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Sel-Leb Marketing, Inc. v. Dial Corp.

United States District Court, S.D. New York
Aug 27, 2002
01 Civ. 9250 (SHS) (S.D.N.Y. Aug. 27, 2002)

Summary

holding that buyer could not enforce right of first refusal against seller because buyer had not provided consideration in exchange for this right

Summary of this case from Trianco, LLC v. International Business Machines Corp.

Opinion

01 Civ. 9250 (SHS)

August 27, 2002


OPINION ORDER


Sel-Leb Marketing brings this action alleging a breach of contract by Dial Corp. when Dial failed to give Sel-Leb the right of first refusal for the purchase of Dial's SARAH MICHAELS brand discontinued inventory and when it failed to deliver certain merchandise to Sel-Leb. Dial moves to dismiss the third and fifth claims for relief in the amended complaint pursuant to Fed.R.Civ.P. 12(b)(6) on the grounds that (1) Sel-Leb waived its right to sue for breach of contract, (2) the alleged right of first refusal fails for lack of consideration and vagueness, and (3) the alleged right of first refusal violates the statute of frauds. That motion is granted.

BACKGROUND

A. Facts

Because this is a motion to dismiss pursuant to Fed.R.Civ.P. 12 (b)(6), the court accepts the allegations in the amended complaint as true.

In June 2001, Sel-Leb issued two purchase orders for the purchase of goods from Dial totaling approximately $340,000. (Am. Compl. ¶¶ 6-8.) It was agreed that as the merchandise became available it would be shipped in several truckloads to Sel-Leb upon payment by wire transfer. (Am. Compl. ¶¶ 9-10.) In August 2001, Dial notified Sel-Leb that part of the merchandise was available and Sel-Leb, pursuant to Dial's instructions, wire transferred $26,148 and was sent the relevant merchandise. (Am. Compl. ¶¶ 12-14.) The following month, Dial notified Sel-Leb that more merchandise was available and instructed Sel-Leb to make two wire transfers for a total sum of $47,299.21. (Am. Compl. ¶¶ 15-19.) Sel-Leb made the transfers but Dial never shipped the merchandise, despite the fact that Sel-Leb had contractually obligated itself to supply the merchandise to third parties. (Am. Compl. ¶¶ 16-19, 27.)

As noted, infra note 6, Dial has returned the $47,299.21 to Sel-Leb.

In July 2001, Dial also orally granted Sel-Leb a right of first refusal to purchase the balance of Dial's discontinued SARAH MICHAELS brand inventory in exchange for "good and valuable consideration." (Am. Compl. ¶ 21.) This alleged oral agreement is claimed to have been memorialized in a series of e-mails. (Am. Compl. ¶ 21.) In late August 2001, despite the oral agreement set forth above and without offering it first to Sel-Leb, Dial sold its entire SARAH MICHAELS brand discontinued inventory to FASMA, LLC. (Am. Compl. ¶ 24.)

Sel-Leb pleads five claims for relief, which it denominates causes of action, in its amended complaint. In its first claim, Sel-Leb alleges a breach of contract by Dial because Dial failed to ship the merchandise that Sel-Leb had paid $47,299.21 for and seeks damages for that amount. The second claim alleges that, due to Dial's failure to ship merchandise as contracted for by the purchase orders, Sel-Leb suffered at least $1 million in lost profits. The third claim for relief alleges that because Dial sold its SARAH MICHAELS brand discontinued inventory to FASMA without first offering it to Sel-Leb despite Sel-Leb's right of first refusal, it has suffered at least $6 million in damages. Sel-Leb's fourth claim, against FASMA, alleges that FASMA interfered with the contract Sel-Leb and Dial allegedly had entered into and seeks $6 million in damages. The fifth claim — against both FASMA and Dial — alleges harm to Sel-Leb's business reputation due to the failure of Dial to deliver the merchandise pursuant to the purchase orders and the failure of Dial to offer the SARAH MICHAELS brand discontinued inventory to Sel-Leb pursuant to the right of first refusal. Sel-Leb seeks $5 million in damages on that claim for relief.

Sel-Leb has dismissed the action without prejudice against FASMA pursuant to Fed.R.Civ.P. 41.

B. This Motion

Dial seeks to dismiss the third and fifth claims in the amended complaint on three grounds: (1) Sel-Leb waived its right to sue Dial in a written letter agreement dated August 10, 2001 entitled "Confidential Disclosure Agreement;" (2) the right of first refusal is unenforceable because there was no consideration given for the right and because it is impermissibly vague; and (3) the right of first refusal violates the statute of frauds. Sel-Leb contends that it did not waive its right to sue Dial because the letter agreement containing the alleged waiver of the right to sue does not encompass the transaction at issue and in any event, it cannot be considered by the Court because it was neither annexed to nor referred to in the amended complaint. Moreover, Sel-Leb contends that there was adequate consideration for the contract; i.e., Dial was being relieved of the burden of carrying discontinued inventory. Finally, Sel-Leb contends that the statute of frauds is satisfied because the contract was memorialized in a series of e-mails.

DISCUSSION

In reviewing a motion to dismiss a complaint for failure to state a claim for relief, a district court's role is to assess the legal feasibility of the complaint; it is not to weigh the evidence that might be offered at trial. See Festa v. Local 3, Int'l Bhd. of Elec. Workers, 905 F.2d 35, 37 (2d Cir. 1990); Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980); Castellano v. City of New York, 946 F. Supp. 249, 252 (S.D.N.Y. 1996). A motion to dismiss should not be granted unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim which would entitle him to relief." Staron v. McDonald's Corp., 51 F.3d 353, 355 (2d Cir. 1995) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)); Walker v. City of New York, 974 F.2d 293, 298 (2d Cir. 1992) (quoting Ricciuti v. New York City Transit Auth., 941 F.2d 119, 123 (2d Cir. 1991)). All factual allegations in the complaint are accepted as true and the complaint is viewed in the light most favorable to plaintiff. Jackson Nat'l Life Ins. Co. v. Merrill Lynch Co., 32 F.3d 697, 699 (2d Cir. 1994). Nonetheless, "'[a] complaint which consists of conclusory allegations unsupported by factual assertions fails even the liberal standard of Rule 12(b)(6).'" De Jesus v. Sears Roebuck Co., Inc., 87 F.3d 65, 70 (2d Cir. 1996) (quoting Palda v. General Dynamics Corp., 47 F.3d 872, 875 (7th Cir. 1995)). See also Kern v. City of Rochester, 93 F.3d 38, 44 (2d Cir. 1996).

A. Sel-Leb's Waiver of the Right to Sue Dial

Dial contends that Sel-Leb waived its right to sue Dial pursuant to the August 10, 2001 letter agreement entitled "Confidential Disclosure Agreement." Sel-Leb counters that the August 10, 2001 letter agreement was neither attached to nor referenced in the amended complaint and therefore, the Court cannot properly consider it on a Rule 12(b)(6) motion. Sel-Leb cannot prevail on that argument.

It is well settled that if documents are attached to the complaint or are an integral part of the complaint, and the plaintiff had possession or knowledge of those documents, the court may properly consider those documents on a motion to dismiss pursuant to Rule 12(b)(6). Cortec Industries, Inc. v. Sum Holding, L.P., 949 F.2d 42, 48 (2d Cir. 1991). Moreover, where the court finds that the plaintiff relied on the terms and effect of documents neither annexed to nor incorporated into the complaint, the court may also consider those documents. Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002). Further, a plaintiff's careful avoidance of certain documents in its pleading does not make those documents any less integral to the complaint. Yak v. Bank Brussells Lambert, BBL (USA), 252 F.3d 127, 131 (2d Cir. 2001).

In this case, Sel-Leb recites all the agreements made between the parties regarding the purchase of the SARAH MICHAELS brand discontinued inventory from June 2001 to September 2001, yet studiously avoids mentioning the August 10 letter agreement documenting Sel-Leb's interest in purchasing Dial's SARAH MICHAELS brand inventory. There is no rational argument to be made that the letter agreement is not integral to a complaint where Sel-Leb is suing Dial because it allegedly failed to give Sel-Leb the first opportunity to purchase Dial's SARAH MICHAELS brand inventory. Sel-Leb's attempt to distinguish the transactions by contending that the right of first refusal pertained only to the discontinued inventory whereas the August 10 agreement pertained to all of the SARAH MICHAELS inventory is unavailing.

The August 10, 2001 "Confidential Disclosure Agreement" contemplates the sale of "Dial's Specialty Personal Care business marketed under the SARAH MICHAELS and FREEMAN trademarks" to Sel-Leb. Paragraph six provides as follows:

[Sel-Leb] acknowledges and agrees that no contract or agreement providing for the sale and purchase of [Dial's] Business will be deemed to exist between [Sel-Leb] and Dial unless and until a Sale Agreement has been executed and delivered by each party thereto, and [Sel-Leb] hereby waives, in advance, any claims (including, without limitation, breach of contract) in connection with the transaction contemplated by this Letter Agreement. . . . [Sel-Leb] . . . agrees that (i) Dial . . . will be free to conduct the process, if any, for the sale of the Business . . . (including, without limitation, negotiating with any prospective buyer(s) and entering into a Sale Agreement without prior notice to [Sel-Leb].

(Littlefield Decl. Ex. A.)

"Waiver is an intentional relinquishment of a known right" and "requires a clear manifestation of intent." Gilbert Frank Corp. v. Federal Ins. Co., 70 N.Y.2d 966, 968, 520 N.E.2d 512, 514, 525 N.Y.S.2d 793, 795 (1988); see also Ess Vee Acoustical Lathing Contractors, Inc. v. Prato Verde, Inc., 268 A.D.2d 332, 332, 702 N.Y.S.2d 38 (1st Dep't 2000). In the absence of fraud or mutual mistake, the effect of a general release "cannot be limited or curtailed." Cahill v. Regan, 5 N.Y.2d 292, 299, 157 N.E.2d 505, 509-10, 184 N.Y.S.2d 348, 354 (1959).

The parties agree that New York law applies here (Pl.'s Mem. Opp. Dismiss at 18-19 n. 5; Def.'s Mem. Supp. Dismiss at 3 n. 2) and thus, this Court shall apply that law. See American Fuel Corp. v. Utah Energy Dev. Co., Inc., 122 F.3d 130, 134 (2d Cir. 1997) (An agreement by the parties to the application of the law of the forum ends the court's choice of law inquiry.). Nonetheless, in dueling footnotes, the parties contend that to the extent that New York law does not apply, either the law of New Jersey (according to Sel-Leb) or Arizona (according to Dial) applies. Neither party, however, points to any conflict and the Court has not found a conflict that is more than trivial. See infra note 4.

Here, Sel-Leb executed the August 10 letter agreement which by its terms, indicated that Sel-Leb was relinquishing its right to sue Dial for "any claims . . . in connection with the transaction contemplated by this Letter Agreement. . . ." The transaction contemplated by the letter agreement was plainly the sale of the SARAH MICHAELS brand business which — Sel-Leb acknowledges — included "not just its inventory, but all or substantially all of its assets, intellectual property etc." (Pl.'s Mem. Opp'n Dismiss at 6.) Moreover, it is that sale that Sel-Leb alleges constitutes a breach of contract. Thus, Sel-Leb's argument that the sale of the discontinued inventory and the alleged right of first refusal were not part of the "transaction contemplated" is contrary to the terms of the letter agreement and Sel-Leb's own acknowledgment that the "contemplated" transaction included the sale of SARAH MICHAELS brand's inventory.

Moreover, Sel-Leb's contention that the fact that there was partial performance by Dial of the purchase orders both prior to and subsequent to the execution of the letter agreement is similarly unavailing because the purchase orders were not for all of the SARAH MICHAELS inventory or for all of its discontinued inventory. Rather, the purchase orders were for specific inventory. In addition, the August 10 letter agreement did not prohibit or limit the parties' right to conduct business in accordance with the purchase orders.

Consequently, Sel-Leb's third and fifth claims for relief must be dismissed to the extent that Sel-Leb seeks damages related to the alleged right of first refusal because it waived its right to sue Dial.

B. The Lack of Consideration Vagueness of the "Right of First Refusal"

Even if the Court did not consider the August 10 letter agreement, Sel-Leb's third and fifth claims for relief would still require dismissal because it failed to plead the elements of a contract in its amended complaint in any way other than conclusory allegations which fail even the liberal pleading standards of Fed.R.Civ.P. 8(a). De Jesus, 87 F.3d at 70.

Pursuant to New York law, "there must be an offer, acceptance, and consideration, as well as a showing of 'a meeting of the minds, demonstrating the parties' mutual assent and mutual intent to be bound.'" Brodie v. New York City Transit Auth., No. 96 Civ. 6813, 2000 WL 557313, at * 3 (S.D.N.Y. May 5, 2000) (quoting Renner v. Chase Manhattan Bank, No. 98 Civ. 926, 1999 WL 47239, at *15 (S.D.N.Y. Feb. 3, 1999)). Sel-Leb's amended complaint fails to plead consideration. Sel-Leb conclusorily states that the right of first refusal was granted in exchange "for good and valuable consideration." (Am. Compl. ¶ 21.) Consideration, in either of its forms — promise or performance — "can be either a bargained for gain or advantage to the promisee or a bargained for legal detriment to the promisor." Roth v. Isomed, Inc., 746 F. Supp. 316, 319 (S.D.N.Y. 1990).

There is nothing in the amended complaint to suggest even mutual consideration. N.F.L. Ins. Ltd. v. B B Holdings, Inc., No. 91 civ. 8580, 1993 WL 78090, at * 7 (S.D.N.Y. Mar. 18, 1993). Sel-Leb's argument that the consideration consisted of its willingness to relieve Dial of its burden of the SARAH MICHAELS brand discontinued inventory is Gilbertian in light of the fact that Sel-Leb seeks at least $6 million in lost profits for breach of its ability to purchase that inventory. (Am. Compl. ¶ 36.) In the absence of consideration, there is no enforceable contract and therefore, no breach. N.F.L. Ins. Ltd., 1993 WL 78090, at *7.

In addition, the terms of the alleged right of first refusal are so vague that there is no evidence that there was a "meeting of the minds . . . demonstrating mutual assent." Brodie, 2000 WL 557313, at * 3 (quoting Renner, 1999 WL 47239, at *15). A valid contract must be "definite and explicit" so that the intention of the parties "may be ascertained to a reasonable degree of certainty." Kunica v. St. Jean Financial, Inc., No. 97 Civ. 3804, 1998 U.S. Dist. LEXIS 11867, at * 14 (S.D.N.Y. Aug. 3, 1998).

Generally, the terms of a right of first refusal include a condition precedent — the receipt by the owner of an offer from a third party and the owner's decision to accept that offer. 3 Corbin on Contracts § 11.3, at 470 (rev. ed. 1996). This occurrence then triggers the right of first refusal and compels the right of first refusal holder to decide whether it desires to enter into a contract of sale with the owner on the same terms the owner is willing to accept from the third party. Id. It is this sequence of events that causes the right of first refusal to ripen into an option contract. Id. These conditions are noticeably absent here. Moreover, even if the right of first refusal was not typical in the sense that it required a condition precedent, neither the amended complaint nor the e-mails annexed to it describe the terms of the right of first refusal so that the intention of the parties can be determined.

Paragraph twenty-one of the amended complaint states,

That on or about July 2001, DIAL and SEL-LEB entered into an agreement whereby DIAL agreed to grant SEL-LEB a right of first refusal to purchase the balance of DIAL'S "Sarah Michaels" brand discontinued inventory in exchange for good and valuable consideration. This agreement was memorialized in e-mail correspondence sent by SEL-LEB to DIAL on July 17, 2001, in e-mail correspondence sent by DIAL to SEL-LEB dated September 7, 2001, and an internal e-mail sent between two (2) DIAL employees dated September 19, 2001.

The e-mail dated July 17, 2001 states that "[a]s additional merchandise becomes available, it was agreed Sel-Leb would be offered the product first." The e-mail does not refer to the SARAH MICHAELS brand discontinued merchandise but rather, refers to "gift baskets," "bath pearls," and "finished goods." It also states that the "agreed purchase price is 16% on finished goods and 8% on component parts." The September 7, 2001 e-mail from Dial states, in its entirety, that "Gordon Brothers will have access to SPC obsolete merchandise; however, I consider our arrangement as sold/consummated prior to the sale of the brand. We will continue to ship until directed otherwise. I suggest moving forward with the transfer." This e-mail was responding to Sel-Leb's e-mail earlier that day that stated that Dial should be in contact "as soon as possible, so we can conclude our purchase agreement." The last e-mail between two Dial employees states that despite the agreement with Sel-Leb "predating the sale of the brands, the new owners purchased the inventory and feel that they have a right to sell as they see fit."

Clearly, neither the amended complaint nor the e-mails define the material terms of the right of first refusal. The price paid by Sel-Leb for the right of first refusal — the consideration — is unknown, the duration of the right of first refusal is unclear, the typical condition precedent that triggers the right of first refusal is absent, and the products the right of first refusal applies to are neither quantified nor defined. Moreover, Dial's obligations are completely unspecified. Because the allegations by Sel-Leb and the e-mails are insufficient to establish the existence of an enforceable oral contract, Sel-Leb's third and fifth claims for relief must be dismissed to the extent that Sel-Leb seeks damages related to the alleged right of first refusal.

"[I]t is the usual practice upon granting a motion to dismiss to allow leave to replead." Cortec Indus., 949 F.2d at 48. Leave to replead lies within the sound discretion of the court, id., and "shall be freely given when justice so requires," Fed.R.Civ.P. 15(a). However, in this case, it is clear that any amendment of the complaint would be futile because of the statute of frauds infirmity as discussed infra. The Court therefore denies leave to replead.

C. The Statute of Frauds

The statutory purpose of the statute of frauds is to prevent fraud. Norminjil Sportwear Corp. v. T G Y Stores, Inc., 644 F. Supp. 1, 3 (S.D.N.Y. 1985). If an asserted contract falls within its ambit, the statute is a complete bar. Id. The writing need not mirror the alleged oral contract to satisfy the statute; however, it must provide a sufficient basis to believe that the oral evidence is premised upon a real transaction. See Precise-Marketing Corp. v. Simpson Paper Co., No. 95 Civ. 5629, 1999 WL 259518, at *5 (S.D.N.Y. Apr. 30, 1999).

The parties disagree as to what section of the Uniform Commercial Code applies to this action, although both parties apply the New York statute of frauds. Dial contends that the general statute of frauds — section 1-206 — for "Personal Property Not Otherwise Covered" is the applicable section. Sel-Leb contends that the applicable provision is section 2-201, which applies to the sale of goods for the price of $500 or more. Sel-Leb maintains that the right of first refusal is a contract for the sale of goods while Dial contends that it is a contract for the sale of an intangible. The Court agrees that the right of first refusal is a contract for the sale of an intangible and therefore section 1-206 of the New York Uniform Commercial Code is applicable.

Although this motion is being decided in accordance with New York law, it is worth noting that while N.Y. U.C.C. § 1-206 can also be found in its entirety at Ariz. Rev. Stat. Ann. § 47-1206, Arizona also has a general statute of frauds that applies here. Section 44-101 provides that there must be "some memorandum . . . in writing signed by the party to be charged, or by some person by him thereunto lawfully authorized." Because the Court has determined that the New York statute of frauds is not satisfied in view of the fact that there was no writing signed by Dial — the party to be charged — and the Arizona statute has that same requirement, other statutory differences are insignificant and in no way alter the outcome here.

First, Sel-Leb is misguided by its misunderstanding that a right of first refusal is an option contract. As noted earlier, a right of first refusal does not ripen into an option contract until the right of first refusal is triggered. Thus, the right of first refusal is not, in and of itself, an option contract to purchase goods. While section 2-201 can apply to a contract for the sale of goods at a future time, whether section 2-201 would apply, as Sel-Leb contends, to an option contract for the sale of goods is a question not determined by this Court.

Second, section 2-201's annotation expressly states that the section is inapplicable to the sale of "choses in action." The official comment to section 1-206 states that it applies to the sale of "choses in action" and its purpose is to serve as a "gap filler" for the void left by section 2-201. See Cohn, Ivers Co., Inc. v. Gross, 56 Misc.2d 491, 495, 289 N.Y.S.2d 301, 305 (N.Y.App. Term 1968). A chose in action is "a personal right not reduced into possession, but recoverable by a suit at law." Black's Law Dictionary 241 (6th ed. 1979). It has been defined as the "sale of intangible property." Nudelman v. Insulite Co., 252 A.D. 642, 643-44, 300 N.Y.S. 698, 700-01 (1st Dep't 1937).

Sel-Leb argues that the right of first refusal is not a "general intangible" pursuant to the New York Uniform Commercial Code but rather, is a contract for the sale of goods. The term "goods" is defined in section 9-102(a)(44) as "all things that are movable when the security interest attaches . . . [and excludes] accounts, chattel paper, . . . general intangibles." The official comment to section 9-102 defines "general intangibles" as "the residual category of personal property, including things in action, that is not included in the other defined types of collateral. Examples are various categories of intellectual property and the right to payment of a loan of funds that is not evidenced by chattel paper or an instrument." The section defines some eighty terms. It does not define a right of first refusal. Nor does it state that the examples provided are either exhaustive or exclusive.

The sections referred to are the New York Uniform Commercial Code provisions effective as of July 1, 2001. These provisions were in effect at the time it is alleged the right of first refusal was agreed to.

The fact that (1) a right of first refusal is not defined in section 9-102, (2) the official comment of section 9-102 provides that anything not defined is a "general intangible," (3) section 1-206 serves as a gap filler, (4) a chose in action is the sale of an intangible and is within the ambit of section 1-206, (5) a right of first refusal is not a movable good, and (6) a right of first refusal is not a contract for a sale of goods but rather, a contract that may lead to a contract for the sale of goods, all lead to the conclusion that a right of first refusal is an intangible that comes within section 1-206.

Section 1-206(1) of the New York Uniform Commercial Code provides that

[A] contract for the sale of personal property is not enforceable by way of action or defense beyond five thousand dollars in an amount or value of remedy unless there is some writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter, and is signed by the party against whom enforcement is sought or by his authorized agent.

Thus unpacked, there are five elements required for a contract to be enforceable pursuant to section 1-206(1): (1) a writing; (2) indicating a contract of sale between the parties; (3) at a specified or defined price; (4) the subject matter must be reasonably defined; and (5) it must be signed by the party to be charged. Here, at minimum four of the five elements have not been met.

There is no writing because it is alleged to be an oral agreement. That in and of itself does not defeat the statute of frauds because New York law permits "a combination of signed and unsigned writings, 'provided that they clearly refer to the same subject matter or transaction.'" Horn Hardart Co. v. Pillsbury Co., 888 F.2d 8, 10-11 (2d Cir. 1989) (quoting Crabtree v. Elizabeth Arden Sales Corp., 305 N.Y. 48, 55, N.E.2d 551, 554 (1953)). This is, however, limited by two conditions: (1) "the signed writing must itself establish 'a contractual relationship between the parties'" and (2) "the unsigned writing must 'on its face refer to the same transaction as that set forth in the one that was signed.'" Id. at 11 (quoting Crabtree, 305 N.Y. at 56, 110 N.E.2d at 554). This must be decided by the Court as a matter of law absent parol evidence. Id.

The e-mails do not survive this burden. At the outset, the July 17 e-mail is the only e-mail that, on its face, could be said to refer to the alleged right of first refusal; however, it is not signed by Dial. The other two e-mails do not refer to the alleged right of first refusal; rather, they appear to refer to the outstanding purchase orders. In fact, the subject line of the September 7 e-mail refers to "Sarah Michaels Delivery" and as it is not alleged that the right of first refusal ever ripened into an option contract or a contract of sale with a set delivery, one can only conclude that the delivery reference was connected to the outstanding purchase orders. Moreover, the September 20 e-mail requests information on the status "of this order." Again, a reference to the purchase orders.

In addition, as previously set forth, the e-mails do not specify the merchandise to be purchased and do not establish a price for all the types of goods referenced. A price is only established for "finished goods" and "component parts" and even that is not definite because there is undefined merchandise that may fall "out of the . . . price range." Finally, and perhaps most importantly, the writing is not signed by Dial — the party to be charged. The only e-mail that can be said to speak to the alleged right of first refusal is signed by Sel-Leb — not Dial.

For all of these reasons, the alleged oral contract is unenforceable because it is violative of the statute of frauds. Moreover, while section 1-206 provides that a contract coming within the ambit of this section is only unenforceable for amounts greater than $5,000, because the Court has determined that there was a lack of consideration and that the terms suffer from vagueness, the alleged oral contract is therefore unenforceable in its entirety and Sel-Leb's third claim must be dismissed. Sel-Leb's fifth claim must also be dismissed to the extent that it seeks damages related to the alleged right of first refusal.

Sel-Leb's first claim is dismissed as moot because Dial returned $47,299.21 to Sel-Leb as demanded. (Def.'s Mem. Supp. Dismiss at 1 n. 1; Pl.'s Mem. Opp'n Dismiss at 9 n. 4.) The fourth and fifth claims for relief as against FASMA have, as previously noted, been dismissed. Therefore, the only remaining claims for relief — second and fifth — consist of Sel-Leb's allegations of lost profits and loss of business reputation only as those allegations relate to the purchase orders.

CONCLUSION

Because (1) Sel-Leb waived its right to sue Dial in regard to the alleged right of first refusal, (2) the alleged right of first refusal is unenforceable due to a lack of consideration and vagueness of terms, and (3) the alleged right of first refusal violates the statute of frauds, Dial's motion pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss Sel-Leb's third and fifth claims is granted to the extent that Sel-Leb seeks damages related to the alleged right of first refusal.


Summaries of

Sel-Leb Marketing, Inc. v. Dial Corp.

United States District Court, S.D. New York
Aug 27, 2002
01 Civ. 9250 (SHS) (S.D.N.Y. Aug. 27, 2002)

holding that buyer could not enforce right of first refusal against seller because buyer had not provided consideration in exchange for this right

Summary of this case from Trianco, LLC v. International Business Machines Corp.

noting the well settled rule that documents that are an integral part of the complaint and of which a plaintiff had knowledge my be considered on a motion to dismiss pursuant to Rule 12(b)

Summary of this case from DIARIO EL PAIS, S.L. v. NIELSEN COMPANY, (US), INC.
Case details for

Sel-Leb Marketing, Inc. v. Dial Corp.

Case Details

Full title:SEL-LEB MARKETING, INC. Plaintiff, v. DIAL CORP. and FASMA, LLC, Defendants

Court:United States District Court, S.D. New York

Date published: Aug 27, 2002

Citations

01 Civ. 9250 (SHS) (S.D.N.Y. Aug. 27, 2002)

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