Yookel, Inc. v. United States Steel Corporation

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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YOOKEL, INC., MEMORANDUM & ORDER

Plaintiff, 20-CV-4513 (KAM) (CLP)

- against -

UNITED STATES STEEL CORP.,

Defendant.

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KIYO A. MATSUMOTO, United States District Judge:

The Keystone Industrial Port Complex (“KIPC”) is an

industrial park located on the site of a former steel mill in

Fairless Hills, Pennsylvania. In 2007, Plaintiff Yookel, Inc.

purchased a parcel of property at the KIPC from Defendant United

States Steel Corporation. As part of that transaction, Yookel

acquired “ancillary rights” that permitted it to use certain

railroad tracks leading to its property. Yookel claims that U.S.

Steel did not disclose that a third party — namely, CSX

Transportation, Inc., the parent company of Consolidated Rail

Corporation (“Conrail”) — would assess “demurrage fees” for

failing to remove rail cars from the tracks in a timely manner.

Based on U.S. Steel’s alleged failure to disclose and reimburse

Yookel for the demurrage fees, the amended complaint asserts claims

for fraudulent inducement, breach of contract, unjust enrichment,

and a declaratory judgment.

U.S. Steel now moves for judgment on the pleadings

pursuant to Federal Rule of Civil Procedure 12(c). For the reasons

set forth below, Defendant’s motion is GRANTED.

BACKGROUND

The Keystone Industrial Port Complex consists of

industrial warehouses that are serviced by an internal rail system,

known as the Fairless Rail Yard. (ECF No. 13 (“Am. Compl.”) ¶

15.) The Fairless Rail Yard includes “common area rails” that are

owned by U.S. Steel. (Id.; see also ECF No. 21 (“Am. Answer”) ¶

15.)

On September 18, 2007, Yookel purchased property within

the KIPC from U.S. Steel for $6,390,000. (Am. Compl. ¶ 17; ECF

No. 21-1 (“Real Estate Agreement”).)1 Pursuant to the Real Estate

Agreement, Yookel obtained “ancillary rights” that included

“irrevocable, non-exclusive rights for rail access[] and railroad

staging” on the common area rails. (Am. Compl. ¶ 18; Real Estate

Agreement § 1.01; see id., Ex. K (depicting Yookel’s ancillary

rights).) In using the common area rails, Yookel agreed that it

would “utilize the switching carrier designated” by U.S. Steel.

(Real Estate Agreement § 1.01.) Yookel also acknowledged that its

ancillary rights were “subject to . . . [U.S. Steel’s] rights,” as

well as the rights of U.S. Steel’s “agents, assignees, carriers,

1 Although the Real Estate Agreement lists non-party Samax Enterprises, Inc. as

a buyer (see Real Estate Agreement at 1), only Yookel is recorded on the deed

for the property. (Am. Compl. ¶ 17 n.1.)

contractors[,] and all other persons lawfully using the Ancillary

Rights . . . .” (Id. § 1.01(A).) Finally, Yookel agreed that

“railcar storage, by [Yookel], shall be limited only to [its]

Premises.” (Id. § 1.01.)

As part of the real estate transaction, U.S. Steel also

granted Yookel an easement over a small area surrounding Yookel’s

property. (Am. Compl. ¶ 30; ECF No. 21-3 (“Rail Easement”); see

Real Estate Agreement, Ex. K1 (depicting easement area).) The

easement disclosed that “[t]he Rail System is currently maintained

for [U.S. Steel] through an operating agreement with Conrail.”

(Rail Easement at 3.) Specifically, U.S. Steel’s predecessor in

interest — USX Corporation — entered into a Rail Operating Service

Agreement with Conrail that became effective on January 1, 2000.

(Am. Compl. ¶ 57; ECF No. 21-2 (“Rail Operating Service

Agreement”). Pursuant to the Rail Operating Service Agreement,

Conrail acquired “the right to operate [Fairless Rail Yard]” and

was “solely responsible for negotiating suitable commercial

arrangements . . . with Shippers for line-haul, terminal[,] and

accessorial freight charges . . . .” (Am. Compl. ¶¶ 57, 59; Rail

Operating Service Agreement §§ 3, 10.)

To compensate U.S. Steel for “maintain[ing]” the common

area rails, the Real Estate Agreement provided that Yookel would

pay U.S. Steel $500 per acre, per year. (Am. Compl. ¶ 21; Real

Estate Agreement § 1.01(B).) This maintenance fee increased by 3%

per year. (Id.) However, if Yookel or any of its lessees

“discontinue[d] payment” of the maintenance fee, Yookel’s

ancillary rights would be terminated. (Am. Compl. ¶ 22; Real

Estate Agreement § 1.01(B).)

In October 2014, Yookel leased its property at the KIPC

to non-party B&J Group, Inc. (Am. Compl. ¶ 40.) As part of their

negotiations, Yookel represented to B&J that B&J was entitled to

use the common area rails pursuant to the ancillary rights. (Id.

¶ 41.) After B&J started using the common area rails in October

2014, however, Conrail’s parent company — CSX Transportation, Inc.

— sent invoices to B&J for demurrage fees. (Id. ¶ 43.) As required

by federal law, “[r]ailroads charge shippers and receivers of

freight ‘demurrage’ fees if the shippers or receivers detain

freight cars on the rails beyond a designated number of days.”

CSX Transp. Co. v. Novolog Bucks County, 502 F.3d 247, 251 n.1 (3d

Cir. 2007) (citation omitted); see, e.g., 49 U.S.C. § 10746; 49

C.F.R. §§ 1333.1-1333.3. B&J disputed the demurrage fees, which

ultimately totaled $80,750, arguing that “neither the Real Estate

Agreement nor the Rail Easement required payment of any fees to

any third party.” (Am. Compl. ¶¶ 53, 55.)

CSX ultimately commenced litigation against B&J to

recover the demurrage fees in the U.S. District Court for the

Eastern District of Pennsylvania. (Id. ¶ 54.) On May 31, 2019,

the district court granted CSX’s motion for summary judgment,

concluding that CSX could assess demurrage fees against B&J

pursuant to a public tariff of which B&J had actual notice. CSX

Transp., Inc. v. B&J Grp., Inc., 381 F. Supp. 3d 438, 442-43 (E.D.

Pa. 2019). The district court awarded CSX $353,979.69,

representing the balance of the demurrage fees, late fees, finance

charges, costs, and attorney’s fees. (Am. Compl. ¶ 67.) Following

the district court’s judgment in the Pennsylvania action, B&J

sought reimbursement from its lessor, Yookel. (Id. ¶ 69.) Yookel

represents that it has paid B&J in partial satisfaction of the

Pennsylvania judgment and will continue to pay B&J until the

judgment is satisfied. (Id. ¶ 70.)

On August 26, 2020, Yookel commenced this action against

U.S. Steel in the Supreme Court of New York for Kings County,

arguing that U.S. Steel is required to pay Yookel for the costs of

the Pennsylvania judgment pursuant to the Real Estate Agreement.

(ECF No. 1-2.) U.S. Steel removed the case to this court on

September 23, 2020. (ECF No. 1.) After each party amended its

pleading (see Am. Compl.; Am. Answer), U.S. Steel requested a pre-

motion conference to move for judgment on the pleadings pursuant

to Federal Rule of Civil Procedure 12(c). (ECF No. 22.) The court

held a premotion conference on February 12, 2021 and heard oral

argument on the fully briefed motion on February 10, 2022.

(2/12/21 Minute Entry; 2/10/22 Minute Entry.)2

LEGAL STANDARD

“After the pleadings are closed — but early enough not

to delay trial — a party may move for judgment on the pleadings.”

Fed. R. Civ. P. 12(c). “The standard for granting a Rule 12(c)

motion for judgment on the pleadings is identical to that for

granting a Rule 12(b)(6) motion [to dismiss] for failure to state

a claim.” Lively v. WAFRA Inv. Advisory Grp., Inc., 6 F.4th 293,

301 (2d Cir. 2021) (citation omitted). As a result, to survive a

motion for judgment on the pleadings, a complaint “must contain

sufficient factual matter, accepted as true, to state a claim to

relief that is plausible on its face.” Id. (citation omitted).

“[J]udgment on the pleadings is not appropriate if there are issues

of fact which if proved would defeat recovery, even if the trial

court is convinced that the party opposing the motion is unlikely

to prevail at trial.” Id. (alteration original; citation omitted).

When analyzing a Rule 12(c) motion, the court may

consider “all documents that qualify as part of the non-movant’s

‘pleading,’ including (1) the complaint or answer, (2) documents

2 At the premotion conference, the court questioned whether this action should

be transferred to the Eastern District of Pennsylvania in the interests of

justice pursuant to 28 U.S.C. § 1404(a). Both parties confirmed that they

consent to the court adjudicating the instant motion, and therefore the court

understands that U.S. Steel does not dispute venue in the Eastern District of

New York. Because the court grants U.S. Steel’s motion for judgment on the

pleadings, it need not consider the issue of transferring venue.

attached to the pleading, (3) documents incorporated by reference

in or integral to the pleading, and (4) matters of which the court

may take judicial notice.” Id. at 306. The court accordingly

considers the Real Estate Agreement, Rail Easement, and Rail

Operating Service Agreement, which were incorporated by reference

in the amended complaint. (See, e.g., Am. Compl. ¶¶ 17, 30, 57.)

DISCUSSION

I. Choice of Law

“A federal court sitting in diversity applies the choice-

of-law rules of the forum state.” Kinsey v. N.Y. Times Co., 991

F.3d 171, 176 (2d Cir. 2021) (citation omitted). Applying New

York’s choice of law rules, the court agrees with U.S. Steel that

Pennsylvania’s substantive law applies to Yookel’s claims for

breach of contract and a declaratory judgment, and that New York’s

substantive law applies to Yookel’s claims for fraudulent

inducement and unjust enrichment. (See ECF No. 26-1 (“Def.’s

Mem.”) at 6-9.)

“Generally, courts will enforce a choice-of-law clause so

long as the chosen law bears a reasonable relationship to the

parties or the transaction.” Welsbach Elec. Corp. v. MasTec N.A.,

Inc., 859 N.E.2d 498, 500 (N.Y. 2006). Here, the parties agreed

to a choice of law clause providing that the Real Estate Agreement

“shall be governed by and performed in accordance with the laws of

the Commonwealth of Pennsylvania . . . .” (Real Estate Agreement

§ 25.) The parties’ choice of Pennsylvania law bears a reasonable

relationship to the Real Estate Agreement because the property and

dispute at issue are located in Pennsylvania.

Under New York law, however, the Real Estate Agreement’s

choice of law provision “governs only a cause of action sounding

in contract, not one sounding in tort.” Lazard Freres & Co. v.

Protective Life Ins. Co., 108 F.3d 1531, 1540 (2d Cir. 1997). By

definition, Yookel’s claim for breach of contract sounds in

contract. Similarly, Yookel’s claim for declaratory relief asks

the court to declare the parties’ rights and obligations under the

Real Estate Agreement. See 10B Charles A. Wright & Arthur R.

Miller, Federal Practice & Procedure § 2756 (“On the substantive

issues that may arise in an action for a declaratory judgment, the

rule of Erie Railroad Company v. Tompkins controls, when it is

applicable.” (citation omitted)). Accordingly, the court will

apply Pennsylvania’s substantive law in adjudicating Yookel’s

claims for breach of contract and a declaratory judgment.3

3 However, the court disagrees with U.S. Steel’s suggestion that Pennsylvania

law provides the applicable procedural standards for Yookel’s claim for a

declaratory judgment. (Def.’s Mem. at 10 (citing Pennsylvania law).) “Courts

in this circuit and elsewhere . . . have concluded that the federal Declaratory

Judgment Act, see 28 U.S.C. § 2201, rather than an otherwise applicable state

declaratory judgment act, governs in diversity actions under Erie Railroad Co.

v. Tompkins, 304 U.S. 64 (1938).” Bruno v. Casella Waste Sys., Inc., 616 F.

App’x 20, 21 n.2 (2d Cir. 2015); see also, e.g., Lighton Indus., Inc. v. Allied

World Nat’l Assurance Co., 348 F. Supp. 3d 167, 182 (E.D.N.Y. 2018) (“The

Declaratory Judgment Act — not state declaratory judgment law — provides the

procedural mechanism for granting declaratory relief in federal diversity

cases.” (citation omitted)).

Yookel’s claims for fraudulent inducement and unjust

enrichment, by contrast, do not sound in contract and thus are not

governed by the Real Estate Agreement’s choice of law provision.

See, e.g., Dessert Beauty, Inc. v. Platinum Funding Corp., 2006 WL

3780902, at *5 (S.D.N.Y. Dec. 26, 2006) (“[T]he choice of law

provision does not determine which state’s law should apply to the

tort claim [for fraudulent inducement].”)4; FCX Solar, LLC v. FTC

Solar, Inc., 2022 WL 355606, at *7 (S.D.N.Y. Feb. 7, 2022)

(“[U]njust enrichment is an equitable claim that is outside the

scope of the contract’s choice-of-law provision and may be governed

by the law of a different state.” (citation omitted)). Without an

applicable choice of law provision, the court conducts an interest

analysis under New York law to determine which jurisdiction has

the greatest interest in resolving the particular claim. See,

e.g., Intellivision v. Microsoft Corp., 2008 WL 3884382, at *5

(S.D.N.Y. Aug. 20, 2008) (fraudulent inducement); Scherie Murray

for Congress v. Shannon, 2021 WL 4480573, at *6 (E.D.N.Y. Sept.

4 It is true that a choice of law provision may apply to tort claims like

fraudulent inducement that “aris[e] incident to the contract,” so long as the

express language of the provision is “sufficiently broad as to encompass the

entire relationship between the contracting parties.” Krock v. Lipsay, 97 F.3d

640, 645 (2d Cir. 1996) (quotations and citation omitted). However, because

the choice of law provision in this case states only that the Real Estate

Agreement “shall be governed by and performed in accordance with” Pennsylvania

law (Real Estate Agreement § 25), it is not broad enough to cover Yookel’s tort

claim for fraudulent inducement. Krock, 97 F.3d at 645 (holding that a

materially identical choice of law provision did not encompass tort claim for

fraudulent misrepresentation).

30, 2021) (unjust enrichment).5 As part of this analysis, the

court looks to “the parties’ domiciles and the locus of the tort,”

with the relative importance of those factors being determined by

“the nature of the law in question.” Krock, 97 F.3d at 646

(citation omitted).

Where, as here, the parties are domiciled in different

states, “the locus of the tort will almost always be determinative

in cases involving conduct-regulating laws.” Id. Yookel’s claim

for fraudulent inducement involves a conduct regulating law. See,

e.g., Chigirinskiy v. Panchenkova, 2015 WL 1454646, at *6 n.7

(S.D.N.Y. Mar. 31, 2015). Similarly, Yookel’s claim for unjust

enrichment involves a conduct regulating law because the claim is

also premised on U.S. Steel’s alleged fraudulent inducement. See

Related Cos., 2019 WL 10947100, at *11 (finding that an unjust

enrichment claim was conduct regulating where the claim was

premised on fraudulent misrepresentations (citing Benefield v.

Pfizer Inc., 103 F. Supp. 3d 449, 458 (S.D.N.Y. 2015))). As a

result, the locus of the alleged tort is determinative.

5 “The question of ‘[w]hether to apply to an unjust enrichment claim New York’s

‘center of gravity’ choice of law test applicable to contract disputes, or New

York’s ‘interest analysis’ test applicable to tort claims, is a matter of debate

among district courts in this Circuit.” Related Cos., L.P. v. Ruthling, 2019

WL 10947100, at *11 (S.D.N.Y. July 23, 2019) (alteration original; citation

omitted). Here, the court applies an interest analysis because Yookel’s unjust

enrichment claim is premised on the same acts and omissions as Yookel’s

fraudulent inducement claim. Id. (collecting cases and holding that an unjust

enrichment claim premised on allegedly fraudulent conduct “sounds more in tort

than it does in contract”).

“New York courts consider the locus of a fraud to be the

place where the injury was inflicted and not the place where the

fraudulent act originated.” H.S.W. Ents., Inc. v. Woo Lae Oak,

Inc., 171 F. Supp. 2d 135, 142 (S.D.N.Y. 2001). Yookel was

allegedly injured in New York, where it was incorporated and

maintains its principal place of business. (Am. Compl. ¶ 10.)

The court thus applies New York law to Yookel’s fraudulent

inducement and unjust enrichment claims. See H.S.W. Ents., 171 F.

Supp. 2d at 142; Related Cos., 2019 WL 10947100, at *11.

Moreover, Yookel’s opposition fails to respond to the

choice of law arguments contained in U.S. Steel’s motion. Yookel’s

“‘silence on the choice-of-law question’ may be understood to

‘constitute[] implied consent . . . sufficient to establish choice

of law.’” Related Cos., 2019 WL 10947100, at *10 (alterations

original; citation omitted); see also, e.g., Brown v. Twitter,

2021 WL 3887611, at *7 (S.D.N.Y. Aug. 31, 2021) (finding implied

consent where plaintiff “d[id] not proffer any alternative state

substantive law”). Accordingly, Yookel’s failure to address

choice of law provides an alternative basis to apply Pennsylvania’s

substantive law to the claims for breach of contract and a

declaratory judgment, and to apply New York’s substantive law to

the claims for fraudulent inducement and unjust enrichment.

II. Breach of Contract

The amended complaint alleges that U.S. Steel has breached

the Real Estate Agreement because CSX (Conrail’s parent company)

assessed demurrage fees against Yookel’s lessee. (Am. Compl. ¶¶

106-08.) In Yookel’s view, U.S. Steel must reimburse Yookel for

the demurrage fees that CSX assessed against its lessee because

the Real Estate Agreement only required Yookel to pay the

maintenance fee. (See, e.g., id. ¶ 45.) U.S. Steel argues that

the amended complaint fails to state a claim for breach of contract

because the Real Estate Agreement does not entitle Yookel to recoup

demurrage fees and because Yookel’s rights under the Real Estate

Agreement were terminated for non-payment in 2013. (Def.’s Mem.

at 19-21.)

Under Pennsylvania law, “[t]he fundamental rule in

interpreting a contract is to ascertain and give effect to the

intent of the contracting parties.” Crawford Cent. Sch. Dist. v.

Commonwealth, 888 A.2d 616, 623 (Pa. 2005). “The intent of the

parties to a written agreement is embodied in the writing itself.”

Id. The court “may not modify the plain meaning of the contract

under the guise of interpretation.” Id. Instead, “[w]hen

contractual language is clear and unequivocal, its meaning must be

determined by its contents alone.” Id. The meaning of an

unambiguous contract presents a question of law for the court to

resolve. Murphy v. Duquesnse Univ. of the Holy Ghost, 777 A.2d

418, 430 (Pa. 2001).

The court agrees with U.S. Steel that the Real Estate

Agreement is unambiguous and does not entitle Yookel to recover

demurrage fees assessed by CSX. The Real Estate Agreement’s

maintenance fee is precisely described: a fee “to maintain the

Common Area Rail lines that service the Premises.” (Real Estate

Agreement § 1.01(B).) In other words, U.S. Steel promised that it

would keep the common area rails in good working condition in

exchange for a fee. (See Rail Easement § 1(D)(c) (“[U.S. Steel]

shall cause, to the extent capable, Conrail to keep and maintain

the Rail System in unobstructed, good working condition adequate

to carry rail cars using the Rail System.”).)

Contrary to Yookel’s allegations, however, U.S. Steel did

not promise that the maintenance fee would be the only expense

that Yookel could ever incur in connection with its use of the

common area rails. (See, e.g., Am. Compl. ¶ 45 (“Yookel rightfully

understood that it was only required to pay U.S. Steel the

Maintenance Fee in connection with its use of the Common Area

Rails, and was not responsible for any other fees.”).) Rather,

U.S. Steel merely promised that the maintenance fee would be the

only expense that Yookel would incur for U.S. Steel to maintain

the common area rails.

As provided by federal regulation, demurrage is not a

matter of maintenance, but instead “is a charge that both

compensates rail carriers for the expenses incurred when rail cars

are detained beyond a specified period of time . . . and serves as

a penalty for undue car detention to encourage the efficient use

of rail cars in the rail network.” 49 C.F.R. § 1333.1. As Yookel

concedes, demurrage fees are “akin to storage charges.” (Am.

Compl. ¶ 45; see id. ¶¶ 1, 52 (referring to demurrage fees as

“storage fees”).) And in the Real Estate Agreement, Yookel

explicitly promised that “railcar storage, by [Yookel], shall be

limited only to the Premises.” (Real Estate Agreement § 1.01.)6

Thus, far from embracing a promise that U.S. Steel would compensate

Yookel for demurrage fees, Yookel undertook to refrain from conduct

— namely, storing its cars on the common area rails — that could

lead to the assessment of demurrage fees.

Reading Yookel’s proposed limitation into the Real Estate

Agreement — that the existence of the maintenance fee precluded

all other fees assessed by third parties — would impermissibly

“modify the plain meaning of the contract under the guise of

interpretation.” Crawford Cent. Sch. Dist., 888 A.2d at 623.

Indeed, the parties’ integration clause makes clear that the Real

6 Yookel’s premises did include its rail easement. (See Real Estate Agreement

§ 1; ECF No. 30 (“Pl.’s Opp’n”) at 4.) As discussed below, however, the

demurrage fees at issue in this case were not assessed for storing cars within

the easement area.

Estate Agreement “constitutes and contains the entire and only

Agreement between the parties,” and that “[n]o representation,

inducement, promise, understanding, condition, or warranty not set

forth herein has been made or relied on by either party.” (Real

Estate Agreement § 22.) And even if the Real Estate Agreement

could be considered ambiguous on the question of demurrage fees,

“ambiguities are to be resolved in favor of a reasonable rather

than an absurd or unreasonable interpretation.” Starling v. Lake

Meade Prop. Owners Ass’n, Inc., 162 A.3d 327, 346 (Pa. 2017). As

U.S. Steel notes, the logic of Yookel’s position extends beyond

demurrage fees assessed by third parties and would hold U.S. Steel

liable for a host of expenses incident to Yookel’s use of the

common area rails, such as utility and tax payments. (Def.’s Mem.

at 13, 23.) The court cannot conclude that the Real Estate

Agreement embraces such absurd results merely by granting Yookel

the right to use the common area rails.

To be sure, the Real Estate Agreement’s ancillary rights

granted Yookel “irrevocable, non-exclusive rights for rail

access[] and railroad staging.” (Real Estate Agreement § 1.01.)

But the Real Estate Agreement explicitly provides that Yookel’s

rights were subject to U.S. Steel’s rights; the rights of U.S.

Steel’s agents, assignees, carriers, and contractors; and the

rights of all others lawfully using the common area rails. (Real

Estate Agreement § 1.01(A).) The plain language of the agreement

thus refutes the amended complaint’s allegation that Yookel’s

rights were “unbeknownst to Yookel, subject to Conrail’s and CSX’s

rights to charge the Demurrage Fees.” (Am. Compl. ¶ 106.) At the

time of the Real Estate Agreement, based on the plain language of

the document and the Rail Easement, Yookel knew that its rights

were subject to the rights of U.S. Steel’s carriers; knew that it

was required to use the switching carrier designated by U.S. Steel;

and knew that the common area rails were operated by Conrail.

(Real Estate Agreement §§ 1.01, 1.01(A); Rail Easement at 3.) Had

Yookel consulted federal law, it would have been alerted to the

prospect of demurrage fees if Yookel misused the common area rails

by failing to remove its cars in a timely manner.7 In sum, the

court concludes that the plain language of the Real Estate

Agreement does not entitle Yookel to recoup demurrage fees from

U.S. Steel.

In the alternative, U.S. Steel argues that the amended

complaint fails to state a breach of contract claim because

7 Yookel claims that it could not have anticipated the prospect of demurrage

fees because “demurrage fees cannot legally be charged on private property.”

(Pl.’s Opp’n at 7 & n. 9 (citing R.R. Salvage & Restoration, Inc., 2010 WL

2836850, at *6 (S.T.B. July 19, 2010)).) The court agrees with U.S. Steel,

however, that the Surface Transportation Board’s decision in Railroad Salvage

& Restoration does not save Yookel’s claims. (See ECF No. 27 (“Def.’s Reply”)

at 2-3 & n.1.) In that case, the STB considered a rail tariff that, by its own

terms, “except[ed] from demurrage charges ‘loaded or empty private cars held on

private or leased storage tracks.’” 2010 WL 2836850, at *6 (citation omitted).

The court’s decision in the Pennsylvania litigation demonstrates that the tariff

applicable to the demurrage fees assessed against Yookel’s lessee contained no

such limitation. As the court found in the Eastern District of Pennsylvania

case, CSX “ha[d] obtained the right to assess demurrage on tracks owned or

operated by Conrail.” B&J Grp., Inc., 381 F. Supp. 3d at 440.

Yookel’s ancillary rights were terminated for non-payment.

(Def.’s Mem. at 20.) In support of this argument, U.S. Steel

attaches to its amended answer a termination letter dated February

7, 2013 and a declaration from a former U.S. Steel employee

representing that Yookel’s ancillary rights were not reinstated.

(ECF Nos. 21-4, 21-5.) However, the court concludes that it is

inappropriate to consider the termination letter and declaration

because they were attached to the movant’s pleading. See Lively,

6 F.4th at 304 (holding that “the district court erred by relying

on several documents attached to [the movant-defendants’] answer

in deciding their Rule 12(c) motion without converting it into a

motion for summary judgment as required by Rule 12(d)”).

In Lively, which was issued after completion of the

briefing on the instant motion, the Second Circuit clarified the

documents that a court may consider on a motion for judgment on

the pleadings. Id. at 306 (“[C]ourts may consider all documents

that qualify as part of the non-movant’s ‘pleading,’ including (1)

the complaint or answer, (2) documents attached to the pleading,

(3) documents incorporated by reference in or integral to the

pleading, and (4) matters of which the court may take judicial

notice.”). The termination letter and declaration are not

attached to, or incorporated by reference in, the amended

complaint. See, e.g., Benny v. City of Long Beach, 2021 WL

4340789, at *10 (E.D.N.Y. Sept. 23, 2021) (“To be incorporated by

reference, the complaint must make a clear, definite[,] and

substantial reference to the documents . . . .” (citation

omitted)). Nor are the termination letter and declaration integral

to the amended complaint because Yookel does not “rel[y] on the

terms and effect of [the] document[s].” Lively, 6 F.4th at 305

(second alteration original; citation omitted). To the contrary,

Yookel’s amended complaint presumes that the termination letter

and declaration have no effect whatsoever. (See, e.g., Am. Compl.

¶ 105 (“Yookel has annually paid U.S. Steel [the] Maintenance Fee

since the execution of the Real Estate Agreement and continues to

pay such fee.”).) Finally, the termination letter and declaration

are not proper subjects of judicial notice because — as the

parties’ briefing demonstrates — their contents are “subject to

reasonable dispute.” Melendez v. City of New York, 16 F.4th 992,

997 n.2 (2d Cir. 2021) (quoting Fed. R. Evid. 201(b)).

For similar reasons, the court finds it unnecessary to

consider the receipt, invoices, and checks that Yookel attached to

its opposition in an effort to demonstrate that the ancillary

rights were not terminated in 2013. (See ECF Nos. 31-2 to 31-9.)

The court has not considered U.S. Steel’s termination letter and

declaration, but rather has assumed the truth of the amended

complaint’s allegation that Yookel has paid and continued to pay

the maintenance fee in accordance with the Real Estate Agreement.

(Am. Compl. ¶ 105.) Nevertheless, even assuming that Yookel’s

ancillary rights were not terminated, the plain language of the

Real Estate Agreement does not entitle Yookel to recoup demurrage

fees from U.S. Steel for the reasons explained above. Judgment on

the pleadings is thus appropriately granted to U.S. Steel on

Yookel’s breach of contract claim.

III. Unjust Enrichment

In addition to a breach of contract claim, the amended

complaint asserts a claim for unjust enrichment. (Am. Compl. ¶¶

111-19.) However, “[a]n unjust enrichment claim is not available

where it simply duplicates, or replaces, a conventional contract

or tort claim.” Transperfect Global, Inc. v. Lionbridge Techs.,

Inc., 2022 WL 195836, at *11 (S.D.N.Y. Jan. 21, 2022) (quoting

Corsello v. Verizon New York, Inc., 967 N.E.2d 1177, 1185 (N.Y.

2012)). Yookel’s unjust enrichment claim merely duplicates its

breach of contract claim because both claims are premised on U.S.

Steel’s purported obligation to reimburse Yookel for demurrage

fees. (See Am. Compl. ¶¶ 106, 113.) Moreover, “New York law is

clear that ‘[a] claim for unjust enrichment, or quasi contract,

may not be maintained where a contract exists between the parties

covering the same subject matter.’” CF2 Co., Ltd. v. YOCO Inc.,

2021 WL 4311150, at *2 (S.D.N.Y. Sept. 21, 2021) (alteration

original) (quoting Goldstein v. CIBC World Mkts. Corp., 776

N.Y.S.2d 12, 14 (1st Dep’t 2004)). Because the Real Estate

Agreement covers the parties’ rights and obligations in connection

with Yookel’s use of the common area rails, Yookel cannot maintain

a separate claim for unjust enrichment.

IV. Declaratory Judgment

Mirroring its breach of contract claim, Yookel requests

a declaration that: (1) the Real Estate Agreement and Rail Easement

are silent as to any obligation for Yookel to pay fees to third-

parties like Conrail; (2) because the Real Estate Agreement and

Rail Easement are silent on the question of third-party fees, U.S.

Steel must reimburse Yookel for any such fees; and (3) because

U.S. Steel has not provided Yookel with the rights that it

bargained for, Yookel is no longer obligated to pay the maintenance

fee to U.S. Steel. (Am. Compl. ¶ 86.) Yookel fails to state a

plausible claim for a declaratory judgment for the same reasons

that it fails to state a plausible breach of contract claim. See,

e.g., BSD-360, LLC v. Phil. Indem. Ins. Co., 2022 WL 138075, at

*11 (E.D. Pa. Jan. 14, 2022) (“Because the Court finds that

[plaintiff’s] claims do not fall within the coverage of its . . .

contract with [defendant] and thus [defendant] did not breach the

contract, the Court similarly finds that [plaintiff] is not

entitled to declaratory relief.”); PRCM Advisors LLC v. Two Harbors

Inv. Corp., 2021 WL 2582132, at *19 (S.D.N.Y. June 23, 2021)

(dismissing declaratory judgment claim for the same reasons as

breach of contract claim); Beach v. HSBC Bank USA, N.A., 2018 WL

3996931, at *7 (S.D.N.Y. Aug. 21, 2018) (same).

As discussed above, the court agrees with Yookel — and

U.S. Steel does not dispute (see Def.’s Mem. at 12-13) — that the

Real Estate Agreement and Rail Easement are silent on the question

of third-party fees like demurrage fees. But the second and third

prongs of Yookel’s request for a declaratory judgment simply do

not follow. Pennsylvania law and the Real Estate Agreement’s

integration clause preclude the court from transforming

contractual silence into an affirmative obligation for U.S. Steel

to pay demurrage fees. In addition, Yookel fails to state a

plausible claim that it did not receive the rights that it

bargained for under the Real Estate Agreement. Yookel does not

allege, for example, that U.S. Steel failed to keep the common

area rails in good working condition. And although Yookel had the

right to use the common area rails for “rail access[] and railroad

staging” (Real Estate Agreement § 1.01.)8, it did not have the

right to store its cars on the rails for as long as it liked. See

49 C.F.R. § 1333.1 (demurrage fees are imposed “when rail cars are

8 Yookel also cites the Rail Easement’s provision that, among other purposes,

the easement was granted for “the staging and storage of rail cars.” (Rail

Easement § 1(D)(a); see Pl.’s Opp’n at 5.) But the relevant agreements make

clear that the easement area on which Yookel could store its cars was a small

area of property immediately surrounding Yookel’s property, and that Yookel’s

rail access rights encompassed a significantly broader area. (See Real Estate

Agreement § 1.01 (“[Yookel] shall have irrevocable, non-exclusive rights for

rail access[] and railroad staging as set forth and designated as the Rail

Rights, attached hereto as Exhibit K . . . . In addition, [Yookel] will take

ownership of a rail easement as depicted on Exhibit K1 . . . .); see also id.,

Exs. K, K-1.) Yookel alleges that the demurrage fees were assessed for B&J’s

storing of cars on the common area rails, and not for storing cars within the

easement area. (See Am. Compl. ¶ 43 (“[U]pon its use of the Common Area Rails,

B&J began receiving invoices from CSX . . . for demurrage fees.”).)

detained beyond a specified period of time”). Because Yookel’s

interpretation “is foreclosed by the clear and unambiguous

language of [the Real Estate Agreement],” the amended complaint

fails to state a plausible claim for declaratory relief. Gillis

v. Respond Power, LLC, 2018 WL 3427636, at *10 (E.D. Pa. July 16,

2018).

V. Fraudulent Inducement

Finally, the amended complaint alleges that U.S. Steel

fraudulently induced Yookel to enter into the Real Estate Agreement

by failing to disclose that Conrail (through its parent) could

assess demurrage fees. (Am. Compl. ¶ 88.) U.S. Steel argues that

the amended complaint fails to state a claim for fraudulent

inducement because U.S. Steel did not withhold any material

information from Yookel and had no duty to disclose the existence

of the federal laws governing demurrage fees. (Def.’s Mem. at 16-

19.)

“[A]n omission can only serve as the basis of a fraudulent

inducement claim where a defendant has a duty to disclose . . . .”

Marquez v. Hoffman, 2021 WL 1226981, at *33 (S.D.N.Y. Mar. 31,

2021); see also, e.g., Merrill Lynch & Co. Inc. v. Allegheny

Energy, Inc., 500 F.3d 171, 181 (2d Cir. 2007). “It is well

established that, absent a fiduciary relationship between the

parties, a duty to disclose arises only under the special facts

doctrine where one party’s superior knowledge of essential facts

renders a transaction without disclosure inherently unfair.” Jana

L. v. W. 29th St. Realty Corp., 802 N.Y.S.2d 132, 134 (1st Dep’t

2005) (quotations and citation omitted). The court agrees with

U.S. Steel that Yookel has failed to adequately plead the existence

of a fiduciary relationship or a duty to disclose under the special

facts doctrine.

First, a fiduciary relationship “is grounded in a higher

level of trust than normally present in the marketplace between

those involved in arm’s length business transactions.” EBC I,

Inc. v. Goldman, Sachs & Co., 832 N.E.2d 26, 31 (N.Y. 2005). As

Yookel notes (see Pl.’s Opp’n at 22), determining the existence of

a fiduciary relationship can sometimes be a fact-intensive inquiry

that is unsuitable for resolution at the pleading stage. See,

e.g., Menton v. Experian Corp., 2003 WL 941388, at *4 (S.D.N.Y.

Mar. 6, 2003). Here, however, the amended complaint fails to

allege the existence of a fiduciary relationship or “anything in

[Yookel’s] dealings with [U.S. Steel] other than an arm’s length

business transaction.” Sharbat v. Iovance Biotherapeutics, Inc.,

2022 WL 45062, at *9 (S.D.N.Y. Jan. 5, 2022); see also, e.g.,

Barron Partners, LP v. LAB123, Inc., 593 F. Supp. 2d 667, 672

(S.D.N.Y. 2009) (dismissing fraudulent inducement claim when party

“failed to allege any facts sufficient to demonstrate that the

relationship between the parties was anything other than arm’s-

length”). Yookel thus has failed to adequately plead a duty to

disclose based on a fiduciary relationship.

Second, to state a claim based on the special facts

doctrine, a plaintiff must plead facts showing that (1) the omitted

information was “peculiarly within the knowledge” of the defendant

and (2) the information could not have been discovered “through

the exercise of ordinary intelligence.” Jana L., 802 N.Y.S.2d at

135 (quotations and citation omitted). Here, the omitted

information — failing to disclose that Conrail (through its parent)

could charge demurrage fees if Yookel failed to remove its cars

from the common area rails in a timely manner — was not peculiarly

within U.S. Steel’s knowledge. Although Yookel claims that U.S.

Steel had superior knowledge of its relationship with Conrail and

the terms of the Rail Operating Service Agreement, Yookel also

acknowledges that demurrage fees are ultimately governed by

federal law. (Pl.’s Opp’n at 17, 22-23.) The federal laws and

regulations governing demurrage fees were readily available to

Yookel at the time of the Real Estate Agreement and thus were not

peculiarly within U.S. Steel’s knowledge. See, e.g., Bell v.

Carey, 2020 WL 3578150, at *7 (S.D.N.Y. July 1, 2020) (no duty to

disclose tax liabilities that were publicly available); Hahn v.

Dewey & Laboeuf Liquidation Trust, 39 N.Y.S.3d 30, 32 (1st Dep’t

2016) (no duty to disclose statute of limitations or legal

precedent establishing the accrual of malpractice claims).

At the time it entered into the Real Estate Agreement,

Yookel had sufficient information to understand the prospect of

Conrail (through its parent) charging demurrage fees pursuant to

federal law. In particular, Yookel knew that it was required to

use the switching carrier designated by U.S. Steel (Real Estate

Agreement § 1.01); that Conrail maintained the common area rails

for U.S. Steel pursuant to an operating agreement (Rail Easement

at 3); and that Yookel’s rights in the common area rails were

subject to the rights of others lawfully using the common area

rails (Real Estate Agreement § 1.01(A)). By Yookel’s own account

of the Pennsylvania litigation, the critical fact that entitled

Conrail to assess demurrage fees was that it operated the common

area rails. (See Pl.’s Opp’n at 10 (“[T]he Eastern District of

Pennsylvania ruled that CSX, as Conrail’s parent, ‘ha[d] obtained

the right to assess demurrage on tracks owned or operated by

Conrail.” (quoting B&J Grp., Inc., 381 F. Supp. 3d at 440)).)

Yookel thus had information regarding Conrail’s entitlement to

assess demurrage fees at the time of the Real Estate Agreement

with U.S. Steel.

Although Yookel claims that U.S. Steel should have

disclosed more about its relationship with Conrail, knowing the

terms of the Rail Operating Service Agreement would not have

materially advanced Yookel’s knowledge of the prospect of

demurrage fees. For example, Yookel identifies the provision of

the Rail Operating Service Agreement stating that Conrail “shall

be solely responsible for negotiating suitable commercial

arrangements based on common transportation characteristics with

Shippers for line-haul, terminal[,] and accessorial freight

charges . . . .” (Rail Operating Service Agreement § 10; see Pl.’s

Opp’n at 8, 15-16.) But federal law already placed Yookel on

notice that a rail carrier like Conrail could assess demurrage

fees by contract rather than a public tariff. 49 C.F.R. § 1333.2

(“A serving carrier and its customers . . . may enter into

contracts pertaining to demurrage.”). In short, the Rail Operating

Service Agreement does not contain anything about demurrage fees

that Yookel could not have obtained by consulting federal law.

At a minimum, any information about the prospect of

demurrage fees that was peculiarly within U.S. Steel’s knowledge

could have been discovered by Yookel through the exercise of

ordinary diligence and intelligence. See Jana L., 802 N.Y.S.2d at

135. The Rail Easement specifically disclosed to Yookel that the

common area rails were operated for U.S. Steel by Conrail pursuant

to an operating agreement. (Rail Easement at 3.) Yookel fails to

allege that it ever inquired about the operating agreement or

requested to see its terms. “If nothing else, the ‘exercise of

ordinary intelligence’ suggests a simple inquiry by [Yookel]” into

U.S. Steel’s relationship with Conrail and the terms of the Rail

Operating Service Agreement. Jana L., 802 N.Y.S.2d at 135; see

also, e.g., Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec.,

LLC, 113 F.4th 247, 264 (2d Cir. 2021) (plaintiff’s “failure to

ask . . . about other investors’ identities or strategies precludes

finding that the defendants had a duty of disclosure based on

superior knowledge”); Johnson v. Levin, 83 N.Y.S.3d 886, 887 (1st

Dep’t 2018) (“The special facts doctrine is not applicable as

plaintiffs knew about the renovations and could have, but chose

not to, inquire about them.”). Because Yookel was aware of the

existence of the Rail Operating Service Agreement and could have

inquired into its terms, Yookel cannot show that U.S. Steel had a

duty to disclose those terms under the special facts doctrine.9

9 The court recognizes that “a party has a duty to disclose information if it

has made a ‘partial or ambiguous statement that requires additional disclosure

to avoid misleading the other party’ . . . when that party is aware that the

other party is ‘operating under a mistaken perception of a material fact.’”

Herzfeld v. JPMorgan Chase Bank, N.A., 354 F. App’x 488, 489 (2d Cir. 2009)

(quoting Remington Rand Corp. v. Amsterdam-Rotterdam Bank, N.V., 68 F.3d 1478,

1484 (2d Cir 1995)); see also, e.g., TVT Records v. Island Def Jam Music Grp.,

412 F.3d 82, 91 (2d Cir. 2005); Sharbat, 2022 WL 45062, at *9. Here, however,

Yookel is proceeding on an omission theory of fraudulent inducement and does

not allege that U.S. Steel made affirmatively misleading statements regarding

demurrage fees. (See, e.g., Am. Compl. ¶ 88 (“U.S. Steel knowingly omitted and

withheld from Yookel the fact that Yookel’s Ancillary Rights . . . would be

subject to fees by a third party . . . .”).) See also In re Vivendi, S.A. Sec.

Litig., 838 F.3d 223, 239-40 (2d Cir. 2016) (distinguishing between “pure

omissions” and “half-truths” in the federal securities context). In addition,

Yookel has forfeited any argument that U.S. Steel had a duty to disclose based

on a partial or ambiguous statement by failing to raise that theory in its

opposition. In any event, the court concludes that Yookel fails to state a

claim based on this theory because (1) consulting federal law, rather than

additional disclosure by U.S. Steel, could have alerted Yookel to the prospect

of demurrage fees, and (2) Yookel fails to allege that U.S. Steel knew that

Yookel was relying on a mistaken perception of demurrage fees. (See, e.g., Am.

Compl. ¶ 92 (alleging only that U.S. Steel intended for Yookel to rely on its

omission regarding demurrage fees, not that U.S. Steel knew Yookel in fact

relied upon it).)

VI. Leave to Amend

“The court should freely give leave [to amend] when

justice so requires.” Fed. R. Civ. P. 15(a)(2). However, “it is

well established that leave to amend a complaint need not be

granted when amendment would be futile.” Ruderman v. Liberty Mut.

Grp., Inc., 2022 WL 244086, at *2 (2d Cir. Jan. 27, 2022) (quoting

Ellis v. Chao, 336 F.3d 114, 127 (2d Cir. 2003)).

“Given the terms of the parties’ contract, any amendment”

to Yookel’s claims for breach of contract and a declaratory

judgment would be futile. Banco Santander (Brasil), S.A. v. Am.

Airlines, Inc., 2021 WL 4820646, at *6 (E.D.N.Y. Oct. 15, 2021).

Having reviewed the plain language of the Real Estate Agreement

and the Rail Easement, a second amended complaint could not change

the court’s conclusion that neither agreement entitles Yookel to

recoup demurrage fees from U.S. Steel. See, e.g., SING for Serv.,

LLC v. DOWC Admin. Servs., LLC, 2022 WL 36478, at *23 (S.D.N.Y.

Jan. 3, 2022) (finding leave to amend futile when “the text of the

[contracts] preclude[d]” the relief sought).10 Similarly, a second

amended complaint could not alter the fact that the parties’ rights

and obligations are governed by the Real Estate Agreement and

therefore Yookel may not assert a duplicative unjust enrichment

10 Although Yookel offers to allege additional facts surrounding the purported

termination of its ancillary rights in 2013 (see Pl.’s Opp’n at 26-27), the

court has not relied on the purported termination for the reasons explained

above.

claim. See, e.g., Hassan v. Fordham Univ., 533 F. Supp. 3d 164,

169-70 (S.D.N.Y. 2021).

Finally, amending Yookel’s fraudulent inducement claim to

specifically allege that U.S. Steel “never disclosed the terms” of

the Rail Operating Service Agreement (Pl.’s Opp’n at 27) would not

change the court’s conclusion that those terms could have been

discovered by Yookel through the exercise of due diligence. See,

e.g., Xerox Corp. v. JCTB Inc., 2018 WL 5776423, at *9 (W.D.N.Y.

Nov. 2, 2018). Despite the court’s directive at the pre-motion

conference to specifically brief the question of leave to amend,

Yookel’s opposition offers no new facts or arguments that could

lead the court to find that U.S. Steel had a duty to disclose the

terms of the Rail Operating Service Agreement or additional details

about its relationship with Conrail. See, e.g., Flowers v. Conn.

Light & Power Co., 2021 WL 5564085, at *2 (2d Cir. Nov. 29, 2021)

(“Leave to amend may be deemed futile where the ‘proposed

amendments would fail to cure prior deficiencies or to state a

claim.’” (quoting Panther Partners, Inc. v. Ikanos Commc’ns, Inc.,

681 F.3d 114, 119 (2d Cir. 2012))). The court thus concludes that

leave to amend would be futile for all of Yookel’s claims.

CONCLUSION

For the foregoing reasons, Defendant’s motion for

judgment on the pleadings is GRANTED. The Clerk of Court is

respectfully directed to enter judgment in favor of Defendant and

close this case.

SO ORDERED.

/s/ Kiyo A. Matsumoto_______

Hon. Kiyo A. Matsumoto

United States District Judge

Eastern District of New York

Dated: February 23, 2022

Brooklyn, New York