Alex and Ani, LLC v. Elite Level Consulting, LLC et al
Filing
72
OPINION AND ORDER granting in part and denying in part 40 Motion to Dismiss for Failure to State a Claim; denying 41 Motion to Dismiss for Failure to State a Claim; granting in part and denying in part 49 Motion to Dismiss. So Ordered by Chief Judge William E. Smith on 7/18/14. (Jackson, Ryan)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
Plaintiff,
)
)
v.
)
)
ELITE LEVEL CONSULTING, LLC,
)
TRAVIS BRODY, J. JONATHAN
)
WEISS, LUXURY BUSINESS JETS,
)
LLC, ROXY, INC., GENESIS
)
SALES CORPORATION, JJ & M
)
CORPORATION, and BJ’S
)
WHOLESALE CLUB, INC.,
)
)
Defendants.
)
___________________________________)
ALEX AND ANI, LLC,
C.A. No. 13-718 S
OPINION AND ORDER
WILLIAM E. SMITH, Chief Judge.
In
this
bewildering
ballad
of
bungled
bangle
banditry,
Plaintiff Alex and Ani, LLC (“Alex and Ani”), a purveyor of
“positive-energy
Complaint
against
jewelry,”
numerous
has
brought
defendants:
a
14
Elite
count
Level
Amended
Consulting
(“ELC”), Travis Brody (“Brody”), J. Jonathan Weiss (“Weiss”),
Luxury Business Jets, LLC (“Jets”), Roxy, Inc. (“Roxy”), Genesis
Sales Corporation (“Genesis”), JJ & M Corporation (“JJM”) and
BJ’s Wholesale Club, Inc. (“BJ’s”) (collectively, “Defendants”).
The suit stems from alleged acts of deception which resulted in
Alex and Ani agreeing to sell some 26,000 pieces of jewelry to
Brody and ELC at heavily discounted prices.
Instead of placing
these pieces in promotional packages at prestigious events, as
advertised, Brody and ELC allegedly acted in concert with other
Defendants to resell the pieces and many of them ultimately made
their way to BJ’s locations in Massachusetts and Rhode Island.
Three motions to dismiss are currently pending.
For the
reasons that follow, the motion to dismiss filed by ELC and
Brody (ECF No. 40) is GRANTED IN PART and DENIED IN PART; the
motion to dismiss filed by BJ’s (ECF No. 41) is DENIED; and the
motion to dismiss filed by Roxy, Genesis and JJM (ECF No. 49) is
GRANTED IN PART and DENIED IN PART.
I.
Facts 1
Alex
and
company.
made,
Ani
is
a
Rhode
Island-based
limited
liability
It manufactures and sells what it calls “American-
eco-friendly,
spiritually
uplifting,
positive-energy
jewelry” and has enjoyed enormous success, achieving high levels
of
sales
Compl.
throughout
¶¶
merchandise
22-23,
at
the
ECF
both
United
No.
States
25.)
and
Ani
will
Alex
company-owned
boutiques owned by third parties.
affiliate
with
a
and
the
and
stores,
world.
Ani
as
third
sells
well
(Id. at ¶ 23.)
(Am.
as
its
at
Before Alex
party-owned
boutique,
however, it employs a rigorous screening process to ensure that
“jewelry
is
displayed
in
a
Ani’s] premiere-level brand.”
1
manner
that
preserves
[Alex
(Id. at ¶¶ 23-24.)
As alleged in the Amended Complaint (ECF No. 25).
2
and
BJ’s is based in Massachusetts and operates retail stores
through
which
American-made,
certainly
it
products
spiritually
sold
representative
sells
at
of
uplifting
discounted
BJ’s
which
and
prices.
contacted
one
may
so
In
Michael
or
may
forth,
May
David
not
but
2013,
be
are
a
Foonberg
(“Foonberg”), the President and owner of JJM, Roxy and Genesis,
in an attempt to procure Alex and Ani jewelry for resale at
BJ’s. 2
(Id. at ¶¶ 25-26.)
Foonberg subsequently submitted an
application to Alex and Ani to sell Alex and Ani product, but
this application was rejected.
(Id. at ¶¶ 28.)
Perhaps sensing the oncoming rejection, the trio of JJM,
Roxy and Genesis began exploring alternative means of securing
Alex and Ani product.
of
Carla
Flammini
In May 2013, a JJM employee by the name
(“Flammini”)
President and owner of Jets. 4
reached
out
to
Weiss, 3
(Id. at ¶¶ 11, 29.)
the
Weiss is
2
JJM and Roxy are Utah corporations; Genesis is a Colorado
corporation; the principal place of business of all three
entities is located in Colorado. (Am. Compl. ¶¶ 7-9.)
3
As will be discussed, Flammini is alleged to perform work
for Roxy and Genesis as well. (Id. at ¶ 29.)
4
Weiss is a California resident and Jets is a California
corporation with its principal place of business located in
California. (Id. at ¶¶ 10-11.)
3
alleged to have connected JJM, Roxy and Genesis with Brody and
Brody’s company, ELC. 5
Genesis agreed to pay Brody and ELC a commission for each
piece of Alex and Ani jewelry that Brody was able to obtain.
(Id. at ¶ 31.)
Alex
and
Ani
On approximately May 22, 2013, Brody contacted
on
behalf
represented
that
Wellington
Classic
competition
in
merchandise
that
ELC
was
Fall
Florida, 6
would
be
of
ELC.
working
(Id.
for
the
Challenge,
in
a
order
included
patrons in VIP suites at the event.
at
¶
32.)
organizers
prestigious
to
in
gift
secure
bags
Brody
of
the
dressage
discounted
provided
to
(Id.)
In late May and early June 2013, Brody and Alex and Ani
exchanged a series of emails in which Brody assured Alex and Ani
that its product would be used for these promotional purposes
only and would, in no event, be resold.
(Id. at ¶ 38.)
Alex
5
Brody is a California resident and ELC is a California
limited liability company with its principal place of business
located in California. (Id. at ¶¶ 5-6.)
6
For those whose sporting interests tend more toward games
with balls, bats, racquets and the like, and less toward dancing
horses, dressage is a competitive equestrian sport in which
horse and rider “walk, trot and canter” their way through a
“prescribed pattern of movements.”
See About Dressage,
Fédération
Equestre
Internationale,
www.fei.org/fei/disc/
dressage/about-dressage (last visited July 16, 2014).
In other
words,
it’s
“horse
ballet.”
Dressage,
Wikipedia,
en.wikipedia.org/wiki/Dressage (last visited July 16, 2014).
4
and Ani asked that Brody draft a written contract memorializing
the arrangement.
(Id. at ¶ 40.)
Simultaneously,
Brody
Foonberg and Flammini.
was
exchanging
emails
with
Weiss,
In these emails, Brody sought advice as
to the drafting of the contract and the parties discussed how
they
could
extract
further
discounted prices.
merchandise
(Id. at ¶¶ 43-48.)
from
Alex
and
Ani
at
Upon receipt of an email
from Weiss seeking input on Alex and Ani’s request that a clause
be included in the contract that would prohibit resale, Foonberg
responded: “Just read this . . . I don’t want to know about
it[,] however[,] just make sure it is very vague and always
leave yourself an out.”
(Id. at ¶ 43.)
Once a contract had
been executed, Brody circulated it to Weiss and Flammini.
Upon
receipt of the email, Flammini responded (cleverly): “I THINK IT
(sic) BEST, IF I DON’T KNOW ANYTHING :-).”
(Id. at ¶ 45.)
On June 28, 2013, based on Brody’s representations, Alex
and
Ani
sold
ELC
8,000
discounted prices.
pieces
(Id. at ¶ 51.)
of
its
jewelry
at
deeply
Alex and Ani delivered this
jewelry to an East Boston, Massachusetts distribution company.
(Id.)
The
acting
on
Amended
behalf
of
Complaint
suggests
Genesis,
Roxy
that
and
one
JJM,
Weiss,
negotiated
arranged Alex and Ani’s delivery of the jewelry. 7
7
Julie
and
(Id. at ¶
The Amended Complaint suggests that Julie Weiss is the
secretary and treasurer of Roxy.
(Id. at ¶ 74.)
At oral
5
167.)
From the East Boston distribution company, unbeknownst to
Alex and Ani, the jewelry was shipped to Roxy and Genesis in
Colorado.
(Id. at ¶ 53.)
Several weeks later, Brody again contacted Alex and Ani,
this time purporting to seek merchandise that could be given
away as promotional gifts to elite guests at the Austin Film
Festival.
(Id. at ¶ 54.)
demographic
and
subject
Seeing another audience in its target
to
another
agreement
that
the
goods
could not be resold under any circumstances, Alex and Ani sold
an additional 9,000 pieces to Brody and ELC.
(Id. at ¶¶ 55-56.)
Alas, these items too made their way to Roxy and Genesis, and
not to the film festival.
(Id. at ¶ 57.)
Finally, in a third
transaction, Alex and Ani agreed to sell approximately 9,000
more
pieces
to
Brody
and
ELC,
also
purportedly
connection with the Austin Film Festival.
for
use
(Id. at ¶ 64.)
pieces, likewise, made their way to Roxy and Genesis.
in
These
(Id. at ¶
66.)
In
total,
Alex
and
Ani
sold
Brody
and
ELC
pieces of its jewelry for approximately $250,000.
67.)
This
$1,000,000.
merchandise
(Id.)
In
had
a
retail
late
value
September
of
2013,
some
26,668
(Id. at ¶
approximately
Alex
and
Ani
argument, counsel for Alex and Ani stated that Julie Weiss also
has an ownership interest in JJM.
To avoid confusion with J.
Jonathan Weiss, her former husband and the president and owner
of Jets, this opinion refers to Julie Weiss by her full name.
6
discovered that the merchandise that it had sold to Brody and
ELC was being sold at discounted prices at BJ’s locations in
Rhode
Island
and
representations
Massachusetts.
from
Alex
and
(Id.
Ani
that
at
¶
the
68.)
Despite
merchandise
in
question had been obtained through fraud, BJ’s declined to stop
selling the items and received at least one additional shipment
from Roxy.
II.
(Id. at ¶¶ 73-78.)
This lawsuit followed.
Discussion
A.
Standard of Review
“In
order
to
survive
a
motion
to
dismiss
under
Rule
12(b)(6), a plaintiff must ‘plead[] factual content that allows
the court to draw the reasonable inference that the defendant is
liable
for
the
misconduct
alleged.’”
Sanchez
v.
Pereira-
Castillo, 590 F.3d 31, 48 (1st Cir. 2009) (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009)) (alteration in original).
The
complaint must “contain sufficient factual matter . . . to state
a claim to relief that is plausible on its face.”
Iqbal, 556
U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)) (internal quotation marks omitted).
The Court must
“accept as true all the factual allegations in the complaint and
construe all reasonable inferences in favor of the plaintiff.”
Sanchez,
590
F.3d
at
41
(citations
omitted).
Nevertheless,
“[t]hreadbare recitals of the elements of a cause of action,
7
supported
by
mere
conclusory
statements,
do
not
suffice.”
Iqbal, 556 U.S. at 678.
Heightened
claims.
“In
particularity
Fed.
R.
pleading
alleging
the
Civ.
requirements
fraud
.
.
circumstances
P.
9(b).
.
apply
party
a
to
must
constituting
“What
fraud-based
state
fraud
constitutes
.
.
with
.
.”
sufficient
particularity necessarily depends upon the nature of the case
and should always be determined in the light of the purpose of
the rule to give fair notice to the adverse party and to enable
him to prepare his responsive pleading.”
Women’s Dev. Corp. v.
City of Central Falls, 764 A.2d 151, 161 (R.I. 2001) (quoting
1 Kent, R.I. Civ. Prac. § 9.2 at 92 (1969)); see also Haft v.
Eastland Fin. Corp., 755 F. Supp. 1123, 1126-27 (D.R.I. 1991).
B.
Brody and ELC’s Motion to Dismiss
Though
Brody
and
ELC
are
counts,
they
move
to
dismiss
(Count
12)
and
violation
named
only
of
in
the
the
six
of
counts
the
for
fourteen
conversion
Massachusetts
protection statute, Mass. Gen. Laws ch. 93A (Count 14).
consumer
For the
reasons discussed below, the motion to dismiss with respect to
the conversion claim will be denied; the motion to dismiss with
respect to the Chapter 93A claim will be granted.
i.
“The
Conversion
gravamen
defendant’s
taking
of
the
an
action
for
plaintiff’s
8
conversion
personalty
lies
without
in
the
consent
and
exercising
dominion
over
it
plaintiff’s right to possession.”
inconsistent
with
the
Fuscellaro v. Indus. Nat’l
Corp., 368 A.2d 1227, 1230 (R.I. 1977).
“To maintain an action
for conversion, [a] plaintiff must establish that she was in
possession of the personalty, or entitled to possession of the
personalty,
at
the
time
of
conversion.”
Montecalvo
v.
Mandarelli, 682 A.2d 918, 928 (R.I. 1996) (emphasis added).
Brody and ELC argue that Alex and Ani cannot support a
claim for conversion because Alex and Ani willingly sold the
jewelry to Brody and ELC and no longer had title to it at the
time of the alleged conversion.
But, this argument overlooks
the fact that “[a] contract is voidable . . . if ‘a party’s
manifestation of assent is induced by either a fraudulent or
material misrepresentation by the other party upon which the
recipient is justified in relying.’”
Turabo,
Inc.,
575
F.3d
10,
20
Rivera v. Centro Medico de
(1st
Cir.
2009)
(quoting
Restatement (Second) of Contracts, § 164 (1979)).
The Amended Complaint plainly alleges that Brody and ELC
committed fraud in inducing Alex and Ani to sell merchandise to
them.
See, e.g., Am. Compl. ¶ 1 (“[Brody and ELC] fraudulently
induced Plaintiff Alex and Ani to enter into a contract with ELC
. . . .”).
Even if the alleged conversion took place after Alex
and Ani willingly sold the jewelry to Brody and ELC, Alex and
Ani’s
allegation
that
the
sale
9
was
fraudulently
induced
is
sufficient to allow the conversion claim to proceed because the
contract pursuant to which the jewelry was sold was voidable at
the time of the alleged conversion.
And, if the contract was
induced by fraud and voidable, Alex and Ani had the right to
possession
of
the
property
at
the
time
of
the
alleged
conversion.
For this reason, insofar as Brody and ELC seek
dismissal
the
of
conversion
claim,
the
motion
to
dismiss
is
DENIED.
ii.
Massachusetts Consumer Protection Law
Chapter 93A is Massachusetts’ consumer protection statute
and prohibits “[u]nfair methods of competition and unfair or
deceptive
acts
commerce.”
or
practices
in
the
conduct
Mass. Gen. Laws ch. 93A, § 2.
of
any
trade
or
A viable Chapter 93A
claim requires that “the actions and transactions constituting
the
alleged
unfair
method
of
competition
or
the
unfair
or
deceptive act or practice occur[] primarily and substantially
within [Massachusetts].”
Id. at § 11.
Brody and ELC seek dismissal of the Chapter 93A claim on
grounds that the alleged conduct did not occur primarily and
substantially in Massachusetts.
This inquiry requires courts to
“determine whether the center of gravity of the circumstances
that
give
within
the
rise
to
the
claim
Commonwealth.”
is
primarily
Kuwaiti
Danish
and
substantially
Computer
Digital Equip. Corp., 781 N.E.2d 787, 799 (Mass. 2003).
10
Co.
v.
The Amended Complaint does not suggest that the “center of
gravity”
of
underlying
Instead,
it
merely
facts
took
suggests
place
that
BJ’s
in
sold
Massachusetts.
Alex
and
Ani
merchandise at locations in Massachusetts and that Julie Weiss
instructed
Alex
and
Ani
to
ship
distribution company in East Boston.
the
merchandise
to
a
(Am. Compl. ¶¶ 2, 51.)
The deception took place principally in Utah, Colorado and
California where JJM, Roxy, Genesis, Weiss, Jets, Brody and ELC
are based and involved a Rhode Island victim.
merchandise
that
was
fraudulently
obtained
That some of the
made
its
way
to
retail locations in Massachusetts does not indicate a primary
and substantial connection to the Commonwealth.
Likewise, the Amended Complaint describes the East Boston
distribution
middleman.
company
as
nothing
more
than
an
uninvolved
The shipping company is not alleged to have been
complicit in the scheme, nor is its location in Massachusetts
meaningful in any apparent way.
As such, this allegation is
also insufficient to conclude that the underlying facts occurred
primarily
and
substantially
in
Massachusetts
and
the
Court
GRANTS the motion to dismiss as to the Chapter 93A claim. 8
8
At oral argument, counsel for Alex and Ani represented
that Flammini may have been located in Massachusetts at the time
that she was involved in these transactions. This is not in the
Amended Complaint, and even if true, Flammini’s incidental
location in Massachusetts would be insufficient to give rise to
a Chapter 93A claim.
11
C.
BJ’s Motion to Dismiss
Alex and Ani has brought just one claim against BJ’s and it
is for conversion.
Like Brody and ELC, BJ’s seeks dismissal on
grounds that a claim for conversion cannot be sustained because
Alex and Ani no longer had title to the jewelry at the time of
the alleged conversion.
The Court rejects this argument for the
same reasons as those set forth in Section II(B)(i), supra. 9
Second,
and
more
substantively,
BJ’s
contends
that
the
conversion claim must be dismissed because BJ’s was a good faith
purchaser for value.
“A person with voidable title has power to
transfer a good title to a good faith purchaser for value.
When
goods have been delivered under a transaction of purchase the
purchaser has such power even though . . . (d) the delivery was
procured through fraud . . . .”
R.I. Gen. Laws § 6A-2-403(1).
“Good faith” is defined as “honesty in fact in the conduct or
transaction concerned.”
Id. at § 6A-1-201(b)(20).
9
The Court has considered the case upon which BJ’s
principally relies, Johnson & Johnson Prods., Inc. v. Dal Int’l
Trading Co., 798 F.2d 100 (3d Cir. 1986), but concludes that the
case is unavailing. Alex and Ani has sufficiently alleged that
Brody and ELC intended to resell the jewelry at the time that
Brody and ELC fraudulently induced Alex and Ani to sell it to
them. See id. at 103 n.2 (“If, at the time of contracting with
[a manufacturer], [a middleman] had intended to restrict the
distribution of goods to [an area in which resale was permitted]
and only later decided to distribute the goods elsewhere, no
fraudulent inducement to contract would have existed.”).
12
Of course, as the title of the doctrine would suggest, it
is incumbent upon a good faith purchaser for value to act in
good faith.
See Shappy v. Downcity Capital Partners, Ltd., 973
A.2d 40, 44 (R.I. 2009) (describing the good faith purchaser for
value
doctrine
purchasers
as
to
and
interests.”).
having
allow
been
them
intended
to
obtain
to
“protect
and
convey
innocent
unsullied
Crucial to the determination of whether BJ’s is
entitled to good faith purchaser status is the alleged timeline
of events.
The Amended Complaint suggests that Alex and Ani
first became aware that its products were being sold at BJ’s in
mid-September 2013.
On October 3, an Alex and Ani sales manager
left a voicemail for a BJ’s jewelry buyer, inquiring as to where
BJ’s
had
inquiry
obtained
was
executives.
this
quickly
(Id.)
product.
elevated
(Am.
by
Compl.
email
¶
to
73.)
several
This
BJ’s
On October 9, BJ’s placed another large
order with Roxy for additional pieces.
(Id. at ¶ 75.)
On October 10, Alex and Ani notified BJ’s by email and
phone that it was investigating whether the jewelry in question
had
been
stolen
or
diverted.
(Id.
at
¶
76.)
subsequently placed another order on October 16.
Again,
BJ’s
(Id. at ¶ 78.)
On October 18, Alex and Ani sent to BJ’s a copy of a demand
letter that it had sent to Brody and ELC.
(Id. at ¶ 80.)
This
letter stated unequivocally Alex and Ani’s belief that Brody and
ELC had committed fraud in obtaining the jewelry.
13
(Id. at 79.)
Nevertheless, three days later, BJ’s placed yet another order
with Roxy for additional pieces.
BJ’s
argues
that
none
(Id. at ¶ 84.)
of
these
communications
were
sufficient to place BJ’s on notice that it was selling goods
procured by fraud and, even if one were to conclude that the
October
18
letter
was
sufficient,
BJ’s
only
ordered
approximately $40,000 worth of product after that date, leaving
Alex and Ani below the $75,000 threshold required for federal
subject matter jurisdiction.
The
Court
concludes
See 28 U.S.C. § 1332(a).
that
the
October
18
letter
was
sufficient to place BJ’s on notice that the jewelry in question
had been procured through fraud.
fraud
statute,
the
letter
plainly
Though it cites a California
states
that
Brody
and
ELC
committed fraud and breached the terms of their agreement by
reselling the jewelry to Roxy.
Accepting for a moment the premise that only upon receipt
of this letter was BJ’s placed on notice of the fraud, BJ’s
would have the Court dismiss the conversion claim on grounds
that the value of the single additional order that BJ’s placed
after this date does not exceed $75,000.
This argument, while
compelling, overlooks the fact that Alex and Ani has pled not
only financial loss, but reputational harm as well.
(Am. Compl.
¶ 205 (“Alex and Ani . . . has suffered and continues to suffer
irreparable injury, including irreversible erosion of its brand
14
image . . . .”).)
Though the Amended Complaint does not put a
dollar figure on the reputational harm allegedly resulting from
the sale of Alex and Ani’s “distinctive fine-quality” jewelry at
BJ’s,
it
is
conceivable
that
this
harm,
monetary damages, would exceed $75,000.
in
addition
to
the
See St. Paul Mercury
Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938) (“The
rule governing dismissal for want of jurisdiction . . . is that
. . . the sum claimed by the plaintiff controls if the claim is
apparently
made
in
certainty
that
good
the
faith.
claim
is
It
must
really
appear
for
less
to
a
legal
than
the
jurisdictional amount to justify dismissal.”).
What is more, the Court is unwilling to conclude at this
early juncture that it was only upon receipt of the letter that
BJ’s first became aware that the jewelry had been procured by
fraud.
Further discovery is warranted to assess the allegations
that BJ’s either did, or should have come to this conclusion
earlier.
presume
All of this is to say that the Court declines to
that
BJ’s
purchaser for value.
is
entitled
to
status
as
a
good
faith
As such, BJ’s motion to dismiss must be
DENIED.
D.
Roxy,
Roxy, Genesis and JJM’s Motion to Dismiss
Genesis
and
JJM
stack
arguments
in
support
of
dismissal of all of the claims brought against them like so many
Alex and Ani bracelets upon the outstretched arm of a trendy
15
woman.
Those arguments may be summarized as follows: (1) Roxy,
Genesis and JJM should be dismissed because Alex and Ani failed
to adequately plead an agency relationship; (2) Genesis and JJM
should
be
dismissed
jurisdiction;
should
plead
be
(3)
Alex
dismissed
intent
based
and
on
and
this
Ani’s
because
knowledge;
Alex
(4)
Court’s
lack
tortious
and
Ani
Alex
of
personal
interference
did
and
claim
not
adequately
Ani’s
fraudulent
omission claim must be dismissed based on Alex and Ani’s failure
to allege a duty to disclose on the part of Roxy, Genesis or
JJM; (5) Alex and Ani’s conversion claim should be dismissed
because Alex and Ani did not have a possessory interest in the
jewelry
at
Chapter
93A
the
time
claim
of
should
the
be
alleged
conversion;
dismissed
for
and
failure
(6)
to
the
allege
sufficient facts linking the claims to Massachusetts.
i.
Agency
Because a purported agency relationship underlies many of
the
claims
brought
by
Alex
and
Ani,
the
Court
assessing the sufficiency of these allegations.
begins
by
Roxy, Genesis
and JJM argue that Alex and Ani has not adequately alleged an
agency relationship between Roxy, Genesis and JJM on the one
hand, and Weiss, Jets, Brody and ELC on the other.
Agency is “the fiduciary relation which results from the
manifestation of consent by one person to another that the other
shall act on his behalf and subject to his control, and consent
16
by the other so to act.”
Lawrence v. Anheuser-Busch, Inc., 523
A.2d 864, 867 (R.I. 1987) (quoting Restatement (Second) Agency §
1(1) (1958)).
An
agency
relationship
exists
where:
(1)
the
principal manifests that the agent will act for him; (2) the
agent accepts the undertaking; and (3) the parties agree that
the principal will be in control of the undertaking.
Butler v.
McDonald’s Corp., 110 F. Supp. 2d 62, 66 (D.R.I. 2000).
“It is
essential to the relationship that the principal have the right
to
control
the
work
of
the
agent,
and
that
primarily for the benefit of the principal.”
the
agent
act
Lawrence, 523 A.2d
at 867.
Alex
Defendants
and
as
Ani
characterizes
follows:
Roxy,
the
relationship
Genesis
and
JJM
between
acted
as
the
the
principals; Weiss and Jets acted as agents; and Brody and ELC
acted
as
numerous
existed.
subagents.
Indeed,
the
allegations
suggesting
Amended
these
Complaint
relationships
contains
to
have
For example, the Amended Complaint refers repeatedly
to Flammini, the employee of JJM who also allegedly performs
work for Roxy and Genesis.
(Am. Compl. ¶ 29.)
The Amended
Complaint suggests that Flammini made the initial contact with
Weiss in an attempt to find a buyer capable of obtaining Alex
and Ani product.
(Id.)
In turn, Weiss contacted Brody and an
arrangement was reached whereby Genesis would pay Brody and ELC
17
a commission on each piece of Alex and Ani jewelry acquired.
(Id. at ¶¶ 30, 31.)
Later, after Brody had allegedly duped Alex and Ani into
agreeing to the arrangement and as contract negotiations were
unfolding, Alex and Ani emailed Brody asking that a provision
prohibiting resale be included.
The Amended Complaint suggests
that Brody forwarded this email to Weiss, who then forwarded it
to Foonberg (the owner of Genesis, JJM and Roxy).
43.)
(Id. at ¶
Foonberg responded as follows: “Just read this . . . I
don’t want to know about it[,] however[,] just make sure it is
very vague and always leave yourself an out.”
(Id.)
Roxy, Genesis and JJM are also alleged to have exercised
control over the styles of jewelry that Brody and ELC acquired.
(Id. at ¶ 50.)
For example, Flammini allegedly asked Weiss
whether Brody could “come up with an event in boston (sic) or ny
(sic) so I can get some of those ‘places we love’ bracelets.”
(Id. at ¶ 48.)
Shortly thereafter, Brody emailed Alex and Ani,
suggesting that many of the attendees at the Wellington Classic
hailed from the northeast and seeking to acquire the ‘places we
love’ pieces about which Flammini had inquired.
(Id. at ¶ 49.)
In sum, the Amended Complaint depicts a scheme in which
Roxy, Genesis and JJM effectively acted in concert in directing
Weiss and Jets, who in turn directed Brody and ELC in the effort
18
to dupe Alex and Ani.
These allegations are sufficient at the
pleading stage to establish an agency relationship.
ii.
Genesis
grounds
Personal Jurisdiction
and
that
JJM
this
(but
Court
claims against them.
jurisdiction
is
directly
of,
out
contacts.”
Cir.
lacks
Roxy)
seek
personal
dismissal
jurisdiction
on
to
the
hear
Specific, rather than general, personal
issue,
or
relates
as
“the
to,
the
cause
of
action
defendant’s
arises
forum-based
Cossaboon v. Maine Med. Ctr., 600 F.3d 25, 31 (1st
2010)
omitted).
at
not
(citations
omitted)
(internal
quotation
marks
Minimum contacts must be such that “maintenance of
the suit does not offend ‘traditional notions of fair play and
substantial justice.’”
Adelson v. Hananel, 510 F.3d 43, 49 (1st
Cir. 2007) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310,
316 (1945)).
In other words, personal jurisdiction requires
establishment that: (1) the claim arises out of, or relates to,
the defendant’s forum-state activities; (2) the defendant’s instate contacts represent a purposeful availment of the privilege
of conducting activities in the forum state, thereby invoking
the benefits and protections of that state’s laws and making the
defendant’s
involuntary
presence
before
the
state’s
courts
foreseeable; and (3) the exercise of jurisdiction is reasonable.
See Adelson, 510 F.3d at 49.
19
The issue of personal jurisdiction is closely related to
the agency allegations discussed previously.
See United Elec.,
Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d
1080,
1090
(1st
Cir.
1992)
(“[W]e
remark
the
obvious:
the
contacts of a corporation’s agent can subject the corporation to
personal jurisdiction.
corporate form.”).
This result flows naturally from the
And, indeed, this makes sense.
An alleged
tortfeasor cannot reasonably expect to escape liability merely
because he engaged an agent to liaise with the victim on his
behalf.
While it is Roxy that is alleged to have ultimately resold
the jewelry to BJ’s and Brody and ELC who are alleged to have
made the false representations regarding use of the products for
promotional
suggesting
purposes,
that
Alex
Genesis
orchestrating the fraud.
employee)
who
initiated
and
and
Ani
JJM
has
were
pled
numerous
closely
facts
involved
in
As examples, it was Flammini (a JJM
contact
with
Weiss
and
Jets
and
who
exercised control over the items that Brody and ELC were to
acquire.
(Am. Compl. ¶¶ 29, 48.)
Furthermore, it was Genesis
who is alleged to have agreed to pay Brody and ELC a commission
on each piece of jewelry acquired.
(Id. at ¶ 31.)
And Julie
Weiss, acting on behalf of Genesis, Roxy and JJM, is alleged to
have communicated directly with Alex and Ani regarding shipping
of the goods to the East Boston distributor.
20
(Id. at ¶ 167.)
In
sum,
the
Amended
Complaint
contains
sufficient
allegations directly implicating Genesis and JJM in the scheme.
And even were the Court to find otherwise, the adequately pled
agency
relationship
between
Roxy,
Genesis
and
JJM
and
the
remaining Defendants would suffice to create a jurisdictional
hook for Genesis and JJM.
to
dismiss
the
claims
For this reason, the Court declines
against
Genesis
and
JJM
for
want
of
personal jurisdiction.
iii. Tortious Interference Claim
A
claim
plaintiff
for
allege
tortious
facts
interference
concerning:
“(1)
requires
the
that
existence
the
of
a
contract; (2) the alleged wrongdoer’s knowledge of the contract;
(3)
his
intentional
therefrom.”
interference;
and
(4)
damages
resulting
See Jolicoeur Furniture Co. v. Baldelli, 653 A.2d
740, 752 (R.I. 1995) (quoting Smith Dev. Corp. v. Bilow Enters.,
308 A.2d 477, 482 (R.I. 1973)).
Roxy, Genesis and JJM seek
dismissal on grounds that Alex and Ani did not adequately plead
the intent and knowledge elements.
This argument may be easily
dispatched.
On June 11, 2013, Brody and Alex and Ani executed what the
parties
refer
to
as
the
Wellington
Classic
Agreement
–
the
agreement whereby Alex and Ani agreed to sell discounted jewelry
to Brody and ELC for promotional distribution at the Wellington
Classic dressage competition.
(Am. Compl. ¶ 44.)
21
The knowledge
element
is
alleged
plainly
in
the
Amended
Complaint,
which
states that Brody sent a copy of the agreement to Weiss, who
then
forwarded
it
to
Flammini.
(Id.
at
¶
45.)
Flammini
acknowledged this email by responding “I THINK IT (sic) BEST, IF
I
DON’T
KNOW
lighthearted
ANYTHING
attempt
to
:-).”
(Id.)
maintain
a
Despite
façade
of
Flammini’s
ignorance,
the
knowledge of Roxy, Genesis and JJM of the existence of this
agreement
and
its
prohibition
against
resale
is
plainly
alleged. 10
The same can be said of the intent element, as the Amended
Complaint
alleges
that
Roxy,
Genesis
and
JJM
intentionally
diverted and resold jewelry in violation of the express terms of
the Wellington Classic Agreement.
(Id. at ¶¶ 53-58.)
Because
both the intent and knowledge elements are sufficiently pled,
the Court declines to dismiss the tortious interference claim.
iv.
Roxy,
Fraudulent Omission Claim
Genesis
and
JJM
seek
dismissal
of
Alex
and
Ani’s
fraudulent omission claim on grounds that they did not owe Alex
and Ani a duty to disclose the knowledge that the jewelry was to
10
This conclusion is further supported by Foonberg’s
alleged involvement in the negotiation of the Wellington Classic
Agreement. (See Am. Compl. ¶ 43.)
22
be resold in violation of the prohibition against resale. 11
This
argument falls flat.
It is, of course, true that “mere silence in the absence of
a duty to speak is not fraudulent,” McGinn v. McGinn, 146 A.
636, 638 (R.I. 1929), but the question of whether such a duty
exists
turns
on
the
particular
facts
of
the
case.
Nye
v.
Brousseau, C.A. No. KC 12-1096, 2013 R.I. Super. LEXIS 127, at
*23 (R.I. Super. Ct. July 10, 2013) (citing 37 Am. Jur. 2d,
Fraud and Deceit, § 200 at 227 (2001)).
This duty may arise
where one party to a business transaction knows of facts or
circumstances that “are not open to equal observation by both
parties and are not discoverable by the exercise of ordinary
diligence.”
(2013).
37 Am. Jur. 2d, Fraud and Deceit, § 205 at 249
“A reason given for this rule is that since matters are
not what they appear to be, and the true state of affairs is not
discoverable by diligence, deceit is accomplished by suppression
of the truth.”
that
Julie
jewelry
Id.
Weiss
was
to
Here, Alex and Ani has sufficiently alleged
intentionally
be
diverted
withheld
in
the
violation
fact
of
that
the
the
resale
prohibition at the time that she communicated with Alex and Ani
on
behalf
of
Roxy,
Genesis
and
11
JJM.
This
nondisclosure
is
Alex and Ani alleges that this disclosure should have
been made at the time that Julie Weiss communicated directly
with Alex and Ani on behalf of Roxy, Genesis and JJM in order to
arrange for shipping. (See id. at ¶¶ 167-174.)
23
sufficient to permit Alex and Ani’s fraudulent omission claim to
proceed.
v.
The
Conversion and Chapter 93A Claims
arguments
advanced
by
Genesis,
Roxy
and
JJM
on
the
conversion and Chapter 93A claims are almost identical to those
discussed previously with respect to Brody, ELC and BJ’s.
For
the same reasons as those outlined above, and subject to the
caveat that follows, the Court concludes that Alex and Ani’s
conversion claim is appropriately pled and may continue, but
that the Chapter 93A claim should be dismissed.
As discussed above, a claim for the conversion of tangible
property requires that the defendant have possessed or exercised
control
over
that
property.
See
Narragansett
Carbone, 898 A.2d 87, 97 (R.I. 2006).
Elec.
Co.
v.
The Amended Complaint
alleges only that the jewelry was shipped to Colorado to Roxy
and Genesis (Am. Compl. ¶¶ 52-53), but it does not suggest that
JJM ever took possession of or otherwise exercised control over
it.
For this reason, the conversion claim is DISMISSED with
respect to JJM.
III. Conclusion
For all of these reasons:
(1)
Brody and ELC’s motion to dismiss is GRANTED IN PART
and DENIED IN PART. The conversion claim may proceed
while the Chapter 93A claim is dismissed.
(2)
BJ’s motion to dismiss is DENIED.
24
(3)
Roxy, Genesis and JJM’s motion to dismiss is GRANTED
IN PART and DENIED IN PART.
All claims may proceed
with the exception of the Chapter 93A claim as to all
three defendants and the conversion claim as to JJM.
IT IS SO ORDERED.
William E. Smith
Chief Judge
Date: July 18, 2014
25
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