Gunderson Amazing Fireworks, LLC v. Merrick Bank et al

Filing 65

MEMORANDUM AND ORDER granting in part and denying in part 29 Motion to Dismiss for Failure to State a Claim. For the foregoing reasons, Defendants' motion to dismiss or for summary judgment for lack of subject matter jurisdiction is DENIED. Defendants' motion to dismiss is otherwise GRANTED. Plaintiffs' claims for unjust enrichment under both Washington and Ohio law, and their claims for negligence and breach of the duty of good faith under Ohio law, are DISMISSED WITH PREJUD ICE. Plaintiffs' remaining claims are DISMISSED WITHOUT PREJUDICE to filing a Consolidated Amended Complaint in compliance with this Memorandum and Order. If Plaintiffs intend to file a Consolidated Amended Complaint, they must do so within thirty (30) days of the date of this Memorandum and Order. If Plaintiffs do not file a Consolidated Amended Complaint within the specified period, the case will be closed. So Ordered by Judge Joanna Seybert on 9/24/2013. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
GUNDERSON AMAZING FIREWORKS, LLC,
Plaintiff,

MEMORANDUM & ORDER
12-CV-3869(JS)(WDW)

-against–
MERRICK BANK, MERRICK BANK MERCHANT
SERVICES DIVISION, CARDWORKS, L.P.,
and PINNACLE PROCESSING GROUP, INC.,
Defendants.
---------------------------------------X
FIREWORKS UNLIMITED, LLC,
Plaintiff,

12-CV-3871(JS)(WDW)
(Member Case)

-against–
MERRICK BANK, MERRICK BANK MERCHANT
SERVICES DIVISION, CARDWORKS, L.P.,
and PINNACLE PROCESSING GROUP, INC.,
Defendants.
---------------------------------------X
KENACO SALES, LLC,
Plaintiff,
-against–

12-CV-3872(JS)(WDW)
(Member Case)

MERRICK BANK, MERRICK BANK MERCHANT
SERVICES DIVISION, CARDWORKS, L.P.,
and PINNACLE PROCESSING GROUP, INC.,
Defendants.
---------------------------------------X
FIREWORKS CENTER 25, LLC,
Plaintiff,
-against–
MERRICK BANK, MERRICK BANK MERCHANT
SERVICES DIVISION, CARDWORKS, L.P.,

12-CV-3873(JS)(WDW)
(Member Case)

and PINNACLE PROCESSING GROUP, INC.,
Defendants.
---------------------------------------X
LADY LUCKS WHOLESALE & RETAIL
FIREWORKS, LLC,
Plaintiff,

12-CV-4019(JS)(WDW)
(Member Case)

-against–
MERRICK BANK, MERRICK BANK MERCHANT
SERVICES DIVISION, CARDWORKS, L.P.,
and PINNACLE PROCESSING GROUP, INC.,
Defendants.
---------------------------------------X
APPEARANCES
For Plaintiffs:
Donald E. Creadore, Esq.
The Creadore Law Firm
305 Broadway, 14th Floor
New York, NY 10007
For Defendants:

Daniel Seth Weinberger, Esq.
Mark W. Stoutenburg, Esq.
Gibbons P.C.
One Pennsylvania Plaza, 37th Floor
New York, NY 10119

SEYBERT, District Judge:
This

is

a

consolidated

action

involving

suits

by

Plaintiffs Gunderson Amazing Fireworks, LLC (“GAF”), Fireworks
Unlimited, LLC, Kenaco Sales, LLC, Fireworks Center 25, LLC, and
Lady

Lucks

Wholesale

“Plaintiffs”)

&

against

Retail

Fireworks,

Defendants

Merrick

LLC

(collectively

Bank

(“Merrick”),

Merrick Bank Merchant Services Division (“MMS”), Cardworks, L.P.
(“CWLP”),

and

Pinnacle

Processing

collectively, “Defendants”).

Group,

Inc.

(“PPG”

and

Currently pending before the Court

2

is Defendants’ motion to dismiss or, in the alternative, motion
for

summary

judgment

(Docket

Entry

29).

For

the

following

reasons, Defendants’ motion is GRANTED IN PART and DENIED IN
PART.
BACKGROUND
Plaintiffs are retail sellers of consumer fireworks
who entered into Merchant Agreements in 2010 with Defendants
whereby Defendants would process Plaintiffs’ credit card sales
transactions.

(GAF Am. Compl.1 ¶ 9.)

The Merchant Agreements

that each of the Plaintiffs signed are nearly identical, except
that GAF’s Merchant Agreement contains a choice-of-law provision
providing
Merchant

that

Washington

Agreements

law

provide

governs,

for

the

whereas

governance

the
of

remaining
Ohio

law.

According to Plaintiffs, Merrick is a banking institution, of
which MMS is a subsidiary,2 CWLP is another banking institution,3
and PPG is a credit card processor.4

(GAF Am. Compl. ¶¶ 2-5.)

Shortly before the cases were consolidated, Plaintiffs filed
Amended Complaints in their independent actions. The Amended
Complaints are primarily identical and, for ease of reference,
the Court will refer to the Amended Complaint filed in Gunderson
Amazing Fireworks, LLC v. Merrick Bank et al., No. 12-CV-3869,
Docket Entry 26 (“GAF Am. Compl.”), noting any differences among
the Plaintiffs and their Amended Complaints when necessary.
1

Defendants maintain that MMS is not a separate legal entity
subject to suit. (Defs.’ Br. in Support (“Defs.’ Br.”), Docket
Entry 36, at 27.)
2

3

Merrick, as defined by the Merchant Agreements, is in
the

general

banking

business,

including

providing

settlement

services to merchants that accept valid credit and debit cards
bearing Visa, Mastercard, or Discover service marks.
Compl. ¶ 12.)

(GAF Am.

The Amended Complaints do not specify the exact

relationships between the parties, but Defendants assert, and
Plaintiffs do not dispute, that acquiring banks such as Merrick
will

sometimes

Organizations

delegate
(“ISOs”).

their

authority

(See

Defs.’

to

Br.

Independent
at

5.)

Sales

Although

Plaintiffs at times refer to PPG as a credit card processor, the
Merchant Agreements define PPG as the ISO.

(GAF Am. Compl.

¶ 11.)
In exchange for Merrick and PPG’s services, “including
arranging for Authorization . . . and processing services” (GAF
Am.

Compl.

processing

¶
and

11),

Plaintiffs

related

fees

for

paid
each

Merrick
credit

and

PPG

small

or

debit

card

transaction, which Merrick and PPG were authorized to deduct
from

Designated

Deposit

Accounts

(“DDAs”).

(GAF

Am.

Compl.

¶ 13.)

Defendants dispute that CWLP is a financial institution, and
instead maintain that it is the ultimate parent company of
Merrick that does not provide any services. (Defs.’ Br. at 6.)
3

According to Defendants, PPG is an Independent Sales
Organization, not a credit card processor. (Defs.’ Br. at 6.)
4

4

Initially,
proceeded

without

the

parties’

incident.

(GAF

business
Am.

relationships

Compl.

¶

15.)

In

approximately March 2012, however, “JetPay Merchant Services,
LLC began to perform certain processing services for and on
behalf of the Defendants . . . .”

(GAF Am. Compl. ¶ 15.)

Approximately

or

one

month

later,

in

about

April

2012,

Plaintiffs began receiving complaints from customers that they
were being double- and triple-charged for their purchases.

(GAF

Am. Compl. ¶ 16.)
Plaintiffs
recklessly

allege

mismanaged”

that

the

Defendants

DDAs,

that

“improperly
“Defendants

and
are

responsible for generating fictitious credit/debit charges,” and
that “Defendants failed to institute proper measures against,
inter

alia,

charges.”

the

risks

(GAF

Am.

associated
Compl.

¶¶

with

repetitive

fictitious

21-23

(emphasis

omitted).)

Accordingly, Plaintiffs assert causes of action for: (1) breach
of contract, (2) negligence, (3) “unfair business practice,” (4)
breach of the duty of good faith, (5) breach of fiduciary duty,
and (6) unjust enrichment.
DISCUSSION
Defendants move to dismiss pursuant to Rules 12(b)(1)
and 12(b)(6) of the Federal Rules of Civil Procedure on the
grounds that the Court lacks subject matter jurisdiction and
that the Amended Complaints fail to state a claim upon which
5

relief

can

judgment

be

granted

pursuant

to

or,

Rule

in
56

the
of

alternative,

the

Federal

for

Rules

summary
of

Civil

Procedure on the grounds that the Court lacks subject matter
jurisdiction.5
matter

The Court will first address the issue of subject

jurisdiction

before

turning

to

the

remainder

of

Defendants’ motion.
I.

Subject Matter Jurisdiction
Defendants move to dismiss or, in the alternative, for

summary judgment because, they assert that, inter alia, this
Court lacks subject matter jurisdiction.

The Court finds that

it cannot definitely determine subject matter jurisdiction at
this stage and, accordingly, Defendants’ motion in this regard
is DENIED.
A.

12(b)(1) Standard
“A

case

is

properly

dismissed

for

lack

of

subject

matter jurisdiction under Rule 12(b)(1) when the district court
lacks the statutory or constitutional power to adjudicate it.”
Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000).
resolving

a

motion

jurisdiction,
materials
questions.

to

the

Court

beyond

the

dismiss
may

for

lack

consider

pleadings

to

of

subject

affidavits
resolve

In

matter

and

other

jurisdictional

See Morrison v. Nat’l Australia Bank, Ltd., 547 F.3d

The Court has provided a somewhat simplified recitation of
Defendants’ motion. For a more complete description, see
Defendants’ Notice of Motion (Docket Entry 29).
5

6

167, 170 (2d Cir. 2008).

The Court must accept as true the

factual allegations contained in the complaint, but it will not
draw

argumentative

inferences

in

favor

of

Plaintiffs

because

subject matter jurisdiction must be shown affirmatively.

See

id.; Atlanta Mut. Ins. Co. v. Balfour Maclaine Int’l Ltd., 968
F.2d 196, 198 (2d Cir. 1992); Shipping Fin. Servs. Corp. v.
Drakos,

140

F.3d

129,

131

(2d

Cir.

1998).

“A

plaintiff

asserting subject matter jurisdiction has the burden of proving
by a preponderance of the evidence that it exists.”

Makarova,

201 F.3d at 113.
B.

Federal Question Jurisdiction
Preliminarily, the Court notes that Plaintiffs have

failed

to

allege

federal

question

jurisdiction.

“Federal

question jurisdiction exists when an action ‘aris[es] under the
Constitution,

laws,

Gucciardo

Reliance

v.

or

treaties
Ins.

of

Co.,

84

the
F.

United

Supp.

2d

States.’”
399,

402

(E.D.N.Y. 2000) (alteration in original) (quoting 28 U.S.C. §
1331).

Here, the only reference to federal laws is a general

assertion in the Amended Complaints that “Defendants’ actions
constitute an unfair business practice under state and federal
laws.”

(GAF Am. Compl. ¶ 34.)

Plaintiffs cite to no federal

statute nor do they offer any allegations to suggest federal
question
argued

jurisdiction.

for

dismissal

Furthermore,
based

upon
7

a

Defendants

lack

of

specifically

federal

question

jurisdiction, and Plaintiffs have not offered any opposition.
Accordingly, Plaintiffs have abandoned any assertion of federal
question jurisdiction.
F.

Supp.

2d

420,

See Adams v. N.Y. State Educ. Dep’t, 752

452

n.32

(S.D.N.Y.

2010)

(claim

deemed

abandoned because plaintiff did not respond to, or even mention,
claim in opposition to defendants’ motion to dismiss).
C.

Diversity Jurisdiction
Thus,

adequately

the

alleged

Court

turns

diversity

to

whether

Plaintiffs

jurisdiction.

“Where

a

have
civil

action between citizens of different states involves an amount
in

controversy

in

excess

of

$75,000,

excluding

interest

and

costs, the federal courts have subject matter jurisdiction based
on diversity of citizenship.”

Gucciardo, 84 F. Supp. 2d at 402

(citing 28 U.S.C. § 1332).
1.

Citizenship

Defendants

maintain

that

Plaintiffs

have

not

adequately alleged the citizenship of its members in order to
show diversity.

The Court disagrees.

Jurisdiction
diversity

such

that

based
the

upon

diversity

citizenship

of

requires
the

different than that of each of the defendants.
§ 1332;
3779295,

accord
at

*1

Winkler

v.

(E.D.N.Y.

Hirsch,
Aug.

30,

No.

plaintiffs

is

See 28 U.S.C.

12-CV-3893,

2012).

complete

“For

2012

WL

diversity

purposes, the citizenship of a limited liability company (‘LLC’)
8

depends

upon

the

citizenship

of

its

members.”

Mackason

v.

Diamond Fin. LLC, 347 F. Supp. 2d 53, 55 (S.D.N.Y. 2004) (citing
Handelsman v. Bedford Vill. Assoc. Ltd. P’ship, 213 F.3d 48, 51
(2d Cir. 2000)).

Here, Plaintiffs have submitted affidavits

affirming that their members are citizens of Missouri, Texas,
and

Oklahoma.

Docket

(Kueck

Entries

Aff.,

42-47;

Docket

Kapchinsky

Entry
Aff.,

39;

Herzog

Docket

Affs.,

Entry

48.)

Defendants, in contrast, are citizens of Washington, Utah, and
New

York.

(See

Defs.’

Br.

at

17-18,

n.11-13.)

Although

Defendants assert that Plaintiffs’ affidavits state residency
only

(Defs.’

affidavits

Reply

also

sufficient.

Br.,

include

Docket

Entry

citizenship,

61,
and

at

2
are

n.2),

the

therefore

Accordingly, Defendants’ motion in this regard is

DENIED.
2.

Amount in Controversy

Defendants

additionally

argue

that

Plaintiffs

have

failed to assert an amount in controversy in excess of $75,000
because

each

of

the

Merchant

Agreements

expressly

limits

Defendants’ liability to the lesser of $50,000 or the amount of
fees received by Merrick and PPG for services performed in the
immediately preceding twelve months.

Plaintiffs counter that

the limitation of liability clause contained in each Merchant
Agreement is unconscionable and therefore void.

9

Plaintiffs bear the burden of showing that there is a
“reasonable

probability

that

statutory

jurisdictional

Assurance

Soc’y

of

the

claim

U.S.,

347

F.3d

in

excess

Scherer

amount.”

is

v.

Equitable

394,

397

(2d

of

Cir.

(internal quotation marks and citation omitted).

the
Life

2003)

“Generally,

this probability is easily met, since there exists a rebuttable
presumption that the face of a plaintiff’s complaint is a ‘good
faith

representation

of

the

actual

amount

in

controversy.’”

Int’l Christian Broad., Inc. v. Koper, --- F. Supp. 2d ----,
2013 WL 664895, at *2 (E.D.N.Y. Feb. 19, 2013) (quoting Wood v.
Maguire

Auto.,

LLC,

508

F.

App’x

65,

65

(2d

Cir.

2013)).

However, the alleged amount of damages “may be rejected . . .
upon a showing to a legal certainty that the claim is actually
for less than the jurisdictional amount to justify dismissal.”
Gucciardo, 84 F. Supp. 2d at 402.
Here, Defendants maintain that the Merchant Agreements
and,

more

specifically,

the

limitation

of

liability

clauses

therein, limit Plaintiffs’ damages to a maximum of $50,000 per
plaintiff

and,

thus,

“to

a

legal

certainty,”

the

Plaintiffs seek fall below the jurisdictional amount.

damages
Correctly

anticipating that Plaintiffs would oppose on the grounds that
the

limitation

of

liability

clauses

are

unconscionable,

Defendants submit affidavits and evidentiary material and urge
the Court to convert their motion to one for summary judgment
10

and find in their favor.
though

Plaintiffs

have

The Court finds, however, that even
submitted

affidavits

and

evidence

of

their own, conversion is inappropriate.
The

parties

devote

significant

portions

of

their

respective briefs to the issue of whether the limitation of
liability clauses are unconscionable.

Limitation of liability

clauses are potentially valid under both Ohio and Washington law
and, in fact, the two states take similar approaches to the
issue.
Cir.

See, e.g., Doe v. SexSearch.com, 551 F.3d 412, 419 (6th
2008)

(“Limitation-of-liability

clauses

are

viewed

critically, but may be freely bargained for in Ohio and will be
enforced absent public policy concerns, unconscionability, or
vague

and

ambiguous

terms.”

(internal

quotation

marks

and

citation omitted)); Reule v. H.O. Seiffert Co., No. 08-CV-1591,
2009 WL 2057047, at *3 (W.D. Wash. July 13, 2009) (listing the
non-exclusive
determining

factors
whether

that
a

Washington

limitation

of

courts
liability

consider

in

clause

is

unconscionable).
However, “[i]n Ohio, ‘although an exculpatory clause
to limit one’s liability due to negligence may be valid and
enforceable, . . . such a clause is ineffective where the party
seeking protection failed to exercise any care whatsoever, [or]
where there was willful or wanton misconduct . . . .”

Airlink

Commc’ns, Inc. v. Owl Wireless, LLC, No. 10-CV-2296, 2011 WL
11

4376123, at *4 (N.D. Ohio Sept. 20, 2011) (quoting Ohio Cas.
Inc. Co. v. D & J Distrib. & Mfg., 2009 Ohio 3806, ¶ 36 (Ohio
Ct.

App.

2009))

(second

alteration

added).

Similarly,

Washington courts have held that “[a] limitation of liability
clause may not apply where the party relying on the clause acted
in ‘bad faith.’”

Valve Corp. v. Sierra Entm’t, Inc., 431 F.

Supp. 2d 1091, 1101 (W.D. Wash. 2004).
Here,
“recklessly,”

Plaintiffs

(GAF

Am.

allege

Compl.

¶

21)

that

Defendants

and,

at

least

acted

arguably

allege that Defendants acted intentionally or with some form of
wanton misconduct or bad faith.
a

considerable

limitation

of

amount

of

liability

Thus, while the parties submit

evidence
clauses

regarding
at

issue

whether
here

the
were

unconscionable, this evidence is not relevant to the Court’s
analysis.
in

a

Rather, Plaintiffs have alleged that Defendants acted

manner

beyond

mere

negligence,

thus

invalidating the limitation of liability clauses.

potentially
As such, the

Court cannot say to a legal certainty, at this juncture, that
the amount in controversy is below the jurisdictional threshold
and, accordingly, Defendants’ motion in this regard is DENIED.
II.

Defendants’ Motion
The

Court

will

first

address

the

applicable

legal

standard on a motion to dismiss before turning to Defendants’

12

arguments more specifically.6
A.

Legal Standard
In

Court

deciding

applies

a

Rule

12(b)(6)

“plausibility

“[t]wo working principles.”

motions

standard,”

to

which

dismiss,
is

guided

the
by

Ashcroft v. Iqbal, 556 U.S. 662,

678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); accord Harris v.
Mills, 572 F.3d 66, 71-72 (2d Cir. 2009).
Court

must

accept

“inapplicable

to

all

allegations

legal

as

First, although the

true,

conclusions;”

this

thus,

“tenet”

is

“[t]hreadbare

recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.”
accord Harris, 572 F.3d at 72.

Iqbal, 556 U.S. at 678;

Second, only complaints that

state a “plausible claim for relief” can survive a Rule 12(b)(6)
motion to dismiss.

Iqbal, 556 U.S. at 679.

Determining whether

Although Defendants moved for summary judgment in the
alternative, their notice of motion makes clear that they seek
summary judgment only on the issues of subject matter
jurisdiction and inclusion of CWLP and MMS as defendants. (See
generally Defs.’ Notice of Motion.) As the Court declines to
convert to summary judgment, and because the remainder of
Defendants’ motion is one to dismiss for failure to state a
claim pursuant to Federal Rule of Civil Procedure 12(b)(6), this
Memorandum and Order will address the standard only under that
rule.
6

Furthermore, to the extent that the parties dispute whether
Plaintiffs waived a potential attorney-client privilege (see
Docket Entries 62-64), the Court has not converted Defendants’
motion to one for summary judgment and therefore has not
considered extraneous evidence. In any event, this is an issue
more appropriately raised with Magistrate Judge William D. Wall
as part of discovery.
13

a complaint does so is “a context-specific task that requires
the

reviewing

common sense.”
B.

court

to

draw

on

its

judicial

experience

and

Id.; accord Harris, 572 F.3d at 72.

Application
Defendants

maintain

that

Plaintiffs

have

failed

to

state a claim for each and every cause of action that they
assert.

Interestingly, Plaintiffs offer no opposition to these

particular arguments, choosing instead to oppose only whether
the limitation of liability clauses are unconscionable.
generally Pls.’ Opp. Br.)

(See

Thus, Plaintiffs appear to concede

the inadequacy of their complaints.

Accordingly, Defendants’

motion to dismiss is GRANTED.
III.

Leave to Amend
Finally, Plaintiffs’ opposition brief contains a one-

paragraph request that the Court permit them to further amend
their operative complaints.

(Pls.’ Opp. Br. at 35.)

The Court

will first address the applicable legal standard before turning
to Plaintiffs’ request.
A.

Legal Standard
Courts should grant leave to amend “when justice so

requires.”

FED. R. CIV. P. 15(a)(2).

Leave to amend should be

granted unless there is evidence of undue delay, bad faith,
undue prejudice to the non-movant, or futility.
Rust–Oleum

Corp.,

244

F.3d

104,
14

110

(2d

See Milanese v.

Cir.

2001).

To

determine whether an amended claim is futile, courts analyze
whether

the

proposed

pleading

would

withstand

a

motion

dismiss under Federal Rule of Civil Procedure 12(b)(6).

to
See

Dougherty v. Town of N. Hempstead Bd. of Zoning Appeal, 282 F.3d
83, 88 (2d Cir. 2002).
B.

Application
Plaintiffs’ brief, one-paragraph request to amend does

not explain exactly what claims they intend to allege if allowed
to amend, nor does it provide a proposed amended complaint.
To the extent that Plaintiffs intend to re-allege a
claim for breach of contract, they may not also assert claims
for negligence and breach of the duty of good faith under Ohio
law, as such claims would be futile.

See Toledo Mack Sales &

Serv., Inc. v. Mack Trucks, Inc., 437 F. App’x 381, 385 (6th
Cir. 2011) (explaining that the existence of a valid contract
precludes tort claims based upon the same set of actions); Ogle
v. BAC Home Loan Servicing, LP, 924 F. Supp. 2d 902, 914-15
(S.D. Ohio 2013) (“[A] breach of covenant of good faith and fair
dealing does not stand alone as a separate cause of action from
a

breach

of

contract

claim.”

(internal

quotation

marks

and

citation omitted)); Jedson Eng’g, Inc. v. Spirit Const. Servs.,
Inc., 720 F. Supp. 2d 904, 928 (S.D. Ohio 2010) (“In Ohio, there
is no separate tort cause of action for breach of good faith
that is separate from a breach of contract claim.”); but see
15

Microsoft Corp. v. Motorola, Inc., --- F. Supp. 2d ----, 2013 WL
4053225, at *5 (W.D. Wash. Aug. 12, 2013) (defining the standard
for a good faith and fair dealing claim under Washington law);
Hayton Farms Inc. v. Pro-Fac Corp. Inc., No. 10-CV-0520, 2010 WL
5174349, at *2 (W.D. Wash. Dec. 14, 2010) (“In New York, a cause
of

action

exist.

for

In

negligent

contrast,

performance

a

tort

that

name

contract
does

exist

under

Furthermore, a cause of action sounding in unjust
both

Ohio

and

and

not

omitted)).

to

marks

does

law.”

pursuant

quotation

a

Washington

enrichment

(internal

by

of

Washington

citation

law

would

likewise be futile because where, as here, there is no dispute
that a valid contract exists, the plaintiff cannot seek quasicontractual

relief

under

an

unjust

enrichment

theory.

See

ArcelorMittal Cleveland, Inc. v. Jewell Coke Co., L.P., 750 F.
Supp. 2d 839, 849 (N.D. Ohio 2010); Minnick v. Clearwire US,
LLC, 683 F. Supp. 2d 1179, 1186 (W.D. Wash. 2010).
The same is true of any purported claim for gross
negligence under Ohio law.

See Wells Fargo Bank, N.A. v. Fifth

Third Bank, --- F. Supp. 2d ----, 2013 WL 1064829, at *4-5 (S.D.
Ohio Mar. 14, 2013).

Plaintiffs’ request to amend contains

vague

Defendants

arguments

that

have

taken

advantage

of

“flaw[s]” in the respective complaints and that “each plaintiff
alleges that Defendants had acted recklessly and negligently,
without

using

magical

terms

like[]
16

‘grossly

negligent’

and

‘willful misconduct.’”

(Pls.’ Opp. Br. at 35.)

To the extent

that these arguments indicate Plaintiffs’ intention to assert a
separate

claim

for

gross

negligence,

such

a

claim

would

be

duplicative of their breach of contract claim, and therefore
amendment would be futile.
With
Plaintiffs

respect

have

at

claims for relief.

to

least

Plaintiffs’
theoretically

remaining
presented

claims,
colorable

See Garcia v. Pancho Villa’s of Huntington

Vill., Inc., 268 F.R.D. 160, 165 (E.D.N.Y. 2010) (noting that
justice requires leave to replead if the plaintiff has presented
“at least colorable grounds for relief (internal quotation marks
and

citation

omitted)).

Accordingly,

Plaintiffs

are

granted

leave to amend their breach of contract, breach of fiduciary
duty, and unfair business practices claims.
Finally,
intend

to

it

proceed

is

with

wholly
their

unclear

claims

whether

against

Plaintiffs

CWLP

and

MMS.

Defendants move to dismiss CWLP “because Plaintiffs allege no
facts

to

support

a

(Defs.’ Br. at 27.)

plausible

claim

against

CWLP

.

.

.

.”

Thus, to the extent that Plaintiffs intend

to direct their claims to CWLP in an amended pleading, the Court
will not dismiss CWLP at this stage.

In addition, insofar as

Defendants submit extraneous evidence regarding MMS, the Court
has declined conversion to summary judgment and, therefore, the
Court will not proffer any ruling in this regard.
17

Accordingly, Plaintiffs are GRANTED leave to file a
Consolidated Amended Complaint against Defendants as specified
above.
CONCLUSION
For
dismiss

or

for

jurisdiction
otherwise
under

the

foregoing

summary

is

both

judgment

DENIED.

GRANTED.

reasons,

lack

Defendants’

Plaintiffs’

Washington

for

Defendants’

and

claims

Ohio

law,

of

motion
for

motion

subject
to

their

matter

dismiss

unjust

and

to

is

enrichment
claims

for

negligence and breach of the duty of good faith under Ohio law,
are DISMISSED WITH PREJUDICE.
DISMISSED

WITHOUT

PREJUDICE

Plaintiffs’ remaining claims are
to

filing

a

Consolidated

Amended

Complaint in compliance with this Memorandum and Order.
If Plaintiffs intend to file a Consolidated Amended
Complaint, they must do so within thirty (30) days of the date
of

this

Complaint

Memorandum

and

should

a

be

consolidated action.

Order.
single

The

complaint

Consolidated
as

this

is

Amended
now

a

If Plaintiffs do not file a Consolidated

Amended Complaint within the specified period, the case will be
closed.
SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:

September
24 , 2013
Central Islip, NY

18