GAELICK et al v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY et al
Filing
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OPINION. Signed by Judge Stanley R. Chesler on 8/25/11. (DD, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
EDWARD GAELICK and PSI
CONSULTANTS, LLC,
:
:
:
Plaintiffs, :
:
v.
:
:
CONNECTICUT GENERAL LIFE
:
INSURANCE COMPANY, CIGNA
:
HEALTH CORPORATION, CIGNA
:
HEALTHCARE, INC. and JOHN DOES 1- :
40 (any individuals or entities whose
:
identities are presently unknown who are or :
have been affiliates, subsidiaries, agents,
:
employees or representatives of Connecticut :
General Life Insurance Company, CIGNA
:
Health Corporation and CIGNA Healthcare :
Inc. Who harmed plaintiffs),
:
:
Defendants. :
Civil Action No. 11-2464 (SRC)
OPINION
CHESLER, District Judge
This matter comes before the Court on the motion by Defendants Connecticut General
Life Insurance Company, CIGNA Health Corporation, and CIGNA Healthcare, Inc. (collectively,
“Defendants”) to dismiss the Amended Complaint, pursuant to Federal Rule of Civil Procedure
12(b)(6) [docket entry 15]. Plaintiffs Edward Gaelick and PSI Consultants, LLC (collectively,
“Plaintiffs”) have opposed the motion. The Court has opted to rule based on the papers
submitted and without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the
reasons expressed below, Defendants’ motion will be granted.
I.
BACKGROUND
This action was initiated by Plaintiffs after Defendants declined to provide them with a
price quote for one of their clients, only to provide a quote for that same client to Plaintiffs’
competitor, which was ultimately accepted, causing Plaintiffs to forego a commission they
allegedly would have made had Plaintiffs been the broker on the accepted deal.
Plaintiff PSI Consultants, LLC (“PSI”) is an insurance broker whose business is to match
companies seeking insurance with companies selling insurance. PSI has entered into producer
agreements with Defendant Connecticut General Life Insurance Company (“CGLIC”), whereby it
obtains quotes and solicits sales for insurance from CGLIC on behalf of its clients in return for a
commission on any sale. According to the Amended Complaint, prior to becoming an insurance
producer for CGLIC, CGLIC represented to PSI that CGLIC would (1) treat PSI the same as
other CGLIC producers and (2) provide PSI with fair and reasonable insurance quotes “which
were the same quotes that [CGLIC] would have provided its other producers for the same or
similar clients.” (Am. Compl. ¶ 18, June 2, 2011.)
Among PSI’s clients was SAI Global US Holdings, Inc. (“SAI”), for whom PSI was
broker of record. In or around June 2010, when SAI’s group insurance policy was coming up for
renewal with its then-insurer, PSI solicited a group insurance coverage quote from CGLIC on
behalf of SAI, providing the insurance company with claims history through March 2010 for the
proposed insured. Over the course of the next several months, CGLIC declined to supply PSI
with a quote, advising it in October 2010 that SAI’s claims history prevented CGLIC from
providing a competitive estimate. On some unspecified date thereafter, PSI learned that CGLIC
had provided a quote for SAI’s group insurance to PSI’s competitor, Mercer Health & Benefits
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(“Mercer”), even though the claims history provided by Mercer was significantly worse than that
provided to CGLIC by PSI. Ultimately, SAI accepted the quote provided by Mercer, terminated
PSI, and appointed Mercer as its broker of record. PSI avers that when it pressed CGLIC for an
explanation, an unidentified representative of CGLIC “admitted [CGLIC] ‘screwed up.’” (Am.
Compl. at ¶ 31.)
According to Plaintiffs, CGLIC’s actions have caused them to suffer damages in the form
of lost commissions in connection with the SAI transaction. As a result, Plaintiffs filed the
Amended Complaint (“Complaint”) on June 2, 2011, asserting the following claims: 1) tortious
interference with prospective economic advantage, 2) tortious interference with contractual
relations, 3) fraud, 4) negligent misrepresentation, 5) breach of the covenant of good faith and
fair dealing, 6) negligence, 7) unjust enrichment, and 8) promissory estoppel. Defendants filed
the instant motion to dismiss for failure to state a claim upon which relief can be granted,
pursuant to Fed.R.Civ.P. 12(b)(6).
II.
LEGAL ANALYSIS
A.
Standard of Review
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) may be granted only
if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light
most favorable to the plaintiff, a court finds that plaintiff’s claims have facial plausibility. Bell
Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). This means that the Complaint must
contain sufficient factual allegations to raise a right to relief above the speculative level,
assuming the factual allegations are true. Id. at 1965; Phillips v. County of Allegheny, 515 F.3d
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224, 234 (3d Cir. 2008). The Supreme Court has made clear that “a formulaic recitation of the
elements of a cause of action will not do.” Twombly, 127 S.Ct. at 1964-65; see also Ashcroft v.
Iqbal, 129 S.Ct. 1937, 1950 (2009) (“While legal conclusions can provide the framework of a
complaint, they must be supported by factual allegations.”).
In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court may
consider only the complaint, exhibits attached to the complaint, matters of public record, and
undisputedly authentic documents if the complainant’s claims are based upon those documents.
See Pension Benefit Guar. Corp., 998 F.2d at 1196. The issue before the Court “is not whether
plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence in support
of the claims.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997)
(quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).
B.
Discussion
1.
First Count: Tortious Interference
Plaintiffs allege that Defendants intentionally and maliciously interfered with “PSI’s
contract with SAI” and with PSI’s “expectation of obtaining further economic advantage as a
result of [its] relationship with SAI.” (Am. Comp. at 7.) As a result of this interference,
Plaintiffs contend that they suffered substantial damages.
a.
Tortious Interference with Prospective Economic Advantage
A complaint based on tortious interference with prospective economic advantage must
allege facts that show some protectable right -- a prospective economic or contractual
relationship. Printing Mart-Morristown v. Sharp Elec. Corp., 563 A.2d 31, 37 (1989); see also
Valentine v. Bank of America, No. 09-262, 2010 U.S. Dist. LEXIS 8546 at *8-9 (D.N.J. Feb. 1,
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2010) (citing Printing Mart as the leading case in New Jersey regarding tortious interference with
prospective economic advantage). Second, the complaint must allege facts claiming that the
interference with the protectable right was done intentionally and with “malice.” Id. Third, the
complaint must allege facts leading to the conclusion that the interference caused the loss of the
prospective gain. Id. Fourth, the complaint must allege that the injury caused damage. Id.
Defendants contend that Plaintiffs’ claim for tortious interference with economic
expectance should be dismissed because Plaintiffs do not sufficiently allege a protectable interest
and because Plaintiffs cannot prove that Defendants acted with the requisite intent. However,
this Court has little difficulty in concluding that Plaintiffs’ Complaint does reveal a sufficient
economic interest deserving of protection against interference. “Prospective economic relation”
is broadly defined under New Jersey law:
The expression, prospective contractual relation, is not used . . . in
a strict, technical sense. It is not necessary that the prospective
relation be expected to be reduced to a formal, binding contract. It
may include prospective quasi-contractual or other restitutionary
rights or even the voluntary conferring of commercial benefits in
recognition of a moral obligation.
Included are interferences with the prospect of obtaining
employment or employees, the opportunity of selling or buying
land or chattels or services, and any other relations leading to
potentially profitable contracts.
Fineman v. Armstrong World Indus., 980 F.2d 171, 195 (3d Cir. 1992). The cases from the real
estate world are particularly useful in addressing the interest for which Plaintiffs seek protection.
In those cases, courts have found a protectable interest in favor of a real-estate broker who has
gained a prospective interest in a commission by introducing a buyer to a seller of property. See
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Harris v. Perl, 197 A.2d 359, 364 (1964) (holding that where the broker presents a prospective
buyer and, on that basis negotiations ensue, the broker maintains a prospective economic
advantage); see also Printing Mart, 563 A.2d at 38 (holding that when Printing Mart received
specifications from Sharp to bid on a job, it received the “go ahead” to “pursue business” with
Sharp and its pursuit of the printing contract was entitled to protection from unjustifiable
interference). In the present matter, once Defendants received Plaintiffs’ request to provide an
insurance quote for SAI and engaged in the process of evaluating SAI’s claims history to
determine the appropriateness of providing a quote, a relationship was established with the
potential of leading to a profitable arrangement where Plaintiffs could have earned a commission.
It is that relationship that the law will protect from undue influence.
The next inquiry is whether the Amended Complaint sufficiently alleges that Defendants
acted with the intent required to sustain a claim for tortious interference with a prospective
economic relationship. “Interference is intentional ‘if the actor desires to bring it about or if he
knows that the interference is certain or substantially certain to occur as a result of his action.’”
Cedar Ridge Trailer Sales, Inc. v. Nat’l Cmty. Bank of N.J., 711 A.2d 338, 345 (N.J. Super. Ct.
App. Div. 1998). Accordingly, to maintain a claim for tortious interference, the plaintiff must
allege facts that would support a finding that the defendant acted with the specific intent to injure
the plaintiff and to interfere with its contract or prospective business relationship. See Woods
Corp. Assocs. v. Signet Star Holdings, 910 F. Supp. 1019, 1032 (D.N.J. 1995).
Plainly, the Amended Complaint does not state, in even a conclusory manner, that the
conduct of the Defendants was intentional. Throughout the entire Complaint, Plaintiffs state that
CGLIC “screwed up” in failing to provide PSI with an insurance quote for SAI. Such a mistake
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does not amount to the intentional conduct calculated to interfere with a prospective business
relationship that is required for this claim to succeed. Compare with Printing Mart, 563 A.2d at
40 (defendant gave false bids on behalf of two companies showing that it intended Printing Mart
to lose the job and that his actions were calculated to produce that result). Therefore, because
Plaintiffs cannot show that Defendants acted with the requisite intent when they refused to
provide them with an insurance quote, they have not pled sufficient facts to establish a claim for
tortious interference with a prospective economic relationship. As such, this claim will be
dismissed.
b.
Tortious Interference with Contractual Relations
To establish tortious interference with an existing contract, a plaintiff must prove: (1) an
existing contractual relationship; (2) intentional and malicious interference with that relationship;
(3) loss or breach of a contract as a result of the interference; and (4) damages resulting from that
interference. Digiorgio Corp. v. Mendez & Co., 230 F. Supp. 3d 552, 558 (D.N.J. 2002). While
this Court does not believe that Plaintiffs have successfully pled the existence of a contract
between PSI and SAI, this claim will be dismissed since, as aforementioned, Plaintiffs have not
established that Defendants acted with the requisite intent to injure Plaintiffs and interfere with
their contractual relations with SAI.
2.
Second Count: Fraud and Negligent Misrepresentation
In their Amended Complaint, Plaintiffs contend that the Defendants made the following
fraudulent and negligent misrepresentations which Plaintiffs relied upon to their detriment:
(1) That they would provide PSI with the best quotes available to
PSI’s clients and that they would provide PSI the same quotes as
they provided other producers;
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(2) That they could not provide PSI a quote for SAI because the
quote would be uncompetitive; and
(3) That if PSI was refused a quote for one of its clients because
CIGNA could not provide a competitive quote for that client, that
CIGNA would not later provide a competitive quote for the same
client to another producer based on similar or worse claims
information.
a.
Fraud
To state a claim for fraud in New Jersey, a plaintiff must allege: (1) defendant made a
false representation of fact; (2) defendant knew or believed that the representation was false; (3)
defendant intended to deceive the plaintiff; (4) plaintiff believed and justifiably relied upon the
statement and was induced to take action upon it, and (5) as a result of plaintiff’s reliance upon
such statements, it sustained damages. Cohen v. Telsey, No. 09-2033, 2009 U.S. Dist. LEXIS
101696 at *33 (D.N.J. Nov. 2, 2009). Federal Rule of Civil Procedure 9(b) requires that “in all
averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated
with particularity.” Id. Rule 9(b)’s heightened pleadings standard “gives defendants notice of
the claims against them, provides an increased measure of protection for their reputations, and
reduces the number of frivolous suits brought solely to extract settlements.” Burlington Coat
Factory Sec. Litig., 114 F.3d at 1417. “To satisfy this standard, the plaintiff must plead or allege
the date, time and place of the alleged fraud or otherwise inject precision or some measure of
substantiation into a fraud allegation.” Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir.
2007). “Even when the defendant retains control over the flow of information, boilerplate and
conclusory allegations will not suffice. In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d
198, 217 (3d Cir. 2002). Plaintiffs must accompany their legal theory with factual allegations
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that make their theoretically viable claim plausible.” Id.
Here, Plaintiffs’ fraud claim does not meet the stringent pleading requirements of Rule
9(b). Plaintiffs do not state with particularity the circumstances of the alleged fraud or otherwise
inject the requisite precision into their allegations. In fact, the Amended Complaint is completely
devoid of any indication of the speaker of the alleged misrepresentations, the recipient of the
alleged misrepresentations, when the alleged misrepresentations were made, or where the alleged
misrepresentations were made. In addition, Plaintiffs’ Complaint insufficiently pleads the
required element of intent. Although “[m]alice, intent, knowledge and other conditions of mind
of a person may be alleged generally,” a plaintiff is still required to provide factual allegations
that support his legal theory. Id. While Plaintiffs aver that each of the aforementioned
representations were made “knowingly,” Plaintiffs make no allegation that CGLIC made any
representation with the intention that Plaintiffs would rely thereon, even in a wholly conclusory
fashion. See Metric Inv. v. Patterson, 236 A.2d 187, 188 (N.J. Super. Ct. Law Div. 1967)
(holding that the “vital omission in plaintiff’s proof [was] any showing that the representations
were made. . . with the intent that [plaintiff] or someone similarly situated should rely on them.”).
As such, Plaintiffs have not successfully asserted a fraud claim against Defendants and this claim
will be dismissed.
b.
Negligent Misrepresentation
In New Jersey, any tort of negligence “requires the plaintiff to prove that the putative
tortfeasor breached a duty of care owed to plaintiff and that plaintiff suffered damages
proximately caused by that breach.” Highlands Ins. Co. v. Hobbs Group, 373 F.3d 347, 351 (3d
Cir. 2004). The elements of negligent misrepresentation are essentially the same as those of
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common law fraud except negligent misrepresentation does not require scienter. Cohen, 2009
U.S. Dist. LEXIS 101696 at *41. To prove a claim of negligent misrepresentation under New
Jersey law, the plaintiff must demonstrate that “1) the defendant negligently provided false
information; 2) the plaintiff was a reasonably foreseeable recipient of that information; 3) the
plaintiff justifiably relied on the information; and 4) the false statements were a proximate cause
of the plaintiff’s damages.” McCall v. Metropolitan Life. Ins., 956 F. Supp. 1172, 1186 (D.N.J.
1996).
Thus, the first issue to be addressed is whether Defendants owed a duty to Plaintiffs.
“The question of whether a duty exists is a matter of law properly decided by the court, not the
jury.” Carter v. Lincoln-Mercury, Inc. v. EMAR Group, Inc., 638 A.2d 1288, 1294 (1994). To
create legal liability upon a defendant for negligence, the injury which is the basis of the action
must be predicated on the violation, neglect, or omission of some legal duty which the defendant
owed to the injured party. Pyle v. Fidelity Philadelphia Trust Co., 10 A.2d 482, 484 (1940). In
determining whether a duty of care exists, a court’s “analysis involves identifying, weighing, and
balancing several factors -- the relationship of the parties, the nature of the attendant risk, the
opportunity and ability to exercise care, and the public interest in the proposed solution.” Id.
Here, Plaintiffs contend that “the agreements and ongoing relationship between the parties
affords PSI a special relationship with [Defendants]” and that Defendants “owed PSI a duty as a
result of the relationship.” (Am. Compl. at 3, 10.) However, Plaintiffs fail to indicate how or
why this “special relationship” gives rise to a legal duty or what that duty entails. In addition,
Plaintiffs have not pointed to any case law in support of their proposition that a legal duty exists
between an insurance company and an insurance broker. See Saltiel v. GSI Consultants, Inc., 788
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A.2d 268, 280 (2002) (“Under New Jersey law, a tort remedy does not arise from a contractual
relationship unless the breaching party owes an independent duty imposed by law”); see also,
e.g., Carter, 638 A.2d at 1291-92 (recognizing that “[a]t common law both agents and brokers,
when acting on behalf of an insured, owe the insured a duty of due care”); Morlino v. Medical
Ctr. of Ocean County, 706 A.2d 721 (1998) (recognizing a duty imposed by law requiring
physician to act with required knowledge, skill and care in diagnosis and treatment of patient);
James v. Bessemer Processing, Co., Inc. 714 A.2d 898 (1998) (recognizing a manufacturer’s
duty at law to warn about potentially harmful effects of a product). As such, the Court is unable
to discern any duty at law owed to the Plaintiffs by Defendants that is independent of the duties
that arose under the business relationship between the parties. Because Plaintiffs have
insufficiently pled the existence of a duty owed to them by Defendants, Defendants’ motion to
dismiss the Second Count of the Amended Complaint will be granted.1
3.
Third Count: Breach of the Covenant of Good Faith and Fair Dealing
In the Third Count of the Amended Complaint, Plaintiffs argue that Defendants breached
the implied covenant of good faith and fair dealing when, after entering into several producer
agreements with Plaintiffs, Defendants refused to provide PSI with an insurance quote for SAI
yet provided one to Mercer for the same client. Every contract in New Jersey contains an implied
covenant of good faith and fair dealing. Black Horse Lane Assoc., L.P. v. Dow Chem. Corp., 228
1
In the Fourth Count of their Amended Complaint, Plaintiffs assert a negligence claim
against Defendants. In order to sustain a common law cause of action in negligence, a plaintiff
must prove four core elements: (1) a duty of care, (2) a breach of that duty, (3) proximate cause,
and (4) actual damages. Loceria Colombiana, S.A. v. Zrike Co., No. 10-5329, 2011 U.S. Dist.
LEXIS 17836 at *8-9 (D.N.J. Feb. 22, 2011). Because Plaintiffs have provided no facts or law to
support their conclusory allegation that Defendants owe them a legal duty, this count of the
Complaint will also be dismissed.
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F.3d 275, 288 (3d Cir. 2000). “A party to a contract breaches the covenant if it acts in bad faith
or engages in some other form of inequitable conduct in the performance of a contractual
obligation.” Id. The covenant operates to ensure that “neither party shall do anything which will
have the effect of destroying or injuring the right of the other party to receive the fruits of the
contract.” Sons of Thunder, Inc. v. Borden, Inc. 690, A.2d 575, 587 (1997).
Plaintiffs, however, point to no evidence of any malice or bad motive on the part of
Defendants, a deficiency which is fatal to their claim. The Supreme Court of New Jersey has
clearly held that bad motive is “essential” to a claim for breach of the implied covenant of good
faith and fair dealing.
[A]n allegation of bad faith or unfair dealing should not be
permitted to be advanced in the abstract and absent improper
motive. Without bad motive or intention, discretionary decisions
that happen to result in economic disadvantage to the other party
are of no legal significance. Bad motive or intention is essential,
for, as stated by the United States Court of Appeals for the Seventh
Circuit, “[c]ontract law does not require parties to behave
altruistically toward each other; it does not proceed on the
philosophy that I am my brother’s keeper.”
Wilson v. Amerada Hess Corp., 168 N.J. 236, 251 (2001) (citations omitted) (quotations in
original) (emphasis added). In the present matter, Defendants erred in failing to provide
Plaintiffs with an insurance quote for PSI and were not acting with bad intentions or motive. As
Plaintiffs themselves repeatedly point out, CGLIC simply “screwed up.” Indeed, “a party does
not breach the implied covenant of good faith and fair dealing merely because its decisions
disadvantaged another party.” Mollo v. Pasaic Valley Sewarge Comm’rs, No. 07-1655, 2009
U.S. Dist. LEXIS 121009 at *52 (D.N.J. Dec. 30, 2009). Because Plaintiffs have not established
an essential element of a good faith and fair dealing violation, this Count will be dismissed.
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4.
Fifth Count: Unjust Enrichment
In the Fifth Count of their Amended Complaint, Plaintiffs contend that Defendants
“unjustly refused to provide PSI a quote for SAI” and that as a result of this unjust action,
Defendants benefitted “by receiving additional business from Mercer and improving its
relationship with Mercer.” (Am. Compl. at 11.) Plaintiffs clearly misunderstand a cause of
action for unjust enrichment. To establish a claim for unjust enrichment, a plaintiff must prove
that defendant received a benefit from plaintiff and that retention of that benefit without payment
would be unjust. VRG Corp. v. GKN Realty Corp., 641 A.2d 519, 541 (N.J. 1994) (emphasis
added). The unjust enrichment doctrine “requires that plaintiff show that it expected
remuneration from the defendant at the time it performed or conferred a benefit on defendant and
that the failure of remuneration enriched defendant beyond its contractual rights.” Id. Here,
Plaintiffs do not claim that they conferred any benefit on Defendants, the remuneration of which
would unjustly enrich Defendants beyond their contractual rights. Instead, Plaintiffs refer to an
allegedly unjust action committed by Defendants which earned them a benefit from Mercer, a
non-party. As such, Defendants’ motion to dismiss Count Five will be granted.
5.
Sixth Count: Promissory Estoppel
Under New Jersey law, to plead a cause of action for promissory estoppel, Plaintiffs must
sufficiently allege the following elements: (1) a clear and definite promise by the promisor; (2)
that the promise was made with the expectation that the promisee would rely thereon; (3) that the
promisee in fact reasonably relied on the promise; and (4) that a detriment of a definite and
substantial nature was incurred in reliance on the promise. Royal Assocs. v. Concannon, 490
A.2d 357, 361 (N.J. Super. Ct. App. Div. 1985). In their Amended Complaint, Plaintiffs claim
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that Defendants made three distinct promises:
(1) That PSI would receive the best quotes from CIGNA available
for PSI’s clients;
(2) That PSI would receive the same quotes as other CIGNA
producers for same or similar clients; and,
(3) That if PSI was refused a quote for one of its clients because
CIGNA could not provide a competitive quote for that client, that
CIGNA would not later provide a competitive quote for the same
client to another producer based on similar or worse claims
information.
The Complaint goes on to state that “CIGNA expected that PSI would rely upon these promises,”
that “PSI relied on these promises,” and that “as a direct and proximate result of its reliance on
the promises [], PSI sustained substantial damages.” (Am. Compl. at 12.) In this Count,
Plaintiffs merely recite the elements of a promissory estoppel action and make no pretense of
offering the necessary factual detail to “allow[] the court to draw the reasonable inference that the
defendant is liable for the conduct alleged.” Iqbal, 129 S. Ct. at 1949. Even on a motion to
dismiss, this “formulaic recitation of the elements of a cause of action will not do.” Id.
Therefore, Defendants’ motion to dismiss the Sixth Count of the Complaint will be granted.
III.
CONCLUSION
For the foregoing reasons, the Court grants Defendants’ motion to dismiss. An
appropriate form of Order will be filed together with this Opinion.
s/ Stanley R. Chesler
STANLEY R. CHESLER
United States District Judge
DATED: August 25, 2011
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