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G & F Graphic Servs., Inc. v. Graphic Innovators, Inc.

United States District Court, D. New Jersey

May 8, 2014


Page 584

PEPPER HAMILTON, By: Jonathan Preziosi, Esq., William Gibson, Esq., Princeton, New Jersey, Counsel for Plaintiff.

REED SMITH LLP, By: Daniel Mateo, Esq., Amy McVeigh, Esq., Princeton Forrestal Village, Princeton, New Jersey, Counsel for Defendants.


Page 585

JOSEPH E. IRENAS, Senior United States District Judge.

Plaintiff G & F Graphic Services, Inc., doing business as Inserts East, contracted to purchase from Defendant Graphic Innovators, Inc. (" GI" ), a " remanufactured" commercial Harris N400B printing press for $2.7 million. Inserts East asserts that the printing press has never worked correctly, and that Graphic Innovators fraudulently sold it an older, historically problematic N400 model, rather than the N400B model specified in the parties' contract of sale.[1]

Presently before the Court is Defendants' Partial Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons stated herein, the Motion will be denied.


The Complaint alleges the following facts.

Plaintiff Inserts East is a New Jersey corporation with its principal place of business in Pennsauken, New Jersey. It specializes in " produc[ing] circulars and other printed materials for a wide variety of customers, including leading supermarkets, arts and craft retailers, clothing retailers, and sporting goods stores." (Compl. ¶ 1)

In 2012, Inserts East, seeking to expand its business, began its search for a printing press that could " print commercially acceptable printed products at a rate of at least 35,000 impressions per hour." (Compl. ¶ 11) In late 2012, Defendant GI told Inserts East that it had a " Harris N400B" press " that it was prepared to remanufacture . . . to meet Inserts East's needs." (Id. ¶ 12)[2] " During its negotiations with GI, Inserts East asked GI and [its President, Defendant Scott] Kiley to confirm that the model GI was offering to sell was indeed a N400B press. Kiley confirmed and represented unequivocally that the GI Press was a N400B." (Id. ¶ 14)[3]

Page 586

In December, 2012, Inserts East and GI executed the contract for the sale and installation of a remanufactured Harris N400B press. (Compl. Ex. A) Particularly relevant to the instant motion, the contract contains a warranty that the press would be free from defects for a period of 12 months after completion of installation, and a damages limitation clause that excludes recovery of consequential damages in a dispute arising out of the sale.

In April, 2013, GI began installation of the press in Inserts East's Pennsauken facility. The press " was operating by late June 2013, [but] it has never run reliably or at acceptable [] speeds to produce a commercially acceptable product." (Compl. ¶ 24) " For example, if the press runs at speeds in excess of 24,000 impressions per hour, it vibrates excessively and 'loses register,' which means that the image is misaligned on the page. Such a product . . . is not commercially acceptable." (Id. ¶ 24)

Inspection of the press has also revealed other problems, such as damaged cylinder bearings, and the absence of certain upgrades that GI represented it would make. (Compl. ¶ 26) " Inserts East has allowed GI to spend weeks . . . attempting to cure the[] defects . . . but those efforts have proven futile." (Id. ¶ 29)

Inserts East believes that GI intentionally sold it a remanufactured N400 press, rather than an N400B press. It bases its belief on the alleged facts that: (1) when Inserts East tried to replace a damaged cylinder, " a stock N400B would not fit" in the press; and (2) " many of the [press's] component parts had their serial numbers removed prior to the delivery of the [press] to Inserts East." (Compl. ¶ ¶ 33-34)

The Complaint asserts seven counts: (1) breach of express warranty; (2) rejection or revocation of acceptance; (3) breach of contract; (4) unjust enrichment; (5) violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.; (6) common law fraud; and (7) a claim for a declaration that the damage limitation clause in the contract of sale " is unconscionable and unenforceable in that it was procured by means of the fraudulent conduct of [Defendants] GI and Kiley." (Compl. ¶ 92) Defendant Kiley is only a Defendant to the statutory and common law fraud claims (Counts 5 and 6); all other counts (i.e., the contract and quasi-contract claims) are asserted only against Defendant GI.

Defendants presently move to dismiss Counts 4 through 7 only.


Federal Rule of Civil Procedure 12(b)(6) provides that a court may dismiss a complaint " for failure to state a claim upon which relief can be granted." In order to survive a motion to dismiss, a complaint must allege facts that raise a right to relief above the speculative level. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Fed.R.Civ.P. 8(a)(2). While a court must accept as true all factual allegations in the plaintiff's complaint, and view them in the light most favorable to the plaintiff, Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008), a court is not required to accept sweeping legal conclusions cast in the form of factual allegations, unwarranted inferences, or unsupported conclusions. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). The complaint must state sufficient facts to show that the legal allegations are not simply possible, but plausible. Phillips, 515 F.3d at 234. " A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678,

Page 587

129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).


The contract provides that it " will be construed in accordance with and governed by the laws of the State of New Jersey." (Compl. Ex. A, p. 13) Moreover, the parties assume that New Jersey law applies to all of the claims presently at issue. (See Defs' Moving Brief, p. 10) Thus, the Court applies New Jersey law.

Each disputed Count is addressed in turn.


Defendants argue that Inserts East's unjust enrichment claim is " duplicative" because it seeks " relief . . . identical to the relief available in [the] rejection/revocation of acceptance claim." (Moving Brief, p. 12) But even assuming arguendo that Defendants' statement is correct, it is not a basis for dismissal under Fed.R.Civ.P. 12(b)(6).

As Defendants themselves state in their brief, " ' recovery based on a quasi-contract theory is mutually exclusive of a recovery based on a contract theory.'" (Moving Brief, p. 11, quoting Duffy v. Charles Schwab & Co., Inc., 123 F.Supp.2d 802, 814 (D.N.J. 2000)) This is a correct statement of the law; if Inserts East prevails, it will not be able to obtain double recovery.[4] But at the pleadings stage, nothing prohibits Inserts East from pleading alternate, and even legally inconsistent, theories. Indeed, the Federal Rules of Civil Procedure expressly allow such pleading. See Fed.R.Civ.P. 8(d)(2)-(3).

Defendants' Motion to Dismiss Count 4 will be denied.


Next, Defendant Kiley argues that the statutory and common law fraud claims asserted against him in his individual capacity fail to ...

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