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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

TMG METAL,

Plaintiff,

 v.

OKAPI CONSULTANTS, LLC, and 

MICHAEL YAMANIS,

 Defendants.

11-CV-2253

 

OPINION

This matter comes before the Court on Defendant Okapi Consultants, LLC

(“Okapi”)’s motion to dismiss Plaintiff TMG Metal’s (“TMG”) complaint for 

failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). For 

the reasons stated below, the Court will grant Okapi’s motion to dismiss in part but 

will also grant TMG leave to amend.

I. Factual and Procedural Background

On October 21, 2010, TMG and Okapi entered into a contract whereby

Okapi agreed to supply TMG with two thousand metric tons of heavy metal scrap

per month (the “Agreement”) with an option to extend the agreement depending on 

the success of the initial transaction. TMG asserts that Okapi failed to provide 

them with any scrap metal. The complaint further alleges that on December 28, 

2010, TMG provided Okapi with written notice of its failure to comply with the 

terms and conditions of the Agreement, but Okapi nevertheless failed to supply the 

required scrap metal. TMG subsequently attempted to mitigate its damages by 

purchasing the scrap metal from other suppliers at a higher rate than listed in the 

Agreement.

On April 20, 2010, TMG filed suit against Okapi. TMG filed the Amended 

Complaint on May 19, 2011. The Amended Complaint contains three counts: 

Count I, alleging breach of contract; Count II, alleging harm to reputation; and 

Count III, alleging breach of the implied covenant of good faith and fair dealing. 

Okapi now moves to dismiss all three counts.

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II. Legal Analysis

A. Legal Standards

In deciding a motion to dismiss under Rule 12(b)(6), a court must take all 

allegations in the complaint as true and view them in the light most favorable to the 

plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino 

Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998). This 

assumption of truth is inapplicable, however, to legal conclusions couched as 

factual allegations or to “[t]hreadbare recitals of the elements of a cause of action, 

supported by mere conclusory statements.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 

1949 (2009).

Although a complaint need not contain detailed factual allegations, “a 

plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires 

more than labels and conclusions, and a formulaic recitation of the elements of a 

cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). 

Thus, the factual allegations must be sufficient to raise a plaintiff’s right to relief 

above a speculative level, such that it is “plausible on its face.” See id. at 570; see 

also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). 

Furthermore, a claim has “facial plausibility when the plaintiff pleads factual 

content that allows the court to draw the reasonable inference that the defendant is 

liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949 (2009) (citing 

Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin to a 

‘probability requirement’ . . . it asks for more than a sheer possibility . . .” Iqbal, 

129 S.Ct. at 1949 (2009). 

Generally, in ruling on a Rule 12(b)(6) motion, a court may rely only on the 

complaint, exhibits attached thereto, and matters of public record. Sands v. 

McCormick, 502 F.3d 263, 268 (3d Cir. 2007). The alternative is to convert the

motion to dismiss into one for summary judgment. See Fed. R. Civ. P. 12(d). Here,

Okapi alleges new facts not found in the Amended Complaint based on an affidavit 

from Brett M. Levy, Okapi’s Direct of Commodities and Trade. This Court will

exercise its discretion and ignore these additional facts – and the arguments based 

upon them – as inappropriate for consideration on a Rule 12(b)(6) motion. Pension 

Ben. Guar. Corp. v. White Consol. Industries, Inc., 998 F.2d 1192, 1196 (3d Cir. 

1993); Kurdyla v. Pinkerton Sec., 197 F.R.D. 128, 131 (D.N.J. 2000). Instead, the 

Court will rely only on the Amended Complaint and the Agreement, which TMG 

attached thereto.

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B. Count I: Breach of Contract

To state a claim for breach of contract under New Jersey Law, a plaintiff 

must allege: (1) a contract between the parties; (2) a breach of that contract; (3) 

damages flowing from that breach; and (4) that the party stating the claim 

performed its own contractual obligations. Frederico v. Home Depot, 507 F.3d 

188, 203 (3d Cir. 2007). Okapi highlight numerous deficiencies. First, Okapi 

argues that TMG failed to allege whether it had satisfied the conditions precedent 

to Okapi’s duty to act. Second, Okapi argues that TMG failed to allege the date 

upon which Okapi was to begin performing. And third, Okapi argues that TMG’s 

failed to allege that its December 28, 2010 notice of non-performance complied 

with the requirements of the parties’ agreement.

Okapi is correct that TMG’s allegations are insufficient. Granted, not all of 

the alleged deficiencies are true deficiencies that would require this Court to 

dismiss the Amended Complaint for failure to state a claim. For example, whether 

or not TMG’s obligations to issue a documentary letter of credit or to provide 

Okapi with an export authorization were conditions precedent is unclear.

1 But the 

Court need not resolve these particular disputes at this time because the fact 

remains that the Amended Complaint fails to allege specific facts showing that 

TMG performed its own contractual obligations. Indeed – although such 

allegations would still be insufficient – the Amended Complaint does not even 

summarily allege that the plaintiff has performed its contractual obligations. As 

such, TMG’s claim for breach of contract necessarily fails. Frederico, 507 F.3d at 

204 (affirming dismissal of breach of contract claim where complaint failed to 

allege that plaintiff complied with her contractual obligations).

C. Count II: Harm to Reputation

TMG’s second claim alleges that Okapi’s failure to deliver the required 

scrap metal harmed TMG’s reputation and relationships with its customers. Okapi 

seeks dismissal of this Count by arguing that the claim is “inherent” in TMG’s 

 1 Courts have held that the process of interpreting contracts to determine whether a condition precedent exists 

includes an emphasis on “purpose, maxims, prior negotiations, usage of trade, course of dealing, and course of 

performance.” See, e.g., Sutherland v. Chesson, 2006 WL 1000574, *5 (N.J.Super.Ct.App.Div. 2006). However, 

conditions precedent are “disfavored by the courts,” Marsa v. Metrobank For Savings, F.S.B., 825 F.Supp. 658, 664 

(D.N.J. 1993), aff'd, 26 F.3d 122 (3d Cir. 1994), because the “failure to comply with a condition precedent works a 

forfeiture.” Castle v. Cohen, 840 F.2d 173, 177 (3d Cir. 1988). Given this analysis, a condition precedent “must be 

expressed in clear language or it will be construed as a promise.” Id. In any event, it seems unlikely that TMG had 

any obligation to visit the scrap yard in the Dominican Republic, condition precedent or otherwise. Rather, the 

language of section seven of the Agreement suggests that TMG had the option of choosing to visit the yard: “Buyer 

elects to visit yard for selection and cutting instructions at his discretion (buyer choice).” But the Court reserves 

decision on that issue.

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breach of contract claim, and that if the breach of contract claim fails so must the 

claim for harm to reputation. Okapi also argues that the economic loss doctrine 

would bar any independent tort action for harm to reputation. But the parties do not 

cite – and this Court is not familiar with – any case law suggesting that New Jersey 

law recognizes an independent cause of action for harm to reputation. Nor does 

TMG appear to be even attempting to plead the type of claim for which harm to 

reputation is typically the central source of damages – namely, a tort claim for 

trade libel or similar injurious falsehood. See, e.g., Patel v. Soriano, 848 A.2d 803, 

834-35 (N.J. Super. A.D. 2004) (discussing trade libel under New Jersey law). 

Because of these facts, the Court does not believe that Count II states an

independent cause of action of any kind. Instead, the Court understands Count II as 

alleging an additional or alternative form of damages arising from Okapi’s alleged 

breaches of the contract and the implied covenant of good faith and fair dealing. 

That is, TMG requests both damages arising directly from the breaches of the 

Agreement and compensation for the indirect damage the breaches may have 

caused to its reputation. And while the Court remains skeptical that such damages 

are likely to be awarded, see Bennington Foods LLC v. St. Croix Renaissance 

Group, LLP, 528 F.3d 176, 178-79 (3d Cir. 2008) (affirming district court’s 

rejection of claim for harm to reputation and holding that plaintiff’s “inability to 

gain possession of the scrap metal at issue here creates at most a monetary loss.”), 

Okapi has not provided a sufficiently explained basis for dismissing or striking this 

additional theory of damages at this time. 

D. Count III: Breach of the Implied Covenant of Good Faith and Fair 

Dealing

Finally, TMG argues that Okapi’s failure to provide scrap metal was a 

breach of the implied covenant of good faith and fair dealing contained in their 

contract. Okapi argues that any claim for breach of the implied covenant cannot 

survive independently of TMG’s claim for breach of the underlying contract, and, 

even if it could, the economic loss doctrine would necessarily bar the action. Both 

arguments are wrong. See Wilson v. Amerada Hess Corp., 773 A.2d 1121, 1126-27 

(N.J. 2001) (holding party may breach implied covenant of good faith and fair 

dealing even where party has not breached underlying contract); State Capital Title 

& Abstract Co. v. Pappas Business Services, LLC, 646 F. Supp. 2d 668, 678 

(D.N.J. 2009) (discussing application of economic loss doctrine to various claims 

and holding that “whether the economic loss doctrine applies is not based on the 

general type of tort claim being asserted but rather whether the plaintiff’s 

entitlement to economic losses flows directly from obligations set forth in a 

contract between the parties.”).

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Instead, the Amended Complaint fails to state a claim for breach of the 

implied covenant of good faith and fair dealing because it fails to assert facts 

tending to show that Okapi’s alleged breach of contract was in bad faith. See

Cargill Trading v. Applied Development Co., 706 F. Supp. 2d 563, 580 (D.N.J. 

2010); Seidenberg v. Summit Bank, 791 A.2d 1068, 1078-79 (N.J. Super. A.D. 

2002). TMG alleges only that “Defendants’ failure to provide the product it was 

required to under the Contract was a breach of the covenant of good faith 

contained in the Contract.” And although Count III incorporates by reference the 

allegations of the preceding Counts, none of those allegations refer in any way to 

the Defendants’ motives. These minimal allegations are far from sufficient. See, 

e.g., GKE Enterprises, LLC v. Ford Motor Credit Co. LLC USA, No. 09-4656, 

2010 WL 2179094, at *4 (D.N.J. May 26, 2010).

III. Conclusion

For the reasons stated above, the Court will grant Okapi’s motion to dismiss 

in part and dismiss Counts I and III. The Court also recognizes that absent inequity 

or futility, a plaintiff should be given an opportunity to amend her complaint prior 

to its dismissal with prejudice under Rule 12(b)(6). Grayson v. Mayview State 

Hosp., 293 F.3d 103, 108 (3d Cir. 2002). The aforementioned procedural defects in 

the Amended Complaint are potentially curable, nothing before the Court suggests 

that TMG has acted in bad faith, and Okapi has made no argument that it would be 

prejudiced by an additional amendment. Therefore, this Court will dismiss those 

counts without prejudice, and will also grant TMG an opportunity to amend their 

Complaint for the narrow purpose of addressing any insufficiencies in Counts I, II, 

or III. An appropriate order follows.

 /s/ William J. Martini

WILLIAM J. MARTINI, U.S.D.J.

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