Ameriway Corporation v. Chen

Background

Ameriway Corporation sued May Yan Chen and Ability Customs, Inc. Chen, who does business under the name Ability Customs Brokers, later filed a third-party complaint against Eagle Trading USA, LLC, Xiyan Zhang, and Shiping Jia. Chen alleged that she served as Eagle Trading’s customs broker under a power of attorney executed by Zhang. She alleged that Eagle Trading paid her invoices from approximately April 11, 2017, through March 12, 2019, but then stopped paying. She claimed that Eagle Trading owed $407,369.73 and that Zhang and Jia were also liable as guarantors.

Chen asserted eight causes of action: implied guarantee of payment, guarantee of payment, misrepresentation, fraud in the inducement, a declaration concerning Zhang and Jia’s liability for Eagle Trading’s invoices, breach of contract, unjust enrichment, and account stated. The third-party defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a plausible claim. Chen did not file opposition papers, so the court treated the motion as unopposed, but it still considered the motion on its merits.

Jurisdiction

The court first considered whether it had authority to hear Chen’s claims. Chen alleged only state-law contract and tort claims and did not adequately plead diversity of citizenship. She did not allege her own citizenship or the citizenship of the third-party defendants; allegations about offices, an entity’s state of organization, and membership were insufficient.

The court nevertheless exercised supplemental jurisdiction. Ameriway’s second amended complaint included a federal racketeering claim, and the court found that claim and Chen’s claims arose from a common set of facts concerning the dealings among Chen, Ameriway, and Eagle Trading.

Analysis

The court applied New York law. It rejected Chen’s first, second, and fifth causes of action, which concerned alleged guarantees of payment. A payment guarantee generally must be in writing and include the contract’s essential terms. Chen’s theory based on a course of conduct was insufficient, and the email she identified did not constitute a guarantee of payment because, in the court’s view, it explained why the third-party defendants would not pay her rather than promising payment.

The court also rejected the breach-of-contract and account-stated claims. Chen did not allege the terms of the claimed agreement or the specific payment terms she contended the third-party defendants had accepted. The email incorporated into her pleading indicated that the third-party defendants disagreed with her accounting, which undermined the account-stated claim.

The unjust-enrichment claim also failed. Chen did not allege facts showing why equity and good conscience required payment or how the third-party defendants had been enriched at her expense. The court additionally found that the misrepresentation and fraud-in-the-inducement claims did not meet the heightened requirement that fraud be pleaded with particularity. Chen offered only vague statements about promises to pay, and the court found those claims duplicative of her contract-based claims.

Disposition

Judge Vernon S. Broderick granted the third-party defendants’ motion to dismiss Chen’s third-party complaint. The Clerk of Court was directed to terminate the motion at docket number 59. The opinion does not specify whether the dismissal was with or without prejudice.