Yoder, et al v. Town of Morristown, et al

Filing 105

MOTION to Amend/Correct 13 Answer to Complaint to clarify and supplement an affirmative defense Motion Hearing set for 4/3/2012 11:00 AM in Albany before Senior Judge Neal P. McCurn Response to Motion due by 3/19/2012 filed by Mark Blanchard, Christopher Coffin, Lanetta Kay Davis, Frank L. Putman, David Stout, III, Town of Morristown, Gary Turner, Howard Warren. (Attachments: # 1 Declaration Laws Declaration, # 2 Exhibit(s) A, # 3 Exhibit(s) B, # 4 Exhibit(s) C, # 5 Exhibit(s) D, # 6 Memorandum of Law, # 7 Appendix unreported case, # 8 Appendix unreported case, # 9 Appendix unreported case, # 10 Appendix unreported case, # 11 Appendix unreported case, # 12 Appendix unreported case, # 13 Appendix unreported case, # 14 Appendix unreported case, # 15 Affidavit certificate of service) Motions referred to Therese Wiley Dancks. (Laws, April)

Page 1

Cited
As of: Feb 17, 2012
RUSSELL SCHARE, Plaintiff, - against - SIX FLAGS THEME PARKS, Defendant.
96 Civ. 9377 (RWS)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK
1998 U.S. Dist. LEXIS 592

January 21, 1998, Decided
January 23, 1998, Filed
DISPOSITION:
[*1] Motion to amend as to
fraudulent inducement claim denied on grounds of
futility. Amendment as to claim under N.Y. Lab. Law §
198 (1-a) granted. Six Flags' opposition to that
amendment of that claim treated as motion for summary
judgment granted.
CASE SUMMARY:

PROCEDURAL POSTURE: Plaintiff consultant filed
an action against defendant theme park alleging a breach
of a consulting agreement between the parties, and a
violation of N.Y. Lab. Law § 191(1)(c). The consultant
filed a motion under Fed. R. Civ. P. 15(a) for leave to file
an amended complaint to add claims of fraudulent
inducement and a violation of N.Y. Lab. Law § 198(1-a)
to his complaint. The theme park opposed the motion to
amend.
OVERVIEW: The consultant sought to plead in his
amended complaint that he was an employee since his
working relationship with the theme park had all of the
substantive characteristics of an employment relationship

at the time of the breach, and therefore the theme park's
failure to pay him the commissions due violated N.Y.
Lab. Law § 198(1-a). The court granted the motion to
amend because the consultant's claim under § 198(1-a)
was not insufficient as a matter of law. However, the
court also converted the theme park's opposition to the
motion as a motion for summary judgment and granted
the motion. The consultant provided no factual support
for the conclusory allegation that he was an employee
during the period at issue. At his deposition he testified
that he was an independent contractor when he arranged
the sponsorship agreement for the theme park. He
testified that the only work he performed for the theme
park was attending one two-hour meeting with
representatives from the sponsor which failed to establish
the degree of control typically exercised over an
employee such as requiring full-time services,
designating the hours of work, or requiring permission
for absences from work.
OUTCOME: The court denied the motion to amend as
to the claim for fraudulent inducement and granted the
claim under the labor law. The court converted the theme

Page 2
1998 U.S. Dist. LEXIS 592, *1

park's opposition to the amendment on the labor law
claim as a motion for summary judgment, and granted the
motion on that claim.
LexisNexis(R) Headnotes

Civil Procedure > Pleading & Practice > Pleadings >
Amended Pleadings > Leave of Court
[HN1] Fed. R. Civ. P. 15(a) provides that leave to amend
a pleading "shall be freely given when justice so
requires." The United States Supreme Court has
interpreted Rule 15 to permit such amendments only
when: (1) the party seeking the amendment has not
unduly delayed, (2) that party is not acting in bad faith or
with a dilatory motive, (3) the opposing party will not be
unduly prejudiced by the amendment, and (4) the
amendment is not futile.
Civil Procedure > Pleading & Practice > Pleadings >
Amended Pleadings > General Overview
[HN2] Mere delay absent a showing of bad faith or undue
prejudice, does not provide a basis for a district court to
deny the right to amend. Parties have been permitted to
assert new claims long after they acquired the facts
necessary to support such claims and have even been
permitted to amend a complaint on the eve of trial. The
party opposing the amendment has the burden of showing
prejudice.
Civil Procedure > Pleading & Practice > Pleadings >
Amended Pleadings > General Overview
[HN3] Denial of amendment may be proper where the
proposed change clearly is frivolous or advances a claim
or defense that is legally insufficient on its face.
Contracts
Law
>
Defenses
>
Fraud
&
Misrepresentation > General Overview
Torts > Business Torts > Fraud & Misrepresentation >
General Overview
[HN4] To maintain an action based on fraudulent
representations, whether it be for the rescission of a
contract or in tort for damages, it is sufficient to show
that the defendant knowingly uttered a falsehood
intending to deprive the plaintiff of a benefit and that the
plaintiff was thereby deceived and damaged.
Accordingly, one who fraudulently makes a

misrepresentation of intention for the purpose of inducing
another to act or refrain from action in reliance thereon in
a business transaction is liable for the harm caused by the
other's justifiable reliance upon the misrepresentation.
The elements of common law fraud are material, false
representation, an intent to defraud thereby, and
reasonable reliance on the representation, causing
damage to the plaintiff.
Contracts
Law
>
Defenses
>
Fraud
&
Misrepresentation > Material Misrepresentation
Torts > Business Torts > Fraud & Misrepresentation >
General Overview
[HN5] A contract action cannot be converted to one for
fraud merely by alleging that the contracting party did not
intend to meet its contractual obligations. New York law
has also established that if a promise was made with a
preconceived and undisclosed intention of not performing
it, it constitutes a misrepresentation of a material existing
fact. Such a material misrepresentation may serve as the
basis for a claim of fraud. However, the tension between
the rule against stating a fraud claim based purely on a
concealed intent not to perform, and the rule permitting
fraud claims for a promise made without intent to
perform has been reconciled by yet a third rule of law,
which states that a false promise can support a claim of
fraud only where that promise was "collateral or
extraneous" to the terms of an enforceable agreement in
place between the parties.
Civil Procedure > Summary Judgment > Motions for
Summary Judgment > General Overview
Civil Procedure > Summary Judgment > Standards >
Appropriateness
Civil Procedure > Summary Judgment > Supporting
Materials > General Overview
[HN6] Where amended claims fail as a matter of law, and
would have been defeated by a motion to dismiss on the
pleadings alone, denial of amendment is within the
discretion of the district court. Where the amended claims
would withstand such a motion, but may be successfully
challenged in a summary judgment posture, denial of
amendment is not appropriate: Where the alleged futility
of the amendment rests on findings of fact courts prefer
to let the district court resolve the factual issues. If the
documents referred to by defendant are as decisive as it
claims, the only prejudice it suffers from allowing
appellant to amend is the inconvenience and expense of
submitting these documents in support of a motion for

Page 3
1998 U.S. Dist. LEXIS 592, *1

summary judgment. This burden hardly amounts to
prejudice outweighing the policy of Fed. R. Civ. P. 15(a)
in favor of permitting the parties to obtain an adjudication
of the merits.
Civil Procedure > Pleading & Practice > Pleadings >
Amended Pleadings > General Overview
Civil Procedure > Summary Judgment > Opposition >
General Overview
[HN7] Where an amended claim would fail on a
summary judgment motion, the court has discretion to
treat the opposition to the amendment as a motion for
summary judgment and to consider matters outside the
pleadings in resolving the motion.

Administrative Proceedings & Remedies > General
Overview
[HN9] N.Y. Lab. Law § 198(1-a) (1986) provides as
follows: In any action instituted upon a wage claim by an
employee or the commissioner in which the employee
prevails, the court shall allow such employee reasonable
attorney's fees and, upon a finding that the employer's
failure to pay the wage required by this article was
willful, an additional amount as liquidated damages equal
to 25 percent of the total amount of the wages found to be
due.
COUNSEL: For Plaintiff: DANIEL J. KAISER, ESQ.,
Of Counsel, KAISER SAURBORN & MAIR, New
York, NY.

Civil Procedure > Summary Judgment > Burdens of
Production & Proof > Movants
Civil Procedure > Summary Judgment > Motions for
Summary Judgment > General Overview
Civil Procedure > Summary Judgment > Standards >
Genuine Disputes
[HN8] Fed. R. Civ. P. 56(e) provides that a court shall
grant a motion for summary judgment if the pleadings,
depositions, answers to interrogatories, and admissions
on file, together with affidavits show that there is no
genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law. The
party seeking summary judgment bears the burden of
establishing that no genuine issue of material fact exists
and that the undisputed facts establish her right to
judgment as a matter of law. In determining whether a
genuine issue of material fact exists, a court must resolve
all ambiguities and draw all reasonable inferences against
the moving party. If there is any evidence in the record
regarding the issues on which summary judgment is
sought from which a reasonable inference could be drawn
in favor of the nonmoving party, summary judgment is
improper. A party seeking to defeat a summary judgment
motion cannot rely on mere speculation or conjecture as
to the true nature of facts to overcome the motion. Rather
the responding party must show the existence of a
disputed material fact in light of the substantive law. In
the absence of any disputed material fact, summary
judgment is appropriate.

For Defendant: JEFFREY I. KOHN, ESQ., LORI A.
MAZUR, ESQ., Of Counsel, O'MELVENY & MYERS,
New York, NY.

Civil Procedure > Remedies > Costs & Attorney Fees >
General Overview
Labor & Employment Law > Wage & Hour Laws >

Six Flags is a corporation duly organized under the
laws of the State of New Jersey. Its principal place of
business is Parsippany, New Jersey.

JUDGES: ROBERT W. SWEET, U.S.D.J.
OPINION BY: ROBERT W. SWEET
OPINION

OPINION
Sweet, D.J.
Plaintiff Russell Schare ("Schare") has moved under
Rule 15(a), Fed. R. Civ. P. for leave to file an amended
complaint to add claims of fraudulent inducement and a
violation of N.Y. Lab. Law § 198(1-a) to his complaint
against defendant Six Flags Theme Parks, Inc. ("Six
Flags"). The motion to amend as to the fraudulent
inducement claim is denied on grounds of futility. The
amendment as to the claim under N.Y. Lab. Law § 198
(1-a) is granted. Six Flags' opposition to that amendment
of that claim will be treated as a motion for summary
judgment and is also granted.
Parties
Schare is a citizen and resident of the State of New
York, residing [*2] in New York City.

Page 4
1998 U.S. Dist. LEXIS 592, *2

Prior Proceedings
This action was filed by Schare on December 13,
1996, alleging a breach of a consulting agreement
between the parties, and a violation of N.Y. Lab. Law §
191(1)(c). Schare filed this motion to amend on
September 11, 1997. It was argued on October 14, 1997
at which time it was deemed fully submitted.
Facts
Facts Underlying Breach of Contract Claim
According to the complaint as initially filed, Six
Flags, a New Jersey corporation, employed Schare, a
New York resident, as director of national sales from
January 1992 until November 1995. While Schare was
employed by Six Flags as a Director of National Sales, he
was entitled to and received commissions for deals he
closed in the amount of 100% of cash values at a
commission rate of approximately .5% and one third of
co-op and television media sales at a commission rate of
approximately .5%. In November 1995, Six Flags
terminated Schare and the group in which he was
employed. He thereafter performed service for Six Flags
[*3] under a consultant's agreement. A letter dated
November 28, 1995, from Joseph M. Redling,
("Redling"), Senior Vice President of Six Flags,
confirmed the consulting arrangement, (the "November
28 Letter"), stating:
This letter will confirm our agreement to
compensate you for your efforts through
the end of the year (December 31, 1995)
on the closing of the following accounts:
1. Reebok; 2. Philips Consumer
Electronics . . . You will be paid a 2%
commission on all cash and on
pre-approved barter and media values.
This commission will be paid once
contracts are signed.

In or about the middle of November 1995, Schare
secured initial verbal approval from Philips Consumer
Electronics ("Philips Consumer") for a sponsorship
program between Philips Consumer and Six Flags for
1996 (the "Philips Consumer 1996 Program"). Philips
Consumer and Six Flags had entered a sponsorship
program in 1995 as well.

Sponsorship programs are generally agreements
wherein in exchange for money, advertising, and/or
barter, Six Flags licenses to a third party the right to use
its name and trademarks in advertising and provides the
third party with a number of admission tickets to its
theme parks. Generally, [*4] Six flags enters into
sponsorship agreements to promote the sale of the third
party's products in exchange for cash. In exchange, Six
Flags may receive free goods -- e.g., hot dog rolls, bottled
water -- which it would otherwise have to purchase. Six
Flags may also receive quality media, i.e., advertising
which Six Flags would otherwise have purchased from its
media budget. An example of qualified media Six Flags
may receive from a sponsorship agreement is a
thirty-second television commercial identifying both Six
Flags and the third party, in which Six flags received
primary identification.
The Philips Consumer 1996 Program for 1996
included the following essential terms: (1) cash to be paid
from Philips Consumer to Six Flags in the amount of $
500,000; (2) television media valued by the contract in
the amount of $ 1,500,000; and (3) co-op media valued at
$ 6,000,000. In or about the middle of December 1995,
the deal between Philips Consumer and Six Flags
received final approval by both contracting parties.
Schare was paid a 2% commission for the $ 500,000 in
cash and a 2% commission for 1/3 of the $ 1,500,000
representing the television media. He was not paid
commissions for the [*5] $ 6,000,000 worth of co-op
media. It is Schare's contention that his consulting
agreement with Six Flags entitled Schare to a 2%
commission on the Philips Consumer co-op media value
and a full 2% commission on the television media value,
and that Six Flags breached the consulting contract when
it failed to pay Schare those commissions.
Facts Underlying the Fraudulent Inducement Claim
Michael Kent ("Kent") is Vice President for
advertising and promotions at Six Flags, and was
responsible for determining the amount of commissions
to be paid to Schare under the consulting contract. In his
deposition of August 7, 1997, (the "Kent Deposition"),
Kent testified that, simultaneously with the negotiating of
the terms of the commissions agreement with Schare, he
and Redling had determined that the co-op media from
the Philips Consumer 1996 Program did not have
significant value and therefore would not be
commissioned:

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1998 U.S. Dist. LEXIS 592, *5

Q: Did Redling specifically tell you
what he told [Schare] in these discussions?
A: He told me that he would be
engaging Russell Schare's services and he
was in discussions on that, yes.
Q: Did he tell you during those
discussions, "We are going [*6] to engage
Russell Schare's service, but we are not
paying him with regard to the co-op media
portion of plaintiff's exhibit 2 [Phillips
Consumer Sponsorship Agreement]?
A: We discussed he would be paid
cash and barter preapproved media.
Q: Did Redling tell you in his
discussions that Russell Schare would not
be commissioned on the co-op media
portion of plaintiff's exhibit 2?
A: He and I were clear that on
qualified media he would be eligible for
commissions on any of these programs.
Q: And this understanding, that is a
general understanding you had . . . was it
also clear that that understanding of
qualified media was clear in your
discussion with Joe Redling that referred
to the deal with Russell Schare, that
Russell Schare pursuant to that general
understanding,
would
not
be
commissioned on co-op media of
plaintiff's exhibit 2?
A: Yes, which was consistent with
media commission policy.
Q: And those discussions occurred
before plaintiff's exhibit 1 [the November
28 Letter] was sent out, correct; those
discussions ultimately culminated in the
sending out of plaintiff's exhibit one to
Russell Schare?
A: I don't recall specific dates, but it
would [*7] have happened simultaneous
with this whole process.

Schare contends that this testimony demonstrates that
Redling and Kent knew he would not receive
commissions for co-op media from the Philips Consumer
1996 Program before sending the November 28 Letter to
Schare. Schare asserts that this pre-knowledge establishes
his a claim for fraudulent inducement as well his claim
for breach of contract.
The Additional Labor Law Claim
In the initial complaint, Schare pleaded a claim
pursuant to N.Y. Lab. Law § 191(1)(c) on the theory that
he was an independent contractor at the time of the
breach. In the amended complaint, Schare pleads in the
alternative that he was an employee since his working
relationship with Six Flags had all of the substantive
characteristics of an employment relationship at the time
of the breach, and therefore Six Flags' failure to pay him
the commissions due violated N.Y. Lab. Law § 198(1-a).
Discussion
A. The Motion to Amend is Granted in Part and
Denied in Part
[HN1] Rule 15(a) provides that leave to amend a
pleading "shall be freely given when justice so requires."
The Supreme Court has interpreted Rule 15 to permit
such [*8] amendments only when: (1) the party seeking
the amendment has not unduly delayed, (2) that party is
not acting in bad faith or with a dilatory motive, (3) the
opposing party will not be unduly prejudiced by the
amendment, and (4) the amendment is not futile. Foman
v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct.
227 (1962); see Mackensworth v. S.S. Am. Merchant, 28
F.3d 246, 251 (2d Cir. 1994); Chan v. Reno, 916 F. Supp.
1289, 1302 (S.D.N.Y. 1996).
i. Amendment is Not Untimely
Six Flags has opposed the amendment on the
grounds that it is untimely. [HN2] "Mere delay . . . absent
a showing of bad faith or undue prejudice, does not
provide a basis for a district court to deny the right to
amend." State Teachers Retirement Board v. Fluor Corp.,
654 F.2d 843, 856 (2d Cir. 1981) (permitting amendment
where amended claim was one of objects of discovery
and related closely to the original claim); accord
Rachman Bag Co. v. Liberty Mutual Insurance Co., 46
F.3d 230, 234 (2d Cir. 1995) (leave to amend affirmed
where movant's reasons for delay not entirely clear but

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1998 U.S. Dist. LEXIS 592, *8

opponent offered no reasons, such as prejudice or bad
faith, to call district court's grant of leave [*9] into
question); Block v. First Blood Associates, 988 F.2d 344,
350 (2d Cir. 1993). "Parties have been permitted to assert
new claims long after they acquired the facts necessary to
support such claims and have even been permitted to
amend a complaint on the eve of trial." Hannah v.
Metro-North Commuter Railroad Co., 753 F. Supp. 1169,
1176 (S.D.N.Y. 1990) (citations omitted); see also Fox v.
Board of Trustees of the State University of New York,
764 F. Supp. 747, 757 (N.D.N.Y. 1991) (parties have been
allowed to assert new claims long after they acquired
facts necessary to support such claims). The party
opposing the amendment has the burden of showing
prejudice. Id. (citing In re Gallaudet, 40 B.R. 828, 830
(Bankr. Vt. 1984)). Six Flags has not articulated any
prejudice it would suffer as a result of the amendments to
the complaint, which arise from the identical set of facts
and same time period as the original claims.
ii. Amendment is Futile as to the Claim of
Fraudulent Inducement
Six Flags urges that the amendment would be futile
because it will not withstand a motion for failure to state
a claim. [HN3] Denial of amendment may be proper
where "the proposed [*10] change clearly is frivolous or
advances a claim or defense that is legally insufficient on
its face." 6 Charles A. Wright, Arthur R. Miller, Mary
Kay Kane, Federal Practice and Procedure: Civil 2d, §
1487 at 637. See, e.g., S.S. Silberblatt, Inc. v. East
Harlem Pilot Block, 608 F.2d 28, 42 (2d Cir. 1979)
(noting that "[a] trial court does not abuse its discretion in
denying leave to amend a complaint which even as
amended would fail to state a cause of action); Freeman
v. Marine Midland Bank-New York, 494 F.2d 1334, 1338
(2d Cir. 1974) (proffered amendment did not contain
sufficient additional facts to make out a violation of
banking law); Torres v. Knapich, 966 F. Supp. 194, 195
(S.D.N.Y. 1997) (amendment denied as futile where
plaintiff failed to allege a municipal policy or custom as
required to state a Monell claim); Chan v. Reno, 916 F.
Supp. 1289, 1302 (S.D.N.Y. 1996) (amended complaint
presented non-justiciable claim and failed to present court
with subject matter jurisdiction); McNally v. Yarnall, 764
F. Supp. 853, 855 (S.D.N.Y. 1991) (amendment futile
where alleged statements which supported additional
claim fell within absolute privilege conferred [*11] by
New York law).

As proof of Six Flag's fraudulent intent, Schare cites
Kent's deposition, contending that it demonstrates that
when Six Flags entered into the consulting arrangement
with Schare after his termination, it was Six Flags'
understanding that Schare would not be entitled to a
commission on the amount of co-op media listed in the
Phillips Consumer Program.
[HN4] To maintain an action based on
fraudulent representations, whether it be
for the rescission of a contract or, as here,
in tort for damages, it is sufficient to show
that the defendant knowingly uttered a
falsehood intending to deprive the plaintiff
of a benefit and that the plaintiff was
thereby deceived and damaged . . .
Accordingly, one "who fraudulently
makes a misrepresentation of . . . intention
. . . for the purpose of inducing another to
act or refrain from action in reliance
thereon in a business transaction" is liable
for the harm caused by the other's
justifiable
reliance
upon
the
misrepresentation.
Channel Master Corp. v. Aluminium Ltd. Sales, Inc., 4
N.Y.2d 403, 406-07, 176 N.Y.S.2d 259, 262, 151 N.E.2d
833, 836 (1958) (quoting 3 Restatement (First) of Torts, §
525 at 59. "The elements [*12] of common law fraud are
material, false representation, an intent to defraud
thereby, and reasonable reliance on the representation,
causing damage to the plaintiff." Katara v. D.E. Jones
Commodities, Inc., 835 F.2d 966 (2d Cir. 1987).
However, it is well-settled under New York law that
[HN5] "a contract action cannot be converted to one for
fraud merely by alleging that the contracting party did not
intend to meet its contractual obligations." Rocanova v.
Equitable Life Assurance Society of the United States, 83
N.Y.2d 603, 614, 612 N.Y.S.2d 339, 343, 634 N.E.2d 940
(1994); see also New York University v. Continental
Insurance Co., 87 N.Y.2d 308, 316, 639 N.Y.S.2d 283,
288, 662 N.E.2d 763, 768 (1995) ("where a party is
merely seeking to enforce its bargain, a tort claim will not
lie."); Bridgestone/Firestone, Inc. v. Recovery Credit
Services, Inc., 98 F.3d 13, 19 (2d Cir. 1996) ("these facts
amount to little more than intentionally false statements
by [defendant] indicating his intent to perform under the
contract. That is not sufficient to support a claim of fraud
under New York law."); Grappo v. Alitalia Linee Aeree

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1998 U.S. Dist. LEXIS 592, *12

Italiane, S.p.A., 56 F.3d 427, 434 (2d Cir. 1995) [*13]
("A cause of action for fraud does not generally lie where
the plaintiff alleges only that the defendant entered into a
contract with no intention of performing it.").
New York law has also established that "if a promise
was made with a preconceived and undisclosed intention
of not performing it, it constitutes a misrepresentation of
a 'material existing fact.'" Sabo v. Delman, 3 N.Y.2d 155,
164 N.Y.S.2d 714, 143 N.E.2d 906 (1957); see also
Channel Master, 4 N.Y.2d at 407, 176 N.Y.S.2d at 262,
151 N.E.2d at 835 (1958) ("a statement of present
intention is deemed a statement of material existing fact,
sufficient to support a fraud action."). Such a material
misrepresentation may serve as the basis for a claim of
fraud. Sudul v. Computer Outsourcing Services, 868 F.
Supp. 59, 62 (S.D.N.Y. 1994) ("a contracting party can be
held liable for fraud when, at the time he made a promise,
he did not intend to keep it.") However, the tension
between the rule against stating a fraud claim based
purely on a concealed intent not to perform, and the rule
permitting fraud claims for a promise made without intent
to perform has been reconciled by yet a third rule of law,
which states that [*14] a false promise can support a
claim of fraud only where that promise was "collateral or
extraneous" to the terms of an enforceable agreement in
place between the parties. International Cabletel Inc. v.
Le Groupe Videotron Ltee, 978 F. Supp. 483, 486
(S.D.N.Y. 1997) (analyzing tension and resolving
principle of law) (citing cases).
In International Cabletel, the plaintiff sought to state
a claim of fraudulent inducement where the defendant
had falsely promised not to enter into negotiations with
any other buyers, when defendant had never intended to
negotiate exclusively with the plaintiff but merely used
plaintiff in order to achieve leverage in its anticipated
discussions with a third party. Id. at 485. The court
dismissed the action on the grounds that the promise to
deal exclusively was explicitly included in the
negotiation agreement between the parties:
To describe plaintiff's claim is to expose
its fundamental flaw. Defendant's promise
to negotiate exclusively with plaintiff
plainly was not collateral to the [contract],
it was memorialized in that agreement as
defendant's principle obligation. Thus,
defendants' allegedly false statements of
future intent [*15] cannot support the

present cause of action.
Id. at 488.
Here, the false promise cited by Schare is the
promise to pay commissions pursuant to the terms
embodied in the November 28 Letter, that is a promise to
perform according to the terms of the contract. Such a
claim cannot stand as a separate cause of action for fraud.
iii. Amendment is Granted as to the Labor Law
Claim
Because Schare's claim under N.Y. Lab. Law §
198(10a) is not insufficient as a matter of law,
amendment will be granted. [HN6] Where amended
claims fail as a matter of law, and would have been
defeated by a motion to dismiss on the pleadings alone,
denial of amendment is within the discretion of the
district court. See Silberblatt, 608 F.2d at 42; Freeman,
494 F.2d at 1338; Torres, 966 F. Supp. at 195; Chan, 916
F. Supp. at 1302. Where the amended claims would
withstand such a motion, but may be successfully
challenged in a summary judgment posture, denial of
amendment is not appropriate:
Where, as here, the alleged futility of the
amendment rests on findings of fact we
prefer to let the district court resolve the
factual issues. If the documents referred to
by [defendant] [*16] are as decisive as it
claims, a question on which we express no
opinion, the only prejudice it suffers from
allowing appellant to amend is the
inconvenience and expense of submitting
these documents in support of a motion for
summary judgment. This burden . . .
hardly amounts to prejudice outweighing
the policy of Rule 15(a) in favor of
permitting the parties to obtain an
adjudication of the merits.
Silberblatt, 608 F.2d at 42; see also 6 Wright, Miller,
Kane § 1487 at 637, 642 (where proposed amendment is
not clearly futile denial of leave to amend is improper).
B. Summary Judgment is Appropriate as to the
Amended Labor Law Claims
[HN7] Where an amended claim would fail on a
summary judgment motion, the court has discretion to

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1998 U.S. Dist. LEXIS 592, *16

treat the opposition to the amendment as a motion for
summary judgment and to consider matters outside the
pleadings in resolving the motion. See Silberblatt, 608
F.2d at 42; Hannah, 753 F. Supp. at 1176 (treating
opposition to motion to amend as motion to dismiss). Six
Flags' opposition to Schare's addition of the Labor Law
claim will be treated as a motion for summary judgment.
[HN8] Rule 56(e) of the Federal Rules of Civil
Procedure [*17] provides that a court shall grant a
motion for summary judgment "if the pleadings,
depositions, answers to interrogatories, and admissions
on file, together with affidavits . . . show that there is no
genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law. See,
Silver v. City University, 947 F.2d 1021, 1022 (2d Cir.
1991).
"The party seeking summary judgment bears the
burden of establishing that no genuine issue of material
fact exists and that the undisputed facts establish her right
to judgment as a matter of law." Rodriguez v. City of New
York, 72 F.3d 1051, 1060 (2d Cir. 1995). In determining
whether a genuine issue of material fact exists, a court
must resolve all ambiguities and draw all reasonable
inferences against the moving party. See Brady v. Town
of Colchester, 863 F.2d 205, 210 (2d Cir. 1988);
Matsushita Elec. Indus. v. Zenith Radio Corp, 475 U.S.
574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). If
there is any evidence in the record regarding the issues on
which summary judgment is sought from which a
reasonable inference could be drawn in favor of the
nonmoving party, summary judgment is improper. [*18]
See Knowles v. New York City Dept. of Corrections, 904
F. Supp. 217, 220 (S.D.N.Y. 1995).
A party seeking to defeat a summary judgment
motion cannot "rely on mere speculation or conjecture as
to the true nature of facts to overcome the motion."
Lipton v. Nature Co., 71 F.3d 464, 469 (2d Cir. 1995)
(quoting Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d
Cir. 1986)). Rather the responding party 'must show the
existence of a disputed material fact in light of the
substantive law." Peer Int'l Corp. v. Luna Records, Inc.,
887 F. Supp. 560, 564 (S.D.N.Y. 1995). In the absence of
any disputed material fact, summary judgment is
appropriate. Because the new claims are based upon the
deposition of Michael Kent, a Six Flags employee with
knowledge of the transactions giving rise to the action,
there are no material facts in dispute.

Schare initially asserted a claim under § 191(1-c) of
the Labor Law on the theory that he was an independent
contractor at the time he performed the services in
question. Schare now seeks to plead alternatively a claim
for damages under N.Y. Lab. Law § 198(1-a) on the
grounds that he was an employee "since his working
relationship with Six Flags [*19] had all of the
substantive
characteristics
of
an
employment
relationship" and "his work was controlled by Six Flags."
[HN9] Section 198(1-a) provides as follows:
In any action instituted upon a wage
claim by an employee or the commissioner
in which the employee prevails, the court
shall allow such employee reasonable
attorney's fees and, upon a finding that the
employer's failure to pay the wage
required by this article was willful, an
additional amount as liquidated damages
equal to twenty-five percent of the total
amount of the wages found to be due.
N.Y. Lab. Law § 198(1-a) (McKinney's 1986).
Schare has provided no factual support for the
conclusory allegation that he was an employee of Six
Flags during the period at issue. At his deposition he
testified that he was an independent contractor when he
performed the services at issue for Six Flags:
Q. And you worked for Six Flags until
November 1995?
A. Correct.
***
Q. And this was your separation
agreement when you terminated your
employment with Six Flags in November
'95?
A. Basically reviewing, yes.
***
Q. Subsequent to your termination of
employment with Six Flags, you entered
into [*20] an agreement to provide
services in connection with the closing of

Page 9
1998 U.S. Dist. LEXIS 592, *20

certain sponsorship agreements?
A. Correct.

On repeated occasions during questioning, counsel
for Schare cautioned counsel for Six Flags to distinguish
between his relationship with Six Flags during his prior
employment and as an independent contractor during this
period.
Additionally, Schare testified that the only work he
performed for Six Flags during this period was attending
one two-hour meeting with representatives from Phillips
which fails to establish the degree of control typically
exercised over an employee such as requiring full-time
services, designating the hours of work, or requiring
permission for absences from work. See In re Ted Is Back
Corp., 64 N.Y.2d 725, 726, 485 N.Y.S.2d 742, 743, 475
N.E.2d 113 (1984); cf. In re Bourk, 165 A.D.2d 969, 561
N.Y.S.2d 858 (3d Dep't 1990); In re Claim of Lucas, 161
A.D.2d 993, 557 N.Y.S.2d 565 (3d Dep't 1990). Since
Schare was not an employee of Six Flags, he cannot
recover an award of attorneys' fees or liquidated damages
under § 198 (1-a). See Di Lorenzo v. Sbarra, 124 A.D.2d
446, 449, 507 N.Y.S.2d 548, 550 (3d Dep't 1986).

Conclusion
[*21] For the reasons set forth above, amendment
as regards the claim for fraudulent inducement is denied.
Amendment as regards the claim under N.Y. Lab. Law §
198(1-a) is granted, and as amended summary judgment
on that claim is granted for Six Flags.
Because the court on its own motion converted the
opposition to a motion for summary judgment, Schare is
granted leave to move to vacate this order upon a
showing within twenty (20) days of the date hereof that
there are either material facts in dispute or the existence
of acts which would be sufficient to support the
dismissed claim under N.Y. Lab. Law § 198(1-a).
It is so ordered.
New York, N. Y.
January 21, 1998
ROBERT W. SWEET
U.S.D.J.