NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

:

AMERICAN RUBBER & METAL HOSE : CIVIL ACTION NO. 11-1279 (MLC)

CO., INC. & VITO POLERA, :

:

Plaintiffs, : MEMORANDUM OPINION

:

v. :

:

STRAHMAN VALVES, INC. & :

AUGIE PERCOCO, :

:

Defendants. :

 :

COOPER, District Judge

Plaintiffs, Vito Polera (“Polera”) and American Rubber &

Metal Hose, Co., Inc. (“American”) (collectively “Plaintiffs”)

brought this action against the Defendants, Strahman Valves, Inc.

(“Strahman”) and August F. Percoco (improperly pled as “Augie

Percoco”) (“Percoco”) (collectively “Defendants”), alleging

claims for: (1) breach of contract, (2) breach of fiduciary duty

(only against Percoco), (3) conversion, (4) breach of implied

covenant of good faith and fair dealing, (5) economic duress, (6)

unjust enrichment, and (7) attorneys’ fees. (Dkt. entry no. 1,

Rmv. Notice, Ex. A, Compl.) Defendants removed to this Court and

now move to dismiss claim two, claim three, claim five, claim

six, and claim seven in their entirety, and claim one and claim

four insofar as they are asserted against Percoco, pursuant to

Federal Rule of Civil Procedure (“Rule”) 12(b)(6). (Dkt. entry

no. 5, Mot. to Dismiss.) The Court determines the Motion without 

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oral argument. Fed.R.Civ.P. 78(b). The Court will grant the

Motion in part and deny the Motion in part. 

BACKGROUND

Polera was previously the owner, or sole shareholder, of

American. (Compl. at ¶ 6; dkt. entry no. 5, Maloney Aff., Ex. B,

Purchase Agreement at 1.) On November 1, 2004, the parties

entered into two agreements: (1) “Agreement for Sale and Purchase

of Assets” (“Purchase Agreement”) and (2) “Employment Agreement”

(collectively, “Agreements”). (Purchase Agreement; Compl. at 21,

Employment Agreement.) The first was signed by Polera, as both

an individual and as the President of American, and by Percoco as

the President of Strahman. (Purchase Agreement at 12.) The

second was signed by Polera as an individual and by Percoco as

the President of Strahman. (Employment Agreement at 7.) 

The Purchase Agreement notes that American is “in the

business of selling and distributing certain metal and rubber

hoses, coupling and clamps.” (Purchase Agreement at 1.) It

purports to sell to Strahman “certain of the tangible and

intangible assets of [American] used in the operation of

[American’s] Business,” and also notes the mutual desire of the

parties to have Polera work at Strahman as a sales person,

“subject to the terms and conditions set forth in the Employment

Agreement.” (Id.) The “Purchase Price” in the Purchase

Agreement appears to consist of three parts: (1) an initial

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payment for “machinery identified on Schedule 1.1.1.” and “other

Acquired Assets,” (2) a second payment for the value of

American’s “Inventory,” upon a reconciliation of same, and (3)

“contingent annual payments as set forth in the Employment

Agreement.” (Id. at 4.) 

The Employment Agreement, in turn, provides a formula for

calculating Polera’s compensation, which appears to be a

combination of a set base salary and a profit-sharing component

whereby Polera would receive a certain amount for exceeding

certain sales targets. (See Employment Agreement at 2-3.) This

section refers to the assets purchased by Strahman as the “Hose

Division” and notes that “the Payments shall be due

notwithstanding the fact [Polera’s] employment is terminated for

any reason . . . as the Payments do not represent additional

compensation for services performed hereunder, instead the

Payments represent a portion of the Purchase Price (as defined in

the Purchase Agreement) paid by [Strahman] in connection with its

purchase of the Hose Division.” (Id. at 3.)

According to the Complaint and documents attached therein,

Polera received two payments from Strahman, totaling $167,000,

and began working as an employee there pursuant to the Employment

Agreement. (Compl. at 18-19, Checks; id. at ¶ 11.) Polera

alleges that he performed as required under the Employment

Agreement, but that Strahman and Percoco “failed to honor the

terms of the agreements and provide support for the sales,

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purchasing, assembly, and marketing” of American’s products. 

(Id. at ¶¶ 12, 17.) As a result, Polera asserts, he resigned

from Strahman in September 2007. (Id. at ¶ 19.)

DISCUSSION

I. Legal Standard for Motion to Dismiss

A motion under Rule 12(b)(6) tests the legal sufficiency of

a complaint, and the Court must “accept all factual allegations

as true, construe the complaint in the light most favorable to

the plaintiff, and determine, whether under any reasonable

reading of the complaint, the plaintiff may be entitled to

relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d

Cir. 2008). At this stage, a “complaint must contain sufficient

factual matter, accepted as true to ‘state a claim to relief that

is plausible on its face.’ 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.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949

(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556

(2007)). “[W]here the well-pleaded facts do not permit the court

to infer more than the mere possibility of misconduct, the

complaint has alleged--but it has not ‘show[n]’--that the

‘pleader is entitled to relief.’” Id. at 1950. In evaluating a

Rule 12(b)(6) motion to dismiss for failure to state a claim, the

Court may consider the Complaint, exhibits attached thereto,

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matters of public record, and undisputedly authentic documents if

the plaintiff’s claims are based upon those documents. See

Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d

1192, 1196 (3d Cir. 1993).

II. Legal Standard Applied Here

A. Breach of contract and implied covenant of good faith

and fair dealing (claims one and four)

The Complaint alleges in claim one that the Defendants “did

not honor,” and “fail[ed] to perform their duties” pursuant to,

the “express terms of the written agreements,” which caused

Plaintiffs to suffer damages. (Compl. at ¶¶ 21-22.) It further

alleges in claim four that Defendants’ conduct constituted breach

of the implied covenant of good faith and fair dealing. (Id. at

¶ 33.) Defendants contend that claim one and claim four should

be dismissed insofar as they are asserted against Percoco because

he was not a party to the Agreements, but merely signed on behalf

of Strahman. (Dkt. entry no. 5, Def. Br. at 8-9.) Plaintiffs

concede that only parties to a contract can commit these

breaches, but they contend that because Percoco was a “signatory”

who “executed said agreements on Defendants’ behalf,” he can be

liable “as a matter of law.” (Dkt. entry no. 8, Pl. Br. at 7-8.) 

“It is a basic tenet of corporate law that a corporation is

an entity separate and distinct from its shareholders.” Kennedy

Funding, Inc. v. Lion’s Gate Dev., LLC, No. 05-4741, 2006 WL

1044807, at *7 (D.N.J. Apr. 18, 2006) (granting defendant’s

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motion to dismiss breach of contract and good faith counterclaims

against individual defendants). “[I]n the absence of a basis for

piercing the corporate veil, an officer is not liable for the

contractual obligations of a corporation.” Home Buyers Warranty

v. Roblyn Dev. Corp., No. A-0500-05T5, 2006 WL 2190742, at *4

(N.J. App. Div. Aug. 4, 2006) (holding officer not personally

liable even where he signed contract without noting his corporate

title). In Royale Luau Resort, LLC v. Kennedy Funding, Inc., No.

07-1342, 2008 WL 482327, at *8-9 (D.N.J. Feb. 19, 2008), the

court dismissed breach of contract and implied covenant of good

faith and fair dealing claims where an individual defendant, as

president of the corporate defendant, could not be “liable for

breach of contract in this circumstance where he simply signed on

behalf of the corporate entity.”1

The Complaint states that Percoco executed the agreement “on

behalf of” Strahman. (Compl. at ¶ 11.) An inspection of the

Agreements confirms Percoco signed as Strahman’s President. (See

Agreements.) Neither party has alleged otherwise. Thus, the

Court concludes Percoco, signing on behalf of the corporate

entity, cannot be individually liable for breach of contract or

implied covenant of good faith and fair dealing here.

 Hicks v. Mulhallan, No. 07-1065, 2008 WL 1995143, at *2 1

(D.N.J. May 5, 2008), also cited by Defendants, is not helpful

because it was decided on a motion for summary judgment and the

president of the corporation was not a signatory to the contract. 

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Plaintiffs alternatively argue that Percoco is a third-party

beneficiary (“TPB”) of the contract, and that under New Jersey

law this is sufficient for liability to attach. (Pl. Br. at 8.) 

“To qualify as a [TPB] it must be shown that the contract was

‘made for the benefit of that third party within the intent and

contemplation of the contracting parties.’” Hadley v. Shaffer,

No. 99-144, 2003 WL 21960406, at *5 (D. Del. Aug. 12, 2003)

(citing Grand St. Artists v. Gen. Elec. Co., 19 F.Supp.2d 242,

253 (D.N.J. 1998)). The Court looks to the terms of the contract

and the surrounding circumstances to determine whether the

contracting parties intended the individual to be a TPB. The

primary focus of this inquiry is the intent of the parties. See

E.I. DuPont & Co. v. Rhone Poulenc Fiber & Resin Intermediates,

S.A.S., 269 F.3d 187, 197 (3d. Cir. 2001) (declining to enforce

an arbitration clause because there was no evidence that the

parent was “anything more than an incidental beneficiary”). 

Without this intention to confer a benefit, the third party just

so happens to benefit and he or she will have no contractual

rights under the agreement. See Reider Cmtys., Inc. v. N.

Brunswick Twp., 227 N.J. Super. 214, 222 (N.J. App. Div. 1988)

(incidental TPBs have no cause of action to enforce contractual

promises). The court in Construcciones Haus Soceidad v. Kennedy

Funding Inc. dismissed the plaintiffs’ TPB claim, noting the

complaint was “devoid of any allegations that would indicate that

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e[i]ther [of the defendants not a party to the contract] were

intended beneficiaries.” No. 07-392, 2008 WL 1882857, at *3

(D.N.J. Apr. 24, 2008) (citing JM Realty & Invs., LLC v. Kennedy

Funding, Inc., No. 07-218, 2007 WL 2159563, at *2 n.3 (D.N.J.

July 26, 2007)). 

The Complaint here similarly does not allege that Percoco

was an intended beneficiary of either contract. Moreover, the

Complaint alleges that Percoco advised Polera that “it was not

the intention of Defendant [Strahman] to honor the terms of the

agreements” and that “Defendant [Strahman] ‘wanted no part’ of”

Polera’s business, not that Percoco sought these ends personally

or individually. (Compl. at ¶ 18 (emphasis added).) Nor does

the Complaint allege that Percoco personally benefitted from the

Agreements or their alleged breach. Finally, the Complaint does

not allege Strahman is an alter-ego of Percoco, so as to justify

piercing the corporate veil. See Plastipak Packaging, Inc. v.

DePasquale, 75 Fed.Appx. 86, 88 (3d Cir. 2003). Thus, the Court 2

will grant the Motion as it pertains to claim one and claim four,

insofar as they are asserted against Percoco. 

 To the extent Plaintiffs argue Percoco as President 2

officer somehow interfered with the performance of the contract

(see Pl. Br. at 8) see Zeiger v. Wilf, 333 N.J. Super. 258, 284

(N.J. App. Div. 2000), Moe v. Seton Hall Univ., No. 09-01424,

2010 WL 1609680, at *9 (D.N.J. Apr. 20, 2010), the Complaint does

not allege such a claim or its necessary elements. 

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B. Breach of fiduciary duty against Percoco (claim two)

The Complaint alleges that Percoco, in his position as

“Chief Executive Officer” of Strahman, was “under a common law

and statutory duty to act, with respect to [Strahman] affairs, in

good faith and with loyalty to [Strahman], including its wholly

owned subsidiary, [American]” and that Percoco “breached his

fiduciary duty to Plaintiffs by failing to adhere to the terms of

the Agreements.” (Compl. at ¶¶ 26-27.) Defendants contend this

should be dismissed because Percoco owed no fiduciary duty to

American, because it was not actually a wholly-owned subsidiary

of Strahman. (Def. Br. at 11.) Plaintiffs dispute this

assertion and claim American was, or was “for all practical

purposes” a wholly-owned subsidiary. (Pl. Br. at 9.) Even if

American was a wholly-owned subsidiary, Defendants continue,

Polera would have no standing to bring a shareholder claim on

behalf of American. (Def. Br. at 11 n.3.) 

“[T]o state a claim for breach of fiduciary duty under New

Jersey law, Plaintiffs must allege: (1) a fiduciary relationship

comprised of ‘two persons when one person is under a duty to act

for or give advice for the benefit of another on matters within

the scope of their relationship,’ and (2) a ‘violation of that

trust.’” Wiatt v. Winston & Strawn, LLP, No. 10–6608, 2011 WL

2559567, at *9 (D.N.J. June 27, 2011) (citing F.G. v. MacDonell,

150 N.J. 550, 563–65 (1997)). “New Jersey law makes clear . . .

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that determining whether a fiduciary relationship exists between

two parties is a fact sensitive inquiry. [F.G., 150 N.J. at

563–64] (citing Bogert, Trusts and Trustees 2d § 481 (1978) (in

which the New Jersey Supreme court states ‘[t]he exact limits of

the term ‘fiduciary relation’ are impossible of statement [and

that the finding of such a relationship depends] upon the

circumstances of the particular case or transaction, certain

business, public or social relationships may or may not create or

involve a fiduciary character.’).” Sunset Fin. Res., Inc. v.

Redev. Grp. V, LLC, Nos. 05-2914, 05-2915, 2006 WL 3675384, at *7

(D.N.J. Dec. 12, 2006). 

“In general, the relationship of a corporate director to the

corporation and its stockholders is that of a fiduciary.”

Whitfield v. Kern, 122 N.J.Eq. 332, 341 (E. & A. 1937). It

follows that corporate directors do not owe a fiduciary duty to

non-shareholders. U.S. Small Bus. Admin. v. Katawczik, 107

Fed.Appx. 281, 286 (3d Cir. 2004) (noting corporate officer

defendants “had no fiduciary duty to disclose” an offer to nonshareholder plaintiff). 

The Court, accepting all alleged facts as true for purposes

of this Motion, assumes, as Plaintiffs allege, that American is a

wholly-owned subsidiary of Strahman. (See Compl. at ¶¶ 10, 26.) 

Plaintiffs have also alleged some facts that tend to demonstrate

this: (1) a 2004 press release issued by Strahman calling

American a “wholly owned subsidiary” (Compl. at 20), (2) the

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reference to the “Hose Division” in the Employment Agreement

(Employment Agreement at 1, 2), and (3) that a portion of

Purchase Agreement is tied to the performance of Hose Division,

in that the purchase price in the Purchase Agreement consists, in

part, of “(iii) contingent annual payments as set forth in the

Employment Agreement as defined in Section 4.1 hereto (see

Purchase Agreement at Art. 2.1).” (Purchase Agreement at 4.) 

The Court further notes that the Purchase Agreement is effective

November 1, 2004, whereas according to the New Jersey Business

Entity Status Reports (“BESR”), the last annual report was filed

on June 20, 2005, more than six months after the Purchase

Agreement took effect. (Maloney Aff., Ex. C, BESR (though

admittedly the next line states “For Last Annual Report Paid

Year: 2004”).) 

Beyond the question of whether American is, or was intended

to be, a wholly-owned subsidiary of Strahman, another is whether

Polera then has standing to bring this claim. It is not clear

whether American even exists anymore. Defendants call it

“defunct.” (Def. Br. at 11.) The Complaint somewhat confusingly

alleges that Strahman purchased “the assets” of American, but

that American then became a wholly-owned subsidiary. (Compl. at

¶ 10.) But Plaintiffs further assert in their opposition to the

Motion that “Strahman and Percoco purchased” Polera’s business;

“American was purchased by Strahman;” “American was an

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independent business in name only;” and “American ceased to

exists as a separate business entity.” (Pl. Br. at 1, 2.) 

The Purchase Agreement appears to indicate that American

sold certain assets to Strahman, but not everything. (See

Purchase Agreement.) The BESR indicates American consists (or

consisted) of 1,000 shares, but neither the parties nor the

Purchase Agreement address these shares. (BESR.) But the BESR

also indicates American’s status as a corporation has been

revoked. (Id.) It is difficult to comprehend how American could

be a wholly-owned subsidiary of Strahman and yet still be owned

even in part by Polera. Nor has Polera alleged that he owns any

shares in either of the business entities that could potentially

claim to be American. 

The Court also notes, however, that the Employment Agreement

specifically provides for Polera to receive payments from

Strahman based on the profits earned by whatever entity was sold

to Strahman. (Employment Agreement.) The Employment Agreement

refers to this entity as the “Hose Division.” (Id.) The

Employment Agreement also notes that these payments represent “a

portion of the Purchase Price” paid by Strahman for the entity. 

(Id. at ¶ 4(a)(3)(vi).) It also appears to provide for Polera 3

 The Court notes the Purchase Agreement calls for monies to 3

be paid to “Seller,” i.e., American, but the sale in the Purchase

Agreement is conditioned on the execution of the Employment

Agreement, which calls for monies to be paid to Polera. 

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to share in losses. (See id.) But it does not appear to

recognize Polera as the continued owner of said entity, or assign

him any shares or voting rights. (See id.)

To bring a claim for breach of fiduciary duty on American’s

behalf against Percoco, if American is a wholly-owned subsidiary

as alleged in the Complaint, then it appears Polera must allege

he was a shareholder of the entity. (Compl. at ¶ 26.) See Valle

v. N. Jersey Auto. Club, 74 N.J. 109, 111 (1977) (citing N.J.S.A.

14A:3-6(1)). As Polera has not done so, as Defendants argue, he

has not demonstrated standing to sue. (Def. Br. at 11 n.3.) 

Moreover, the wholly-owned subsidiary assertion is potentially in

conflict with, among others, the statement that Polera was “[a]t

all times relevant to the allegations set forth in this Complaint

. . . the owner of Plaintiff [American] and/or an employee of

Defendant [Strahman].” (Compl. at ¶ 6.) 

4

It might be a different matter if the breach of fiduciary

duty claim was, for example, based equitably upon Polera’s “trust

and confidence” in Percoco, alleging that Percoco owed Polera a

duty to advance the business entity purchased from American, such

as it was, since Polera agreed to tie part of the Purchase Price

to this business entity’s continued success. See Bogert’s Trusts

And Trustees, BOGERT § 481 (2010) (“Equity refuses to bind itself

 Of course, if the Complaint alleged a duty to a still- 4

independent American, it is not clear how Percoco would owe one. 

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by an all-inclusive definition. . . . the facts and circumstances

will determine whether the fiduciary relationship is present or

not regarding relationships such as . . . employer and employee .

. . .”). But the pleadings here rest the claim upon an alleged

duty to American, not Polera. (See Compl. at ¶ 26.) Even if the

opposite were the case, the Court would then have to consider

whether an adequate contractual remedy at law already existed

instead. See Coca-Cola Bottling Co. of Shreveport, Inc. v.

Coca-Cola Co., 988 F.2d 414, 432-33 (3d Cir. 1993) (affirming

conclusion of no fiduciary duty, in part because of adequate

remedy at law). The Court concludes that the confusing,

seemingly conflicting, factual allegations Plaintiffs have set

forth in the Complaint do not “raise a right to relief above the

speculative level.” Twombly, 127 S.Ct. at 1965. The Court will

dismiss claim two without prejudice.

C. Conversion (claim three)

The Complaint next alleges that Defendants “intentionally

and wrongfully exercised ownership, control and/or dominion over

Plaintiffs’ property and funds, and converted those funds to

their own use.” (Compl. at ¶ 30.) Defendants argue the tort of

conversion is not applicable here because a “mere debt” is at

issue, as Plaintiffs’ cause of action “arises exclusively from

Strahman and Mr. Percoco’s alleged failure to remit funds

purportedly due to plaintiffs” under the Agreements. (Def. Br.

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at 13-15.) Plaintiffs counter that more than money is at issue,

namely the machinery and inventory formerly held by American. 

(Pl. Br. at 10.) Defendants respond (in a rather tortured

reading of the Complaint) that Plaintiffs only allege the

conversion of “funds,” not property, but in any case the property

was purchased as per the Purchase Agreement, and thus was not

converted. (Dkt. entry no. 10, Def. Reply at 6 n.3, 7-8.) 

A conversion claim in New Jersey is defined as “an

unauthorized assumption and exercise of the right of ownership

over goods or personal chattels belonging to another, to the

alteration of their condition or the exclusion of an owner’s

rights.” Barco Auto Leasing Corp. v. Holt, 228 N.J. Super. 77,

83 (N.J. App. Div. 1988). However, “[a]n action for conversion

will not lie in the context of a mere debt.” Scholes Elec. &

Commc’ns., Inc. v. Fraser, No. 04-3898, 2006 WL 1644920, at *5

(D.N.J. June 14, 2006). Because a monetary loss can be repaid in

whole by other money, allegedly converted money is deemed a mere

debt unless there is a requirement that the “identical money” be

repaid. Kam Int’l. v. Franco Mfg. Co. Inc., No. 10-2733, 2010 WL

5392871, at *5 (D.N.J. Dec. 22, 2010) (where plaintiff’s claim

did not “allege a mere debt” because the allegedly converted

property was textiles).

The Court will not, at the stage, interpret the Agreements. 

However, the Court notes that the Purchase Agreement authorizes

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the transfer of ownership of certain tangible assets, whereas

conversion requires unauthorized assumption of ownership. See

Pension Benefit, 998 F.2d at 1196 n.1 (considering “the

concededly authentic purchase and sale agreement that [defendant]

attached to its motion to dismiss”). The alleged failure to

fulfill the requirements of the purchase of said assets sounds in

contract, not tort. See O’Toole v. Philips Elecs. N. Am. Corp.,

No. 04-1730, 2006 WL 3019698, at *6 (D.N.J. Oct. 23, 2006)

(granting summary judgment on conversion claim where dispute was

over payment under a contract, not unauthorized exercise of

dominion over plaintiff’s property). Thus, Plaintiffs cannot

succeed on a conversion claim. The Court will grant the Motion

as to claim three. 

D. Economic duress (claim five)

The Complaint alleges both that (1) Defendants “knowingly,

intentionally, maliciously, and repeatedly threatened [Polera] in

an effort to force him against his will to voluntarily agree to

alter the clear and unambiguous written terms of the agreements

and/or terminate the agreements between the parties” and (2)

“[Polera] acquiesced to their demands and voluntarily agreed to

forfeit monies owed to him under fear of economic duress and

hardship”. (Compl. at ¶¶ 36, 39.) Defendants claim that

economic duress does not exist as a separate cause of action

under substantive New Jersey state tort law, but that it is

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merely an affirmative defense to avoid the operation of a

contract. (Def. Br. at 16-17; Def. Reply at 8-9.) Plaintiffs

further cite authority they claim supports the argument that this

cause of action is not barred in New Jersey, and that pleading it

in the alternative to breach of contract is permissible. (Pl.

Br. at 11-12.)

“Although New Jersey courts recognize economic duress as a

defense or a basis for contract recision, the courts do not yet

recognize economic duress as an affirmative tort action in New

Jersey.” Nat’l Amusements, Inc. v. N.J. Tpk. Auth., 261 N.J.

Super. 468, 479 (N.J. Law Div. 1992), aff’d, 275 N.J. Super. 134

(N.J. App. Div. 1992.). “New Jersey law does not currently

recognize economic duress as an affirmative cause of action.” 

Coastal Grp., Inc. v. Westholme Ptnrs., No. 94-3010, 1996 WL

33545605, at *11 (D.N.J. Oct. 3, 1996) (citing id.; Glenfed

Finan. Corp. v. Penick Corp., 276 N.J. Super. 163, 173 (N.J. App.

Div. 1994)). Plaintiffs do not cite, nor has the Court found,

any more recent authority that contradicts this case law. 

The Court also rejects Plaintiffs’ alternative pleading

argument, because it does not appear that in this instance

Plaintiffs are attempting to use economic duress as a defense to

invalidate any other contract: while the Complaint alleges that

Defendants attempted to force him to alter the Agreements (Compl.

at ¶ 36), it does not then allege that Polera actually agreed to

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alter them, even under duress. “Thus, because the cause of

action simply does not presently exist,” the Court, “applying New

Jersey law, has no choice but to dismiss” claim five of the

Complaint. See Coastal Grp., 1996 WL 33545605, at *11. 

E. Unjust enrichment (claim six)

The Complaint also alleges that Defendants have been

unjustly enriched as a result of their failure to honor the terms

of the Agreements, because Plaintiffs incurred damages that

Defendants would otherwise have been required to pay. (Compl. at

¶¶ 43-44.) Defendants argue the unjust enrichment claim should

be dismissed because it is a quasi-contractual remedy that is not

applicable and cannot be pleaded if an express contract exists. 

(Def. Br. at 19-20; Def. Reply at 12-13.) As above, Plaintiffs

assert that unjust enrichment is a permissible alternative

pleading to breach of contract. (Pl. Br. at 13.)

“To establish a claim for unjust enrichment, ‘a plaintiff

must show that defendant received a benefit and that retention of

that benefit without payment would be unjust.’” VRG Corp. v. GKN

Realty Corp., 135 N.J. 539, 554 (1994); see Cameco, Inc. v.

Gedicke, 299 N.J. Super. 203, 218 (N.J. App. Div. 1997). 

Recovery for unjust enrichment, however, is an equitable remedy

that is only available when there is no express contract

providing for remuneration. See Caputo v. Nice-Pak Prods., 300

N.J. Super. 498, 507 (N.J. App. Div. 1997). 

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Even where an unjust enrichment claim is not based on an

express contract, the pleading can still go awry. In Oswell v.

Morgan Stanley Dean Witter & Co., Inc., the plaintiff appeared to

seek relief for unjust enrichment while also incorporating her

breach of contract claim. No. 06-5814, 2007 WL 1756027, at *9

(D.N.J. June 18, 2007). Specifically, within the plaintiff’s

unjust enrichment claim, the plaintiff “incorporated [the

preceding allegations of the Complaint] as if set forth at length

herein,” and this included an allegation that a contract existed

between the parties and the defendant breached that contract. 

Id. The Oswell court determined this was improper “because an

unjust enrichment claim must be independent of a breach of

contract claim and a Plaintiff may not bring an unjust enrichment

claim while also pleading the existence of a contract.” Id. 

(dismissing unjust enrichment claim, but granting leave to amend

Complaint to make it independent of the contract claim). 

Plaintiffs here similarly pleaded breach of contract in

paragraph 20 of the Complaint, then paragraph 42 at the beginning

of the unjust enrichment claim states “Plaintiffs repeat and

reallege the allegations set forth in paragraphs 1-41 as if fully

set forth here at.” (Compl. at ¶¶ 20, 42.) Beyond technicality,

the Court notes that Plaintiffs also specifically allege unjust

enrichment “[a]s a result of Defendants’ failure to honor the

clear and unambiguous terms of the[] agreements between the

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parties.” (Id. at ¶ 43.) See Premier Pork L.L.C. v. Westin,

Inc., No. 07-1661, 2008 WL 724352, at *14 (D.N.J. Mar. 17, 2008)

(dismissing unjust enrichment claim where Amended Complaint

alleged “Defendants had a benefit conferred upon them by

[Plaintiff] in that [Plaintiff] has completed its contractual

obligations by shipping” and “[i]t would be inequitable for

Defendants to enjoy the benefits . . . without [Plaintiff]

receiving the contracted for compensation that it is owed”)

(internal citations omitted). Because the unjust enrichment

claim in the Complaint is based on the alleged Agreements, the

Court will grant the Motion as it pertains to claim six. 

F. Attorneys’ fees (claim seven)

The Complaint seeks attorneys’ fees. (See Compl.) 

Defendants argue Plaintiffs cannot obtain attorneys’ fees under

New Jersey state law. (Def. Br. at 23-24.) Plaintiffs argue

they may recover where such fees are provided for in a contract. 

(Pl. Br. at 13.) New Jersey law follows the “American rule,”

which “has long been that attorneys’ fees are not ordinarily

recoverable in the absence of a statute or enforceable contract

providing therefor.” In re Estate of Lash, 169 N.J. 20, 43

(2001). The New Jersey Court Rules specifically prohibit

attorneys’ fees except for a few limited exceptions, none of

which appear to apply here. N.J. Ct. R. 4:42-9; see also McAdam

v. Dean Witter Reynolds, Inc., 896 F.2d 750, 775 (3d Cir. 1990)

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As Defendants point out, while Plaintiffs “respectfully

assert that the provisions of the agreements . . . provide for”

attorneys’ fees, Plaintiffs have not asserted or demonstrated

where an attorneys’ fees provision actually exists in the

Agreements, outside of a reference to arbitration. (Def. Reply

at 13-14; Pl. Br. at 13.) Nor has the Court’s perusal of the

Agreements revealed any such reference. The Court will thus

dismiss claim seven without prejudice, with leave to file an 

Amended Complaint with citation to the specific provisions in the

Agreements that provide for the recovery of attorneys’ fees.5

CONCLUSION

For the reasons discussed, the Court will grant the Motion. 

The Court will issue an appropriate order.

 s/ Mary L. Cooper 

 MARY L. COOPER

 United States District Judge

Dated: July 22, 2011

 As it appears Plaintiffs will seek leave to amend the 5

Complaint to assert punitive damages, if it becomes appropriate,

the Court will defer consideration of this aspect of the claim

until such time, and upon new notice of motion by Defendants. 

(See Pl. Br. at 14.) The Court will do the same if Plaintiffs

amend the Complaint to properly plead a common law breach of

fiduciary duty, as attorneys’ fees may be available there as

well. See DiMisa v. Acquaviva, 400 N.J. Super. 307, 315 (N.J.

App. Div. 2008)(“[b]reach of fiduciary duty is a tort theory,

such that attorneys’ fees incurred as a result of that breach may

be recoverable as a portion of the plaintiff’s damages”). 

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