Opinion
INDEX NO. 601737/2015
06-17-2015
ECOLOGICAL LABORATORIES, INC., Plaintiff, v. BLUEPLANET, LLC, BLUEPLANET LABS, LLC, and JOHN D. MORRELL Defendant.
NYSCEF DOC. NO. 29 At a Term of the Supreme Court of the State of New York held in and for the County of Nassau, 100 County Seat Drive, Mineola, New York, on the 18th day of June 2015 PRESENT: HON. JULIANNE T. CAPETOLA Acting Justice of the Supreme Court DECISION AND ORDER ON MOTION
Motion Sequence: 001 The following papers were read on this Motion:
Defendants's Notice of Motion, Memorandum of Law, and Supporting Documents
Plaintiff's Affirmation in Opposition and Supporting Documents
The defendants in this action move by notice of motion for an order pursuant to CPLR §3211(a)(8) dismissing the complaint as against Defendant BluePlanet, LLC and against Defendant BluePlanet Labs, LLC for lack of personal jurisdiction, for an order pursuant to CPLR §7503(a) compelling arbitration and staying the underlying action, and for the dismissal of the complaint pursuant to CPLR §3211(a)(7) for failure to state a cause of action. Plaintiff has opposed this motion, and the motion was deemed submitted June 11, 2015.
Defendant BluePlanet, LLC and Defendant BluePlanet Labs, LLC (which is the assignee, subsidiary and/or successor-in-interest of Defendant BluePlanet LLC) move for dismissal of the underlying complaint as against them for lack of personal jurisdiction based upon Plaintiff having served the Summons and Complaint upon Rachelle Knopf, who they claim is not affiliated with either of these defendants and is not authorized to accept service on their behalf. Defendants have annexed an Affidavit of Rachelle Knopf, and an Affidavit of Defendant John D. Morrell alleging same. Plaintiff has argued in opposition that, though they claim that Ms. Knopf was, in fact, authorized to accept service, they nonetheless cured the alleged defect in service by effectuating service on April 29, 2015 upon Laural Doulbin, managing agent of U.S. Corporation Agent Inc., a designated agent for service of process for Defendants BluePlanet, LLC and BluePlanet Labs, LLC. No reply papers were received from Defendants disputing that claim, and sufficient evidence has been annexed to Plaintiff's opposition papers to substantiate their claims. Accordingly, the request for dismissal of the complaint as against Defendants BluePlanet, LLC and BluePlanet Labs, LLC is without merit.
Defendants have also sought dismissal of the underlying complaint pursuant to CPLR §3211(a)(7) for failure to state a cause of action.
In determining a motion for dismissal pursuant to CPLR §3211(a)(7), "the court must determine whether, accepting as true the factual averments of the complaint and according the plaintiff the benefits of all favorable inferences which may be drawn therefrom, the plaintiff can succeed upon any reasonable view of the facts stated". Board of Education v. County of Westchester, 282 A.D.2d 561 (2d. Dept. 2001). A motion to dismiss for failure to state a cause of action "cannot be sustained simply by showing that facts are imperfectly or informally averred, or that the pleading lacks definiteness and precision, or that material facts are only argumentatively averred. The pleading may be deficient in technical language or in logical statement, but, as against a demurrer or a motion of this character at the trial, the pleading will be deemed to allege whatever can be implied from its statements by fair and reasonable intendment". Kain v. Larkin, 141 N.Y. 144 (N.Y.C.A. 1894).
In the instant matter, Defendants argue that the complaint fails to state certain causes of action based upon the lack of specificity to each claim, to wit, specific dates and names of customers whose business with Plaintiff was allegedly interfered with, and specific confidential information and trade secrets allegedly wrongfully utilized by Defendants.
Viewed in the light most favorable to Plaintiff, the underlying complaint sets forth a prima facie case for each of their claims, and the specificity Defendants claim is lacking can be ascertained through appropriate discovery mechanisms. Accordingly the branch of Defendants' motion which seeks dismissal of the complaint pursuant to CPLR §3211(a)(7) must be denied at this time.
Defendants have further sought an order pursuant to CPLR §7503(a) compelling arbitration of the dispute that has arisen between the parties relative to the parties' October 1, 2003 International Limited License Agreement (hereinafter referred to as the "License Agreement").
This Court rendered a decision on a prior motion to compel arbitration by Defendant BluePlanet, LLC on a related matter on April 17, 2015 and reiterates the following:
"Defendant commenced an arbitration against Plaintiff on August 12, 2014 pursuant to paragraph 12.1 of the parties' License Agreement which reads, in relevant part:
'All disputes, claims, and questions regarding the rights and obligations of the Parties under this [License Agreement] are subject to arbitration. Either Party may demand arbitration by written notice to the other Party should a dispute remain unresolved'.
Subsequent thereto, on September 18, 2014, Plaintiff filed a Verified Complaint seeking separate relief.
Defendant has argued in support of the instant motion, that in reading the relevant clause of the License Agreement as a whole that compulsory arbitration was the intent of the clause.
Plaintiff disagrees with the reading of the clause, arguing instead that arbitration was intended to permissive, rather than mandatory, to the extent that both parties must agree to arbitrate a dispute, and accordingly oppose the motion to compel arbitration.
The instant application hinges on a single word in the License Agreement that, when read in concert with the remainder of the clause, determines the meaning of the clause as a whole, to wit, the word "may", as opposed to the more commonly employed term "shall".
The United States Court of Appeals, Second Circuit, addressed this specific issue, as it relates to the use of the word "may" versus "shall" in the construction of an alternative dispute resolution clause of a contract in Local 771, I.A.T.S.E., AFL-CIO v. RKO General, Inc., WOR Division, wherein it was clearly stated that:
'The district court construed the foregoing language as giving each party a choice between 'the right' to invoke arbitration or resort to the courts. We disagree. Neither the word 'may' nor any language used in the Agreement implies that the parties had the option of invoking some remedy other than arbitration. The Agreement is clear that the parties relegated themselves to arbitration in accordance with the rules of the American Arbitration Association as the sole remedy, subject only to the possibility that an arbitrator might be selected by some other mutually agreed upon process. The sole option an aggrieved party retained through use of the word 'may' was to abandon its claim'. 546 F.2d 1107 (U.S.C.A. 2d. Circ. 1977).
The Appellate Division Second Department referred to that holding in its decision in Lovisa Construction Co., Inc. V. Metropolitan Transportation Authority, wherein it reiterated that
'the mere fact that the alternate dispute resolution provision states that the contractor 'may' initiate a dispute pursuant to the enumerated procedures outlined therein does not afford the plaintiff the option to resort to [another] action ... Therefore, under these circumstances, the use of the term 'may' in the alternate dispute resolute resolution should be interpreted to limit the plaintiff to a choice between arbitration and abandonment of its claim'. 225 A.D.2d 740 (2d. Dept. 1996), citing Local 771, I.A.T.S.E., AFL-CIO v. RKO General, Inc., WOR Division, supra.
Accordingly, the Defendant herein exercised its only option other than abandonment of a claim by demanding arbitration as required by the License Agreement. The Plaintiff, on the other hand, chose to seek remedy through litigation, which is not permissible under the License Agreement."
In accordance with this Court's prior ruling, arbitration of disputes arising from the parties' agreement is compulsory, not permissive, pursuant to the terms of the agreement.
Based on the foregoing, it is hereby:
ORDERED, that the branch of Defendants' motion seeking a dismissal of the underlying complaint pursuant to CPLR §3211(a)(8) for lack of personal jurisdiction is hereby denied in its entirety; and it is further
ORDERED, that the branch of Defendants' motion seeking to compel arbitration is hereby granted in its entirety; and it is further
ORDERED, that the branch of Defendants' motion which requests "such other and further relief to which this Court seems appropriate" is hereby granted to the extent that Plaintiff's complaint is dismissed in its entirety with leave to renew upon proper proceedings, to wit, a demand for arbitration regarding its own claims; and it is further
ORDERED, that the branch of Defendants' motion seeking to stay the Plaintiff's action in this Court, and the branch of Defendants' motion seeking a dismissal of the underlying complaint pursuant to CPLR §3211(a)(7) for failure to state a cause of action are hereby denied as academic.
This constitutes the decision and order of the Court. Dated: 6/17/15
ENTER
/s/_________
HON. JULIANNE T. CAPETOLA
A.J.S.C.