Chen v. Antel Communications, LLC et al

Filing 17

ORDER granting in part and denying in part 13 Motion to Dismiss for Failure to State a Claim. Ordered by Judge Sandra J. Feuerstein on 9/30/2015. (Florio, Lisa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

----------------------------------------------------------){

JIA CHEN AIK/A KEVIN CHEN
Plaintiff,

QRDER
-against-

14-CV-6629 (SJF)

ANTEL COMMUNICATIONS, LLC,
SHENZHEN HIPAD
TELECOMMUNICATION TECHNOLOGY
CO., LTD,
HANGZHOU MANKO TECHNOLOGIES
LTD.

FILED
IN CLERK'S OFFICE
U S DISTRICT COURT E D NY

*

YONG HANG ZOU, and LOUIS
ANTONIOU

SEP 3 0 2015

*

LONG ISLAND OFFICE
Defendants.

----------------------------------------------------------){
FEUERSTEIN, J.

Defendant Ante! Communications, LLC (Ante!), and its chief executive officer,
defendant Louis Antoniou, move for dismissal of plaintiff's complaint pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure. For the reasons that follow, defendants' motion is
granted in part, and denied it in part.
I.

FACTUAL BACKGROUND

For purposes of this motion, the Court accepts as true the following allegations found in
the complaint. Defendants Shenzhen Hipad Telecommunication Technology Co., Ltd.
(Shenzhen Hipad) and Hangzhou Manko Technologies, Ltd. (Hangzhou Manko) are Chinese
corporations which are both wholly owned by defendant Y ong Hang Zou. Shenzhen Hipad and
Hangzhou Manko employed plaintiff in China for several years as their general manager of
overseas operations. Pl.'s Compl. 4-5, ~~15-17, 26--27. In either January or February 2014, Zou

decided to transfer plaintiff to the United States to work at Ante!, the United States affiliate of
Shenzhen Hipad and Hangzhou Manko, as its vice-president of operations. Pl.'s Com pl. 5, ,2829.
On March 6, 2014, plaintiff and Ante! executed an "Appointment Contract" ("March 6,
2014 Appointment Contract" or "Appointment Contract"). Def.'s Br., Ex. A. This two-page
agreement provided that Ante! would employ plaintiff as its vice-president of all of Antel's
operations, and those of its "sub-companies, including but not limited with [sic] Administrations,
HR, Finance & Accounting, sales & Marketing, Sourcing & Purchasing, Technology & Projects,
IT & Logistics, etc." for a term beginning on March 20,2014, and ending on March 19,2016.
Def.'s Br., Ex. A. The Appointment Contract obligated Ante!: (I) to pay plaintiff an annual
salary of$200,000, half to be paid in the United States, and the other half paid in China; (2) to
provide health and medical insurance, accommodation, food, car rent, and reimbursement for
travel and cellular telephone expenses; (3) to transfer "3% of the company physical stock ...
freely as the welfare [sic]."; and (4) to pay a bonus, and provide paid home and annual leave.
Def.'s Br., Ex. A. The Appointment Contract concluded, "To accept this offer, [plaintift] and
[Ante!] shall sign this job appointment contract where indicated below," which the parties did.
Def.'s Br,. Ex. A.
On March 21, 2014, the parties executed a more comprehensive "Employment
Agreement" (March 21, Employment Agreement). Def.'s Br., Ex. B. 1 Although this agreement
also provided that plaintiff would serve as Antel's vice-president of operations for a two-year

1

Plaintiff refers to the "Appointment Contract" as the "Employment Agreement," and appears to refer to
the March 21,2014 Employment Agreement as the "Employment Agreement, as amended." Pl.'s Compl.
15,, 90.
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employment term beginning in March 2014, it differed from the Appointment Contract in that:
(I) it set a $100,000 base annual salary, plus "the same benefits afforded to other executive staff
of the Company," (2) it did not contain a share-transfer provision, (3) it limited reimbursement to
expenses incurred "in or about the performance of [plaintiff's) normal and regular duties." In
addition, Paragraph 5(c) of the Employment Contract provided that Ante I could terminate
plaintiff without cause upon thirty (30) days' notice, and Paragraph 5(b) allowed Antel to
terminate plaintiff immediately with cause, in certain enumerated instances. Def. 's Br., Ex. B.
The Employment Contract also contained the following merger clause:
This Agreement constitutes the entire agreement between the parties concerning
the subject matter hereof and supersedes all prior and contemporaneous
agreements, if any, between the parties.
Plaintiff sold most of his personal effects in China, and moved to the United States, at a
cost of more than $33,000. Pl.'s Compl. 6, ~ 34-35. Shenzhen Hipad and Hangzhou Manko paid
his salary between April2014 and July 2014. Pl.'s Compl. 7, ~ 38.2
On September 8, 2014, defendants terminated plaintiff, allegedly without cause or notice.
Pl.'s Compl. 8, ~ 44. His last date of employment was September 30, 2014. Pl.'s Compl. 8,
~

45. He alleges that Ante I "failed to pay half of [his) wages in August 2014 and half in

September 2014," and failed to reimburse his travel expenses between April2014 and 2014.
Pl.'s Compl. 8, ~~ 45-46.
On November II, 2014, plaintiff filed a complaint seeking monetary and declaratory
relief. Count One alleges that defendant breached the Appointment Contract "by unilaterally

2

Plaintiff and defendants Zou and Antoniou also executed a "Share Transfer Agreement for a three
percent (3%) stake in Antel." Pl.'s Compl. 7, ~ 37.

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terminating the Plaintiff without cause prior to the end of[its] term." Pl.'s Compl. 9-10, ~~51,
53. It alleges damages of his base salary of"$200,000 per year from September 2014 to March
19,2016, together with additional benefits, unreimbursed travel expenses, unpaid wages,
bonuses, a 3% equity share of stock in Ante I, and the value of Plaintiff's paid vacation." Pl.'s
Compl. 10-11, ~ 61.
Counts Two, Three, and Four assert quasi-contractual claims for promissory estoppel,
unjust enrichment, and breach of implied covenant of good faith and fair dealing, respectively.
Pl.'s Compl. 11-13, ~~ 62-78. Count Five alleges violations ofNew York State Labor Laws,
and seeks damages in the amount of plaintiff's unpaid compensation, plus interest and attorney's
fees. Pl.'s Compl. 13, ~~ 79-81. Count Six seeks payment of unpaid "gap time" wages pursuant
to the Fair Labor Standards Act (FLSA), 29 U.S.C. § 216. Pl.'s Compl. 14, ~~ 82-86. Count
Seven seeks a declaration that based on defendants' conduct, plaintiff's contractual obligations
are terminated. Pl.'s Compl. 14-15, ~89.
II.
A.

DISCUSSION

Rule 12(b)(6)

To survive a 12(b)(6) motion, "a complaint must contain sufficient factual matter ... to
state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129
S. Ct. 1937, 173 L. Ed.2d 868 (2009) (internal quotation marks omitted). The court must accept
all well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in
favor of the non-moving party. !d. at 679. The court is limited "to facts stated on the face of the
complaint, in documents appended to the complaint or incorporated in the complaint by
reference, and to matters of which judicial notice may be taken." Allen v. WestPoint-Pepperell,

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Inc., 945 F.2d 40,44 (2d Cir. 1991). "Dismissal is appropriate when 'it is clear from the face of
the complaint ... that the plaintiffs claims are barred as a matter oflaw. "' Parkcentral Global
Hub Ltd v. Porsche Auto. Holdings SB, 763 F.3d 198,208-09 (2d Cir. 2014) (quoting Conopco,
Inc. v. Roll Int'l, 231 F.3d 82, 86 (2d Cir. 2000)).
B.

Plaintiff's Claims

Plaintiff's bases his claims on the March 6, 2014 Appointment Contract, which he argues
is the only operative contract. Pl.'s Compl. 5-6, '1[31; Pl.'s Br. 11-12. The Court disagrees.
The March 21, 2014 Employment Agreement, by the terms of its merger clause, superseded the
March 6, 2014 Appointment Contract. Def. 's Br., Ex. B. It, therefore, became the parties'
exclusive agreement. E.g., Indep. Energy Corp. v. Trigen Energy Corp., 944 F. Supp. 1184,
1195 (S.D.N.Y. 1996) (explaining that under New York law, "[p ]rior agreements and
negotiations are deemed to merge and be subsumed in a later written agreement") (citing Shubin
v. Surchin, 280 N.Y.S.2d 55, 59 (App. Div. 1967)) (citations omitted).
Although plaintiff admits that he executed the March 21,2014 Employment Agreement,
he argues--but does not plead- that defendant "fraudulently represented to" him that he needed
to sign it as part of his visa-application process, and that he did not intend to be bound by it.
Pl.'s Br. 8, 12-13. However, under New York law, a party's intent to be bound is a question of
law in the first instance, and a court must look to the language of the contract itself, and not a
party's subjective intent. See Four Seasons Hotels Ltd. v. Vinnik, 515 N.Y.S.2d I, 5-6 (App.
Div. 1987) ("[T]he question is to be decided by the court if determinable from the language
employed in the written instrument, and if not so determinable ... then by the finder of the
facts.") (citations omitted). A court may treat as conclusive a written contract's indication of the

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parties' intent to be bound. See Brown v. Cara, 420 F.3d 148, 154 (2d Cir. 2005). Paragraph 13
of the March 21,2014 Employment Contract expresses an unambiguous mutual intent to be
bound. Def. 's Br., Ex. B. Moreover, plaintiff did not plead fraud with particularity. FED. R.
CIV. P. 9(b). As the March 21, 2014 Employment Agreement governed the terms of plaintiff's
employment with Ante!, plaintiff may not maintain claims for breach of the March 6, 2014
Appointment Contract.
A related issue is whether the Court may consider the March 6, 2014 Appointment
Contract and the March 21, 2014 Employment Agreement as part of the pleadings on this Rule
12(b)(6) motion. Plaintiff did not attached a copy of the March 21, 2014 Employment Contract,
does not specifically refer to its provisions, does not specifically refer to it in his complaint, and
argues, therefore, that the Court may not consider it on this dismissal motion. Pl.'s Br. 10-11.
A court considering such a document on a Rule 12(b)(6) motion must be satisfied that no
dispute exists as to its authenticity or accuracy, and must be satisfied that there are no material
issues of fact regarding its relevance. Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 2006)
(citations omitted). Plaintiff does not dispute the March 21,2014 Employment Agreement's
accuracy, its authenticity, or that he executed it. Pl.'s Br. 8. The Court finds this contract
integral to the issues raised in the complaint and treats it as part of the pleadings, notwithstanding
the fact that plaintiff did not attach it as an exhibit. E.g., Loftus v. Se. Pennsylvania Transp.
Auth., 843 F. Supp. 981,983 (E.D. Pa. 1994) (treating collective bargaining agreement appended

to defendant's dismissal motion as part of the pleadings because agreement formed the basis of
plaintiff's claims). The Court treats defendant's motion as a dismissal motion under Rule
12(b)(6), and not a Rule 56 summary judgment motion, and does not consider thee-mails

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appended to plaintiff's opposition papers as part of the "pleadings" under Rule I 0(c). E.g.,
DiFalco v. MSNBC Cable L.L.C., 622 F.3d 104, 113 (2d Cir. 2010).
I.

Claims against Antoniou.

Under New York law, an individual who signs a contract on behalf of a corporation is not
personally liable, unless the individual expressly assumes personal liability. E.g., Metro. Switch
Bd. Co. v. Amici Associates, Inc., 799 N.Y.S.2d 531, 531 (App. Div. 2005); San Diego Cnty.
Employees Ret. Ass'n v. Maounis, 749 F. Supp. 2d 104, 128 (S.D.N.Y. 2010) (citations omitted).
Although plaintiff argues that Antoniou is personally liable, he has failed to come forward with
factual allegations to warrant piercing the corporate veil. See EED Holdings v. Palmer Johnson
Acquisition Corp., 228 F.R.D. 508, 512 (S.D.N.Y. 2005) (explaining that "[t]o avoid dismissal, a
party seeking application of the doctrine must come forward with factual allegations as to both
elements of the veil-piercing claim," and plead them according to the heightened pleading
requirements of FED. R. CIV. P. 9(b)) (citations omitted). Antoniou signed the March 21,2014
Employment Agreement as Antel's Chief Executive Executive Officer. Def.'s Br., Ex. B.
Neither the contract, nor the pleadings suggest that he ever intended to assume personal liability.
Plaintiff's claims against defendant Antoniou are, therefore, dismissed.
2.

Breach of Contract (Count One).

Rather than acknowledging the March 21, 2014 Employment Agreement, he
characterizes it as an "amend[ment]" to the March 6, 2014 Appointment Contract. Pl.'s Compl.
15,, 90. Plaintiff's Count One alleges multiple breaches by Ante!: (!)failure to pay a bonus,

severance, and moving expenses; (2) failure to pay post-termination salary and benefits; (3)
termination without cause or notice; (4) failure to pay travel and incidental expenses; and (5)

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failure to pay vacation time. To the extent that plaintiffs breach of contract claims arise out of the
March 21, 2014 Employment Agreement, defendants' dismissal motion is granted in part, and denied in
part as to Count One.
To survive a motion to dismiss, a breach of contract claim under New York law must
allege facts to show: "(1) the existence of an agreement, (2) adequate performance of the contract
by plaintiff, (3) breach of the contract by defendant, and (4) damages." Eternity Global Master

Fund Ltd. v. Morgan Guar. Trust Co. ofN.Y., 375 F.3d 168, 177 (2d Cir. 2004); Palmetto
Partners, L.P. v. AJW Qualified Partners, LLC, 921 N.Y.S.2d 260,264 (App. Div. 201 1)). For
the reasons articulated above, the Court finds that the March 21,2014 Employment Agreement
constituted a valid employment contract between Ante! and plaintiff that superseded the
Appointment Contract. There is no dispute that plaintiff performed under the contract by
working as Ante!' s vice-president of operations.
However, plaintiff pleads that Ante! breached their agreement by failing to pay severance
provided by "Article 3," and for failing to pay a bonus identified in "Article 4," Pl.'s Compl. 10,
~54,

57. Moreover, he alleges damages in the amount of $33,000, representing moving

expenses. Pl.'s Compl. 49. However, the March 21,2014 Employment Agreement does not
provide for moving expenses, severance, or a bonus. To the extent that Count One seeks
damages for Antel's breach in failing to pay these expenses, it is dismissed.
Plaintiff also seeks damages in the amount of$300,000, reflecting post-termination salary
for the balance of the contractual term, from October 2014 to March 2016, as well as benefits in
the amount of$73,000 for the balance of the contractual term ending in March 2016. Pl.'s
Compl. 9, ~ 49. Plaintiff cannot recover either amount for the balance of the contractual term,
however, because Paragraph 5(e) of the March 21, 2014 Employment Agreement limits his
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recovery to base salary until the termination date. To the extent that Count One seeks recovery
for benefits and salary for the balance of the contractual term, it is dismissed.
Plaintiff has also pleaded that Ante! terminated him without notice and without cause.
Pl.'s Compl. 8, 1 44. "[W]hen an employee's protection has been diminished by a late notice of
termination or no notice at all, New York courts have required the employer to pay the
employee's salary for the full notice period." Holt v. Seversky Electronatom Corp., 452 F.2d 31,
34 (2d Cir. 1971); Delvecchio v. Bayside Chrysler Plymouth Jeep Eagle, Inc., 706 N.Y.S.2d 724,
726 (App. Div. 2000). Paragraph 5(b) of the March 21, 2014 Employment Agreement required
Ante! to give plaintiff thirty (30) days' notice before terminating him without cause. Def.'s Br.,
Ex. B. Accepting as true plaintiff's allegation that Ante! terminated him without cause or notice,
he has stated a claim for breach of contract, and may recover any unpaid contractual salary for
the notice period set forth in Paragraph 5(b).
Likewise, insofar as plaintiff alleges a breach and damages from Ante!' s failure to pay for
travel and incidental expenses from April through July 2014, Pl.'s Compl. 8, 1 46, Paragraph
4(d) of the March 21, 2014 Employment Agreement required Ante! to reimburse plaintiff for
these expenses so long as there were "incurred by [him] in or about the performance of his
normal and regular duties[.]" Def.'s Br., Ex. B. The Court cannot determine from the pleadings
alone whether any of his unreimbursed expenses fell under Paragraph 4(b), and leaves plaintiff to
his proofs as to his entitlement to reimbursement for any travel or incidental expenses.
Finally, plaintiff seeks to recover the monetary value of thirty (30) days of paid vacation.
Under New York law, "[a]n employee may, under certain circumstances, be entitled to recover
for unused vacation and sick time when he or she is discharged without being given the

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opportunity to use the time and without being compensated for its monetary value." Andruzzi v.
Cnty. ofNassau, 826 N.Y.S.2d 324, 325 (App. Div. 2006). Paragraph 4(b) ofthe March 21,
2014 Employment Agreement guaranteed plaintiff vacation days in accordance with "Company
Policy." Def. 's Br., Ex. B. Plaintiff, therefore, has plausibly alleged that he may recover the
monetary value of his unused vacation time, if any. Because nothing in the pleadings sheds any
light on Antel's vacation policy or plaintiff's use of vacation time, defendants' motion is denied
as to these claims.
3.

Quasi-Contractual Claims (Counts Two and Three)

Having found the existence of a valid contract between the parties, the Court finds that
plaintiff's quasi-contractual claims for promissory estoppel and unjust enrichment fail to state a
claim. "The existence of a valid and enforceable written contract governing a particular subject
matter ordinarily precludes recovery in quasi contract for events arising out of the same subject
matter." Clark-Fitzpatrick, Inc. v. Long Island R. Co., 516 N.E.2d 190, 193 (N.Y. 1987); Beth
Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield ofNew Jersey, Inc., 448 F.3d 573, 587 (2d
Cir. 2006) (affirming dismissal of claim for unjust enrichment because under New York law,
existence of valid contract governing same subject-matter precludes recovery in quasi-contract)
(citations omitted).
Plaintiff's promissory estoppel and unjust enrichment claims mirror his breach of
contract claim. Plaintiff's promissory estoppel claim, Count Two, pleads that he detrimentally
relied on Antel's promises to him regarding his compensation and benefits. Pl.'s Compl. II,
, 63. Likewise, his unjust enrichment claim, Count Three, pleads that he conferred "a substantial
benefit" on Ante! through his work, and that it would be inequitable not to compensate him in

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accordance with Antel's promises and their contractual arrangement. Pl.'s Compl. 12,1169,73.
In essence, both claims seek enforcement of Antel's promises regarding compensation and

benefits, which are governed by the March 21, 2014 Employment Agreement. Accordingly,
Counts Two and Three are dismissed.
4.

Duty of Good Faith and Fair Dealing (Count Four).

Similarly, plaintiffs claim for breach of the duty of good faith and fair dealing, Count
Four, fails as a matter of law. "Under New York law, parties to an express contract are bound by
an implied duty of good faith, but breach of that duty is merely a breach of the underlying
contract." Harris v. Provident Life & Accident Ins. Co., 310 F.3d 73,80 (2d Cir.2002)
(quotation marks omitted). "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." !d. at 81. "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." Cruz v. FXDirectDealer,
LLC, 720 F.3d 115, 125 (2d Cir. 2013) (citing L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d

419, 434 n. 17 (2d Cir. 2011 ). Plaintiffs complaint pleads no additional facts to suggest a
distinct breach of the implied duty of good faith and fair dealing, only that defendants "breached
[it] by, among other things, repeatedly reaping the financial benefits of[plaintiffs] work with
without compensating in accordance with the Employment Agreement." Pl.'s Com pl. 13, 1 77.
As plaintiffs claim for breach of the duty of good faith and fair dealing is identical to his breach
of contract claim, Count Four is dismissed.

II

5.

New York Labor Law (Count Five).

Plaintiff's claim pursuant to Article 6, sections 191 and 198, of the New York Labor Law
seeking unpaid wages and unreimbursed expenses for defendants' alleged breach of contract fails
because, as a vice-president, plaintiff was not covered by these provisions. Pl.'s Com pl. 13,
'11'1!79-81. While an "executive" may recover ifhe or she proves a substantive violation of
Article 6's provisions, "employees serving in an executive, managerial or administrative capacity
do not fall under section 191 of the Labor Law and, as a result, those individuals are not entitled
to statutory attorney's fees under section 198( 1-a) if they assert a successful common-law claim
for unpaid wages." Pachter v. Bernard Hodes Grp., Inc., 891 N.E.2d 279, 283 (N.Y. 2008).
Here plaintiff pleads that he served as Antel's vice-president of operations, and therefore he was
an "executive" under New York Labor Law. Pl.'s Compl. 5, '1!28-29; see, e.g., Carlson v.

Katonah Capital, L.L.C., 814 N.Y.S.2d 889 (Sup. Ct. 2006) ("An employee qualifies as an
executive if he or she "exercises independent judgment" in performing his or her duties."). He
earned more than nine hundred dollars per week ($900). Pl.'s Compl. 10-11, 'II 61. Def.' s Br.,
Ex. B. Accordingly, his fifth count fails to state a claim under sections 191 and 198 of the New
York Labor Laws, and is, therefore dismissed. See Eden v. St. Luke 's-Roosevelt Hosp. Ctr., 96
A.D.3d 614,615, 947 N.Y.S.2d 457,459 (2012) ("As a professional earning more than $900 a
week (Labor Law § 190 [7]), plaintiff is "expressly excluded" from the protections of Labor Law

§ 191 ")(citing Pachter, 891 N.E.2d 279).

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6.

FLSA (Count Six).

As, plaintiff has abandoned his FLSA claim, Count six is dismissed. Cf Anna v.
Buyseasons, Inc., 591 F. Supp. 2d 637, 643 (S.D.N.Y. 2008) (explaining that court need not
perform independent analysis oflegal merits of abandoned claim on 12(b)(6) dismissal motion).
7.

Declaratory Judgment (Count Seven).

Count Seven seeks a judgment "declaring that [defendants] have violated plaintiff's
rights pursuant to the Employment Agreement, the FLSA, and [New York Labor Law)" and
declaring plaintiffs obligations to defendants arising out of their contractual agreements and
their employer-employee relationship terminated. Pl.'s Compl. 15-16, ~~ d, e. For the reasons
already stated, the Court grants defendants' motion, and dismisses plaintiff's claims for
declaratory relief insofar as they seek a declaratory judgment that defendants violated plaintiff's
rights under the FLSA, New York Labor Law, or the March 21, Employment Agreement for
their failure to pay a bonus, severance, moving expenses, and post-termination salary and
benefits for the balance of the contractual term. Otherwise, the Court denies defendants' motion
as to Count Seven.
8.

Attorney's Fees, Punitive Damages.

Finally, plaintiff seeks an award ofboth attorney's fees and punitive damages. However,
New York law does not permit fee-shifting in breach of contract cases, unless specifically
provided in the contract, e.g., Equitable Lumber Corp. v. IPA Land Dev. Corp., 344 N.E.2d 391,
394 (N.Y. 1976), and does not allow punitive damages, unless the breach would constitute an
independently actionable fraud involving a "high degree of moral turpitude." Rocanova v.
Equitable Life Assur. Soc. of US., 634 N.E.2d 940,943 (N.Y. 1994) (citations and internal
13

quotations omitted). Because the March 21,2014 Employment Agreement contains no feeshifting provision, and plaintiff has not pleaded fraud, he has not stated a claim for attorney's
fees or punitive damages.
III.

CONCLUSION

For the foregoing reasons, defendants' dismissal motion under Rule 12(b)(6) of the
Federal Rules of Civil Procedure is granted in part, and denied in part.

SO ORDERED.

sl Sandra J. Feuerstein
Sandra J. Feuerstein
United States District Judge
Dated: September 30, 2015
Central Islip, New York

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