Northern Shipping Funds I, L.L.C. v. Icon Capital Corp. et al
MEMORANDUM AND ORDER granting in part and denying in part 38 Motion to Dismiss; granting 41 Motion to Dismiss. For the foregoing reasons, the motion of Northern and the third-party defendants (Docket no. 40) is granted, and the counterclaims and third-party claims are dismissed. Boa's motion (Docket no. 38) is denied to the extent that it sought dismissal of the cross-claim alleging breach of the confidentiality clause, granted to the extent that the cross - claim based on breach of the non-disparagement clause is dismissed without prejudice, and granted to the extent that the cross-claim based on breach of the implied covenant of good faith and fair dealing is dismissed with prejudice. (Signed by Magistrate Judge James C. Francis on 4/12/2013) Copies Mailed By Chambers. (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -:
NORTHERN SHIPPING FUNDS I, L.L.C., :
- against :
ICON CAPITAL CORP., BOA SUB C AS, :
BOA DEEP C AS, BOA HOLDING AS,
BOA OFFSHORE AS, and
- - - - - - - - - - - - - - - - - -:
TAUBATKOMPANIET AS, BOA HOLDING AS,:
BOA SUB C AS, BOA OFFSHORE AS, and :
BOA DEEP C AS,
Counter Claimants, :
- against :
ICON CAPITAL CORP.,
Counter Defendant. :
- - - - - - - - - - - - - - - - - -:
ICON CAPITAL CORP.,
- against :
SEAN DURKIN and JOHN HARTIGAN,
----------------------------------JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE
12 Civ. 3584 (JCF)
Plaintiff Northern Shipping Funds I, L.L.C. (“Northern”)
brings this action against defendants Icon Capital Corporation
(“Icon”) and Boa Sub C AS, Boa Deep C AS, Boa Holding AS, Boa
Offshore AS, and Taubãkompaniet AS (collectively, “Boa”), alleging
breach of contract, unjust enrichment, and money had and received.1
Icon asserts counterclaims against Northern and third-party claims
against agents of Northern, Sean Durkin and John Hartigan (the
“third-party defendants”), as well as cross-claims against Boa.
Northern, the third-party defendants, and Boa now move to dismiss
respectively, under Rule 12(b)(6) of the Federal Rules of Civil
The parties have consented to my jurisdiction for all
purposes, in accordance with 28 U.S.C. § 636(c).
For the reasons
set forth below, Northern and the third-party defendants’ motion is
granted, and Boa’s motion is granted in part and denied in part.
The factual background of this dispute is set forth in my
January 24, 2013, Memorandum and Order and will only be summarized
briefly and supplemented as necessary here.
Funds I, LLC,
F. Supp. 2d
, 2013 WL 440632.
allegations in the counterclaims, third-party claims, and crossclaims are taken as true, and all reasonable inferences are drawn
in the non-movant’s favor.
See Gilman v. Spitzer,
, 2012 WL 4510681, at *1 n.1 (S.D.N.Y. 2012).
F. Supp. 2d
I have considered documents incorporated in or integral to the
I previously dismissed the plaintiff’s constructive trust
and breach of fiduciary duty claims against Icon.
Shipping Funds I, LLC v. Icon Capital Corp.,
F. Supp. 2d
2013 WL 440632 (S.D.N.Y. 2013).
On September 17, 2010, Northern and Boa entered into a binding
contract (the “Commitment Letter”) under which Northern and Icon
would provide Boa with a $70,000,000 loan (the “transaction”).
(Counterclaims and Third Party Claims (“Countercl.,”), attached to
Icon’s Answer to Complaint, Third Party Claims, Counter-Claim[,]
and Cross-Claims (“Ans.”), ¶¶ 4-5; Cross-Claims (“Cross-Cl.”),
attached to Ans., ¶¶ 1-2 ; Letter of C. Tobias Backer and John
Hartigan dated Sept. 16, 2010 (the “Commitment Letter”), attached
as Exh. A to Complaint (“Compl.”)).
Northern participated in
drafting the terms and conditions of the Commitment Letter.
(Countercl., ¶ 5; Cross-Cl., ¶ 2).
The letter was signed by C.
Tobias Back, Senior Director of Icon, and was to be signed by John
Hartigan, Senior Investment Manager of Northern. (Countercl., ¶ 5;
Cross-Cl., ¶ 2; Commitment Letter at 20).2
Boa unilaterally withdrew from the transaction on December 15,
(Countercl., ¶ 6; Cross-Cl., ¶ 3).
Icon determined that it
would pursue legal action against Boa to enforce its right to
liquidated damages under the terms and conditions of the Commitment
(Countercl., ¶ 7; Cross-Cl., ¶ 4).
On January 6, 2011,
and several times thereafter, Icon invited Northern to join the
litigation, but Northern declined. (Countercl., ¶ 8). On February
recommending Northern not to join Icon’s lawsuit because of the
reputational risk and the expense of litigation.
The Commitment Letter is not numbered so I refer to the page
numbers on the Complaint filed in the Case Management/Electronic
Case Filing (CM/ECF) system.
On March 14, 2011, Icon initiated a lawsuit against Boa (the
(Countercl., ¶ 10; Cross-Cl., ¶ 5; Complaint,
Icon Capital Corp. v. Boa Sub C AS, No. 11 Civ. 1746 (S.D.N.Y.
March 14, 2011)).
On January 1, 2012, Icon and Boa entered into a
settling the Prior Action.
(Countercl., ¶ 11; Cross-Cl., ¶ 6).
Mr. Hartigan and Sean Durkin, President of Northern, learned
about the Settlement Agreement and contacted Boa to inquire about
the amount for which the Previous Action settled.
Icon alleges that Boa informed Northern of the settlement
amount and made certain disparaging remarks about Icon’s agents.
(Countercl., ¶ 13).
On May 7, 2012, Northern initiated the instant action against
Icon and Boa, alleging that Icon did not own the exclusive rights
to settle the case against Boa in the Prior Action and that
Northern also owned those claims.
(Compl., ¶ 2).
Icon has asserted counterclaims against Northern and thirdparty claims against Mr. Durkin and Mr. Hartigan, alleging tortious
interference of contract and conspiracy to interfere with contract.
Icon has also brought cross-claims against Boa, asserting breach of
the confidentiality, non-disparagement, and good faith and fair
dealing provisions of the Settlement Agreement in the Prior Action.
A motion to dismiss a counterclaim, third-party claim, and
cross-claim is evaluated under the same standard as a motion to
dismiss a complaint.
See Renovate Manufacturing, LLC v. Acer
America Corp., No. 12 Civ. 6017, 2013 WL 342922, at *2 (S.D.N.Y.
Jan. 18, 2013) (“A motion to dismiss a counterclaim is evaluated
under the same standard as a motion to dismiss a complaint.”
(internal quotation marks omitted)); Cohen v. Stephen Wise Free
Synagogue, No. 95 Civ. 1659, 1996 WL 159096, at *1 (S.D.N.Y. April
counterclaims, cross-claims and third-party claims, plaintiff’s
motion to dismiss . . . will be evaluated under  same standards
Thus, to survive a motion to dismiss under Rule
12(b)(6), the pleading “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 (2009) (quoting Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
factual allegations,’” are not necessary, the pleading must be
supported by more than mere “‘labels and conclusions’ or ‘
formulaic recitation[s] of the elements of a cause of action.’”
Id. (quoting Twombly, 550 U.S. at 555).
devoid of ‘further factual enhancement’” is insufficient.
(quoting Twombly, 550 U.S. at 557).
Further, where the factual
allegations permit the court to infer only a possible, but not a
plausible, claim for relief, it fails to meet the minimum standard.
Id. at 679.
In ruling on a motion to dismiss, the court’s task
“‘is merely to assess the legal feasibility of the [claim], not to
assay the weight of the evidence which might be offered in support
GVA Market Neutral Master Ltd. v. Veras Capital
Partners Offshore Fund, Ltd., 580 F. Supp. 2d 321, 327 (S.D.N.Y.
2008) (quoting Eternity Global Master Fund Ltd. v. Morgan Guaranty
Trust Co. of New York, 375 F.3d 168, 176 (2d Cir. 2004)).
As noted above, in assessing a motion to dismiss, a court must
reasonable inferences in the non-movant’s favor.
See Erickson v.
Pardus, 551 U.S. 89, 93-94 (2007) (per curiam); DiFolco v. MSNBC
Cable LLC, 622 F.3d 104, 110–11 (2d Cir. 2010).
However, this is
inapplicable to legal conclusion and a court is “not bound to
accept as true a legal conclusion couched as a factual allegation.”
Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).
On a motion to dismiss, the court is generally limited to
reviewing the allegations in the pleadings and documents attached
to it or incorporated by reference. Ferrara v. Leticia, Inc., No.
09 CV 3032, 2012 WL 4344164, at *2 (E.D.N.Y. Sept. 21, 2012); see
Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007); Gryl ex rel.
Shire Pharmaceuticals Group PLC v. Shire Pharmaceuticals Group PLC,
298 F.3d 136, 140 (2d Cir. 2002).
“‘To be incorporated by
substantial reference to the documents . . . [and] [t]o be integral
to the [pleading], the [claimant] must have (1) actual notice of
the extraneous information and (2) relied upon the documents in
framing the [pleading].’”
Bill Diodato Photography LLC v. Avon
Products, Inc., No. 12 Civ. 847, 2012 WL 4335164, at *3 (S.D.N.Y.
Sept. 21, 2012) (second and third alterations in original) (quoting
DeLuca v. AccessIT Group, Inc., 695 F. Supp. 2d 54, 60 (S.D.N.Y.
Here, the Commitment Letter and the Settlement Agreement
are incorporated by reference in Icon’s pleadings.
Counterclaims Against Northern and Third-Party Claims
Against Sean Durkin and John Hartigan
Icon, in its counterclaims and third-party claims, alleges
that Northern, through its agents Mr. Durkin and Mr. Hartigan,
intentionally and improperly induced Boa to breach the Settlement
Agreement and divulge confidential information (Countercl., ¶¶ 1214), and that Mr. Durkin and Mr. Hartigan conspired to interfere
furtherance of this conspiracy, contacted Boa for the purpose of
inducing Boa to disclose the settlement amount in the Prior Action
and disparage Icon (Countercl., ¶¶ 17-18)
Tortious Interference with Contract
To state a claim for tortious interference with contract under
New York law, a party must allege “(a) that a valid contract
exists; (b) that a ‘third party’ had knowledge of the contract; (c)
that the third party intentionally and improperly procured the
breach of the contract; and (d) that the breach resulted in damage
to the plaintiff.”
Albert v. Loksen, 239 F.3d 256, 274 (2d Cir.
2001) (internal quotation marks omitted); accord Luv N’ Care Ltd.
v. Toys “R” Us, Inc., No. 12 Civ. 228, 2012 WL 5265723, at *3
(S.D.N.Y. Oct. 24, 2012).
Northern argues that Icon has failed to
adequately plead the second, third, and fourth elements of this
cause of action.
(Memorandum of Law in Support of Plaintiff and
Third-Party Defendants’ Motion to Dismiss Defendant Icon Capital
Corp.’s Counterclaims and Third-Party Claims (“Northern Memo.”) at
Northern also asserts an economic justification defense and
argues that Icon’s counterclaims are against public policy.
(Northern Memo. at 8-9).
“With respect to the second element, ‘[a]lthough a defendant
need not be aware of all the details of a contract, it must have
actual knowledge of the specific contract.’” Medtech Products Inc.
v. Ranir, LLC, 596 F. Supp. 2d 778, 796 & n.13 (S.D.N.Y. 2008)
(alteration in original) (quoting LinkCo, Inc. v. Fujitsu Ltd., 230
interference with contract claim because even assuming conclusory
allegation that defendants knew of contracts at issue, complaint
fails to suggest defendants saw governing contracts or were aware
of limitations that contracts imposed which defendants purportedly
caused breach); see Leadsinger, Inc. v. Cole, No. 05 Civ. 5606,
2006 WL 2320544, at *12 (S.D.N.Y. Aug. 10, 2006) (finding failure
to allege relevant terms of contracts and defendant’s knowledge of
interference with contract claim); Granite Partners, L.P. v. Bear,
Stearns & Co., 58 F. Supp. 2d 228, 267 n.21 (S.D.N.Y. 1999)
contract provision that they purportedly induced third-party to
breach is ground for dismissal of tortious interference with
contract claim); see also Pitcock v. Kasowitz, Benson, Torres &
Friedman, LLP, 80 A.D.3d 453, 454, 915 N.Y.S.2d 239, 241 (1st Dep’t
2011) (finding plaintiff failed to state tortious interference with
language, the essential terms of the parties contract, including
the specific provisions upon which liability is predicated”).
predicated on Boa’s alleged breach of the confidentiality and nondisparagement covenants of the Settlement Agreement rather than
breach of the entire Settlement Agreement, Icon must allege that
Northern and the third-party defendants had knowledge of these
specific covenants, not just knowledge of the Settlement Agreement
in general. Icon has made no such allegation. Rather, it contends
that Northern and the third-party defendants “found out about the
Settlement Agreement” and when they contacted Boa, “Boa advised
them of the settlement amount and made certain disparaging remarks
about ICON.” (Countercl., ¶¶ 12-13). Accordingly, Icon has failed
to sufficiently set forth facts to plausibly suggest Northern and
the third-party defendants knew of the contractual provisions that
they purportedly caused Boa to breach.
Northern and the third-party defendants also argue that Icon
has not plausibly pled that they used wrongful means, or acted
intentionally or improperly in procuring the alleged breach.
(Northern Memo. at 6-7).
Where, as here, “a plaintiff alleges
interference with a valid, enforceable contract . . . there is
legal authority establishing that it is not necessary to allege
that the interference was malicious or done through wrongful means”
but rather needs only to allege that the interference was “done
Medtech Products Inc., 596 F. Supp. 2d at
797-98. Nevertheless, the interference must be intentional and “an
interference that is merely an intrusion that is negligent or
incident to some other lawful purpose is not enough.”
(S.D.N.Y. May 26, 2009) (internal quotation marks omitted); see
Alvord & Swift v. Stewart A. Muller Construction Co., 46 N.Y.2d
276, 281, 413 N.Y.S.2d 309, 312 (1978) (“[T]he interference must be
intentional, not merely negligent or incidental to some other
Icon has offered no factual support for its assertion that
“Northern had no rights or entitlements” to contact Boa about the
settlement amount in the Prior Action, and a bare legal conclusion
Iqbal, 556 U.S. at 681; see Zhang v.
is entitled to no weight.
Wang, 317 F. App’x 26, 28 (2d Cir. 2008) (dismissing tortious
defendants “‘unjustified[ly],’ ‘malicious[ly],’ ‘tortious[ly],’ and
“nothing more than legal conclusions” (alterations in original)).
Moreover, Icon has acknowledged that Northern may have claims
against Boa, as evidenced by Icon’s invitation to Northern to join
its lawsuit against Boa, which undercut Icon’s assertion that
Northern and the third-party defendants acted without justification
when they contacted Boa about the Settlement Agreement in the Prior
(Countercl., ¶ 8).
Icon contends that it sufficiently alleged that Northern
communicated with Boa under the “threat of bringing claims against
(Defendant Icon Capital Corp.’s Memorandum of Law in
Opposition to the Motion to Dismiss Filed by Plaintiff Northern
Shipping Funds I, LLC and Third-Party Defendants Sean Durkin and
John Hartigan (“Icon Opp. Memo. to Northern”) at 9; Countercl., ¶
Under New York law, threat of litigation can give rise to a
claim for tortious interference with contract “(1) ‘if the actor
has no belief in the merit of the litigation’ or (2) if the actor,
having some belief in the merits of the suit, ‘nevertheless
institutes or threats to institute the ligation in bad faith.’”
Kramer v. Lockwood Pension Services, Inc., 653 F. Supp. 2d 354, 382
(S.D.N.Y. 2009) (quoting Universal City Studios, Inc. v. Nintendo
interference with contract claim because counterclaimants could not
litigation or instituted litigation merely to harass); accord Tap
Publications, Inc. v. Chinese Yellow Pages (New York) Inc., 925 F.
Supp. 212, 222 (S.D.N.Y. 1996). Icon has not alleged that Northern
lacked belief in the merits of this litigation or that it was
initiated in bad faith.
In fact, in its Answer, Icon admits that
“Boa’s withdrawal from the transaction gave rise to obligation to
pay fees to Icon and Northern.”
(Ans., ¶ 24).
cannot plausibly contend that Northern lacked belief in the merit
of this action or that it was instituted in bad faith.
Northern and the third-party defendants further argue that
they were acting to protect their own economic and legal interests
under the Commitment Letter when they contacted Boa about the
Settlement Agreement and that “any interference that may have
resulted from Northern’s actions was merely the incidental byproduct.”
interference with contract cannot rest on the conduct that is
‘incidental to some other lawful purpose.’”
Aetna Casualty and
Surety Co. v. Aniero Concrete Co., 404 F.3d 566, 589 (2d Cir. 2006)
(quoting Costanza Construction Corp. v. City of Rochester, 135 A.2d
111, 111, 523 N.Y.S.2d 707, 708 (4th Dep’t 1987)).
“[u]nder New York law, actions taken to protect an economic
interference with a contract claim.”
In re Bernard L. Madoff
Investment Securities LLC, 440 B.R. 282, 294 (Bankr. S.D.N.Y.
2010); see Quinn v. Jacobs, No. 12 Civ. 2423, 2012 WL 3000673, at
plaintiff/counter-claim-defendant here may assert the ‘economic
interest’ defense -- i.e., ‘that it acted to protect its own legal
or financial stake in the breaching party’s business.’” (quoting
White Plaints Coat & Apron Co. v. Cintas Corp., 8 N.Y.3d 422, 426,
835 N.Y.S.2d 530, 532 (2007))).
Likewise, “‘procuring the breach
of a contract in the exercise of equal or superior right is acting
with just cause or excuse and is justification for what would
otherwise be an actionable wrong.’” Italverde Trading Inc. v. Four
Bills of Lading Numbered LRNN 120950, LRNN 122950, LRNN 123580, and
MSLNV 254064, 485 F. Supp. 2d 187, 204 (E.D.N.Y. 2007) (quoting
Foster v. Churchill, 87 N.Y.2d 744, 750, 642 N.Y.S.2d 583, 587
However, justification defense is unavailable “where
there has been a ‘showing of either malice on the one hand, or
fraudulent or illegal means on the other.’”
Quinn, 2012 WL
3000673, at *2 (quoting Foster, 87 N.Y.2d at 750, 642 N.Y.S.2d at
587); In re Refco Inc. Securities Litigation, 826 F. Supp. 2d 478,
520 (S.D.N.Y. 2011) (noting “‘New York only requires proof of
malice if the economic interest defense has been triggered’”
(quoting White Plains Coat & Apron Co., 460 F.3d at 284)).
a motion to dismiss only addresses the sufficiency of the pleading,
generally “[i]t is improper for the Court to make a determination
at this juncture as to the economic interest defense.” Reach Music
Publishing, Inc. v. Warner/Chappell Music, Inc., No. 09 Civ. 5580,
2011 WL 3962515, at *6 (S.D.N.Y. Sept. 7, 2011) (declining to
address economic interest defense when facts upon which defense is
premised are not developed in pleadings); but see Quinn, 2012 WL
3000673, at *3 (considering economic justification defense on
motion to dismiss, and finding defendant alleged malice to defeat
defense); Metro-Goldwyn-Mayer Studios Inc. v. Canal+ Distribution
S.A.S., No. 07 Civ. 2918, 2010 WL 537583, at *8 (S.D.N.Y. Feb. 9,
2010) (dismissing tortious interference claim because amended
motivation beyond own economic interest and made no showing of
malice or illegality).
Since Icon acknowledges that Northern had claims against Boa
for Boa’s withdrawal from the transaction and the Prior Action
relates to that withdrawal, from the basis of Icon’s pleadings
alone, there are sufficient facts to support Northern’s economic
Icon has not alleged Northern and the third-
party defendants acted with any motivation beyond their own legal
or economic interest, or made any showing of malice or illegality
to defeat this defense.
Finally, Icon has failed to allege that but for the conduct of
Northern and the third-party defendants, the alleged breach would
not have occurred. See Friedman v. Wahrsager, 848 F. Supp. 2d 278,
297 (E.D.N.Y. 2012) (“Plaintiff must also allege that the breach
would not have occurred ‘but for’ the conduct of the defendants.”
(quoting Sharma v. Skaarup Ship Management Corp., 916 F.2d 820, 828
(2d Cir. 1990)).
In fact, Icon alleges in its claims against Boa
that Boa “lack[ed] a good faith intention to carry out its material
obligations in the Settlement Agreement.” (Cross-Cl., ¶ 23). When
predisposition toward breaching the Agreement independent of the
alleged involvement of the Defendants, Plaintiffs cannot establish
‘but for’ causation.”
RSM Production Corp. v. Fridman, 643 F.
Supp. 2d 382, 410 (S.D.N.Y. 2009); see Mina Investment Holdings
Ltd. v. Lefkowitz, 184 F.R.D. 245, 251 (S.D.N.Y. 1999) (plaintiff
failed to allege “but for” causation because plaintiff alleged that
contract would have been breached regardless of defendant’s alleged
action); Granite Partners, L.P., 58 F. Supp. 2d at 267 (tortious
interference with contract claim dismissed because, among others,
original complaint alleged that non-party “was predisposed toward
breaching its agreements . . . and would have done so independently
of each of the [defendants]’s actions or participation” (internal
quotation marks omitted)).
Accordingly, the tortious interference with contract claim is
Conspiracy to Interfere with Contract
Kirch v. Liberty Media Corp., 449 F.3d 388, 401 (2d
Since Icon has failed to allege a cause of action for
tortious interference with contract which underlie the alleged
conspiracy, it necessarily fails to state an actionable claim for
RSM Production Corp., 643 F. Supp. 2d at 413
(dismissing civil conspiracy claim because plaintiff failed to
prospective business advantages and tortious interference with
contract underlying alleged conspiracy).
Moreover, “[t]he intra-corporate conspiracy doctrine dictates
that employees of the same corporate entity who are acting within
their employment are legally incapable of conspiring with each
Angulo v. Manny, No. 11 Civ. 878, 2012 WL 569190, at *3
(S.D.N.Y. Feb. 14, 2012); see Crews v. County of Nassau, No. 06 CV
2610, 2007 WL 4591325, at *12 (E.D.N.Y. Dec. 27, 2007) (“The
agents, and employees of a single corporate or municipal entity,
each acting within the scope of his or her employment, are legally
incapable of conspiring with each other.”). Icon contends that Mr.
Durkin, the President of Northern, and Mr. Hartigan, the Senior
Investment Manager at Northern, were acting as agents of Northern
when they allegedly induced Boa to breach the Settlement Agreement.
(Countercl., ¶¶ 1-2, 14, 18).
Since Mr. Durkin and Mr. Hartigan
are agents of the same corporate entity and are alleged to have
been acting within their scope of employment, the doctrine of
intracorporate conspiracy bars this claim.
Accordingly, Northern and the third-party defendants’ motion
is granted, and Icon’s counterclaims and third-party claims are
dismissed with prejudice.
Cross-Claims Against Boa
Icon brings three cross-claims against Boa, alleging that (1)
Settlement Agreement when it informed Northern of the settlement
amount in the Prior Action (Cross-Cl., ¶¶ 10-13); (2) Boa breached
Agreement by reporting to Northern alleged misrepresentations made
by Icon during the settlement negotiations in the Prior Action
(Cross-Cl., ¶¶ 16-19); and (3) Boa breached the implied covenant of
good faith and fair dealing by sharing contractually-protected
confidential information with Northern and inducing Icon to dismiss
the Prior Action while lacking a good faith intention to carry out
its obligations under the Settlement Agreement (Cross-Cl., ¶¶ 2124).
Boa moves to dismiss all cross-claims.
“‘Settlement agreements are contracts and must therefore be
Gerrero v. FJC Security Services Inc., No. 10 Civ. 9027, 2012 WL
2053535, at *5 (S.D.N.Y. June 5, 2012) (quoting Red Ball Interior
Demolition Corp. v. Palmadessa, 173 F. 3d 481, 484 (2d Cir. 1999));
accord Robles v. Cox and Co., 841 F. Supp. 2d 615, 632 (E.D.N.Y.
“To state a claim for breach of contract, [the plaintiff]
was required to plausibly allege (1) the existence of an agreement,
(2) its own adequate performance, (3) breach by the defendant, and
(4) damages.’” Brooklyn 13th Street Holding Corp. v. Nextel of New
York, Inc., 495 F. App’x 112, 113 (2d Cir. 2012) (citing Eternity
Global Master Fund Ltd. v. Morgan Guaranty Trust Co. of New York,
375 F.3d 168, 177 (2d Cir. 2004)).
Boa and Icon do not dispute that they executed a Settlement
Agreement to resolve the Prior Action. (Cross-Cl., ¶ 6; Memorandum
of Law in Support of Boa’s Motion to Dismiss Icon’s Cross-Claims
confidentiality covenant that states:
Each of the Parties agrees not to voluntarily disclose,
either directly or indirectly, the specific terms and
conditions of this Agreement to any third party,
including, but not limited to, present and former
employees, independent contractors, customers and
distributors of the Parties, or the public or press.
Notwithstanding the foregoing, the Parties may disclose
the terms of this Agreement, on an “as needed” basis only
(I) to those of its employees having a need to know, and
its attorneys, accountants, auditors and tax consultant
all of whom shall agree to maintain this confidentiality,
and (ii) if necessary to comply with any valid and
uncontested subpoena or other legal or judicial process
issued by any court, legislative body or government
agency of competent jurisdiction.
(Declaration of Thomas O. Johnston dated March 15, 2013 (“Johnston
Decl.”), ¶ 8). It also contains a mutual non-disparagement clause.
(Cross-Cl., ¶ 16).
Boa contends that Icon cannot maintain an action for breach of
Settlement Agreement when Icon was the first to breach it.
Memo. at 9-11).
Boa points to the representations and warranties
Icon made in the Agreement, which state:
ICON represents that, to the best of its knowledge,
Northern Shipping Fund I L.L.C. (“Northern”) has not
executed the Commitment Letter. ICON further represents
that it made Northern aware of its intention to file the
subject lawsuit between ICON and Boa. To the best of
ICON’s knowledge, Northern has not made nor does it
intend to make a claim against Boa related to the
Commitment Letter or this litigation.
(Johnston Decl., ¶ 9; Boa Memo. at 6).
Based on the allegations in
Northern’s Complaint, Boa argues that Icon knowingly misrepresented
Northern’s position in the Prior Action, thereby breaching the
Settlement Agreement and releasing Boa of its duty to perform under
the Settlement Agreement.
(Boa Memo. at 9-10).
“‘A fundamental principle of contract law provides that the
contractual obligations of the non-breaching party.’”
American Home Mortgage Servicing Inc.,
F. Supp. 2d
WL 544010, at *19 (E.D.N.Y. 2013) (quoting Bear, Stearns Funding,
Inc. v. Interface Group-Nevada, Inc., 361 F. Supp. 2d 283, 291
“However, because ‘[t]here might be a genuine
issue of fact as to whether such a breach[, if any,] was material,’
it ‘cannot be said as a matter of law that any breach was material”
at the motion to dismiss stage.
Id. (alterations in original)
(quoting Johnson & Johnson v. Guidant Corp., 525 F. Supp. 2d 336,
355-57 (S.D.N.Y. 2007) (declining to dismiss breach of contract
claim on basis that plaintiff did not adequately perform under
Accordingly, I decline to dismiss Icon’s contract
claims on this basis.
Boa argues that the breach of contract cross-claim based on
the confidentiality provision must be dismissed because Icon has
disclosure of the settlement amount to Northern. (Boa Memo. at 1112).
“Under New York law, plaintiffs asserting breach of contract
claims must allege facts showing damage caused by the alleged
USAirways Group, Inc. v. British Airways PLC, 989 F.
Supp. 482, 492 (S.D.N.Y. 1997); see Counsel Financial Services, LLC
v. Melkersen Law, P.C., 602 F. Supp. 2d 448, 452 (W.D.N.Y. 2009)
(“‘In the absence of any allegations of facts showing damage, mere
allegations of breach of contract are not sufficient to sustain a
complaint.’” (quoting Lexington 360 Associates v. First Union
National Bank of North Carolina, 234 A.D.2d 187, 189-90, 651
N.Y.S.2d 490, 492 (1st Dep’t 1996))); Smith McDonnell Stone & Co.
v. Delicato Vineyards, No. 94 Civ. 6474, 1995 WL 375918, at *4
(S.D.N.Y. June 22, 1995) (“Allegations of a breach of contract are
Moreover, a party “‘seeking damages for breach of
contract . . . must demonstrate that the damages were caused by and
are directly traceable to the . . . breach.’”
Management, LLC v. Magnus Funding, Ltd., No. 03 Civ. 5539, 2004 WL
1444868, at *7 (S.D.N.Y. June 25, 2004) (alterations in original)
(quoting Bausch & Lomb, Inc. v. Bressler, 977 F.2d 720, 731 (2d
Cir. 1992)); see Diesel Props S.r.l. v. Greystone Business Credit
II LLC, 631 F.3d 42, 52-53 (2d Cir. 2011) (“‘Causation is an
essential element of damages in a breach of contract action; . . .
a plaintiff must prove that a defendant’s breach directly and
proximately caused his or her damages.’” (emphasis in original)
(quoting National Market Share v. Sterling National Bank, 392 F.3d
520, 525 (2d Cir. 2004))). “‘Where a party has failed to come
forward with evidence sufficient to demonstrate damages flowing
from the breach alleged and relies, instead, on wholly speculative
theories of damages, dismissal of the breach of contract claim is
Counsel Financial Services, LLC, 602 F. Supp. 2d at
452 (quoting Lexington 360 Associates, 234 A.D.2d at 190, 651
N.Y.S.2d at 492).
In addition, “[r]ecovery is not allowed if the
claimed losses are the result of other intervening causes.” Diesel
Props S.r.l., 631 F.3d at 53 (internal quotation marks omitted).
Icon purports to have suffered damages from Boa’s alleged
disclosure of the settlement amount to Northern because Northern
filed the present action seeking half of the settlement in the
Prior Action. (Cross-Cl., ¶ 13). Boa contends that Northern would
have commenced this action “regardless of the actual amount of the
settlement of the Prior Action” and it was Icon’s refusal to
prompted this action.
(Boa Memo. at 12).
These are factual
allegations that go beyond the pleadings.
At this point in the
proceedings, drawing all reasonable inferences in Icon’s favor,
Icon presents sufficient facts to suggest damages stemming from the
alleged breach of the confidentiality provision, and “it [is]
unnecessary at this stage to address whether . . . a claim for
damages for breach of a contract . . . is too speculative to
Sharp v. Patterson, No. 03 Civ. 8772, 2004 WL 2480426,
at *5 (S.D.N.Y. Nov. 3, 2004); see Xpedior Creditor Trust v. Credit
Suisse First Boston (USA) Inc., 341 F. Supp. 2d 258, 271-72
(S.D.N.Y. 2004) (“If [the plaintiff], as a matter of proof, cannot
establish a causal connection between [the defendant]’s alleged
breach and its own damages, then surely the contract claims will
But such questions are appropriately handled at summary
judgment or trial, not on a motion to dismiss.”); USAirways Group,
Inc., 989 F. Supp. at 492 (“Although the allegations of damages are
short on specifics and [plaintiff] may ultimately have difficulty
establishing the amount of damages caused by the alleged breach,
such allegations are sufficient to survive a motion to dismiss the
Accordingly, Boa’s motion to dismiss Icon’s first cross-claim
Boa also argues that since the settlement amount would
inevitably be disclosed in discovery in this case, that any earlier
disclosure was harmless. (Boa Memo. at 12-13). Since Icon claims
that but for Icon’s purported disclosure of the settlement amount,
Northern would not have brought the instant action, Boa’s
contention does not undermine Icon’s damages allegation.
Boa contends that Icon has failed to plead its second crossclaim with the requisite specificity.
(Boa Memo. at 13-14).
relying on defamation case law, argues that Icon must provide
details as to the alleged disparaging statements made by Boa,
statements, when the statements were made, to whom the statements
were communicated, and the mode of communication.
(Boa Memo. at
Since Icon’s cross-claim is a breach of contract claim based
on the non-disparagement provision, Icon must plausibly plead,
Icon alleges that Boa breached by “report[ing] to
representations made by ICON agents during its prior settlement
negotiations, which had no basis in fact.”
(Cross-Cl., ¶ 18).
“Stating in a conclusory manner that an agreement was breached does
not sustain a claim of breach of contract.”
Berman v. Sugo LLC,
580 F. Supp. 2d 191, 202 (S.D.N.Y. 2008); see Schupak Group, Inc.
v. Travelers Casualty and Surety Co. of America, 716 F. Supp. 2d
262, 267 (S.D.N.Y. 2010) (“A claim for breach of contract cannot be
breached a contract.”). Icon has offered no factual allegations to
support its claim that Boa breached the non-disparagement clause.
See BDCM Fund Adviser, L.L.C. v. Zenni, 103 A.D.3d 475, 477-78, __
(1st Dep’t 2013) (affirming dismissal of breach of non22
disparagement provision cause of action because complaint failed to
specify disparaging statements allegedly made by defendants);
also Structural Preservation Systems, LLC v. Andrews,
, 2013 WL 459784, at *10 (D. Md. 2013) (dismissing breach
of non-disparagement provision claim because plaintiff simply
alleges defendant made “[s]everal disparaging remarks and false
accusations against [the defendant],” and fails to “allege the
particular nature of the remarks or to whom or when such remarks
were made”); cf. Soroof Trading Development Co. v. GE Fuel Cell
(dismissing breach of contract claim because complaint “does no
more than make naked assertions without any factual enhancement to
support” claim that contract was breached); Fink v. Time Warner
Cable, 810 F. Supp. 2d 633, 645 (S.D.N.Y. 2011) (dismissing breach
of contract claim because “simplistic allegations that Defendant
failed to perform, are insufficient to make the requisite plausible
factual demonstration of the basis of Plaintiffs’ claim”); Murphy
v. Senior Investigator Neuberger, No. 94 Civ. 7421, 1996 WL 442797,
at *14 (S.D.N.Y. Aug. 6, 1996) (dismissing breach of contract claim
because complaint makes only vague and conclusory allegations about
how defendants breached contract).
“[N]aked assertion devoid of
further factual enhancement” is insufficient.
Iqbal, 556 U.S. at
678 (internal quotations marks and citation omitted). Accordingly,
this claim is dismissed without prejudice to being repled.
Implied Covenant of Good Faith and Fair Dealing
“Under New York law, ‘[i]mplicit in all contracts is a
covenant of good faith and fair dealing in the course of contract
Transeo S.A.R.L. v. Bessemer Venture Partners VI
F. Supp. 2d
, 2013 WL 1285453, at *20 (S.D.N.Y.
2013) (alteration in original).
However, “a claim alleging a
breach of this covenant will not stand if it is duplicative of a
breach of contract claim.”
Id.; see Harris v. Provident Life and
Accident Insurance Co., 310 F.3d 73, 81 (2d Cir. 2002) (“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
Icon argues that its good faith and fair dealing claim is not
duplicative of its breach of contract claims because it is based on
its allegation that “Boa induced Icon ‘into dismissing [Icon’s]
action against Boa while, at the same time, lacking a good faith
Settlement Agreement.’” (Defendant Icon Capital Corp.’s Memorandum
of Law in Opposition to the Motion to Dismiss Filed by Defendants
Boa Sub C AS, Boa Deep C AS, Boa Holding AS, and Boa Offshore AS
(“Icon Opp. Memo. to Boa”) at 12; Cross-Cl., ¶ 23).
information” with Northern.
(Cross-Cl., ¶ 23).
This is the same
confidentiality covenant claim. Accordingly, Icon’s good faith and
fair dealing claim is duplicative and is dismissed.
the motion of Northern and the
third-party defendants (Docket no. 40) is granted, and the counter
claims and third-party claims are dismissed.
Boa's motion (Docket
is denied to the extent that it sought dismissal of the
cross-claim alleging breach of the confidentiality clause, granted
to the extent that the cross - claim based on breach of the nondisparagement clause is dismissed without prejudice, and granted to
the extent that the cross-claim based on breach of the implied
C. FRANCIS IV
ITED STATES MAGISTRATE JUDGE
New York, New York
April 12, 2013
Copies mailed this date:
Phillip R. Schatz, Esq.
Kristin Marlowe, Esq.
Wrobel & Schatz LLP
1040 Avenue of the Americas
New York, NY 10018
Thomas o. Johnston, Esq.
Porzio, Bromberg & Newman, P.C.
156 West 56th Street, Suite 803
New York, NY 10019
Michael D. Traub, Esq.
Akerman Senterfitt LLP
335 Madison Avenue
New York, NY 10017
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