Maricultura Del Norte v. World Business Capital, Inc.

Citations: 159 F. Supp. 3d 368; 2015 U.S. Dist. LEXIS 161048; 2015 WL 10013010Docket: No. 14 Civ. 10143 (CM)

Court: District Court, S.D. New York; November 23, 2015; Federal District Court

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Plaintiffs Maricultura Del Norte, S. de R.L. de C.V. (Marnor) and Servax Bleu, S. de R.L. de C.V. (Servax) are partners in a joint venture focused on Bluefin Tuna farming off Baja California. Marnor borrowed funds from Defendant World Business Capital, Inc. (WBC) in 2005, defaulting on the loan secured by its fishing vessels by 2010. Despite attempts to repay, WBC did not disclose the payoff amount, hindering Marnor's ability to cure the default and regain its vessels. Subsequently, WBC assigned the loan to Defendant Umami Sustainable Seafood, Inc. (Umami), Marnor's competitor, which also withheld the total payoff amount. Umami acquired WBC's rights after learning of Marnor's default through Defendant Amerra Capital Management, LLC (Amerra) and its managing director, Craig Tashjian. Amerra allegedly breached a confidentiality promise regarding this information, allowing Umami to eliminate competition and improve profitability. Plaintiffs filed claims for breach of contract, fraud, and violations of the Sherman Act against all defendants, with specific allegations against the Amerra Defendants for breach of contract, tortious interference, fraud, and antitrust violations. The Amerra Defendants' motion to dismiss these claims was partially granted and partially denied. The facts are primarily derived from the plaintiffs' complaint and accompanying exhibits, establishing the parties involved and the context of Marnor's loan and subsequent defaults.

Marnor had the option to cure its default on a loan by making full payment. In 2012, Marnor negotiated a joint venture with Altex and its affiliate, Servax, aiming to utilize Servax's $4 million cash infusion to pay off Marnor's WBC loan. The joint venture was contingent on Marnor removing liens from its assets, after which Servax would acquire those assets. Marnor claims it was unable to cure its default because WBC did not disclose the payoff amount, though the complaint does not clarify why Marnor couldn't calculate this amount.

Defendant Tashjian, while at Amerra, learned about the joint venture and suggested Amerra finance it. During a September 2012 meeting, Servax shared confidential information with Amerra, including Marnor's precarious financial situation. Despite a promise of confidentiality from Amerra, it allegedly disclosed information about the joint venture and Marnor's default to Umami, which had a prior credit relationship with Amerra. Umami, having exhausted its credit line, received an extension from Amerra to acquire Marnor's Credit Agreement and Mortgages from WBC, allowing it to dominate the Bluefin Tuna market by seizing Marnor’s assets.

WBC began foreclosure on Marnor’s vessels in August 2012, and by February 2013, it assigned its rights under the Credit Agreement and Mortgages to Umami, enabling Umami to control Marnor’s seized vessels. As a result, Marnor's business significantly declined due to the loss of its fleet, forcing it to rely on contracted vessels and ceasing meaningful competition in the U.S. market. Plaintiffs allege a conspiracy between Amerra and Umami to exclude them from the market by exploiting the confidential information.

In the context of a motion to dismiss under Rule 12(b)(6), the court is required to interpret claims liberally, accept factual allegations as true, and draw reasonable inferences in favor of the plaintiff.

To survive a motion to dismiss, a complaint must include sufficient factual matter to establish a claim for relief that is plausible on its face, as outlined in Ashcroft v. Iqbal and Bell Atlantic Corp. v. Twombly. A claim is deemed plausible when it allows the court to draw reasonable inferences of the defendant's liability based on the factual content provided. While detailed factual allegations are not mandatory, plaintiffs must provide more than mere labels or conclusory statements; their claims must move from conceivable to plausible. 

In this case, the court partially granted and partially denied the Amerra Defendants’ motion to dismiss. After withdrawing a conversion claim, the plaintiffs retained four claims: breach of contract, fraud, tortious interference, and violations of the Sherman Act. The Sherman Act claim is governed by federal law, while the breach of contract and fraud claims are governed by New York law due to the parties’ agreement that the underlying conduct occurred in New York. The plaintiffs and defendants dispute whether New York or Mexican law applies to the tortious interference claim, but the plaintiffs failed to state a valid claim under either jurisdiction.

Regarding the breach of contract claim, the plaintiffs assert that they disclosed confidential information to the Amerra Defendants based on a promise from Tashjian not to disclose it. Tashjian allegedly breached this promise by informing Umami about Marnor's financial issues. Under New York law, the elements of a breach of contract claim include the formation of a contract, plaintiff's performance, defendant's non-performance, and resulting damages. The plaintiffs referenced a Confidentiality Agreement dated April 20, 2012, which they characterized as valid and enforceable, although they did not attach it to their complaint. The Amerra Defendants included this agreement in their motion to dismiss, which the court permitted for consideration. The agreement did not bind Amerra to Marnor or Servax but required Amerra to keep information received from VFT Global confidential. The complaint alleges that Amerra learned of the Marnor/Servax joint venture during financing discussions with VFT Global and Altex and subsequently initiated financing discussions with Servax representatives.

Plaintiffs argue that the document in question is not the contract they rely upon, as their breach of contract claim stems from oral representations made by the Amerra Defendants. These representations either modified the Confidentiality Agreement to include Altex’s affiliate, Servax, or established a new agreement with terms identical to those of the Confidentiality Agreement. Although Plaintiffs submitted declarations to support their claims of oral promises, the court will not consider these declarations as they do not supplement the original pleadings. Nonetheless, the complaint contains sufficient factual allegations to withstand a motion to dismiss. Plaintiffs assert that Servax relied on Amerra's assurances of confidentiality when disclosing sensitive corporate information during financing deliberations. New York law permits oral contracts and modifications of written contracts without a no-oral-modification clause, which the Confidentiality Agreement lacks. The court finds that the allegations suggest an agreement between Servax and Amerra regarding confidentiality. Although Defendants can present evidence against the existence of any oral agreement, dismissal at this stage is not justified. The motion to dismiss the breach of contract claim is denied. Additionally, Plaintiffs' fraud claim, based on Amerra’s promise of confidentiality, is challenged by Defendants as duplicative of the breach of contract claim and lacking the required specificity for fraud claims under Federal Rule of Civil Procedure 9(b).

Defendants assert that the fraud claim is duplicative of the breach of contract claim, making compliance with Rule 9(b) irrelevant. A plaintiff cannot pursue a fraud claim based on the same facts as a breach of contract claim unless they meet specific criteria: (i) show a legal duty separate from the contract, (ii) demonstrate a fraudulent misrepresentation that is collateral to the contract, or (iii) claim special damages due to the misrepresentation that are not recoverable as contract damages. Plaintiffs argue for the ability to plead fraud in the alternative, but New York law does not permit overlapping fraud and breach of contract claims, regardless of the enforceability of the contract. To maintain a fraud claim, plaintiffs must adequately allege one of the three specified criteria. 

Plaintiffs contend their fraud claim meets exceptions (ii) and (iii), asserting a misrepresentation collateral to the contract and special damages. They claim the fraud stems from a misrepresentation by Tashjian regarding his intention to perform contractual obligations. However, previous case law indicates that claims based on false statements of intent to perform are insufficient for fraud claims under New York law. Courts have consistently dismissed fraud claims rooted in allegations of a lack of intent to fulfill contractual obligations. In this context, the alleged misrepresentation does not meet the required standard as it overlaps with the contractual promises Tashjian is accused of breaching. Thus, the assertion that Tashjian had no intention of complying merely rephrases a breach of contract dispute rather than establishing a separate fraud claim.

Plaintiffs’ fraud claim fails as it does not meet the 'extraneous or collateral' exception, which allows for special damages stemming from misrepresentation. To assert both fraud and contract claims based on similar facts, plaintiffs must demonstrate that their damages are a distinct consequence of the fraud, separable from those arising from the alleged breach of contract. Plaintiffs claimed 'special damages' due to the loss of tools to a competitor but did not adequately explain how these damages are a special consequence of the fraud, as they appear linked to the breach of contract. Consequently, the court dismissed the fraud claim.

Regarding the claim for tortious interference, plaintiffs allege that defendants' actions obstructed a contract between Marnor and Servax. However, under Mexican law, expert testimony indicates that tortious interference is not recognized unless it violates a specific statute. Plaintiffs did not provide evidence contradicting this view and failed to assert that any specific statute was violated. Therefore, they cannot support a tortious interference claim under Mexican law.

Similarly, under New York law, the plaintiffs did not meet the necessary elements for tortious interference with a contract, which include demonstrating that the breach would not have occurred without the defendants' actions. As plaintiffs did not adequately address these requirements, their claim under New York law also fails.

The Amerra Defendants argue that there are no allegations supporting their actions as the but-for cause of any breach concerning Marnor’s joint venture agreements. Plaintiffs claim that WBC, OPIC, Umami, Tashjian, and Amerra refused to accept full payment that would extinguish Marnor’s debt, leading to breaches of joint venture agreements with Servax from 2012. These agreements supposedly required the elimination of all liens on Marnor’s assets. Plaintiffs assert that the refusal to allow Marnor to cure its default and release its vessels disrupted Marnor and Servax's contractual obligations. 

However, the Amerra Defendants contend they could not have caused the alleged breach, as they had no authority to accept or reject payments and were not owed any money. They did breach confidentiality by informing Umami of Marnor’s default and allegedly conspired to exclude Marnor from the Bluefin Tuna market, but they were not in a position to influence the loan's payment or release of vessels. Plaintiffs do not address this specific argument in their opposition to the Amerra Defendants' motion to dismiss, and while they mention a conspiracy in their opposition to WBC and Umami, they do not link it to the alleged breach of the joint venture agreements. The court concludes that the Amerra Defendants' conduct is not the but-for cause of any breach, leading to the dismissal of the tortious interference claim against them.

Plaintiffs have not successfully stated a claim under the Sherman Act, which prohibits contracts, combinations, or conspiracies that restrain trade. The core issue is whether the alleged anticompetitive behavior arises from independent actions or a conspiratorial agreement. Plaintiffs claim that Amerra and Umami conspired to eliminate Umami's competitors in the Bluefin Tuna market, thereby allowing Umami to control prices. Amerra is accused of financing Umami's acquisition of rights related to Marnor's loan, thereby enhancing Umami's market dominance. However, the Amerra Defendants argue that the claim fails for three reasons: (1) the Foreign Trade Antitrust Improvements Act (FTAIA) bars the claim, (2) Plaintiffs lack antitrust standing due to not demonstrating antitrust injury, and (3) the complaint does not adequately plead a conspiracy under Section 1 of the Sherman Act.

The court finds that the claim is not barred by the FTAIA but rules that Plaintiffs have failed to allege a valid antitrust injury, negating their standing. Consequently, the court does not address the conspiracy allegations. Although the FTAIA exempts certain foreign commerce from the Sherman Act, it does allow for claims if there are direct, substantial, and foreseeable effects on U.S. trade. The ongoing debate among courts regarding the scope of the FTAIA's import exception is acknowledged, with some courts limiting its application to domestic importers.

Certain courts reject a restrictive interpretation of the Foreign Trade Antitrust Improvements Act (FTAIA), asserting that it encompasses all forms of import trade or commerce. For example, in *In re Vitamin C Antitrust Litig.*, the court ruled that the defendants' argument, which claimed that the FTAIA barred actions for foreign purchasers, was too narrow. The court emphasized that the FTAIA applies not only to import commerce but also to conduct involving import commerce, necessitating an inquiry into whether the alleged anticompetitive behavior targeted an import market. The plaintiffs, who purchased vitamin C from Chinese manufacturers, sufficiently demonstrated that the conduct was directed at the U.S. import market despite many transactions occurring abroad. Similarly, in *Minn-Chem, Inc. v. Agrium, Inc.*, the Seventh Circuit found that the plaintiffs could pursue claims under the FTAIA as the alleged price-fixing by foreign distributors impacted U.S. import commerce. The court highlighted that foreign entities selling goods in the U.S. market must adhere to U.S. laws, and the FTAIA's provisions regarding imports do not impose self-restraint. When anticompetitive actions are directed at a U.S. import market, the FTAIA does not apply, as illustrated in *Eskofot A/S v. E.I. Du Pont De Nemours Co.*, where the plaintiff's claims indicated an impact on U.S. import trade. The Second Circuit's ruling in *Lotes Co. v. Hon Hai Precision Indus. Co.* does not contradict this interpretation.

The case examined the domestic effects exception to the Foreign Trade Antitrust Improvements Act (FTAIA). A Taiwanese electronics manufacturer claimed that five competitors conspired to monopolize the USB connector market. Although the plaintiff sold USB products to foreign entities, which were later incorporated into products shipped to the U.S., the court ruled that the FTAIA barred the action because it did not meet the domestic effects exception, emphasizing the importance of the FTAIA's separate import exclusion for foreign anticompetitive conduct affecting U.S. markets.

In contrast, the current plaintiffs assert immediate impacts on the U.S. Bluefin Tuna market, claiming they intend to export Bluefin Tuna to the U.S. but are hindered by the defendants’ alleged anticompetitive practices. Their allegations suggest a direct interference with their ability to export and conduct business in the U.S. market, thereby invoking the FTAIA's import exception. The complaint includes specific claims about how the defendants' actions have impaired their exports and affected U.S. import trade.

Additionally, the text addresses antitrust standing, requiring plaintiffs to prove their injury aligns with what antitrust laws aim to prevent. Defendants argue that the plaintiffs lack antitrust standing because they have not sufficiently demonstrated a cognizable antitrust injury. The cited case of Gatt Commc’ns illustrates that injury must stem from the unlawful acts of the defendants, as evidenced by the harm resulting from an illegal bid-rigging scheme, which ultimately leads to inflated consumer prices. The court found that the plaintiff's losses did not establish antitrust injury since they were tied to an illegal scheme in which the plaintiff was previously involved.

Revenue loss due to the termination of a distribution contract is not considered an antitrust injury linked to bid-rigging. The court determined that antitrust laws aim to prevent harm to competition rather than injuries to competitors from their involvement in unlawful schemes. Although plaintiffs assert that courts have not ruled out the possibility of antitrust injury for competitors, the precedent set in Gatt indicates that their specific injuries did not arise from the conduct that constitutes the antitrust violation. In this case, the plaintiffs claim injuries such as exclusion from competition, lost profits, and increased prices due to alleged anti-competitive actions by Uma-mi and Amerra, which they argue impaired their ability to compete in the Bluefin Tuna market.

However, the court found that these injuries were not a direct result of the defendants’ alleged conspiracy but rather stemmed from Marnor's default on a loan, leading to the seizure of their fishing vessels. The court emphasized that lawful foreclosure actions do not violate antitrust laws, and plaintiffs failed to demonstrate that their vessels would have been returned but for the alleged conspiracy. Consequently, the plaintiffs could not establish antitrust injury, leading to the dismissal of their Sherman Act claim.

The Amerra Defendants' motion to dismiss was granted in part and denied in part. The plaintiffs voluntarily withdrew their conversion claim against the Amerra Defendants, and a claim for tortious interference with prospective business advantage was deemed abandoned as it was not briefed. The court noted that the motions to dismiss filed by WBC and Umami would be addressed separately.