ILKB, LLC v. Singh et al
ORDER granting 33 Motion to Dismiss for Failure to State a Claim; granting 33 Motion to Dismiss for Lack of Personal Jurisdiction: For the reasons set forth in the attached opinion and order, I dismiss without prejudice all counterclaims against ILKB Too for lack of personal jurisdiction, and I dismiss without prejudice the remaining counterclaims for failure to state a claim. Ordered by Judge Allyne R. Ross on 6/7/2021. (Roeck, Victoria)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-againstARDAMANDEEP SINGH et al.,
-againstILKB, LLC, MICHAEL PARRELLA, and ILKB TOO,
20-CV-4201 (ARR) (SJB)
NOT FOR ELECTRONIC
OR PRINT PUBLICATION
OPINION & ORDER
ROSS, United States District Judge:
In this trade secrets action, counterdefendants ILKB, LLC (“ILKB”), Michael Parrella, and
ILKB Too, LLC (“ILKB Too”) move to dismiss counterclaims for breach of contract, common
law fraud, and negligent misrepresentation brought by counterplaintiff, Ardamandeep Singh.
Counterdefs.’ Mot. Dismiss (“Counterdefs.’ Mot.”), ECF No. 33. Counterplaintiff opposes.
Counterpl.’s Opp’n, ECF No. 33-1. For the following reasons, I grant counterdefendants’ motion.
I dismiss without prejudice all counterclaims against ILKB Too for lack of personal jurisdiction,
and I dismiss without prejudice the remaining counterclaims for failure to state a claim.
Counterplaintiff, Ardamandeep Singh, is a former iLoveKickboxing franchisee. Singh
Decl. ¶ 2, ECF No. 33-2. Counterdefendant ILKB is “a franchisor of the iLoveKickboxing
franchise system.” Countercompl. ¶ 9, ECF No. 23. Counterdefendant Michael Parrella used to be
but no longer is the chief executive officer of ILKB. Id. ¶ 10; Asset Purchase Agreement 5, Valenza
Decl. Ex. C, ECF No. 33-6. ILKB Too, a Florida LLC with an office located at 210 Lake Harris
Drive, Lakeland, Florida, currently owns ILKB’s assets and operates the iLoveKickboxing
franchise system, having assumed those assets in June 2020. Asset Purchase Agreement; ILKB
Transition Letter, Singh Decl. Ex. A, ECF No. 33-3; Countercompl. ¶ 11.
Mr. Singh’s counterclaims for breach of contract, common law fraud, and negligent
misrepresentation under New York law arise from his business dealings with all three
counterdefendants. Mr. Singh alleges that around April 2015 he began discussions with
representatives from ILKB, including Mr. Parrella, to purchase an ILKB franchise. Countercompl.
¶¶ 16–18. He also attended “ILKB’s ‘Discovery Day’ meeting for prospective franchisees to learn
about the franchise on July 26-27, 2015.” Id. ¶ 17. Mr. Singh alleges that throughout these
discussions ILKB made the following representations “to induce him to sign the Franchise
Agreement which were later discovered to be false:
a. ILKB made the representation that franchisees in the ILKB system break even in weeks
or months; of opening their franchise with 200 members paying $135.00/month each
which would generate $27,000/month, and costs would be at or below $25,000/month;
b. ILKB told Counter-plaintiff that franchisees in the ILKB system were able to operate
the franchises as absentee owners and spent only about 1-2 hours a week running their
franchises, and that they were able to keep other full-time employment;
c. ILKB told Counter-plaintiff that ILKB’s marketing generated at least 100 trial
members per month starting when their studios opened; and
d. ILKB told Counter-plaintiff that the historical rate of trial to membership conversion
rates were in the 70-80% range.”
Id. ¶ 18. Mr. Singh claims he relied on these representations to purchase an ILKB franchise. Id. ¶
In July 2015, Mr. Singh signed a Franchise Agreement with ILKB to open a kickboxing
studio. Franchise Agreement, Countercompl. Ex. A, ECF No. 23-1. In this contract, he agreed to
pay a monthly marketing fee to ILKB, and ILKB committed to “expend[ing] . . . an amount equal
to the aggregate Marketing and Promotion Fees . . . collected from all of its franchisees less a 15%
administrative fee” on “national, regional or local marketing, advertising, cooperative advertising,
market research, public relations and promotional campaigns.” Id. at 20. Mr. Singh now claims
counterdefendants breached this contract because “ILKB’s marketing completely failed Counterplaintiff.” Countercompl. ¶ 25.
Federal Rule of Civil Procedure 12(b)(2)
“[T]o survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make
a prima facie showing that jurisdiction exists.” Chufen Chen v. Dunkin’ Brands, Inc., 954 F.3d
492, 497 (2d Cir. 2020). “The jurisdictional analysis is not limited to the allegations of the
complaint. [I] may consider supplemental materials, including affidavits, provided by either
party.” Mercury Pub. Affairs LLC v. Airbus Defence & Space, S.A.U., No. 19-CV-7518 (MKV),
2020 WL 4926334, at *2 (S.D.N.Y. Aug. 21, 2020). “[W]here the issue is addressed on
affidavits, all allegations are construed in the light most favorable to the plaintiff.” A.I. Trade
Fin., Inc. v. Petra Bank, 989 F.2d 76, 79 (2d Cir. 1993); see also MacDermid, Inc. v. Deiter, 702
F.3d 725, 728 (2d Cir. 2012).
Federal Rule of Civil Procedure 12(b)(6)
In reviewing a complaint for failure to state a claim, I must “constru[e] [it] liberally,
accepting all factual allegations in the complaint as true, and drawing all reasonable inferences in
the plaintiff’s favor.” Bacon v. Phelps, 961 F.3d 533, 540 (2d Cir. 2020) (citation omitted). I may
consider only those “facts stated on the face of the complaint, in documents appended to the
complaint or incorporated in the complaint by reference, and to matters of which judicial notice
may be taken.” Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991). “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a
claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation
and quotation marks omitted). A claim is facially plausible “when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
Counterplaintiff Has Failed to Make a Prima Facie Showing of Personal
Jurisdiction over ILKB Too.
Counterplaintiff asserts, and counterdefendants deny, that I have general personal
jurisdiction over ILKB Too. Counterpl.’s Opp’n 2–7; Counterdefs.’ Mot. 6. “[A] court may assert
general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all
claims against them when their affiliations with the State are so ‘continuous and systematic’ as to
render them essentially at home in the forum State.” Daimler AG v. Bauman, 571 U.S. 117, 127
(2014) (citation omitted). “[E]xcept in a truly exceptional case, a corporate defendant may be
treated as essentially at home only where it is incorporated or maintains its principal place of
business.” Chufen Chen, 954 F.3d at 498 (citation omitted).
Here, counterplaintiff alleges that ILKB Too “is a Florida limited liability company with
an office located at 210 Lake Harris Drive, Lakeland, Florida.” Countercompl. ¶ 11. As a Florida
LLC, ILKB Too is not incorporated in New York. Moreover, nowhere in counterplaintiff’s
complaint or briefs does he allege that ILKB Too’s principal place of business is in New York or
plead any “exceptional” facts showing that ILKB’s contacts with New York are so continuous and
systematic as to render it at home in that state. Chufen Chen, 954 F.3d at 498. Therefore,
counterplaintiff has failed to make a prima facie showing of general jurisdiction over ILKB Too
In the alternative, counterplaintiff argues that I have general personal jurisdiction over
ILKB Too as a successor in interest of ILKB. Counterpl.’s Opp’n 5–7. “[W]hen a person is found
to be a successor in interest, the court gains personal jurisdiction over them simply as a
consequence of their status as a successor in interest, without regard to whether they had any other
minimum contacts with the state.” LiButti v. United States, 178 F.3d 114, 123 (2d Cir. 1999).
“Under both New York law and traditional common law, a corporation that purchases the assets
of another corporation is generally not liable for the seller’s liabilities.” New York v. Nat’l Serv.
Indus., Inc., 460 F.3d 201, 209 (2d Cir. 2006). Rather, successor liability attaches only where: ”(1)
[the successor] expressly or impliedly assumed the predecessor’s tort liability, (2) there was a
consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere
continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape
such obligations.” Id.
Turning to the first factor, the Asset Purchase Agreement shows that ILKB Too did not
explicitly assume ILKB’s tort liability. In fact, ILKB Too only assumed limited contractual
liabilities unrelated to this action. Asset Purchase Agreement 26.
As to the second and third factors, I may evaluate them together. Cargo Partner AG v.
Albatrans, Inc., 352 F.3d 41, 45 n.3 (2d Cir. 2003) (“[T]he mere-continuation and de-facto-merger
doctrines are so similar that they may be considered a single exception.” ). To determine whether
there has been a de facto merger, I consider whether there was: “(1) continuity of ownership; (2)
cessation of ordinary business and dissolution of the acquired corporation as soon as possible; (3)
assumption by the purchaser of the liabilities ordinarily necessary for the uninterrupted
continuation of the business of the acquired corporation; and (4) continuity of management,
personnel, physical location, assets, and general business operation.” Nat’l Serv. Indus., 460 F.3d
at 209. The key factor, however, is continuity of ownership: “[C]ontinuity of ownership is the
‘essence of a merger’ and thus a necessary predicate to a finding of a de facto merger.” Id. at 212
(citation omitted). “The continuity-of-ownership element is designed to identify situations where
the shareholders of a seller corporation retain some ownership interest in their assets after cleansing
those assets of liability.” Id. at 211 (citation and quotation marks omitted). Counterplaintiff alleges
“continuity of ownership in that existing ILKB member or equity owner, Parrella, directly or
indirectly, retained an interest in ILKB, its business and/or its assets following the merger.”
Countercompl. ¶ 12. But the Asset Purchase Agreement disproves that allegation. Mr. Parrella did
not retain an interest or a management role in ILKB Too and was required to resign as part of the
sale of ILKB’s assets. Asset Purchase Agreement 5; see also Transition Letter (noting new
management of ILKB). Even the countercomplaint itself contradicts this allegation where it says
“Parrella resigned as ILKB’s CEO in January of 2020, but he abandoned the franchise system long
before that.” Countercompl. ¶ 26.
As to the fourth factor, counterplaintiff alleges that “the merger or de facto merger was
entered into fraudulently or wrongfully to avoid ILKB’s liabilities to the Counter-plaintiff and
other similarly situated franchisees.” Countercompl. ¶ 13. But this allegation is merely conclusory.
Indeed, the Asset Purchase Agreement undercuts this assertion because ILKB agreed to indemnify
ILKB Too for claims in certain enumerated lawsuits. Asset Purchase Agreement 10–11. Therefore,
counterplaintiff has failed to make a prima facie showing of successor liability, and I dismiss all
claims against ILKB Too without prejudice for lack of personal jurisdiction.
Finally, counterplainitff seeks leave to conduct jurisdictional discovery if I find he has
failed to make a prima facie showing of personal jurisdiction over ILKB Too. Counterpl.’s Opp’n
7. I have “discretion to deny a request for discovery regarding personal jurisdiction . . . where a
plaintiff’s proposed discovery, even if permitted, would not uncover facts sufficient to sustain
jurisdiction.” Hitachi Data Sys. Credit Corp. v. Precision Discovery, Inc., 331 F. Supp. 3d 130,
147 n.3 (S.D.N.Y. 2018) (citation and quotation marks omitted). Here, counterplaintiff has not
“explained how discovery would permit [him] to support any [jurisdictional] theory if it did exist,”
id., and thus I deny his request.
Counterplaintiff Has Failed to State a Claim for Common Law Fraud Against the
“In alleging fraud . . . , a party must state with particularity the circumstances constituting
fraud . . . .” Fed. R. Civ. P. 9(b). “Malice, intent, knowledge, and other conditions of a person’s
mind may be alleged generally.” Id. Under New York law, there are five elements of fraud: “(1) a
material misrepresentation or omission of fact (2) made by defendant with knowledge of its falsity
(3) and intent to defraud; (4) reasonable reliance on the part of the plaintiff; and (5) resulting
damage to the plaintiff.” Crigger v. Fahnestock & Co., 443 F.3d 230, 234 (2d Cir. 2006).
Counterdefendants claim counterplaintiff did not allege that counterdefendants knew their
representations were false. Counterdefs.’ Mot. 12. While counterplaintiff may make allegations of
knowledge “generally,” Fed. R. Civ. P. 9(b), a court “must not mistake the relaxation of Rule
9(b)’s specificity requirement regarding condition of mind for a license to base claims of fraud on
speculation and conclusory allegations.” Lerner v. Fleet Bank, 459 F.3d 273, 290 (2d Cir. 2006)
(citation omitted). Rather, counterplaintiff must allege facts that “give rise to a strong inference of
fraudulent intent.” Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir. 1994). To satisfy
this requirement, a plaintiff may allege: (a) facts showing that defendants had “both motive and
opportunity to commit fraud,” or (b) facts “constitut[ing] strong circumstantial evidence of
conscious misbehavior or recklessness.” Lerner, 459 F.3d at 290–91. Counterplaintiff only alleges
that “ILKB and Parrella knew these representations were false and made them with the intent that
Counter-plaintiff would rely upon them to his detriment.” Countercompl. ¶ 37. He does not allege
any facts underlying this assertion. Thus, I dismiss without prejudice counterplaintiff’s common
law fraud claim against ILKB and Mr. Parrella for failing to plead sufficient facts giving rise to a
strong inference of fraudulent intent.
I also dismiss counterplaintiff’s common law fraud claim against Mr. Parrella on an
alternative ground. Counterdefendants argue that counterplaintiff did not specify who said which
allegedly fraudulent statements when. Counterdefs.’ Mot. 14–15. Rule 9(b) requires a plaintiff to
“(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3)
state where and when the statements were made, and (4) explain why the statements were
fraudulent.” Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993). Here,
counterplaintiff alleges that “ILKB” made various representations, later discovered to be false,
“[o]ver the course of Counter-plaintiff’s discussions with representatives of ILKB including
Parrella . . . , during Discovery Day and prior to signing the Franchise.” Countercompl. ¶ 18. But
just attributing statements to the company does not satisfy Rule 9(b) as to Mr. Parrella. See Mills,
12 F.3d at 1175 (finding that alleging fraudulent statements attributed to a company did not satisfy
Rule 9(b) as to fraud claims against its directors). Thus, I dismiss counterplaintiff’s fraud claim
against Mr. Parrella without prejudice for this additional reason.
Counterplaintiff Has Failed to State a Claim for Negligent Misrepresentation
Against the Remaining Counterdefendants.
“Under New York law, the elements for a negligent misrepresentation claim are that (1)
the defendant had a duty, as a result of a special relationship, to give correct information; (2) the
defendant made a false representation that he or she should have known was incorrect; (3) the
information supplied in the representation was known by the defendant to be desired by the
plaintiff for a serious purpose; (4) the plaintiff intended to rely and act upon it; and (5) the plaintiff
reasonably relied on it to his or her detriment.” Hydro Invs., Inc. v. Trafalgar Power Inc., 227 F.3d
8, 20 (2d Cir. 2000). Claims for negligent misrepresentation under New York law “must be pled
in accordance with the specificity criteria of Rule 9(b).” Aetna Cas. & Sur. Co. v. Aniero Concrete
Co., 404 F.3d 566, 583 (2d Cir. 2005).
Counterdefendants claim that counterplaintiff has failed to plead a “special relationship”
required to state a claim for negligent misrepresentation under New York law. Counterdefs.’ Mot.
13. Counterplaintiff asserts that “Counter-defendants, as the franchisors, stand in a special
relationship with a franchisee.” Counterpl.’s Opp’n 10–11. However, “[i]t is well established that,
in general, the relationship between franchisor and franchisee does not constitute the sort of
relationship needed to support a negligent misrepresentation claim.” JM Vidal, Inc. v. Texdis USA,
Inc., 764 F. Supp. 2d 599, 625 (S.D.N.Y. 2011) (collecting cases); Manhattan Motorcars, Inc. v.
Automobili Lamborghini, S.p.A., 244 F.R.D. 204, 215 (S.D.N.Y. 2007) (“A simple commercial
relationship, such as that between a franchisor and franchisee, does not constitute the kind of
special relationship necessary for a negligent misrepresentation claim.”). Counterplaintiff “points
to no facts in the [countercomplaint] suggesting that this case presents an exception to the general
rule.” JM Vidal, Inc., 764 F. Supp. 2d at 625–26. “[I]nstead, [he] asserts that the
requisite relationship existed merely because [counterdefendants were], in fact,  franchisor[s].”
Id. at 626. That is insufficient to survive a motion to dismiss. Accordingly, I dismiss
counterplaintiff’s negligent misrepresentation claim without prejudice for failure to state a claim.
Counterplaintiff Has Failed to State a Claim for Breach of Contract Against the
Under New York law, “[t]o make out a viable claim for breach of contract a ‘complaint
need only allege (1) the existence of an agreement, (2) adequate performance of the contract by
the plaintiff, (3) breach of contract by the defendant, and (4) damages.’” Eternity Glob. Master
Fund Ltd. v. Morgan Guar. Tr. Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (quoting Harsco
Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996)).
Counterdefendants first argue that counterplaintiff has failed to state a claim against Mr.
Parella because only ILKB is a party to the Franchise Agreement. Counterdefs.’ Mot. 16.
Counterplaintiff does not appear to contest this fact. Thus, I deem counterplaintiff’s breach-ofcontract claim against Mr. Parella abandoned and dismiss it without prejudice.
As to ILKB, counterdefendants argue that counterplaintiff failed to plead a breach because
the challenged actions do not actually violate the contract. Counterdefs.’ Mot. 17. Counterplaintiff
asserts that ILKB breached the franchise agreement “by failing to market the franchise and
abandoning its support obligations under the Franchise Agreement.” Countercompl. ¶ 32. “Despite
collecting a marketing fee as provided for in the Franchise Agreement, ILKB’s marketing
completely failed Counter-plaintiff.” Counterpl.’s Opp’n 12; Countercompl. ¶ 25. The Franchise
Agreement states that ILKB “will expend . . . an amount equal to the aggregate Marketing and
Promotion Fees . . . collected from all of its franchisees less a 15% administrative fee” on “national,
regional or local marketing, advertising, cooperative advertising, market research, public relations
and promotional campaigns.” Franchise Agreement 20. ILKB also agreed that if requested by a
certain date, it “will provide” the franchisee “a statement of receipts and expenditures of the
aggregate Marketing and Promotion Fees relating to the preceding calendar year.” Id.
Counterplaintiff does not allege that ILKB did not spend the amount of money on marketing that
it agreed to spend. Rather, he alleges that “ILKB’s marketing completely failed Counter-plaintiff”
such that he “was forced to hire a third-party marketing company.” Countercompl. ¶ 25. He further
alleges that “[f]rom the summer of 2019 onward . . . ILKB . . . reduced the marketing that they
provided (which was already insufficient).” Id. ¶ 26. But he does not allege that this reduced
amount of marketing was below the threshold agreed upon in the Franchise Agreement. For this
reason, counterplaintiff has failed to plead a breach of the Franchise Agreement, and I dismiss this
claim without prejudice. 1
Counterdefendants’ Motion to Dismiss Counterplaintiff’s Claim for Attorneys’ Fees
Counterdefendants seek to dismiss counterplaintiff’s fourth counterclaim for attorneys’
fees because attorneys’ fees are not a cause of action. Counterdefs.’ Mot. 17. In response,
counterplaintiff requests leave to replead attorneys’ fees as “requests for relief rather than a
standalone claim.” Counterpl.’s Opp’n 13. This issue is moot because I have dismissed all of
counterplaintiff’s claims without prejudice.
For the foregoing reasons, I grant counterdefendants’ motion. I dismiss without prejudice
all counterclaims against ILKB Too for lack of personal jurisdiction, and I dismiss without
prejudice the remaining counterclaims for failure to state a claim. Should counterplaintiff choose
not to file an amended countercomplaint within ten days of the date of this order, the dismissal
Additionally, because counterplaintiff failed to plead a breach of the Franchise Agreement, I also
dismiss without prejudice his fifth counterclaim for a declaratory judgment.
will become with prejudice.
Allyne R. Ross
United States District Judge
June 7, 2021
Brooklyn, New York
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