Pinnacle Agriculture Distribution v. Watts

Filing 24

MEMORANDUM AND ORDER granting 16 Motion to Dismiss. For the foregoing reasons, defendant's partial motion to dismiss is granted. The defendant should file no later than May 14, 2019 a responsive pleading as to the claims that remain. The Clerk of Court is respectfully directed to terminate the motion pending at Docket Number 16. SO ORDERED. (Signed by Judge Naomi Reice Buchwald on 4/23/2019) (ks) Modified on 4/23/2019 (ks).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------X
PINNACLE AGRICULTURE DISTRIBUTION, INC.,
f/k/a JIMMY SANDERS INCORPORATED
Plaintiff,
- against -

MEMORANDUM AND ORDER

BENJAMIN WATTS,

18 Civ. 5365 (NRB)

Defendant.
--------------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
Plaintiff

Pinnacle

Agriculture

Distribution,

Inc.

(“Pinnacle”) brought this suit against defendant Benjamin Watts
(“Watts”)

alleging

that

Watts

violated

various

restrictive

covenants contained in retention bonus agreements signed by Watts
during the course of his employment at Pinnacle.

Before the Court

is defendant’s partial motion to dismiss plaintiff’s first and
fourth causes of action for breach of contract and breach of the
implied covenant of good faith and fair dealing, respectively.
For the reasons that follow, that motion is granted.
I.

Background
The following facts are drawn from Pinnacle’s Complaint and

the documents appended thereto.

The facts alleged by Pinnacle, to

the extent well-pleaded, are accepted as true.
Plaintiff

Pinnacle

distribution company.

is

a

large

Compl. ¶ 9.

farm

and

agriculture

Defendant Watts was a sales

representative

for

Pinnacle

from

voluntary resignation in June 2018.

September
Id. ¶ 14.

2012

until

his

On July 30, 2013,

defendant signed a retention bonus agreement (“2013 agreement”),
which had been offered to him by plaintiff.

Id. ¶ 19.

That

agreement imposed various restrictive covenants on defendant’s
post-employment
incentives.

activities

in

exchange

for

2013 Agreement, ECF No. 7-1, at 1.

monetary

bonus

Of particular

relevance, Section 1(a)(i) of the agreement stated that defendant
would be prohibited during the 12-month period following the
termination of his employment from engaging in “activities . . .
that compete directly or indirectly with” Pinnacle’s business.
Id. at 5.

Such “Competitive Activities” were defined in Section

1(a)(i) as:
including (A) soliciting or attempting to solicit any
customer, client, supplier, developer, subcontractor,
licensee, licensor or other business relation . . . of
[Pinnacle] to purchase any services of the type provided
by [Pinnacle] from anyone other than [Pinnacle], (B)
providing services to any customer, client, supplier or
other business relation of [Pinnacle], or (C) assist any
Person in any way to do, or attempt to do, anything
prohibited by 1(a)(ii)(A) or (B) above.
Id.

The agreement, however, further stated that “the non-

complete

[sic]

in

Section

1(a)(i)”

would

not

apply

to

defendant “unless otherwise mutually agreed in a prior or
future retention bonus award or other agreement.”

Id. at 1.

It is undisputed that the parties never executed an agreement

2

stating that the non-compete in Section 1(a)(i) would apply
to defendant.
Immediately after resigning from Pinnacle, Watts assumed a
sales position role for Crop Production Services, Inc. (“CPS”).
Compl. ¶ 29.

In that role, Watts has either solicited or attempted

to solicit at least one Pinnacle customer.

Id. ¶ 33.

Watts has

also provided services to at least one Pinnacle customer.
36.

Id. ¶

Pinnacle now brings the present Complaint alleging, inter

alia,

that

Watts

has

violated

Section(1)(a)(i)

of

the

2013

agreement, as well as the implied covenant of good faith and fair
dealing.
II.

Id. ¶¶ 41, 53.

Discussion
“To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.”
U.S.

662,

omitted).

678

(2009)

(citation

and

Ashcroft v. Iqbal, 556

internal

quotation

We accept all factual allegations as true and draw all

reasonable inferences in the plaintiff’s favor.
Nast, 807 F.3d 541, 544 (2d Cir. 2015).
relied

on

marks

in

the

complaint

Biro v. Condé

However, “[i]f a document

contradicts

allegations

in

the

complaint, the document . . . control[s], and the court need not
accept the allegations in the complaint as true.”

Poindexter v.

EMI Record Grp. Inc., No. 11 Civ. 559 (LTS), 2012 WL 1027639, at
*2 (S.D.N.Y. Mar. 27, 2012).
3

“Under New York law, the initial interpretation of a contract
is a matter of law for the court to decide.

Where the agreement

is unambiguous, a court may not admit extrinsic evidence and
interprets the plain language of the agreement as a matter of law.”
Kamfar v. New World Rest. Group, Inc., 347 F. Supp. 2d 38, 48–49
(S.D.N.Y. 2004).
not

ambiguous

“Language whose meaning is otherwise plain is
merely

because

the

interpretations in the litigation.”

parties

urge

Metro. Life Ins. Co. v. RJR

Nabisco, Inc., 906 F.2d 884, 889 (2d Cir. 1990).
should

not

find

the

language

different

ambiguous

on

And “[t]he court

the

basis

of

the

interpretation urged by one party, where that interpretation would
‘strain[ ] the contract language beyond its reasonable and ordinary
meaning.’”

Id. (internal citation omitted).

Defendant argues that plaintiff’s first cause of action for
breach

of

Section

(1)(a)(i)

of

the

2013

agreement

should

be

dismissed because the plain text of the agreement makes clear that
Section (1)(a)(i), in its entirety, does not apply to defendant.
Def.’s Br., ECF No. 17, at 2.

Plaintiff counters that Section

(1)(a)(i) consists of multiple restrictive covenants and, while
the “non-compete” clause itself does not apply to defendant, he is
nonetheless prohibited from engaging in “Competitive Activities”
as defined in Section (1)(a)(i).

Compl. ¶ 23.

In support of this

contention, plaintiff asserts that the use of the qualifier “noncompete” in the phrase “the non-complete [sic] in Section 1(a)(i)”
4

must mean that Section 1(a)(i) contains additional restrictive
covenants other than the non-compete.

Pl.’s Br., ECF No. 20, at

8.
Plaintiff’s

interpretation

of

Section

(1)(a)(i)

would

“strain[ ] the contract language beyond its reasonable and ordinary
meaning.”

RJR Nabisco, Inc., 906 F.2d at 889.

The definition of

“Competitive Activities” is simply a partial listing of activities
that would violate Section (1)(a)(i)’s non-compete restriction; it
is not a separate and independent restrictive covenant.

This is

apparent from the agreement’s use of the word “including,” which
implies that the “Competitive Activities” listed thereafter merely
constitute

a

sub-set

Section(1)(a)(i).

of

the

behaviors

prohibited

by

See Pinnacle Agric. Distrib., Inc. v Watts,

2019 N.Y. Misc. LEXIS 1158 (Sup. Ct. N.Y. Cty. Mar. 15, 2019). 1
Plaintiff next argues that it would be premature to dismiss
the first cause of action because discovery could reveal the extent
to

which

the

parties

understood

Section(1)(a)(i)

to

contain

multiple restrictive covenants, including both a “‘non-compete’
component and a ‘non-solicit’ component . . . .”

Pl.’s Br., at 9.

But “where the language of a contract is unambiguous, the parties’
intent is determined within the four corners of the contract,

1 The cited state action concerned a dispute between Pinnacle and another
of its former employees over the same restrictive covenant language at issue
here.
While the former employee involved in that action is also
(coincidentally) named Watts, he is not a relative of the defendant in the
present action.

5

without reference to external evidence.”

Feifer v. Prudential

Ins. Co. of Am., 306 F.3d 1202, 1210 (2d Cir. 2002).
language

of

the

2013

agreement

unambiguously

Section 1(a)(i) did not apply to defendant.

Here, the

indicates

that

Therefore, it is

appropriate for the Court to interpret “the plain language of the
agreement as a matter of law” and dismiss plaintiff’s first cause
of action.

Kamfar, 347 F. Supp. 2d at 48–49.

Defendant also moves to dismiss plaintiff’s fourth cause of
action -- for breach of the implied covenant of good faith and
fair dealing -- as duplicative of plaintiff’s first cause of
action.

Def.’s Br., at 3.

“A claim for breach of the implied

covenant will be dismissed as redundant where the conduct allegedly
violating the implied covenant is also the predicate for breach of
covenant of an express provision of the underlying contract.”

ICD

Holdings S.A. v. Frankel, 976 F. Supp. 234, 243–44 (S.D.N.Y. 1997).
Plaintiff argues that the fourth cause of action is not duplicative
because it is predicated on defendant’s alleged scheme to breach
the 2013 agreement, rather than on the breach itself.
at 12.

Pl.’s Br.,

This conduct, plaintiff argues, is not covered by the 2013

agreement because it occurred before defendant left his employment
at Pinnacle.

Id.

But contrary to plaintiff’s assertion, “the

applicable restrictive [covenant]” applied “while Watts was an
employee of the company,” and plaintiff’s fourth cause of action
is consequently “duplicative of the breach of contract claim
6

II

Pinnacle, 2019 N.Y. Misc. LEXIS 1158, at *12-13.

con cl us ion is only reinforced by the

fact

that plaintiff seeks

identical relief for its first and fourth causes of action.
'il'll

43,

54;

see

Rapresentanze v.
WL

2244062,

at

also

Compagnia

Importazioni

L-3 Commc'ns Corp., No.
*6

(S.D.N.Y.

July

2007)

Compl.

Esportazioni

06 CIV 3157

31,

This

(NRB),

2007

(dismissing

as

duplicative a claim for breach of the implied covenant because,
"in pursuing

[that]

claim [,]

[plaintiff

was]

seeking

relief requested in the breach of contract claim")

the

same

Accordingly,

we dismiss plaintiff's fourth cause of action.
III.

Conclusion

For

the

foregoing

reasons,

defendant's

partial

motion

to

dismiss is granted.
The

defendant

should

file

no

later

than

May

14,

2019

a

responsive pleading as to the claims that remain.
The Clerk of Court is respectfully directed to terminate the
motion pending at Docket Number 16.

SO ORDERED.

Dated:

New York, New York
April 23, 2019

NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

7