Trianco, LLC v. International Business Machines Corporation

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 07-1095
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TRIANCO, LLC,
Appellant
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION,
Appellee
__________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
No. 06-cv-03533
District Judge: Honorable Anita B. Brody
___________
Submitted Under Third Circuit L.A.R. 34.1(a)
March 10, 2008
___________
Before: FUENTES, CHAGARES, and ALDISERT, Circuit Judges
(Opinion Filed: April 2, 2008)
___________
OPINION
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FUENTES, Circuit Judge:
Presently before the Court is Trianco, LLC’s (“Trianco”) appeal of the dismissal
of its complaint against International Business Machine Corporation (“IBM”) under Rule
12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, we will
affirm in part, vacate in part, and remand with instructions.
I.
In early 2005, the federal Defense Commissary Agency (the “Government”)
issued a “request for proposal” (“RFP”) seeking bids for a prime contract to install
computerized “point-of-sale” checkstand equipment at the approximately 280 military
commissaries located in the United States and abroad. IBM, which possessed no prior
experience in performing point-of-sale work at military commissaries, wished to submit a
bid proposal as a potential prime contractor. IBM sought out Trianco, which possessed
considerable experience in performing point-of-sale work, as a “team member” to prepare
the bid.
In May 2005, IBM and Trianco entered into a “Teaming Agreement.” Under the
Teaming Agreement, IBM was obligated to prepare the bid proposal for the prime
contract. Trianco, in turn, was obligated to submit to IBM, prior to submission of the bid
proposal, its “cost/price” and “technical” proposals for the subcontract work. The
Teaming Agreement further required Trianco to assist in drafting the bid proposal. In
addition, the Teaming Agreement required Trianco to collaborate exclusively with IBM.

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The crux of the present litigation is whether the Teaming Agreement required
IBM to grant Trianco the subcontract, or whether IBM could grant the subcontract to a
more affordable third party. A few provisions of the Teaming Agreement are relevant to
our discussion. Several sections support Trianco’s position, including Section 1.3 of the
Teaming Agreement, which provides that “[u]pon award to IBM of a prime contract for
the [Project], IBM will award a subcontract to [Trianco].” (App. 121.) Next, Section 5.0
of a document entitled “Scope of Work,” which was attached to the Teaming Agreement,
provides that “[s]ubject to successful contract award from [the Government], IBM shall
offer Trianco a Subcontract to support IBM by providing resources to perform under the
contract.” (App. 124.) Section 5.0 of the Scope of Work also states that “[i]f Trianco
offers competitive pricing, availability of competent resources, and an acceptable
plan/strategy to perform the work in these areas, Trianco will have the right of first
refusal to perform the work.” (App. 125.)
However, other sections of the Teaming Agreement support IBM’s position that, if
the Government awarded IBM the prime contract, IBM and Trianco would then negotiate
the terms of a subcontract and, if such negotiations were unfruitful, IBM could award the
subcontract to another party. For instance, Section 1.4 of the Teaming Agreement
provides that “[a]fter the successful award of a contract to IBM, the parties will in good
faith negotiate mutually acceptable terms and conditions of the subcontract.” (App. 121.)
Furthermore, Section 5.1(f) of the Teaming Agreement provides that the agreement

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would terminate if “[t]he parties fail to negotiate and execute a subcontract agreement
containing mutually satisfactory prices and terms within a reasonable period after the
award of the prime contract to IBM.” (App. 122.) Moreover, Section 5.0 of the Scope of
Work states that “Trianco’s support/participation is subject to the ability of the parties to
negotiate mutually acceptable terms and conditions and Trianco offering competitive
pricing.” (App. 125.)
In the spring and summer of 2005, Trianco began preparing the technical plans
and proposals responsive to the RFP. Trianco’s work-product contained proprietary
business information and reflected its years of experience working on similar proposals.
In July 2005, Trianco submitted the proposal, which IBM used to prepare its bid for the
prime contract. In addition, Trianco submitted a proposal to IBM for the pricing of the
subcontract work. According to Trianco, IBM’s bid proposal, which it submitted to the
Government, confirmed that Trianco’s pricing proposal was “competitive” and
“acceptable.” (App. 102.)
The Government awarded IBM the prime contract on December 30, 2005. On
December 31, 2005, IBM advised Trianco that its pricing proposals for the subcontract
work were unacceptable and not competitive. IBM then asked Trianco to “re-bid” its
initial pricing. (App. 106.) Trianco submitted a new bid “under protest,” which IBM
rejected. (App. 107.) IBM then revealed that it had solicited an alternative bid for the
subcontract work from a third party.

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1The Teaming Agreement contained a choice of law provision stating that New
York law would govern its terms.
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Trianco then filed suit in the United States District Court for the Eastern District of
Pennsylvania. Trianco alleged that IBM breached its fiduciary duty to Trianco and the
implied covenant of good faith and fair dealing. Trianco also asserted claims of unjust
enrichment, equitable estoppel, and promissory estoppel. IBM then moved to dismiss
Trianco’s complaint under Federal Rule of Civil Procedure 12(b)(6). On December 21,
2006, the District Court granted IBM’s motion and dismissed the complaint in its
entirety. See Trianco LLC v. Int’l Bus. Mach. Corp., 466 F. Supp. 2d 600 (E.D. Pa.
2006). Trianco now appeals.
II.
We have jurisdiction to review this matter under 12 U.S.C. § 1291. We will
review the District Court’s dismissal of Trianco’s complaint de novo. Edgar v. Avaya,
Inc., 503 F.3d 340, 344 (3d Cir. 2007). When reviewing the grant of a motion to dismiss,
we must accept as true all factual allegations asserted in the complaint and draw all
reasonable inferences in favor of Trianco. Lum v. Bank of Am., 361 F.3d 217, 223 (3d
Cir. 2004). In assessing the sufficiency of Trianco’s allegations, we may consider the
various documents referenced in the complaint, such as the Teaming Agreement and
Scope of Work. See Winer Family Trust v. Queen, 503 F.3d 319, 327 (3d Cir. 2006).
Furthermore, neither party disputes that this matter is governed by New York law. 1
III.

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The first issue before us is whether Trianco’s complaint states a claim for breach
of contract. The District Court dismissed Trianco’s breach of contract claim because the
Teaming Agreement, it held, was missing an essential term – namely, Trianco’s price for
performing the subcontract. According to the District Court, the Teaming Agreement left
the award of the subcontract contingent on future negotiations, and thus, the Teaming
Agreement did not require IBM to grant Trianco the subcontract. Trianco, 466 F. Supp.
2d at 606.
It is well-settled under New York law that a contract provision may be rendered an
unenforceable “agreement to agree” if the parties left a material term for future
negotiations. See Joseph Martin, Jr. Delicatessen, Inc. v. Schumacher, 52 N.Y.2d 105,
109 (N.Y. 1981). However, “where it is clear from the language of an agreement that the
parties intended to be bound and there exists an objective method for supplying a missing
term, the court should endeavor to hold the parties to their bargain.” 166 Mamaroneck
Ave. Corp. v. 151 East Post Rd. Corp., 78 N.Y.2d 88, 91 (N.Y. 1991). Martin
Delicatessen sets forth two ways the “objective method” can be identified: (1) where,
within the four corners of the agreement, there exists a methodology for ascertaining the
missing term; or (2) where the agreement “invited recourse to an objective, intrinsic
event, condition or standard on which the amount was made to depend.” Martin
Delicatessen, 52 N.Y.2d at 110.
We find that IBM’s promise to grant Trianco a subcontract, subject to the parties’
future agreement on its terms, conditions, and pricing, is merely an agreement to agree.

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2We note that Section 1.2(e) of the Teaming Agreement states that Trianco’s
pricing proposal would constitute the maximum it could be paid if a subcontracting
agreement was reached. (App. 121.) This provision falls well short, though, of
constituting an objective pricing mechanism. All this provision created was a price
ceiling which Trianco could charge IBM. It did not provide any range or method for
determining when a price would be considered “competitive” under the Teaming
Agreement.
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As such, it is unenforceable under New York law. While the Teaming Agreement
provided that Trianco “will” and “shall” be awarded a subcontract, a material term of that
promise was missing – namely, the price that IBM would pay Trianco for performing the
subcontract. The agreement also contains no method for determining this price. While
the Teaming Agreement states that Trianco will have a right of first refusal to reject the
subcontract if it submitted “competitive pricing,” the Teaming Agreement also does not
define the term “competitive” nor does it refer to any extrinsic method for determining
whether Trianco’s pricing was, in fact, “competitive.”
We are also not persuaded by Trianco’s assertion that IBM accepted its pricing as
competitive when it submitted its bid to the Government. Nothing in the Teaming
Agreement states that Trianco’s proposed pricing, when submitted by IBM to the
Government, would constitute a definitive or even an approximate basis for determining
Trianco’s price. 2 Again, while the doctrine of definiteness is not a rigid concept, there
must be some objective method for supplying a missing material term. See, e.g., Clifford
R. Gray, Inc. v. Le Chase Constr. Servs., LLC, 31 A.D.3d 983 (N.Y. App. Div. 2006)
(holding that a subcontractor’s pricing proposals submitted to the prime contractor to

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3The District Court did hold that “[t]he Teaming Agreement was an enforceable
contract to the extent that it bound the parties to negotiate for a subcontract price in good
faith after the award of the prime bid.” Trianco, 466 F. Supp. 2d at 609. This holding,
though, appears to contradict the District Court’s earlier comment that “The question of
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secure a bid did not, without more, supply the missing term of the subcontractor’s
pricing). No such method existed here. Accordingly, we agree with the District Court
that the Teaming Agreement, as it relates to Trianco’s right to receive the subcontract, is
unenforceable as a matter of law. Thus, because Trianco had no contractual right to
receive the subcontract, the District Court correctly dismissed Trianco’s claim for breach
of contract.
IV.
Next, we consider Trianco’s unjust enrichment claim. Unjust enrichment is a
“quasi-contract claim” and “is an obligation the law creates in the absence of any
agreement.” Goldman v. Metro. Life Ins. Co., 5 N.Y.3d 561, 572 (N.Y. 2005). The
elements of an unjust enrichment claim are: (1) the defendant was enriched; (2) at the
expense of the plaintiff; and (3) it would be inequitable to permit the defendant to retain
that which is claimed by the plaintiff. Cruz v. McAneney, 31 A.D.3d 54, 59 (N.Y. App.
Div. 2006) (quotations omitted). The District Court dismissed Trianco’s unjust
enrichment claim on the ground that the Teaming Agreement was enforceable and thus
precluded the unjust enrichment claim. Trianco, 466 F. Supp. 2d at 609. However, the
District Court did not analyze whether the Teaming Agreement was, in fact, enforceable
in its entirety.3

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whether the bid-preparation phase obligations of the Teaming Agreement are all
enforceable – for example, Trianco’s exclusivity agreement – is not reached by this
case.” Trianco, 466 F. Supp. 2d at 607 n.3. Regardless, as discussed below, the District
Court did not discuss whether valid consideration existed for the Teaming Agreement.
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Above we found that the Teaming Agreement did not bind IBM to grant Trianco
the subcontract. However, Section 12.0 of the Teaming Agreement contains a
severability clause providing that the unenforceability of any of its provisions does not
render the remainder of the agreement unenforceable. (App. 123.) Thus, our holding
that IBM’s promise to award Trianco a subcontract is unenforceable does not require us
to find the remainder of the Teaming Agreement to be unenforceable. The promise of
each party to a bilateral agreement, such as the Teaming Agreement, must be supported
by valuable consideration. See, e.g., Curtis Props. Corp. v. Grief Cos., 212 A.D.2d 259,
264 (N.Y. App. Div. 1995) (citing Calamari and Perillo, Contracts § 70, at 134). As
such, a promise obliging only one party to a contract to do something, without receiving
any benefit in return, is illusory and creates no enforceable obligation. Id.
Here, the Teaming Agreement required Trianco to provide IBM with its
proprietary information and industry expertise to assist in preparing the bid. However,
without receiving a guaranteed subcontract in return, it appears that Trianco may not
have received consideration.
Accordingly, we will remand this matter to the District Court for a determination
as to whether the remainder of the Teaming Agreement was valid and, if so, whether
Trianco’s complaint states a cause of action for unjust enrichment.

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V.
Next, Trianco challenges the District Court’s dismissal of its breach of fiduciary
duty claim. The District Court rejected this claim because the allegations in Trianco’s
complaint described an “arms-length” transaction between two parties possessing
considerable industry experience. Trianco, 466 F. Supp. 2d at 608. The District Court
also held that IBM did not breach its fiduciary duty by awarding the subcontract to a third
party because it was merely exercising its rights under the Teaming Agreement. See id.
at 608-609.
Trianco argues that the District Court erred because IBM’s “dominant position” in
their relationship, and IBM’s representations and assurances, created a “special
relationship of trust and confidence” that IBM breached by not awarding the subcontract
to Trianco. (App 111.) Trianco also argues that IBM breached its fiduciary duty when it
secretly sought cheaper bids on the subcontract, and by using Trianco’s proprietary
business information and industry credentials contrary to Trianco’s best interests.
To determine whether a fiduciary relationship exists, “New York law inquires
whether one person has reposed trust or confidence in the integrity and fidelity of another
who thereby gains a resulting superiority or influence over the first.” Teachers Ins. &
Annuity Assoc. of Am. v. Wometco Ent., Inc., 833 F. Supp. 344, 349-50 (S.D.N.Y. 1993).
Accordingly, a fiduciary duty exists where one assumes control and responsibility over
another, or where one has a duty, created by his undertaking, to act primarily for the

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benefit of another in matters connected with his undertaking. See id.; see also
Mandelblatt v. Devon Stores, Inc., 132 A.D.2d 162, 168 (N.Y. App. Div. 1987).
Fiduciary relationships, though, typically do not arise between parties engaging in arms
length business transactions. See EBC I, Inc. v. Goldman Sachs & Co., 5 N.Y.3d 11, 22
(N.Y. 2005); SNS Bank, N.V. v. Citibank, N.A., 7 A.D.3d 352, 355 (N.Y. App. Div.
2004). Absent an allegation of a special relationship, mere assertions of “trust” in one
party are insufficient to support a claim of fiduciary relationship. See Freedman v.
Pearlman, 271 A.D.2d 301, 305 (N.Y. App. Div. 2000).
We agree with the District Court that this claim was appropriate for dismissal. As
the District Court correctly ruled, Trianco’s complaint merely reflects an arms length
commercial transaction between two experienced business entities. See Abercrombie v.
Andrews Coll., 438 F. Supp. 2d 243, 274 (S.D.N.Y. 2006) (though claims alleging the
existence of a fiduciary duty are not normally appropriate for dismissal at the 12(b)(6)
stage, “absent an allegation of a special relationship, mere assertions of trust and
confidence are insufficient to support a claim of a fiduciary relationship.”) (quotations
omitted); SNS Bank, N.V., 7 A.D.3d at 355 (affirming dismissal of breach of fiduciary
duty claims where “the parties merely had an arm’s length business relationship.”). In
fact, Trianco concedes in its complaint that it is an “experienced electrical services
contractor” which has been the “sole [point-of-sale] site survey, site preparation and
checkstand installation contractor (or subcontractor) for all military commissary

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installations” for the past 20 years. (App. 92.) While Trianco alleges that IBM held a
“dominant position” in their relationship, Trianco does not allege that IBM possessed
some “superior expertise or knowledge about some subject and misled plaintiff by false
representations concerning that subject,” thereby creating a fiduciary duty. Talansky v.
Schulman, 2 A.D.3d 355, 360 (N.Y. App. Div. 2003) (quotations omitted).
VI.
Next, Trianco challenges the District Court’s dismissal of its claim that IBM
breached the implied covenant of good faith and fair dealing. The District Court
dismissed this claim because it was “based on and incorporates the same allegations that
the breach of contract claim is based on: that IBM stopped Trianco from getting a
subcontract.” Trianco, 466 F. Supp. 2d at 609. We agree. Under New York law, a claim
for breach of the implied covenant of good faith and fair dealing must be separate from
any breach of contract claim. See Cerberus Int’l, Ltd. v. BancTec, Inc., 16 A.D.3d 126,
127 (N.Y. App. Div. 2005) (“The claim for breach of the implied covenant of good faith
and fair dealing was properly dismissed as duplicative of the contract claim.”). Here,
Trianco’s allegations essentially duplicate the allegations in its breach of contract claim.
Accordingly, dismissal was appropriate.
VII.
Trianco also challenges the District Court’s dismissal of its equitable estoppel
claim. “Equitable estoppel is defined as ‘[t]he doctrine by which a person may be

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precluded by his act or conduct, or silence when it is his duty to speak, from asserting a
right which he otherwise would have had.’” Besicorp Group v. Enowitz, 235 A.D.2d 761,
764 (N.Y. App. Div. 1997) (quoting Black’s Law Dictionary 538 (6th ed. 1990)). To
state a claim for equitable estoppel, a party must plead: (1) lack of knowledge of the true
facts; (2) reasonable reliance on the conduct of the party estopped; and (3) a prejudicial
change in its position. Broadworth Realty Assoc. v. Chock 336 B’Way Operating, Inc.,
168 A.D.2d 299, 301 (N.Y. App. Div. 1990).
Even if IBM concealed its solicitation of a cheaper subcontractor, or failed to
advise Trianco that its pricing was not competitive, the Teaming Agreement nevertheless
clearly stated that Trianco would only be awarded the subcontract if, after future
negotiations, it was the cheapest bidder. As such, Trianco could not have reasonably
relied on any alleged misrepresentation or concealment of fact by IBM that it its pricing
was competitive, or that it was guaranteed the subcontract. Accordingly, we agree with
the District Court that dismissal of this claim was appropriate.
VIII.
Finally, Trianco challenges the District Court’s dismissal of its promissory
estoppel claim. The District Court dismissed this claim because Trianco did not allege
that IBM made an express promise to award it a subcontract at the prices Trianco
proposed. We agree with this conclusion. To state a claim for promissory estoppel, the
complaint must allege a “clear and unambiguous promise.” Richbell Info. Servs. v.
Jupiter Partners, L.P., 309 A.D.2d 288, 304 (N.Y. App. Div. 2003). Here, Trianco’s

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claim that IBM clearly and unambiguously promised Trianco a subcontract at a certain
price is contradicted by the terms of the Teaming Agreement, which states in no
uncertain terms that Trianco’s receipt of a subcontract was subject to future negotiations
on price. Accordingly, the District Court properly dismissed this claim.
IX.
For the foregoing reasons, we will affirm in part and vacate in part.

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