LAmore Consulting,LLC v. SBS Services, Inc.

Background

L’Amore Consulting LLC sued SBS Services, Inc. for breach of contract. According to the proposed Second Amended Complaint, the parties entered a one-year written consulting agreement on or about July 15, 2022. L’Amore alleged that it was to provide business-development services in exchange for a monthly fee of $16,600. It alleged that it billed $199,200 in monthly fees but SBS paid $190,900.

The agreement also contemplated bonus compensation for revenue from specific projects, with the amount and structure to be agreed upon by the parties. L’Amore alleged that the parties agreed to bonus compensation at 12 percent of gross payments received by SBS for a particular project. L’Amore alleged that it billed $454,536.96 in bonus compensation but SBS paid $161,610.60. L’Amore also alleged that, in or around March 2023, SBS stopped accepting new business opportunities that L’Amore generated.

SBS moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. L’Amore cross-moved for permission to file the Second Amended Complaint. Judge Nelson S. Roman considered SBS’s motion using the allegations in the proposed amended complaint.

Breach of Contract

The court held that L’Amore adequately stated a breach-of-contract claim. Under the court’s description of New York law, such a claim requires an agreement, the plaintiff’s performance, the defendant’s breach, and damages. The parties did not appear to dispute the existence of the agreement or L’Amore’s performance.

The court rejected SBS’s argument that the agreement gave it discretion to reject business opportunities generated by L’Amore. The court read the agreement as requiring SBS to pay the monthly fee once L’Amore performed its services and as containing no provision giving SBS discretion to reject those opportunities. The court therefore found that SBS’s alleged refusal to accept L’Amore’s performance could constitute an actionable breach.

The court also found that L’Amore adequately alleged a breach based on unpaid bonus compensation. It concluded that the allegations were consistent with the agreement and rejected SBS’s argument that bonus compensation had to be memorialized in a signed writing. The court stated that the agreement did not require the bonus amount or structure to be in writing and signed.

Account Stated

An account stated is a claim based on a debtor’s alleged promise to pay a stated amount that the parties agreed was due. The court dismissed this claim because L’Amore relied on nearly identical facts and damages for the account-stated and breach-of-contract claims. The court found the account-stated claim duplicative of the contract claim.

Implied Covenant of Good Faith and Fair Dealing

The implied covenant of good faith and fair dealing is a duty that New York law reads into contracts. The court dismissed L’Amore’s claim based on that covenant because it relied on the same facts as the breach-of-contract claim. The court treated the claim as redundant rather than as a separate cause of action.

Disposition

The court granted in part and denied in part SBS’s motion to dismiss. It granted the motion insofar as L’Amore’s account-stated claim and implied-covenant claim were dismissed, and otherwise denied the motion.

The court granted and denied in part L’Amore’s motion for leave to amend. It granted that motion only insofar as the breach-of-contract claim, as pleaded in the Second Amended Complaint, survived. The Second Amended Complaint, minus the second and third causes of action, became the operative complaint. SBS was directed to answer or otherwise respond by September 13, 2024, and the parties were directed to file a case-management plan and scheduling order by September 20, 2024.