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White Pearl Inversions v. Cemusa

July 16, 2010

WHITE PEARL INVERSIONS, ET AL. PLAINTIFFS,
v.
CEMUSA, INC., DEFENDANT.



The opinion of the court was delivered by: Wayne R. Andersen United States District Judge

Wayne R. Andersen District Judge

MEMORANDUM OPINION AND ORDER

This matter is before the court on the motion of the Defendant, Cemusa, Inc. ("Cemusa" or "Defendant") to dismiss the amended complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). For the reasons set forth below, Defendant's motion to dismiss is granted.

BACKGROUND

Plaintiffs White Pearl Inversions ("White Pearl") and Sanlo Corporation ("Sanlo," collectively "Plaintiffs") originally filed a ten count complaint against Cemusa in the Circuit Court of Cook County. Cemusa then removed this case to this court on November 9, 2007. On March 11, 2009, this court granted Cemusa's motion to dismiss the entire complaint, dismissing the entirety of Plaintiffs' claims with prejudice. On March 25, 2009, Plaintiffs moved for reconsideration pursuant to Federal Rule of Civil Procedure 59(e), or, in the alternative, 60(b). This court granted Plaintiffs' motion for reconsideration on April 6, 2009, insofar as Plaintiffs were given leave to file an amended complaint.

The dispute in the instant case involves the payment of commissions by Cemusa to Plaintiffs for services Plaintiffs allegedly rendered to Cemusa in order to facilitate Cemusa's successful bid for a contract with New York City to build street furniture, including bus stop shelters and public restrooms.

As noted in the opinion dated March 11, 2009, Cemusa is a subsidiary of a Spanish corporation that builds and installs street furniture in the United States. The street furniture typically bears advertising space that is sold to advertisers, which creates a revenue stream for whoever installs it. Winning a bid to install street furniture is often competitive and involves a certain amount of lobbying. Accordingly, in 2002 and 2003 Cemusa discussed with Plaintiffs a strategy for putting together a successful bid in response to a request for proposal ("RFP") to build street furniture that Cemusa expected New York City to issue. Pursuant to those discussions Cemusa entered into an agreement (the "Pre-RFP Agreement") with the Plaintiffs on March 25, 2003. The relevant portions of the Pre-RFP Agreement provide that the Plaintiffs would:

(i) In anticipation to the release of the RFP, introduce Cemusa as an important International company operating with the design, manufacture, installation, leasing and management of street furniture in major markets, and as a competent party to provide such services to the City of New York within the same standards practices by competitors such as J.C. Decaux, Clear Channel and Viacom

(ii) Provide advice and guidance on the strategy to be adopted by Cemusa, as it relates to the City of New York street furniture and local government concerns, starting on February, 2003.

Am.Compl., Ex. 1 at 2. The Pre-RFP Agreement provided that Cemusa was obligated to pay Plaintiffs $240,000 in exchange for services listed above, and Cemusa did pay this sum.

Further, the Pre-FRP agreement contemplated the creation of a Master Consulting Agreement (the "Master Agreement"), which would govern future agreements between the parties regarding the release of RFPs to Cemusa. The relevant language of the Pre-RFP Agreement stated:

In the event a RFP is released, White Pearl and Cemusa agree to act in accordance with the terms and conditions set forth in the Master Consulting Agreement, to be agreed in the near future among White Pearl, Cemusa and Sanlo Corp. Am. Compl., Ex. 1 at 2.

On April 1, 2003, Cemusa, White Pearl, and Sanlo entered into the Master Agreement, which provided the terms that would govern any subsequent agreement between the parties in response to future RFPs. The Master Agreement included a percentage compensation provision, which stated, in relevant part:

Percentage Compensation. The compensation (the "Percentage Compensation") payable to the Consultants, unless otherwise provided in the RFP Agreement, shall be in an amount equal to three and three-fourth percent (3.75%) of the Net Advertising Revenue, as hereinafter defined, received by Cemusa under the applicable Service Contract.

Am. Compl., Ex. 2 at 2-3. Compensation under this agreement would be conditional upon the success of Cemusa's bid in response to the RFP.

The Master Agreement also included a termination clause, which enabled either party to terminate the contract for any reason provided that the other party was given 30 days prior written notice. It also provided that,

Upon termination of this Agreement for any reason, all RFP Agreements then in effect shall terminate as well; provided, however, that any such termination shall not terminate the consultants' right to receive ongoing ...


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