Gym Door Repairs, Inc. et al v. Young Equipment Sales, Inc. et al

Filing 312

MEMORANDUM OPINION AND ORDEr re: 290 MOTION to Dismiss . filed by Eastern Suffolk Boces. The Court has considered all of the arguments raised by the parties. To the extent not specifically addressed, the arguments are either moot or without merit. For the foregoing reasons, the motion to dismiss is granted in part and denied in part. The plaintiffs' request for sanctions is denied. The Clerk is directed to close Dkt. 290. (As further set forth in this Order.) (Signed by Judge John G. Koeltl on 3/8/2017) (cf)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
────────────────────────────────────
GYM DOOR REPAIRS, INC. ET AL.
Plaintiffs,

15-cv-4244 (JGK)

- against –
YOUNG EQUIPMENT SALES, INC. ET AL.,

MEMORANDUM OPINION AND
ORDER

Defendants.
────────────────────────────────────
JOHN G. KOELTL, District Judge:
The pending motion to dismiss by the defendant, the Eastern
Suffolk Board of Cooperative Educational Services (the
“ESBOCES”), seeks to dismiss the First Supplemental and Third
Amended Complaint Against ESBOCES (the “TAC”) filed by the
plaintiffs, Gym Door Repairs, Inc. (“GDRI”), and Safepath
Systems LLC.
In an Amended Opinion and Order dated September 9, 2016,
this Court granted in part and denied in part the ESBOCES’
motion to dismiss the plaintiffs’ Second Amended Complaint (the
“SAC”). Gym Door Repairs, Inc. v. Young Equip. Sales, Inc., No.
15-CV-4244 (JGK), 2016 WL 4747281 (S.D.N.Y. Sept. 12, 2016) (Gym
Door I); see also Gym Door Repairs, Inc. v. Young Equip. Sales,
Inc., No. 15-CV-4244 (JGK), 2016 WL 4742317, at *5 (S.D.N.Y.
Sept. 12, 2016) (Gym Door II) (denying the plaintiffs’ motion
for a preliminary injunction). Specifically, this Court in Gym
Door I granted the motion to dismiss with respect to the claims
1

for patent infringement, trademark infringement and unfair
competition, and civil conspiracy, but denied the motion with
respect to the claim for copyright infringement. Id. at *31.
In a Memorandum Opinion and Order dated November 10, 2016,
this Court denied the plaintiffs’ motion for reconsideration of
the grant of the dismissal of their claims against the ESBOCES
for tortious interference with business relationships and civil
conspiracy, but granted the plaintiffs’ motion to amend (or
supplement) the SAC to add new allegations that, the plaintiffs
argued, would suffice to state those claims against the ESBOCES.
Gym Door Repairs, Inc. v. Young Equip. Sales, Inc., No. 15-CV4244 (JGK), 2016 WL 6652733, at *1 (S.D.N.Y. Nov. 10, 2016) (Gym
Door III). This Court held that amendment (or supplementation)
was warranted under the liberal standards of Federal Rule of
Civil Procedure 15 because it could not be said that the
addition of new allegations directed against the ESBOCES would
be futile. Id. at *4.
The TAC followed. For the following reasons, the motion to
dismiss the TAC is granted in part and denied in part.
I.
The allegations in the TAC are accepted as true for
purposes of this motion to dismiss. For the purposes of this
motion, the parties’ familiarity with the standard of review to
be applied on a motion to dismiss pursuant to Rule 12(b)(6) of
2

the Federal Rules of Civil Procedure, the facts, procedural
history, and underlying claims is presumed. See Gym Door I, 2016
WL 4747281, at *1-4.
The TAC is designed to defeat the ESBOCES’ statute of
limitations defense. To state a claim, the allegations must
point to tortious acts that occurred on or after March 4, 2014.
See Gym Door I, 2016 WL 4747281, at *22.
At its heart, the TAC includes three new allegations.
First, the TAC alleges that, on May 23, 2014, Gregory Gucerio of
the law firm Gucerio & Gucerio LLP wrote a letter on behalf of
the ESBOCES (the “Gucerio Letter”) to several state agencies
that was (only superficially) designed to update the agencies
about the plaintiffs’ allegations of fraud, but that had “the
effect of quelling the investigations” by those agencies because
the Letter neglected to mention the ESBOCES’ participation in
the fraud or that the fraud remained ongoing. TAC ¶¶ 78-79; see
also Kleinberg Decl., Ex. D (The Gucerio Letter).
Second, the TAC alleges that, in the summer of 2015, the
ESBOCES issued a bid request for inspection, maintenance and
repair of basketball backstops and bleachers (the “2015-2016 Bid
Request”). TAC ¶ 80. GDRI and two competitors --- the Nickerson
Corporation (“Nickerson”) and the defendant Young Equipment
Sales, Inc. --- were allegedly the only companies to respond to
the 2015-2016 Bid Request. TAC ¶ 80. The TAC alleges that GDRI
3

should have won the bid because GDRI had the lowest bid, and
because “Young [Equipment Sales, Inc.] and Nickerson were under
investigation for the misuse of subcontractors” by the New York
Department of Labor. TAC ¶ 81. Rather than award the bid to
GDRI, the TAC alleges that on November 19, 2015, the ESBOCES
withdrew the 2015-2016 Bid Request, “an action smacking of
retaliation.” TAC ¶ 82.
Finally, the TAC alleges that the ESBOCES has aided the
Young defendants’ scheme to poach the plaintiffs’ business with
school districts since 2011 by “repeatedly accepting falsified
documents” as part of the Young defendants’ bid packages, and
nevertheless awarding the bids to the Young defendants even
though the ESBOCES had “full knowledge of Young’s malfeasance.”
TAC ¶¶ 76, 94, 108. The TAC alleges that the fraudulent
documents included “fake listings for partition door and safety
system components and labor.” TAC ¶¶ 35-36. The TAC alleges that
the Young defendants used the bids awarded by the ESBOCES to win
the plaintiffs’ business from school districts. See TAC ¶¶ 40,
75, 89, 110.
The TAC includes allegations (mostly related to conduct
that occurred before May 2014) to show that the ESBOCES knew
that the documents were falsified, and that the ESBOCES has been
actively conspiring with the Young defendants. For example, the
TAC alleges that the fraudulent nature of the documents would be
4

obvious to ESBOCES employees due to clerical errors and other
inconsistencies in the documents. See ¶¶ TAC 51-53, 76-77. The
TAC also alleges that, since 2011, the plaintiffs have
repeatedly alerted the ESBOCES to the Young defendants’
misconduct, including by explicitly warning the ESBOCES in
August 2012 that the bid documents were falsified. TAC ¶¶ 43,
53-54, 65-66, 70. The TAC alleges that the ESBOCES has
inexplicably ignored the plaintiffs’ warnings. See, e.g., TAC ¶¶
54, 57, 66.
II.
(i)
In support of the tortious interference claim, the TAC
identifies two acts by the ESBOCES that occurred after March 4,
2014: the mailing of the Guercio letter, and the withdrawal of
the 2015-2016 Bid Request. Neither act is sufficient to state a
claim.
“Under New York law, to state a claim for tortious
interference with prospective economic advantage, the 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.’” Gym Door I, 2016 WL 4747281, at *21 (citations
5

omitted). “A tortious interference with prospective economic
advantage ‘claim begins to run when the defendant performs the
action (or inaction) that constitutes the alleged interference.
It does not commence anew each time the plaintiff is unable to
enter into a contract, unless the defendant takes some further
step. Even where . . . the claim is based entirely on the
assertion that the defendants’ action (or inaction) had a
negative effect on contractual relationships that plaintiff
might later have had, the subsequent injuries alleged do not
affect the timeliness issue.’” Id. at *23 (quoting Thome v.
Alexander & Louisa Calder Found., 890 N.Y.S.2d 16, 30 (App. Div.
2009)).1
There is no plausible explanation for how the Guercio
Letter interfered with the plaintiffs’ business relations with
any third-party. The Letter was not addressed to potential
customers, nor was it directed toward any business relations.
See Carvel Corp. v. Noonan, 818 N.E.2d 1100, 1104 (N.Y. 2004)
(“[C]onduct constituting tortious interference with business
relations is, by definition, conduct directed not at the
plaintiff itself, but at the party with which the plaintiff has
or seeks to have a relationship.”). The Letter merely provided
1

The plaintiffs argue that the date of accrual should be
measured from the date that the plaintiffs felt the injury by
being hindered from entering into business relationships, and
not the date of the allegedly tortious act. This argument was
already rejected in Gym Door I, 2016 WL 4747281, at *22-23.
6

an update to state agencies regarding the plaintiffs’
allegations of fraud. The plaintiffs allege that the Guercio
Letter interfered with state regulatory investigations; they do
not plausibly allege that it interfered with any business
relationships.
The plaintiffs cannot rely on the withdrawal of the 20152016 Bid Request on November 19, 2015, to state a claim. As
explained in Gym Door I, “[U]nder N.Y. Educ. Law § 3813(2), ‘no
action or special proceeding founded upon tort may be prosecuted
or maintained’ against NYCDOE unless (1) the plaintiff serves
within ninety days after the claim arose a notice of claim ‘made
and served in compliance with’ N.Y. Gen. Mun. Law 50–e and (2)
the action is ‘commenced pursuant to the provisions of’ N.Y.
Gen. Mun. Law § 50–i, which requires, among other things, that
the complaint allege compliance with N.Y. Gen. Mun. Law § 50–e.
The failure to serve the proper public body with a notice of
claim ‘is a fatal defect mandating dismissal of th[e] action.’”
Gym Door I, 2016 WL 4747281, at *22 (first alteration, citations
and some internal quotation marks omitted).
It is common ground that the plaintiffs filed a
procedurally compliant notice of claim on May 1, 2015, that
covered the plaintiffs’ tortious interference and conspiracy
claims that accrued before that date. However, the alleged
withdrawal of the 2015-2016 Bid Request occurred after May 1,
7

2015. The plaintiffs do not argue that a previously filed notice
of claim permits a plaintiff to assert any conceivably related
claim that accrues after the filing, nor do the plaintiffs argue
that they have sought to amend the May 1, 2015 notice of claim
to cover any subsequent tortious acts. See Solow v. Liebman, 609
N.Y.S.2d 58, 59 (App. Div. 1994) (a plaintiff cannot circumvent
the notice of claim requirement by labeling wrongs as
“ongoing”); cf. Nassau Cty. v. Inc. Vill. of Roslyn, 582
N.Y.S.2d 276, 278 (App. Div. 1992).
Instead, the plaintiffs indicate that, on October 11, 2016,
they sent a second notice of claim to the ESBOCES that covered
the withdrawal. See Daniels Decl., Ex. 7. As the EBOCSES
correctly argues, N.Y. Gen. Mun. Law 50–e required the
plaintiffs to serve the notice of claim by February 17, 2016,
meaning that the second notice of claim was untimely.2 The
plaintiffs have failed to comply with N.Y. Gen. Mun. Law 50–e
and thus cannot base their claims on the withdrawal of the 20152016 Bid Request. See Gym Door I, 2016 WL 4747281, at *22.
In any event, the withdrawal of the 2015-2016 Bid Request
does not plausibly state a claim for tortious interference with
business relations. The withdrawal was plainly directed at the

2

The plaintiffs have not asked this Court for permission to file
a late notice of claim. Accordingly, it is unnecessary to reach
the ESBOCES’ argument that federal courts lack jurisdiction to
grant parties leave to file late notices of claim.
8

plaintiffs, and not any third-parties. Carvel, 818 N.E.2d at
1104; see also Gross v. Empire Healthchoice Assur., Inc., 819
N.Y.S.2d 210, 2006 WL 1358474 at *7 (Sup. Ct. 2006) (“[T]he
complaint does not allege that defendants directly interfered
with plaintiffs’ patients; instead, it alleges that defendants’
actions were directly at plaintiffs themselves rather than their
patients.”). There is again no explanation as to how the
withdrawal plausibly interfered with the plaintiffs’ business
relationships with third-parties.
The remaining allegations in the TAC discuss events that
are time-barred. Accordingly, the claim for tortious
interference is dismissed with prejudice because the TAC has
failed to identify any tortious acts within the narrow window
permitted by the relevant statute of limitations.
(ii)
The ESBOCES argues that they cannot be liable for civil
conspiracy because the tortious interference claim against them
has been dismissed, but the conclusion that the ESBOCES cannot
be liable as a primary tortfeasor does not end the inquiry. The
plaintiffs also claim that the ESBOCES agreed to aid the Young
defendants in committing the tort. As explained in Gym Door I,
“It is textbook law that New York does not recognize
an independent tort of conspiracy. If an underlying,
actionable
tort
is
established,
however,
[the]
plaintiff may plead the existence of a conspiracy in
order to demonstrate that each defendant’s conduct was
9

part of a common scheme.” Sepenuk v. Marshall, No. 98cv-1569 (RCC), 2000 WL 1808977, at *6 (S.D.N.Y. Dec.
8, 2000) (citation omitted). To establish a claim of
civil conspiracy, the plaintiffs “must demonstrate the
primary tort, plus the following four elements: (1) an
agreement between two or more parties; (2) an overt
act in furtherance of the agreement; (3) the parties’
intentional participation in the furtherance of a plan
or purpose; and (4) resulting damage or injury.” World
Wrestling Fed’n Entm’t, Inc. v. Bozell, 142 F. Supp.
2d 514, 532 (S.D.N.Y. 2001). Under New York law, in
order to be liable for acting in concert with a
primary tortfeasor under a theory of either conspiracy
or aiding and abetting, the defendant must know of the
wrongful nature of the primary actor’s conduct.
Pittman by Pittman v. Grayson, 149 F.3d 111, 123 (2d
Cir. 1998). “It is essential that each defendant
charged with acting in concert have acted tortiously
and that one of the defendants committed an act in
pursuance of the agreement which constitutes a tort.”
Rastelli v. Goodyear Tire & Rubber Co., 591 N.E.2d
222, 224 (N.Y. 1992). Gym Door I, 2016 WL 4747281, at
*26.
In Gym Door I, this Court held that the plaintiffs had
plausibly stated a claim for tortious interference with business
relationships against several defendants, including the Young
defendants. See id. at *25. This Court also held that the
plaintiffs’ allegations of civil conspiracy against the ESBOCES
were “conclusory and speculative” and therefore insufficient to
withstand a motion to dismiss, and moreover time-barred because
the plaintiffs could not identify any act in furtherance of any
conspiracy that occurred before the expiration of the statute of
limitations. Id. at *29. The TAC has cured these pleading
defects with respect to the ESBOCES. The TAC plausibly alleges
that the ESBOCES conspired with the Young defendants to
10

tortiously interfere with the plaintiffs’ business
relationships.
Contrary to the ESBOCES’ arguments, the TAC does not merely
allege that the ESBOCES acted as a passive bystander by
receiving fraudulent documents from the Young defendants or by
failing to police its component school districts when confronted
with allegations of misconduct. Instead, the TAC alleges that
the ESBOCES actively aided the Young defendants by knowingly
accepting fraudulent documents and nevertheless awarding the
bids to the Young defendants. The TAC includes plausible
allegations that the ESBOCES was aware that the conduct of the
Young defendants was wrongful, including the allegation that the
fabrications in the documents would be obvious to ESBOCES
employees charged with reviewing those documents, and the
allegation that the plaintiffs explicitly informed the ESBOCES
that the documents contained misrepresentations. It is plausible
that the ESBOCES’ bidding process was designed to give an
outward veneer of fairness to bidders, when it was in reality
rigged against the plaintiffs and in favor of the Young
defendants. The TAC plausibly alleges that the ESBOCES violated
the law by knowingly accepting fabricated documents. The Young
defendants in turn allegedly used the winning bids to poach the
plaintiffs’ business from school districts.

11

While the ESBOCES argues that its conduct was merely
negligent, and independent of the Young defendants, it is
plausible that that the ESBOCES agreed to help the Young
defendants win business from school districts to the detriment
of the plaintiffs. It is a reasonable inference that the ESBOCES
knew that the alleged scheme was directed against the
plaintiffs, which were allegedly harmed by the interference with
their business relations. While it is unclear when exactly the
ESBOCES joined the alleged conspiracy, the TAC includes
plausible allegations that it had done so by late 2011.
The ESBOCES argues that the civil conspiracy claim is
nonetheless time-barred. “The statute of limitations for civil
conspiracy is the same as that for the underlying tort.” Deans
v. Bank of Am., No. 10 CIV. 9582 (RJH), 2011 WL 5103343, at *3
(S.D.N.Y. Oct. 27, 2011) (alteration omitted) (quoting Brady v.
Lynes, No. 05 Civ. 6540 (DAB), 2008 WL 2276518, at *9 (S.D.N.Y.
June 2, 2008)); see also Schlotthauer v. Sanders, 545 N.Y.S.2d
197, 199 (App. Div. 1989) (a claim for civil conspiracy “is
time-barred when the substantive tort underlying it is timebarred”). “In a civil conspiracy action, . . . the Statute of
Limitations . . . commences to run with respect to each act when
it occurs . . . . Repeated wrongs are treated as separate rights
of action and the Statute of Limitations begins to run as to
each . . . upon its commission.” Korry v. Int’l Tel. & Tel.
12

Corp., 444 F. Supp. 193, 195-96 (S.D.N.Y. 1978) (citations and
internal quotations marks omitted); see also Fuji Photo Film
U.S.A., Inc. v. McNulty, 640 F. Supp. 2d 300, 322 (S.D.N.Y.
2009); Pasqualini v. MortgageIT, Inc., 498 F. Supp. 2d 659, 671
(S.D.N.Y. 2007).
The ESBOCES cannot be liable for tortious acts in
furtherance of the conspiracy that occurred before March 4,
2014. As addressed above, the TAC does not identify any tortious
acts that the ESBOCES itself took after that date. However, the
plaintiffs have now plausibly alleged that the ESBOCES conspired
with the Young defendants for purposes of the civil conspiracy
claim. The plaintiffs allege that the Young defendants continued
committing overt tortious acts in furtherance of their scheme
through at least June 2014 by “divert[ing] . . . inspection,
maintenance, and repair work from” the plaintiffs. See TAC ¶ 75.
The time-bar accordingly is not a barrier to the plaintiffs’
claim against the ESBOCES to the extent that the Young
defendants committed acts of tortious interference with the
plaintiffs’ business relationships after March 4, 2014.
Accordingly, the motion to dismiss the civil conspiracy
claim is denied
III.
The plaintiffs have asked for sanctions to compensate the
legal fees that they incurred while opposing the motion to
13

dismiss. The request is without merit. The ESBOCES plainly had a
good faith basis for bringing the motion, which has successfully
resulted in the dismissal of the first claim, and the
substantial narrowing of the second claim.3
CONCLUSION
The Court has considered all of the arguments raised by the
parties. To the extent not specifically addressed, the arguments
are either moot or without merit. For the foregoing reasons, the
motion to dismiss is granted in part and denied in part. The
plaintiffs’ request for sanctions is denied. The Clerk is
directed to close Dkt. 290.
SO ORDERED.
Dated:

New York, New York
March 8, 2017

_____________/s/_______________
John G. Koeltl
United States District Judge

3

While the Court expressed doubts at the
as to whether the motion to dismiss would
briefing demonstrated that the motion did
any event, the motion was plainly made in
substantial basis.
14

pre-motion conference
be successful, full
indeed have merit. In
good faith with a