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Robert Rivard and Dogleg Properties, Inc. Formerly Known As v. Jerry Bello

March 27, 2013

ROBERT RIVARD AND DOGLEG PROPERTIES, INC. FORMERLY KNOWN AS RIVARD POPCORN PRODUCTS, INC., PLAINTIFFS,
v.
JERRY BELLO, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Rufe,j.

MEMORANDUM OPINION

Before the Court is Defendants' Motion to Dismiss. For the reasons that follow, the Motion will be granted in part and denied in part.

I. FACTUAL BACKGROUND

Because the Court writes primarily for the parties, the Court states herein only those facts which are necessary to provide a general context for its analysis. Additionally, in stating the factual background, the Court accepts as true the facts alleged in the Complaint, and draws all reasonable inferences in favor of Plaintiffs.*fn1

Plaintiff Robert Rivard is the President and sole shareholder of Plaintiff Dogleg Properties, Inc., formerly known as Rivard Popcorn Products, Inc. ("RPI"), a snack foods manufacturer with the exclusive right to purchase specialized machines used to produce snack foods. RPI used these machines at its manufacturing facility in Lancaster County, Pennsylvania.*fn2 Defendants Jerry Bello and Jason Cohen operate several entities identified by Plaintiffs in the Complaint as Defendants World Gourmet Acquisition, LLC; World Gourmet Acquisition Company, LLC; and World Gourmet Marketing, LLC (collectively "World Gourmet") that are also in the snack food industry.*fn3

In 2006, Plaintiffs became aware that Bello and Cohen were interested in finding a company to manufacture a World Gourmet product line, and the parties began negotiating an agreement whereby RPI would manufacture this product line using its specialized machines.*fn4 To this end, on December 6, 2006, Rivard, Bello, and Cohen executed a Supply, Marketing, Option and Stock Purchase Agreement (the "December 2006 Agreement").*fn5 The December 2006 Agreement provided, inter alia, that RPI would manufacture World Gourmet Products and in return, World Gourmet would use "commercially reasonable efforts" to solicit customers for RPI's manufacturing facility and would use their snack food industry and marketing expertise for RPI's benefit.*fn6 By the Agreement, Rivard also agreed to give World Gourmet an option to purchase his business assets and to sell World Gourmet a portion of RPI common stock.*fn7 It also provided that the parties would execute a Shareholders' Agreement whereby Bello and Cohen would be elected as directors of RPI.*fn8

Plaintiff alleges that as shareholders and directors, Bello and Cohen assumed operational control of RPI and having this control, engaged in a scheme to defraud Plaintiffs. Bello and Cohen allegedly drove the enterprise value of RPI to zero so that they could exercise their option to acquire RPI without paying additional consideration for the acquisition.*fn9 Plaintiffs refused Defendants' attempt to exercise their option.

The parties attempted to resolve their dispute by entering into an Asset Purchase Agreement dated June 4, 2008 ("the 2008 Agreement"), by which Plaintiffs agreed to sell RPI assets to World Gourmet for $350,000.*fn10 However, Plaintiffs allege that two years later, in June 2010, they discovered that "mere weeks" after the June 4, 2008 sale, Defendants experienced "astronomical growth" in the acquired business, selling the acquired business along with its business on June 15, 2010 for $112,000,000.*fn11 Plaintiffs claim that Bello and Cohen used their position as fiduciaries of RPI and their knowledge of the snack food industry to defraud Rivard, who was in poor health, by inducing him to sell RPI for far less than it was worth only to later enjoy a great benefit for themselves.

Plaintiffs' seven-count Complaint alleges the following: Breach of Fiduciary Duties against Defendants Bello and Cohen (Count I); Breach of Contract against Defendant World Gourmet Acquisition, LLC (Count II); Fraud against all Defendants (Count III); Interference with Prospective Contractual Business Relations and Opportunities against all Defendants (Count IV); Conversion of Business Opportunities against all Defendants (Count V); Civil Conspiracy against all Defendants (Count VI); and Unjust Enrichment, pled in the alternative as to all Defendants (Count VII). Defendants have filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).

II. STANDARD OF REVIEW

Pursuant to Federal Rule of Civil Procedure 12(b)(6), dismissal of a complaint for failure to state a claim upon which relief can be granted is appropriate where a plaintiff's "plain statement" lacks enough substance to show that he is entitled to relief.*fn12 In determining whether a motion to dismiss should be granted, the court must consider only those facts alleged in the complaint, accepting the allegations as true and drawing all logical inferences in favor of the non-moving party.*fn13 Courts are not, however, bound to accept as true legal conclusions couched as factual allegations.*fn14 Something more than a mere possibility of a claim must be alleged; rather plaintiff must allege "enough facts to state a claim to relief that is plausible on its face."*fn15

The complaint must set forth "direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory."*fn16 The court has no duty to "conjure up unpleaded facts that might turn a frivolous . . . action into a substantial one."*fn17

III. DISCUSSION

A. The Scope of the ...


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