Tal v. Computech Int'l

1

HILLEL TAL, Plaintiff, v. COMPUTECH INTERNATIONAL, INC., Defendant.

No. 21-cv-5773 (JMA)(SIL)

United States District Court, E.D. New York

December 1, 2022

REPORT AND RECOMMENDATION

STEVEN I. LOCKE, UNITED STATES MAGISTRATE JUDGE

Presently before the Court in this diversity-breach of contract-statutory commission action, on referral from the Honorable Joan M. Azrack for report and recommendation, is Defendant Computech International, Inc.'s (“CTI” or “Defendant”) motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ. P.”) 12(b)(6). See Notice of Motion to Dismiss (“Defendant's Motion” or “Def Mot.”), Docket Entry (“DE”) [15] Defendant's Memorandum of Law in Support of Its Motion to Dismiss (“Def. Mem.”), DE [15-1]. Plaintiff Hillel Tal (“Tal” or “Plaintiff”) filed a complaint in Nassau County Supreme Court on October 7, 2021 against Defendant alleging claims for breach of contract, unjust enrichment, violation of New York Labor Law (“NYLL”) § 191(1)(c)^[1]and declaratory judgment. See Complaint (“Compl.”), DE [1-1]. CTI removed the case to this Court on October 15, 2021 pursuant to 28 U.S.C. § 1446. See DEs [1]-[3]. Defendant then filed its motion to dismiss on May 27, 2022. See Def. Mot. Plaintiff opposes, and alternatively cross-moves for leave to amend the Complaint. See Plaintiff's Memorandum of Law in Opposition to Defendant's Motion to Dismiss (“Pl Opp.”), DE [17]. Judge Azrack referred the motion to this Court on November 1, 2022. See November 1, 2022 Electronic Order. For the reasons set forth below, the Court respectfully recommends granting Defendant's Motion in its entirety and granting Plaintiff leave to amend the Complaint.

I. BACKGROUND

A. Relevant Facts

The facts set forth herein are taken from the Complaint, and are accepted as true for purposes of this Report and Recommendation.

Tal currently resides in Florida and is a former resident of New York County, New York. See DE [10]; Compl. ¶ 1. CTI is a New York corporation with its principal office in Nassau County. Compl. ¶ 2. In or around August 2009, CTI hired Tal as its Vice President of Business Development and a commission salesperson. Id. ¶ 4. In addition to a salary and benefits, CTI agreed to pay Tal a ten percent sales commission of the profits realized for all customer orders he secured. Id. ¶ 5.

Sometime in 2014, CTI asked Tal to accept a five percent sales commission on the profits realized for sales of air filtration systems designed by Beth El Industries (“BEI”) and their spare parts while other commissions remained at ten percent, and CTI was to tender and sign a written agreement in accordance with these terms. Id. ¶ 6. Plaintiff accepted the proposal although, according to Tal, Defendant never offered and signed a new contract. Id. While the amended agreement on commissions was not in writing, Plaintiff claims it was confirmed in periodic statements, communications and memoranda exchanged by the parties. Id. ¶ 7. Defendant followed this practice for years paying Plaintiff commissions quarterly, in arrears, and Tal in turn, continued to originate orders for Defendant's products from customers and obtain sales. Id. ¶ 8. Plaintiff provides no information, however, regarding his job duties, what type of business CTI was engaged in, the products he sold for CTI other than BEI systems, the amount he sold, when he made sales, over what time period or to what customers.

On or around May 3, 2021, Tal accepted new employment and tendered his resignation by letter effective May 14, 2021. Id. ¶ 9. Defendant refused to pay Plaintiff commissions he earned on orders already secured but were not partially or fully fulfilled and paid for by customers prior to his resignation. Id. ¶¶ 10-11. Tal claims this was a breach of their agreement, in willful disregard of CTI's legal obligations, and that the outstanding commissions due to Tal and are in excess of $600,000, although no further elaboration is provided as to this calculation. Id. ¶¶ 11, 16. Plaintiff alleges that he fully performed his obligations under the agreement to secure customer orders for CTI and that Defendant has already received some of the revenues for the orders at issue. Id. ¶¶ 13-14. According to Tal, these commissions are owed to him post-resignation when CTI collects the revenues realized. Id. ¶ 16. Tal claims that the orders were specific to the amount of product sold, the time within which CTI was to fill the order, and the deadline for customers to pay after delivery, although no further details on these dates, timing or amounts are provided. Id. ¶ 15. Plaintiff alleges this constitutes a breach of the parties' agreement and that CTI has been unjustly enriched. Id. ¶¶ 17, 20, 23.

B. Procedural History

Based on the above, Plaintiff commenced this action against Defendant on October 7, 2021 in Nassau County Supreme Court for breach of contract, unjust enrichment, violation of NYLL § 191(1)(c) and for a declaratory judgment seeking damages, liquidated damages, declaratory relief and attorneys' fees and costs. See generally Compl. CTI removed the case to federal court on October 15, 2021 based on the Court's diversity jurisdiction, and Plaintiff confirmed by letter that he resides, is domiciled and is a citizen of Florida. See DE [1]-[3], [10]. CTI filed a motion for premotion conference for its anticipated motion to dismiss on January, 13, 2022. See DE [8]. The case was referred to mediation on January 20, 2022, where the parties failed to reach a settlement. See January 20, 2022 Electronic Order; March 21, 2022 Mediation Report.

On May 27, 2022, Defendant filed its motion to dismiss the Complaint. See generally Defs.' Mem; Defendant's Reply Memorandum of Law in Further Support of Its Motion to Dismiss (“Def. Reply”). Plaintiff opposes, and alternatively seeks leave to amend under Fed.R.Civ.P. 15(a)(2), and attaches Tal's declaration and two exhibits to their brief, which include a paystub, emails, and two documents titled “Sales Commission Agreement.” See Pl. Opp.; Plaintiff's Declaration in Opposition to Motion to Dismiss (“Tal Decl.”), Pl. Opp. Exhibits (“Exs.”) 1-2. Judge Azrack referred the motion to this Court for report and recommendation on November 1, 2022. See November 1, 2022 Electronic Order. For the reasons set forth below, the Court respectfully recommends that Defendant's Motion be granted in its entirety and that Plaintiff be granted leave to amend the Complaint.

II. LEGAL STANDARD

To survive a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), a complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1940 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1960 (2007)). A claim is considered plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. But a pleading “that offers only ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. at 1965). “Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. at 1966).

In deciding a motion to dismiss under Fed.R.Civ.P. 12(b)(6), “a court must ‘accept all allegations in the complaint as true and draw all inferences in the nonmoving party's favor.'” U.S. ex rel. Siegel v. Roche Diagnostics Corp., 988 F.Supp.2d 341, 343 (E.D.N.Y. 2013) (quoting LaFaro v. N.Y. Cardiothoracic Grp., 570 F.3d 471, 475 (2d Cir. 2009)). Nevertheless, “threadbare recitals of the elements of a cause of action” that are supported by “conclusory” statements and mere speculation are inadequate and subject to dismissal. Chavis v. Chappius, 618 F.3d 162, 170 (2d Cir. 2010) (internal quotation and citation omitted); see Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949 (“[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”).

III. DISCUSSION

A. Plaintiff's Declaration and Exhibits

Initially, Plaintiff's declaration and exhibits attached to his opposition should be disregarded in considering its motion. In deciding a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the court may consider:

(1) the factual allegations in the complaint, which are accepted as true;

(2) documents attached to the complaint as an exhibit or incorporated ... by reference; (3) matters of which judicial notice may be taken; and (4) documents upon whose terms and effect the complaint relies heavily, i.e., documents that are “integral” to the complaint.

Calcutti v. SBU, Inc., 273 F.Supp.2d 488, 498 (S.D.N.Y. 2003) (internal citation omitted); see also Miotto v. Yonkers Pub. Sch., 534 F.Supp.2d 422, 425 (S.D.N.Y. 2008) (“[I]n assessing the legal sufficiency of a claim, the court may consider only the facts alleged in the complaint, and any document attached as an exhibit to the complaint or incorporated in it by reference.”)); Henry Avocado Corp. v. Z.J.D. Brother, LLC, No 17-CV-4559 (ARR), 2017 WL 6501864, at *3 (E.D.N.Y. Dec. 19, 2017) (finding that declarations provided by the parties and supporting documentation not relied on the complaint should not be considered on a motion to dismiss). Even if a document is “integral” to the complaint, it must be clear on the record that no dispute exists regarding the authenticity or accuracy of the document. Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 2006) (citations omitted). “A district ...