Beckworth ex rel. Disc. Trophy & Co. v. Bizier

48 F.Supp.3d 186

Glenn BECKWORTH, individually and derivatively on behalf of Discount Trophy & Co., Inc., Willis Beckworth, individually and derivatively on behalf of Discount Trophy & Co., Inc., Vicky Juneau, individually and derivatively on behalf of Discount Trophy & Co., Inc., Glenn Beckworth, individually and derivatively on behalf of Marco Plastic Industries, Inc., Plaintiffs

v. Marcel O. BIZIER and Barbara King Bizier, DefendantsandDiscount Trophy & Co., Inc. and Marco Plastic Industries, Inc., Nominal Defendants.

Civ. No. 3:13CV1593 AWT.

United States District Court, D. Connecticut.

Signed Sept. 30, 2014.

Carol L. Austin, J. Jerome Miller, Miller Walker & Austin, Charlotte, NC, Matthew C. Mason, Gregory & Adams, Wilton, CT, for Plaintiffs.

Erick M. Sandler, Ernest J. Mattei, Meredith A. Long, Day Pitney LLP, Hartford, CT, for Defendants.

RULING ON MOTION TO DISMISS

ALVIN W. THOMPSON, District Judge.

In the Complaint, plaintiffs Glenn Beckworth, Willis Beckworth and Vicky Juneau, individually and derivatively on behalf of Discount Trophy & Co. Inc., and Glen Beckworth, individually and derivatively on behalf of Marco Plastic Industries, Inc., assert claims against defendants Marcel Bizier and Barbara King Bizier for Breach of Contract (First, Second, Third, Fourth and Eighth Causes of Action); Director Conflict of Interest in violation of Conn. Gen.Stat. § 33–781(1)(4) and § 33–783(a) and (c) (Fifth Cause of Action); Unlawful Distribution in violation of Conn. Gen.Stat. § 33–687(a) and (b) (Sixth Cause of Action); Breach of Fiduciary Duty (Seventh and Fifteenth Causes of Action); Refusal of Access to Books in violation of Conn. Gen.Stat. § 33–946(a) and § 33–948(a) and (c) (Ninth Cause of Action); Promissory Estoppel (Tenth Cause of Action); Right to Compel Involuntary Dissolution pursuant to Conn. Gen.Stat. § 33–896 et seq. (Eleventh Cause of Action); Fraud (Twelfth Cause of Action); Civil Conspiracy (Thirteenth Cause of Action); Unfair and Deceptive Trade Practices in violation of Conn. Gen.Stat. § 42–110b (Fourteenth Cause of Action); and Unjust Enrichment (Sixteenth Cause of Action).

The defendants have moved to dismiss each cause of action pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons set forth below, the Ninth Cause of Action is being dismissed with leave to amend and the remaining causes of action are being dismissed.

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

“The complaint, which [the court] must accept as true for purposes of testing its sufficiency,” alleges the following circumstances. Monsky v. Moraghan, 127 F.3d 243, 244 (2d Cir.1997).

From 1998 to 2008, Glenn Beckworth managed and operated Plastic Plus Awards (“Plastic Plus”), a company “engaged in the wholesale trophy/awards component business with [its] primary customers being retail trophy/awards stores throughout the continental United States.” (Complaint, Doc. No. 1 (“Compl.”) ¶¶ 14, 16, 22). Although its operational headquarters were located in Charlotte, North Carolina, Plastic Plus was a Louisiana general partnership composed of Glenn Beckworth, Willis Beckworth and Vicky Juneau.

In or about 1998, Glenn Beckworth became acquainted with Marcel Bizier. At that time, Marcel Bizier was the sole shareholder, president and Chief Executive Officer of Discount Trophy & Co., Inc. (“Old DTC”), a Connecticut corporation in the same line of business as Plastic Plus. Prior to November 20, 2008 the four children of Marcel Bizier and his wife Barbara King Bizier were the sole shareholders of Marco Plastic Industries, Inc. (“MPI”), a Connecticut corporation that “acts as a conduit in ordering trophy/awards parts and components from Chinese vendors and reselling them to DTC at a 5% markup.” (Id. ¶ 24).

For 12 to 18 months prior to November 20, 2008, Marcel Bizier and Glenn Beckworth had discussed merging Plastic Plus and Old DTC “with a view to Glenn [Beckworth] and Marcel [Bizier] jointly operating [the combined businesses] for three years.” (Id. ¶ 26). After the three year period, Glenn Beckworth would “purchas[e] the shares of Marcel Bizier and assum[e] management and control of the combined businesses and Marcel [Bizier] [would] retire.” (Id. ).

By an agreement dated November 20, 2008 (the “Merger Agreement”), Old DTC and Plastic Plus agreed to merge and operate under the name Discount Trophy & Co., Inc. (“DTC”). Under the Shareholder Agreement, executed on the same date, Marcel Bizier owns 75% of DTC, Glenn Beckworth owns 11.25%, Willis Beckworth owns 11.25%, and Vicky Juneau owns 2.5%; additionally, Glenn Beckworth owns 20% of MPI and the Biziers' four children continue to own 80% of MPI. The Shareholder Agreement provides that Marcel Bizier will be the President and Chief Executive Officer of DTC and Glenn Beckworth will be the Vice–President and Chief Operating Officer. DTC's Board of Directors is composed of Marcel Bizier, Glenn Beckworth and Barbara King Bizier. In connection with the merger, employment agreements were executed between DTC and Glenn Beckworth, Marcel Bizier, Barbara King Bizier, Vicky Juneau and Willis Beckworth. Also, commercial leases were entered into between DTC (as tenant) and Glenn Beckworth and Willis Beckworth (as landlords) (the “Commercial Leases”).

The plaintiffs allege that after the merger, Marcel Bizier and Barbara King Bizier engaged in certain conduct that was in violation of the various merger-related agreements and was detrimental to DTC, MPI, their shareholders, and the plaintiffs. The plaintiffs allege that, inter alia, Marcel Bizier unilaterally increased his salary in violation of the Shareholder Agreement and Marcel Bizier's employment agreement (“M. Bizier Employment Agreement”); Marcel Bizier unilaterally reduced Glenn Beckworth's salary in violation of Glenn Beckworth's employment agreement (“G. Beckworth Employment Agreement”); Marcel Bizier and Barbara King Bizier unilaterally cancelled the Commercial Leases; Marcel Bizier has withheld access to the books and accounting records of DTC; DTC acquired the issued and outstanding shares of Barhill Manufacturing, Inc. (“Barhill”), a Pennsylvania corporation owned by Barbara King Bizier; and Marcel Bizier caused MPI to distribute a sum of $2,076,828.00 to his children without distributing a pro-rated amount to Glenn Beckworth.

In July 2012, the plaintiffs, proceeding individually and not derivatively, filed a seven-count complaint (hereinafter “Beckworth I ”) against Marcel Bizier in North Carolina state court. Marcel Bizier thereafter removed the case to the United States District Court for the Western District of North Carolina. (See Beckworth, et al. v. Bizier, 3:2012–cv–00512 (W.D.N.C.)). The complaint in Beckworth I alleged, inter alia, that:

• Marcel Bizier unilaterally increased his salary in violation of the Shareholder Agreement and M. Bizier Employment Agreement (Beckworth I Compl. ¶ 34);

• Marcel Bizier unilaterally reduced Glenn Beckworth's salary in violation of the G. Beckworth Employment Agreement (Beckworth I Compl. ¶ 39);

• Marcel Bizier has withheld access to the books and accounting records of DTC (Beckworth I Compl. ¶ 70);

• DTC acquired the issued and outstanding shares of Barhill (Beckworth I Compl. ¶ 42);

• Marcel Bizier caused MPI to distribute a sum of $2,076,828.00 to his children without distributing a pro-rated amount to Glenn Beckworth (Beckworth I Compl. ¶ 60).

Marcel moved to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Beckworth I (Doc. No. 11)). On December 19, 2012, United States Magistrate Judge David S. Cayer issued a Memorandum and Recommendation which recommended that the motion to dismiss be granted and that the case be dismissed with prejudice. (Beckworth I (Doc. No. 14)). Subsequently, the court entered an order accepting the Memorandum and Recommendation, and granting the motion to dismiss. (Beckworth I (Doc. No. 15)). Judgment entered in favor of Marcel Bizier on January 25, 2013. (Beckworth I (Doc. No. 16)). The plaintiffs did not appeal.

The plaintiffs subsequently filed the present case against Marcel Bizier and Barbara King Bizier.

II. LEGAL STANDARD

A claim is properly dismissed for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) when the court lacks the statutory or constitutional power to adjudicate the claim. Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir.1996). On a Rule 12(b)(1) motion to dismiss, the party asserting subject matter jurisdiction “bears the burden of proving subject matter jurisdiction by a preponderance of the evidence.” Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir.2005). When reviewing a motion to dismiss for lack of subject matter jurisdiction, the court may consider evidence outside the pleadings. See Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000).

When deciding a motion to dismiss under Rule 12(b)(6), the court must accept as true all factual allegations in the complaint and must draw inferences in a light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). Although a complaint “does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) (on a motion to dismiss, courts “are not bound to accept as true a legal conclusion couched as a factual allegation”)). “Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955 (internal quotation marks omitted)). “Factual...