Gabayzadeh v. Global Equip. & Mach. Sales Inc.

MEHDI GABAYZADEH, Plaintiff, v. GLOBAL EQUIPMENT AND MACHINERY SALES INC., et al., Defendants.

18 Civ. 3851 (LGS)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

January 28, 2019

OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:

Pro se Plaintiff Mehdi Gabayzadeh sues Defendants Global Equipment & Machinery Sales, Inc. ("GEMS"), Global Equipment International, LLC ("GEI"), Ronald Feldman, Michael Downing, American Paper Recycling Corporation ("APRC") and Kenneth Golden, alleging claims based on the sale and taking of certain machinery and equipment. Defendants GEMS, GEI and Feldman¹ move to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). For the following reasons, the motion is granted.

I. BACKGROUND

The summary below is based on allegations in the Complaint. See Goel v. Bunge, Ltd., 820 F.3d 554, 559 (2d Cir. 2016). On a motion to dismiss, all uncontroverted facts are accepted as true, and all reasonable inferences are drawn in favor of Plaintiff as the party asserting jurisdiction and the non-moving party. See Raymond Loubier Irrevocable Tr. v. Loubier, 858 F.3d 719, 725 (2d Cir. 2017); Fountain v. Karim, 838 F.3d 129, 134 (2d Cir. 2016).

A. SATI Copy Paper Machine (Complaint, Part I)

Plaintiff is a businessman who owns several tissue manufacturing corporations and limited liability companies. In 2001, Plaintiff's company Super American Tissue Inc. ("SATI") purchased a copy paper machine from a third party through GEMS -- a brokerage firm that facilitates the purchase and sale of certain manufacturing equipment. Defendants Feldman and Downing were executives at GEMS. Beginning in November 2003, Feldman stored the machine. From April 2005 until September 2016, Plaintiff was incarcerated. In 2005, while Plaintiff was incarcerated, Feldman visited Plaintiff to discuss the stored machine. During the visit, they agreed that GEMS would broker a sale for the machine on Plaintiff's behalf. They further agreed that Feldman would work with Plaintiff's son John, and provide John with a contract of sale when the sale was arranged. John maintained an ongoing relationship with Downing and Feldman throughout Plaintiff's incarceration. Feldman told Plaintiff after his release that the equipment had been sold. Neither John nor Plaintiff ever received the agreed-upon contract of sale or any of the proceeds for the copy paper machine, despite Plaintiff's demands.

B. Jinglebell Lane Equipment and Machinery (Complaint, Part II)

Between April 2003 and May 2005, Plaintiff directly purchased certain equipment through GEMS, Feldman and Downing. This and other equipment was kept in a warehouse owned by one of Plaintiff's corporate entities, 400 Jinglebell Lane, LLC ("Jinglebell Lane"), located in Coxsackie, New York. Plaintiff purchased this and other equipment so that when he finished serving his sentence, there would be "a company, business and operating equipment available to him."

John used GEMS, Feldman and Downing as brokers to sell some of the Jinglebell Lane equipment -- once in 2007 and then for multiple transactions between March 2012 and October 2013. However, apart from these acknowledged deals, Feldman and Downing stole equipment and machinery from the warehouse using an unauthorized key. The thefts occurred between March 2012 and February 2014 while Plaintiff was incarcerated.

C. Dean Rewinder Machine (Complaint, Part III)

In 2000, Plaintiff's company Dean Machinery International, Inc. ("Dean") purchased a rewinder machine from a non-party. In 2007, the machine was held as collateral for a debt owed by Plaintiff's son John to Defendant APRC. After this debt was extinguished around September 2016, John attempted to retrieve the machine, but was told that APRC had authorized Defendant GEMS to sell the rewinder machine in South America.

II. DISCUSSION

The pro se Complaint is construed to include a quasi-contract claim and two claims for conversion -- a quasi-contract claim for the failure to deliver the proceeds from the sale of the copy paper machine owned by SATI (Complaint, Part I), a conversion claim for the theft of equipment and machines housed in Jinglebell Lane's warehouse (Complaint, Part II) and a conversion claim for the unauthorized sale of the rewinder machine possessed by Dean (Complaint, Part III). Although the Complaint couches its claims in fraud, the fraud is "merely incidental" to the heart of Plaintiff's claims -- that Defendants unlawfully took Plaintiff's property and did not perform on a promise. See Scott v. Fields, 925 N.Y.S.2d 135, 138 (2d Dep't 2011) (declining to apply fraud's statute of limitations where the fraud was "merely incidental to the negligence cause of action"); see also D. Penguin Bros. Ltd. v. City Nat'l Bank, No. 158949/14, 2018 WL 6493548, at *1 (1st Dep't Dec. 11, 2018) (applying fraud's statute oflimitations where "[t]he fraud claim is the gravamen of this case; it is not . . . merely incidental to the conversion claim").

Courts must "liberally construe pleadings and briefs submitted by pro se litigants, reading such submissions to raise the strongest arguments they suggest." McLeod v. Jewish Guild for the Blind, 864 F.3d 154, 156 (2d Cir. 2017) (internal quotation marks omitted); see also Hardaway v. Hartford Pub. Works Dep't, 879 F.3d 486, 489 (2d Cir. 2018) (internal quotation marks omitted) ("We afford a pro se litigant 'special solicitude' by interpreting a complaint filed pro se to raise the strongest claims that it suggests."). "The policy of liberally construing pro se submissions is driven by the understanding that implicit in the right to self-representation is an obligation . . . of the court to make reasonable allowances to protect pro se litigants from inadvertent forfeiture of important rights because of their lack of legal training." McLeod, 864 F.3d at 156-57 (internal quotation marks omitted).

A. Standing

Plaintiff lacks standing to bring the claims premised on the SATI copy paper machine and the Dean rewinder machine (Complaint, Parts 1 and III), but the Complaint sufficiently alleges individual standing for the Jinglebell Lane equipment and machinery theft (Complaint, Part II).

1. Applicable Law of Standing

"A district court properly dismisses an action under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction if the court lacks the statutory or constitutional power to adjudicate it, such as when . . . the plaintiff lacks constitutional standing to bring the action." Cortland St. Recovery Corp. v. Hellas Telecomms., S.A.R.L., 790 F.3d 411, 416-17 (2d Cir. 2015) (internal quotation marks and citation omitted). Under Article III, "the irreducible constitutionalminimum of standing" contains three elements. Spokeo, Inc. v. Robins, 136 S.Ct 1540, 1547 (2016) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). "The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, 136 S. Ct. at 1547.

"In resolving a motion to dismiss under Rule 12(b)(1), the district court must take all uncontroverted facts in the complaint . . . as true, and draw all reasonable inferences in favor of the party asserting jurisdiction." Fountain, 838 F.3d at 134 (quoting Tandon v. Captain's Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014)). "It is a long-settled principle that standing cannot be inferred argumentatively from averments in the pleadings, but rather must affirmatively appear in the record." FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231 (1990) (citations and quotation marks omitted); accord Steinberger v. Lefkowitz, 634 F. App'x 10, 11 (2d Cir. 2015) (summary order) (internal quotation marks omitted). Therefore, the plaintiff must "'clearly [] allege facts [in his complaint] demonstrating that he is a proper party to invoke judicial resolution of the dispute.'" Steinberger, 634 F. App'x at 11 (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)). Ultimately, "[t]he plaintiff bears the burden of proving subject matter jurisdiction by a preponderance of the evidence." McGowan v. United States, 825 F.3d 118, 125 (2d Cir. 2016) (internal quotation marks omitted).

2. SATI Copy Paper Machine and Dean Rewinder Machine (Complaint, Parts I and III)

Regarding the SATI copy paper machine and Dean rewinder machine, the Complaint does not plead facts sufficient to show that Plaintiff has standing to bring these claims because, as pleaded, Plaintiff's alleged injuries were indirect and caused by direct injury to his entities.

The Complaint affirmatively states that the machines were purchased by SATI and Dean, not Plaintiff. Even accepting that Plaintiff -- as the owner of the entities -- was injured by the losses described in the Complaint, his injuries "are either direct injuries to the [entities] or indirect injuries flowing from the harm to the [the entities]." Alphas v. City of New York Bus. Integrity Comm'n, No. 15 Civ. 03424, 2017 WL 1929544, at *3 (S.D.N.Y. May 9, 2017). "A shareholder -- even the sole shareholder -- does not have standing to assert claims alleging wrongs to the corporation." Jones v. Niagara Frontier Transp. Auth. (NFTA), 836 F.2d 731, 736 (2d Cir. 1987); accord Alphas, 2017 WL 1929544, at *3; see also Ali v. New York City Envtl. Control Bd., 670 F. App'x 26, 27 (2d Cir. 2016) (summary order). Plaintiff, as an individual, lacks standing to bring this suit. See Bingham v. Zolt, 66 F.3d 553, 561-62 (2d Cir. 1995) ("When the claim is that corporate property has been removed from the corporation, it is the corporation -- having an independent legal identity -- that must seek, on its own or derivatively, to redress its injury. The shareholder in such a case is injured only as a result of the injury to another, i.e., the corporation, and therefore generally lacks standing.").

Plaintiff essentially requests to pierce the...