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finding extrinsic evidence of industry custom irrelevant because the contract was unambiguous and dismissing the implied covenant of good faith and fair dealing claim because it was inconsistent with the express terms of the contract
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No. 01 Civ. 4129 (JGK)
June 26, 2002
OPINION AND ORDER
The plaintiff, Mordecai Jofen, as Trustee of the Harbor Trust, formerly known as the Edward Blech Trust, raises a number of claims for breach of contract, equitable estoppel, breach of an implied covenant of good faith and fair dealing and unjust enrichment against the defendant Epoch Biosciences, Inc., formerly known as Epoch Pharmaceuticals, Inc. ("Epoch" or the "Company"). These claims all arise out of the fact that prior to August 2001, the defendant did not register stock for which warrants had been issued and held in escrow for David Blech ("Blech") pending Blech's satisfaction of a prior debt under the terms of an agreement between Blech and the defendant that was reduced to writing on March 29, 1996 (the "Agreement"). The plaintiff subsequently acquired all of Blech's rights and interests under the Agreement and brought this action alleging breach of the written Agreement.
On November 23, 2001, the Court dismissed the plaintiff's original claims for breach of the written Agreement without prejudice to repleading a claim based on an alternative theory that there was either an oral modification of the Agreement, a novation, an accord and satisfaction or a waiver of certain critical terms of the Agreement. The plaintiff filed an Amended Complaint on December 13, 2001, and the defendant now moves to dismiss the Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
I.
On a motion to dismiss, the allegations in the Amended Complaint are accepted as true. See Grandon v. Merrill Lynch Co., 147 F.3d 184, 188 (2d Cir. 1998); VTech Holdings Ltd v. Lucent Technologies Inc., 01 Civ. 0612, 2001 WL 1380382, at *1 (S.D.N.Y. Oct. 27, 2001). In deciding a motion to dismiss, all reasonable inferences must be drawn in the plaintiff's favor. See Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 673 (2d Cir. 1995); Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir. 1989). The Court's function on a motion to dismiss is "not to weigh the evidence that might be presented at trial but merely to determine whether the complaint itself is legally sufficient." Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). Therefore, the defendant's present motion should only be granted if it appears that the plaintiff can prove no set of facts in support of his claims that would entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Grandon, 147 F.3d at 188; see also Goldman, 754 F.2d at 1065; see generally also Swierkiewicz v. Sorema N.A., 122 S.Ct. 992, 996-99 (2002) (discussing Rule 12(b)(6) standards and notice pleading in context of a Title VII case).
In deciding the defendant's motion to dismiss, the Court may consider documents attached to the Amended Complaint or incorporated in it by reference, matters of which judicial notice may be taken, or documents that the plaintiff relied upon in bringing suit and either are in his possession or of which he had knowledge. Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2000).
II.
The Court has already discussed a number of the relevant factual allegations in this case, as well as the original claims that the plaintiff raised, in a previous Order dated November 23, 2001. See Order dated November 23, 2001. Familiarity with that Order is assumed. The Amended Complaint alleges the following relevant facts, which the Court accepts as true for the purposes of this motion.
Prior to March 29, 1996, Blech and the defendant entered into an oral agreement under which Blech would act as Epoch's financial advisor by, among other things, arranging equity financing for the defendant in return for a combination of cash, warrants to purchase stock in the defendant and, if Blech were to obtain $5 million of such financing, cancellation of a prior debt that Blech owed to the defendant amounting to more than $3 million (the "Ribonetics Debt"). (Am. Compl. ¶¶ 5, 10.) Blech commenced efforts to obtain such financing under the terms of this oral agreement. (Id. ¶ 6.) The defendant subsequently advised Blech that its Board of Directors wanted to modify the compensation portion of the agreement so that Blech would obtain cancellation of only one-half of the Ribonetics Debt upon successful placement of $5 million in equity financing for the defendant. Under the modified agreement, the defendant would also hold any warrants that Blech earned as collateral for satisfaction of the balance of the Ribonetics Debt. (Id. ¶ 7.) Blech was assured that he "would nevertheless have full discretion with regard to the timing and/or amount of the exercise of the warrants and the disposition of the underlying shares being held by defendant as collateral." (Id.) Blech agreed to the modifications. (Id.) The parties later confirmed their understanding of the final agreement and reduced it to writing in a letter agreement dated March 29, 1996 (the "Agreement"). (Id. ¶ 8; see also Letter Agreement dated March 29, 1996, attached as Ex. A to Am. Compl.)
The Agreement states that "[t]he parties acknowledge that the amount of the Ribonetics Debt is $3,271,175, and is now due and payable and is accruing interest. . . ." Agreement § 1(c). The Agreement allowed Blech to reduce this debt by 50% by obtaining at least $5 million in equity financing for the Company by April 30, 1996. Id. The Agreement also stated that "[i]n consideration of [Blech's] services, should [Blech] introduce the Company to an opportunity that yields immediately available funds to the Company," Blech would be entitled to (i) monetary compensation amounting to "[s]even percent (7%) of the gross proceeds received by the Company in the transaction" and (ii) "Warrants to purchase shares of the Company's Common Stock with an aggregate exercise price amount equal to ten percent (10%) of the gross proceeds received by the Company in the transaction, with a per share exercise price of $1.00" (the "Warrants"). Id. §§ 1, 1(a) 1(b). The Agreement provided that any such "Warrants [would] be held in escrow by the Company until such time as the balance of the Ribonetics Debt [was]. . .satisfied." Id. § 1(b).
The Warrants referred to in the Agreement were to be exercisable only within a limited time period. This period was to "commenc[e] one year after the closing of a transaction" leading to the issuance of the Warrants under the Agreement and to last "for a term of four years after such closing." Id. § 1. The Agreement stated that "[t]he Warrants would have customary anti-dilution provisions and demand and piggyback registration rights attached to the shares of Common Stock issuable upon exercise thereof." Id.
Blech was unable to deliver $5 million in immediate equity financing to the defendant by April 30, 1996, but he did introduce the defendant to such an opportunity, which closed in June 1996. (Am. Compl. ¶ 13.) The defendant agreed to waive the requirement that this funding be provided by April 30, 1996, and, in return for these financial services, cancelled 50% of the Ribonetics Debt. Pursuant to the terms of the Agreement, the defendant also placed 500,000 Warrants in escrow for Blech pending satisfaction of the balance of the Ribonetics Debt. (Id.) Finally, it is undisputed between the parties that Blech received a fee of $350,000 for his services. (See, e.g., id. ¶ 14.)
In 1998, Blech was adjudicated bankrupt in the United States District Court for the Southern District of New York, and all of his assets and rights devolved upon Bruce D. Scherling, as trustee of the bankruptcy estate. (Id. ¶ 15.)
In the summer of 1999, the defendant notified Blech that it was planning to effect a registration of its common stock. (Id. ¶ 18.) The defendant inquired whether Blech wanted to include the stock covered by the Warrants in this registration statement. The Company did not ask Blech first to satisfy the balance of the Ribonetics Debt. (Id. ¶ 19.) After consulting with Scherling, Blech instructed the defendant to register the stock. (Id. ¶ 23.) In August 1999, the Company effected a registration but did not include the stock covered by the Warrants in the registration. (Id. ¶ 24.) On or about March 20, 2000, the United States Bankruptcy Court for the Southern District of New York discharged the balance of the Ribonetics Debt. (Id. ¶ 28.)
The Warrants were set to expire under the terms of the Agreement in June 2000, four years after the transaction leading to the issuance of the Warrants had closed. See Agreement § 1. At or about this time, Scherling transferred and assigned all of his right, title and interest in and to the 500,000 Warrants and/or the underlying shares, together with any claims or causes of action against the defendant to the plaintiff. (Am. Compl. ¶ 31 Ex. E.) The Company subsequently registered the shares, effective on or about August 1, 2000. (Id. ¶ 33.) At no time did Blech or any of his successors-in-interest pay the balance of the Ribonetics Debt or obtain delivery of the Warrants.
On May 16, 2001, the plaintiff brought this action. In his initial Complaint, the plaintiff alleged that the defendant breached the Agreement by failing to register the shares underlying the Warrants at Blech's request in the summer of 1999. The plaintiff claimed that if the defendant had registered the shares at that time, Blech, or his successors-in-interest, could have sold the stock and satisfied the balance of the Ribonetics debt with the proceeds of the sale while still making a substantial profit.
On November 23, 2001, the Court dismissed the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Order dated November 23, 2001. The Court held that the Agreement unambiguously made satisfaction of the Ribonetics Debt a condition precedent to delivery of the Warrants, and that, even viewing the Original Complaint in a light most favorable to the plaintiff, the plaintiff had never satisfied the Ribonetics Debt before the Warrants expired. Although the Agreement referenced "customary anti-dilution provisions and demand and piggyback registration rights," which were to be "attached to the shares of Common Stock issuable upon exercise [of the Warrants]," Agreement § 1, this language merely required that any stock obtained by exercising a Warrant and paying the purchase price for the stock would be stock with these registration rights attached. The Agreement did not, on the other hand, give Blech the right to demand registration of the stock before obtaining the stock; obtain the stock without exercising the Warrants; or exercise the Warrants without satisfying the Ribonetics Debt and receiving the Warrants and paying the purchase price for the stock. See Order dated November 23, 2001, at 7-10.
At oral argument, the plaintiff had nevertheless made a number of allegations that were not contained in the original Complaint and that indicated that the parties may have entered into either an oral modification, a waiver of the condition precedent of satisfaction of the Ribonetics Debt, a novation or an accord and satisfaction of the Agreement in 1999, when the defendant asked Blech if he would like the defendant to register the stock underlying the Warrants as part of the defendant's registration of common stock in that year. The Court therefore dismissed the original Complaint without prejudice to repleading a claim for breach of contract based on one of those alternative theories. On December 13, 2001, the plaintiff filed the Amended Complaint.
III.
The plaintiff's first cause of action alleges that the defendant "breached the parties' agreement, as modified, by failing and refusing to register the shares of stock underlying Blech's warrants pursuant to his direction and thereafter to act on Blech's or Scherling's direction with respect to the disposition of the shares and the net proceeds from the sale(s) thereof." (Am. Compl. ¶ 38.) The defendant argues that this claim should be dismissed because neither Blech nor Scherling ever had a contractual right to demand registration of the stock before satisfying the Ribonetics Debt.
The plaintiff makes a number of claims that appear to renew a claim for breach of the written Agreement. However, for the reasons discussed in detail in the Court's previous Order dated November 23, 2001, the written Agreement unambiguously placed the Warrants in escrow pending satisfaction of the Ribonetics Debt, and unambiguously attached any demand or piggyback registration rights to the stock underlying the Warrants. Hence, under the clear terms of the Agreement, Blech was required to satisfy the Ribonetics Debt before he could obtain the Warrants, exercise the Warrants, and obtain any stock or any of the registration rights that were attached to this stock. To the extent that the Amended Complaint seeks to renew any direct claims for breach of the written Agreement, the plaintiff's claims have already been correctly dismissed with prejudice, and the renewed claim is therefore dismissed.
The plaintiff argues that the arrangement created by the Agreement does not meet all of the technical requirements for an "escrow" under New York law because "[a]n escrow is a written agreement that imports a legal obligation to deposit an instrument or property by the promisor. . . with a third party to be kept by the latter in the capacity of depositary or escrowee until the performance of a condition or the happening of an event, which then is to be delivered by the escrow agent to the promisee. . ." whereas in this case there was no delivery to a third party depositary because the defendant maintained possession of the Warrants all along. Nat'l Union Fire Ins. Co. v. Proskauer, Rose, Goetz Mendelsohn, 634 N.Y.S.2d 609, 614 (App Div. 1994). However, like an escrow arrangement, the purpose of the Agreement's provisions allowing for the defendant to maintain the Warrants was "to assure the carrying out of an obligation already contracted for and in furtherance of the obligation the [plaintiff] deposit[ed] money, goods, or documents to an. . . agent who agree[d] to part with it only on a specified condition." Id. The Agreement clearly made satisfaction of the Ribonetics Debt a condition precedent to delivery of the Warrants, and, by using the term "escrow" to describe the arrangement, see Letter Agreement § 1(b), the parties also expressed a clear intent not to allow for the passage of title to the plaintiff unless and until that condition precedent had been met. See, e.g., Mizuna, Ltd. v. Crossland Fed. Sav. Bank., 90 F.3d 650, 658-59 (2d Cir. 1996) (as a general principle of New York law, the placing of property in escrow does not pass title to the incidents of ownership to the beneficiary until the condition precedent for release of-the escrow has been met); Press v. Marvalan Indus., Inc., 422 F. Supp. 346, 349 (S.D.N.Y. 1976) (incidents of ownership do not pass to beneficiary of escrow until the conditions of the escrow agreement have been fulfilled).
In sum, regardless of what this precise arrangement might be called under New York law, the Agreement clearly made satisfaction of the Ribonetics Debt a condition precedent to delivery of the Warrants. The Agreement also explicitly indicated that the Warrants would be held in "escrow," thereby unambiguously reflecting the parties' intent that any incidents of ownership in the Warrants would only pass to the plaintiff once this condition precedent had been met. Where, as here, it is clear as a matter of contractual interpretation that there has been no breach of contract under New York law, a breach of contract claim is properly dismissed on a motion to dismiss. See, e.g., Compania Financiera Ecuatoriana de Desarollo, S.A. v. The Chase Manhattan Bank, No. 97 Civ. 5724, 1998 WL 74299, at *3 (S.D.N.Y. Feb. 19), aff'd, 165 F.3d 13 (2d Cir. 1998); see also K. Bell Assocs., Inc. v. Lloyd's Underwriters, 97 F.3d 632, 637 (2d Cir. 1996) (Under New York law, "the initial interpretation of a contract `is a matter of law for the court to decide.'") (quoting Readco, Inc. v. Marine Midland Bank, 81 F.3d 295, 299 (2d Cir. 1996)).
In his Amended Complaint, the plaintiff alleges that the defendant and Blech nevertheless entered into a subsequent oral modification of the written Agreement in 1999, when the defendant asked Blech if he would like to have the stock covered by the Warrants included as part of the defendant's registration of its common stock. However, "[f]undamental to the establishment of a contract modification is proof of each element requisite to the formulation of a contract, including mutual assent to its terms." Beacon Terminal Corp. v. Chemprene, Inc., 429 N.Y.S.2d 715, 717 (App.Div. 1980). In this case, the plaintiff alleges only that the defendant asked Blech if Blech wanted to have this stock included in the defendant's next registration. The plaintiff adds that the defendant did not at the same time remind Blech of his obligation to satisfy the Ribonetics Debt before he could obtain the Warrants. (Am. Compl. ¶¶ 18-19.) These allegations fall short of a claim that the defendant ever promised to register the stock, and they do not amount to a claim that the defendant agreed to modify the Agreement by waiving the requirement that the Ribonetics Debt be satisfied before the Warrants would be delivered to Blech.
These allegations also fail to plead a claim for modification because there is no allegation of any consideration for registering the stock underlying the Warrants. There is no claim that Blech ever undertook any new obligation or gave up any right as consideration for registration of the stock, as would have been required to support a binding oral modification of the Agreement. See, e.g., LaGuardia Assocs. v. Holiday Hospitality Franchising, Inc., 92 F. Supp.2d 119, 129 (E.D.N.Y. 2000) ("Plaintiffs' contention of an oral or course-of-conduct modification. . . fails as a matter of law from lack of consideration.").
The plaintiff argued at oral argument that he need not plead facts sufficient to meet the ordinary pleading standards for Rule 12(b)(6), as traditionally construed in this Circuit, because the Supreme Court overturned those standards in Sorema, 122 S.Ct. at 992. However, the Supreme Court did not question this Circuit's ordinary applications of the Rule 12(b)(6) standard, which require plaintiffs to provide defendants with fair notice of what their claims are and the grounds upon which they rest, but rather this Circuit's prior jurisprudence requiring a "heightened pleading standard in employment discrimination cases." See id. at 997; see also id. at 997-99 (plaintiff need only meet ordinary Rule 12(b)(6) standards to state a claim for discrimination under Title VII and need not plead a prima facie case of discrimination under the McDonnell-Douglas burden shifting regime, which is an evidentiary standard that applies at the summary judgment stage rather than a pleading standard that applies to motions to dismiss). The plaintiff in this case has failed to meet the ordinary Rule 12(b)(6) standard.
Finally, the plaintiff has explicitly withdrawn any claim of a novation in his opposition papers in this motion. See Pl.'s Opp. at 25. Hence, the plaintiff has failed to identify any binding agreement requiring registration of the stock arising out of an oral modification to the written Agreement.
The plaintiff argues that he had a right to demand registration of the stock arising from two oral agreements between the parties that predated the written Agreement. The first such oral agreement allegedly allowed the plaintiff to cancel the entire Ribonetics Debt by obtaining $5 million of immediate equity financing. (See Am. Compl. ¶ 5.) However, the plaintiff concedes that he agreed to a modification of the first alleged oral agreement, and that the parties' second, modified oral agreement was eventually confirmed and reduced to writing in the written Agreement dated March 29, 1996. (See Am. Compl. ¶¶ 7, 8.) As discussed above, this final Agreement did not give the plaintiff the right to demand registration of the stock before satisfying the Ribonetics Debt.
The plaintiff tries to avoid this conclusion by arguing that the written Agreement incompletely reduced the parties' oral understanding to writing, and that the defendant had orally granted the plaintiff the right to demand registration before satisfying the Ribonetics Debt. However, under New York law, "[i]t is well established that where a contract is reduced to writing it is presumed to embody the final and entire agreement of the parties." Namad v. Salomon Inc., 537 N.Y.S.2d 807, 809 (App.Div.) (internal quotation and alteration marks omitted), aff'd, 543 N.E.2d 722 (N.Y. 1989); see also Itar-Tass Russian News Agency v. Russian Kurier, Inc., No. 95 Civ. 2144, 1999 WL 58680, at *11 (S.D.N.Y. Feb. 4, 1999). A written agreement also supersedes any prior oral agreements that are addressed to the same subject matter under New York law. See Indep. Energy Corp. v. Trigen Energy Corp., 944 F. Supp. 1184, 1195-96 (S.D.N.Y. 1996).
The parol evidence rule bars the admission of any prior or contemporaneous agreements offered to contradict or modify the terms of a written agreement. Itar-Tass, 1999 WL 58680, at *10. For purposes of the parol evidence rule, a contract that appears complete on its face is an integrated agreement as a matter of law. Id. at *11. "Even where [a written] agreement is not fully integrated, parol evidence may be admitted to complete the agreement or to resolve some ambiguity therein, but it may not be admitted to vary or contradict its content." Id. at *10; Apsan v. Gemini Consulting, Inc., No. 98 Civ. 1256, 1999 WL 58679, at *3 (S.D.N.Y. Feb. 4, 1999) (collecting cases); accord Rothberg v. Bernstein, No. 87 Civ. 2053, 1990 WL 58902, at *4 (S.D.N.Y. Apr. 30, 1990).
In this case, the written Agreement contained a detailed specification of the compensation that Blech was to receive for his services, including a specification of the kind of stock that would underlie any Warrants issued for Blech's services and a requirement that any such Warrants would be held in escrow pending satisfaction of the Ribonetics Debt. The Agreement appears on its face to contain the parties' entire agreement relating to compensation for these services, and Section 4 of the Agreement explicitly states that "[t]he Company will have no obligation to pay any fee or other amounts except as specifically set forth" in the Agreement. The rights that the plaintiff is claiming are part of the same subject matter as the Agreement, and, for the reasons discussed above, the Agreement does not give Blech the right to demand registration of the stock prior to obtaining the stock. The Agreement also does not mention any prior oral agreement to grant Blech this right. While the plaintiff argues that without this right, Blech and successors-in-interest were unable to engage in a number of financial transactions that were customary in the financial industry and that would have allowed for satisfaction of the Ribonetics Debt, the parties did not provide for delivery of the Warrants prior to the satisfaction of the Ribonetics Debt. In these circumstances, the written Agreement is a fully integrated agreement, which superseded any prior alleged oral assurances, and the plaintiff may not rely upon such alleged parol evidence to modify the plain terms of the Agreement. See Itar-Russ, 1999 WL 58680, at *11. For the reasons discussed above, the terms of the Agreement are clear with respect to the plaintiff's alleged right to demand registration, and evidence of any assurances that may have preceded the written Agreement is irrelevant to the issue of contractual interpretation.
In sum, the plaintiff has failed to state a claim for breach of contract and the plaintiff's first cause of action must be dismissed.
IV.
The plaintiff's second cause of action alleges that the defendant nevertheless waived satisfaction of the Ribonetics Debt as a condition precedent to his right to demand registration of the underlying stock. Under New York law, a waiver requires the voluntary and intentional relinquishment of a known right that would have been enforceable without the waiver. Gen. Motors Acceptance Corp. v. Clifton-Fine Cent. School Dist., 647 N.E.2d 1329, 1331 (N.Y. 1995); see also Nassau Trust Co. v. Montrose Concrete Prods. Corp., 436 N.E.2d 1265, 1269-70 (N.Y. 1982). "Waiver may be established by affirmative conduct or by failure to act so as to evince an intent not to claim a purported advantage." Gen. Motors, 647 N.E.2d at 1331. The plaintiff claims, in particular, that the defendant waived the condition in question by asking Blech if Blech wanted to have the stock registered, and by taking steps to register the stock before the Warrants expired. The plaintiff seeks to revive his claim for breach of contract on this basis, claiming, in effect, that Blech had a contractual right to demand registration of the stock, which was no longer dependent on his satisfaction of the Ribonetics Debt after the alleged waiver. See generally Nassau Trust, 436 N.E.2d at 1269 (noting that a waiver, unlike an oral modification, need not be based upon consideration or an agreement).
However, the plaintiff's allegations do not plead a claim. The Agreement did not, in fact, provide for any rights to demand registration of the underlying stock, apart from the rights that were attached to the stock itself. The Agreement also never made satisfaction of the Ribonetics Debt a condition precedent to registration of the underlying stock. Rather, the Agreement made satisfaction of the Ribonetics Debt a condition precedent to delivery of the Warrants. Blech could not exercise the registration rights on the underlying stock because he had no right to obtain the Warrants until he had satisfied the Ribonetics Debt. The plaintiff makes no allegations that the defendant ever waived satisfaction of the Ribonetics Debt as a condition precedent to the delivery of the Warrants. Hence, the plaintiff has not made any allegations of waiver that would support a claim for relief.
Moreover, a waiver of a contractual condition is "not lightly presumed" under New York law: "the intent to waive must be unmistakably manifested, and is not to be inferred from a doubtful or equivocal act." Estate of Anglin v. Estate of Kelley, 705 N.Y.S.2d 769, 772 (App.Div. 2000) (internal quotation marks and citations omitted); see also United States Fid. Guar. Co. v. Treadwell Corp., 58 F. Supp.2d 77, 90 (S.D.N.Y. 1999). The plaintiff alleges that the defendant inquired as to whether Blech wanted to have the stock registered, took some steps to register the stock before the Warrants expired, and acted as if the stock would be registered. However, these allegations fall short of a claim that the defendant ever engaged in any clear or unequivocal conduct expressing an intent to relinquish any known rights under the Agreement or to grant the plaintiff a right to demand registration of the stock without having obtained and exercised the Warrants and purchased the stock.
The Amended Complaint is ambiguous as to whether the plaintiff's claim for waiver is limited to the claim that the defendant intentionally relinquished a condition precedent in the written Agreement or whether the claim includes a theory that the defendant blocked or prevented Blech from satisfying the condition precedent in bad faith and thereby waived its right to enforce the condition precedent. See, e.g., Cross Cross Prop., Ltd. v. Everett Allied Co., 886 F.2d 497, 501 (2d Cir. 1989) ("It is true that a condition precedent may be excused if the party whose performance is predicated on that condition somehow blocks its occurrence."); CSC Recovery Corp. v. Daido Steel Co., No. 94 Civ. 9214, 2000 WL 134578, at *5 (S.D.N.Y. Feb. 4, 2000). In his opposition papers, the plaintiff has clarified that he is not, in fact, pursuing the latter claim for blocking satisfaction of the Ribonetics Debt. See Pl.'s Opp. at 16-17 (arguing that Cross Cross is directed to a ground for excusing failures to meet conditions precedent that is distinct from the kind of waiver that is asserted in the second cause of action). The plaintiff also asserts a number of other alleged waivers, which either preceded the written Agreement or were directed at other conditions in the Agreement, such as the condition that the plaintiff obtain the $5 million in equity financing by April 30, 1996 rather than June 1996, when the transaction that Blech obtained for the defendant actually closed. The former allegations of waiver are not relevant to the question whether the defendant ever waived the contractual conditions in the written Agreement, and the latter are not relevant to the question whether the defendant ever waived satisfaction of the Ribonetics Debt as a condition precedent to release of the Warrants.
In sum, the plaintiff has failed to state a claim for breach of contract based on an alleged waiver of a condition precedent in the Agreement. The second cause of action must therefore be dismissed.
V.
In his third cause of action, the plaintiff claims that the defendant was equitably estopped by its conduct in 1999 from refusing to register the stock before the Warrants expired. The conduct that forms the basis for this claim is the defendant's inquiry in 1999 whether Blech wanted to have the stock registered and the defendant's subsequent steps to register the stock.
Under New York law, equitable estoppel is a doctrine:
imposed by law in the interest of fairness to prevent the enforcement of rights which would work fraud or injustice upon the person against whom enforcement is sought and who, in justifiable reliance upon the opposing party's words or conduct, has been misled into acting upon the belief that such enforcement would not be sought.
Nassau Trust, 436 N.E.2d at 1269. To establish a claim for equitable estoppel, a plaintiff must show that the defendant "(1) engaged in conduct which amounts to a false representation or concealment of material facts; (2) intended that such conduct would be acted upon by the other party; and (3) knew the real facts." Readco, Inc. v. Marine Midland Bank, 81 F.3d 295, 302 (2d Cir. 1996) (internal alteration marks omitted). In addition, "the party alleging estoppel must. . . show with respect to himself: (1) lack of knowledge of the true facts; (2) reliance upon the conduct of the party estopped; and (3) a prejudicial change in his position." Id. (internal quotation marks omitted).
The plaintiff argues that the defendant knowingly made a material misrepresentation of fact when the defendant indicated that it would register the stock underlying the Warrants in 1999. The plaintiff alleges that he was prejudiced by the defendant's failure to register the stock because the "defendant induced Blech to forebear from causing [the Ribonetics Debt] to be satisfied before the Warrants expired." (Am. Compl. ¶ 42.) These allegations fail to state a claim because there is no allegation of a false representation or concealment of material facts. There is, for example, no allegation that the defendant told Blech that the stock was registered. Furthermore, there is no actionable reliance or causation pleaded. The plaintiff concedes the Warrants were allowed to expire. Any damages resulted from the decision to allow the Warrants to expire, not from any statements as to whether the defendant intended to register the underlying stock. Hence, the plaintiff has not stated a claim for equitable estoppel and the third cause of action must be dismissed.
The Amended Complaint is ambiguous as to whether the third cause of action raises a claim for equitable estoppel, promissory estoppel, or both. In his opposition papers, the plaintiff indicates that his third cause of action is limited to a claim for equitable estoppel. In any event, the plaintiff has not pleaded facts sufficient to state a claim for promissory estoppel under New York law. Pl.'s Opp. at 18-22. To establish a claim for promissory estoppel, a plaintiff must show "(1) a clear and unambiguous promise, (2) reasonable and foreseeable reliance by the promisee, and (3) unconscionable injury to the relying party as a result of the reliance." Readco, 81 F.3d at 301. For the reasons already discussed, the plaintiff has not alleged facts sufficient to indicate that the defendant ever made any clear or unambiguous promise to register the stock. The plaintiff has also failed to allege any injuries resulting from Blech's reliance on any such alleged promise. Hence, the plaintiff has failed to state a claim for promissory estoppel as well.
VI.
In the plaintiff's fourth and fifth causes of action, the plaintiff claims that the defendant deviated from the customs and practice of the financial industry by requiring that Blech satisfy the Ribonetics Debt before he could demand registration of the stock. The plaintiff claims that this deviation constituted a breach of the written Agreement and a breach of the implied covenant of good faith and fair dealing that was an implicit part of their Agreement under New York law. See generally New York Univ. v. Continental Ins. Co., 662 N.E.2d 763, 769 (N.Y. 1995) ("[I]mplicit in every contract is a covenant of good faith and fair dealing. . . .").To the extent that the plaintiff is attempting to renew a direct claim for breach of the written Agreement, the plaintiff's claim must be dismissed for the reasons discussed above and in the Court's Order dated November 23, 2001. Extrinsic evidence of industry custom and practice is not relevant to the question of contractual interpretation where, as here, the parties have expressed their intent clearly in a written contract. Schuman v. Gallett, Dreyer Berkey, L.L.P., 689 N.Y.S.2d 628, 630 (Sup.Ct. 1999) ("Where the language of a contract is plain and unambiguous, resort to extrinsic facts is inappropriate in interpretation.") (collecting cases).
The plaintiff's claim that the defendant breached a covenant of good faith and fair dealing that was implicit in the Agreement fails for similar reasons. The covenant of good faith and fair dealing "encompasses any promises that a reasonable promisee would understand to be included" in a contract. New York Univ., 662 N.E.2d at 318. The covenant prohibits the parties from doing "anything which has the effect of destroying or injuring the right of the other party to receive the fruits of the contract." M/A-Com Sec. Corp. v. Galesi, 904 F.2d 134, 136 (2d Cir. 1990). The doctrine is used to "effectuate the intentions of the parties, or to protect their reasonable expectations," in entering into a contract. Id. (quotation marks omitted). Hence, the implied covenant does not undermine a party's "general right to act on its own interests in a way that may incidentally lessen the other party's anticipated fruits from the contract." Id. The duty of good faith and fair dealing "cannot. . . imply any covenant which is inconsistent with the terms of the contract." The City of New York v. Coastal Oil New York, Inc., No. 96 Civ. 8667, 1999 WL 493355, at *5-6 (S.D.N.Y. July 12, 1999); see also Readco, 81 F.3d at 301 (collecting cases); Pinky Originals v. Bank of India, No. 94 Civ. 3568, 1996 WL 603969, at *21 (S.D.N.Y. Oct. 21, 1996).
In this case, the plaintiff claims rights that are inconsistent with the basic agreement of the parties expressed in the written Agreement. Hence, the plaintiff's fourth and fifth causes of action must also be dismissed.
VII.
The plaintiff's sixth cause of action asserts a claim for unjust enrichment arising from the fact that the defendant obtained all the financial services Blech agreed to perform under the Agreement but did not grant him the right to register the stock and thus allegedly prevented him from obtaining all of the compensation allegedly due to him under the written Agreement. The defendant argues that this claim should be dismissed because any benefits that the defendant obtained were part of the terms bargained for in the written Agreement.
The equitable doctrine of unjust enrichment rests on the principle that a party should not be allowed to enrich himself at the expense of another. Reprosystem, B.V. v. SCM Corp., 727 F.2d 257, 263 (2d Cir. 1984). In order to establish a claim for unjust enrichment under New York law, a plaintiff must establish (1) that the defendant benefitted; (2) at the plaintiff's expense; and (3) that equity and good conscience require restitution. Mid-Island Hospital, Inc. v. Empire Blue Cross Blue Shield, 276 F.2d 123, 129-30 (2d Cir. 2002); see also Reprosystem, 727 F.2d at 263. However, under New York law, "[u]njust enrichment is a quasi-contract claim, and the existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi-contract for events arising out of the same subject matter." Chrysler Capital Corp. v. Century Power Corp., 778 F. Supp. 1260, 1272 (S.D.N.Y. 1991) (internal quotation marks omitted) (collecting cases).
In this case, the written Agreement precludes any claim for unjust enrichment arising out of benefits that the parties bargained for in the Agreement. Blech correctly argues that he fully performed the financial services that were required of him under the Agreement. However, Blech was also fully compensated for all of these services. In particular, Blech obtained a fee of $350,000, cancellation of 50% of the Ribonetics Debt, and the right to obtain 500,000 Warrants to purchase stock in the defendant by satisfying the balance of the Ribonetics Debt any time between in or about June 1997 and in or about June 2000. The plaintiff alleges that Blech or his successors-in-interest could have obtained such financing at any time during this period. Pl.'s Opp. at 19-20. Nevertheless, neither Blech nor any of his successors-in-interest ever satisfied the Ribonetics Debt by that time. One of the rights that the defendant bargained for and obtained in the Agreement was that, in this eventuality, the Warrants would expire and the defendant would have no obligation to sell the underlying stock to Blech at $1 per share. Hence, the defendant acted within the rights that it had bargained for under the Agreement, and Blech could not have justly anticipated that he would be able to demand registration of the stock or sell the stock without first satisfying the Ribonetics Debt. Indeed, it is Blech's successor-in-interest who seeks to obtain benefits that were not bargained for in the written Agreement. Hence, there is no merit to the plaintiff's contention that the defendant was unjustly enriched in this case.
In sum, the plaintiff's sixth cause of action must be dismissed.
VIII.
The seventh cause of action asserts that the defendant breached a novation of the written Agreement, which was formed in 1999. In his opposition papers, the plaintiff voluntarily withdrew this claim, and the claim is therefore dismissed.
CONCLUSION
For all of the foregoing reasons, the defendant's motion to dismiss the Amended Complaint is granted in its entirety. The Clerk of the Court is directed to enter judgment for the defendant and to close this case.