Sanders v. WB Kirby Hill LLC et al

Filing 60

MEMORANDUM AND ORDER granting 32 Motion to Dismiss for Failure to State a Claim. For the reasons stated herein, the Janowitz defendants' motion to dismiss is granted. Plaintiff is granted leave to replead consistent with this Order within twenty (20) days. (Ordered by Judge Leonard D. Wexler on 11/14/2017.) (Fagan, Linda)

FILED
IN CLERK'S OFFICE
U.S. DISTRICT COURT E.D.N.Y.

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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NOV 14 2017

*

LONG ISLAND OFFICE

DOUGLAS H. SANDERS,

MEMORANDUM AND ORDER
Plaintiff,
-against-

cv 16-4596
(Wexler, J.)

WB KIRBY HILL LLC, TRJ SERVICES, LLC
d/b/a COAST OAK GROUP, BERNARD M.
JANOWITZ, and SAMMY I. JANOWITZ,
Defendants.
--------------------------~-----------7~---------------}C
APPEARANCES:
BARSHAY SANDERS, PLLC
BY: Craig B~ Sande~s, Esq.
lOO. Garden City Plaza, Suite 500
·Garden City·, New.York . 11530 ·
. A~orney for P-laintiff
STEVEN SIEGEL, P.C.
BY: ·Nathan V. Bishop, Esq. ..
123-12 82nd Avenue .. · ·.. ·
Kew Gardens, New York 11415
Attorneys for Defendants Bernard M. Janowitz and Sammy I. Janowitz
WEXLER, District Judge:
This case arises out of transactions between the parties whereby plaintiff Douglas H.
Sanders ("plaintiff' or "Sanders") purchased a piece of property and defendants built a home on
that property pursuant to contract. Plaintiff alleges that the home as built did not comply with
the requirements set forth by the non-party Village ofMuttontown (the "Village"), and thus
defendants WB Kirby Hill LLC ("WB Kirby") and TRJ Services LLC d/b/a Coast Oak Group
("Coast Oak") breached the contract. He further alleges that the individual defendants, Bernard
M.

Jan~witz

("Bernard J.") and Sammy I. Janowitz ("Sammy J.") (collectively, the "Janowitz

. :defendants"), made various misrepresentations constituting fraud. Currently before the Court is

the Janowitz defendants' .motion to dismiss. For the reasons set forth below, the motion is
granted.

I. BACKGROUND
A. Factual History
The factual allegations regarding the moving defendants are summarized for the purpose
of this motion. This case involves plaintiffs purchase of a lot located at 6 Kingwood Court,
'

.

Muttontown, New Yotk~·_inan·area referred to as the Stone Hill development, and the
circumstances leading to the building of his home ·on that lot.
1. The parties
On Fehruary.23, 2010, San~ers and WB Kirby 1 entered into a purchase agreement for
the land for $1.4 mi_llion. Am. Comp~. ~.~8 & Ex. 1 ("Purchase Agreement"). The Purchase
. Agreement was signed by plaintiff and WB Kirby "By Bernard Janowitz." That same day, WB
Kirby entered into a Construction Agreement with Sanders to build a home on the land. Am.
Compl. ~19 & Ex. 2 (the "Construction Agreement"). That agreement was also signed by
plaintiff and WB Kirby "By· Bernard Janowitz, Builder." Plaintiff makes no allegations
regarding Bernard J.' s signature on these documents, but rather claims that there is "no contract"
between Bernard J. and himself. Id

~158.

He also alleges that Bernard J. was neither an owner

nor principal of WB Kirby, and only held himself out as a principal of that entity. On a single
occasion, plaintiff refers to Bernard J. as "the developer." Am. Compl.

~72.

Plaintiff alleges that Co~st Oak is a successor in interest to WB Kirby and has agreed to indemnify it for
any liabilities arising from the construction of homes in the Stone Hill development. Am. Campi.~~ 1011. There are no separate allegations regarding defenda~t TRJ Serv;ces, LLC d/b/a Coast Oak Group. As
the claims against the. non-Janowitz defendants are not at issue on this motion, recitation of particular
allegations regarding them is limited.
· ·
1

2

SammyJ.'s role in th~se events is unclear. Plaintiff alleges Sammy J. was not an owner
· or employee of WB Kirby and that Sanders had·no contractual relationship with him. Plaintiff
claims that Sammy J. "falsely represented and held his father out as a principal of WB Kirby."
Am. Compl.

~29.

Presumably, Sammy's "father" is Bernard. In addition, Sammy J., in some

undesignated capacity, "personally picked the pavers and supervised the design of the retaining
wall." Id

~85.

2. Allegations leading to the execution of contracts
Plaintiff generally alleges that in January 201 0, prior to his purchase of the property,
· Bernard J., knowing that plaintiff wanted to build an oversize, 6000 square foot home with room
for a pool as of right, Am.

CompL~.JS,

of the land for both the larger

provided drawings and oral assurances on the suitability

home ~d the pool, id. ~3?.? and "fraudulently misrepresented

and/or failed to advise Sanders that the larger home would require varriances [sic] and
potentially would violate Village rules and ordinances despite knowing same." Id

~37.

Plaintiff

further alleges that Bernard J. made additional fraudulent representations including, inter alia,
that he would handle filings with the Village, that there would be no issues with plaintifrs
specifications, that no variances would be required, and that the specific lot purchased by
plaintiff could accommodate all his requirements without variances. There is no indication
regarding when, where, or how these representations were made.
Sammy J. also allegedly made representations to plaintiff such as, inter alia, that no
variances would be required, and that there would be no issue with the Village regarding either
the size of the hoine or the addition of a pool as of right. Plaintiff alleges that both Janowitz
defendants knew at the time ofplaintifrs purchase that the Village would not approve the larger
home and would not approve a pool as of right. Additionally, the Janowitz defendants

3

fraudulently conveyed ''inaccurate information from the architect to Sanders" to convince the
latter to enter into the purchase and· c<;>nstruction agreements. Am. Compl. ~48.
2. Post-contract allegations
The Construction Agreement on February 23, 2010 provided, inter alia, that WB Kirby
would furnish all labor, ma~erials, and equipment necessary to construct the home, and that WB
Kirby "shall obtain and pay for all Certi~cates of Occupancy, Compliance and/or Completion for
the Improveme~ts as· inay be required by the applicable governmental authoritie~ ... " Am.
Compl. ~65. Sanders paid WB Kirby $1.6 million as required by the Construction Agreement,
plus an additional $330,.000 in change order charges. WB Kirby delivered the Certificate of
Occupancy to Sanders on or about September 21, 2011. Id

~92.

· Sanders resided-in the home from approximately March 2011 to August 2014. During his
residency, Sander~ installed landscaping, and a patio and pergola at the rear of the home. Upon
the relocation of plaintiffs business, the property was placed on the market. On or about August
6, 2014, plaintiff entered into a contract of sale for the property in the amount of $3.415 million.
In October 2014, the purchasers' attorney advised that their title company required approval
from the Village building department for the ·patio, p~rgola, and landscaping. Sanders applied
. for a building permit to the Village for these improvements.
9n or about April2,-2015,.Plaintiffreceived a comment letter from the Village advising
·him that the rear patio encroaches upon the required setback. Am. Compl., Ex. 4. The letter
listed additional items to be addressed including a front masonry walk that required a permit,
violations of a drainage easement and deed restricted area. Plaintiff alleges these conditions
were built by WB Kirby in violation of the building permits it had obtained from the Village. He
also alleges that the conditions were "fraudulently hidden" by WB Kirby and the Janowitz
defendants. !d.

~I 08.

4

On July 26, 2016, the Vil~age issued another comment letter listing outstanding
comments that had not been satisfied. Am. Compl., Ex. 5. In addition to items mentioned in the
previous comment letter, the Village indicated that the Sanders home exceeds the maximum 35
· foot building height as well as the sit~ line equation from street level and would also require a
variance. In the absence of the granting of a variance, Sanders claims that, in order to obtain a
Certificate of Occupancy, he would be required to "remediate the violations by demolishing and
rebuilding in accordance with [V'illage] r~quirements." Id. ~118.
Sanders has filed multiple pe11J1it applications to date with the Village. In light of the
requirements of the Village,· Sanders. was forced to terminate the sale of the property and refund
the deposit. Am. Compl.

~116.

The Amended Complaint does not indicate when this occurred.

Plaintiff further claims that the property is not marketable for sale or rent under its current
condition, and that .he lost several potential.pur~~~sers and renters who were afraid of the loss of
qui~tenjoyment created by the permitting process.

B. Procedural History
Plaintiff commenced this case against defendants alleging three causes of action -. · breach of contract against both WB Kirby and Coast Oak, and fraud against the Janowitz
defendants. Plaintiff amended his complaint to add claims of fraudulent inducement, and
· negligent misrepresentation against the Janowitz defendants. The Janowitz defendants move to
dismiss a~l the claims alleged against th~m.

II. LEGAL STANDARDS
In considering a motion to dismiss made pursuant to Rule 12(b)( 6), the court must accept
the factual allegations in the complaints as true and draw all reasonable inferences in favor of the
plaintiff. Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 113 (2d Cir. 2013)
(citations omitted). The court determines "whether the 'well-pleaded factual allegations,'
5

assumed to

b~

true, 'plausibly give rise to an entitlement to relief."' Hayden v. Paterson, 594

F.3d I50,'I6I (2d Cir. 20IO) (qu<?tiiig,A.s:hcroft v. Iqbal, 556 U.S. 662, 679 (2009)). "The
plausibility standard.is not akin to aprobability requirement, but it asks for more than a sheer
possibility that a defendant has acted unlawfully." Iqbal, 556 U.S at 678 (citing Bell At/. Corp. v.

Twombly, 550 U.S. 544, 556 (2097)) ..
The determination of "whether a c~mplaint states a plausible claim for relief' is a
"context-specific task that requires the reviewing court-to draw on its judicial experience and
common sense." Iqbal, 556 U.S at 679. A determination of plausibility "depends on a host of
considerations: the full factual· picture presented by the complaint, the particular cause of action
..

and its elements, and the existence of alternative explanations so obvious that they render
plaintiffs inferences unreasonable." L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 4I9, 430 (2d
Cir. 20 II). A pleading that does nothing more than recite bare legal conclusions, however, is
insufficient to "unlock the doors of discovery." Iqbal, 556 U.S. at 678-679; see also Twombly,
· 550 U.S. at 555 (holding· that a "formulaic recitation of cause of action's elements will not do.
Factual allegations must be enough to raise a right to relief above the speculative level."). In
addition to the allegations in the complaint, the court may consider documents incorporated by
reference in the complaint. Here, plaintiff incorporates by reference and attaches several
documents to the amended complaint including t_!l~ contracts and the two comment letters sent by
.

.

..

•·.

:-'·;.··

the Village. As such,. the Court considers those documents as well .
.Rule 9(b) further requires that claims of fraud be pled with particularity. FED. R. Ctv. P.
9(b). The Second Circuit has instructed that ~ule 9(b) ~~reci'uires the 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."

Nakahara v. New York-Presbyterian Healthcare Sys., . 723 F.3d I92, I97 (2d Cir. 2013) (internal
quotation ahd citations omitted). · Shnply stated, a plaintiff alleging fraud "must allege the time,
.
.
6

place, speaker, and sometimes even the content of the alleged misrepresentation." Bruno v.
Zimmer, Inc., No. CV 15-6129,2016 WL 4507004, at *3 (E.D.N.Y. Aug. 26, 2016) (citing
Bertini v. Smith & Nephew, Inc., 8 F. Supp. 3d 246, 259 (E.D.N.Y. 2014) (citation and internal

quotati<?n marks omitted)). "Conclu~ory statements and allegations are not enough to meet the
Rule 9(b) pleading requirement~ .." Mus alii Factory for Gold & Jewellry Co. v. JPMorgan Chase
Bank,

N.~.,

382 F. App'x 107, 108 (2d Cir. 2010) (summary order).

Rule 9(b) allows a defendant's state of mind regarding knowledge or intent to be averred
generally. This is not,

h~weve~,

"a license to base claims of fraud on speculation and conclusory

allegations" and "plaintiffs must. ~llege facts that give rise to a strong inference of fraudulent
intent." ~erne': v. Fleet Bank, N.A., 459 F3d 273; 290 (2d Cir. 2006) (internal quotation and
citation omitted), A plaintiff may clear this hurdle by alleging ''a motive for committing fraud
and a clear opportunity for ~oing so" or, where no motive is apparent, "by identifying
circumstances indicating conscious behavior by the defendant, though the strength of
circumstantial allegations must be correspondingly greater." Vaughn v. Air Line Pilots Ass'n,
377 F. App'x 88, 90-91 (2d Cir. 2010) (internal quotation and citation omitted).

III. DISCUSSION
A. Fraud Claims
To state a fraud Claim in New York, a plaintiff must allege "(1) a misrepresentation or a
material omission of fact which was fals~ and kno\Vn to be false by defendant, (2) made for the
purppse of inducing the· ~ther party to rely upon it, (3) justifiable reliance of the other party on
the misrepresentation or material omission, and (4) injury." Premium Mortg. Corp. v. Equifax,
Inc., 583 F.3d 103, 108 (2d Cir. 2009) (quoting Lama Holding Co. v. Smith Barney Inc., 88

N.Y.2d 413,421,668 N.E.2d 1370,646 N.Y.S.2d 76 (1996)). A claim for fraudulent
inducement requires that: "the defendant must have made a misrepresentation of a material fact,
7

that was kno.wn t~ be fa~se and intended to be relied on when made, and that the plaintiff
justifiably relied on that misrepresentation to its injury." Amida Capital Mgmt. II, LLC v.
Cerberus Capital Mgmt., L.P., 669.F. Supp. 2d 430,444 (S.D.N.Y. 2009) (citing Braddock v.
Braddock, 60 A.D.3d 84, 86,

~71

N.Y.S.2d 68 (1st Dep't 2009)).

Plaintiff has alleged breach of contract claims against the other defendants, but only fraud
coupts against .the Janowitz defendar1~s. New York law is clear that "a restyling of contract
· claims does not create an independent claim for fraud and New York courts have dismissed such
claims. as dupli~ative." Torchlight Loan Servs. LLC v. Column Fin., Inc., No. 11 Civ. 7426, 2012
WL 3065929, at *9 (S.D.N.Y. July 25, 2012). A plaintiff seeking to maintain a fraud claim in
this situation must either "(i) demonstrate a legal duty separate from the duty to perform under
the contract; or (ii) demonstrate a fraudulent misrepresentation collateral or extraneous to the
contract; or (iii) seek special damages that are caused by the misrepresentation and
unrecoverable as contract damages." Cont'l Petroleum Corp. v. Corp. Funding Partners, LLC,
No .. 11 CIV. 780,2012 WL 1231775, at *10 (S.D.N.Y. Apr. 12, 2012) (quoting Bridgestone/
Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 19-20 (2d Cir. 1996)). The Janowitz
defendants seek dismissal of the fraud claims as duplicative of plaintiffs breach of contract
claims brought against WB Kirby and Coast Oak. Plaintiff argues that the Janowitz defendants
are not parties· to either the Purchase Agreement or the Construction Agreement, and that any
representations made by them are collateral to the contracts.
Plaintiff alleges that the misrepresentations made by the Janowitz defendants regarding
the proposed size of the home and the suitability of the lot for the addition of a pool, both
without additional variances, induced him to enter into a contract to purchase this particular
property. In other words, the material misrepresentations made by the defendants "were as to the
perniitted uses of the unimproved property, on which Plaintiff relied in making the decision to
purchase this particular lot in the first place," Mem. in Opp. at 13, and that but for their conduct,

8

he never would have purchased this piece of property. "New York law specifically recognizes
causes ~f ~ctio!l for fraud in the inducement when the misrepresentation is collateral to the
contract it induced." Wall v. CSXTransp., Inc., 471 F.3d 410,416 (2d Cir. 2006); see also
Fierro v. Gallucci, No. 06-CV-5189, 2008 WL 2039545, at *4 (E.D.N.Y. May 12, 2008) ("New
York distinguishes between a promissory statement of what will be done in the future that gives
rise only to a breach of contract cause of action and a misrepresentation of a present fact that
gives rise to a separate cause of action for fraudulent inducement."). The Court finds that the
Janowitz defendants' alleged niisrepresentations regarding the suitability of the lot that induced
plaintiff to purchase tha~ p~icu~ar .Piece of property are collateral or extraneous to the
contracts. 2 Thus, a fraudulent inducement claim, if pled with the requisite particularity, could be
stated against these defendants.

B. Negligent Misrepresentation
In New York, "'[a] claim for negligent misrepresentation requires the plaintiff to
·

demons~ate

(1) the existence of a sp.ecial or privity-like relationship imposing a duty on the

defendant td impart . correct information to the plaintiff; (2) that the information was incorrect;
and (3) reasonable reliance on the information."' Mandarin Trading Ltd. v. Wildenstein, 16
N.Y.3d 173, 180,944 N.E.2d 1104,919 N.Y.S.2d 465 (2011) (quoting.J.A.O. Acquisition Corp.
v. Stavitsky, 8 N.Y.3d 144, 148, 863 N.E.2d 585, 831 N.Y.S.2d 364 (2007)). Whether a special
relationship exists between the parties is a question of fact implicating factors such as (1)
"whether the person making the representation held or appeared to hold unique or special
expertise"; (2) "whether a special relationship of trust or confidence existed between the parties";

2

The alleged misrepresentations by the Janowitzes concerning the failures to perform under the contract,
however, constitute a duplicative claim barred under New York law as they "amount to nothing more than
allegations of a misrepresentation of an intention to perform under the contract." Yenrab, Inc. v. 794
Linden Rea?ty, LlC, 68 A.D.2d 755, 758, 892 N.Y.S.2d 105 (2d Dep't 2009).

9

and (3) "whether the speaker was aware of the use to which the information would be put and
s.upplied it .for that·purpose." Kimmel! v. Schaefer, 89 N.Y.2d 257, 264, 675 N.E.2d 450,454,
652 N.Y.S.2d 715 (1996).
Here, the allegations of the amended complaint fail to allege the existence of a special or
privity-like relations~ip between p~ain~~(f and either Janowitz defendant. The allegations in the
~ended ~o~plaint..serve only to designate the roles'these defendants do not play - neither was

allegedly .an owner or principal o~ ~he ~orporate parties. Bernard J. is referred to once in passing
as a "developer," and there is no clue whatsoever as to Sammy J. 's part in the transaction. As the
amended complaint does not contain any allegations that adequately describe Sanders'
relationship with the Janowitz d~fenda~~s,. it ~ails to plead any basis for the imposition of duty
upon either of them.

C. Failure to Plead Claims with Particularity
All the ca-qses 9f action asserted. against the Janowitz defendants must satisfy the
particularity requirements ofRul~·9(b). See generally CAC Grp., Inc. v. Maxim Grp., LLC, No.
12 CIV. 5901, 2012 WL 4857518, at

~5

(S.D.N.Y. Oct. 10, 2012) (noting that "Federal courts

considering claims for negligent misrepresentation under ... New York ... law[] require such
claims be plead with particularity under Rule 9(b)"), affd, 523 F. App'x 802 (2d Cir. 2013). 3
The Court finds t~at plaintiffs allegations regarding the allegedly fraudulent actions of the
Jan9witz defendants fail to satisfy Rule 9(b) as to all the claims brought by him against these
defendants.
The amended complaint is rife with allegations regarding misrepresentations made by the
Janowitz defendants, but those allegations are condtisory and lack any substance or specificity.

3

While some courts have questioned whether the Rule 9(b) standard applies to all claims of negligent
misrepresentation; see Riker v. Premier Capital, LLC, 15-CV-8293, 2016 WL 5334980, at *5 (S.D.N.Y.
Sept. 22, 201·6) (citing cases and noting that "[w]hether negligent misrepresentation claims are always
subject to Rule 9(b )'s heightened standard is a matter of greater debate"), there is little doubt that Rule
9(b) does apply where the claim sounds in fraud.

10

Only three allegations provide any hint of when the alleged misrepresentations were made, and
those three simply allege conduct by Bernard J. "[p]rior to sale of the Property to Sanders, in
January 2010.." Am. Compl. ~~35-37. In addition to failing to indicate when misrepresentations
were made, plaintiff utterly fails to allege where the occurrences happened, how the statements
were conveyed, or who. was present when any exchange occurred. Some allegations indicate that
misrepresentations were.allegedly made to Sanders, while others do not provide information
regarding the recipient of the misinformation. To the extent the misrepresentations were made to
Sanders directly, he aware of specific facts, such as when and where the statements were made,
to state his claims wit~ more specificity.
Moreover, plaintiff fails to allege facts that give rise to a strong inference of fraudulent
intent by the Janowitz defendants. As discussed above, it is completely unclear what role
Sammy J. played in these events. Bernard J., although allegedly not a principal ofWB Kirby,
signed the. agreements on behalf of that entity' yet plaintiff claims he was not an owner or
principal. As the nature of thei~ relationship to plaintiff is not apparent, it is impossible to
discern any motive for their allegedly fraudulent conduct.
The only allegations that arguably hint at motive are plaintiffs claims that the Janowitz
defendants, along with WB Kirby, hid material defects to avoid remediation costs if variances
were denied, Am. Compl. ~88, and that each fraudulently induced plaintiffs purchase for his
own "personal gain." !d. ~~60-61. 4 A "generalized motive to satisfy consumers' desires, [or to]
increase sales and profits,· 'does not support a strong inference of fraudulent intent."' In re Frito-

Lay N Am., Inc. All Natural Litig., No. 12-MD-2413, 2013 WL 4647512, at *25 (E.D.N.Y.
Aug. 29, 201~) (quoting Chill v. Gen. Elec. Co., 101 F.3d 263, 268 (2d Cir. 1996)); see also
4

In his memorandum in opposition to this motion, plaintiff states that the Janowitz defendants' intent was
the "opportunity to earn additional brokerage and construction management fees for themselves." Mem.
in Opp. at 24. These allegations do not appear within the amended complaint. Even if they had been
identified as "brokers" or "construction managers" in the pleadings, this designation by itself is
insufficient to support a strong inference of fraudulent intent given the conclusory nature of the
allegations.. .
11

Shields v. Citytrust Bancorp, Inc., 25 F . 3d 1124, 1130 (2d Cir. 1994) (noting that "[i]n looking
for a sufficient allegation of motive, we assume that the defendant is acting in his or her
informed economic self-interest"). Nor has plaintiff identified any circumstances indicating
conscious behavior by the Janowitz defendants that could give rise to a strong inference of their
fraudulent intent. Thus, plaintiff has failed to satisfy Rule 9(b) as to his claims against the
Janowitz defendants.

IV. CONCLUSION
For the above stated reasons, the Janowitz defendants' motion to dismiss is granted.
Plaintiff is granted leave- tp replead consistent with this Order within twenty (20) days.

SO ORDERED.

.

I

Dated: Central Islip, New York
November 14, 201 ~

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D.

__,

LEONARD
WEXLER=r-=====
UNITED STATES DISTRICT JUDGE