Opinion
Civil Action No. 99-1623 (NHP).
May 31, 2000.
Stanley N. Silverman, Esq., SILVERMAN KOST, P.C., Montclair, N.J., Attorneys for Plaintiff.
Arthur S. Goldstein, Esq., Adam K. Derman, Esq., WOLFF SAMSON, PC, Roseland, N.J., Attorneys for Defendants.
Paul Connell, Esq., Brian D. Sullivan, Esq., PAUL, HASTINGS, JANOFSKY WALKER, LLP, Atlanta, GA., Attorneys for Defendants.
THE ORIGINAL OF THIS LETTER OPINION IS ON FILE WITH THE CLERK OF THE COURT
Dear Counsel:
This matter comes before the Court on the motion of defendants Visy Paper Company and Visy Industries, Inc. for judgment on the pleadings and on the motion of plaintiff J. Supor Son Trucking Rigging Company Inc. for leave to file an Amended Complaint. This Court heard oral argument on December 13, 1999, and thereafter directed the parties to submit supplemental briefs regarding certain aspects of New York contract law. For the following reasons, defendants' motion for judgment on the pleadings is GRANTED and plaintiff's motion for leave to file an Amended Complaint is DENIED.
BACKGROUND
This case arises out of a contract dispute between plaintiff J. Supor Son Trucking Rigging Co., Inc. ("plaintiff" or "Supor") and defendants Visy Industries, Inc., and Visy Paper Company. Plaintiff's Complaint alleges the following facts.Supor provides commercial trucking and hauling services on a short-term and long-term basis for the public and for private businesses. Visy is a company engaged in the processing and production of recycled paper and paper-related products, with its offices and facilities located in the State of New York. On or about March 1, 1997, Visy contacted Supor and requested that Supor prepare and submit a contract proposal for the provision of trucking and hauling services to Visy.
On or about May 6 and May 7, 1997, Supor prepared and submitted to Visy a contract "proposal," which included a minimum term of one year of service from the initial date of commencement with options to renew the services. The proposal also provided for weekly minimum requirements on the part of Visy to use two tractors daily, six days per week at a daily, fixed rate of $650.00 per tractor. Supor alleges that Visy accepted the proposal on or about May 15, 1997.
On or about June 13, 1997, Supor began performance of the agreement pursuant to the provisions of the proposal. It is alleged that on or about August 22, 1997, Visy informed Supor that it was canceling the contract. Supor contends that it was induced by Visy's acceptance of the proposal to expend substantial sums of money to acquire additional trucks, trailers and hauling equipment. No written agreement was executed between the parties. Supor's Complaint includes claims for breach of contract, economic loss, bad faith, and punitive damages.
DISCUSSION
I. Judgment on the Pleadings
Federal Rule of Civil Procedure 12(c) provides that after the pleadings are closed any party may move for judgment on the pleadings. Under Rule 12(c), judgment will not be granted "unless the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law." Jablonski v. Pan American World Airways, Inc., 863 F.2d 289, 292 (3d Cir. 1988) (quotingSociety Hill Civic Association v. Harris, 632 F.2d 1045, 1054 (3d Cir. 1980)). See also Kruzits v. Okuma Mach. Tool, Inc., 40 F.3d 52, 54 (3d Cir. 1994). In essence, there is no real distinction between the standard for a motion to dismiss under Rule 12(b)(6) and that of a motion to dismiss pursuant to Rule 12(c). See Children's Seashore House v. Waldman, 197 F.3d 654, 657 n. 1. (3d Cir. 1999).
II. Determining Applicable Law
A threshold task is to ascertain the law applicable in this case. When sitting in diversity, a federal court applies the choice of law principles of the forum state. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941). First, there must be an actual conflict among the laws of the interested states. See Oil Shipping (Bunkering) B.V. v. Sonmez Denizcilik Ve Ticaret A.S., 10 F.3d 1015, 1018 (3d Cir. 1993). Here, there is an actual conflict between the law of New York and the law of New Jersey. This case involves an alleged oral agreement which cannot be performed within one year of its making. New Jersey's Statute of Frauds does not prevent enforcement of oral contracts which cannot be performed within one year. See N.J.S.A . 12A:2-201. Under New York law, however, an oral agreement which cannot be performed within one year of its making is unenforceable. See N.Y . General Obligations Law § 5-701(a)(1). Therefore, it must be determined which law applies.
Under New Jersey choice of law rules, if a conflict does exist, the governing law in a contract case is that of the jurisdiction with the most significant relationship and closest contacts with the transaction and the parties. See Nat'l Util. Serv., Inc. v. Chesapeake Corp., 45 F. Supp.2d 438, 446 (D.N.J. 1999); Keil v. Nat'l Westminster Bank, 311 N.J. Super. 473, 485, 710 A.2d 563, 569 (App.Div. 1998); State Farm Mut. Auto. Ins. Co. v. Estate of Simmons, 84 N.J. 28, 35-37, 417 A.2d 488, 491-492 (1980).
New Jersey has adopted Section 188 of the Restatement (Second) of Conflict of Laws (1971), which provides that the law of the state having the most significant relationship to the parties and the transaction is to control. See Keil, 311 N.J. Super. at 485. When determining which state has more significant contacts with the parties and the contract, New Jersey courts look to the following non-exclusive contacts listed in Section 188 of the Restatement:
(a) the place of contracting;
(b) the place of negotiation of the contract;
(c) the place of performance;
(d) the location of the subject matter of the contract; and
(e) the domicile, residence, nationality, place of incorporation and place of business of the parties.See id. (quoting restatement (Second) of Conflict of Laws § 188(2) (1971)). In addition, other relevant factors courts consider in the choice of law analysis are found in Section 6 of the Restatement:
(a) the needs of the interstate and international systems;
(b) the relevant policies of the forum;
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue;
(d) the protection of justified expectations;
(e) the basic policies underlying the particular field of law;
(f) certainty, predictability and uniformity of result; and
(g) ease in the determination and application of the law to be applied.See id. (quoting Restatement (Second) of Conflict of Laws § 6 (1969)). See also General Ceramics Inc. v. Firemen's Fund Insurance Cos., 66 F.3d 647, 653 (3d Cir. 1995).
Considering these factors, in this case it is readily apparent that New York has the more significant relationship and closest contacts with this transaction and the parties. Although negotiations occurred in both jurisdictions, the purpose and object of the alleged contract was for plaintiff to deliver waste paper to Visy's facilities in New York. Plaintiff's trucks would travel to transfer stations in Brooklyn or the Bronx to pick up the waste paper and then deliver it to Visy's facility in Staten Island. At this point, plaintiff's service was complete. Thus, the place of performance was at Visy's facilities in New York.
The fact that plaintiff's drivers began their journey in New Jersey and traveled back to New Jersey after delivering the waste paper is of no moment. It matters not that plaintiff's trucks were registered in New Jersey or that its drivers reported to work in New Jersey. Likewise, the determination of which jurisdiction possesses more significant contacts does not turn on the route which plaintiff's drivers took to carry out its performance.
Furthermore, the subject matter of the alleged contract — the waste paper — was at all times located in New York. Defendants are not corporate residents of New Jersey. Indeed, New York holds a strong interest in adjudicating a claim concerning an alleged contract the performance of which occurred in New York and the subject of which was located in New York. Accordingly, New York law applies in this case.
III. Application of New York Contract Law
Under New York contract law, an oral agreement which cannot be performed in less than one year from its making falls within the Statute of Frauds and is unenforceable. See N.Y . General Obligations Law § 5-701(a)(1). In this case, no material issues of fact exist. Based upon the Complaint, Supor alleges that Visy accepted the contract proposal on or about May 15, 1997. It is alleged that the agreement called for a minimum term of one year of service from the initial date of commencement, which was to be on or about June 15, 1997. By its terms, then, this is an oral agreement which cannot be performed within one year of its making. The agreement therefore falls within the ambit of Section 5-701(a)(1) and cannot be enforced. See Valentino v. Davis, 703 N.Y.S.2d 609, 611 (N.Y.App.Div. 2000).
New York's Statute of Frauds specifically requires a writing subscribed by the party to be charged if an agreement "[b]y its terms is not to be performed within one year from the making thereof. . . ." N.Y . General Obligations Law § 5-701(a)(1).
Plaintiff advances the argument that its part performance removes the agreement from the fatal reach of the Statute of Frauds. Under New York law, however, the doctrine of part performance does not save contracts governed by Section 5-701. See Messner Vetere Berger McNamee Schmetterer Euro RSCG v. Aegis Group PLC, 93 N.Y.2d 229, 234 n. 1, 689 N.Y.S.2d 674 (1999). In Messner, the New York Court of Appeals, when asked to decide questions certified by the Second Circuit regarding the proper interpretation of the part performance doctrine to an agreement governed by Section 5-703 of New York's General Obligations Law, stressed that it had not recognized a judicially-created part performance exception to Section 5-701. See 93 N.Y.2d at 234 n. 1.
In the wake of Messner, one court has expressed serious doubts as to whether part performance could salvage a breach of contract claim where the agreement falls within Section 5-701. See Doehla v. Wathne Limited, Inc., 1999 WL 566311, at *7-8 (S.D.N.Y. Aug. 3, 1999) ("In view of theMessner pronouncement, it is questionable, to put it mildly, whether part performance could theoretically salvage plaintiff's breach of contract claim here."). Still another court has held that, in light of Messner, part performance cannot save a contract claim where the agreement is governed by Section 5-701(a)(1). See Valentino v. Davis, 703 N.Y.S.2d 609, 611 (N.Y.App.Div. 2000). Therefore, Section 5-701(a)(1) of New York's Statute of Frauds precludes enforcement of the purported oral agreement between the parties. Consequently, the defendants are entitled to judgment on the pleadings.
IV. Motion to Amend the Complaint
Federal Rule of Civil Procedure 15(a) provides that a party may amend the party's pleading by leave of court, and that such leave shall be freely given when justice so requires. A court may deny a motion to amend if the amendment is found to be futile. See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962); Shane v. Fauver, 2000 WL 655642, at *1 (3d Cir. May 19, 2000) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997) and Lorenz v. CSX Corp., 1 F.3d 1406, 1413-14 (3d Cir. 1993)). "Futility means that the complaint, as amended, would fail to state a claim upon which relief could be granted." Shane v. Fauver, 2000 WL 655642, at *1 (citingBurlington, 114 F.3d at 1434); Jablonski, 863 F.2d at 292; Massarsky v. GM Corp., 706 F.2d 111, 125 (3d Cir.), cert. denied, 464 U.S. 937, 104 S.Ct. 348, 78 L.Ed.2d 314 (1983). In determining whether an amendment is futile, a district court applies the same standard of legal sufficiency as applied under Rule 12(b)(6). See Shane v. Fauver, 2000 WL 655642, at *1; 3 Moore's Federal Practice, § 15.15[3], at 15-47 to -48 (3d ed. 2000). Where the claim is vulnerable to dismissal under Rule 12(b)(6), but the plaintiff moves to amend, leave to amend generally must be granted unless the amendment would not cure the deficiency. See Shane v. Fauver, 2000 WL 655642, at *1.
Based on the above explanation of New York law, it is clear that plaintiff's amendment is futile inasmuch as it will not cure the deficiency found in the original Complaint. In fact, it is apparent to this Court that plaintiff's amendment, which is virtually the same as the original Complaint and adds no new claims or allegations, could not withstand a motion to dismiss for the same reasons the original Complaint fails. Therefore, plaintiff's motion for leave to file an Amended Complaint is DENIED, and judgment on the pleadings is entered in favor of the defendants.
CONCLUSION
Based on the foregoing, the motion of defendants Visy Paper Company and Visy Industries, Inc. for judgment on the pleadings pursuant to Rule 12(c) is hereby GRANTED. The motion of plaintiff J. Supor Son Trucking Rigging Company, Inc. for leave to file an Amended Complaint is hereby DENIED.
An appropriate Final Order accompanies this Letter Opinion.