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Cipciao LLC v. M Chow One LLC

Purchase Agreement Barred Firm From Seeking Return of its $5 Million Initial Payment

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OPINION AND ORDER In January 2020, Cipciao, LLC (“Cipciao”), a restaurant acquisition company, entered into a written agreement with M Chow One, LLC (“MCO”) to purchase a controlling membership interest in the chain of upscale Chinese restaurants doing business as “Mr. Chow,” which MCO owns. As part of the deal, Cipciao paid a “non-refundable” $5 million payment to MCO. Thereafter, however, the deal fell apart; indeed, both parties now purport to have terminated their agreement. Not surprisingly perhaps, Cipciao now wants its $5 million back. To that end, it brings a breach of contract claim and a constructive trust claim against MCO. It also brings claims against Michael Chow, MCO’s principal. Each Defendant now moves, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss. For the reasons that follow, both motions are granted, and Cipciao’s claims are dismissed in their entirety. BACKGROUND The following facts — drawn from the Complaint and documents attached to, integral to, or incorporated by reference in it — are assumed to be true for purposes of these motions. See, e.g., DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 110-11 (2d Cir. 2010). On January 31, 2020, Cipciao and MCO entered into a written agreement (the “Purchase Agreement”), pursuant to which Cipciao agreed to purchase from MCO a 90 percent interest in MCO — which owns all Mr. Chow restaurants and the licensing rights to the “Mr. Chow” name — for $68 million. ECF No. 1-1 (“Compl.”),

17-19; see ECF No. 13-4 (“Agreement”). Chow, who controls MCO, see Compl. 3, was not a party to the Purchase Agreement. Section 2.1(a) of the Purchase Agreement required Cipciao to pay MCO a “good faith non-refundable payment (subject to Section 8.2(b))” of $5 million dollars (the “Initial Payment”) “to demonstrate [Cipciao's] good faith pursuit of the transactions contemplated by [the] Agreement and as evidence of the availability” to Cipciao of funds sufficient to satisfy the full purchase price. Compl.

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