Richard W. Mark 

David M. Fine 

ORRICK, HERRINGTON & SUTCLIFFE LLP 

666 Fifth Avenue 

New York, NY 10103 

Telephone: (212) 506-5000 

Facsimile: (212) 506-5151 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

-------------------------------------- X 

SEAT SACK, INC., 

Plaintiff, 

-againstCHILDCRAFT EDUCATION CORP.; 

US OFFICE PRODUCTS COMPANY; 

US OFFICE PRODUCTS NORTH 

ATLANTIC DISTRICT, INC.; and 

SCHOOL SPECIALTY, INC., 

Defendants. 

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CASE NO. 07-CIV-3344 (RJH)(DFE) 

-------------------------------------- X 

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ 

MOTION TO DISMISS AND MOTION FOR A MORE DEFINITE STATEMENT

OF COUNSEL:

Nicholas A. Kees 

Anthony S. Baish 

Mark E. Schmidt 

GODFREY & KAHN, S.C. 

780 North Water Street 

Milwaukee, WI 53202-3590 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 1 of 20
TABLE OF CONTENTS

Page

 -iTHE FACTS AS PLEADED IN THE COMPLAINT................................................................... 2 

STANDARDS................................................................................................................................ 4 

ARGUMENT................................................................................................................................. 4 

I. THE FRAUD COUNTS SHOULD BE DISMISSED........................................... 4 

A. The Complaint Merely Alleges Breach Of Contract, Not Fraud............... 4 

B. The Complaint Fails To Plead Fraud With Particularity ........................... 6 

II. The Conversion Claim Should Be Dismissed........................................................ 8 

A. Money Cannot Be Converted, Except In Exceptional Circumstances 

Not Present Here........................................................................................ 8 

B. The Economic Loss Doctrine Bars Plaintiff’s Tort Action For 

Conversion ................................................................................................. 9 

III. THE FOURTH CAUSE OF ACTION FAILS TO STATE A CLAIM 

UPON WHICH RELIEF MAY BE GRANTED................................................. 10 

A. The Seat Sack Is Not A Trade Secret....................................................... 10 

B. Section 349 of New York General Business Law Protects The 

Consuming Public From “Deceptive Trade Practices,” Not Parties 

To Private Contracts ................................................................................ 11 

C. The “Unfair Competition” Claim Also Fails ........................................... 11 

D. At Minimum, Plaintiff Should Be Compelled to Restate Its Fourth 

Cause of Action So That Childcraft Defendants Have a Meaningful 

Opportunity to Respond........................................................................... 11 

IV. THERE IS NO BASIS FOR THE STAND-ALONE “ATTORNEY FEES” 

CLAIM................................................................................................................. 12 

V. THE EXISTENCE OF A CONTRACT BARS THE UNJUST ENRICHMENT 

CLAIM................................................................................................................. 14 

CONCLUSION............................................................................................................................ 14 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 2 of 20
TABLE OF AUTHORITIES

Page

 -iiCASES 

American High-Income Trust v. AlliedSignal, 329 F. Supp. 2d 534 (S.D.N.Y. 

2004) ..............................................................................................................................2 

Bangkok Crafts Corp. v. Capitol Di San Pietro In Vaticano, 331 F. Supp. 2d 247 

(S.D.N.Y. 2004).....................................................................................................11, 12 

Bristol-Myers Squibb, Industrial Division v. Delta Star, Inc., 206 A.2d 177, 620 

N.Y.S.2d 196 (N.Y. App. Div. 1994) ......................................................................9, 10 

C.B. Western Financial Corp. v. Computer Consoles, Inc., 122 A.D.2d 10, 504, 

N.Y.S.2d 179 (N.Y. App. Div. 1986) ............................................................................6 

Canstar v. Jones, 212 A.D. 452, 622 N.Y.S.2d 730 (N.Y. App. Div. 1995).......................6 

Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382 (N.Y. 1987)...................14 

Crabtree v. Tristar Automotive Group, Inc., 776 F. Supp. 155 (S.D.N.Y. 1991) ...............6 

DS America (East), Inc. v. Chromagrafx Imaging Systems, Inc., 873 F. Supp. 786 

(E.D.N.Y. 1995).............................................................................................................6 

DiVittorio v. Equidyne Extractive Industrial, Inc., 822 F.2d 1242 (2d Cir. 1987)..........7, 8 

Feeney v. Licari, 131 A.D.2d 539, 516 N.Y.S.2d 265 (N.Y. App. Div. 1987) .................12 

Gill v. Pidlypchak, 389 F.3d 379 (2d Cir. 2004)..................................................................4 

Hunt v. Sharp, 85 N.Y.2d 883, 626 N.Y.S.2d 57, 649 N.E.2d 1201 (N.Y. 1995).............12 

Independence Discount Corp. v. Bressner, 47 A.D.2d 756, 365 N.Y.S.2d 44 

(N.Y. App. Div. 1975) ...................................................................................................9 

L. Fatato, Inc. v. Decrescente District Co., 86 A.D.2d 600, 446 N.Y.S.2d 120 

(N.Y. App. Div. 1982) ...................................................................................................6 

Laurent v. Williamsburg Sav. Bank, 28 Misc. 2d 140, 137 N.Y.S.2d 750 (N.Y. 

1954) ..............................................................................................................................9 

Lehman v. Dow, Jones & Co., Inc., 783 F.2d 285 (2d Cir. 1986) .....................................10 

Linkco, Inc. v. Fujitsu, Ltd., 230 F. Supp. 2d 492 (S.D.N.Y. 2002) ..................................10 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 3 of 20
TABLE OF AUTHORITIES

(continued) 

Page

 -iiiIn re Livent, Inc. Noteholders Sec. Litigation, 151 F. Supp. 2d 371 (S.D.N.Y. 

2001) ........................................................................................................................4, 13 

Lou v. Belzberg, 728 F. Supp. 1010 (S.D.N.Y. 1990) .........................................................7 

MBW Advertising Network, Inc. v. Century Business Credit Corp., 173 A.D.2d 

306, 569 N.Y.S.2d 682 (N.Y. 1991) ..............................................................................6 

In re Mid-Island Hospital, Inc., 276 F.3d 123 (2d Cir. 2002) ...........................................13 

Mills v. Polar Molecular Corp., 12 F.3d 1170 (2d Cir. 1993) ............................................8 

O'Brien v. Price Waterhouse, 740 F. Supp. 276 (S.D.N.Y. 1990), aff'd, 936 F.2d 

674 (2d Cir. 1991)..........................................................................................................7 

Oechsner v. Connell Ltd. Partnership, 283 F. Supp. 2d 926 (S.D.N.Y. 2003) ...................7 

Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 

N.Y.2d 20, 647 N.E.2d 741 (N.Y. 1995).....................................................................11 

Papasan v. Allain, 478 U.S. 265 (1986) ..............................................................................4 

Pelman v. McDonald's Corp., 396 F. Supp. 2d 439 (S.D.N.Y. 2005)...............................12 

Peters Griffin Woodward, Inc. v. WCSC, Inc., 88 A.D.2d 883, 452 N.Y.S.2d 599 

(N.Y. App. Div. 1982) ...................................................................................................9 

Piccoli A/S v. Calvin Klein Jeanswear Co., 19 F. Supp. 2d 157 (S.D.N.Y. 1998)..............2 

Reingold v. Deloitte Haskins & Sells, 599 F. Supp. 1241 (S.D.N.Y. 1984)........................7 

Rombach v. Chang, 355 F.3d 164 (2d Cir. 2004)................................................................7 

Rothman v. Gregor, 220 F.3d 81 (2d Cir. 2000)..................................................................2 

SNS Bank, N.V. v. Citibank, N.A., 777 N.Y.S.2d 62 (N.Y. App. Div. 2004).....................13 

Shred-It USA, Inc. v. Mobile Data Shred, 222 F. Supp. 2d 376 (S.D.N.Y. 2002).............10 

Whitney v. Citibank, N.A., 782 F.2d 1106 (2d Cir. 1986)..................................................13 

Wiener v. Lazard Freres & Co., 672 N.Y.S.2d 8 (N.Y. App. Div. 1988) .........................13 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 4 of 20
TABLE OF AUTHORITIES

(continued) 

Page

 -ivZito v. Fischbein, Badillo, Wagner & Harding, 831 N.Y.S.2d 25, 35 N.Y.S.2d 

306 (1st Dep't 2006).....................................................................................................14 

STATUTES 

Fed. R. Civ. P. 9(b) ..........................................................................................................4, 7 

Fed. R. Civ. P. 12(b)(6)........................................................................................................4 

Fed. R. Civ. P. 12(e) ..........................................................................................................12 

N.Y. G.B.L. § 349..............................................................................................................11 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 5 of 20
 

Richard W. Mark 

David M. Fine 

ORRICK, HERRINGTON & SUTCLIFFE LLP 

666 Fifth Avenue 

New York, NY 10103 

Telephone: (212) 506-5000 

Facsimile: (212) 506-5151 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

-------------------------------------- X 

SEAT SACK, INC., 

Plaintiff, 

-againstCHILDCRAFT EDUCATION CORP.; 

US OFFICE PRODUCTS COMPANY; 

US OFFICE PRODUCTS NORTH 

ATLANTIC DISTRICT, INC.; and 

SCHOOL SPECIALTY, INC., 

Defendants. 

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CASE NO. 07-CIV-3344 (RJH)(DFE) 

-------------------------------------- X 

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ 

MOTION TO DISMISS AND MOTION FOR A MORE DEFINITE STATEMENT

In a thirteen-count Complaint, plaintiff Seat Sack, Inc. levels accusations ranging from 

fraud to patent infringement against defendants Childcraft Education Corp. (“Childcraft”) and 

School Specialty, Inc. (“School Specialty”). Yet each of Seat Sack, Inc.’s claims are premised 

on the same basic fact: Childcraft introduced a product – the “Seat Pocket” – to compete with 

plaintiff’s product called the “Seat Sack.”1

 While Childcraft and School Specialty (collectively, 

“Childcraft Defendants”) are confident they will prevail on all of Plaintiff’s claims, the present 

motion focuses on those claims that, in a classic case of over-pleading, are wholly superfluous to 

 

1

 In order to avoid confusion between plaintiff Seat Sack, Inc. and the Seat Sack product itself, we hereafter refer to 

Seat Sack, Inc. as “Plaintiff.” 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 6 of 20
 -2- 

the true dispute. Properly distilled, the lawsuit involves just three basic claims for breach of 

contract, trademark infringement, and patent infringement. All other causes of action should be 

dismissed because they fail to state claims as a matter of law. 

THE FACTS AS PLEADED IN THE COMPLAINT

Except where noted below, Childcraft Defendants accept the following allegations as true 

for purposes of this motion only. These facts are derived from the Complaint (cited herein as 

“Compl.”), a true and correct copy of which is attached as Exhibit 1 to the accompanying 

Declaration of Anthony S. Baish, dated June 26, 2007 (the “Baish Decl.”). 

Plaintiff is a Florida corporation that manufactures and sells the Seat Sack, a storage 

product for school supplies that drapes over the back of a student’s chair. (Compl. para. 1). 

Childcraft is a New York corporation that develops, markets and distributes educational products 

and school supplies. (Id. at paras. 3, 7). Defendant School Specialty is a Wisconsin corporation 

that is also in the business of developing, marketing and distributing educational products and 

school supplies. (Compl. para. 7; Answer para. 5).2

In late 1999, Plaintiff entered into a contract (the “Distribution Agreement”) with 

Childcraft whereby Childcraft agreed to market and sell the Seat Sack as part of its line of school 

supply products. (Compl. para. 12; Baish Decl. para. 4, Ex. 2).3

 Although the Complaint alleges 

that all defendants entered into the Distribution Agreement with Plaintiff (see, e.g., Compl. 

paras. 12, 14), the Distribution Agreement reflects that only Childcraft did so. (Baish Decl., 

 

2

 Defendants US Office Products Company and US Office Products North Atlantic District, Inc. do not join this 

motion, as they no longer exist. The successor in interest to those entities is USOP Liquidating LLC, the special 

purpose entity approved by the United States Bankruptcy Court for the District of Delaware to administer, liquidate 

and distribute the assets of USOP. (Compl. para. 5; Answer para. 5). USOP Liquidating LLC has not filed an 

Answer, but did file a Suggestion of Bankruptcy with the Court on May 29, 2007. 

3

 Where a Complaint expressly refers to and relies upon a contract that it does not attach, the Court may consider 

that contract without converting a motion to dismiss into one for summary judgment. See Rothman v. Gregor, 220 

F.3d 81, 88-89 (2d Cir. 2000); American High-Income Trust v. AlliedSignal, 329 F. Supp. 2d 534, 540 (S.D.N.Y. 

2004); Piccoli A/S v. Calvin Klein Jeanswear Co., 19 F. Supp. 2d 157, 162 n.25 (S.D.N.Y. 1998). 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 7 of 20
 -3- 

Ex. 2). As alleged in the Complaint, under the Distribution Agreement Childcraft became 

Plaintiff’s “lawful distributor and non-exclusive licensee,” while Plaintiff allowed Childcraft to 

include the Seat Sack in Childcraft’s catalog and advertisements, and provided Seat Sacks to 

Childcraft for sale. (Compl. para. 14). Plaintiff alleges “upon information and belief” that 

Childcraft Defendants made a number of extrinsic representations during the negotiation of the 

Distribution Agreement. Specifically, Childcraft Defendants allegedly promised to: (1) act as 

Plaintiff’s fiduciary and in Plaintiff’s best interests in distributing the Seat Sack; (2) timely 

account for and remit all payments from sales of the Seat Sack to Plaintiff; (3) not manufacture 

or distribute any product that competes with the Seat Sack; and (4) protect Plaintiff’s United 

States Design Patent as well as Plaintiff’s state and federal trademark rights. (Compl. para. 

13(a)-(d)). 

The Complaint states that Childcraft Defendants ultimately created a “knock-off” 

product, called the Seat Pocket, to unfairly compete with the Seat Sack; artificially increased the 

price of the Seat Sack in order to promote Seat Pocket sales; and set up an Internet website that 

transferred customers searching for the Seat Sack to information regarding sales of the Seat 

Pocket. (Compl. para. 18). The Complaint characterizes these actions as “defaults” under the 

parties’ distribution agreement. (Id. at paras. 18-21, 23-24). 

From these basic operative facts, Plaintiff contrives thirteen causes of action. They 

include: fraud in the inducement and fraud (Counts I-II); conversion (Count III); “deceptive 

trade, unfair business practices, misappropriation of trade secrets, and unfair competition” 

(Count IV); breach of contract (Count V); “attorney’s fees” (Count VI); patent infringement 

(Count VII); trademark infringement under federal and state laws (Counts VIII-XII), and unjust 

enrichment (Count XIII). The present motion addresses six of these causes of action – those for 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 8 of 20
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fraud, conversion, “deceptive trade practices,” “attorney’s fees,” and unjust enrichment. Because 

they fail as a matter of law, the claims should be dismissed. 

STANDARDS

In considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the Court must accept 

all well-pleaded allegations in the complaint as true, and draw all reasonable inferences in favor 

of the nonmoving party. See Gill v. Pidlypchak, 389 F.3d 379, 384 (2d Cir. 2004). Dismissal is 

proper if it appears beyond doubt that the plaintiff cannot prove any set of facts in support of his 

claim that would entitle him to relief. See id. However, “[t]he court need not credit conclusory 

statements unsupported by assertions of facts or legal conclusions and characterizations 

presented as factual allegations.” In re Livent, Inc. Noteholders Sec. Litig., 151 F. Supp. 2d 371, 

404 (S.D.N.Y. 2001) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). In addition, “the 

circumstances constituting fraud . . . shall be stated with particularity.” Federal Rule of Civil 

Procedure 9(b). Plaintiff’s claims in Counts I-IV, VI, and XIII fail under these standards. 

ARGUMENT

I. THE FRAUD COUNTS SHOULD BE DISMISSED

Counts I and II of the Complaint allege fraud in the inducement and fraud. The alleged 

“fraud,” however, relates solely to Childcraft Defendants’ alleged breach of contractual 

promises. The claims accordingly fail as a matter of law. Moreover, the Complaint fails to 

satisfy the heightened pleading requirements of Fed. R. Civ. P. 9(b) in that it does not specify the 

time, place, speaker, or even the precise content of the alleged misrepresentations. 

A. The Complaint Merely Alleges Breach Of Contract, Not Fraud 

According to the Complaint, “on, about, or immediately proceeding [sic] the making of” 

the Distribution Agreement, Childcraft Defendants made certain allegedly false statements to 

Plaintiff. (Compl. para. 13). Although characterized as “representations,” the alleged statements 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 9 of 20
 -5- 

in fact amount to promises of future performance under the contract. Specifically, as noted 

above, Childcraft Defendants allegedly promised to: (1) act as Plaintiff’s fiduciary and in 

Plaintiff’s best interests in distributing the Seat Sack; (2) timely account for and remit all 

payments from sales of the Seat Sack to Plaintiff; (3) not manufacture or distribute any product 

that competes with the Seat Sack; and (4) protect Plaintiff’s United States Design Patent as well 

as Plaintiff’s state and federal trademark rights. (Compl. para. 13(a)-(d)). 

Plaintiff eliminates all doubt as to whether the alleged “fraud” involved promises of 

performance, as the fraud claims are replete with allegations pertaining solely to contractual 

performance. See, e.g., Compl. para. 13(a) (“defendants would faithfully adhere and perform all 

of its/their obligations under the aforesaid agreement”); para. 17 (“defendants have failed to 

perform its/their obligations under its aforesaid distributorship agreement”); para. 19 

(“defendants were and still are in default of its/their contractual obligations”); para. 20 (“plaintiff 

has allowed defendants numerous opportunities to cure the aforesaid defaults”); para. 22 

(“Plaintiff has fully performed all of its duties and obligations under the distributorship 

agreement”); para. 23 (“plaintiff has fully performed its obligations under the aforesaid 

agreement but the obligations to be performed by the defendants have not been met”); para. 24 

(“Defendants have fail and/or refused to meet its/their obligations and as a result, said defendants 

have defaulted”); para. 25 (“Plaintiff has demanded in timely and reasonable manner that said 

defendants fully perform its/their obligations pursuant to its agreement”). In other words, the socalled “fraud” claims are nothing more than claims for breach of contract. 

While Childcraft Defendants dispute Plaintiff’s description of the terms of the 

Distribution Agreement, a breach of the agreement – whatever its terms – does not amount to 

fraud. It is well settled under New York law that a claim of fraud does not lie if the alleged fraud 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 10 of 20
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merely relates to a breach of a contract.4

 See, e.g., Crabtree v. Tristar Automotive Group, Inc., 

776 F. Supp. 155, 161 (S.D.N.Y. 1991); MBW Advertising Network, Inc. v. Century Business 

Credit Corp., 173 A.D. 2d 306, 569 N.Y.S.2d 682 (N.Y. 1991). Similarly, a cause of action for 

fraud in the inducement cannot be based solely upon a failure to perform contractual promises of 

future acts. See DS America (East), Inc. v. Chromagrafx Imaging Systems, Inc., 873 F. Supp. 

786, 796 (E.D.N.Y. 1995) (citing C.B. Western Financial Corp. v. Computer Consoles, Inc., 122 

A.D.2d 10, 504, N.Y.S.2d 179, 182 (N.Y. App. Div. 1986)). An alleged failure to fulfill such 

promises is a breach of contract and may be remedied only in an action on the contract. See id.; 

see also L. Fatato, Inc. v. Decrescente Dist. Co., 86 A.D.2d 600, 601, 446 N.Y.S.2d 120, 121 

(N.Y. App. Div. 1982) (allegation “that [the] defendant made [an] agreement knowing that it 

would not abide by it, thereby misrepresenting its intention to [the] plaintiff [.] . . . says nothing 

which is not legally embraced by [a cause] of action for breach of contract”); Canstar v. Jones, 

212 A.D. 452, 453, 622 N.Y.S.2d 730, 731 (N.Y. App. Div. 1995) (decrying “an improper 

attempt to recast the breach of contract claim in terms of fraud”). 

Even accepting as true all of Plaintiff’s allegations about the terms of the Distribution 

Agreement, the Complaint merely alleges breach of contract, not fraud or fraud in the 

inducement. Plaintiff has a remedy for such alleged misconduct – a breach of contract claim, 

which is set forth in Count V. On this ground alone, the “fraud” claims of Counts I and II should 

be dismissed. 

B. THE COMPLAINT FAILS TO PLEAD FRAUD WITH PARTICULARITY 

Another basis for dismissing Plaintiff’s fraud claims is that the Complaint fails to allege 

fraud with the specificity required by Fed. R. Civ. P. 9(b). This rule provides that “[i]n all 

 

4

 For purposes of this motion only, and without waiving any rights with respect to choice of law, Childcraft 

Defendants will assume New York law applies. 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 11 of 20
 -7- 

averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated 

with particularity. Malice, intent, knowledge, and other condition of mind of a person may be 

averred generally.” The Second Circuit “has read Rule 9(b) to require that a complaint [alleging 

fraud] (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the 

speaker, (3) state where and when the statements were made, and (4) explain why the statements 

were fraudulent.” Rombach v. Chang, 355 F.3d 164, 170 (2d Cir. 2004). The pleading must be 

sufficiently particular to serve the three goals of Rule 9(b), which are to provide a defendant with 

fair notice of the claims against it, to protect a defendant from harm to its reputation or goodwill 

by unfounded allegations of fraud, and to reduce the number of strike suits. See DiVittorio v. 

Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir. 1987) (citing Reingold v. Deloitte 

Haskins & Sells, 599 F. Supp. 1241, 1266 (S.D.N.Y. 1984)); O’Brien v. Price Waterhouse, 740 

F. Supp. 276, 279 (S.D.N.Y. 1990), aff’d, 936 F.2d 674 (2d Cir. 1991). The Complaint falls far 

short of these requirements. 

As to the time when the alleged misrepresentations were made, the Complaint offers only 

a vague reference to a period “on, about, or immediately proceeding [sic] the making of the . . . 

agreement[.]” (Compl. para. 13). The place where the alleged misrepresentations were made is 

not identified. Indeed, the Complaint remarkably does not even specify which of the defendants 

made the alleged misrepresentations, merely referencing “defendants.” This defect alone is fatal: 

where multiple defendants are involved in an alleged fraud, the fraud must be particularized as to 

each one of them. See Lou v. Belzberg, 728 F. Supp. 1010, 1022 (S.D.N.Y. 1990); see also

Oechsner v. Connell Ltd. P’ship, 283 F. Supp. 2d 926 (S.D.N.Y. 2003) (pleading unspecified 

false statements by corporation’s chairman “and others” allegedly made to “various employees” 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 12 of 20
 -8- 

at “various meetings” did not satisfy time, place, speaker and content requirements necessary for 

allegations of fraudulent concealment). 

Finally, the fraud allegations also are insufficient because they are made “upon 

information and belief.” (Comp. para. 13, 15-16). Accusations of fraud may not rest 

upon allegations made on information and belief. See Mills v. Polar Molecular Corp., 12 

F.3d 1170, 1175 (2d Cir. 1993); Di Vittorio v. Equidyne Extractive Indus., Inc., 822 F.2d 

1242, 1247 (2d Cir. 1987). 

The Federal Rules are clear: the serious allegation of fraud requires more than 

vague assertions “upon information and belief” of fraud committed somewhere, at some 

time, by someone. Rather, Plaintiff must set forth specific facts supporting its claim. 

The Complaint is woefully lacking in any such facts. As a matter of law, Plaintiff fails to 

state a claim for fraud, and Counts I and II should be dismissed. 

II. THE CONVERSION CLAIM SHOULD BE DISMISSED 

Plaintiff’s conversion claim – Count III – is nothing more than a duplicative rephrasing of 

other claims. Childcraft Defendants allegedly converted “monies and the proceeds of sales due 

plaintiff” by breach of contract, breach of fiduciary duty, “and/or” by selling the Seat Pocket. 

(Compl. para. 33). The conversion claim, in other words, simply seeks money damages for the 

same alleged conduct underlying other causes of action in the Complaint. Plaintiff misuses the 

tort of conversion, and the claim should be dismissed. 

A. Money Cannot Be Converted, Except In Exceptional 

Circumstances Not Present Here 

Conversion is a tort that involves the unauthorized taking of specific, identifiable 

property to which the plaintiff has an immediate right of possession. See Independence Discount 

Corp. v. Bressner, 47 A.D.2d 756, 757, 365 N.Y.S.2d 44, 46 (N.Y. App. Div. 1975) (citing 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 13 of 20
 -9- 

cases); Laurent v. Williamsburg Sav. Bank, 28 Misc. 2d 140, 143-44, 137 N.Y.S.2d 750, 754-55 

(N.Y. 1954). A right to money damages is not “property” that is subject to conversion. Money 

cannot be converted unless it is specifically identifiable – for example, a specific $20 bill with a 

specific serial number – or unless it is placed in a specially segregated or designated account or 

fund. See id.; Peters Griffin Woodward, Inc. v. WCSC, Inc., 88 A.D.2d 883, 883-84, 452 

N.Y.S.2d 599, 600 (N.Y. App. Div. 1982). For this reason, then, a plaintiff cannot sue for 

conversion “where damages are merely being sought for breach of contract.” Id. at 884; see also

Laurent, 137 N.Y.S.2d at 754-55 (conversion “cannot be predicated upon an equitable interest or 

a mere breach of contract obligation”) (internal quotations and citations omitted). In other 

words, a conversion claim is not an appropriate means to seek general money damages 

compensable through other claims. Yet this is exactly what Plaintiff is attempting to do. The 

conversion claim fails as a matter of law and should be dismissed. 

B. The Economic Loss Doctrine Bars Plaintiff’s Tort Action For Conversion 

To the extent Plaintiff’s conversion claim is premised on a breach of the Distribution 

Agreement, it also is barred by the economic loss doctrine. The economic loss doctrine is 

designed to maintain the distinction between contract and tort law. In essence, the doctrine 

prohibits a plaintiff from suing in tort for breach of a contractual duty. 

It is a well-established principle that a simple breach of contract is 

not to be considered a tort unless a legal duty independent of the 

contract itself has been violated. This legal duty must spring from 

circumstances extraneous to, and not constituting elements of, the 

contract, although it may be connected with and dependent on the 

contract. 

Bristol-Myers Squibb, Indus. Div. v. Delta Star, Inc., 206 A.2d 177, 620 N.Y.S.2d 196 (N.Y. 

App. Div. 1994) (internal quotations and citations omitted). “The economic loss rule reflects the 

principle that damages arising from the failure of the bargained-for consideration to meet the 

Case 1:07-cv-03344-DFE Document 19 Filed 06/27/2007 Page 14 of 20
 -10- 

expectations of the parties are recoverable in contract, not tort.” Id., 206 A.2d at 181; 620 

N.Y.S.2d at 198-99. Thus, for claims alleging only economic loss (as opposed to injury to 

person or property), “the usual means of redress is an action for breach of contract; a tort action 

for economic loss will not lie.” Shred-It USA, Inc. v. Mobile Data Shred, 222 F. Supp. 2d 376, 

379 (S.D.N.Y. 2002). Childcraft Defendants’ alleged duties to Plaintiff are not imposed by tort 

law, but rather are imposed by the express terms of the Distribution Agreement, the existence of 

which is admitted. The conversion claim, therefore, is barred by the economic loss doctrine and 

should be dismissed. 

III. THE FOURTH CAUSE OF ACTION FAILS TO STATE A CLAIM UPON 

WHICH RELIEF MAY BE GRANTED 

The parameters of Plaintiff’s Fourth Cause of Action are hard to discern. Plaintiff alleges 

“deceptive trade, unfair business practices, misappropriation of trade secrets and unfair 

competition.” Plaintiff apparently has lumped several distinct claims within a single cause of 

action. Regardless, the allegations are insufficient to support any of the purported claims. 

A. The Seat Sack Is Not A Trade Secret 

In order to state a claim for misappropriation of trade secrets, the Complaint must 

identify information that is secret. See Lehman v. Dow, Jones & Co., Inc., 783 F.2d 285, 298 

(2d Cir. 1986). Here, the only reasonable reading of the Complaint is that the Seat Sack itself is 

the alleged “trade secret.” (Compl. para. 13(d)). Yet the Complaint also alleges that the Seat 

Sack is marketed and sold to schools across the country and even “throughout the world.” 

(Compl. para. 12). A product that is marketed to the public cannot be a trade secret, as “secrecy 

is necessarily lost when the design or product is placed on the market.” See Linkco, Inc. v. 

Fujitsu, Ltd., 230 F. Supp. 2d 492, 498 (S.D.N.Y. 2002). The Complaint therefore fails to state a 

claim for misappropriation of a trade secret. 

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B. Section 349 of New York General Business Law Protects The Consuming 

Public From “Deceptive Trade Practices,” Not Parties To Private Contracts 

Childcraft Defendants do not know precisely what Plaintiff means by “deceptive trade 

practices,” but any such practices would be governed by New York General Business Law § 349. 

This statute is expressly oriented to the protection of consumers within the general public and 

requires the claimant to establish that the alleged deceptive act or practice was directed to the 

consuming public at large. See Bangkok Crafts Corp. v. Capitol Di San Pietro In Vaticano, 331 

F. Supp. 2d 247, 256 (S.D.N.Y. 2004). Accordingly, “[p]rivate contract disputes, unique to the 

parties [do] not fall within the ambit of the statute.” Oswego Laborers’ Local 214 Pension Fund 

v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 25, 647 N.E.2d 741 (N.Y. 1995). In so limiting 

the application of the statute, the New York Court of Appeals stated, “We are mindful of the 

potential for a tidal wave of litigation against businesses that was not intended by the 

Legislature. . .” Id., 85 N.Y.2d at 26. Accordingly, misrepresentations covered by the statute are 

“limited to those likely to mislead a reasonable consumer acting reasonably under the 

circumstances.” Id. (emphasis added). Here, so far as Childcraft Defendants are able to tell, the 

Complaint concerns a private dispute between Plaintiff and Childcraft Defendants. The 

Complaint fails to state a claim under N.Y. G.B.L. § 349. 

C. The “Unfair Competition” Claim Also Fails 

The vague and conclusory allegations of “unfair competition” making up the remainder 

of the Fourth Cause of Action do not set forth any discernible or distinct claim, and therefore 

should be dismissed. 

D. At Minimum, Plaintiff Should Be Compelled to Restate Its 

Fourth Cause of Action So That Childcraft Defendants 

Have a Meaningful Opportunity to Respond 

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At the very least, Plaintiff should be required to re-plead the “unfair competition” 

allegations in a more definite statement that gives the Childcraft Defendants meaningful notice 

of Plaintiff’s claims. See Bangkok Crafts, 331 F. Supp. 2d at 255 (dismissing unfair competition 

claim). 

An order compelling a more definite statement under Fed. R. Civ. P. 12(e) is appropriate 

when a complaint pleads a viable legal theory, but is so unclear that the opposing party cannot 

respond to the complaint. See Pelman v. McDonald’s Corp., 396 F. Supp. 2d 439, 443 

(S.D.N.Y. 2005). While Childcraft Defendants do not believe Count IV pleads a viable legal 

theory for the reasons stated above, Childcraft Defendants must confess that they are unsure just 

what is alleged in Count IV. To the extent the Court concludes Count IV articulates some viable 

theory of recovery, Childcraft Defendants request an order compelling Plaintiff to elucidate that 

theory. 

IV. THERE IS NO BASIS FOR THE STAND-ALONE “ATTORNEY FEES” CLAIM

Plaintiff’s Sixth Cause of Action seeks “an award of attorney’s fees and costs in favor of 

the Plaintiff and against the defendants.” (Compl. para. 42). This claim is inappropriate and 

should also be dismissed. Absent a specific contractual fee-shifting clause or statutory provision, 

the general rule is that a prevailing party is not entitled to recover attorney fees from the losing 

party. See Hunt v. Sharp, 85 N.Y.2d 883, 626 N.Y.S.2d 57, 649 N.E.2d 1201 (N.Y. 1995) 

(prevailing litigant ordinarily cannot collect attorney fees from unsuccessful opponents); see also

Feeney v. Licari, 131 A.D.2d 539, 516 N.Y.S.2d 265 (N.Y. App. Div. 1987) (addressing 

statutory basis for attorney fee award). Plaintiff, however, claims entitlement to attorneys’ fees 

as a result of Childcraft Defendants’ alleged breach of fiduciary duties. (Compl. para. 42; see 

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also Plaintiff’s May 23, 2007 correspondence to the Court). The Complaint, however, fails to 

adequately allege the existence of a fiduciary relationship. 

In order to pursue a breach of fiduciary duty claim, there must first be a fiduciary 

relationship between the parties. See Whitney v. Citibank, N.A., 782 F.2d 1106, 1115 (2d Cir. 

1986). No such relationship existed here. A conventional business relationship where the parties 

deal at arm’s length does not create a fiduciary relationship. See In re Mid-Island Hosp., Inc., 

276 F.3d 123, 130 (2d Cir. 2002); SNS Bank, N.V. v. Citibank, N.A., 777 N.Y.S.2d 62, 65 (N.Y. 

App. Div. 2004). Rather, a fiduciary relationship arises in limited circumstances where “a party 

reposed confidence in another and reasonably relied on the other’s superior expertise and 

knowledge,” such as a relationship between attorney and client, executor and heir, or investment 

manager and investor. See Wiener v. Lazard Freres & Co., 672 N.Y.S.2d 8, 14 (N.Y. App. Div. 

1988). Here, Childcraft agreed to offer the Seat Sack for sale through its catalog and on its 

website (as it does with hundreds of other products.) The Distributor Agreement reflects a 

quintessential arms’ length commercial transaction, not the establishment of the sort of intimate 

relationship of trust that gives rise to fiduciary duties. Plaintiff’s bare and conclusory allegations 

that Childcraft Defendants acted in a “fiduciary capacity” (Compl. para. 42) do not change that 

fact. See In re Livent, Inc. Noteholders Sec. Litig., 151 F. Supp. 2d at 404 (On a motion to 

dismiss, “[t]he court need not credit conclusory statements unsupported by assertions of facts or 

legal conclusions and characterizations presented as factual allegations.”). Plaintiff cannot plead 

facts showing the existence of a fiduciary relationship, and thus has no basis to demand attorney 

fees on the basis of such a relationship.

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V. THE EXISTENCE OF A CONTRACT BARS THE 

UNJUST ENRICHMENT CLAIM 

Plaintiff’s Thirteenth Cause of Action asserts a claim for unjust enrichment. Under New 

York law, however, an enforceable contract between the parties concerning a particular subject 

matter precludes recovery in unjust enrichment for claims arising out of that subject matter. See

Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382, 388-89 (N.Y. 1987) (noting that 

quasi-contractual relief is only available “where there has been no agreement or expression of 

assent, by word or act, on the part of either party involved”); see also Zito v. Fischbein, Badillo, 

Wagner & Harding, 831 N.Y.S.2d 25, 35 N.Y.S.2d 306, 307 (1st Dep’t 2006) (existence of 

express oral agreement bars unjust enrichment claim). Here, paragraphs 80 and 81 of Plaintiff’s 

Complaint simply reiterate and incorporate by reference the previous allegations of the 

Complaint. No additional facts are set forth that provide any basis to conclude that Childcraft 

Defendants was somehow “enriched” through an act of the Plaintiff by any means other than 

through the Distribution Agreement. Accordingly, the unjust enrichment claim should be 

dismissed. 

CONCLUSION

Based on the foregoing, Childcraft Defendants move the Court to dismiss Counts I, II, III, 

IV, VI, and XIII. As an alternative to the dismissal of Count IV, Childcraft Defendants request 

that the Court order Plaintiff to set forth a more definite statement with respect to that claim. 

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Dated: June 27, 2007 Respectfully submitted, 

ORRICK, HERRINGTON & SUTCLIFFE LLP 

By: s/Richard W. Mark 

Richard W. Mark 

David M. Fine 

666 Fifth Avenue 

New York, NY 10103 

Attorneys for Defendants, 

Childcraft Education Corp. and 

School Specialty, Inc. 

OF COUNSEL:

Nicholas A. Kees 

Anthony S. Baish 

Mark E. Schmidt 

GODFREY & KAHN, S.C. 

780 North Water Street 

Milwaukee, WI 53202-3590 

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