SANDRA J. FEUERSTEIN, District Judge.
On or about May 10, 2013, plaintiffs Steven Manney and Joseph Leonardo (collectively, "plaintiffs"), as assignees of Bassline Digital Inc. ("Bassline"), commenced an action in the Supreme Court of the State of New York, County of Nassau ("the state court") against defendant Intergroove U.S., Inc. ("Intergroove U.S.") and Ralf Reichert ("Reichert"), alleging one (1) claim seeking compensatory and punitive damages for fraud in the inducement. On August 5, 2013, Reichert filed a notice of removal pursuant to 28 U.S.C. §§ 1441(b) and 1446, removing the action to this Court pursuant to this Court's diversity jurisdiction under 28 U.S.C. § 1332(a). Thereafter, (1) plaintiffs moved pursuant to 28 U.S.C. § 1447(c) to remand this matter to the state court; (2) Reichert moved to dismiss the action against him pursuant to Rules 12(b)(2), (3) and (6) of the Federal Rules of Civil Procedure for lack of in personam jurisdiction, improper venue and failure to state a cause of action, respectively, and on the basis of forum non conveniens; and (3) plaintiffs moved pursuant to Rule 12(f) of the Federal Rules of Civil Procedure to strike Reichert's first motion to dismiss and his opposition to their motion to remand this action to the state court. By order dated March 28, 2014 ("the March Order"), plaintiffs' motions were denied, plaintiffs' claims against Intergroove U.S. were dismissed without prejudice pursuant to Rule 21 of the Federal Rules of Civil Procedure and decision was deferred on Reichert's motions to dismiss.
Pending before the Court, in addition to Reichert's motions to dismiss, are plaintiffs' motions (1) seeking, inter alia, leave to amend the complaint pursuant to Rules 15(a), 19 and 20 of the Federal Rules of Civil Procedure to join Intergroove Media GmbH ("Intergroove Media"), Peter Matthias ("P. Matthias") and Eva Matthias ("E. Matthias") as additional defendants in this action;
Plaintiffs are citizens of the State of New York and commenced this action as the assignees of Bassline, a Delaware corporation licensed to do business in the State of New York which has its principal place of business in New York. (Complaint ["Compl."], ¶ 1). Plaintiffs are primarily engaged in the business of video production. (Compl., ¶ 5).
Reichert is a resident of Offenbach, Germany and a citizen of the Federal Republic of Germany. (Notice of Removal ["Rem."], ¶ 7). Reichert is the managing director of Intergroove Media, formerly known as Intergroove Tontrager Vertreibs GMBH, (Compl., ¶¶ 2, 6; see Rem., ¶ 12 [referring to Reichert as Intergroove Media's managing director]), which, according to plaintiffs, is a German corporation with its principal places of business in Frankfurt and Offenbach Am Main, Germany. (Compl., 2). Intergroove Media "is engaged in the business of distributing pre-recorded videos (DVDs) and pre-recorded music." (Compl., ¶ 6).
Plaintiffs allege, "[u]pon information and belief," that Intergroove U.S. is a New York corporation with a principal place of business at 622 Broadway, Suite 3b, New York, New York 10012, and is a wholly-owned subsidiary of Intergroove Media. (Compl., ¶¶ 3, 7).
Plaintiffs allege that between approximately June 28, 2008 through July 9, 2008, P. Matthias traveled to New York and met with them. (Compl., ¶ 8). According to plaintiffs, during that time: (1) it was agreed that P. Matthias would be their "exclusive agent/representative in Europe in order to solicit Plaintiffs [sic] video service," (
Plaintiffs allege that in September 2008, P. Matthias "negotiated a deal with Intergroove [Media]." (Compl., ¶ 8). According to plaintiffs, "[P.] Matthias was to share with [them] in the revenue generated from Intergroove [Media]."
In late November 2008, "[P.] Matthias arranged a meeting with Plaintiffs and Ralf Reichert[,] managing director of Intergroove [Media], and in late December 2008 an agreement was reached." (Compl., ¶ 9). According to plaintiffs, "[o]n or about December 23, 2008, after being contacted by [P.] Matthias, [they] through Bassline * * *, entered into a contract ["the December 2008 Contract"] whereby Bassline would deliver approximately twenty-five (25) to thirty (30) video productions to Intergroove [Media], and Intergroove [Medial would pay Bassline at a rate of $650.00 per hour for the Plaintiff's [sic] services * * *." (Compl., ¶ 10).
Plaintiffs allege that between approximately January 2009 and July 2009, they delivered twenty-seven (27) video productions to Intergroove Media "in a timely manner" pursuant to the December 2008 Contract, (Compl., ¶ 11), and sent several invoices to Intergroove Media requesting payment for their services. (Compl., ¶ 12). Specifically, plaintiffs sent the following invoices to Intergroove Media: (a) a February 1, 2009 invoice containing total charges of one hundred eighty thousand seven hundred dollars ($180,700.00); (b) a March 1, 2009 invoice containing total charges of one hundred ninety-one thousand four hundred twenty-five dollars ($191,425.00); (c) an April 1, 2009 invoice containing total charges of sixty-six thousand nine hundred fifty dollars ($66,950.00); (d) a May 1, 2009 invoice containing total charges of one hundred fifty-one thousand four hundred fifty dollars ($151,450.00); and (e) a June 1, 2009 invoice containing total charges of one hundred ninety-one thousand one hundred dollars ($191,100.00). (
According to plaintiffs, on or about March 29, 2009 and June 30, 2009, Intergroove Media made payments of nine thousand four hundred fourteen dollars and seventy-five cents ($9,414.75) and seven thousand six hundred seventy-five dollars and twenty cents ($7,675.20), respectively, towards the balance due them. (Compl., ¶¶ 13-14). In addition, on or about July 6, 2009, plaintiffs "made an adjustment to the amount of $433.05 to Intergroove [Media]." (Compl., ¶ 15). Thus, according to plaintiffs, "[a]s of July 7, 2009, and continuing to the current date, pursuant to the December [2008] Contract, Intergroove [Media] has a balance due and owing to the Plaintiffs in the sum of $764,102.00." (Compl., ¶ 16).
On or about June 29, 2009, plaintiffs met with Reichert and P. Matthias in Germany to demand payment from Intergroove Media on the balance due them of the invoices. (Compl., ¶¶ 17-18). According to plaintiffs, Reichert promised to provide payment "and stated that they [sic] had a subsidiary corporation which was to be a guarantor that payments would be made." (Compl., ¶ 19). "The subsidiary corporation being the defendant Intergroove U.S., Inc." (
Plaintiffs allege that "[n]o payments were forthcoming, and it was discovered by [them] that Ralf Reichert and [P.] Matthias made a new deal with another corporation, thus eliminating [them] from any further involvement with the Defendants." (Compl., ¶ 20;
Plaintiffs allege, "[u]pon information and belief," that Reichert "received the proceeds [for plaintiffs' video productions] from Intergroove [Media] without remitting any portion due to [them] and * * * is wrongfully in possession of [their] money." (Compl., ¶ 31).
The following additional facts are alleged in the proposed amended complaint:
P. Matthias and E. Matthias (collectively, "the Matthias defendants") are German Nationals who reside in Kembs, France, (Amended Complaint ["Amend. Compl."], ¶ 5), and, "upon information and belief," are "individuals who acted as private entrepreneurs, and undisclosed agents and intermediaries of Intergroove [Media] * * *." (Amend. Compl., ¶ 9).
In addition to alleging that Intergroove U.S. is a wholly owned subsidiary of Intergroove Media, the proposed amended complaint also alleges, "upon information and belief," that Intergroove U.S. "has acted as a mere instrumentality of Intergroove [Media], subject to the complete control and domination of Intergroove [Media] and doing business and operating as Intergroove [Media] in the United States and has been in all respects the alter ego of Intergroove [Media]." (Amend. Compl., ¶ 8).
The proposed amended complaint alleges: (1) that during plaintiffs' meetings with the Matthias defendants in June and July 2008, the Matthias defendants, in addition to making the representations alleged in the original complaint, "falsely and fraudulently failed to disclose and concealed the truth that they were already acting as agents for Intergroove [Media] * * * with intent * * * to defraud and deceive the plaintiffs[,]" (Amend. Compl., ¶ 11); (2) that "[p]laintiffs did not know the truth and relied on the false misrepresentations and concealments to [their] detriment[,]" (
In addition, the proposed amended complaint alleges that on or about July 7, 2008, Manney asked the Matthias defendants "if they could arrange work for Plaintiffs [sic] video service company through the [Intergroove] U.S. office after they had further explained that [Intergroove] U.S. was located in lower Manhattan." (Amend. Compl., ¶ 13). According to plaintiffs, the Matthias defendants (1) represented to Manney (a) "that Intergroove [Media] handled some of the [Intergroove] U.S. affairs through the parent company Intergroove [Media] located abroad in Offenbach, Germany[,]" (Amend. Compl., ¶ 14); (b) "that they had an informal and casual business relationship with Intergroove [Media], Ralf Reichert and an individual and financier named Joachim Keil (`Keil') whereby they had acted as independent agents for sellers of products in sales to Intergroove [Media], when in truth [they] had acted as agents for Intergroove [Media] * * *[,]" (Amend. Compl., ¶ 15); (c) "that Keil was the owner of a music company called Daredo * * * and that Keil and Reichert conduct business deals together in the field of music publishing[,]" (Amend. Compl., ¶ 16); (d) "that Daredo also had an office in lower Manhattan and that [Intergroove] U.S. sub-distributed Daredo product [sic] in New York State and across the United States[,]" (Amend. Compl., ¶ 17); and (e) "that P. Matthias had been travelling [sic] back and forth to New York from Europe as an agent for Daredo and Keil[,]" (Amend. Compl., ¶ 18), (2) invited plaintiffs "to visit Intergroove [Media] for purpose [sic] of introduction to Reichert[,]" (Amend. Compl., ¶ 19), and (3) "requested that Plaintiffs provide samples of video productions to them for Reichert's viewing and approval prior to Plaintiff's [sic] arrival in Germany, and to further bring additional samples of work upon arrival in Germany for the express purpose of letting Reichert view and discuss them with Plaintiffs[,]"
(Amend. Compl., ¶ 20).
Plaintiffs allege, "upon information and belief," that during the September 2008 negotiations with Intergroove Media, the Matthias defendants, while "purport[ing] to be acting as agents for the plaintiff [sic]," "were being simultaneously compensated for their services as undisclosed agents of Intergroove [Media] and falsely and fraudulently failed and refused to disclose the truth thereof to plaintiffs and thereby fraudulently concealed such facts from plaintiffs while being under a legal duty to have disclosed the truth of such facts to plaintiffs * * * with the intent to defraud and deceive the plaintiffs[,]" (Amend. Compl., ¶ 21).
The proposed amended complaint further alleges, for the first time, and only after Reichert moved to dismiss the complaint pursuant to, inter alia, Rule 12(b)(6) for failure to state a claim for relief, that during the December 23, 2008 meeting: (1) Reichert "stat[ed] to Plaintiffs that initial payments would be tendered from the Intergroove [Media] office in Germany and that [Intergroove] U.S. would be used as a guarantor if the German Intergroove [Media] office failed to make payments for services," (Amend. Compl., ¶ 24)
On January 11, 2010, Bassline commenced an action in this Court against Intergroove Media ("the First Action"), alleging claims for breach of contract; goods and services sold and delivered; implied contract; unjust enrichment; and promissory estoppel, which was assigned to the Honorable Arthur D. Spatt, United States District Judge, under docket number 10-cv-0097. On March 26, 2010, Senior Judge Spatt entered a default judgment against Intergroove Media based upon its failure to answer the complaint or to otherwise appear in the First Action, and referred the matter to the Honorable E. Thomas Boyle, former United States Magistrate Judge, to hear and determine the amount of damages to be awarded to Bassline. Magistrate Judge Boyle issued a report and recommendation dated July 29, 2010 ("the Report"), recommending that the default judgment against Intergroove Media be vacated for lack of personal jurisdiction since Intergroove Media had never been served with process in that action. By memorandum of decision and order dated October 7, 2010, Senior Judge Spatt adopted the Report in its entirety; vacated the default judgment against Intergroove Media; and dismissed Bassline's complaint against Intergroove Media in the First Action without prejudice based upon Bassline's failure to effect proper service upon Intergroove Media. Judgment was entered against Bassline in the First Action on October 13, 2010.
On or about July 12, 2010, plaintiffs, in their purported capacity as "assignees of Bassline Digital Inc.," commenced an action ("the Second Action") against Intergroove Media, the Matthias defendants and Intergroove U.S. in the state court, alleging the same claims against Intergroove Media as had been asserted in the First Action, with the exception that they omitted their claim based upon promissory estoppel and added a claim seeking damages for fraud in the inducement.
On or about October 10, 2012, plaintiffs, as assignees of Bassline,
On or about May 10, 2013, plaintiffs, in their capacity as assignees of Bassline, commenced this action in the state court against Intergroove U.S., a named defendant in the Third Action still pending in the state court, and Reichert, who, although referenced in the complaints filed in the prior actions, is named in his individual capacity as a defendant for the first time in this action. The original complaint in this action alleges only one (1) claim seeking, inter alia, compensatory and punitive damages for fraud in the inducement, the claim plaintiffs presumably intentionally omitted in the Third Action. The complaint in this action alleges, inter alia: (1) that Reichert "made materially false and misleading representations on June 29, 2009, to Plaintiffs by failing to advise them that they [sic] had no intention of paying any further money to [them] even though he stated that the codefendant Intergroove U.S. Inc. was a guarantor of payment and that future payments would be made via Intergroove U.S. Inc.[,]" (Compl., ¶ 25); (2) that Reichert made those representations "knowing that [they] would rely on [them] to their detriment[,]" (Compl., ¶ 26); (3) that they "were induced by, and relied on defendants Intergroove U.S. and Reichert, that payment would be made and that as insurance the defendant had a New York Corporation (Intergroove U.S., Inc.) that would insure said payment, and [they] did not know that the Defendant Intergroove U.S. had no intention of making or guarantying payments[,]" (Compl., ¶ 27); and (4) that Reichert "made such representation knowing that [they] would rely on [it] and continue to deal with Intergroove [Media] because of the false representations[,]" (Compl., ¶ 28). Plaintiffs seek, inter alio': (1) judgment declaring that Reichert and Intergroove U.S. "should hold all proceeds they received in a Constructive Trust for the benefit of the Plaintiffs[,]" (Compl., ¶ 32); (2) compensatory damages in the amount of seven hundred sixty-four thousand one hundred two dollars ($764,102.00), which is the same amount of damages they seek to recover on their breach of contract and quasi-contractual claims against Intergroove Media, Intergroove U.S. and the Matthias defendants in the Third Action pending in the state court; and (3) punitive damages in the amount of two million two hundred ninety-two thousand three hundred six dollars ($2,292,306.00). (Compl. at 5).
On August 5, 2013, Reichert filed a notice of removal pursuant to 28 U.S.C. §§ 1441(b) and 1446, removing this action to this Court pursuant to this Court's diversity jurisdiction under 28 U.S.C. § 1332(a).
On August 15, 2013, plaintiffs moved pursuant to 28 U.S.C. § 1447(c) to remand this action to the state court. On or about August 29, 2013, Reichert served plaintiffs with a motion to dismiss the complaint pursuant to Rules 12(b)(2),(3) and (6) of the Federal Rules of Civil Procedure. On September 3, 2013, plaintiffs filed two (2) motions pursuant to Rule 12(1) of the Federal Rules of Civil Procedure seeking to strike Reichert's (a) motion to dismiss pursuant to Rules 12(b)(2), (3) and (6) of the Federal Rules of Civil Procedure, and (b) opposition to their motion to remand. On September 18, 2013, Reichert filed his fully-briefed motion to dismiss pursuant to Rules 12(b)(2), (3) and (6) of the Federal Rules of Civil Procedure in accordance with my individual rules. On October 10, 2013, Reichert filed a fully-briefed motion to dismiss this action on the basis of forum non conveniens, which had been served upon plaintiffs on September 20, 2013.
On March 26, 2014, almost seven (7) months after Reichert had served them with his motion to dismiss pursuant to Rules 12(b)(2), (3) and (6) of the Federal Rules of Civil Procedure, plaintiffs filed a motion seeking leave to amend their complaint pursuant to Rules 15(a)(2), 19 and 20 of the Federal Rules of Civil Procedure to join Intergroove Media and the Matthias defendants, the same parties against whom they asserted claims involving the same transactions and occurrences relating to the December 2008 Contract in the Third Action that is still pending in the state court, as additional defendants in this action in order to assert a fraudulent inducement claim, the same claim they presumably intentionally omitted against those same defendants in the Third Action, against them. Thus, in addition to the fraudulent inducement claim against Reichert and Intergroove U.S. asserted in the original complaint, the amended complaint alleges, inter alia:
(Amend. Compl., ¶¶ 40-41). In addition, plaintiffs allege that Reichert and the Matthias defendants failed to inform them that Intergroove U.S. "had filed insolvency proceedings in Germany in March 2003 while still operating in New York State[,]" (Amend. Compl., ¶¶ 46, 48), and that the Matthias defendants made "materially false and misleading representations beginning on June 28
Due to an apparent clerical error, plaintiffs' motion to amend was not docketed until March 31, 2014, during which time the Court was unaware of it. In the interim, the Court issued the March Order, inter alia, dismissing plaintiffs' claims against Intergroove U.S. without prejudice pursuant to Rule 21 of the Federal Rules of Civil Procedure on the basis of fraudulent joinder; denying plaintiffs' motion to remand this action to the state court pursuant to 28 U.S.C. § 1447(c); and deferring decision on Reichert's motions to dismiss this action pursuant to Rules 12(b)(2), (3) and (6) of the Federal Rules of Civil Procedure, and on the basis of forum non conveniens, in order to afford him an opportunity to waive his challenge to this Court's personal jurisdiction over him. By letter dated April 1, 2014, Reichert waived his challenge to this Court's personal jurisdiction over him, thereby effectively withdrawing the branch of his first motion seeking dismissal of the complaint against him pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure.
Thus, pending before the Court are: (1) the branches of Reichert's first motion seeking dismissal of the complaint pursuant to Rules 12(b)(3) and (6) of the Federal Rules of Civil Procedure; (2) Reichert's motion seeking dismissal of the complaint on the basis of forum non conveniens; and (3) plaintiffs' motions (a) seeking leave to amend the complaint pursuant to Rules 15(a), 19 and 20 of the Federal Rules of Civil Procedure to join Intergroove Media and the Matthias defendants as additional defendants in this action in order to assert a fraudulent inducement claim against them, and (b) seeking reconsideration of the March Order pursuant to Local Civil Rule 6.3 and Rule 54(b) of the Federal Rules of Civil Procedure on the basis, inter alia, that the Court overlooked their motion to amend when determining the March Order.
Rule 54(b) of the Federal Rules of Civil Procedure provides, in relevant part, that "any order or other decision * * * that adjudicates * * * the rights and liabilities of fewer than all the parties does not end the action as to any of the * * * parties and may be revised at any time before the entry of a judgment adjudicating * * * all the parties' rights and liabilities."
Motions for reconsideration in this district are governed by Local Civil Rule 6.3 ("Local Rule 6.3"), which provides, in relevant part, that a "notice of motion for reconsideration or reargument of a court order determining a motion shall be served within fourteen (14) days after the entry of the court's determination of the original motion * *. There shall be served with the notice of motion a memorandum setting forth concisely the matters or controlling decisions which counsel believes the court has overlooked." The requirements of Local Rule 6.3 are "narrowly construed and strictly applied,"
In determining a motion for reconsideration, the court should consider: (1) whether there has been "an intervening change of controlling law;" (2) whether there is new evidence presented that was not previously available on the original motion; and (3) whether there is a "need to correct a clear error or prevent manifest injustice."
Since, inter alia, this Court overlooked plaintiffs' motion to amend when determining the March Order, plaintiff's motion for reconsideration is granted. However, for the reasons set forth below, upon (a) consideration of plaintiffs' motion to amend the complaint pursuant to Rules 15(a)(2), 19 and 20 of the Federal Rules of Civil Procedure; (b) reconsideration of so much of the March Order as dismissed plaintiffs' claims against Intergroove U.S. without prejudice pursuant to Rule 21 of the Federal Rules of Civil Procedure and denied plaintiffs' motion to remand this matter to the state court pursuant to 28 U.S.C. § 1447(c)
Rule 15(a)(2) of the Federal Rules of Civil Procedure provides that a party shall be given leave to amend "when justice so requires." Nonetheless, leave to amend may properly be denied for, inter alio, bad faith or "undue prejudice to the opposing party by virtue of allowance of the amendment[.]"
As noted above, in the Third Action that is still pending in the state court, plaintiffs: (1) asserted claims against Intergroove U.S. and the proposed additional defendants, i.e., Intergroove Media and the Matthias defendants, based upon the same transactions and occurrences relating to the December 2008 Contract as are involved in this case, but only sought relief with respect to the invoice they sent to Intergroove Media on April 1, 2009 in the total amount of sixty-six thousand nine hundred fifty dollars ($66,950.00); (2) pleaded all of their claims in their alternative; and (3) omitted the fraudulent inducement claim they had previously asserted in the Second Action against those same defendants, thereby limiting any recovery in that action to no more than sixty-six thousand nine hundred fifty dollars ($66,950.00).
What this Court did not anticipate in the Third Action, however, was that plaintiffs would devise a similar act of bad faith gamesmanship than that foreshadowed in the August 19, 2013 order in the Third Action, i.e., they would file a new action in the state court, i.e., this action, (a) against (i) a party, Reichert, who, although referenced in the complaints filed in the previous three (3) actions in his capacity as Intergroove Media's managing director, had not been individually named in any of those previous actions, and (ii) Intergroove U.S., against which they already had claims pending in the Third Action in the state court and which, as set forth in the March Order, was fraudulently joined in this action in order to defeat this Court's diversity jurisdiction under 28 U.S.C. § 1332(a); (b) involving the same transactions and occurrences relating to the December 2008 Contract as the previous three (3) actions and seeking to recover the total amount of all of the unpaid invoices that they sent to Intergroove Media, including the April 1, 2009 invoice for which they are currently seeking recovery from Intergroove U.S. and the proposed additional defendants in the Third Action that is still pending in the state court; and (c) then seek leave to amend the complaint in this action to add three (3) of the defendants named in the Third Action as additional defendants in this action in order to assert the very same fraudulent inducement claim that they presumably intentionally omitted in the Third Action in order to limit the amount in controversy in that action to below the jurisdictional amount prescribed by 28 U.S.C. § 1332(a).
Instead of commencing this action, plaintiffs could have, and should have, moved in the Third Action pending in the state court for leave to amend the complaint in that action to join Reichert as an additional defendant and to assert any additional claims involving the same transactions and occurrences relating the December 2008 Contract, including their fraudulent inducement claims, therein. Presumably, plaintiffs did not do so, and commenced this action in lieu of moving the state court for leave to amend the complaint in the Third Action, in order to circumvent the outcome projected by this Court in its August 19, 2013 order in the Third Action, i.e., to prevent the Third Action from again be removed to this Court under 28 U.S.C. §§ 1446(b)(3) and (c)(1). Clearly, plaintiffs' request for leave to amend their complaint in this action is, thus, done in bad faith.
Furthermore, Reichert, Intergroove U.S. and/or the proposed additional defendants would be unduly prejudiced by allowing plaintiffs to amend their complaint in this action because, inter alia, (1) they would need to expend significant resources to defend this action, much of which will be duplicative of the resources they already expended in not only this action, but the previous actions commenced against them, individually or in their representative capacity, by plaintiffs as well,
Since plaintiffs' motion to amend their complaint is denied, and there is no other basis for reconsidering the March Order, the Court adheres to its determination of the March Order, inter alia, to dismiss plaintiffs' claims against Intergroove U.S. without prejudice pursuant to Rule 21 of the Federal Rules of Civil Procedure and to deny plaintiffs' motion to remand this action to the state court pursuant to Rule 28 U.S.C. § 1447(c).
In the March Order, this Court deferred decision on Reichert's motions to dismiss the complaint against him in order to afford him an opportunity to waive his challenge to this Court's in personam jurisdiction so that the Court could address the merits of plaintiffs' claims against him. (March Order at 23-24). By letter dated April 1, 2014, Reichert waived his challenge to this Court's in personam jurisdiction, (Doc. No. 61), thereby effectively withdrawing the branch of his first motion seeking dismissal of the complaint against him pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure.
The standard of review on a motion made pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is that a plaintiff plead sufficient facts "to state a claim for relief that is plausible on its face."
"A pleading that offers `labels and conclusions' or `a formulaic recitation of the elements of a cause of action will not do.'"
In deciding a motion pursuant to Rule 12(b)(6), the Court must liberally construe the claims, accept all factual allegations in the complaint as true, and draw all reasonable inferences in favor of the plaintiff.
Nonetheless, a plaintiff is not required to plead "specific evidence or extra facts beyond what is needed to make the claim plausible."
In deciding a motion pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must limit itself to the facts alleged in the complaint, which are accepted as true; to any documents attached to the complaint as exhibits or incorporated by reference therein; to matters of which judicial notice may be taken; or to documents upon the terms and effect of which the complaint "relies heavily" and which are, thus, rendered "integral" to the complaint.
As set forth in the March Order, New York law applies to plaintiffs' fraudulent inducement claim against Reichert. To state a claim for fraudulent inducement under New York law, plaintiffs "must allege: (i) a material misrepresentation of a presently existing or past fact; (ii) an intent to deceive; (iii) reasonable reliance on the misrepresentation by [plaintiffs]; and (iv) resulting damages."
The only misrepresentations alleged in the original complaint in this action are that Reichert "made materially false and misleading representations on June 29, 2009, to Plaintiffs by failing to advise them that they [sic] had no intention of paying any further money to [them] even though he stated that the codefendant Intergroove U.S. Inc. was a guarantor of payment and that future payments would be made via Intergroove U.S. Inc." (Compl., ¶ 25;
For purposes of a fraudulent inducement claim, an alleged misrepresentation is "material" if "it influenced the party's decision to enter into the contract."
Since Reichert's purported misrepresentations to plaintiffs during the June 29, 2009 meeting were made more than six (6) months after plaintiffs entered into the December 2008 Contract with Intergroove Media, they could not have influenced plaintiffs' decision to enter into that contract and, thus, are not material.
Although plaintiffs conclusorily claim in their original complaint in this action that they "were induced by, and relied on defendants Intergroove U.S. and Reichert, that payment would be made and that as insurance the defendant had a New York Corporation (Intergroove U.S., Inc.) that would insure said payment, and [they] did not know that the Defendant Intergroove U.S. had no intention of making or guarantying payments[,]" (Compl., ¶ 27), they do not assert any facts from which it may reasonably be inferred that they did, or did not do, anything in reliance upon Reichert's statements other than to continue demanding payment of the money allegedly due them under the December 2008 contract. Since such conclusory allegations are "not entitled to the assumption of truth,"
Under New York law, plaintiffs must establish that they suffered losses that were "the direct, immediate, and proximate result of the misrepresentation."
With the exception of their claim for punitive damages, which are not recoverable against Reichert because his purported statements were neither "sufficiently egregious" nor "part of a pattern of behavior aimed at the public generally,"
For the reasons stated herein, plaintiffs' motion seeking leave to amend their complaint in this action pursuant to Rules 15(a)(2), 19 and 20 of the Federal Rules of Civil Procedure is denied; plaintiffs' motion seeking reconsideration of this Court's March Order pursuant to Local Civil Rule 6.3 and Rule 54(b) of the Federal Rules of Civil Procedure is granted, but, upon reconsideration, the Court adheres to its determination in the March Order to dismiss plaintiffs' claims against Intergroove U.S. without prejudice pursuant to Rule 21 of the Federal Rules of Civil Procedure and to deny plaintiffs' motion to remand this action to the state court pursuant to 28 U.S.C. § 1447(c); the branch of Reichert's first motion seeking dismissal of plaintiffs' claims against him pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is granted and plaintiffs' claims against Reichert are dismissed in their entirety with prejudice for failure to state a claim for relief; and the branch of Reichert's first motion seeking dismissal of the complaint pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure for improper venue, and his motion seeking dismissal of the complaint on the basis of forum non conveniens, are denied as moot.
The Clerk of the Court shall enter judgment in favor of Reichert in this action, close this case and, pursuant to Rule 77(d)(1) of the Federal Rules of Civil Procedure, serve notice of entry of this Order on all parties as provided in Rule 5(b) of the Federal Rules of Civil Procedure.
SO ORDERED.