Matec SRL v. Gramercy Holdings I, LLC

Background

Matec and its American affiliate sold Noranda three industrial water-filtration machines. Their 2019 agreements included a punch-list agreement requiring Matec to perform maintenance on two machines sold in 2017, and a manufacture agreement conditioning Noranda’s payment for the newer machines on Matec’s completion of those repairs.

Matec alleged that Noranda frustrated the repair work by changing work standards, restricting access to its plant, improperly maintaining the machines, using third-party parts, rejecting parts it had previously accepted, and directing Matec’s technicians to stop work. Matec notified Noranda that the work was complete on April 7, 2020, but Noranda responded that it would make no further payments.

Matec also alleged that Luca Martinelli, a former director of Matec’s supplier, began working for “Noranda or a Noranda-affiliated entity.” Matec claimed that Martinelli had access to technical, design, installation, maintenance, and vendor-pricing information and disclosed it to Noranda.

Matec asserted claims for breach of contract, breach of the implied duty of good faith and fair dealing, tortious interference, and trade-secret misappropriation. Noranda moved to dismiss under the rule requiring a complaint to allege enough facts to make a claim plausible.

Breach of Contract

Applying New York law, the court held that Matec plausibly alleged a breach-of-contract claim. The manufacture agreement expressly conditioned Noranda’s payment obligations on Matec’s completion of repairs to the existing machines, and Matec conceded that it had not completed those repairs. But Matec alleged specific facts supporting an inference that Noranda prevented or frustrated its performance, including excluding technicians from the plant, refusing parts, and improperly maintaining the machines.

The court rejected Noranda’s argument that the contracts authorized the conduct Matec alleged. It also concluded that a contract provision requiring Matec to request a change order after certain delays was a promise rather than an express condition because it lacked sufficiently unmistakable language. Failure to comply with that promise could support a breach claim, but did not necessarily excuse Noranda from its payment obligations.

Trade-Secret Misappropriation

The court held that Matec did not plausibly allege trade-secret misappropriation. Under New York law, Matec had to allege that it possessed a trade secret and that Noranda used it in violation of an agreement, confidential relationship, duty, or through improper means.

Matec did not allege a nondisclosure agreement with Martinelli or a formal corporate relationship between Matec and Matec Steelworks, Martinelli’s employer. It also did not identify specific steps it took to keep the information confidential. The court therefore found inadequate Matec’s allegations that the information was secret and that Noranda obtained it improperly. Martinelli’s employment by Noranda, without more, did not support a plausible inference of disclosure of protected trade secrets.

Tortious Interference

The court applied the more demanding standard for interference with prospective economic relations because Matec did not allege that it had a contract with Martinelli. To state that claim, Matec had to allege a business relationship, Noranda’s knowledge and intentional interference, improper or independently wrongful conduct, and injury.

The court found that Matec did not allege how Martinelli came to be hired or what its business relationship with him was. Because Matec’s theory depended on the alleged disclosure of trade secrets, and the court found that theory insufficient, Matec also failed to allege the independently tortious or criminal conduct required for prospective-interference liability.

Disposition

Judge Alison J. Nathan granted Noranda’s motion to dismiss as to Matec’s trade-secret misappropriation and tortious-interference claims. She denied the motion as to Matec’s breach-of-contract claims. The order stated that it resolved Docket Number 14 and that a status conference would be set by separate order.