The Golub Corporation v. Sandell Transport, Inc.
Filing
33
MEMORANDUM-DECISION AND ORDERED, that Wonderfuls Motion to Dismiss (Dkt. No. 20) is GRANTED in part and DENIED in part; and it is further ORDERED, that Sandells Amended Third Party Complaint (Dkt. No. 8) is DISMISSED; and it is further ORDERED, that if Sandell wishes to continue against Wonderful, it must file a motion to amend its complaint, in accordance with the Local Rules, within thirty (30) days from the date of this Memorandum-Decision and Order; and it is further ORDERED, that if Sandell does not move to amend its complaint within the time provided, the Clerk of the Court shall enter judgment in favor of Wonderful and terminate it as a defendant, with prejudice, without further order of the Court. Signed by Senior Judge Lawrence E. Kahn on September 08, 2016. (sas)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
THE GOLUB CORPORATION,
Plaintiff,
-against-
1:15-CV-0848 (LEK/CFH)
SANDELL TRANSPORT, INC.,
d/b/a Sandell Logistics,
Defendant.
MEMORANDUM-DECISION AND ORDER
I.
INTRODUCTION
Plaintiff The Golub Corporation commenced this action against Defendant Sandell
Transport, Inc., complaining of Sandell’s role in the loss of a shipment of pistachios. Dkt. No. 1
(“Complaint”) ¶¶ 1, 8–25. After answering Golub’s Complaint, Dkt. No. 5 (“Answer”), Sandell
impleaded the Wonderful Growers Cooperative and Wonderful Pistachios & Almonds, LLC
(collectively, “Wonderful”), the sellers of the pistachios, as third-party defendants, Dkt. No. 8
(“Amended Third Party Complaint”); see also Dkt. No. 6 (“Original Third Party Complaint”).
Currently before the Court is Wonderful’s Motion to Dismiss. Dkt. No. 20 (“Motion”); see also
Dkt. Nos. 23 (“Opposition”), 24 (“Plaintiff’s Memorandum”), 27 (“Reply”). For the following
reasons, Wonderful’s Motion is granted, except that Sandell may file a motion to further amend
its complaint.
II.
BACKGROUND
A. The Con
Golub is an owner and operator of grocery stores and is headquartered in Schenectady,
New York. Compl. ¶¶ 4–5. In need of goods to sell, on September 15, 2014, Golub placed an
order with Wonderful—or more specifically, Wonderful’s predecessors, Paramount Growers
Cooperative, Inc. and Paramount Farms International LLC—seeking to buy a truckload of
pistachios. Id. ¶ 8. Wonderful, however, is located in California, so Golub needed an
intermediary to safely get the nuts from the West Coast to the East. Id. ¶ 8–9. A nonparty,
Pellegrino Sales and Marketing, brokered a deal in which Sandell, a transportation and logistics
company, would ship the pistachios from California to New York. Id. ¶¶ 1–2, 9–10; Am. TPC
¶¶ 6–8.
Instead of carrying the nuts itself, Sandell posted on industry job boards, “which are
accessed by only registered motor carriers,” seeking another trucking company that could handle
the shipment. Am. TPC ¶ 9. A company called GM EXPRESS responded to Sandell’s post, and
its insurance and safety information checked out. Id. ¶ 10. Sandell then commissioned GM
EXPRESS to handle the delivery. Id. ¶ 11.
But appearances can be deceiving, and it turns out that “GM EXPRESS” was not actually
GM EXPRESS. Unknown to Sandell, the identity of GM EXPRESS had been stolen by criminals
who were set on pilfering Golub’s pistachio shipment. Id. ¶¶ 13–14. In this shell game of
trucking companies, the pistachio thieves provided Sandell with stolen yet still valid bona fides,
including insurance information, tractor and trailer license plate numbers, and a driver’s license
number (which Sandell claims was valid despite its conspicuously sequential numbering of
2
B7890123). Id. ¶ 13. Through this scheme, Sandell and Wonderful would become the thieves’
unwitting insiders, happily loading the nuts directly onto the getaway vehicle.
B. The Caper
On September 18, 2014—the day the pistachios were to be picked up—Sandell contacted
Wonderful and sent it information on the truck and driver who would be picking up the nuts.
Compl. ¶¶ 16–17; Am. TPC ¶ 12. Specifically, Sandell gave Wonderful the tractor and trailer
license plate numbers provided by GM EXPRESS, along with the driver’s license number. Am.
TPC ¶ 12.
Later that day, a truck from “GM EXPRESS” manned by a driver and a passenger arrived
at Wonderful to pick up the pistachios. Id. ¶ 15. When the truck arrived, the passenger exited the
vehicle and provided Wonderful with a driver’s license. Id. ¶¶ 20–22; Dkt. No. 8-3 (“Exhibit
A”). The name on this license was “Eduard Banjari,” and the driver’s license number matched
the one provided by GM EXPRESS to Sandell and thus by Sandell to Wonderful. Ex. A. Of
particular importance to Sandell now, the address on the license was “10150 Lasaine Ave.,
Northdrige, CA 91325.” Id.; Am. TPC ¶ 21. But according to Sandell, “Northdrige”—
presumably a misspelling of Northridge, a neighborhood in Los Angeles that is itself not a proper
municipality—“is a fictitious location,” which should have tipped Wonderful off as to the
impending heist. Am. TPC ¶ 22.1 Additionally, Wonderful “never spoke to the driver” of the
1
In addition to its other motion papers, Wonderful also asked the Court to take judicial
notice that “Northridge, California”—the neighborhood discussed above—is indeed a real place,
presumably justifying its acceptance of the driver’s license. Dkt. No. 22. Because, as discussed
below, the question of Wonderful’s liability based on the “Northdrige” issue is epistemic rather
then existential, the Court does not need to consider this request.
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truck, and instead relied on the two truck license plate numbers and the driver’s license to verify
that the pistachios were being loaded onto the correct vehicle. Id. ¶ 23.
Unaware that it was being swindled, Wonderful loaded the pistachios onto the GM
EXPRESS truck and allowed them to leave. Id. ¶ 16. The pistachios were never delivered to
Golub, and the driver and passenger have yet to be found. Id. ¶ 17.
C. The Case
Less than one year after the pistachios were lost, Golub initiated its lawsuit against
Sandell, seeking to recover the amount it paid Wonderful for the nuts. Compl.; Am. TPC ¶ 18.
According to Golub, Sandell is liable for the loss as a motor carrier entrusted with the lost
pistachios pursuant to the Carmack Amendment, 49 U.S.C. § 14706, and also due to breach of
contract and Sandell’s alleged negligence in appointing GM EXPRESS to handle the shipment.
Compl. ¶¶ 6, 34–49.2
After answering, Sandell filed a third party complaint, claiming that the loss of the
pistachios was in fact Wonderful’s fault. Original TPC; Am. TPC. Sandell’s primary claim is that
Wonderful was negligent in releasing the pistachios to GM EXPRESS, both because the driver’s
license provided by the truck’s passenger had an address from “Northdrige,” a nonexistent place,
and because representatives of Wonderful never spoke to the truck’s driver (only to the
passenger). Am. TPC ¶¶ 21–23. Additionally, Sandell appears to claim that Wonderful breached
a contract with Golub, Sandell, or both “by allowing an unapproved vehicle . . . to pick up the
2
Golub’s Complaint erroneously cites to the section on liability of rail carriers instead of
motor carriers. Compl. ¶¶ 6–7 (citing 49 U.S.C. § 11706).
4
shipment of pistachios,” and that Wonderful “fraudulently prepared the Bill of Lading with
information that [it] knew or should have known was invalid.” Id. ¶¶ 26, 28–38.
Wonderful responded by moving to dismiss the Amended Third Party Complaint in its
entirety, arguing that Sandell’s pleading fails to establish any duty owed by Wonderful to
Sandell, and that if even if there were a duty, Sandell failed to show that it was breached. Dkt.
No. 20-1 (“Memorandum in Support”) at 8–13. Wonderful also argues that Sandell’s fraud claim
must be dismissed, both for not alleging facts going to the elements of that claim and for failing
to meet the heightened pleading requirements of Rule 9(b). Id. at 13–14.
III.
LEGAL STANDARD
To survive a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure, 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) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court must accept as
true the factual allegations contained in a complaint and draw all inferences in favor of the
plaintiff. Allaire Corp. v. Okumus, 433 F.3d 248, 249–50 (2d Cir. 2006). Plausibility, however,
requires “enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of
[the alleged misconduct].” Twombly, 550 U.S. at 556. The plausibility standard “asks for more
than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (citing
Twombly, 550 U.S. at 556). “[T]he pleading standard Rule 8 announces does not require
‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Id. (quoting Twombly, 550 U.S. at 555). Where a court is unable to infer
more than the mere possibility of the alleged misconduct based on the pleaded facts, the pleader
5
has not demonstrated that she is entitled to relief and the action is subject to dismissal. Id. at
678–79.
IV.
DISCUSSION
A. Negligence
In response to Sandell’s negligence claim, Wonderful moves to dismiss on two grounds.
First, Wonderful argues that Sandell’s complaint fails to establish any duty owed by Wonderful
to Sandell. Mem. Supp. at 8–12. Second, Wonderful says that even if there were such a duty, the
Amended Third Party Complaint does not set out sufficient facts to demonstrate any breach. Id.
at 12–13.
As a preliminary matter, Wonderful seems to misapply the element of duty within its
motion papers, and commingle its arguments concerning duty and breach. See id. at 8–13. The
duty in negligence refers to the obligation to act (or not to act) in a certain manner that is created
by the relationship between or among the parties. This duty arises “whenever one person is by
circumstances placed in such a position with regard to another that every one of ordinary sense
who did think would at once recognize that if he [or she] did not use ordinary care and skill in his
[or her] own conduct with regard to the circumstances he [or she] would cause danger of injury
to the person or property of the other.” Palka v. Servicemaster Mgmt. Servs. Corp., 634 N.E.2d
189, 192 (N.Y. 1994) (alterations in original) (quoting Havas v. Victory Paper Stock Co., 402
N.E.2d 1136, 1138 (N.Y. 1980)). “In [applying the element of duty], courts identify what people
may reasonably expect of one another. In assessing the scope and consequences of civil
responsibility, they define the boundaries of ‘duty’ to comport with what is socially, culturally
6
and economically acceptable.” Darby v. Compagnie Nat’l Air Fr., 753 N.E.2d 160, 162 (N.Y.
2001).
This duty need not have been owed directly to Sandell, since a third-party claim for
contribution may be predicated on the third-party defendant’s responsibility for the original
plaintiff’s injuries. E.g., Isabella v. Koubek, 733 F.3d 384, 387 (2d Cir. 2013); see also Bank of
India v. Trendi Sportswear, Inc., 239 F.3d 428, 438 (2d Cir. 2000) (describing the use of Rule 14
impleader as an effort to pass on liability from the original defendant to the third-party
defendant); Doucette v. Vibe Records, Inc., 233 F.R.D. 117, 120 (E.D.N.Y. 2005) (same).
Furthermore, the relationships that can give rise to a duty in tort often stem from the business
dealings of the parties, and can even arise out of a contract. See Int’l Fid. Ins. Co. v. Gaco W.,
Inc., 645 N.Y.S.2d 522, 525 (App. Div. 1996) (“A person charged with performing work under a
contract must exercise reasonable skill and care in performing the work and negligent
performance of the work may give rise to actions in tort and for breach of contract.”);
Rosenbaum v. Branster Realty Corp., 93 N.Y.S.2d 209, 211 (App. Div. 1949) (“Where a person
contracts to do certain work he is charged with the common law duty of exercising reasonable
care and skill in the performance of the work required to be done by the contract. It is the breach
of the duty imposed by law and not of the contract obligation which constitutes the tort.” (citation
omitted)).
The Court, however, does not need to determine the existence of a duty in this case. This
is because, even under the duty to act with reasonable care concerning the loading and surrender
of Golub’s pistachio order, Sandell’s Amended Third-Party Complaint does not establish a
plausible claim that Wonderful breached this duty.
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1. “Northdrige,” California
As described above, the basis for Wonderful’s alleged negligence is its provision of the
pistachios to the GM EXPRESS truck crew when—according to Sandell—it either failed to
properly verify the truckers’ identities or should have known that the GM EXPRESS crew might
steal the pistachios. Am. TPC ¶¶ 20–26, 32–36. The first factual prong of this allegation is
Wonderful’s loading the truck even after being supplied with a driver’s license listing
“Northdrige, CA” as the license holder’s municipality. Id. ¶¶ 21–22; Ex. A.
In a typical negligence claim, including one stemming from an originally contractual
relationship, Int’l Fid. Ins. Co., 645 N.Y.S.2d at 525, the duty imposed is one of reasonableness,
under which the defendant is charged with behaving reasonably in light of the circumstances,
e.g., Bethel v. N.Y.C. Transit Auth., 703 N.E.2d 1214, 1215–16 (N.Y. 1998); Fox v. Marshall,
928 N.Y.S.2d 317, 320 (App. Div. 2011); see also Restatement (Third) of Torts: Physical and
Emotional Harm § 3 (Am. Law Inst. 2010) (“A person acts negligently if the person does not
exercise reasonable care under all the circumstances.”); Restatement (Second) of Torts § 283
(Am. Law Inst. 1965) (“[T]he standard of conduct to which [the defendant] must conform to
avoid being negligent is that of a reasonable man under like circumstances.”). This standard
“takes into account the circumstances with which the actor was actually confronted when the
accident occurred, including the reasonably perceivable risk and gravity of harm to others and
any special relationship of dependency between the victim and the actor.” Bethel, 703 N.E.2d at
1216. While the question of breach (and thus of reasonableness) is a factual one that is typically
reserved for the finder of fact at trial, the Court must—on a motion to dismiss or for summary
judgment—“make a threshold determination as to whether the plaintiff . . . has made out a case
8
sufficient in law to support a favorable jury verdict.” Akins v. Glens Falls City Sch. Dist., 424
N.E.2d 531, 534 (N.Y. 1981).
The misspelled or fictitious city on the driver’s license, in this case, cannot be enough to
establish liability for negligence by Wonderful. According to Sandell, the listing of “Northdrige”
on the criminal’s license was “clearly identifiable,” which rendered that identification invalid for
use by Wonderful in confirming the trucker’s identify and caused it to “breach[] its duty to
properly load the pistachios by loading the [truck] with the pistachios ordered by Golub after
being presented with fake identification of the driver.” Am. TPC ¶¶ 21–22, 24–25. Sandell’s
proposed interpretation of Wonderful’s duty would require consignors to know every possible
municipality that a carrier’s driver could have come from before releasing a shipment; this does
not comport with a “reasonable expectation of the care owed” by consignor to consignee, Palka,
634 N.E.2d at 192, especially when the carrier (in this case, Sandell, and GM EXPRESS by
extension) was hired by the latter. While a completely unintelligible string of text in the
municipality block might have raised a closer issue (such as how closely the consignor was
required to check the license), which may have been sufficient for the question to reach a jury,
catching the “Northdrige” mistake—and by extension knowing that the license holder was a
prospective pistachio thief—goes beyond the standard of reasonableness imposed under New
York law.
The Court holds that, as a matter of law, the “Northdrige” error on the driver’s license
was not alone sufficient to have required Wonderful to deny GM EXPRESS the pistachios. Since
this is the only allegation in the Amended Third Party Complaint related to the apparent
9
authenticity (or lack thereof) of the license, Am. TPC, Sandell’s tort claim against Wonderful
cannot proceed based on the “Northdrige” issue alone.
2. Failure to Examine the Driver
While almost all of Sandell’s allegations relate to the “Northdrige” mistake in Mr.
Banjari’s driver’s license, one other allegation going to negligence warrants separate attention.
According to Sandell, after Wonderful received the identification from the GM EXPRESS
truck’s passenger, it “never spoke to the driver of said vehicle and never inquired about the fake
identification bearing license number B7890123.” Am. TPC ¶ 23. While—for the same reasons
discussed above—the failure to confront the truck driver based on the erroneous municipality
cannot establish negligence, there are other facts that might show that communicating solely with
the truck’s passenger (and never the driver) could constitute negligence in ensuring that the
proper carrier received the pistachios for delivery.
In this case, however, Sandell failed to include sufficient allegations on this point within
its complaint. For example, if the man whose image is shown in the license was not the
passenger, but was instead the driver or some other person, Wonderful would never have
determined that the person taking custody of the pistachios was actually the person whose
driver’s license number matches the one sent by Sandell. If true, this might raise a question of
fact as to whether Wonderful’s determination of GM EXPRESS’s identity was reasonable under
the circumstances. But nothing concerning this issue is found within the four corners of Sandell’s
complaint, and neither are allegations concerning any other reason why Wonderful should have
spoken with the second crew member of the truck instead of relying on the license provided by
the passenger (with the number on it matching the one provided by Sandell). Instead, the Court is
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left to speculate as to what additional facts might have made Wonderful’s conduct unreasonable,
but it is the plaintiff’s burden to “allege a plausible set of facts sufficient ‘to raise a right to relief
above the speculative level.’” Operating Local 649 Annuity Tr. Fund v. Smith Barney Fund
Mgmt. LLC, 595 F.3d 86, 91 (2d Cir. 2010) (quoting Twombly, 550 U.S. at 555); accord Arfa v.
Mecox Lane Ltd., 504 F. App’x 14, 15 (2d Cir. 2012). For these reasons, Sandell’s third-party
negligence claims against Wonderful are dismissed.
B. Breach of Contract
In addition to its tort claims, Sandell also attempts to allege a breach of contract based on
its claim that Wonderful “promised, agreed and contracted, in exchange for compensation from
Golub, to ensure the safe pickup and loading of the order of pistachios.” Am. TPC ¶ 29; see also
id. ¶¶ 30–33 (making similar allegations). This claim, however, is insufficient to survive a
motion to dismiss.
The allegations in Sandell’s Amended Third Party Complaint are conclusory and fail to
identify the specific contract in question, the specific terms that were breached, or any facts
tending to show the formation of or other details about the contract in question. See id. ¶¶ 29–33.
This is insufficient to state a claim for breach of contract. See Kelly v. Yale Univ., No.
01-CV-1591, 2003 WL 1563424, at *5 (D. Conn. Mar. 26, 2003) (“It is axiomatic that a plaintiff
cannot sustain a claim for breach of contract unless she is able to demonstrate the existence of a
contract that was allegedly breached. Kelly’s allegations in her complaint are purely conclusory
and do not even identify the contract term Yale allegedly breached.”); see also Ace Arts, LLC v.
Sony/ATV Music Pub., LLC, 56 F. Supp. 3d 436, 450 (S.D.N.Y. 2014) (“[M]erely asserting in ‘a
conclusory manner that an agreement was breached’ is not enough to survive a motion to
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dismiss.” (quoting Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F. Supp. 2d
162, 189 (S.D.N.Y. 2011))).
“In order to adequately allege the existence of an agreement, ‘a plaintiff must “plead the
provisions of the contract upon which the claim is based.”’” Howell v. Am. Airlines, Inc., No.
05-CV-3628, 2006 WL 3681144, at *3 (E.D.N.Y. Dec. 11, 2006) (quoting Phoenix Four, Inc. v.
Strategic Res. Corp., No. 05-CV-4837, 2006 WL 399396, at *10 (S.D.N.Y. Feb. 21, 2006));
accord Mayes v. Local 106, Int’l Union of Operating Eng’rs, 739 F. Supp. 744, 748 (N.D.N.Y.
1990). While this does not require plaintiffs to attach a copy of the contract or quote its
provisions verbatim, “the complaint must at least ‘set forth the terms of the agreement upon
which liability is predicated . . . by express reference.’” Howell, 2006 WL 3681144, at *3
(alteration in original) (quoting Phoenix Four, 2006 WL 399396, at *10). Sandell has failed to do
so in its Amended Third Party Complaint.
Even if Sandell had properly identified and alleged the existence of a contract between
Wonderful and Golub that was breached, its claims under that agreement would likely still be
subject to dismissal unless Sandell was a party to that same contract and Wonderful was liable
directly to Sandell. This is because a third-party plaintiff typically cannot assert a breach of
contract claim on behalf of the original plaintiff, and any claim for contribution must therefore
stem from the third-party plaintiff’s and defendant’s jointly tortious behavior. See Ames Assocs.
v. ABS Partners Real Estate LLC, No. 06-CV-928, 2010 WL 890034, at *3 (S.D.N.Y. Mar. 3,
2010) (“New York does not authorize contribution as a result of a third-party’s breach of
contract.”); Bonacci v. Lone Star Int’l Energy, Inc., No. 98-CV-0634, 1999 WL 76942, at *5
(S.D.N.Y. Feb. 16, 1999) (“[C]ontribution is not available in actions that allege breach of
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contract.”); Mun. Hous. Auth. of Schenectady v. Crozier Philippi Assocs. P.C., 593 N.Y.S.2d
347, 348 (App. Div. 1993) (“[D]efendant can be held liable only for the economic loss
proximately caused by its own acts or omissions and not for any of the economic loss caused by
third-party defendant’s breach of its contractual obligations to plaintiff. Third-party defendant,
therefore, cannot be liable for contribution or implied indemnity . . . .”). Accordingly, Sandell’s
claim for breach of contract is dismissed.
C. Fraud
Similar to its allegations regarding the breach of unidentified “promises and duties,”
Sandell states without additional elaboration that Wonderful “fraudulently prepared the Bill of
Lading with information that [Wonderful] knew or should have known was invalid, inaccurate
and/or fraudulent.” Am. TPC ¶ 26. This allegation is plainly conclusory and fails to state a claim
of fraud. “To make a prima facie case of fraud, the complaint must contain allegations of a
representation of material fact, falsity, scienter, reliance and injury.” Small v. Lorillard Tobacco
Co., 720 N.E.2d 892, 898 (N.Y. 1999); accord Barclay Arms, Inc. v. Barclay Arms Assocs., 540
N.E.2d 707, 709 (N.Y. 1989); ACA Fin. Guar. Corp. v. Goldman, Sachs & Co., 15 N.Y.S.3d
764, 766 (App. Div. 2015); Zanett Lombardier, Ltd. v. Maslow, 815 N.Y.S.2d 547, 548 (App.
Div. 2006). While this single-sentence allegation may hint at falsity, Sandell’s complaint fails to
allege facts that might establish any other element.
Additionally, Rule 9(b) carries enhanced pleading requirements for claims “alleging fraud
or mistake.”
Claims that sound in fraud are subject to the heightened pleading
standards of Fed. R. Civ. P. 9(b), which requires that averments of
fraud be “state[d] with particularity.” To satisfy this requirement, a
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complaint must “specify the time, place, speaker, and content of the
alleged misrepresentations,” “explain how the misrepresentations
were fraudulent and plead those events which give rise to a strong
inference that the defendant[] had an intent to defraud, knowledge of
the falsity, or a reckless disregard for the truth.”
Cohen v. S.A.C. Trading Corp., 711 F.3d 353, 359 (2d Cir. 2013) (alterations in original)
(quoting Fed. R. Civ. P. 9(b); Caputo v. Pfizer, Inc., 267 F.3d 181, 191 (2d Cir. 2001)).
It is clear from Sandell’s Amended Third Party Complaint that its allegations are
insufficient to meet the heightened pleading standard for fraud claims. In fact, the only fraud
allegation in the complaint—namely, that Wonderful incorrectly prepared the bill of lading by
relying on the identity of the carrier that was confirmed by the documents GM EXPRESS
provided and by the information given to it by Sandell—seems to expressly rebut any notion of
scienter. Sandell’s claim for fraud against Wonderful based on the preparation of the bill of
lading is therefore dismissed.
D. Amendment of the Complaint
At the outset, the Court rejects Sandell’s request for amendment found at the end of its
Opposition. Opp’n at 8; Dkt. No. 23-1 (“Proposed Amended Complaint”). This request fails to
comply with the Local Rule governing motions for leave to amend pleadings. L.R. 7.1(a)(4).
Furthermore, the request is simply tacked onto the end of an opposition brief, and “[i]t is within
the court’s discretion to deny leave to amend . . . when leave is requested informally in a brief
filed in opposition to a motion to dismiss.” Corsini v. Nast, 613 F. App’x 1, 4 (2d Cir. 2015)
(quoting In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 220 (2d Cir. 2006), overruled on
other grounds by FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013)).
14
Even if the Court were to consider Sandell’s request, it would be denied as futile. The
only difference in the Proposed Amended Complaint concerns its fraud claims, and these
allegations still fail to show all the elements of fraud, and especially not with the particularity
required by Rule 9(b). Dkt. No. 23-1 (“Proposed Amended Third Party Complaint”) ¶¶ 38–42;
see also, e.g., Zanett, 815 N.Y.S.2d at 548 (“To state a claim for fraud, a plaintiff must allege
misrepresentation or concealment of a material fact, falsity, scienter by the wrongdoer, justifiable
reliance on the deception, and resulting injury.”).
Rule 15 does, however, command that “[t]he court should freely give leave [to amend]
when justice so requires.” Therefore, when a complaint is dismissed for the first time pursuant to
Rule 12(b)(6), leave to amend before reviewing the proposed amended pleading should typically
be withheld only if amendment would be futile—namely, if it is clear from the facts alleged that
the events in question cannot give rise to liability. Ricciuti v. N.Y.C. Transit Auth., 941 F.2d
119, 123 (2d Cir. 1991); see also, e.g., In re Aluminum Warehousing Antitrust Litig., No. 143574, 2016 WL 4191132, at *9 (2d Cir. Aug. 9, 2016) (discussing affirmance of dismissal
without leave to amend due to futility); Orchard Hill Master Fund Ltd. v. SBA Commc’ns Corp.,
No. 15-3462, 2016 WL 3923849, at *3 (2d. Cir. July 21, 2016) (noting that denial of leave to
amend on futility grounds is subject to de novo review); Lorely Fin. (Jersey) No. 3 Ltd. v. Wells
Fargo Sec., LLC, 797 F.3d 160, 191 (2d Cir. 2015) (holding that, by not allowing plaintiffs to
submit a new pleading attempting to correct any deficiencies, the district court “violated the
liberal spirit of Rule 15” (quoting Williams v. Citigroup, Inc., 659 F.3d 208, 214 (2d Cir.
2011))). In this case, the biggest problem with Sandell’s complaint is perhaps that it is haphazard
and incomplete, beyond the specific legal deficiencies discussed in this opinion. While the
15
sparsity of its factual allegations renders the Amended Third Party Complaint legally insufficient
as described above, it is unclear whether this is because the facts themselves support
Wonderful’s position, or because Sandell’s lawyers simply failed to marshal the proper facts into
their pleadings. As a consequence, the Court will allow Sandell one additional chance to move to
amend its complaint, at which point Wonderful may respond and the Court can assess the
proposed amendment’s viability and the other factors governing leave to amend.
Sandell should take particular note that this motion to amend must comply with the Local
Rules, L.R. 7.1(a)(4), and must fully address the deficiencies identified in this MemorandumDecision and Order as to any claim it wishes to pursue. Failure to do so will result in denial of
the motion and the dismissal of its claims with prejudice. See, e.g., Burrowes v. Combs, 124 F.
App’x 70, 71 (2d Cir. 2005) (affirming the district court’s dismissal without further leave to
amend after a previous amendment was unsuccessful).
V.
CONCLUSION
Accordingly, it is hereby:
ORDERED, that Wonderful’s Motion to Dismiss (Dkt. No. 20) is GRANTED in part
and DENIED in part; and it is further
ORDERED, that Sandell’s Amended Third Party Complaint (Dkt. No. 8) is
DISMISSED; and it is further
ORDERED, that if Sandell wishes to continue against Wonderful, it must file a motion
to amend its complaint, in accordance with the Local Rules, within thirty (30) days from the
date of this Memorandum-Decision and Order; and it is further
16
ORDERED, that if Sandell does not move to amend its complaint within the time
provided, the Clerk of the Court shall enter judgment in favor of Wonderful and terminate it as a
defendant, with prejudice, without further order of the Court; and it is further
ORDERED, that the Clerk of the Court shall serve copies of this Memorandum-Decision
and Order on all parties in accordance with the Local Rules.
IT IS SO ORDERED.
DATED:
September 08, 2016
Albany, New York
17
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