Tarzy v. Dwyer et al

Filing 25

OPINION AND ORDER: re: 9 FIRST MOTION to Change Venue to the District of New Jersey. FIRST MOTION to Dismiss for failure to state a claim (partial) filed by Andrew Dwyer, Dwyer & Barrett, L.L.C. For the foregoing reasons, Defendants' motion to transfer venue is DENIED. Defendants' partial motion to dismiss Plaintiff's claims is GRANTED in part and DENIED in part. Defendants' motion to dismiss Plaintiff's claim for promissory estoppel is denied. Plaintiff's other causes of action for breach of contract, fraudulent inducement, breach of an implied-in- fact contract, and tortious interference are dismissed without prejudice. SO ORDERED. (Signed by Judge John F. Keenan on 1/08/2019) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------ALAN A. TARZY, ESQ.,
Plaintiff,
-againstANDREW DWYER, DWYER & BARRETT,
L.L.C., formerly known as THE
DWYER LAW FIRM, L.L.C.,
Defendants.
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No. 18 Civ. 1456 (JFK)
OPINION & ORDER

APPEARANCES
FOR PLAINTIFF ALAN A. TARZY, ESQ.
Declan P. Redfern
KAYSER & REDFERN, L.L.P.
FOR DEFENDANT ANDREW DWYER
Andrew W. Dwyer
DWYER & BARRETT L.L.C.
FOR DEFENDANT DWYER & BARRETT, L.L.C.
Andrew W. Dwyer
DWYER & BARRETT L.L.C.
JOHN F. KEENAN, United States District Judge:
Before the court is a motion by Defendants Andrew Dwyer and
Dwyer & Barrett, L.L.C., formerly known as the Dwyer Law Firm,
L.L.C., to transfer venue pursuant to 28 U.S.C. § 1404(a) and
for partial dismissal of the complaint for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6).

For the

reasons set forth below, this Court denies Defendants’ request
to transfer venue, and denies in part and grants in part
Defendants’ partial motion to dismiss.
1

BACKGROUND
A. Factual Background
For the purposes of this motion, this Court assumes the
facts alleged in the Amended Complaint to be true.
Plaintiff Alan A. Tarzy (“Tarzy”) is a resident of and
attorney licensed to practice law in New York. (Am. Compl. ¶ 1.)
Defendant Andrew Dwyer (“Dwyer”) is a member of Dwyer & Barrett
L.L.C., formerly known as the Dwyer Law Firm, L.L.C., and an
attorney licensed to practice law in New Jersey. (Id. ¶ 2.)
Tarzy’s law office is located in New York, New York, while
Defendants’ law office is located in Newark, New Jersey. (Id. ¶¶
1-2.)

This Court has subject matter jurisdiction pursuant to 28

U.S.C. § 1332.
On or about February 1, 2013, a new client (“Client”)
consulted Tarzy in connection with claims for wrongful
termination and employment discrimination. (Id. ¶ 9.)

Client

and Tarzy subsequently entered into a retainer agreement
pursuant to which Tarzy would be paid a contingency fee based on
a percentage of any sums recovered through a lawsuit or
settlement. (Id. ¶ 10.)
After Tarzy’s retention, Tarzy and Client discussed
Client’s claims of workplace discrimination based on his Jewish
heritage and assessed an appropriate level of severance. (Id. ¶
11.)

Tarzy had multiple discussions between February and May
2

2013 with the General Counsel for Client’s former employer but
was unable to negotiate a satisfactory severance offer. (Id.)
After failing to negotiate an adequate offer, Tarzy advised
Client to bring claims against Client’s former employer based on
a “compelling cause of action for employment discrimination.”
(Id. ¶ 12.)

Tarzy and Client engaged in discussions regarding

legal strategy, and Tarzy suggested retaining an attorney
experienced in the area of employment law to act as lead
counsel. (Id.)

Tarzy explained to Client that the contingency

fee payable under the retainer agreement would not change
because Tarzy would agree to divide fees with any attorney
selected to act as lead counsel. (Id.)
On or about June 1, 2013, Tarzy contacted Dwyer to discuss
representing Client in his employment discrimination case. (Id.
¶¶ 13-14.)

On June 13, 2013, Tarzy, Dwyer, and Client met at

Tarzy’s New York office, and Client consented “generally” to
Dwyer acting as lead counsel and to the attorneys dividing fees.
(Id. ¶¶ 14-15.)

After that meeting, Tarzy and Dwyer met and

agreed to a sixty/forty division because Defendants “would be
doing the majority of the work.” (Id. ¶ 16.)

On June 19, 2013,

following a telephone call with Tarzy, Dwyer confirmed by e-mail
the parties’ oral agreement. (Id. ¶ 17.)
Following the in-person meeting with Tarzy and Client on
June 13, 2013, but before sending the June 19, 2013 email to
3

Tarzy, Dwyer arranged for the Client to sign a separate retainer
agreement exclusively with Defendants. (Id. ¶ 19.)

Tarzy was

never sent a copy of the agreement. (Id.)
On July 5, 2013, Defendants filed the Client’s complaint in
the Superior Court of New Jersey, identifying the offices of
both Tarzy and Defendants as “Attorneys for the Plaintiff.” (Id.
¶¶ 20-21.)

Although Dwyer led the litigation of Client’s claims

in New Jersey, Tarzy had consistent involvement with Client,
reviewing all documents and briefs, preparing Client for
deposition, and discussing litigation and settlement strategy
with Client. (Id.)
In late 2016, when it appeared Client’s action was close to
settling, Tarzy contacted Dwyer about the division of fees. (Id.
¶ 23.)

Dwyer responded with surprise and claimed a lack of

recollection regarding an agreement. (Id.)

After being reminded

of his June 19, 2013 e-mail, Dwyer claimed that any purported
agreement was unenforceable under various local court rules and
rules of professional conduct relating to fee sharing agreements
in New Jersey. (Id.)
In January 2017, Client and his former employer reached a
settlement agreement. (Id. ¶ 24).

Pursuant to the settlement

agreement, sixty percent of the legal fees were payable to
Defendants without restriction, and forty percent of the legal
fees were paid into escrow with Defendants to cover Tarzy’s
4

claims for legal fees. (Id. ¶ 25.)

In or about January or

February 2017, Defendants received the settlement proceeds on
behalf of Client and, after deducting disbursements and legal
fees, remitted the balance to Client. (Id. ¶ 26)

Dwyer, on

behalf of himself and as principal of the Dwyer Firm L.L.C.,
refused to remit Tarzy’s forty percent share of the legal fees.
(Id. ¶¶ 26-27.)
B. Procedural History
On February 14, 2018, Tarzy brought the instant action in
the Supreme Court of the State of New York, County of New York.
(Id. ¶ 7.)

On February 17, 2018, Defendants removed the action

to this Court pursuant to 28 U.S.C. § 1441 and § 1446. (Notice
of Removal (Feb. 14, 2018), ECF No. 1.)

Tarzy filed his amended

complaint on April 3, 2018, asserting seven causes of action
against Defendants: (1) breach of contract; (2) fraudulent
inducement; (3) promissory estoppel; (4) breach of implied-infact contract; (5) unjust enrichment and quantum meruit; (6)
tortious interference of contract; and (7) constructive trust
and equitable tracing.
DISCUSSION
I.

Motion to Transfer Venue Under 28 U.S.C. § 1404(a)
A. Legal Standard

A district court may transfer a civil action “to any other
district or division where it might have been brought” if doing
5

so is for “the convenience of the parties and witnesses” and “in
the interest of justice.” 28 U.S.C. § 1404(a).
motion to transfer is two-fold.

The inquiry on a

“First, the court must

determine whether the action sought to be transferred is one
that ‘might have been brought’ in the transferee court.” Orb
Factory, Ltd. v. Design Sci. Toys, Ltd., 6 F. Supp. 2d 203, 208
(S.D.N.Y. 1998).

Second, a court must weigh several factors,

including “(1) the plaintiff's choice of forum, (2) the
convenience of witnesses, (3) the location of relevant documents
and relative ease of access to sources of proof, (4) the
convenience of parties, (5) the locus of operative facts, (6)
the availability of process to compel the attendance of
unwilling witnesses, and (7) the relative means of the parties.”
N.Y. Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d
102, 112 (2d Cir. 2010) (quoting D.H. Blair & Co., Inc. v.
Gottdiener, 462 F.3d 95, 106-107 (2d Cir. 2006)).
also consider two additional factors:

Some courts

the comparative

familiarity of each district with the governing law and trial
efficiency.

See Royal & Sun All. Ins., PLC v. Nippon Express

USA, Inc., 202 F. Supp. 3d 399, 405 (S.D.N.Y. 2016).
The burden of demonstrating that a transfer of venue is
appropriate “lies with the moving party, and in considering the
motion for transfer, a court should not disturb a plaintiff's
choice of forum ‘unless the defendants make a clear and
6

convincing showing that the balance of convenience favors
defendants’ choice.’” Orb Factory, Ltd., 6 F. Supp. 2d at 208
(quoting Hubbell Inc. v. Pass & Seymour, Inc., 993 F. Supp. 955,
962 (S.D.N.Y. 1995)); see also N.Y. Marine, 599 F.3d at 114.
The moving party must support its transfer application “with an
affidavit containing detailed factual statements relevant to the
factors [to be considered by the court in its transfer
decision], including the potential principal witnesses expected
to be called and a general statement of the substance of their
testimony.” Orb Factory, Ltd., 6 F. Supp. 2d at 208 (quoting
Hernandez v. Graebel Van Lines, 761 F. Supp. 983, 987 (E.D.N.Y.
1991)); see also Davidson v. Chung Shuk Lee, No. 17 CV 9820
(VB), 2018 WL 6047830, at *3 (S.D.N.Y. Nov. 19, 2018).
B. Defendants’ Motion to Transfer Venue is Denied
Tarzy does not dispute that his claims could have been
filed in the District of New Jersey -- the venue requested by
Defendants.

Nonetheless, after reviewing the nine factors, this

Court concludes that a transfer would be inappropriate.
1. Convenience of Witnesses
“The convenience of witnesses is an important
consideration, and has often been described as the single most
important § 1404(a) factor.” Everlast World’s Boxing
Headquarters Corp. v. Ringside, Inc., 928 F. Supp. 2d 735, 743
(S.D.N.Y. 2013).

In analyzing this factor, a court “does not
7

merely tally the number of witnesses who reside in the current
forum in comparison to the number located in the proposed
transferee forum.” Fuji Photo Film Co. v. Lexar Media, Inc., 415
F. Supp. 2d 370, 373 (S.D.N.Y. 2006) (quoting Herbert Ltd.
P’ship v. Elec. Arts Inc., 325 F. Supp. 2d 282, 286 (S.D.N.Y.
2004)).

Instead, “the court must qualitatively evaluate the

materiality of the testimony that the witnesses may provide.”
Id. “The convenience of non-party witnesses generally carries
more weight than the convenience of party witnesses.” Herbert
Ltd., 325 F. Supp. 2d at 286.
Defendants identify five witnesses who would likely testify
at trial.

Of those witnesses, three would be inconvenienced by

the forum in this District because they reside in New Jersey.
Those three are Dwyer himself, his law partner, and their
paralegal. (Defs.’ Mem. of Law in Supp. of Partial Mot. to
Dismiss at 7-8 (April 9, 2018), ECF No. 9 [hereinafter “Mem.”].)
Tarzy counters that this factor weighs in favor of neither party
because the witness whose testimony would possess the most
material information, Tarzy and Dwyer’s mutual client, resides
in the Eastern District of New York and, therefore, is equally
inconvenienced by both forums. (Pls.’ Mem. of Law in Opp. to
Defs.’ Partial Mot. to Dismiss at 9 (April 10, 2018), ECF No. 15
[hereinafter “Opp.”].)

8

This Court finds that this factor is neutral for the
reasons articulated by Tarzy:

(1) Defendants’ key witnesses in

New Jersey are affiliated with Dwyer & Barrett and are,
therefore, under Defendants’ control and can be brought to
testify in New York, and (2) Dwyer and Tarzy’s mutual client,
the main key witness in the case, is equally inconvenienced by
both forums because he lives in neither New York or New Jersey.
Computer Operations, Inc., v. Digital Equipment Corp., 387 F.
Supp. 8, 11 (E.D.N.Y. 1975)(“Section 1404(a) was designed
primarily for those cases . . . where defendant’s essential
witnesses were not under its control and were located in the
proposed transferee district and plaintiff could not make the
same claim as to its witnesses in the transferor
district . . . .”).

Accordingly, this factor does not weigh

significantly in favor of transfer.
2. Location of Relevant Evidence
Defendants argue that “the New Jersey litigation resulted
in a massive case file that occupies multiple file cabinets.”
(Mem. at 9; Dwyer Decl. ¶¶ 12-14 (April 9, 2018), ECF No. 11.)
They also argue that “[m]ost of the file is not in electronic
format” and that “if the file were stacked end to end, it would
be approximately 38 feet high.” (Mem. at 9.)
Tarzy has persuasively argued that the physical evidence to
establish his contract, fraud, and equitable claims would be
9

limited, consisting mostly of e-mails exchanged between the
parties, the retainer agreements signed by the Client, Dwyer’s
June 19, 2013 email, any contingency agreement entered into
between Dwyer and Client, and the settlement agreement signed by
Client. (Opp. at 10.)

He further argues that the extent of his

participation in Client’s employment discrimination suit would
be established by the testimony of the parties and the Client,
not by physical evidence, making most of Defendants’ “38 feet
high” stack of documents unnecessary to this action. (Id.)
Although this Court is convinced by Tarzy’s arguments, this
factor still weighs slightly in favor of Defendants. “[M]odern
technologies such as photocopying and faxing permit any
documents . . . to be transported to New York with presumably
minimal difficulty, and Defendants have made no showing of any
particular burden that transferring the documents would entail.”
Herbert Ltd., 325 F. Supp. 2d at 289.

Common sense, however,

“suggests that retaining this case in New York imposes some
incrementally greater burden, however slight, on Defendants to
copy or transport documents that . . . would not [be necessary]
if the case proceeded in [New Jersey].” Id.

This factor,

therefore, weighs slightly in favor of transfer.
3. Convenience of the Parties
“A defendant moving for transfer must show both that the
original forum is inconvenient for it and that the plaintiff
10

would not be substantially inconvenienced by a transfer.”
Everlast World’s Boxing Headquarters Corp, 928 F. Supp. 2d at
744 (quoting 15 Charles A. Wright, et al., Federal Practice and
Procedure § 3849 (3d ed. 2007)).

“[A] motion to transfer

‘should not be granted if all transfer would accomplish is to
shift the inconvenience from one party to the other.’” Id.
(quoting Guardian Life Ins. Co. of Am. v. Hernandez, No. 11 CV
2114(SAS), 2011 WL 3678134, at *2 (S.D.N.Y. Aug. 22, 2011)).
Defendants are located in Newark, New Jersey.
located in New York, New York.

Tarzy is

Tarzy argues that he selected

this venue because this action “is clearly a New York contract
dispute.” (Tarzy Decl. ¶ 5.)

Defendants contend that Tarzy has

failed to demonstrate that litigating in New Jersey will
inconvenience Tarzy in any way. (Mem. at 11.)

Although this

Court agrees with Defendants, this Court also notes that
Defendants have failed to articulate how -- apart from their
concerns relating to the location of evidence -- they would be
inconvenienced by having to litigate in New York, Tarzy’s choice
of forum.

This factor, therefore, is neutral.
4. Locus of Operative Facts

Many courts consider the locus of operative facts to be a
“primary factor in determining a § 1404(a) motion.” Nat’l Union
Fire Ins. Co. of Pittsburgh, PA v. St. Paul Fire & Marine Ins.
Co., No. 12 CIV 1250 PKC RCE, 2012 WL 1829589, at *4 (S.D.N.Y.
11

May 11, 2012) (quoting Mitsui Marine & Fire Ins. Co. v. Nankai
Travel Int’l Co., 245 F. Supp. 2d 523, 525-36 (S.D.N.Y. 2003)).
Courts interpret the locus of operative facts as “the place
where events and actors material to proving liability are
located.” Id. (quoting Amardeep Garments Indus., Pvt. Ltd. v.
Cathay Bank, No. 10 CV 2429 (BSJ), 2011 WL 1226255, at *3
(S.D.N.Y. Mar. 23, 2011)).

Transfers are generally favored when

a party has failed to show that “any of the operative facts
arose in the Southern District of New York.” Royal & Sun All.
Ins., 202 F. Supp. 3d at 408 (quoting Everlast, 928 F. Supp. 2d
at 745).
Tarzy alleges a breach of contract claim, a fraud claim,
and several equitable claims. “[F]or a breach of contract
action, the court must consider (1) ‘the location where the
contract was negotiated or executed,’ (2) ‘where the contract
was to be performed,’ and (3) ‘where the alleged breach
occurred.’” Royal & Sun All. Ins., 202 F. Supp. 3d at 408
(quoting Everlast, 928 F. Supp. 2d at 745).

For fraud claims,

the court must consider where the fraudulent statements or
omissions were made. Samson Lift Techs. v. Jerr-Dan Corp., No.
09 CIV. 2493RJH, 2009 WL 2432675, at *4 (S.D.N.Y. Aug. 7, 2009)
(“The operative events relating to fraud and misrepresentation
are deemed [to] occur in the place where such statements are
made.”); accord Purcell Graham, Inc. v. Nat’l Bank of Detroit,
12

No. 93 CV 8786 (MBM), 1994 WL 584550, at *4 (S.D.N.Y. Oct. 24,
1994) (“Misrepresentations and omissions are deemed to ‘occur’
in the district where they are transmitted or withheld, not
where they are received.”).
The purported contract at issue relates to the splitting of
fees between Tarzy and Defendants. (Am. Compl. ¶¶ 16-18.)

It

was allegedly negotiated in part in Tarzy’s office in New York
and through communications between Tarzy and Dwyer over phone
and email. (Id.; Mem. at 6.)

The performance and breach of the

contract -- i.e. the refusal to pay Tarzy pursuant to the
alleged fee sharing agreement -- occurred in New Jersey. (Opp.
at 8-9.)

Dwyer’s statements confirming the fee sharing

agreement were transmitted from New Jersey to Tarzy in New York.
(Am. Compl. ¶¶ 42-44.)

Because the only event that occurred in

New York was the initial meeting between Dwyer and Tarzy and all
other relevant events occurred in New Jersey, the principal
locus of operative facts is New Jersey.

This weighs slightly in

favor of transfer.
5. Availability of Process to Compel Attendance of Unwilling
Witnesses
Neither party argues that there are unwilling witnesses who
will need to be compelled to testify.

This factor is,

therefore, neutral.
6. Relative Means of the Parties

13

Plaintiff argues that because Defendants are set to receive
at a minimum sixty percent of the contingency fee obtained from
Client’s employment discrimination case, they are in a better
financial position than Plaintiff, and it is therefore less
burdensome on them to litigate the dispute in New York than for
Plaintiff to litigate in New Jersey. (Opp. at 12.)

The Court

does not find this argument convincing and finds that both
parties are in similar financial situations.

This factor is,

therefore, also neutral.
7. Forum’s Familiarity with Governing Law
“In federal court, familiarity with the governing law is
generally given little weight when considering transfer of
venue.” Royal & Sun All. Ins., 202 F. Supp. 3d at 410.

This is

because “federal courts commonly apply state substantive law,
which may not be the law of the state in which the federal court
sits.” Kwik Goal, Ltd. v. Youth Sports Publ’g, Inc., No. 06 CV
395(HB), 2006 WL 1517598, at *4 (S.D.N.Y. May 31, 2006).
The parties dispute whether New York or New Jersey law
would apply to Tarzy and Dwyer’s fee sharing arrangement.

Even

if New Jersey law governs, however, this Court is capable of
applying New Jersey contract law. Royal & Sun All. Ins., 202 F.
Supp. 3d at 410.

This Court is also capable of applying New

Jersey law to Tarzy’s fraud and equitable claims if New Jersey
law is indeed the applicable law. See S-Fer Int’l, Inc. v.
14

Paladion Partners, Ltd., 906 F. Supp. 211, 215 (S.D.N.Y. 1995)
(“[E]ven if California law governs this dispute, the legal
issues involve relatively unexceptional questions of contract
and fraud.”)

Accordingly, this factor weighs only slightly in

favor of transfer. See Vassallo v. Niedermeyer, 495 F. Supp.
757, 760 (S.D.N.Y. 1980) (“The fact that the law of another
jurisdiction governs the outcome of the case is a factor
accorded little weight on a motion to transfer, however,
especially in an instance such as this where no complex
questions of foreign law are involved.”); see also Woodlawn
Fulton Properties, LLC v. Great Lakes Reinsurance (UK) PLC, No.
13-CV-5324 JG, 2013 WL 6577146, at *5 (E.D.N.Y. Nov. 20, 2013)
(declining to grant a motion to transfer venue, even though any
decision by the court interpreting New Jersey state law “could
have a persuasive effect on numerous other state and federal
cases involving New Jersey Storm Sandy claims and the
interpretation of New Jersey insurance law.”).
8. Trial Efficiency and Interests of Justice
Defendants argue that trial efficiency and the overall
interests of justice “strongly favor transfer” because “[a]t
bottom this fee dispute is about the regulation of fee sharing
between attorneys” and “[b]ecause the underlying lawsuit was at
all times in the New Jersey state court system, and the
attorneys were representing a client who was a New Jersey
15

resident, New Jersey has the interest in this case, not New
York.” (Mem. at 11.)

Defendants also cite the statistic that

19.1 percent of civil cases in New York are over three years
old, while only 4.1 percent are in New Jersey. (Dwyer Decl. ¶
72.)

Tarzy only disputes Defendants’ argument that New York

courts are slower than New Jersey courts, arguing that “a more
significant statistic is the median time in months from filing
to trial for the period ending December 31, 2017, for New York
and New Jersey civil cases which is 29.4 months and 41.1 months
respectively.” (Opp. at 12.)
None of the statistics cited by Defendants regarding trial
efficiency lean heavily in favor of New Jersey over New York.
“Nor has either party identified unique issues . . . as to why
an imbalance in the parties’ financial or other means make a
transfer (or the lack thereof) in the interests of justice.” E.
Mishan & Sons, INC., v. Smart and Easy Corp., No. 18 CIV. 3217
(PAE), 2018 WL 6528496, at *12 (S.D.N.Y. Dec. 12, 2018).

This

Court thus concludes that this factor is neutral.
9. Plaintiff’s Choice of Forum
“A plaintiff’s choice of forum is generally entitled to
considerable weight and should not be disturbed unless the
balance of the factors is strongly in favor of the defendant.”
Berman v. Informix Corp., 30 F. Supp. 2d 653, 659 (S.D.N.Y.
1998); see also Gottdiener, 462 F.3d at 107 (“[Plaintiff] chose
16

New York as its forum, a decision that is given great weight.”).
A plaintiff’s choice of forum, however, “is accorded less weight
where the [plaintiff’s] chosen forum is neither [his] home nor
the place where the operative facts of the action occurred.”
Dwyer v. Gen. Motors Corp., 853 F. Supp. 690, 694 (S.D.N.Y.
1994).
Defendants argue that because New York has only a “tenuous”
connection to this action, Tarzy’s choice of forum should be
given less weight. (Mem. at 10 (quoting I Create Int’l v.
Mattel, Inc., 03 CV 3993 (JFK), 2004 U.S. Dist. LEXIS 14577, at
*16 (Aug. 9, 2004).)

This Court disagrees.

First, Tarzy is a

resident of New York and, therefore, his decision to file his
complaint in his home state is accorded substantial weight.
TouchTunes Music Corp. v. Rowe Int’l Corp., 676 F. Supp. 2d 169,
173 (S.D.N.Y. 2009) (holding that courts are “loath to disturb a
plaintiff’s choice of forum,” in particular “where plaintiff’s
chosen forum is its principal place of business”).

Second, the

meeting where Tarzy and Dwyer purportedly agreed to split fees
occurred in New York; therefore, some of the operative facts
occurred in this state.

This factor, thus, weighs against

transfer.
C. Conclusion
Defendants have not sustained their burden in convincing
this Court that a transfer is warranted in this action.
17

The

principal factors that weigh in favor of transfer -- the
location of the evidence, the locus of operative facts, and this
forum’s familiarity with New Jersey law -- do so only slightly.
This is not enough to overcome the considerable weight this
Court is required to give to Plaintiff’s choice of forum. See
Gottdiener, 462 F.3d at 107.

As a result, this Court denies

Defendants’ motion to transfer this case to the District of New
Jersey.

After all, Newark is not Los Angeles and the federal

court there is closer to the federal court in Manhattan than the
White Plains courthouse of the Southern District is.
II.

Motion to Dismiss

Having declined to transfer this case to the District of
New Jersey, this Court will now decide Defendants’ motion to
dismiss.
A. 12(b)(6) Legal Standard
To survive a motion to dismiss under Rule 12(b)(6), a
complaint must contain “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007).

A claim is plausible “when the plaintiff

pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d
Cir. 2011).

In determining the adequacy of the complaint, the

Court may consider any document attached to the complaint as an
18

exhibit or incorporated in the complaint by reference, as well
as documents which are integral to the complaint. Int’l
Audiotext Network, Inc. v. AT&T Co., 62 F.3d 69, 72 (2d Cir.
1995).

On a motion to dismiss, the Court must accept the

factual allegations in the complaint as true and draw reasonable
inferences in the plaintiff’s favor. Tsirelman v. Daines, 794
F.3d 310, 313 (2d Cir. 2015).
B. Discussion
1. The Complaint Fails to Allege a Breach of Contract Claim
Tarzy’s first cause of action is for breach of contract.
(Am. Compl. ¶¶ 37-44.)

Tarzy alleges that he and Defendants

entered into a contract which provided that together they would
jointly litigate Client’s action “upon the Defendants’ agreement
to share [any] legal fees recovered . . . on the basis of a
sixty (60%) percent to a forty (40%) percent split, with
Defendants receiving a sixty (60%) interest,” and that
Defendants breached this agreement when they refused to pay
Tarzy forty percent of the legal fees from the Client’s
settlement. (Id. ¶ 38.)

Tarzy also alleges that, although

Client’s consent to the division of fees was not initially
obtained in writing, the Client subsequently ratified the fee
division arrangement between his attorneys when he signed the
confidential settlement agreement in his underlying employment
discrimination suit. (Id. ¶ 24.)
19

Defendants argue that (1) Tarzy’s breach of contract claim
is governed by New Jersey law, not New York law; (2) Tarzy has
failed to state a claim for breach of contract because, pursuant
to New Jersey Rule of Professional Conduct 1.5(e), attorneys are
only allowed to divide fees in an arrangement not based on the
proportion of services performed if the attorneys have obtained
written agreement from the client, which Tarzy has not alleged
he obtained; and (3) Client never ratified any fee sharing
agreement between the attorneys because, by signing the
settlement agreement in his employment discrimination case,
Client was merely acknowledging the existence of a dispute
between the attorneys, not ratifying any prior consent given to
a specific fee sharing agreement. (Defs.’ Reply Mem. of Law at
10 (April 9, 2018), ECF No. 12; see also Mem. at 13.)
a. Choice of Law
To determine whether the Amended Complaint pleads an
enforceable contract, this Court must first decide what law
governs the breach of contract claim.

“A federal court sitting

in diversity jurisdiction applies the choice of law rules of the
forum state.” Forest Park Pictures v. Universal Television
Network, Inc., 683 F.3d 424, 433 (2d Cir. 2012).

In New York,

the first step in any choice of law analysis is “to determine
whether an actual conflict exists between the laws of the
jurisdictions involved.” Id.

In breach of contract cases, if a
20

conflict exists, New York law then “looks to the ‘center of
gravity’ of a contract to determine choice of law.” Id. (quoting
Matter of Allstate Ins. Co. (Stolarz), 81 N.Y.2d 219, 226
(1993)).
There is a conflict of contract law in this action.

Under

New Jersey law, a failure to comply with an ethical rule
“forecloses the ability of an attorney to recover against
another attorney under a breach of contract theory” because the
agreement is considered “contrary to law.” Vinick v. Friedman,
No. A-2590-09T3, 2011 WL 3176712, at *4 (N.J. Super. Ct. App.
Div. July 28, 2011) (quoting Goldberger, Seligsohn & Shinrod,
P.A. v. Baumgarten, 378 N.J. Super. 244, 252 (App. Div. 2005));
accord Weiner & Mazzei, P.C. v. Sattiraju Law Firm, PC, No. A1079-14T3, 2016 WL 2993123, at *2 (N.J. Super. Ct. App. Div. May
25, 2016) (“A fee sharing agreement between attorneys that does
not satisfy the requirements of R.P.C. 1.5(e) is not
enforceable.”).

Under New York law, however, failure to adhere

to an ethical rule does not foreclose a court from enforcing a
fee-sharing agreement between attorneys. See Marin v.
Constitution Realty, LLC, 28 N.Y.3d 666, 672 (2017).

In other

words, in New York, an attorney cannot “use the ethical rules as
a sword to render unenforceable, as between . . . two attorneys,
[an] agreement[].” Id.

Thus, if New Jersey law applies, the

alleged contract between Tarzy and Dwyer is invalid, but if New
21

York law applies, Tarzy may be able to recover under the
contract.
Because there is a conflict of law, this Court must now
determine the “center of gravity” of the contract.

This Court

“may consider a spectrum of significant contacts, including the
place of contracting, the places of negotiation and performance,
the location of the subject matter, and the domicile or place of
business of the contracting parties.” Lazard Freres & Co. v.
Protective Life Ins. Co., 108 F.3d 1531, 1539 (2d Cir. 1997)
(quoting Brink’s Ltd. v. South African Airways, 93 F.3d 1022,
1030-31 (2d Cir. 1996)).

This Court “may also consider public

policy where the policies underlying conflicting laws in a
contract dispute are readily identifiable and reflect strong
governmental interests.” Id. (quoting Brink’s Ltd., 93 F.3d at
1031).

“The traditional choice of law factors, the places of

contracting and performance, are given the heaviest weight in
this analysis.” Brink’s Ltd., 93 F.3d at 1031.
This Court concludes that New Jersey law applies to Tarzy’s
breach of contract claim, since (1) Tarzy and Dwyer contracted
and negotiated the purported joint representation agreement in
both New York and New Jersey, (2) their joint representation of
the Client occurred predominately in New Jersey, and (3) the
fees to be divided between them are located in New Jersey. (Am.
Compl. ¶¶ 14-18, 22, 25, 26.)

New Jersey, therefore, has “the
22

most significant interest in, or relationship to, the dispute.”
Lazard Freres & Co., 108 F.3d at 1539.
b. Liability for Breach of Contract
As stated above, New Jersey law is clear that an attorney
cannot enforce a fee sharing agreement where the attorney has
failed to comply with the rules of professional conduct
governing fee sharing agreements. See Goldberger, 378 N.J.
Super. at 252 (“We agree . . . with the motion judge’s
conclusion that the alleged agreement did not conform to the
requirements of R.P.C. 1.5(e) and therefore plaintiff was not
entitled to relief on the breach of contract claim.”).

Tarzy

concedes that the Client, in violation of both New York Rule of
Professional Conduct 1.5(g) and New Jersey Rule of Professional
Conduct 1.5(e), which prohibit the division of fees between
attorneys without written consent from the client, never
acknowledged his consent to Tarzy and Dwyer’s alleged fee
sharing agreement in writing prior to the commencement of the
Client’s employment discrimination case.1 (Opp. at 5 (“Even

New York Rule of Professional Conduct 1.5(g) provides that “a lawyer shall
not divide a fee for legal services with another lawyer who is not associated
in the same law firm” unless “the division is in proportion to the services
performed by each lawyer or, by a writing given to the client, each lawyer
assumes joint responsibility for the representation.” N.Y. Rule of Prof’l
Conduct r. 1.5(g) (emphasis added). New Jersey Rule of Professional Conduct
1.5(e) provides that lawyers who are not in the same firm may divide fees
only if “the division is in proportion to the services performed by each
lawyer, or, by written agreement with the client, each lawyer assumes joint
responsibility for the representation.” N.J. Rule of Prof’l Conduct r. 1.5(e)
(emphasis added).
1

23

though Dwyer acknowledged the parties’ agreement, neither party
took any further steps to further memorialize the attorneys’
fee-sharing agreement with a document evidencing the Client’s
consent.”).)

Tarzy argues, however, without citing case law,

that the fee sharing agreement is still enforceable because the
Client ratified the attorneys’ decision to divide fees when he
signed the settlement agreement.
This Court holds that the Client’s signing of the
confidential settlement agreement, at the end of his case, does
not bring the fee sharing agreement into compliance with either
New York Rule of Professional Conduct 1.5(g) or New Jersey Rule
of Professional Conduct 1.5(e).

This Court has found no case

law that holds that a client can ratify a fee sharing agreement
after a dispute has been litigated.

In fact, the ABA has

authored a formal opinion interpreting ABA Model Rule of
Professional Conduct 1.5 –- on which both rules are based -which states that a client’s consent to a fee sharing agreement
must be obtained “either before or within a reasonable time
after commencing the representation.” ABA Comm’n on Ethics &
Prof’l Responsibility, Formal Op. 474 (2016), at 6.

Tarzy has

failed to allege that either he or Dwyer obtained Client’s
written consent to the fee sharing arrangement before commencing
with the Client’s employment discrimination case.

Tarzy cannot

cure that defect by arguing that the Client later ratified his
24

consent during the settlement of his employment discrimination
case.
Accordingly, Tarzy’s breach of contract claim must be
dismissed because (1) New Jersey law is clear that a failure to
comply with a rule of professional conduct can render a contract
unenforceable, and (2) the Client’s written signature, obtained
at the end of litigation, is not enough to bring Tarzy and
Dwyer’s fee sharing agreement into compliance with either New
York Rule of Professional Conduct 1.5(g) or New Jersey Rule of
Professional Conduct 1.5(e).
2. The Complaint Fails to Allege a Claim of Fraudulent Inducement
Tarzy’s second cause of action is for fraudulent
inducement.

He alleges that Dwyer agreed to the joint

representation agreement while intending to later argue that the
agreement was unenforceable based on New Jersey Rule of
Professional Conduct 1.5(e), New York Rule of Professional
Conduct 1.5(g), and New Jersey Court Rule 1:39-6. (Am. Compl. ¶¶
30-34, 41-44.)

Defendants move to dismiss Tarzy’s fraudulent

inducement claim, arguing that (1) it should be governed by New
Jersey law, (2) Tarzy has failed to meet the heightened pleading
requirement imposed by Federal Rule of Civil Procedure 9(b), and
(3) Tarzy cannot convert a breach of contract claim into a claim
for fraudulent inducement. (Mem. at 18-19; Defs.’ Suppl. Resp.
at 2 (May 8, 2018), ECF No. 21.)
25

a. Choice of Law
In New Jersey, “[a] misrepresentation amounting to actual
legal fraud consists of a material representation of a presently
existing or past fact, made with knowledge of its falsity and
with the intention that the other party rely thereon, resulting
in reliance by that party to his detriment.” Jewish Ctr. of
Sussex Cty. v. Whale, 86 N.J. 619, 624 (1981); see also CDK
Glob., LLC v. Tulley Auto. Grp., Inc., No. 15-3103 (KM) (JBC),
2016 WL 1718100, at *3 (D.N.J. Apr. 29, 2016).
In New York, to prove fraud, “a plaintiff must show that
(1) the defendant made a material false representation, (2) the
defendant intended to defraud the plaintiff thereby, (3) the
plaintiff reasonably relied upon the representation, and (4) the
plaintiff suffered damage as a result of such reliance.” Banque
Arabe et Internationale D'Investissement v. Maryland Nat. Bank,
57 F.3d 146, 153 (2d Cir. 1995).
This Court concludes that there is no material difference
between New Jersey and New York law governing fraud claims.

As

a result, this Court will apply the law of New York, the forum
state, to Plaintiff’s claims. See Int’l Bus. Machines Corp. v.
Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir. 2004) (“In the
absence of substantive difference, however, a New York court
will dispense with choice of law analysis; and if New York law

26

is among the relevant choices, New York courts are free to apply
it.”).
b. Liability for Fraudulent Inducement
“It is black letter law in New York that a claim for common
law fraud will not lie if the claim is duplicative of a claim
for breach of contract.” Townsley v. Airxcel, Inc., No. 18-CV1439 (KBF), 2018 WL 3946449, at *4 (S.D.N.Y. Aug. 15, 2018)
(quoting EQT Infrastructure Ltd. v. Smith, 861 F. Supp. 2d 220,
233 (S.D.N.Y. 2012)). “[U]nder New York law, parallel fraud and
contract claims may be brought if the plaintiff (1) demonstrates
a legal duty separate from the duty to perform under the
contract; (2) points to a fraudulent misrepresentation that is
collateral or extraneous to the contract; or (3) seeks special
damages that are unrecoverable as contract damages.” Merrill
Lynch & Co. Inc. v. Allegheny Energy, Inc., 500 F.3d 171, 183
(2d Cir. 2007) (citing Bridgestone/Firestone, Inc. v. Recovery
Credit Servs., Inc., 98 F.3d 13, 20 (2d Cir.1996)).

“New York

distinguishes between a promissory statement of what will be
done in the future that gives rise only to a breach of contract
cause of action and a misrepresentation of a present fact that
gives rise to a separate cause of action for fraudulent
inducement.” Merrill Lynch & Co. Inc., 500 F.3d at 184.
Tarzy is not alleging that Dwyer has a separate legal duty
to perform under the contract nor has he alleged that he is
27

seeking special damages that would be unrecoverable as contract
damages.

Instead, he is basing his fraudulent inducement claim

on alleged misrepresentations made by Dwyer.

Specifically,

Tarzy alleges that (1) “Defendant falsely and knowingly
misrepresented to the Plaintiff, that Defendant agreed to the
joint representation of the Client, on the terms agreed at the
parties’ June 13, 2013, meeting as subsequently

memorialized in

the Defendant’s June 19, 2013, e-mail” (Am. Compl. ¶ 42); (2)
“Defendants’ representation at the time was false when made
because Defendants intended to rely on NJ RPC R 1.5(e) and NY
RPC R 1.5(g) and/or New Jersey Rules, R 1:39-6 to avoid their
contractual obligation” (Id.); and (3) “Defendants’
misrepresentations were intended to deceive the Plaintiff and to
induce the Plaintiff to act upon the misrepresentation to his
detriment.” (Id.)
These allegations fail to plead a claim for fraudulent
inducement.

In essence, Tarzy has alleged that Dwyer’s

misrepresentation was Dwyer’s agreement to perform under a
contract that Dwyer intended later to argue was invalid.

This

cannot sustain a claim of fraudulent inducement because the
misrepresentation is “closely related to the subject matter of
the contract and concern[s] representations of future intent,
not a separate, present fact,” and, therefore, can only sustain
a possible breach of contract claim. MCI Worldcom Commc’ns, Inc.
28

v. N. Am. Commc’ns Control, Inc., No. 98 CIV 6818 LTS, 2003 WL
21279446, at *9 (S.D.N.Y. June 4, 2003); see also Grappo v.
Alitalia Linee Aeree Italiane, S.p.A., 56 F.3d 427, 434 (2d Cir.
1995) (“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.”); Miller v.
Holtzbrinck Publishers, LLC, No. 08 CIV 3508 (HB), 2009 WL
528620, at *4 (S.D.N.Y. Mar. 3, 2009), aff’d sub nom. Miller v.
Holtzbrinck Publishers, L.L.C., 377 F. App’x 72 (2d Cir. 2010)
(“It is well settled under New York law that ‘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.’” (quoting Astroworks, Inc. v. Astroexhibit, Inc.,
257 F. Supp. 2d 609, 616 (S.D.N.Y. 2003))).
Tarzy also appears to base his fraudulent inducement claim
on Defendants’ failure to disclose that the contract was not in
compliance with certain rules of professional conduct.

“Where

the fraud is based on alleged omission of material fact -- as is
the case here -- the plaintiff must show that the defendant had
a duty to disclose.” In re Refco Sec. Litig., 759 F. Supp. 2d
301, 316 (S.D.N.Y. 2010); see also United States v. Szur, 289
F.3d 200, 211 (2d Cir. 2002) (“[W]hen dealing with a claim of
fraud based on material omissions, it is settled that a duty to
disclose ‘arises [only] when one party has information that the
29

other [party] is entitled to know because of a fiduciary or
other similar relation of trust and confidence between them.’”
(quoting Chiarella v. United States, 445 U.S. 222, 228 (1980)
(alterations in original)).

Tarzy has failed to allege that

Dwyer had a duty to disclose that the fee sharing agreement
could potentially be rendered unenforceable by New Jersey’s or
New York’s rules of professional conduct.

Thus, he has failed

to plead fraudulent inducement based on the omission of material
fact.
3. The Complaint Alleges a Claim of Promissory Estoppel
Tarzy’s third cause of action is for promissory estoppel.
To establish a claim for promissory estoppel in New York, a
plaintiff “must show ‘[1] a clear and unambiguous promise; [2] a
reasonable and foreseeable reliance by the party to whom the
promise is made; and [3] an injury sustained by the party
asserting the estoppel by reasons of his reliance.’” Fantozzi v.
Axsys Techs., Inc., No. 07 CIV 2667 LMM, 2007 WL 2454109, at *5
(S.D.N.Y. Aug. 20, 2007) (quoting City of Yonkers v. Otis
Elevator Co., 844 F.2d 42, 48 (2d Cir. 1988)). In New Jersey, a
plaintiff must show “(1) there was a clear and definite promise;
(2) the promise was made with the expectation that the promisee
would rely upon it; (3) the promisee reasonably did rely on the
promise; and (4) incurred a detriment in said reliance.”
Ergowerx Int’l, LLC, 18 F. Supp. 3d at 442 (quoting Martin v.
30

Port Auth. Transit Corp., No. 09-3165 (NLH), 2010 WL 1256650, at
*5 (D.N.J. Mar. 25, 2010)).

The parties dispute whether New

York or New Jersey law governs this claim. (Mem. at 17; Opp. at
19.)

This Court, however, concludes that there is no

substantial difference between the elements of New York and New
Jersey law regarding promissory estoppel and, therefore, no
choice of law analysis is necessary.
Defendants move to dismiss Tarzy’s promissory estoppel
claim on the ground that it is duplicative of Tarzy’s breach of
contract claim. (Mem. at 17.)

Promissory estoppel, however, “is

a legal fiction which is used as consideration for contractual
consideration where a party relies, to its detriment, on the
promises of another without having entered into an enforceable
contract.” Paxi, LLC v. Shiseido Americas Corp., 636 F. Supp. 2d
275, 287 (S.D.N.Y. 2009).

“It is a narrow doctrine which

generally only applies where there is no written contract, or
where the parties’ written contract is unenforceable for some
reason.” Id.

This Court disagrees with Defendants that Tarzy’s

promissory estoppel claim is duplicative of its breach of
contract claim.

Because the fee sharing agreement between Tarzy

and Dwyer is unenforceable due to the parties’ failure to comply
with rules of professional conduct, the door to a promissory
estoppel claim has opened. Mendez v. Bank of Am. Home Loans
Servicing, LP, 840 F. Supp. 2d 639, 654 (E.D.N.Y. 2012)
31

(“Plaintiff is permitted to continue his claim for promissory
estoppel because the existence of the contract itself is
disputed . . . .”).
Tarzy alleges that (1) in agreeing to the joint
representation of the Client, Tarzy relied to his detriment on
the clear and unambiguous promise that Dwyer would pay him forty
percent of the legal fees recovered; (2) Tarzy’s reliance was
reasonable because the promise was made by Dwyer, “an attorney
and officer of the Court in New York and New Jersey”; and (3)
Tarzy “suffered damages in the amount of forty (40%) of the
legal fees paid” in Client’s action. (Am. Compl. ¶¶ 46-49.)
These allegations are sufficient at this stage to plausibly
allege a claim of promissory estoppel.
4. The Complaint Fails to Allege a Claim for Breach of an
Implied-in-Fact Contract
Tarzy has failed to allege facts supporting his fourth
cause of action:

breach of a contract implied in fact.

Tarzy

alleges that an implied-in-fact contract is established “by the
Client’s execution of the Settlement Agreement which
acknowledges the joint representation of Plaintiff and
Defendants and their division of legal fees.” (Id. ¶ 51.)
Defendants move to dismiss this claim because it is “simply a
restatement of the breach of contract claim.” (Mem. At 17.)
In New York, a breach of an implied contract claim is
governed by the same choice of law analysis as a breach of an
32

express contract claim. See Beth Israel Med. Ctr. v. Horizon
Blue Cross & Blue Shield of New Jersey, Inc., 448 F.3d 573, 583
(2d Cir. 2006) (applying a “center of gravity” test to a breach
of an implied-in-fact contract claim).

Therefore, for the

reasons stated above, Tarzy’s implied-in-fact contract claim is
governed by New Jersey law.
In New Jersey, a claim to enforce a contract implied in
fact fails where an express agreement “concern[s] the same
subject matter” as the contract implied in fact. Saeed v.
Kreutz, 606 F. App’x 595, 597 (2d Cir. 2015); accord Baer v.
Chase, 392 F.3d 609, 618 (3d Cir. 2004).

This Court, however,

has held the parties’ express agreement unenforceable.
Nevertheless, even if this Court were to find one existed, an
implied-in-fact contract would be unenforceable because the
parties failed to comply with the rules of professional conduct
regarding fee sharing agreements.

See St. Paul Fire & Marine

Ins. Co. v. Indem. Ins. Co. of N. Am., 32 N.J. 17, 23 (1960)
(“An implied-in-fact contract is in legal effect an express
contract.”); Goldberger, 378 N.J. Super. at 25 (denying relief
on a breach of contract claim because the parties failed to
comply with the rules of professional conduct). Accordingly,
Tarzy’s fourth cause of action must be dismissed.

33

5. The Complaint Fails to Allege a Claim for Tortious
Interference
Defendants have moved to dismiss Tarzy’s sixth cause of
action for tortious interference with contract. (Mem. at 21;
Defs.’ Suppl. Resp. at 5.)
To plead a claim for tortious interference under New York
law, a plaintiff “must show ‘(1) the existence of a valid
contract between plaintiff and a third party; (2) the
defendant’s knowledge of that contract; (3) the defendant’s
intentional procuring of the breach, and (4) damages.’” White
Plains Coat & Apron Co. v. Cintas Corp., 460 F.3d 281, 285 (2d
Cir. 2006) (quoting Foster v. Churchill, 87 N.Y.2d 744, 750–751
(1996)).

Under New Jersey law, a plaintiff must plead “(1) the

existence of the contract; (2) interference which was
intentional and with malice; (3) the loss of the contract or
prospective gain as a result of the interference; and (4)
damages.” Tuff-N-Rumble Mgmt., Inc. v. Sugarhill Music Pub.
Inc., 49 F. Supp. 2d 673, 678 (S.D.N.Y. 1999) (quoting Velop,
Inc. v. Kaplan, 301 N.J.Super. 32, 49 (App.Div.1997)).
Tarzy has failed to allege a claim for tortious
interference under either New York or New Jersey law.

He

alleges that Defendants tortiously interfered with his retainer
agreement with Client. (Am. Compl. ¶ 57.)

This claim fails

because Tarzy has not alleged that the Client breached his
retainer agreement with Tarzy. See G-I Holdings, Inc. v. Baron &
34

Budd, 179 F. Supp. 2d 233, 253 (S.D.N.Y. 2001) (“New York law
requires that to plead tortious interference with contract
properly, the plaintiff must allege ‘breach’ of an existing
contract.”); see also id. (“[W]hile New Jersey law does not
explicitly identify breach as an element of this cause of
action, inducing a third party to violate some provision of its
contract with the putative plaintiff is implicit in the element
of ‘interference’ with the pre-existing contract.”).

Nowhere in

the complaint has Tarzy made the claim that the Client breached
the terms of the retainer agreement in any way.

Without such

allegations, Tarzy’s claim for tortious interference of contract
must be dismissed.
III.

Leave to Amend

Federal Rule of Civil Procedure 15 instructs a court to
“freely give leave” to amend “when justice so requires.” Fed. R.
Civ. P. 15(a)(2).

However, amendment “is not warranted absent

some indication as to what [a plaintiff] might add to [its]
complaint in order to make it viable.” Horoshko v. Citibank,
N.A., 373 F.3d 248, 249 (2d Cir. 2004) (internal quotation marks
omitted).

Accordingly, should Tarzy wish to amend, his motion

must demonstrate how he will cure the deficiencies in his claims
and that justice requires granting leave to amend.

His motion

must be filed within 30 days of the date of this Opinion.

35