Pullman v. Alpha Media Publishing, Inc. et al

Filing 80

ORDER ADOPTING REPORT AND RECOMMENDATIONS: CONCLUSION: For the foregoing reasons, the Court accepts and adopts Magistrate Judge Netburn's January 11, 2013 Report and Recommendation in its entirety. Accordingly, Alpha Media and Quadrangle's motions to dismiss are DENIED as to the common law fraud and NJCFA claims. Neither party has filed objections to Magistrate Judge Netburn's recommendation that the Court not dismiss the action pursuant to Fed. R. Civ. P. Rule 12(b)(7) for fail ure to join an indispensible party. Upon review for clear error, the Court declines to do so. The Court GRANTS Colvin and Ezersky's motions to dismiss those claims. Finally, defendants' motions to dismiss the piercing the corporate veil and punitive damages claims are GRANTED. The reference to Magistrate Judge Netburn continues for further disposition of this matter. SO ORDERED. Copy Mailed By Chambers. (Signed by Judge Paul A. Crotty on 03/28/13) (mov)

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: March 28, 2013

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
JACLINN PULLMAN,
Plaintiff,
v.
ALPHA MEDIA PUBLISHING, INC. et al.,
Defendants.

12.Civ. 1924 (PAC) (SN)
ORDER ADOPTING REPORT
AND RECOMMENDATION

HONORABLE PAUL A. CROTTY, United States District Judge:
BACKGROUND
On December 21, 2011, pro se Plaintiff Jaclinn Pullman initiated this action alleging
common law fraud, violations of the New Jersey Consumer Fraud Act (“NJCFA”), piercing the
corporate veil and punitive damages.1 Pullman complains that Defendants deceived her into
investing in a timeshare called Maxim Bungalows by misrepresenting that Maxim owned the
Bungalows, when in fact, Maxim was nothing but a “passive trademark licensor.” Pullman
asserts claims against (1) Alpha Media Group Inc., a multimedia company and its subsidiary
Alpha Media Publishing, Inc., a magazine publishing company formerly known as Dennis
Publishing, Inc., the publishers of Maxim Magazine (collectively, “Alpha Media”) (2)
Quadrangle Group, LLC (“Quadrangle”) a private investment management and advisory firm
that was in the process of acquiring Dennis Publishing around the time of the purported fraud;
(3) Peter Ezersky, a managing partner at Quadrangle Group, LLC, and (4) Stephen Colvin, the
former Chief Executive Officer of Dennis Publishing.

1

This action was commenced in the Superior Court of the State of New Jersey. Defendants Quadrangle Group LLC
(“Quadrangle”) and Peter Ezersky removed this case to the District of New Jersey on February 14, 2012, and
Plaintiff transferred venue to the Southern District of New York on March 15, 2012.

1

A. The Facts2
On June 22, 2007, Pullman began her weeklong stay at the Sun Village Resort and Spa in the
Dominican Republic. While there, Pullman was solicited to invest in the Maxim Bungalow
projects in Cofresi and Juan Dolio in the Dominican Republic. Pullman contends that she was
deceived into believing that Maxim owned the Bungalows. For example, an unidentified person
told her that Maxim made a large investment. Further, at an informational meeting, Pullman saw
a promotional video entitled “Right Time, Right Place,” which she contends suggested that
Maxim and the Elliot Company partnered in owning the Bungalows. She also viewed a threehundred-page-plus promotional book (the “Maxim Draft Book”). These materials neglected to
disclose that Maxim did not own any part of the Bungalows and had merely licensed its
trademark to be used in promoting the Bungalows. The materials also failed to disclose that
Maxim could terminate its license in the event that the project was not completed by June 30,
2007. The Bungalows were scheduled to open in September and October 2007.
Pullman also spoke with Roger Walser, who represented himself as a Sun Village employee
and her “Maxim Bungalows sales representative.” Walser, too, indicated that Maxim owned the
Bungalows. Lastly, Pullman spoke with an unnamed agent of Ocean Palms Real Estate. This
representative informed Pullman that Ocean Palms was a “joint Maxim-Elliot Company” that
owned the Maxim Bungalows. Based on these representations, Pullman agreed to a purchase
price of $124,620, signed purchase documents, and made a $5000 deposit. When Pullman
returned home to New Jersey, she continued to research the Bungalows. She visited Maxim’s
website, which linked her to Maxim Bungalows’s web pages. Finding no information dispelling
her belief about Maxim’s ownership, Pullman sent a check for $119,620 to the sales office at the
Sun Village at the Dominican Republic for the balance of the purchase price.
2

The facts are taken from the R&R unless otherwise noted.

2

In the fall of 2009, creditors foreclosed on the Bungalows. It was then that Pullman
discovered that the Bungalows were the subject of a purported Ponzi scheme and that Maxim did
not own the Bungalows. Pullman alleges that had she known of Maxim’s limited involvement,
she would not have invested in the project.
B. Magistrate Judge Netburn’s R&R
Magistrate Judge Netburn recommended that Alpha Media and Quadrangle’s motions to
dismiss Plaintiff’s common law fraud and NJCFA claims sound be denied, but recommended
granting their motions to dismiss Plaintiff’s claims for piercing the corporate veil and punitive
damages. She further recommended that the motions to dismiss by Colvin and Ezersky should
be granted in their entirety. Finally, she recommended that the Defendants’ motions to dismiss
for failure to join an indispensible party should be denied. Pullman, Alpha Media, and
Quadrangle, submitted timely objections. The Court has reviewed the contested issues de novo
and those portions of the Report and Recommendation (“R&R”) to which there were no
objections for clear error. Upon review, the Court adopts Magistrate Judge Netburn’s R&R in its
entirety.
a. Common Law Fraud
In New Jersey, the five elements of common law fraud are: “(1) a material misrepresentation
of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an
intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and
(5) resulting damages.” Gennari v. Weichert Co. Realtors, 691 A.2d 350, 367 (N.J. 1997).
With respect to Alpha Media, Magistrate Judge Netburn found that Pullman plausibly alleged
that the purported misrepresentations about Maxim’s ownership of the Maxim Bungalows could
be attributed to Alpha Media and that Pullman reasonably relied on those statements. (R&R at

3

12-16, 18-26.) Magistrate Judge Netburn also found that as against Quadrangle, Pullman
adequately pled Quadrangle’s control over Maxim at the relevant time. (Id. at 30-33.)
Alternatively, Pullman pled a sufficient basis to hold Quadrangle liable for Alpha Media’s fraud
under either an agency theory of liability or by piercing the corporate veil. (Id. at 33-36.)
With respect to Colvin and Ezersky, however, Magistrate Judge Netburn found that Pullman
failed to adequately plead, with particularity, that these individuals made any misrepresentations
on which Pullman relied, or that Colvin had the requisite scienter. (R&R at 37-41, 42-43.)
While recommending the denial of Defendants’ motions to dismiss Plaintiff’s common law fraud
claim against Alpha Media and Quadrangle, Magistrate Judge Netburn recommended that Colvin
and Ezersky’s motions to dismiss be granted.
b. New Jersey Consumer Fraud Act (“NJCFA”)
“To state a cause of action under the [New Jersey] Consumer Fraud Act, a plaintiff must
allege: (1) an unlawful practice by the defendant; (2) an ascertainable loss by plaintiff; and (3) a
causal nexus between the first two elements - defendant's allegedly unlawful behavior and the
plaintiff's ascertainable loss.” Szymczak v. Nissan N. Am., Inc., 2011 U.S. Dist. LEXIS 153011,
at *46 (S.D.N.Y. 2011) (citing Parker v. Howmedica Osteonics Corp., 2008 U.S. Dist. LEXIS
2570, at *6 (D.N.J. 2008)). To adequately state a claim under the NJCFA, a plaintiff must plead
allegations with particularity pursuant to Fed. R. Civ. P. Rule 9(b). Dimitrakis v. Citibank, 2013
U.S. Dist. LEXIS 16652, at *4 (D.N.J. 2013).
Finding the requisite connections to New Jersey to apply the NJCFA, Magistrate Judge
Netburn found that Pullman adequately pled that the material misrepresentations attributed to
Alpha Media constituted an “unlawful practice” that caused Pullman’s loss. (R&R at 45-50.) As
pleaded, Pullman plausibly tied Quadrangle’s direct participation to the scheme and adequately

4

pled a basis for alternate liability. (Id. at 51.) But, Pullman failed to provide nonconclusory
support for her allegations that Colvin and Ezersky personally misled Pullman. (Id. 52-54.) As
with the common law fraud claim, Magistrate Judge Netburn recommended that Plaintiff’s
NJCFA claim against Alpha Media and Quadrangle be sustained, but recommended that Colvin
and Ezersky’s motions to dismiss be granted.
c. Piercing the Corporate Veil and Punitive Damages
Magistrate Judge Netburn found that “piercing the corporate veil” and “punitive
damages” did not constitute cognizable free-standing claims. For that reason, she recommended
dismissal of Pullman’s claims against all Defendants. (R&R at 54 (citing Pulaski Constr. Co.,
Inc. v. Air Frame Hangars, Inc., 950 A.2d 868, 878 (N.J. 2008); Hassoun v. Cimmino, 126 F.
Supp. 2d 353, 372 (D.N.J. 2000).)
d. Failure to Join an Indispensible Party
Under Fed. R. Civ. P. Rule 12(b)(7), an action may be dismissed for failure to join an
indispensible party. Fed. R. Civ. P. Rule 19(a)(1) defines “required party” as one whom:
(A) In that person’s absence, the court cannot accord complete relief among existing parties;
or
(B) That person claims an interest relating to the subject of the action and is so situated that
disposing of the action in the person’s absence may: (i) as a practical matter impair or
impede the person’s ability to protect the interest; or (ii) leave an existing party subject to
a substantial risk of incurring double, multiple, or otherwise inconsistent obligations
because of the interest.
Magistrate Judge Netburn concluded that the Elliots and Impact entities were not required
parties under Rule 19(a) because these entities do not claim for themselves an interest in the
subject of the suit and Defendants failed to show that any party would be exposed to inconsistent
obligations. (R&R at 55-56.) Accordingly, Magistrate Judge Netburn recommended that the
action not be dismissed for failure to join these entities.

5

DISCUSSION
A. Standard of Review
In reviewing a report and recommendation, a court “may accept, reject, or modify, in whole
or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. §
636(b)(1)(C). Where a party makes a timely “specific written objection,” the district court is
obligated to review the contested issues de novo. Greene v. WCI Holdings Corp., 956 F. Supp
509, 513 (S.D.N.Y. 1997). “The district court may adopt those portions of the report to which no
timely objection has been made, so long as there is on the face of the record.” Feehan v. Feehan,
No. 09 Civ. 7016, 2011 U.S. Dist. LEXIS 14045, 2011 WL 497776 at *1 (S.D.N.Y. Feb. 10,
2011).
Federal Rule of Civil Procedure 12(b)(6) requires the court to accept the complaint’s factual
allegations as true and draws all reasonable inferences in the plaintiff's favor. See Chambers v.
Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). A court need not accept as true, however,
“[l]egal conclusions, deductions or opinions couched as factual allegations.” In re NYSE
Specialists Sec. Litig., 503 F.3d 89, 95 (2d Cir. 2007).
“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662,
129 S.Ct. 1937, 1960, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570, 127 S.Ct. 1955, 167 L. Ed. 2d 929 (2007)). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. “It is well settled that pro se litigants
generally are entitled to a liberal construction of their pleadings, which should be read to raise
the strongest arguments that they suggest.” Green v. United States, 260 F.3d 78, 83 (2d Cir.

6

2001) (citation and internal quotation marks omitted) (emphasis in original).
B. Plaintiff’s Objections to Magistrate Judge Netburn’s R&R
Pullman’s objections focus on Magistrate Judge Netburn’s recommendation that the Court
dismiss her NJCFA claim against Colvin. She does not specifically contest the recommendation
that her common law fraud claim against Colvin be dismissed, other than to say that it should not
be dismissed with prejudice. (Objection at 1, ¶¶ 2, 3; 3-29.) As for Ezersky, she does not object
to the recommendation of dismissal as to either the NJCFA or the common law fraud claims, but
objects they should not be dismissed with prejudice. (Id. at 1 ¶ 4; 29-30.)
a. Colvin’s Liability Under the NJCFA
Pullman objects to Magistrate Judge Netburn’s recommendation that the Court dismiss her
NJCFA claim against Colvin. (ECF No. 68, Objection at 1.) Pullman asserts that she has
demonstrated Colvin’s personal liability, as well as his tort participation liability arising from his
alleged participation as a corporate officer in Alpha Media’s tortious conduct.
Pullman alleges that Colvin executed the Maxim Bungalows Licensing Agreement, spoke at
a press conference and training events, was quoted in Maxim Bungalows press articles, gave
interviews, and made appearances in which he claimed to be “very excited to be in partnership
with them [the Elliots] to develop the Maxim Bungalows.” (Objection ¶¶ 40-47; P. Colvin Opp.
at 23.) As set forth in Magistrate Judge Netburn’s R&R, Pullman failed to allege that Colvin
personally misrepresented Maxim Bungalow’s ownership or that she relied on Colvin’s
statements. The statements of Walser, the Ocean Palms real estate agent, and the Maxim website
arguably misrepresented Maxim’s ownership, but Pullman does not connect them to Colvin.
Pullman also contends that she relied on various misleading marketing and advertising materials,
but does not claim that they misstate Maxim’s ownership or that Colvin created those materials.

7

(See Objection ¶¶ 14, 17.)
As for the statements that Colvin did make, his indications of “excitement” were not alleged
to be false. (Objection ¶ 44.) See Gennari v. Weichert Co. Realtors, 148 N.J. 582, 607 (N.J.
1997) (noting that a misrepresentation must be “found to be false.”). While Pullman contends
that Colvin’s references to a “partnership” with the Elliot Group were misleading, standing
alone, they were not because Dennis Publishing and the EMI Resorts (S.V.G.) Inc. did in fact
share a relationship through licensing. (Objection ¶¶ 62, 64; Compl. ¶¶ 290, 291). More
problematically, however, Pullman does not allege that she knew about any statements made by
Colvin at the time of her purchase, and so they could not have caused her loss. Szymczak v.
Nissan N. Am., Inc., 2011 U.S. Dist. LEXIS 153011, at *46 (S.D.N.Y. 2011) (requiring a causal
nexus to sustain an NJCFA claim).
Further, Pullman’s objection identifies facts that she contends should have been disclosed,
but there is no allegation that Colvin had a disclosure obligation arising from a fiduciary or
special relationship or prior disclosure. Arcand v. Brother Int’l Corp., 673 F. Supp. 2d 282, 297
(D.N.J. 2009); Bonnieview Homeowners Ass'n, LLC v. Woodmont Builders, L.L.C., 655 F.
Supp. 2d 473, 512 (D.N.J. 2009). The cases that Pullman cites do not support a duty to disclose
outside some sort of relationship between the parties. (Objection ¶ 23.) Absent misstatements
by Colvin or a duty to disclose, what Colvin knew is not independently actionable. Thus
Pullman has failed to plead individual liability based on an unlawful practice.3
Pullman’s tort participation theory fails as well because she has also not shown that by
his own conduct, Colvin breached any duty that Alpha Media could have owed to her. See
Saltiel v. GSI Consultants, Inc., 788 A.2d 268, 272 (N.J. 2002) (requiring corporate officer’s
3

Plaintiff’s allegations of an “unconscionable business practice” fail for the same reason. (Objection ¶ 15.) See
Kugler v. Romain, 58 N.J. 522, 544 (N.J. 1971) (“[U]nconscionability must be equated with the concepts of
deception, fraud, false pretense, misrepresentation, concealment and the like.”).

8

“sufficient[ ] involve[ment]” in the corporation’s tortuous conduct to establish tort participation
liability). Pullman’s renewed objections may establish Colvin’s involvement in promoting the
Maxim Bungalows project, executing the licensing agreement, and Quadrangle’s purchase of
Dennis Publishing, but not in misrepresentations about its ownership.
b. Leave to Amend
Pullman objects to Magistrate Judge Netburn’s recommendation that Colvin and Ezersky’s
motions to dismiss be granted in their entirety. (Objection ¶¶ 120, 127; R&R at 58.) That is, she
requests that she be given the opportunity to amend her allegations against both Colvin and
Ezersky. (Id. ¶¶ 118, 125.)
“A pro se complaint is to be read liberally. Certainly the court should not dismiss without
granting leave to amend at least once when a liberal reading of the complaint gives any
indication that a valid claim might be stated.” Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d Cir.
2000). Read liberally, Plaintiff’s lengthy complaint gives no indication that she can cure the
reported deficiencies. Piercing the corporate veil and punitive damages are not independent,
cognizable causes of action. With respect to Ezersky, notably, Pullman’s objection does not
challenge the legal basis for recommending dismissal. Her objection identifies no new factual
material that she would replead to suggest that Ezersky made the requisite misstatements or was
otherwise involved in the “unlawful practices upon which she relied.” (R&R at 42-43, 53-54.)
Pullman has similarly failed to show that an opportunity to replead would cure the Complaint’s
defects to state a claim against Colvin. While Pullman contends that she has uncovered
“additional facts” since her initial filing, such as the registration of the Maxim Bungalows
trademark in Turks and Caicos, these facts do not connect Colvin to any misrepresentations.
(Objection ¶ 116.)

9

C. Defendants’ Objections to Magistrate Judge Netburn’s R&R
a. Quadrangle’s Objections
As an initial matter, Quadrangle objects to Magistrate Judge Netburn’s consideration of the
exhibits that Pullman attached to her opposition to the motions to dismiss. Quadrangle
acknowledges the deference given to pro se litigants, but argues that it is not appropriate to do so
when Defendants have already answered the complaint. (Objection at 8.) The argument is
rejected and the Court finds that it was appropriate to consider the attached exhibits.
On the merits, Quadrangle objects that there was an insufficient basis to find that it directly
participated in the fraud by controlling or directing Dennis Publishing at the time of the alleged
misrepresentations. (Objection at 1.) Specifically, Quadrangle contends that “Plaintiff’s papers
only establish that Quadrangle contemplated the acquisition and began the acquisition process
prior to her purchase of the timeshare interests,” steps which do not amount to control. (Id. at 12.) Defendants have not shown, however, that an acquisition must be completed as a prerequisite
to exercising control over a corporate entity or to directing that entity to perpetrate a fraud. It is
plausible for an entity with a demonstrated interest in acquiring another to assert some control
throughout the merger process or earlier, especially where Pullman alleges that Quadrangle’s
acquisition was multi-staged and began before her purchase.
Quadrangle argues that the exhibits on which the Plaintiff relies and her allegations in her
Complaint and opposition do not suggest control prior to Pullman’s purchase of the timeshares in
late June/early July 2007. For example, Quadrangle contends that the exhibit supporting the
transfer of certain Maxim marks in November 2006 contains only an ambiguous reference that
does not connect any transfer to Quadrangle (Objection at 8-9; Pl. Opp. Ex. F); a letter written by
Dennis Publishing’s attorney referring to a change in ownership fails to specify that the change

10

occurred prior to late 2006 (Objection at 9); Colvin’s bio on the Daily Beast website stating that
he had “implemented the sale” of Dennis Publishing a “few months” after the May 29, 2007
Bungalows project announcement, which would have implausibly permitted only a three-week
window for the acquisition prior to Pullman’s purchase on June 22, 2007 (Objection at 10); and
that Alpha Media Group Inc.’s certificate of incorporation indicating that it was formed on June
13, 2007 says nothing about Quadrangle’s control (id.). While these arguments may be
persuasive to a fact finder concerning Quadrangle’s control, at the motion to dismiss stage, the
court does not “assay the weight of the evidence . . . .” Lopez v. Jet Blue Airways, 662 F.3d 593,
596 (2d Cir. 2011) (internal quotation marks omitted). It only “assess[es] the legal feasibility of
the complaint.” Id. As Magistrate Judge Netburn noted, opposing inferences can be made (R&R
at 31), but it does not follow that Plaintiff’s allegations are “pure conjecture.” (Objection at 11.)
The evidence presented, which Quadrangle concedes supports a contemplated closing in the third
quarter of 2007, is not inconsistent with a multi-staged acquisition process that plausibly
overlapped with Pullman’s purchase. (See Pl. Opp. Ex. G.)
Plaintiff has alleged that Quadrangle purchased assets that were used to “market and promote
the sales of Maxim Bungalows.” (R&R at 32 (citing P. Opp. at 1).) Plaintiff’s well-pled factual
allegations must be accepted as true and all reasonable inferences must be drawn in the
plaintiff’s favor. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). Under
this standard, Plaintiff has plausibly established Quadrangle’s control, sufficient to survive
dismissal of Pullman’s common law fraud and New Jersey Consumer Fraud Act claims.
Quadrangle also contends that there is no basis for piercing the corporate veil or holding
Quadrangle liable as a principal under agency law. (Objection at 13.)4 “In order to state a claim

4

This is a different argument than Pullman’s free-standing, independent piercing the corporate veil claims, which
the Court dismisses. (See R&R at 54.) Here, Pullman is asserting veil-piercing as a means of holding Quadrangle

11

for piercing the corporate veil under New Jersey law, a plaintiff must show that: (1) one
corporation is organized and operated as to make it a mere instrumentality of another
corporation, and (2) the dominant corporation is using the subservient corporation to perpetrate
fraud, to accomplish injustice, or to circumvent the law.” Bd. of Trustees of Teamsters Local
863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 171 (3d Cir. 2002).
The Court has considered the Complaint, Plaintiff’s opposition papers and Quadangle’s
objection, and concludes that Pullman has made the requisite allegations to support piercing of
the corporate veil. Pullman’s allegation that Quadrangle and Alpha Media functioned as one
entity under Quadangle’s control is not conclusory. (R&R at 34 (citing P. Opp. 10-11).)
Pullman alleges that Quadrangle representatives signed documents on behalf of Alpha Media
Group Inc., the two entities shared addresses and principals and otherwise failed to maintain
corporate formalities. (P. Opp. 10-11.) Quadrangle’s time-frame based objections do not
support dismissal (Objection at 15)—a liberal construction of Pullman’s factual allegations
supports an inference of Quadrangle’s earlier dominance at the time of Pullman’s purchase.
Pullman has similarly pled a sufficient agency relationship.
b. Alpha Media’s Objections
Alpha Media seeks dismissal of the common law fraud and NJCFA claims “to the extent
such causes of action are premised on allegations of fraud by omission” because Pullman
disclaimed fraud by omission as a theory of liability in her opposition papers. (Objection at 1.)
The Court declines to do so and will permit Pullman to proceed with both theories. As
Magistrate Judge Netburn noted in the R&R, Pullman is alleging a theory of misrepresentation.
(R&R at 17-18.) Magistrate Judge Netburn also recognized, however, that the Complaint alleges
both omissions as well as affirmative misrepresentations. (Id. at 9 (citing Compl. ¶¶ 149-229).)
liable for the actions of Alpha Media on her underlying fraud claims. (See R&R at 33.)

12

Pullman has always maintained that Alpha Media had a duty to disclose arising from prior
misleading representations that could be attributed to it. (See Compl. ¶ 162; Pl. Alpha Media
Opp. at 6-7.)
Alpha Media also requests the omission-based factual allegations to be stricken from the
Complaint and Plaintiff’s opposition. (Objection at 1, 7-8.) Under Fed. R. Civ. P. Rule 12(f),
there is a “strong presumption against striking portions of pleadings . . . .’” Dunn v. Albany
Med. College, 2010 U.S. Dist. LEXIS 55314, at *20 (N.D.N.Y. 2010) (citation omitted). “A
motion to strike on grounds of impertinence and immateriality should be denied unless ‘it can be
shown that no evidence in support of the allegation would be admissible.’” In re Merrill Lynch
& Co. Research Reports Sec. Litig., 2003 U.S. Dist. LEXIS 18717, at *7 (S.D.N.Y. 2003).
Alpha Media has made no such showing. Pullman’s allegations touching on concealment
provide background and could be relevant to her misrepresentations claims. Alpha Media has
failed to identify any authority that supports striking the Complaint and Pullman’s opposition
papers. Accordingly, the Court declines to do so.
Alpha Media incorrectly claims that Magistrate Judge Netburn made factual findings and
conclusions of law with regard to Defendants’ liability. (Objection at 8-9.) At no point did
Magistrate Judge Netburn suggest that Plaintiff’s factual allegations were true. (R&R at 18
(“[T]he Court need not decide the truth of these allegations.”); id. at 23 “This is a factual dispute
with arguments on both sides.”).) The R&R indicated that “reliance was reasonable,” but the
procedural posture and a fair reading of the R&R make clear that Magistrate Judge Netburn
determined that Pullman provided sufficient facts to plausibly allege that reliance was
reasonable. Alpha Media also complains that the R&R quotes authority referring to “one who
engages in fraud . . . ,” presumably because it suggests that Alpha Media engaged in fraud.

13

(R&R at 24 (citing Jewis h Or. o[Su ssex C ntv v. Whate, 432 A. 2d 52 1, 524 01. 1 (N .J . 1981).)
The c itation

is a C01Tec! stateme nt of lhe law ; the o bjection is w ithout merit.

Finall y, Alpha Media objec ts to the R&R's finding thaI the misrepresentations on which
Pullman re lied co uld be attributed to Alpha Media. The Co url agrees with Magistrate Judge

Netbum' s recommendation , as a matter of pleading, that the "in dicia of authorit y that originated
from M axim ," includ ing its webpage, coupled wilh (he represe(llalio!1 s of Walser a nd the Ocean
Palm s realto r, are suffic ien llO creale the requi site agency connection between Alpha Medi a and
th e alleged mi sreprese ntations to survive a moti on to di smi ss.
CONCLUSION
For the roregoin g reason s. the COllr1 accept s and adopt s Magi strat e Judge Net bum 's
Janu ary 11 , 2013 Re port and Reco mmendati on in it s entirety. Acco rdingly, Alpha Media and
Quadrangle's motion s to di smiss are DENIED as to the common law fraud and NJCF A claims .
Neither part y has flied objections to Magistrate Judge Netbum ' s recom mendat ion that th e COllrl
not dismiss the acti on pursuant

\0

Fed. R. C iv. P. Rule 12(b)(7) fo r fai lure to join an

indispensibl e party . Upon revi ew for clear error, the C ourt declines to do so. T he Co urt
GRANT S Colv in and Ezersky' s motions to di smiss those cl aims. Finall y, defendants ' moti ons

to di smiss the pi erc ing the corporate veil and plilli live damages claims are G RANTED , T he
reference to Magistrate Judge Netbum continues for fur1h er dispositi on o flhi s matte r.
Dated: New York, New York

Maceh 2(2013
SO ORDERED

i2t14

PAU L A. CROTTY
United Slates Distric t Jud ge

14

Copies mailed to:

Jaclinn Pullman
140 Woodland St.
TenaDy, NJ 07670

IS