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News America Marketing In-Store Services, LLC v. Anidjar

August 4, 2010

RE: NEWS AMERICA MARKETING IN-STORE SERVICES, LLC
v.
ANIDJAR, ET AL.



The opinion of the court was delivered by: William J. Martini Judge

MARTIN LUTHER KING JR. FEDERAL BLDG. & U.S. COURTHOUSE 50 WALNUT STREET, P.O. BOX 419 NEWARK, NJ 07101-0419 (973) 645-6340

LETTER OPINION

Dear Counsel:

Plaintiff News America Marketing-In Store Services, LLC ("NAM") brings the instant action against Defendants Floorgraphics, Inc. ("FGI"), Yves Anidjar, Mike Devlin, Richard Rebh, and George Rebh, alleging fraud and breach of contract. All Defendants filed motions to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6). There was no oral argument. Fed. R. Civ. P. 78. For the reasons stated below, Defendants‟ motion to dismiss is GRANTED in part and DENIED in part.

I. BACKGROUND

Plaintiff NAM and Defendant FGI each provide in-store marketing for sellers of retail products nationwide. This marketing includes at-shelf coupons, shelf-delivered recipes and rebates, and cart advertisements. (Compl. ¶¶ 12, 19.) On March 10, 2009, NAM agreed to purchase FGI‟s service contracts. (Compl. ¶ 19.) Toward that end, the parties signed an Asset Purchase Agreement ("APA") to sell FGI for $13,000,000. (Compl. ¶ 24.) In conjunction with the APA, NAM also entered into four individual Goodwill Purchase Agreements ("GPA") with each of the four principal FGI officers: Chief Financial Officer Yves Anidjar; Vice President Mike Devlin; Chief Executive Officer, Chairman of the Board of Directors, and President Richard Rebh; and, Executive Vice President, Secretary, and Treasurer George Rebh. Compensation for the four Goodwill Purchase Agreements totaled an additional $12,000,000.*fn1 (Compl. ¶ 25.)

The sale was completed on a tight schedule, with only two days given to NAM to complete its due diligence. (Compl. ¶ 29.) NAM alleges that, soon after closing, NAM discovered that FGI had sold it certain contracts that either: (1) did not exist or (2) by their terms, could not be assigned to a third party. (Compl. ¶¶ 38-39.) NAM considers the conveyance of both categories of contracts to be void and violative of the warranty provisions of the APA. (Compl. ¶ 26.)

NAM then sought indemnification from FGI under Section 7.2 of the APA. NAM requested indemnification for "losses" resulting from FGI‟s conveyance of these allegedly non-existent and nontransferable contracts. After FGI rejected the indemnification request, NAM undertook this instant action, bringing claims for breach of contract and fraud against FGI and four of FGI‟s officers. In response, Defendants brought this motion to dismiss, pursuant to Rule 12(b)(6).

II. DISCUSSION

A. Federal Rule of Civil Procedure 12(b)(6) Standard

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated, Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005), and dismissal is appropriate only if, accepting all of the facts alleged in the complaint as true,*fn2 the plaintiff has failed to plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). Although a complaint need not contain detailed factual allegations, "a plaintiff‟s obligation to provide the "grounds‟ of his "entitlement to relief‟ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. Thus, the factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, see id. at 570, such that the court may "draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a "probability requirement‟ ... it asks for more than a sheer possibility..." Iqbal, 129 S.Ct. at 1949 (2009).

In considering a motion to dismiss, the court generally relies on the complaint, attached exhibits, and matters of public record. Sands v. McCormick, 502 F.3d 263 (3d Cir. 2007). The court may also consider "undisputedly authentic document[s] that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the [attached] document[s]." Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993). Moreover, "documents whose contents are alleged in the complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered." Pryor v. Nat'l Coll. Athletic Ass'n, 288 F.3d 548, 560 (3d Cir. 2002).

B. Count One -- Breach of Contract (against FGI only)

Count One asserts that FGI breached the warranties set forth in the APA by: (1) not obtaining "the consent of third parties to assign some of the Seller Contracts that it promised to convey to NAM" and (2) conveying Seller Contracts that either did not ...


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