula . . . [but] those on the conference call do not
remember such a commitment . . . [and it is] more likely that we’d
rebate them $0.15/gallon on every gallon of non-Lubrizol CJ-4 they
sold to [MTA].
(Id. at 3.)
Finally, in an August 22, 2014 letter from Stetz to Defendant’s representatives, Stetz lists,
among other grievances, that “in August 2013, Mr. Curt Knapp had come to our offices to meet
with us. During one of many conversations, he had requested that we get [the MTA] to request
the Infineum additive in place of the Lubrizol additive.” (Letter dated Aug. 22, 2014 at 4,
Docket Entry No. 39-4.)
Based on the evidence before the Court, the parties clearly disagree about whether
Plaintiff was obligated only to set up a meeting with the MTA to discuss the formulation switch,
or whether Plaintiff was obligated to set up a meeting as part of an effort to obtain access to the
Qualified Products List, at which point Defendant would provide the fifteen-cent rebate on the
existing CJ-4+Lubrizol contract. Neither interpretation is unreasonable, and it is not the Court’s
21

role on summary judgment to weigh the extrinsic evidence to determine which interpretation
better captures the parties’ intent in September of 2013. See Utica, 594 F. App’x at 703
(explaining that a phrase is ambiguous where it “suggest[s] more than one meaning when viewed
objectively by a reasonably intelligent person who has examined the context of the entire
integrated agreement and who is cognizant of the customs, practices, usages and terminology as
generally understood in the particular trade or business” (citation and internal quotation marks
omitted)).
The Court finds the exclusivity agreement ambiguous as a matter of law. Because the
evidence “does not point unerringly in a single direction but is capable of supporting conflicting
inferences,” the question of whether the parties formed a contract with such substantial
ambiguity that may have precluded a meeting of the minds is a question of fact for the jury. See
Vacold, 545 F.3d at 123. Accordingly, the Court denies Defendant’s motion for summary
judgment as to the breach of the exclusivity agreement and the breach of the implied exclusivity
agreement claims, counts one and five. See Palmieri, 445 F.3d at 187 (“Where contractual
language is ambiguous and subject to varying reasonable interpretations, intent becomes an issue
of fact and summary judgment is in appropriate.); Proteus Books Ltd. v. Cherry Lane Music Co.,
Inc., 873 F.2d 502, 509 (2d Cir. 1989) (noting that where the district court found that a phrase
was ambiguous as a matter of law, “[t]he interpretation of the phrase was . . . a question for the
jury”).
ii. Implied covenant of good faith and fair dealing
Plaintiff’s claims in counts two and six of the SAC, breach of the implied covenant of
good faith and fair dealing as to the exclusivity agreement and the implied exclusivity
agreement, state that Defendant withheld technical data and “other information” from Plaintiff in

22

bad faith in order to undermine Plaintiff’s attempt to obtain MTA acceptance of a bid for
CJ-4+Infineum. (Id. ¶¶ 70–74, 80–86.)
Defendant argues that because the implied covenant claims arise from the exclusivity
agreements, “[t]hese counts necessarily fail because there was never an enforceable agreement in
the first instance.” (Def. Mem. 7.) Plaintiff argues that there is a genuine issue of fact that
precludes summary judgment on both breach of contract claims and, as a result, the implied
covenant claims. (Pl. Opp’n 13–14.)
“‘[T]he covenant of good faith and fair dealing is implicit in every contract’ under New
York law . . . .” Fillmore E. BS Fin. Subsidiary LLC v. Capmark Bank, 552 F. App’x 13, 16
(2d Cir. 2014) (alteration in original) (quoting Consol. Edison, Inc. v. Ne. Utils., 426 F.3d 524,
529 (2d Cir. 2005)). “The implied covenant of good faith and fair dealing prevents any party
from doing ‘anything which will have the effect of destroying or injuring the right of the other
party to receive the fruits of the contract.’” Gaia House Mezz LLC v. State St. Bank & Trust Co.,
720 F.3d 84, 93 (2d Cir. 2013) (quoting Dalton v. Educ. Testing Serv., 87 N.Y.2d 384, 389
(1995)). “In order to find a breach of the implied covenant, a party’s action must ‘directly
violate an obligation that may be presumed to have been intended by the parties.’” Gaia House
Mezz, 720 F.3d at 93 (quoting Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 407–08 (2d
Cir. 2006)); see also Thyroff, 460 F.3d at 407 (“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.’” (quoting M/A–COM Sec. Corp. v. Galesi, 904 F.2d 134, 136 (2d Cir.
1990))). A court must examine “not only the express language of the parties’ contract, but also
any course of performance or course of dealing that may exist between the parties.” Tractebel
Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487 F.3d 89, 98 (2d Cir. 2007) (citation omitted).

23

“Thus, whether particular conduct violates or is consistent with the duty of good faith and fair
dealing necessarily depends upon the facts of the particular case, and is ordinarily a question of
fact to be determined by the jury or other finder of fact.” Id. (citation omitted).
In addition, a claim for breach of the implied covenant can only lie where it “relates to
the performance of obligations under an extant contract.” Ray Legal Consulting Grp. v.
DiJoseph, 37 F. Supp. 3d 704, 727 (S.D.N.Y. 2014) (quoting Indep. Order of Foresters v.
Donald, Lufkin & Jenrette, Inc., 157 F.3d 933, 941 (2d Cir. 1998)). Because a breach of the
implied covenant is “merely a breach of the underlying contract,” there can be no breach
“without a governing valid contract.” Kapsis v. Am. Home Mortg. Servicing, Inc., 923 F. Supp.
2d 430, 452 (E.D.N.Y. 2013) (first quoting Fasolino Foods Co. v. Banca Nazionale del Lavoro,
961 F.2d 1052, 1056 (2d Cir. 1992); and then quoting Garrett v. Music Publ’g Co. of Am., LLC,
740 F. Supp. 2d 457, 463 (S.D.N.Y. 2010)).
However, “New York law does not recognize a separate cause of action for breach of the
implied covenant of good faith and fair dealing when a breach of contract claim, based upon the
same facts, is also pled.” Galderma Labs., --- F. App’x at ---, 2017 WL 1491838, at *3 (quoting
Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 125 (2d Cir. 2013)). “Therefore, when a complaint
alleges both a breach of contract and a breach of the implied covenant of good faith and fair
dealing based on the same facts, the latter claim should be dismissed as redundant.” Id. (quoting
Cruz, 720 F.3d at 125).
Plaintiff’s claims for breach of the implied covenant of good faith and fair dealing in
counts two and six are based on the same underlying facts as Plaintiff’s breach of contract claims
alleged in counts one and five of the SAC, except that Plaintiff’s good-faith-and-fair-dealing
claims additionally alleged that Defendant “withheld technical data and other information from

24

Plaintiff in order to undermine Plaintiff’s effort to obtain [MTA] acceptance of a bid.” (See SAC
¶¶ 59–65, 80–86.) As to all other allegations but those relating to the technical data, the Court
grants Defendant’s motion for summary judgment because Plaintiff’s implied covenant claims
are duplicative of its contract claims. See Galderma Labs., --- F. App’x at ---, 2017 WL
1491838, at *3. As to the allegations that Defendant breached the implied covenant of good faith
and fair dealing by withholding technical data relating to the MTA bid, the Court denies
Defendant’s motion because disputed issues of fact exist regarding whether the parties had a
valid and enforceable contract for exclusive price support and, if so, whether Defendant
complied with its duties under that contract. See Kapsis, 923 F. Supp. 2d at 452; see also FCOF
UB Secs. LLC v. MorEquity, Inc., 663 F. Supp. 2d 224, 232 (S.D.N.Y. 2009) (collecting cases).
iii. Promissory estoppel
Plaintiff alleges in count seven of the SAC that Defendant made a “clear and
unambiguous promise” to Plaintiff that Defendant would provide exclusive “price support,” or
preferred pricing, for sales of Defendant’s product to the MTA, as well as a price discount on
Defendant’s product, “in exchange for Plaintiff’s obtaining consideration of CJ-4+Infineum for
the [MTA] Qualified Product List.” (SAC ¶ 88.) In reliance on that promise, Plaintiff persuaded
the MTA to “entertain CJ-4+Infineum as a viable product for purchase,” but Defendant failed to
provide the exclusive “price support” on sales to the MTA or the price discount on Defendant’s
product. (Id. ¶¶ 89–90.)
Defendant argues that Plaintiff cannot recover under a theory of promissory estoppel
because Plaintiff has not “pointed to any expenditure made in reliance” on Defendant’s alleged
promise of exclusivity or price support. (Def. Mem. 7.) Plaintiff argues that Stetz testified in his
deposition that Plaintiff devoted time, money and resources to facilitating Plaintiff’s meeting

25

with the MTA, and that Stetz will be able to quantify those amounts at trial. (Pl. Opp’n 16–17.)
In addition, Plaintiff argues that it may be entitled to benefit-of-the-bargain damages — that is,
the amount that Plaintiff would have received had Defendant kept its promise. (Id. at 17–18.)
“A cause of action for promissory estoppel under New York law requires the plaintiff to
prove three elements: 1) a clear and unambiguous promise; 2) reasonable and foreseeable
reliance on that promise; and 3) injury to the relying party as a result of the reliance.” Kaye v.
Grossman, 202 F.3d 611, 615 (2d Cir. 2000); Cacchillo v. Insmed, Inc., 551 F. App’x 592, 594
(2d Cir. 2014) (stating elements); Dumont v. Litton Loan Servicing, LP, No. 12-CV-2677, 2014
WL 815244, at *9 (S.D.N.Y. Mar. 3, 2014) (same); Picini v. Chase Home Fin. LLC, 854
F. Supp. 2d 266, 275 (E.D.N.Y. 2012) (same). “A promissory estoppel claim is duplicative of a
breach of contract claim unless the plaintiff alleges that the defendant had a duty independent
from any arising out of the contract.” Benefitvision Inc. v. Gentiva Health Servs., Inc., No. 09CV-0473, 2014 WL 298406, at *9 (E.D.N.Y. Jan. 28, 2014) (alteration and internal quotation
marks omitted) (quoting Underdog Trucking, LLC, Reggie Anders v. Verizon Servs. Corp., No.
09-CV-8918, 2010 WL 2900048, at *6 (S.D.N.Y. July 20, 2010)); Bd. of Trs. ex rel. Gen. Ret.
Sys. of Detroit v. BNY Mellon, N.A., No. 11-CV-6345, 2012 WL 3930112, at *6 (S.D.N.Y. Sept.
10, 2012) (“[A] valid and enforceable contract precludes recovery in quasi-contract for all
matters covered by the contract.” (citing Kwon v. Yun, 606 F. Supp. 2d 344, 368 (S.D.N.Y.
2009))).
Here, Plaintiff’s claim for promissory estoppel fails, and the Court therefore grants
Defendant’s motion for summary judgment as to this claim. If a factfinder determines that the
exclusivity agreement constituted a “valid and enforceable contract” in that the parties had a
meeting of the minds, that contract precludes Plaintiff’s recovery for promissory estoppel, which

26

is based on the same price support and exclusivity as outlined in the contract. See BNY Mellon,
2012 WL 3930112, at *6.
However, even if the exclusivity agreement is determined not to have established a valid
and enforceable contract, Plaintiff nevertheless fails to meet a necessary element of a promissory
estoppel claim as a matter of law 18 because Plaintiff has failed to offer any evidence that it was
injured in reliance on Defendant’s alleged promise. 19 In deciding what type of damages are

18

As the Court explained in connection with the breach of contract claims above, it is
not apparent that Defendant’s promise was “clear and unambiguous” — in fact, at least as to the
offer and acceptance necessary to form a meeting of the minds, the Court holds as a matter of
law that the contract was ambiguous. Although it does not necessarily follow that Defendant’s
promise was too ambiguous or insufficiently definite to support a claim of promissory estoppel,
see Brooks v. Aon Corp., 128 F. App’x 807, 808 (2d Cir. 2005) (noting that, at least under
Connecticut law, the promise to support a claim of promissory estoppel need not necessarily be
of the specificity that would support an oral contract), the Court notes that to the extent that a
rational juror determines that the contract is unenforceable for lack of mutual assent, the
reasonable predicate finding is that the terms were not clear and unambiguous, see Cacchillo,
551 F. App’x at 594; see also Cohen v. Lehman Bros. Bank, FSB, 273 F. Supp. 2d 524, 529
(S.D.N.Y. 2003) (finding that where the defendant said it would “work through” the issues
plaintiffs raised with the deal and neither party could remember specifically what was said, the
statements “[could not] be construed as a clear and unambiguous promises”); cf. Bunkoff Gen.
Contractors, Inc. v. Dunham Elec., Inc., 753 N.Y.S.2d 156, 158 (App. Div. 2002) (denying
summary judgment on promissory estoppel claim because “questions of fact exist concerning
whether [the] defendant indeed made a clear and unambiguous promise to [the] plaintiff when it
submitted its quote”).
19

Indeed, it is not clear to the Court that Defendant failed to reimburse Plaintiff for
approximately $23,000 in expenses, and, based on the record before the Court, it appears that
this was the full amount Plaintiff requested as a benefit of its bargain with Defendant. (See, e.g.,
Email from Gary Stetz to Mike Smith dated Apr. 24, 2014,Docket Entry No. 44-13 (“Dear Mike,
See email chain below. The purpose of the $.15 per gallon credit was to motivate us to persuade
NYC/MTA to drop their exclusive request for Lubrizol additive. I don’t think that you need me
to remind you that the eliminating [sic] the need for Lubrizol additive is very beneficial to
Safety-Kleen . . . .”); see also Email from Mike Smith to Gary Stetz et al. dated Apr. 24, 2014,
Docket Entry No. 44-13 (“Gary’s request is $22,716.45 to cover the .15/gallon retroactive back
to the beginning of the bid. Approved to process once you’ve [verified] the gallons are
correct.”); see also Email from Mike Smith dated Apr. 29, 2014, Docket Entry No. 44-9 (“As
we know, we wrote [Plaintiff] a credit for $23K for converting the additive from Lubrizol to
Infineum. When will they be taking the new formulated product? We obviously need to start
realizing the benefits of the cost savings as soon as possible.”).)
27

available to a plaintiff when no contract or meeting of the minds was formed, the New York
Supreme Court, Appellate Division, has held that “where the underlying agreement fails,” the
doctrine of promissory estoppel is not being used “defensively in support of contract rights” but,
instead, to create “a new right in the interests of justice” with relief designed to achieve equity.
Clifford R. Gray, Inc. v. LeChase Const. Servs., 857 N.Y.S.2d 347, 350 (App. Div. 2008).
“Under these circumstances [the] plaintiff ‘is not entitled to the benefit of the bargain because
there was no bargain’” — the plaintiff is entitled only “to those expenses that [the] plaintiff
incurred in relying on [the] defendant’s alleged promise.” Id. (quoting Restatement (Second) of
Contracts § 90, cmt. d, illus. 8, 12 (Am. Law Inst. 1981)). There is no evidence in the record to
support Plaintiff’s allegation that it incurred any expenses when, in reliance on Defendant’s
alleged promise of a rebate, Plaintiff facilitated a meeting with the MTA to discuss accepting CJ4+Infineum. (See SAC ¶ 91.) Accordingly, the Court grants Defendant’s motion for summary
judgment on Plaintiff’s claim for promissory estoppel.
iv. Fraud
Plaintiff alleges in count nine of the SAC that Defendant “misrepresented to Plaintiff” in
“numerous telephone conversations and in e-mail correspondence” between September of 2013
and January of 2014 that, “in exchange for Plaintiff’s obtaining consideration of CJ-4+Infineum
for the [MTA] Qualified Products List,” (1) Defendant would provide exclusive price support for
sales of Defendant’s product to New York City as well as a price discount and (2) Plaintiff
would be the exclusive distributor of Defendant‘s products to New York City. (SAC ¶¶ 103–04.)
Defendant argues that Plaintiff’s fraud claim is duplicative of its breach of contract claim
because the misrepresentations supporting the fraud claim “include only purported statements by
[Defendant’s] representatives promising that they would perform on various alleged contracts

28

identified by Plaintiff.” (Def. Mem. 9.) Plaintiff argues that its fraud claim falls within an
exception to the general rule that fraud claims cannot be based on misrepresentations duplicative
of a contract claim — namely, the exception that permits fraud claims collateral to a contract.
(Pl. Opp’n 19.)
Under New York law, fraud requires proof of “(1) a material misrepresentation or
omission of a fact, (2) knowledge of that fact’s falsity, (3) an intent to induce reliance, (4)
justifiable reliance by the plaintiff, and (5) damages.” Loreley Fin. (Jersey) No. 3 Ltd. v. Wells
Fargo Secs., LLC, 797 F.3d 160, 170 (2d Cir. 2015) (citing Eurycleia Partners, LP v. Seward &
Kissel, LLP, 12 N.Y.3d 553, 559 (2009)). A plaintiff may bring “parallel fraud and contract
claims . . . if the plaintiff (1) demonstrates a legal duty separate from the duty to perform under
the contract; (2) points to a fraudulent misrepresentation that is collateral or extraneous to the
contract; or (3) seeks special damages that are unrecoverable as contract damages.” Merrill
Lynch & Co. v. Allegheny Energy, Inc., 500 F.3d 171, 183 (2d Cir. 2007) (citing
Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 20 (2d Cir. 1996)).
“New York distinguishes between a promissory statement of what will be done in the future that
gives rise only to a breach of contract cause of action and a misrepresentation of present fact that
gives rise to a separate cause of action” for fraud. Id.
“A cause of action for fraud does not arise, where the only fraud alleged merely relates to
a contracting party’s alleged intent to breach a contractual obligation.” TVT Records v. Island
Def Jam Music Grp., 412 F.3d 82, 91 (2d Cir. 2005) (alterations and internal quotation marks
omitted) (quoting Caniglia v. Chicago Tribune–N.Y. News Syndicate, Inc., 612 N.Y.S.2d 146,
147 (App. Div. 1994)); see id. (finding that because the alleged collateral aims were “allegations
about defendants’ states of minds used to support the contention that they intended to breach the

29

contract (i.e. the motives for the breach),” the plaintiff’s claim for fraud was “insufficiently
distinct from the breach of contract claim to be viable”); see also Bridgestone/Firestone, 98 F.3d
at 19 (“However, these facts amount to little more than intentionally-false statements by [the
defendant] indicating his intent to perform under the contract. That is not sufficient to support a
claim of fraud under New York law.”); Contemporary Mission, Inc. v. Bonded Mailings, Inc.,
671 F.2d 81, 85 (2d Cir. 1982) (holding that “[i]f the only interest involved . . . is holding a party
to a promise, a plaintiff will not be permitted to transform the contract claim into one for tort”);
N.Y. Univ. v. Cont’l Ins. Co., 87 N.Y.2d 308, 309 (1995) (finding a plaintiff’s allegations
insufficient to support a claim for fraud where the plaintiff alleged that the defendant allegedly
entered into a contract while lacking the intent to perform it); McKernin v. Fanny Farmer Candy
Shops, Inc., 574 N.Y.S.2d 58, 59 (App. Div. 1991) (holding that where a fraud claim “is
premised upon an alleged breach of contractual duties and the supporting allegations do not
concern representations which are collateral or extraneous to the terms of the parties’ agreement,
a cause of action sounding in fraud does not lie”); cf. Merrill Lynch, 500 F.3d at 183 (holding
that a fraud claim was not duplicative of a warranty claim because the defendant’s allegations
“involve[d] misstatements and omissions of present facts, not contractual promises regarding
prospective performance”); Deerfield Commc’ns Corp. v. Chesebrough-Ponds, Inc., 68 N.Y.2d
954, 956 (1986) (refusing to dismiss a fraud claim alleging “a misrepresentation of present fact,
not of future intent” which misrepresentation was “collateral to, but which was the inducement
for the contract” and thus not duplicative of contract claim (citations and internal quotation
marks omitted)).
Here, at least part of Plaintiff’s fraud claim must be dismissed because it is duplicative of
Plaintiff’s breach of contract claim. Contrary to Plaintiff’s contention that its fraud claim is

30

“collateral to” the breach of contract claim, Plaintiff’s fraud claim rests on two alleged
misrepresentations: first, that Defendant misrepresented it would provide exclusive price support
for sales of its product to New York City and a rebate in exchange for Plaintiff’s “obtaining
consideration” of CJ-4+Infineum from the MTA; and second, that Plaintiff would be the
exclusive distributor of Defendant’s products to New York City. (SAC ¶¶ 103–04.) At least the
first of these alleged misrepresentations is entirely subsumed within Plaintiff’s breach-ofcontract claim based on the exclusivity agreement and thus cannot form the basis of Plaintiff’s
fraud claim. 20 (See id. ¶¶ 39–49, 57.) Plaintiff is correct that, to the extent that Defendant
misrepresented that it would provide exclusive price support and a rebate, it was not merely
breaching its contract, (Pl. Opp’n 20); nevertheless, even Plaintiff’s characterization of
Defendant’s actions — as having “induced [Plaintiff] to take action based upon an understanding
that it would enjoy ‘exclusive price support,’” (id.) — “amount to little more than intentionallyfalse statements” indicating Defendant’s intent to perform under the contract, see
Bridgestone/Firestone, 98 F.3d at 19. “This is not sufficient to support a claim of fraud under
New York law.” See id.; see also TVT Records, 412 F.3d at 91 (finding that because the alleged
collateral aims were “allegations about defendants’ states of minds used to support the
contention that they intended to breach the contract (i.e. the motives for the breach),” the

20

Plaintiff attempts to circumvent this reality by arguing that it has “cited to numerous
representations made by [Defendant’s] representatives” that Plaintiff should “expand its
business” based on “promises that [Defendant] and [Plaintiff] would be ‘strategic partners’”
when it did not intend to continue the “strategic partnership,” and that Defendant “never intended
to provide [Plaintiff] with the CJ-4+Infineum technical data required by the MTA.” (Pl. Opp’n
20.) However, Plaintiff does not make these allegations in the SAC to support its fraud claim,
and it cannot now amend its pleadings through its opposition papers. See Vioni v. Providence
Inv. Mgmt., LLC, 648 F. App’x 114, 117 (2d Cir. 2016); see also Wright v. Ernst & Young LLP,
152 F.3d 169, 178 (2d Cir. 1998) (collecting cases recognizing that a party “is not entitled to
amend its complaint through statements made in motion papers”).
31

plaintiff’s claim for fraud was “insufficiently distinct from the breach of contract claim to be
viable”).
As to the second alleged misrepresentation — that Plaintiff would be the exclusive
distributor of Defendant’s products to New York City — Plaintiff’s claim fails because there is
no evidence from which a factfinder could reasonably find in Plaintiff’s favor as to Defendant’s
knowledge of falsity at the time of the promise and Defendant’s intent to induce Plaintiff’s
reliance. See Loreley Fin., 797 F.3d at 170 (listing elements of fraud as “(1) a material
misrepresentation or omission of a fact, (2) knowledge of that fact’s falsity, (3) an intent to
induce reliance, (4) justifiable reliance by the plaintiff, and (5) damages”). The Court has
thoroughly examined the record and has neither found nor been directed to evidence that
supports elements two or three of Plaintiff’s fraud claim based on Defendant’s alleged promise
that Plaintiff would be the exclusive distributor of Defendant’s products to New York City.
Indeed, there is little evidence to support Plaintiff’s contention that Defendant promised
exclusive distribution for New York City bids. (See Email from Gary Stetz to Curt Knapp dated
Sept. 23, 2013, Docket Entry No. 44-1 (“I probably should not have used the word ‘exclusive.’
What we had asked for was to be the Safety Kleen authorized distributor in the New York
Metropolitan area for all your Buyback business in our market and to be the sole bidder for
government contracts in our market.”); id. (“OK. We can make that happen. But do know that
if/when we make that switch, we could lose . . . another supplier as retribution. That’s why I
want to a shot [sic] at your PL volume; let’s see if it is something we want/can be competitive on
at acceptable margins for us.”).)
Without any evidence of Defendant’s knowledge that its promise was false at the time it
was made or Defendant’s intent to induce Plaintiff’s reliance on that promise, there is no genuine

32

dispute as to any material fact, and Defendant is entitled to summary judgment on Plaintiff’s
fraud claim.
v.

Tortious interference

Plaintiff alleges in counts ten and eleven of the SAC that Defendant agreed to provide
Plaintiff exclusive pricing support in connection with Plaintiff’s bids to New York City and then
“purposely failed and refused to provide the technical data and endorsements” needed to obtain
the MTA’s approval of CJ-4+Infineum for its Qualified Product List. (SAC ¶¶ 113–15, 125–27.)
Plaintiff also alleges that at the same time, Defendant “surreptitiously supported the bids of other
distributors” and “communicated with one or more agencies or departments of the City of New
York in an attempt to interfere with Plaintiff’s ability to act as a distributor of oil to New York
City and its agencies.” (Id. ¶¶ 116–17, 128–29.)
Defendant argues that, as to the claim for tortious interference with contract, Plaintiff has
not identified any contract with which Defendant allegedly interfered. (Def. Mem. 9–10.) As to
the claim for tortious interference with prospective economic advantage, Defendant argues that
Plaintiff has not identified any malicious or unfair conduct that Defendant directed at a third
party. (Id. at 11.)
Plaintiff argues as to both claims that Defendant had knowledge that Plaintiff “had
contracts with its customers to supply them with [Defendant’s] product,” and “was aware that if
it withheld [its] product from [Plaintiff], [Plaintiff] would be unable to fulfill its obligations with
its customers.” (Pl. Opp’n 21.)
1.

Tortious interference with contract

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

33

knowledge of the contract; (3) the defendant’s intentional procurement of the third-party’s
breach of the contract without justification; (4) the actual breach of the contract; and (5) damages
resulting therefrom.” Kirch v. Liberty Media Corp., 449 F.3d 388, 401 (2d Cir. 2006) (internal
quotation marks omitted) (quoting Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 424
(1996)).
As relevant here, a plaintiff must identify the specific third-party contract with which the
defendant allegedly interfered. See Valley Lane Indus. Co. v. Victoria’s Secret Direct Brand
Mgmt., LLC, 455 F. App’x 102, 104 (2d Cir. 2012) (dismissing a tortious interference with
contract claim because the plaintiff’s allegation that it had a “long-standing agreement [with the
third party] to produce shoes for [the defendant] and other customers” failed to “plausibly plead
the existence of a contractual relationship”); Katz v. Travelers, --- F. Supp. 3d ---, ---, 2017 WL
1317000, at *7–8 (E.D.N.Y. Mar. 10, 2017) (dismissing the plaintiffs’ tortious interference with
contract claim where the complaint “merely state[d] that ‘insurance carriers and third party
independent medical companies terminated and/or suspended their contractual relationship with
[the plaintiffs] based on the false and misleading statements made by the [d]efendants’”
(collecting cases)); Amto, LLC v. Bedford Asset Mgmt., LLC, 168 F. Supp. 3d 556, 567–68
(S.D.N.Y. 2016) (dismissing a claim for tortious interference with contract where the plaintiff
did not show “the existence of a valid contract between the plaintiff and a third party” (citing,
inter alia, Lama Holding Co., 88 N.Y.2d at 424)); Mi-Kyung Cho v. Young Bin Café, 42 F. Supp.
3d 495, 510 (S.D.N.Y. 2013) (“The record is devoid of any facts that even arguably suggest that
[the] plaintiff had a contract with a third party. This absence of a valid and enforceable contract
is fatal to [the] plaintiff’s tortious interference with contract claim.”); Plasticware, LLC v. Flint
Hill Res., LP, 852 F. Supp. 2d 398, 404 (S.D.N.Y. 2012) (“Plaintiff has not plausibly alleged

34

adequate details about a specific contract between itself and a third party, but merely has alleged
that it has ‘agreements’ with its customers. This is insufficient.”); Bose v. Interclick, Inc., No.
10-CV-9183, 2011 WL 4343517, at *10–11 (S.D.N.Y. Aug. 17, 2011) (dismissing a tortious
interference with contract claim where the plaintiff claimed that it had contracts with various
parties, but did not give any “facts regarding the terms of the contracts or the specific parties to
the contracts”); Ho Myung Moolsan Co. v. Manitou Mineral Water, Inc., 665 F. Supp. 2d 239,
255 (S.D.N.Y. 2009) (denying plaintiffs leave to amend a tortious interference with contract
claim that the court dismissed, because plaintiffs alleged only that the “defendants interfered
with their customer contracts” but did not “specify a single customer contract with which
defendants interfered”).
Plaintiff has failed to identify any contract between Plaintiff and a third party with which
Defendant allegedly interfered. Even accepting as true Plaintiff’s contentions that it “had
contracts with its customers to supply them with [Defendant’s] product,” and Defendant “was
aware that if it withheld [its] product from [Plaintiff], [Plaintiff] would be unable to fulfill its
obligations with its customers,” (Pl. Opp’n 21), Plaintiff neither identifies the contracts nor
alleges that the third parties, as opposed to Plaintiff, breached those contracts. See Valley Lane
Indus., 455 F. App’x at 104.
From the evidence in the record, the Court can locate only one contract between Plaintiff
and a third party: Plaintiff’s contract with the MTA for the sale of CJ-4+Lubrizol. (See SAC ¶¶
14, 39.) Plaintiff does not allege, nor is there any evidence, that the MTA breached its contract
with Plaintiff. In sum, Plaintiff has not identified a contract with which Defendant allegedly
interfered, but even if the Court assumes that the MTA CJ-4+Lubrizol contract is a relevant
contract underlying Plaintiff’s tortious interference claim, there is no evidence in the record that

35

the MTA breached the CJ-4+Lubrizol contract. See Kirch, 449 F.3d at 402 (finding that a failure
to prove breach by the third party is fatal to tortious interference with contract claim). The Court
therefore grants Defendant’s motion for summary judgment on Plaintiff’s claim for tortious
interference with contract.
2.

Tortious interference with prospective economic advantage

In order to state a claim for tortious interference with prospective economic advantage, a
plaintiff must allege that “(1) it had a business relationship with a third party; (2) the defendant
knew of that relationship and intentionally interfered with it; (3) the defendant acted solely out of
malice, or used dishonest, unfair or improper means; and (4) the defendant’s interference caused
injury to the relationship.” Kirch, 449 F.3d at 400; Ace Arts, LLC v. Sony/ATV Music Publ’g,
LLC, 56 F. Supp. 3d 436, 452 (S.D.N.Y. 2014) (internal quotation marks omitted) (quoting
Kirch, 449 F.3d at 400). The elements of tortious interference with prospective economic
advantage are similar to those of tortious interference with contract, except that “the defendant’s
conduct must be more culpable for a claim of tortious interference with a prospective contract.”
Ace Arts, 56 F. Supp. 3d at 452 (quoting In re Refco Inc. Sec. Litig., 826 F. Supp. 2d 478, 520
(S.D.N.Y. 2011) (quoting Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183,
191 (1980))).
“The New York Court of Appeals has explained that, ‘as a general rule, a defendant’s
conduct must amount to a crime or an independent tort’ in order to amount to tortious
interference with a prospective economic advantage.’” Friedman v. Coldwater Creek, Inc., 321
F. App’x 58, 60 (2d Cir. 2009) (quoting Carvel Corp. v. Noonan, 3 N.Y.3d 182, 190 (2004)). “A
defendant who has not committed a crime or independent tort or acted solely out of malice may
nevertheless be liable if he has employed ‘wrongful means,’” which include “physical violence,

36

fraud or misrepresentation, civil suits and criminal prosecutions” and “extreme and unfair
economic pressure.” Id. (internal quotation marks and citations omitted). If the defendant’s
“motive in interfering . . . was normal economic self-interest,” the defendant did not use
unlawful means. Carvel, 3 N.Y.3d at 190.
In addition, “conduct constituting tortious interference [with prospective economic
advantage] is, by definition, conduct directed not at the plaintiff itself, but at the party with
which the plaintiff has or seeks to have a business relationship.” Carvel, 3 N.Y.3d at 192
(collecting cases); see also Valley Lane, 455 F. App’x at 107 (holding that the plaintiff’s
allegations regarding the defendant’s tortious conduct “also fail because there is no allegation
that this conduct — which was undisputedly directed at [the plaintiff] — proximately caused [the
third party] to sever its business relationship with [the plaintiff]”); G.K.A. Beverage Corp. v.
Honickman, 55 F.3d 762, 768 (2d Cir. 1995) (dismissing a tortious interference claim because
alleged conduct was not directed at the plaintiff’s customers); Fonar Corp. v. Magnetic
Resonance Plus, Inc., 957 F. Supp. 477, 482 (S.D.N.Y. 1997) (“Under New York law, in order
for a party to make out a claim for tortious interference with prospective economic advantage,
the defendant must . . . direct some activities toward the third party . . . .”).
Plaintiff’s claim for tortious interference with prospective economic advantage fails
because there is no evidence that Defendant directed any improper or wrongful conduct toward a
third party with which Plaintiff had an existing business relationship. Indeed, the only evidence
in the record that Defendant contacted any third party with which Plaintiff had a business
relationship is the January 21, 2015 email exchange in which Defendant informed DCAS, in
response to a DCAS inquiry, that Plaintiff was no longer an authorized distributor of Defendant’s
products. (Def. 56.1 ¶¶ 23–24; see Email dated Jan. 21, 2015, Docket Entry No. 39-17.) The

37

communication occurred two months after Defendant sent Plaintiff a final demand letter and
informed Plaintiff that its account would be moved to collection. (See Final Demand Letter
dated Nov. 19, 2014, Docket Entry No. 39-13.) Plaintiff does not argue that this email was
improper or wrongful, and the Court has found no evidence from which a rational juror would
find for Plaintiff. Accordingly, the Court grants Defendant’s motion for summary judgment on
Plaintiff’s claim for tortious interference with prospective economic advantage. See Gun Hill
Rd. Serv. Station, Inc. v. ExxonMobil Oil Corp., No. 08-CV-7956, 2013 WL 395096, at *16
(S.D.N.Y. Feb. 1, 2013) (finding that because the “plaintiffs point[ed] to no evidence in the
record suggesting that [the defendant] acted with the sole purpose of harming [the plaintiffs],”
there was “no genuine dispute that [the defendant] acted with a ‘normal economic self-interest.’”
(quoting Carvel, 3 N.Y.3d at 190)).
vi. Declaratory judgment
Plaintiff requests a declaratory judgment in count twelve of the SAC “with respect to the
validity and amount” of the charges arising from Defendant’s sale of its product to Plaintiff and
Plaintiff’s dispute of the unpaid invoices. (SAC ¶¶ 136–40.)
Defendant argues that Plaintiff improperly seeks declaratory relief with respect to past
actions, where declaratory relief is only appropriate for prospective rights and responsibilities.
(Def. Mem. 13.) Plaintiff argues that parties routinely seek declaratory relief to determine their
rights under contracts before and after breach, and because the amounts owed are in dispute, the
Court should deny summary judgment on Plaintiff’s declaratory judgment claim. (Pl. Opp’n 22–
23.)
The Declaratory Judgment Act provides that, “[i]n a case of actual controversy within its
jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations

38

of any interested party seeking such declaration, whether or not further relief is or could be
sought.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126 (2007) (quoting 28 U.S.C.
§ 2201(a)); see also Fed. R. Civ. P. 57. The court retains “unique and substantial discretion in
deciding whether to” issue declaratory relief. Mariah Re Ltd. v. Am. Family Mut. Ins. Co., 52
F. Supp. 3d 601, 623 (S.D.N.Y. 2014) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 286
(1995)), aff’d sub nom. Maria Re Ltd. ex rel. Varga v. Am. Family Mut. Ins. Co., 607 F. App’x
123 (2d Cir. 2015). In deciding “whether to entertain an action for declaratory judgment, [the
Second Circuit has] instructed district courts to ask: (1) whether the judgment will serve a useful
purpose in clarifying or settling the legal issues involved; and (2) whether a judgment would
finalize the controversy and offer relief from uncertainty.” Id. (quoting Duane Reade, Inc. v. St.
Paul Fire & Marine Ins. Co., 411 F.3d 384, 389 (2d Cir. 2005)). However, “there is no basis for
declaratory relief where only past acts are involved.” Id. (citation omitted); see also Adirondack
Cookie Co. Inc. v. Monaco Baking Co., 871 F. Supp. 2d 86, 94 (N.D.N.Y. 2012) (dismissing a
plaintiff’s claim for declaratory judgement because the “plaintiff [wa]s not seeking prospective
relief, but merely a declaration that its past ‘inadvertent’ use of the words ‘Patent Pending’ on its
Cookie Bouquet Stand did not violate the False Marking Statute”); S.E.C. v. Credit Bancorp,
Ltd., 738 F. Supp. 2d 376, 388–89 (S.D.N.Y. 2010) (“[D]eclaratory judgment is inappropriate
where the moving party seeks to adjudicate past conduct.”).
“The fact that a lawsuit has been filed that will necessarily settle the issues for which
declaratory judgment is sought suggests that the declaratory judgment will serve no useful
purpose.” Fleischer v. Phx. Life Ins. Co., 858 F. Supp. 2d 290, 302 (S.D.N.Y. 2012) (citation
and internal quotation marks omitted). Thus, courts routinely dismiss requests for declaratory
judgment when the parties’ rights will be adjudicated through a breach of contract claim in the

39

same action. See, e.g., Target Corp. v. RichRelevance, Inc., No. 15-CV-6614, 2017 WL 590316,
at *10 (S.D.N.Y. Feb. 13, 2017) (collecting cases); Marshall v. Hyundai Motor Am., 51 F. Supp.
3d 451, 472 (S.D.N.Y. 2014) (dismissing a claim for declaratory relief where the plaintiffs
sought the same relief in their claim for breach of express warranty); Piven v. Wolf Haldenstein
Adler Freeman & Herz L.L.P., No. 08-CV-10578, 2010 WL 1257326, at *10–11 (S.D.N.Y. Mar.
12, 2010) (holding that where the plaintiffs brought breach of contract and quasi-contract claims,
“a declaratory judgment announcing the terms of the fee-sharing agreement [was] unnecessary”
because “the factual findings made as to each party’s rights and liabilities . . . will necessary
accomplish the purpose of a declaratory judgment by ‘clarifying and settling the legal relations in
issue’ and ‘afford[ing] relief from [the] uncertainty, insecurity, and controversy giving rise to the
proceeding.’” (citation omitted)); J.C. Penney Corp., Inc. v. Carousel Ctr. Co., L.P., 635 F.
Supp. 2d 126, 135 (N.D.N.Y. 2008) (finding declaratory judgment “unnecessary and
inappropriate” where the court’s “resolution of [the plaintiff’s] breach-of-contract claims
regarding the methods used to calculate [the plaintiff’s] past escalation payments will provide
binding authority for the correct methods going forward”); see also Apple Records, Inc. v.
Capitol Records, Inc., 529 N.Y.S.2d 279, 281 (App. Div. 1988) (dismissing a declaratory
judgment claim concerning the calculation of future payments where resolution of the breach-ofcontract claims would “sufficiently guide the parties on their future performance of the
contracts”).
Here, Plaintiff seeks a declaratory judgment “with respect to the validity and amount of
[the] disputed charges and whether and to what extent Plaintiff is responsible for same, if at all.”
(SAC ¶ 140(b).) The declaratory judgment Plaintiffs seek would “serve[] neither of the[] two
objectives” of declaratory relief. Dolphin Direct Equity Partners, LP v. Interactive Motorsports

40

& Entm’t Corp., No. 08-CV-1558, 2009 WL 577916, at *11 (S.D.N.Y. Mar. 2, 2009) (quoting
Camolfi Master LDC v. College P’ship, Inc., 452 F. Supp. 2d 462, 480 (S.D.N.Y. 2006)), aff’d,
419 F. App’x 60 (2d Cir. 2011). Because the Court is analyzing the parties’ rights and
obligations under the Distributor Agreement and in connection with the agreements for
exclusivity and price support, as well as in the context of Defendant’s counterclaims arising from
the same transactions, a declaratory judgment would serve no purpose. See id. (finding that,
where the court was already analyzing the parties’ rights under various agreements, “a
declaratory judgment on the same issue[s] would be superfluous” (quoting Core-Mark Int’l v.
Commonwealth Ins. Co., No. 05-CV-183, 2006 WL 2501884, at *9 (S.D.N.Y. Aug. 30, 2006)));
see also Mariah Re Ltd., 52 F. Supp. 3d at 623 (“[D]eclaratory relief in this case would be
wholly superfluous, as the resolution of [the plaintiff’s] other claims would ‘settle the issues for
which declaratory judgment is sought.’” (citation omitted)); Miramax Film Corp. v. Abraham,
No. 01-CV-5202, 2003 WL 22832384, at *15 (S.D.N.Y. Nov. 25, 2003) (“The lawfulness of
defendants’ actions will be determined by resolution of the contract claim. Hence, the
declaratory relief will serve no useful purpose.”).
The Court therefore grants Defendant’s motion for summary judgment on Plaintiff’s
claim for declaratory relief.
vii. Breach of the Waste Oil Agreement
Plaintiff alleges in count thirteen of the SAC that Defendant breached its obligations
under the Waste Oil Agreement by failing to pay commissions due to Plaintiff and wrongfully
attempting to repudiate the agreement by letter dated December 16, 2014. (SAC ¶¶ 142–43.)
Defendant argues that the Court lacks jurisdiction over any claim for damages arising
from the Waste Oil Agreement because that agreement requires that disputes be arbitrated. (Def.

41

Mem. 13.) In the alternative, Defendant argues that the Court should rule as a matter of law that
Plaintiff cannot recover for damages incurred on or after February 14, 2015, because the Waste
Oil Agreement permits termination by either party with sixty days’ notice and Defendant
terminated the agreement by letter on December 14, 2014. (Id. at 14.) Plaintiff argues that
Defendant has waived its right to arbitration because it has filed responsive pleadings, deposed
several witnesses and conducted extensive document discovery since Plaintiff first asserted a
claim under the Waste Oil Agreement. (Pl. Opp’n 24.) Plaintiff also argues that damages should
not be limited through February 14, 2015 because document discovery has demonstrated that
Defendant “surreptitiously continued to collect waste oil from [Plaintiff’s] customers, yet never
provided payment to [Plaintiff]” after that date. (Id.)
“Federal policy strongly favors arbitration and waiver of a right to arbitrate is not lightly
inferred.” Tech. in P’ship, Inc. v. Rudin, 538 F. App’x 38, 39 (2d Cir. 2013). “This preference
for arbitration ‘[h]as led to its corollary that any doubts concerning whether there has been a
waiver are resolved in favor of arbitration.’” PPG Indus., Inc. v. Webster Auto Parts, Inc., 123
F.3d 103, 107 (2d Cir. 1997) (quoting Leadertex Inc. v. Morganton Dyeing & Finishing Corp.,
67 F.3d 20, 25 (2d Cir. 1995)). Nevertheless, “a party waives its right to arbitration when it
engages in protracted litigation that prejudices the opposing party.” Tech. in P’ship, 538 F.
App’x at 39 (quoting In re Crysen/Montenay Energy Co., 226 F.3d 160, 162 (2d Cir. 2000)).
“The question of whether a party’s pretrial conduct amounts to waiver of the defense of
arbitration is a legal question to be decided by the court.” NV Petrus SA v. LPG Trading Corp.,
No. 14-CV-3138, 2017 WL 1831096, at *3 n.3 (E.D.N.Y. May 4, 2017) (quoting Burns v.
Imagine Films Entm’t, Inc., 165 F.R.D. 381, 387 (W.D.N.Y. 1996) (citing Leadertex, 67 F.3d at
25)).

42

“In determining whether a party has waived its right to arbitration by expressing its intent
to litigate the dispute in question,” courts consider the following three factors: “(1) the time
elapsed from when litigation was commenced until the request for arbitration; (2) the amount of
litigation to date, including motion practice and discovery; and (3) proof of prejudice.”
Sutherland v. Ernst & Young, LLP, 600 F. App’x 6, 7–8 (2d Cir. 2015) (internal quotation marks
omitted) (quoting La. Stadium & Expo. Dist. v. Merrill Lynch, Pierce, Fenner & Smith Inc., 626
F.3d 156, 159 (2d Cir. 2010)). “There is no rigid formula or bright-line rule for identifying when
a party has waived its right to arbitration; rather, the above factors must be applied to the specific
context of each particular case.” Id. (quoting La. Stadium, 626 F.3d at 159). However, “[t]he
key to a waiver analysis is prejudice. Waiver of the right to compel arbitration due to
participation in litigation may be found only when prejudice to the other party is demonstrated.”
Id. (quoting Thyssen, Inc. v. Calypso Shipping Corp., S.A., 310 F.3d 102, 105 (2d Cir. 2002));
see also Leadertex, 67 F.3d at 25 (“Although litigation of substantial material issues may amount
to waiver, delay in seeking arbitration does not create a waiver unless it prejudices the opposing
party.” (citations omitted)).
The Second Circuit has recognized “two types of prejudice: substantive prejudice and
prejudice due to excessive cost and time delay.” Sutherland, 600 F. App’x at 7–8 (citing
Thyseen, 310 F.3d at 105); O’meara v. Interpros, Inc., No. 16-CV-1840, 2017 WL 3140359, at
*5–6 (D. Conn. July 24, 2017) (citing Sutherland, 600 F. App’x at 7–8). Substantive prejudice
occurs “when a party loses a motion on the merits and then attempts, in effect, to relitigate the
issue by invoking arbitration,” and prejudice of excessive cost and time occurs “when a party too
long postpones his invocation of his contractual right to arbitration, and thereby causes his
adversary to incur unnecessary delay or expense.” Sutherland, 600 F. App’x at 8 (quoting

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Kramer v. Hammond, 943 F.2d 176, 179 (2d Cir. 1991)); S&R Co. of Kingston v. Latona
Trucking, Inc., 159 F.3d 80, 83–84 (2d Cir. 1998) (explaining that prejudice has been found
where “a party seeking to compel arbitration engages in discovery procedures not available in
arbitration, makes motions going to the merits of an adversary’s claims, or delays invoking
arbitration rights while the adversary incurs unnecessary delay or expense” (citing Cotton v.
Slone, 4 F.3d 176, 179 (2d Cir. 1993))); see also NV Petrus SA, 2017 WL 1831096, at *2–3
(“Prejudice ‘refers to the inherent unfairness — in terms of delay, expense, or damage to a
party’s legal position — that occurs when the party’s opponent forces it to litigate an issue and
later seeks to arbitrate that same issue.” (quoting Doctor’s Assocs., Inc. v. Distajo, 107 F.3d 126,
134 (2d Cir. 1997))). A court will not find waiver where “delay in trial proceedings was not
accompanied by substantial motion practice or discovery.” Sutherland, 600 F. App’x at 8
(quoting Thyssen, 301 F.3d at 105).
Plaintiff first added the Waste Oil Agreement claim in the SAC, which it filed August 13,
2015. (See generally SAC.) Defendant first raised the agreement’s arbitration clause seven
months later, on March 15, 2016, (see Def. Letter Requesting Pre-Mot. Conf., Docket Entry No.
28), and, at a pre-motion conference on June 14, 2016, the Court directed Defendant to brief the
issue in its motion for summary judgment, (see Min. Entry dated June 14, 2016). During this
seven-month period, the parties appear to have attempted to mediate and settle their claims and
exchanged some document and deposition discovery. (See Docket Entry Nos. 15–27.)
Defendant also filed an answer to Plaintiff’s SAC without raising the issue of the Waste Oil
Agreement’s arbitration clause. (See Answer, Docket Entry No. 15.) None of this, however, is
determinative, because the parties have not explained the nature of the discovery they exchanged
between August of 2015 and March of 2016, whether it related to the Waste Oil Agreement,

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whether such discovery would be available to them in arbitration, and what prejudice, if any,
Plaintiff would suffer should the Court decide to sever the Waste Oil Agreement claim and refer
it to arbitration. Therefore, the Court reserves decision on Plaintiff’s claim related to the Waste
Oil Agreement and instructs Plaintiff to submit a letter brief of no more than five pages, singlespaced, within ten days of this Memorandum and Order, explaining any prejudice, with
Defendant’s response due ten days thereafter. See Sutherland, 600 F. App’x at 7–8 (“Waiver of
the right to compel arbitration due to participation in litigation may be found only when
prejudice to the other party is demonstrated.”).
c.

Summary judgment on Defendant’s counterclaims

Defendant moves for summary judgment on its counterclaims for breach of contract and
unjust enrichment, arguing that there is no genuine issue of material fact that Plaintiff accepted
Defendant’s product throughout 2014 under the Distributor Agreement and did not pay for that
product. (Def. CC Mem. 4.) Plaintiff argues that Defendant’s contract claim fails because “no
enforceable contract existed” between the parties to govern Defendant’s shipment of product,
Defendant’s unjust enrichment claim fails because Defendant “seeks the wrong type of damages
in support of its claim,” and, in any event, the parties dispute the amounts owed under
Defendant’s 2014 invoices. (Pl. CC Opp’n Mem. 1.)
i.

Breach of contract

Defendant argues that pursuant to the APA, Plaintiff effectively “stepped into the shoes”
of NYCL and was obligated to purchase a minimum amount of Defendant’s product each year
— and, in fact, that Plaintiff did continue to purchase Defendant’s product throughout 2013 and
2014 as NYCL had under the Distributor Agreement. (Def. CC Mem. 1–2; Def. CC 56.1 ¶ 12.)
However, Plaintiff failed to pay for the product Defendant shipped in 2014, and, according to

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Defendant, Plaintiff owes $1,056,383.97 for that product and $314,083.77 in interest under the
Distributor Agreement. (Def. CC Mem. 2.) In his deposition, Stetz admitted that Plaintiff
received the products indicated in Defendant’s invoices and sold the products to third parties,
which Plaintiff does not dispute. (Def. CC 56.1 ¶¶ 14–15; Pl. CC 56.1 ¶¶ 14–15.) Plaintiff
argues, however, that it was never assigned the Distributor Agreement under the APA with
NYCL, 21 and, to the extent that it owes Defendant for the product shipped by Defendant, those
charges should be offset, at a minimum, by the amounts Defendant owes Plaintiff under the
exclusivity agreement and the Waste Oil Agreement. (Pl. CC Opp’n Mem. 2.)
As explained above, under New York law, a plaintiff alleging breach of contract must
first show the existence of a contract. See Hudson & Broad, 553 F. App’x at 39 (listing
elements). “Under both New York law and traditional common law, a corporation that purchases
the assets of another corporation is generally not liable for the seller’s liabilities,” including
contracts. Byrd v. Repub. of Honduras, 613 F. App’x 31, 33–34 (2d Cir. 2015) (quoting New
York v. Nat’l Serv. Indus., Inc., 460 F.3d 201, 209 (2d Cir. 2006)); see also N.Y. State Elec. &
Gas Corp. v. FirstEnergy Corp., 766 F.3d 212, 227–28 (2d Cir. 2014) (“When a corporation
purchases the assets of another corporation, it does not acquire its liabilities . . . .” (citing Nat’l
Serv. Indus., 460 F.3d at 209)).
However, “a buyer of a corporation’s assets will be liable as its successor” if “(1) it

21

Defendant has not carried its burden on summary judgment to demonstrate that there
is no issue of material fact regarding the existence of a contract. According to the language of
the APA, Plaintiff purchased from NYCL certain contracts “specifically identified on Schedule
1.1(b),” which neither party appears to have included in the record on summary judgment. (APA
at 3.) Moreover, Defendant does not argue that the Distributor Agreement was included on
Schedule 1.1(b). The Court is therefore unable to determine whether the Distributor Agreement
was explicitly transferred as part of NYCL’s asset sale to Plaintiff, but because this fact is not
disputed by Defendant, the Court accepts Plaintiff‘s assertion that the Distributor Agreement was
not explicitly transferred. (See Stetz Aff. ¶ 8.)
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expressly or impliedly assumed the predecessor’s . . . liability, (2) there was a consolidation or
merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the
selling corporation, or (4) the transaction is entered into fraudulently to escape such obligations.”
Nat’l Serv. Indus., 460 F.3d at 209; see also Byrd, 613 F. App’x at 34 (quoting Nat’l Serv.
Indus., 460 F.3d at 209); FirstEnergy Corp., 766 F.3d at 227–28 (quoting same). As relevant
here, the second and third exceptions — the “de facto merger” and “mere continuation”
exceptions, respectively — “are often regarded as so similar as to be considered a single
exception.” 22 Douglas v. Stamco, 363 F. App’x 100, 101–02 (2d Cir. 2010) (citing Cargo
Partner AG v. Albatrans, Inc., 352 F.3d 41, 45 n.3 (2d Cir. 2003)). The inquiry is whether “a
transaction, although not in form a merger, is in substance a consolidation or merger of seller and
purchaser.” Id. (quoting Nat’l Serv. Indus., 460 F.3d at 209).
Thus, to determine whether there has been a de facto merger or a mere continuation of a
corporate entity for successor liability, a court considers whether there was: “(1) continuity of
ownership; (2) cessation of ordinary business and dissolution of the acquired corporation as soon
as possible; (3) assumption by the purchaser of the liabilities ordinarily necessary for the
uninterrupted continuation of the business of the acquired corporation; and (4) continuity of
management, personnel, physical location, assets and general business operation.” Id. (quoting
Nat’l Serv. Indus, 460 F.3d at 209). Although courts examine all factors, “continuity of
ownership is the essence of a merger.” Id. at 102 (quoting Nat’l Serv. Indus., 460 F.3d at 211);
see also Nat’l Serv. Indus., 460 F.3d at 211 (concluding that there is no de facto merger where

22

Although it is possible that Plaintiff “impliedly assumed” NYCL’s liabilities, the
Court construes Defendant’s argument that Plaintiff “stepped into [NYCL’s] shoes”, (Def. CC
56.1 ¶ 5), to suggest that there was either a de facto merger or that Plaintiff is a mere
continuation of NYCL.
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there is no evidence of continuity of ownership because “the nature of an asset sale is that the
seller’s ownership interest in the entity is given up in exchange for consideration”); see also
Battino v. Cornelia Fifth Ave., LLC, 861 F. Supp. 2d 392, 401 (S.D.N.Y. 2012) (“Here, there is
no dispute that ownership of the business changed hands; thus, regardless of whether the other de
facto merger factors are present, the de facto merger and ‘mere continuation’ exceptions do not
apply.”); Kaur v. Royal Arcadia Palace, Inc., 643 F. Supp. 2d 276, 289 (E.D.N.Y. 2007) (“Under
the common law mere continuation theory, successor liability attaches when the plaintiff
demonstrates the existence of a single corporation after the transfer of assets, with an identity of
stock, stockholders, and directors between the successor and predecessor corporations.” (quoting
Graham v. James, 144 F.3d 229, 240 (2d Cir. 1998))).
The successor issue is “highly fact-specific” and typically cannot be determined as a
matter of law. See Aguas Lenders Recovery Grp. v. Suez, S.A., 585 F.3d 696, 703 (2d Cir. 2009)
(remanding for a determination of successor liability where the successor assumed control of the
predecessor under a new name, “maintained a ninety percent ownership interest,” “assumed
operating control of the facilities and infrastructure improvements, as well as business channels,
to deliver, without interruption, the same services,” and maintained the same employees and
management as well as equity ownership).
Here, Defendant has not demonstrated that there is no genuine issue of material fact as to
Plaintiff’s successor liability. Defendant states that Plaintiff “stepped into the shoes” of NYCL,
“kept all the same employees, the same facility, the same equipment and the same website,” and
“purchased the right to use [NYCL’s] commercial name, ‘Metrolube.’” (Def. CC Mem. 1–2;
Def. CC 56.1 ¶¶ 4–6.) Plaintiff states that it “purchased only certain assets” of NYCL and did
not “step into [NYCL’s] shoes.” (Pl. CC 56.1 ¶ 5.) Neither party provides information

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regarding the critical “continuity of ownership” element of successor liability, including any
differences in the composition of NYCL’s ownership, management, personnel and business
operations after the APA. See Nat’l Serv. Indus., 460 F.3d at 211. Defendant has therefore
failed to show, as a matter of law, that Plaintiff was NYCL’s successor for purposes of the
Distributor Agreement. See Byrd, 613 F. App’x at 33–34 (“Finally, plaintiffs suggest, in passing,
that [the predecessor] has de facto merged into [the defendant], but they offer no evidence or
even argument to support that suggestion.”); Priestley v. Headminder, Inc., 647 F.3d 497, 506
(2d Cir. 2011) (holding that an allegation regarding “continuity of . . . officers,” without
sufficient facts to allege continuity of ownership, was insufficient to support claim of de
facto merger); Douglas, 363 F. App’x at 102 (holding that no exception to successor liability
applied to debts after bankruptcy asset sale because there was “no common identity among the
[p]urchaser and the [d]ebtors’ incorporators, officers, directors or material stockholders,” and the
predecessor entity survived the asset sale as a bankrupt entity); 105 Mt. Kisco Assocs., LLC v.
Carozza, No. 15-CV-5346, 2017 WL 1194700, at *12 (S.D.N.Y. Mar. 30, 2017) (finding that
even where the plaintiffs asserted allegations of dissolution and continuity of management and
business operations, they could not support a claim of de facto merger without facts to support
continuity of ownership).
Accordingly, the Court denies Defendant’s motion for summary judgment on its breach
of contract claim.
ii. Unjust enrichment
Defendant argues in the alternative that, if the Court finds that there was no contract in
place between Plaintiff and Defendant, the Court should grant summary judgment on
Defendant’s claim for unjust enrichment as a result of Plaintiff’s acceptance and resale of

49

Defendant’s product without payment. (Def. CC Mem. 9.) Plaintiff argues that Defendant has
improperly calculated its purported damages based on its own losses from the product, rather
than by Plaintiff’s gain, and that this “dooms [Defendant’s] request for summary judgment.” (Pl.
CC Opp’n Mem. 19–20.)
“The theory of unjust enrichment lies as a quasi-contract claim. It is an obligation the
law creates in the absence of any agreement.” Diesel Props. S.r.l. v. Greystone Bus. Cred. II
LLC, 631 F.3d 42, 54 (2d Cir. 2011) (quoting Goldman v. Metro. Life Ins. Co., 5 N.Y.3d 561,
572 (2005)). Thus, “where a valid and enforceable contract governs the relevant subject matter
of the parties’ dispute, the contract — rather than principles of restitution — should determine
the measure of a party’s recovery for events arising from that subject matter.” Chesapeake
Energy Corp. v. Bank of N.Y. Mellon Tr. Co., N.A., 837 F.3d 146, 150 (2d Cir. 2016), cert.
denied, 137 S. Ct. 1815 (Apr. 24, 2017); Poplar Lane Farm LLC v. Fathers of Our Lady of
Mercy, 449 F. App’x 57, 59 (2d Cir. 2011) (“[W]hen a valid agreement governs the subject
matter of a dispute between parties, claims arising from that dispute are contractual; attempts to
repackage them as sounding in . . . unjust enrichment . . . are generally precluded, unless based
on a duty independent of the contract.”). This principle does not apply, however, “where there is
a bona fide dispute as to the existence of a contract or where the contract does not cover the
dispute in issue.” Poplar Lane Farm, 449 F. App’x at 59 (quoting Am. Tel. & Util. Consultants
v. Beth Israel Med. Ctr., 763 N.Y.S.2d 466, 466 (App. Div. 2003)).
Because, as discussed above, there is a bona fide dispute as to the existence of a contract
between Plaintiff and Defendant, the Court denies Defendant’s motion for summary judgment on
its unjust enrichment claim. If Defendant proves the existence of a contract at trial, the Court
will dismiss its unjust enrichment claim as a matter of law.

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III. Conclusion
For the foregoing reasons, the Court grants Defendant’s motion for partial summary
judgment in part as to Plaintiff’s claims for the implied covenant of good faith and fair dealing
(counts two and six), except to the extent they are based on Defendant’s refusal to provide
technical data for the MTA bid; and grants Defendant’s motion for partial summary judgment as
to Plaintiff’s claims for promissory estoppel (count seven), equitable estoppel (count eight),
fraud (count nine), tortious interference with contract and with prospective economic advantage
(counts ten and eleven), and declaratory judgment (count twelve). In addition, the Court reserves
judgment on count thirteen, for breach of the Waste Oil Agreement, and instructs Plaintiff to
brief the issues explained above within ten days of the date of this Memorandum and Order, with
Defendant’s response due ten days thereafter. Finally, the Court denies Defendant’s motion for
summary judgment on Plaintiff’s claims for breach of the exclusivity agreement (count one) and
the implied exclusivity agreement (count five), as well as Defendant’s motion for summary
judgment on its counterclaims for breach of contract and unjust enrichment.

SO ORDERED:
s/ MKB
MARGO K. BRODIE
United States District Judge
Dated: August 8, 2017
Brooklyn, New York

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