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MK Strategies, LLC v. Ann Taylor Stores Corp.

July 30, 2008

MK STRATEGIES, LLC, PLAINTIFF,
v.
ANN TAYLOR STORES CORPORATION AND THE TOWER GROUP, INC., DEFENDANTS.



The opinion of the court was delivered by: Irenas, Senior District Judge

OPINION

This matter appears before the Court on Defendant Ann Taylor Stores Corporation's ("Ann Taylor") Motion to Dismiss or, Alternatively, for a More Definite Statement pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(e). For the reasons set for below, the Court will deny Ann Taylor's motion to dismiss or, alternatively, motion for a more definite statement.

I.

This action arises out of an alleged contract between Defendant The Tower Group, Inc. ("Tower") and Ann Taylor,*fn1 pursuant to which Tower was to perform certain software services for Ann Taylor. Tower then allegedly subcontracted with Plaintiff MK Strategies, LLC ("MK") for work on its main contract with Ann Taylor. (Am. Compl. ¶¶ 10, 11).*fn2 MK claims that Tower failed to pay MK for two outstanding invoices, which totaled $83,370.33.*fn3 (Id. ¶¶ 17-18).

MK filed its initial complaint on May 30, 2007, seeking judgment against Tower and Ann Taylor for the balance of the unpaid invoices tendered to Tower.*fn4 On July 27, 2007, Ann Taylor filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). On December 6, 2007, this Court granted Ann Taylor's motion to dismiss MK's claim without prejudice and with leave to amend the complaint. MK Strategies v. Ann Taylor Stores Corp., No. 07-2519, 2007 U.S. Dist. LEXIS 90136, at *12-13 (D.N.J. Dec. 6, 2007). MK filed an Amended Complaint on January 7, 2008.

In its Amended Complaint, MK now alleges that Ann Taylor sought MK's source code for the project, which MK offered to release contingent upon Ann Taylor's assurance of payment to MK for its work under the Tower subcontract. (Am. Compl. ¶¶ 24-25). According to MK, based on this offer, authorized representatives of Ann Taylor promised to directly pay MK for its work on the Tower subcontract if Tower failed to make such payments. (Id. ¶ 26). Although Tower did not pay MK for the final two invoices, Ann Taylor failed to remit any payment to MK. (See id. ¶ 28). MK believes that Ann Taylor is currently using the programming, services, and source code provided and designed by MK. (Id.)

Count One, which alleges a breach of the main contract between Tower and MK, is against Tower only. In Count Two, MK seeks relief from both Tower and Ann Taylor on the theory of unjust enrichment.*fn5 MK seeks relief from Ann Taylor in Count Three*fn6 because Ann Taylor allegedly promised to pay MK directly and often directed and supervised MK's work, thereby creating privity and a contractual relationship between Ann Taylor and MK.*fn7

In response to MK's Amended Complaint, on January 25, 2008, Ann Taylor filed the present motion to dismiss, or in the alternative, for a more definite statement. Because MK has pleaded sufficient facts to establish either of its claims, the Court will deny Ann Taylor's motion to dismiss and will deny the alternative motion for a more definite statement.

II.

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides that a court may dismiss any part of a complaint for "failure to state a claim upon which relief can be granted." In considering a Rule 12(b)(6) motion, the Court accepts as true all well pleaded factual allegations contained in the complaint and draws all reasonable inferences from such allegations in the light most favorable to the plaintiff. See Worldcom, Inc. v. Graphnet, Inc., 343 F.3d 651, 653 (3d Cir. 2003). To survive a Rule 12(b)(6) motion, "a civil plaintiff must allege facts that 'raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).'" Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007) (internal citations omitted)).

III.

MK brings Count Two of its Amended Complaint under the theory of unjust enrichment.*fn8 As set forth in the Court's prior opinion, there are two basic elements to a claim based on unjust enrichment. A plaintiff must demonstrate "both that defendant received a benefit and that retention of that benefit without payment would be unjust." VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554 (1994). "Unjust enrichment is not an independent theory of liability, but is the basis for a claim of quasi-contractual liability." Nat'l Amusements, Inc. v. N.J. Turnpike Auth., 619 A.2d 262, 267 (N.J. Super. Ct. Law Div. 1992), aff'd, 645 A.2d 1194 (N.J. Super. Ct. App. Div. 1994).*fn9 A quasi-contract claim cannot exist when there is an enforceable agreement between parties. Callano v. Oakwood Park Homes Corp., 219 A.2d 332, 334 (N.J. Super. Ct. App. Div. 1965).

"[A] plaintiff is not entitled to use the legal fiction of quasi-contract to substitute one promisor or debtor for another." Insulation Contracting & Supply, 507 A.2d at 759 (citing Callano, 219 A.2d at 335). Nevertheless, where the primary beneficiary of a contract undertakes additional obligations to a subcontractor, the subcontractor may recover on the bases of those additional obligations from the primary beneficiary of that contract. See U.S. East Telecomms. v. U.S. West Commc'ns, 38 F.3d 1289, 1293 (2d Cir. 1994)(under New York law, "a subcontractor may recover from a landowner (and a sub-subcontractor from a general contractor), even when a separate contract exists between the subcontractor and general contractor, if the owner has agreed to pay the general contractor's debt or if the circumstances surrounding the parties' dealings can be found to have given rise to an obligation to pay"); Onorato Constr., Inc. v. Eastman Constr. Co., 711 A.2d 1363, 1367 (N.J. Super. Ct. App. Div. 1998).

In support of its unjust enrichment claim, MK makes a number of assertions. First, MK alleges that it provided "services and knowledge" to Ann Taylor.*fn10 (Am. Compl. ¶ 23.) MK further alleges that "Ann Taylor authorized representatives made demands that MK Strategies provide to Ann Taylor the source code underlying the programming" and that "MK Strategies, which does not as a rule release source code, offered to release source code to Ann Taylor contingent upon adequate assurance of payment to MK Strategies for its work under the Tower subcontract." (Id. ¶¶ 24 & 25.) MK alleges that "Ann Taylor, through its authorized representatives, promised to make payment directly to MK Strategies for its work under the Tower subcontract, if MK Strategies was not paid by Ann Taylor through Tower." (Id. ¶ 26.) Finally, MK Strategies states that ...


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