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LIOR v. SIT

January 11, 1996

Eyal Lior, Sun Cupid International (U.S.) Inc.
v.
Michael P.J. Sit, Sun Cupid Industries, Ltd., Sun Cupid International (Holdings) Co., Ltd., Fourace Industries, Ltd., Conair, Inc.



The opinion of the court was delivered by: LECHNER

 ORIGINAL FILED WITH THE CLERK OF THE COURT

 Counsel:

 This action is brought by plaintiff Eyal Lior ("Lior") and Sun Cupid International (U.S.) ("Sun Cupid U.S.") (collectively, the "Plaintiffs"), against defendants Michael P.J. Sit ("Sit"), Sun Cupid Industries, Ltd. ("Sun Cupid Industries"), Sun Cupid International (Holdings) Co., Ltd. ("Sun Cupid Holdings") and Fourace Industries, Ltd. ("Fourace") (collectively, the "Defendants"). Plaintiffs have also listed Conair, Inc. ("Conair") as a defendant in the caption of the case. Removal jurisdiction is alleged pursuant to 28 U.S.C. § 1441(a) ("Section 1441(a)").

 Currently before the court is the Plaintiffs' timely motion to remand this matter (the "Motion to Remand") to the Superior Court of New Jersey, Chancery Division, Bergen County (the "Superior Court") pursuant to 28 U.S.C. § 1447(c) ("Section 1447(c)") and for costs, expenses and attorney fees. *fn1" For the reasons set forth below, this matter is remanded to the Superior Court.

 Facts

 A. Background

 Plaintiffs filed a complaint in the Superior Court, and filed a verified amended complaint (the "Amended Complaint") in the Superior Court on 25 September 1995. Plaintiffs allege Lior, an individual, is a resident of the State of New Jersey, with a principal business office in Fort Lee, New Jersey. Amended Complaint, P 1. Plaintiffs allege Sun Cupid U.S. is a corporation organized and existing under the laws of the State of New Jersey with its principal place of business in Fort Lee, New Jersey. Id., P 3. Sit, an individual, is allegedly a resident of Hong Kong, with a principal business office in Kowloon, Hong Kong. Id., P 6. Plaintiffs allege, on information and belief, that Sun Cupid Industries and Sun Cupid Holdings are corporations organized and existing under the laws of the Cook Islands, with principal places of business in Kowloon, Hong Kong. Id., P 7. Plaintiffs allege, on information and belief, that Fourace is a corporation organized and existing under the laws of Hong Kong, with a principal place of business in New Territories, Hong Kong. Id., P 8.

 Although the Amended Complaint does not address the citizenship of Conair, the First ABI Report provides a list of thirty-nine Conair executives who maintain offices in Stamford, Connecticut. Moving Brief, Exhibit A. These executives comprise the headquarters of Conair, including the President and Chairman, the Treasurer, the Controller, the Executive Vice President, four Senior Vice Presidents, seventeen Vice Presidents, the Vice President for Finance, the Vice President for Human Resources, the Corporate Secretary, the General Counsel, the Executive Officer, the Purchasing Agent and seven Directors. See id. The second report, attached to the Moving Brief as Exhibit A, (the "Second ABI Report") provides a list of Conair executives who maintain offices with a mailing address in Hightstown, New Jersey. *fn2" The Second ABI Report lists one individual, with the title "manager," at that location. Id.

 Plaintiffs allege Lior owns thirty percent of the shares of Sun Cupid U.S. and that Lior is a director and the President of Sun Cupid U.S. Amended Complaint, P 2. Sit is allegedly the owner of seventy percent of the shares of Sun Cupid U.S., and is the chairman of the board of directors and the secretary-treasurer of that corporation. Id., P 4. Plaintiffs allege Sun Cupid Industries, Sun Cupid Holdings and Fourace (collectively, the "Manufacturing Group") manufacture "small household electrical appliances in Hong Kong and the People's Republic of China." Id., P 9. The Manufacturing Group allegedly manufactures breadmakers, toaster-ovens, bagel makers, pizza makers, hair clippers and hair driers. Id., P 14. Sit allegedly owns all of the stock of the entities that comprise the Manufacturing Group. Id., P 11.

 Plaintiffs allegedly design and sell appliances manufactured by the Manufacturing Group. Amended Complaint, P 12. The buyers of appliances designed and sold by Plaintiffs and manufactured by the Manufacturing Group are "Black and Decker, Inc., Toastmaster, Inc., Salton/Maxim Housewares, Inc., and Remington Products Company. . . ." Id., P 15. Plaintiffs refer to these customers as the "Original Equipment Manufacturing Customers" (the "OEMs"). *fn3" Id., P 18. In addition, Plaintiffs allegedly "service U.S. and worldwide customers of the Manufacturing Group, even with regard to appliances that Plaintiffs do not directly design and sell, and also source components used by the Manufacturing Group in manufacturing all of its line of products." Id., P 13.

 Plaintiffs allege a "relationship" with Defendants arose "in late 1993," wherein:

 
Defendants have manufactured and sold electrical appliances designed, sold and/or serviced by Plaintiffs, in the sum of approximately $ 93,000,000.00 to [the OEMs], all of whom have offices or do business in the State of New Jersey. Most, if not all, of these customers of defendants became such customers directly from the contacts and efforts of Lior, who had fifteen years of experience in the small appliance business before his business association with . . . Sit.

 Amended Complaint, P 15.

 Plaintiffs allege that, for services rendered, Sit, personally and on behalf of the Manufacturing Group, agreed to compensate Lior and Sun Cupid U.S. by way of an advance or reimbursement of all of their "business-related expenses." Amended Complaint, P 16(a). Lior would receive a "lump sum, non-refundable salary/advance" of $ 150,000.00, id., P 16(b), and personal commissions for each of certain specified appliances the Manufacturing Group sold. Id., P 16(c), (e). Sun Cupid U.S. would also receive commissions for each of certain specified appliances the Manufacturing Group sold. Id., P 16(d). In addition, Sun Cupid U.S. would be appointed "as worldwide agent of the Manufacturing Group" for which it would receive commissions for each of certain specified appliances "manufactured by . . . Manufacturing Group. . . ." Id., P 16(f). Finally, "Sit agreed to form a trading company *fn4" ], 30% owned by Lior, whose purpose was to sell appliances . . . worldwide that were not then manufactured by the Manufacturing Group." Id., P 16(g). Lior was to receive thirty percent of the profits of the Trading Company. Id. The foregoing agreement was allegedly memorialized in a memorandum (the "Agreement"), signed by Lior and Sit on 23 April 1994. Id., P 17.

 Pursuant to the Agreement, Lior and Sit formed Sun Cupid U.S. "in early 1994." Lior Cert., P 2. Plaintiffs allege Sit failed to honor his obligations under the Agreement and also caused the Manufacturing Group to dishonor its obligations under the Agreement. Amended Complaint, P 19. Plaintiffs allege damages, including the failure to receive commissions from Sit and the Manufacturing Group. Id., PP 20-27. Plaintiffs allege Sit expressly repudiated the Agreement in June 1995. Id., P 28. Specifically, it is alleged Sit indicated to Lior that Sit would no longer pay to Lior the personal commissions due Lior under the Agreement. *fn5" Id. Instead, Sit allegedly indicated "Lior would have to look to his 30% interest in plaintiff Sun Cupid U.S. and the Trading Company for compensation for his efforts." Id.

 Plaintiffs further allege Sit violated his fiduciary duty to Sun Cupid U.S. by directing the OEMs to deal directly with Sit and the Manufacturing Group, thereby bypassing the Plaintiffs. Amended Complaint, P 29. In addition, Plaintiffs allege:

 
Sit sabotaged the business of the Trading Company by stalling and delaying the fulfillment of orders for products, with the goal of having the Manufacturing Group manufacture the products, thereby keeping the manufacturing profits for himself with the goal of paying a 3% commission to . . . Sun Cupid U.S., as opposed to ordering the products from third party manufacturers and splitting the Trading Company Profits 30% with . . . Lior.

 Id., P 30. Plaintiffs allege Sit ordered the offices of Sun Cupid U.S. closed after Lior demanded payment from Sit. Id., P 31. "The actions of . . . Sit individually and on behalf of the Manufacturing Group . . . effectively ended the business of Plaintiffs, violated the [Agreement], and violated Sit's fiduciary duties to Plaintiffs." Id., P 32.

 Lior alleges causes of action against Defendants for breach of contract, Amended Complaint, PP 34-36, as well as quantum meruit. Id., PP 37-39. Lior also alleges a cause of action derivatively on behalf of Sun Cupid U.S. for breach of contract, pursuant to N.J.S.A. § 14A:3-6. Id., PP 40-46. In addition, Lior seeks from Sit profits of the Trading Company. Id., PP 47-51. Lior also seeks to enjoin Sit from liquidating or transferring his interest in Sun Cupid U.S. Id., PP 52-56. Moreover, Lior seeks an appraisal remedy against Sit under N.J.S.A. § 14A:12-7, to compel Sit to purchase Lior's thirty percent interest in Sun Cupid U.S. Id., PP 57-58. Lior seeks a declaratory judgment that the Agreement "will continue to obligate Defendants to pay commissions to Plaintiffs on all products, so long as Defendants manufacture them." Id., PP 59-61.

 The Plaintiffs neither raise any substantive claims against Conair, nor do they define Conair in the introductory paragraphs of the Amended Complaint. The final count of the Amended Complaint seeks a writ of attachment against Conair, alleging Conair purchases products from the Defendants on open account. Amended Complaint, PP 62-64. Pursuant to N.J.S.A. §§ 2A:26-2, 2A:26-8 and 2A:26-13, Plaintiffs request "a restraining order in the nature of an attachment be issued against Conair, . . . and other companies licensed to or doing business in New Jersey that owe monies or credits, from remitting such proceeds to the Defendants pending further order of the Superior Court." Id., P 64.

 B. Procedural History

 The Amended Complaint is dated 22 September 1995. The instant matter was commenced by way of an order to show cause (the "Order to Show Cause"), filed with the Superior Court on 25 September 1995. *fn6" Moving Brief at 1; see Defendants' Petition for Removal (the "Removal Petition"), P 1 The Plaintiffs allege the Superior Court held hearings on the Order to Show Cause on 13 October and 2 November 1995. Moving Brief at 2.

 After the hearings in October and November, Plaintiffs drafted a stipulation (the "Stipulation"), which they forwarded to counsel for Defendants by facsimile on 10 November 1995. Filocco Cert., P 5 & Exhibit B (transmission report confirming transmittal of facsimile to Clifford Kuhn, Esq., counsel for Defendants, from Nicholas I. ...


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