Reinschmidt v. Exigence L.L.C. (Del.) et al

Filing 63

DECISION AND ORDER granting 7 Motion to Dismiss; granting 8 Motion to Dismiss for Failure to State a Claim; granting 20 Motion to Dismiss; granting 21 Motion to Dismiss for Failure to State a Claim; adopting in part Report and Recommendations re 41 Report and Recommendations. The amended complaint is dismissed with prejudice 13 . (Clerk to close case.). Signed by Hon. Michael A. Telesca on 2/25/19. (JMC)-CLERK TO FOLLOW UP-

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

Jonathan Reinschmidt, M.D.,
Plaintiff,
DECISION and ORDER
No. 1:14-cv-00997-MAT-HBS

-vsExigence LLC (Del), Buffalo
Emergency Associates, L.L.P.,
Exigence Medical of Hornell
P.L.L.C., Exigence Medical of
Binghamton P.L.L.C., Austin
Immediate Care, P.L.L.C., Exigence
Medical of New York P.L.L.C.,
Exigence of Fremont L.L.C.,
Exigence New Jersey L.L.C. (N.J.),
Exigence of New Jersey L.L.C.
(N.J.), Exigence New York L.L.C.,
Nyamekye North America L.L.C.,
Exigence Management Company, Inc.,
Exigence Pennsylvania L.L.C.,
Exigence of Bradford P.L.L.C.,
Exigence of Sunbury L.L.C.,
Exigence LP (Pa.), Exigence,
L.L.C. (Pa.), Exigence Healthcare
Solutions of Nevada L.L.C.,
Exigence Hospitalist Services of
Western New York, PLLC, Exigence
Hospitalist Services of Olean,
PLLC, Nyamekye Hospitalist
Services of Erie County, PLLC,
Exigence Health Plan, Inc.,
Lakeway Emergency Management
Services L.L.C., Multistate
Holdings L.L.C. (Del.), Multistate
Holdings Partnership, Western New
York Immediate Medical Care
L.L.C., Pulse Occupational
Medicine, L.L.C., Exigence Arizona
L.L.C., Irving H. Levy, FMB
Holdings L.L.P., Joseph
Divincenzo, Esq. and Gregory F.
Daniel, M.D.,
Defendants.

I.

Introduction
This

case

is

before

the

Court

upon

the

Report

and

Recommendation (“R&R”) (Dkt #41) issued by United States Magistrate
Judge Hugh B. Scott on January 19, 2016. The R&R recommends denying
in part and granting in part the Motion to Dismiss (Dkt #21,
replacing Dkt #8) by defendants Exigence L.L.C. (Del.); Exigence
New Jersey, L.L.C.; Exigence New York, L.L.C.; Nyamekye North
America L.L.C.; Exigence Pennsylvania, L.L.C.; Exigence of Sunbury
L.L.C.; Exigence Healthcare Solutions of Nevada L.L.C.; Exigence
Hospitalist

Services

of

Western

New

York,

PLLC;

Exigence

Hospitalist Services of Olean, PLLC; Nyamekye Hospitalist Services
of Erie County, PLLC; Exigence Health Plan, Inc.; Lakeway Emergency
Management Services, L.L.C.; Multistate Holdings L.L.C. (Del.);
Multistate Holdings Partnership; Exigence Arizona L.L.C.; Irving H.
Levy

(“Levy”);

(“DiVincenzo”);

FMB
and

Holdings

L.L.P.;

Gregory

F.

Joseph

Daniel,

DiVincenzo,
M.D.

Esq.

(“Daniel”)

(collectively, “the Connors Defendants”).1 The R&R also recommends
denying

in

part

and

granting

in

part

the

Motion

to

Dismiss

(Dkt #20, replacing Dkt #7) by Buffalo Emergency Associates,
L.L.P., Exigence Medical of Hornell P.L.L.C., Exigence Medical of
Binghamton

P.L.L.C.,

Austin

Immediate

Care

P.L.L.C., Exigence

1

Because there is overlap between portions of the names of some of the
entities represented by two different law firms (e.g., a number of the defendants
have “Exigence” in their names), the Court will refer to each group of defendants
by reference to the name of the law firm that represents them—Connors LLP
(“Connors”) or Harris Beach LLP (“Harris Beach”).

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Medical of New York P.L.L.C., Exigence of Fremont L.L.C., Exigence
Management Company, Inc., Exigence of Bradford, P.L.L.C., Western
New York Immediate Medical Care, L.L.C., and Pulse Occupational
Medicine, P.L.L.C. (collectively, “the Harris Beach Defendants”).
II.

Factual Background and Procedural History
Plaintiff filed his original Complaint (Dkt #1) on November

26, 2014. Both sets of defendants filed Motions to Dismiss (Dkt ##7
& 8) on April 1, 2015. Pursuant to Fed. R. Civ. P. 15(a)(1)(B),
Plaintiff filed an Amended Complaint (Dkt #13) on April 22, 2015,
asserting seventeen causes of action. The well-pleaded allegations
in the Amended Complaint are taken as true for purposes of Fed. R.
Civ. P. 12(b)(6) and are summarized briefly below.
After

completing

his

residency

at

University

of

Buffalo

Medical School, Plaintiff accepted a position of employment with
Buffalo

Emergency

Associates,

L.L.P.

(“Buffalo

Emergency

Associates”) as an emergency room physician. Plaintiff signed a
partnership agreement with Buffalo Emergency Associates on June 11,
2001, becoming a general partner in 2004. Plaintiff subsequently
obtained interests in four other entities connected with Buffalo
Emergency

Associates:

Multistate

Holdings

Partnership

(“Multistate”), Western New York Immediate Medical Care, L.L.C.
(“WNY Immediate Care”); Exigence Medical of Hornell PLLC (“Exigence
Hornell”); and Exigence Medical of Binghamton PLLC (“Exigence
Binghamton”). Buffalo Emergency Associates, along with Multistate

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and WNY Immediate Care, control the twenty-some-odd remaining
defendant entities listed in the caption. Plaintiff refers to these
entities collectively as the “Exigence Group.” Levy acts as the
chief financial officer, and DiVincenzo acts as corporate counsel
and compliance officer for Exigence Group. Daniel, in addition to
being the chief executive officer of Buffalo Emergency Associates,
was purportedly a partner, officer, and architect of the Exigence
Group.
Sometime prior to December 2010, Plaintiff began inquiring
about withdrawing from the Exigence Group in order to move to
Tennessee for reasons not specified in the Amended Complaint.
Plaintiff announced his intention of leaving in December 2010, and
then began winding down his involvement. As part of this process,
he signed an “exit letter” agreeing to sell his interest in
Multistate, in April 2011. His last shift working as an emergency
room physician for Buffalo Emergency Associates was in July 2011.
In August 2011, he signed more “exit letters” agreeing to sell his
interests in Buffalo Emergency Associates and WNY Immediate Care.
At the end of August of 2011, he had completed his exit and moved
to Tennessee. For a total capital contribution to the Exigence
Group of $252,000, Plaintiff received approximately $2,253,000 when
he withdrew—a nearly ten-fold return on investment.
On May 1, 2012, more than a year after Plaintiff gave notice
that he was leaving, Exigence Group was acquired by non-party

-4-

TeamHealth, Inc. (“TeamHealth”). According to Plaintiff, this move
was very lucrative for physicians who remained a part of the
Exigence Group.
On November 25, 2013, Plaintiff commenced his first federal
lawsuit, Reinschmidt v. Buffalo Emergency Associates, LLP, et al.,
No. 1:13-cv-1153-RJA-McCarthy). This case was dismissed on May 19,
2014, because there was incomplete diversity of citizenship, and
therefore subject matter jurisdiction was lacking.
Approximately t a year later, on November 26, 2014, Plaintiff
then instituted this lawsuit, in which he reprises his assertions,
raised in the previous case, that he was not provided with critical
information

about

the

TeamHealth

acquisition

by

the

Exigence

Group’s leadership, which he claims was being contemplated months
before he inquired about the value of his shares or gave notice of
his intention to withdraw. He also asserts that the Exigence
Group’s leadership finalized their intention to proceed with the
acquisition in October of 2011. Plaintiff contends if he had been
informed

that

this

acquisition

was

being

negotiated

by

his

partners, he would have retained his interest in Exigence Group,
which he believes would have been worth in excess of $4 million at
the time of the acquisition.
After Plaintiff filed his Amended Complaint, both sets of
defendants renewed their Motions to Dismiss (Dkt ##20 & 21). The
Connors Defendants moved to dismiss Counts One and Three (fraud by

-5-

omission);

Four

and

Five

(conversion);

Six

(negligent

misrepresentation); Seven, Eight, and Nine (breach of fiduciary
duty); Ten (breach of contract); Fourteen (unjust enrichment);
Fifteen

(accounting);

violation)

and

and

Seventeen

Sixteen

(commission

(conspiracy

to

of

commit

civil

RICO

civil

RICO

violation). See Dkt #21. The Harris Beach Defendants moved to
dismiss Count Two (fraud by omission); Four and Five; Ten, Eleven,
Twelve, and Thirteen (breach of contract); and Fourteen, Sixteen,
and Seventeen. See Dkt #20.
The R&R recommended denying the motions with regard to Counts
Eleven, Twelve, Thirteen, and Fifteen; denying the motions with
respect to Count Ten as to the individual defendants (DiVincenzo,
Levy, and Daniel) and Buffalo Emergency Associates, WNY Immediate
Care,

Pulse

Occupational

Medicine

PLLC

(“Pulse

Medicine”),

Multistate, Exigence Hornell, and Exigence Binghamton; granting the
motions as to Count Ten for all other defendants, but dismissing
that count without prejudice with leave to replead after discovery;
and granting the motions with regard to Counts One, Two, Three,
Four, Five, Six, Seven, Eight, Nine, Sixteen, and Seventeen as to
all defendants and dismissing those counts with prejudice. In
addition, the R&R recommended dismissing Exigence New Jersey,
L.L.C. (N.Y.); Exigence, LP (Pa.); and Exigence L.L.C. (Pa.)
because,

although

Plaintiff

had

-6-

named

them

in

the

original

Complaint, he did not include them in the Amended Complaint. See
Dkt #41 at 55-56.
On February 12, 2016, the Harris Beach Defendants filed
Objections (Dkt #46) to the R&R, as did Plaintiff (Dkt #47) and the
Connors Defendants (Dkt #48). On February 29, 2016, the Harris
Beach

Defendants

submitted

a

Reply/Response

to

Plaintiff’s

Objections (Dkt #49), Plaintiff filed a Response to the Connors
Defendants’ Objections (Dkt #50) and a Response to the Harris Beach
Defendants’

Objections

(Dkt

#51),

and

the

Connors

Defendants

submitted a Response to Plaintiff’s Objections (Dkt #52). On March
16, 2016, the Harris Beach Defendants filed a Reply in Further
Support of Their Objections (Dkt #53), Plaintiff filed a Response
to Defendants’ Responses to Plaintiff’s Objections (Dkt #54), and
the Connors Defendants filed a Reply/Response in Further Support of
Their Objections (Dkt #55).
Magistrate Judge Scott requested further briefing on the
Connors Defendants’ argument, asserted in their Objections, that
the Court would be divested of subject-matter jurisdiction if it
were to accept the R&R. See Dkt #57. The Connors Defendants pointed
out that if, as the R&R suggested, Plaintiff did not actually
withdraw from Buffalo Emergency Associates, WNY Immediate Care,
Pulse

Medicine,

Multistate,

Exigence

Hornell,

and

Exigence

Binghamton, those defendants must be deemed citizens of the same

-7-

State

as

Plaintiff

as

a

matter

of

partnership

law,

thereby

eliminating complete diversity of citizenship.
On June 2, 2016, Plaintiff filed his Reply/Response (Dkt #58)
to the request for further briefing on the issue of subject-matter
jurisdiction. On June 16, 2016, the Harris Beach Defendants filed
a Memorandum of Law in Support of Co-Defendants’ Diversity Argument
(Dkt #59). The Connors Defendants filed a Supplemental Brief
Regarding Subject-Matter Jurisdiction on June 23, 2016 (Dkt #60).
The parties appeared for oral argument before the Hon. Richard
J.

Arcara,

United

States

District

Judge

on

July

14,

2016.

Judge Arcara reserved decision.
On

October

24,

2018,

the

matter

was

transferred

to

the

undersigned. The Motions to Dismiss were submitted without oral
argument on October 25, 2018. For the reasons discussed below, the
Court accepts in part and rejects in part the R&R, and it grants
both motions to dismiss in their entirety.
III. Standard of Review
Recommendations

made

by

a

magistrate

judge

pursuant

to

28 U.S.C. § 636(b)(1)(B) “need not be automatically accepted by the
district court.” Grassia v. Scully, 892 F.2d 16, 19 (2d Cir. 1989).
Should either party object to a magistrate judge’s report and
recommendation, “[a] judge of the court shall make a de novo
determination of those portions of the report or specified proposed
findings or recommendations to which objection is made.” 28 U.S.C.

-8-

§ 636(b)(1). The Second Circuit has clarified that “[e]ven if
neither party objects to the magistrate’s recommendation, the
district

court

is

not

bound

by

the

recommendation

of

the

magistrate.” Grassia, 892 F.2d at 19. Rather, “‘[a] judge of the
court may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate. The judge may
also receive

further

evidence

or

recommit the

matter

to

the

magistrate with instructions.’” Id. (quoting 28 U.S.C. § 636(b)(1);
citing Mathews v. Weber, 423 U.S. 261, 271 (1976); McCarthy v.
Manson, 714 F.2d 234, 237 n. 2 (2d Cir. 1983)).
IV.

Discussion
A.

Counts One, Two, Three, Four, Five, Six, Seven, Eight,
Nine, Fourteen, Sixteen, and Seventeen Should Be
Dismissed, as Recommended in the R&R
1.

The R&R Correctly Recommended Dismissal of Counts
Four and Five

In Counts Four and Five of the Amended Complaint, Plaintiff
alleges that Daniel converted his interest in Exigence Hornell and
Exigence Binghamton when he ceased working shifts at the medical
facilities served by those entities. Dkt #13 at 41-43, ¶¶ 263-78.
Plaintiff objects to the R&R’s recommendation to dismiss these
counts because they “‘do not allege any actionable conduct that was
collateral to or extraneous of the contractual obligations under
the various operating or partnership agreements.’” Plaintiff’s
Objection (Dkt #47) at 2 (quoting Dkt #41 at 45). The need for
alternative pleading, Plaintiff argues, is demonstrated by the
-9-

Harris Beach Defendants’ argument they should be released from any
breach of contract claims (Counts Eleven, Twelve, and Thirteen)
because

the

defendant

entities

cannot

agreements that created them. Dkt #47 at 2

be

in

breach

of

the

(citing Dkt #46-1 at 4)

(stating that Counts Eleven, Twelve, and Thirteen “in substance
complain that Plaintiff’s co-partners and/or co-members breached
the respective partnership and/or membership agreements (which
created

those

entities)

by

failing

to

provide

him

with

distributions he was allegedly entitled to thereunder”) (italics in
original; footnote omitted).
Both

sets

of

defendants

argue

that

the

R&R

correctly

determined that the conversion claims are duplicative of the breach
of contract claims. The Court agrees. As the Connors Defendants
point out, in alleging that Daniel converted Plaintiff’s ownership
interest in Exigence Medical of Hornell and Exigence Medical of
Binghamton, Plaintiff is simply asserting that Daniel violated his
contractual

rights

under

those

entities’

respective

operating

agreements. See Dkt #52 at 3. Under New York State Law, it is well
settled that “‘[a] claim to recover damages for conversion cannot
be predicated on a mere breach of contract[.]’” Singapore Tong Teik
PTE Ltd. v. Coppola, No. 04-CV-3440 FB RLM, 2007 WL 2375796, at *4
(E.D.N.Y. Aug. 17, 2007) (quoting Priolo Commc’ns, Inc. v. MCI
Telecommc’ns Corp., 669 N.Y.S.2d 376, 376 (2d Dep’t 1998)); accord,
e.g., Nasso v. Bio Reference Labs., Inc., 892 F. Supp.2d 439, 454

-10-

(E.D.N.Y. 2012). Because Plaintiff’s allegations “merely recast[,]”
Singapore Tong Teik PTE Ltd., 2007 WL 2375796, at *4, his breach of
contract claims, they “must be dismissed.” Id.; see also Nasso, 892
F. Supp.2d at 454 (plaintiff failed to state claim for conversion
where he alleged no independent or additional wrong aside from
defendant’s

failure

to

adhere

to

the

alleged

oral

agreement

concerning the commission).
For

related

reasons,

the

Court

must

reject

Plaintiff’s

assertion that he is entitled to plead conversion claims in the
alternative because it rests on the mistaken assumption that he can
elect between enforcement of a contractual right under contract or
tort law. “It is . . . settled under New York law that a tort claim
will not arise ‘where[, as here,] plaintiff is essentially seeking
enforcement of the bargain.’” In re Chateaugay Corp., 10 F.3d 944,
958 (2d Cir. 1993) (quoting Sommer v. Federal Signal Corp., 79
N.Y.2d 540, 552 (1992)).
In sum, the Court concludes that the R&R correctly recommended
dismissal of Counts Four and Five. The Court therefore need not
reach

the

Connors

Defendants’

and

Harris

Beach

Defendants’

objections to the R&R’s rejection of alternative arguments these
defendants urged for dismissal of Counts Four and Five.

-11-

2.

The R&R Correctly Recommended Dismissal of Counts
One, Two, Three, Six, Seven, Eight, Nine, Fourteen,
Sixteen, and Seventeen

Plaintiff does not object to the R&R’s recommendation that
Counts One, Two, and Three (fraud by omission); Six (negligent
misrepresentation); Seven, Eight, and Nine (breach of fiduciary
duty); Fourteen (unjust enrichment); Sixteen (commission of civil
RICO violation); and Seventeen (conspiracy to commit civil RICO
violation) be dismissed. The Connors Defendants and the Harris
Beach Defendants ask that the Court adopt the R&R’s recommendation
to dismiss these counts.
The Court has reviewed the R&R’s findings and recommendations
as to Counts One, Two, Three, Six, Seven, Eight, Nine, Fourteen,
Sixteen, and Seventeen. Finding no clear error, the Court accepts
the R&R’s recommendation that these Counts be dismissed with
prejudice.
B.

Count Ten Must Be Dismissed With Prejudice, Contrary to
the R&R

Count

Ten

alleges

breach

of

the

Multistate

partnership

agreement by all named defendants on the basis that they are alteregos

of

Multistate.

recommended

Dkt

sustaining

#13

Count

at
Ten

48-50,
as

¶¶

316-50.

against

The

Daniel,

R&R

Levy,

DiVincenzo, Multistate, and the Harris Beach Defendants. The R&R
recommended dismissing Count Ten, without prejudice, as to all
other defendants, i.e., the entities in which Plaintiff did not own
an interest. See Dkt #41 at 47-48. The Connors Defendants and
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Harris Beach Defendants have asserted various objections to the
R&R’s findings as to Count Ten. See, e.g., Dkt #46-1 at 7-13; Dkt
#48 at 22-25; Dkt #59 at 2-3; Dkt #60 at 1-3.
The foundation for the R&R’s determination regarding Count
Ten’s viability is that Plaintiff did not effectively withdraw from
the

Multistate

partnership

agreement

before

the

TeamHealth

acquisition in May of 2102. In the Amended Complaint, Plaintiff
alleges that he “withdrew his partnership [in Multistate] before
this action was commenced.” Dkt #13 at 21, ¶ 126. Plaintiff cites
the exit letter to Multistate that he signed on April 12, 2011
(Dkt #13-3 at 1-2) which, by its own terms, was effective as of
December 31, 2010. Id.

Likewise, in the context of Count Ten,

Plaintiff does not allege that his ownership interest in Multistate
continued

until

TeamHealth

announced

the

acquisition

of

the

Exigence Group on May 1, 2012. Instead, he reiterates that his
ownership interest in Multistate continued “[u]ntil his withdrawal
[o]n December 31, 2010.” Dkt #13 at 49, ¶ 317. Indeed, the only two
theories of breach pleaded by Plaintiff in Count Ten are that the
defendants “made unapproved, secret loans,” id. at 49, ¶ 322; and
failed

to

“provide

[him]

with

a

third-party

valuation,

an

accounting, of his Partnership Units as of December 31, 2010,” id.
at 50, ¶ 330. When supplemental briefing was requested as to “what
was the last date on which [P]laintiff was an owner,” Dkt #39 at 3,
Plaintiff again confirmed that he “divested his ownership interests

-13-

in

[Multistate]

and

any

[of

its]

subsidiaries

on

or

before

April 29, 2011.” Id. at 6.
The R&R, however, ignored Plaintiff’s express allegations and
concluded that “this attempted withdrawal by [P]laintiff . . . was
null and void” because Plaintiff does not allege that he followed
the correct procedure for transferring his ownership interest set
forth

in

Multistate’s

partnership

agreement,

and

therefore

a

valuation of his ownership interest should have reflected any
increase in value from the May 2012 acquisition. See Dkt #41 at 45.
“While the court must construe the complaint in plaintiff’s favor,
it

cannot

rewrite

plaintiff[’]s

pleading

or

invent

factual

scenarios for him.” Massapinero v. Rikers Island Mental Health
Dep’t Servs., No. 13-CV-00530 TPG, 2015 WL 1473313, at *3 (S.D.N.Y.
Mar. 31, 2015).
Moreover, even assuming Plaintiff failed to follow the proper
procedure

in

transferring

his

ownership

interest

back

to

Multistate, that does not mean that his purposeful withdrawal from
the partnership was ineffective. In Cahill v. Haff, 248 N.Y. 377
(1928), the New York Court of Appeals, relying on N.Y. P’ship Law
§ 62(2), “observed that notwithstanding provisions in a partnership
agreement involving the termination of the partnership, any partner
may repudiate the agreement at any time, reasoning that ‘[n]o
agreement can prevent this result. No one can be forced to continue
as

partner

against

his

will.

.

-14-

.

.’”

Eskenazi

v.

Schapiro,

27 A.D.3d 312, 315, 812 N.Y.S.2d 474 (1st Dept. 2006) (quoting
Cahill, 248 N.Y. at 382). Thus, Plaintiff’s failure to follow the
proper

procedure

for

selling

back

his

partnership

shares

to

Multistate does not void his withdrawal. See Napoli v. Domnitch,
236

N.Y.S.2d

549,

551–52

(2d

Dept.

1962)

(plaintiff

sent

a

registered letter to defendants notifying them that he elected to
dissolve the partnership as of the close of business on June 30,
1961; defendants’ attorney notified plaintiff's attorney that it
was defendants’ position that the contract was not terminable at
will; and that, if plaintiff wished to withdraw, he presumed that
plaintiff would follow the procedure specified in the agreements;
court held that plaintiff was not liable in damages for breach),
aff’d, 14 N.Y.2d 508 (1964).
The

Court

further

notes

that

Multistate’s

partnership

agreement expressly provided that
[n]otwithstanding any provision of this Agreement, if a
Partner ceases to be a Partner of the Partnership, . . .
all his rights under this Agreement, shall terminate
effective immediately as of the date he ceases to be a
Partner.
Dkt #21-3 at 26, Article VII(G)(4). Thus, Plaintiff’s withdrawal
immediately terminated his rights thereunder. If he had a right to
a

valuation

of

his

shares

under

the

Multistate

partnership

agreement, it was as of the effective date of his withdrawal,
either December 31, 2010, the date in his April 12, 2011 exit
letter; or April 12, 2011, the date he signed the exit letter. It

-15-

cannot be May 1, 2012, the date of the acquisition, and therefore,
the R&R’s suggested theory of liability for Count 10 is untenable.
The Court finds that the R&R erroneously concluded that the Amended
Complaint

sufficiently

alleges

that

Plaintiff

retained

his

ownership in Multistate until at least May 1, 2012, and that Count
Ten therefore states a plausible breach of contract claim. The
Court therefore rejects the recommendation to allow Count Ten to
proceed.
Instead, the Court elects to dismiss Count Ten based on the
failure of the Amended Complaint to plausibly allege the essential
elements of a breach of contract claim. A plaintiff seeking to
prevail on a breach of contract claim under New York law must
establish “‘(1) a contract; (2) performance of the contract by one
party; (3) breach by the other party; and (4) damages.’” First
Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168
(2d Cir. 1998) (quoting Rexnord Holdings, Inc. v. Bidermann, 21
F.3d 522, 525 (2d Cir. 1994)). “In pleading these elements, a
plaintiff must identify what provisions of the contract were
breached as a result of the acts at issue.” Wolff v. Rare Medium,
Inc., 171 F. Supp.2d 354, 358 (S.D.N.Y. 2001) (citing Levy v.
Bessemer Tr. Co., No. 97 CIV. 1785(JFK), 1997 WL 431079, at *5
(S.D.N.Y. July 30, 1997) (citing Pits Ltd. v. American Express
Bank, Int’l, 911 F. Supp. 710, 719 (S.D.N.Y. 1996)). Even assuming
arguendo that Plaintiff satisfies the first three elements, he does

-16-

not plausibly allege how any damages result from either of his two
proposed theories of breach of contract.
The first theory of alleged breach is that the defendants
“made unapproved, secret loans of at least $3 million to other
entities at the sole discretion of Daniel.” Dkt #13 at 49, ¶ 322.
However, Plaintiff does not offer anything more than conclusory
assertions

regarding

how

any

damages

“result[ed]

from”

the

unauthorized loans. Id. at 50, ¶ 323. Furthermore, Plaintiff fails
to identify which provisions of the contract were breached as a
result of the unlawful actions, which is fatal to his ability to
state a claim. See CreditSights, Inc. v. Ciasullo, No. 05 CV
9345(DAB),

2008

WL

4185737,

at

*11

(S.D.N.Y.

Sept.

5, 2008)

(“New York law is eminently clear that a proper breach of contract
claim must identify specifically breached contract terms. None are
so alleged in the counterclaims.”). Both of these deficiencies
warrant a finding that Plaintiff has failed to state a viable
breach of contract claim on the first theory.
The second theory of alleged breach is that, under “Article
VII, paragraphs (H) and (I) of the Partnership Agreement required
that the purchase price of the units be based on a third-party
valuation conducted within a year prior to closing,” but “[n]o
third-party valuation . . . took place.” Dkt #13 at 50, ¶¶ 325-26.
According

to

Plaintiff,

absent

the

“contractually-required

third-party valuation, it is impossible to determine how much [he]

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sustained in damages.” Id. ¶ 329. Although Plaintiff does identify
the contractual provisions at issue (Article VII, paragraphs (H)
and (I)), he nevertheless fails to state a claim because he does
not allege the element of performance of his own obligations.
As noted above, Article VII, paragraphs (H) and (I), of the
Multistate partnership contract, are the basis of Plaintiff’s
valuation claim. In order to trigger the third-party valuation,
these paragraphs demand service of “the required Notice described
in Paragraph B [of Article VII].” Exhibit (“Ex.”) A10 at 26, ¶ H to
Declaration of Lawrence Vilardo, Esq. (Dkt #21-1). “Paragraph B,”
in turn, provides that if a partner shall “desire to sell” his or
her interest, then the partner “shall immediately give written
notice” to the other partners and to Multistate. Id. at 18, ¶ B(1).
However, a letter dated January 31, 2013 (Dkt #13-8), attached to
the Amended Complaint,2 demonstrates that Plaintiff never provided
the required written notice. See Dkt #13-8 at 3 (“Importantly,
[Plaintiff] never provided any formal written notice of withdrawal
required by the governing agreements and thus himself breached
same.”). Although Count 10 includes the allegation “Plaintiff
performed

his

obligations

under

the

Partnership

Agreements,”

Dkt #13 at 49, ¶ 318, this is too conclusory an allegation to

2

“In considering a motion to dismiss for failure to state a claim pursuant
to Rule 12(b)(6), a district court may consider the facts alleged in the
complaint, documents attached to the complaint as exhibits, and documents
incorporated by reference in the complaint.” DiFolco v. MSNBC Cable L.L.C., 622
F.3d 104, 111 (2d Cir. 2010).

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suffice for

purposes

of

Rule

12(b)(6).

See Hirsch

v.

Arthur

Andersen & Co., 72 F.3d 1085, 1092 (2d Cir. 1995) (“General,
conclusory allegations need not be credited, however, when they are
belied by more specific allegations of the complaint.”) (citation
omitted). Because the Amended Complaint does not include any nonconclusory allegation that Plaintiff provided the required written
notice, Count Ten fails to state a claim based on Plaintiff’s
second theory of breach.
C.

Counts Eleven, Twelve, and Thirteen Must Be Dismissed,
Contrary to the R&R

Counts Eleven, Twelve, and Thirteen assert causes of action
for breach of contract against Buffalo Emergency Associates, WNY
Immediate Care, and Exigence Hornell, respectively. See Dkt #13 at
51-54, ¶¶ 331-55. The R&R acknowledged the defendants’ argument for
dismissal of Counts Eleven, Twelve, and Thirteen, based on the
settled

principle

that

a

partnership

is

not

a

party

to

the

agreement creating the partnership; only the individual partners
are. Therefore, the partnership entity cannot be in breach of the
agreement that formed it. See, e.g., Cordts-Auth v. Crunk, LLC, 815
F. Supp.2d 778, 798 (S.D.N.Y. 2011) (“Under New York law, limited
liability company (LLC) was not party to LLC’s operating agreement,
but instead was formed by agreement, and thus could not have
breached it.”) (citing Purchase Partners II, LLC v. Max Capital
Mgmt. Corp., 19 Misc.3d 1123(A), 862 N.Y.S.2d 817 (Table), 2008 WL

-19-

1821878, at *2 (Sup. Ct. 2008)), aff’d, 479 F. App’x 375 (2d Cir.
2012).
Instead, the R&R found that this principle did not apply
because Plaintiff “successfully pled that the entities he partly
owned were alter egos of the individual defendants.” Dkt #41 at 48.
This appears to be the sole basis for the recommendation to sustain
Counts Eleven, Twelve, and Thirteen. However, as the Harris Beach
Defendants argue, Plaintiff does not allege that the entities named
as defendants in Counts Eleven, Twelve, and Thirteen were alter
egos of the individual defendants; nor does he assert Counts
Eleven, Twelve, and Thirteen against any individual members or
partners of the respective entities. See Dkt #46-1 at 8 & n. 7
(citing Dkt #13 at 51-54, ¶¶ 331-55). Again, the R&R seems to have
supplemented the Amended Complaint with a theory of liability not
advanced by Plaintiff.
In any event, even assuming arguendo that Plaintiff had sued
the individual defendants for their breaches of the respective
partnership

agreements

cited

in

Counts

Eleven,

Twelve,

and

Thirteen, he cannot invoke a veil-piercing theory as a basis to
attach liability to the entities through the individual partners
because they are “natural person[s] with no corporate veil to
pierce.”

Purchase

Partners

II,

LLC,

2008

WL

1821878,

at

*3

(plaintiff sued defendant, a limited liability company formed by
two individuals, Adam and Lerner; court noted that while plaintiff

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did not sue Adam for breach of contract, “if he had done so, he
could not attach liability to Max Capital through Adam on a
veil-piercing theory, as Adam is a natural person with no corporate
veil

to

pierce”).

Because

Buffalo

Emergency

Associates,

WNY

Immediate Care, and Exigence Hornell, the defendants named in
Counts Eleven, Twelve and Thirteen, are not parties to their
operating or partnership agreements, those Counts fail to state a
claim as against them and must be dismissed.
D.

Count Fifteen Should Be Dismissed, Contrary to the R&R

In Count Fifteen of the Amended Complaint, Plaintiff

demands

an accounting from all defendants. See Dkt #13 at 55-56, ¶¶ 362-67.
The R&R recommended sustaining Count Fifteen, noting that the
defendants “made only the nominal opposition” that Plaintiff “is
not entitled to this Court’s aid in obtaining an accounting for the
simple reason that the defendants are and always have been willing
to provide [him] with access to information under their control
regarding his former interests in the Exigence Group.” Dkt #41 at
49 (quoting Dkt #21-2 at 42; quotation marks omitted). The Connors
Defendants argue in their objections, their opposition is not
“nominal” because it goes to an essential element of a cause of
action for an accounting—a demand for an accounting and a refusal.
See Dkt #48 at 13-14.
“Under New York law, to state a claim for accounting, a
plaintiff must establish four conditions: ‘(1) relations of a

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mutual and confidential nature; (2) money or property entrusted to
the defendant imposing upon him a burden of accounting; (3) that
there is no adequate legal remedy; and (4) in some cases, a demand
for an accounting and a refusal.’” IMG Fragrance Brands, LLC v.
Houbigant, Inc., 679 F. Supp. 2d 395, 411 (S.D.N.Y. 2009) (quoting
Pressman v. Estate of Steinvorth, 860 F. Supp. 171, 179 (S.D.N.Y.
1994) (quoting 300 Broadway Realty Corp. v. Kommit, 37 Misc.2d 325,
235 N.Y.S.2d 205, 206 (Sup. Ct. 1962)). Plaintiff alleges that his
“requests to officers and managing members of the entities . . .
for an accounting and valuation of his interests went unanswered at
the time of his withdrawal.” Dkt #13 at 55, ¶ 363. The Connors
Defendants note that they provided responses to such requests
citing their letter dated January 31, 2013 (Dkt #13-8), in which
they answered Plaintiff’s letter requesting “explanations as to how
his

ownership

interests

in

holding

companies

with

more

than

20 entities affiliated with them would be or were valued upon his
departure.” Dkt #13-1 at 1. In their January 31, 2013 letter,
Defendants explained how Plaintiff’s interests in the various
entities were calculated, see Dkt #13-8 at 6-9, and attached, as
exhibits, tables and calculations regarding Plaintiff’s payments,
id. at 10-17.
Defendants argue that their January 2013 letter and exhibits
directly contradict Plaintiff’s allegation, Dkt #13 at 55, ¶ 362,
that they have refused to provide him with the contractually

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required valuations of his partnership interests. The Connors
Defendants urge the Court not to accept this allegation as true,
because the documents control over his allegations. Dkt #48 at 15
(citations omitted). Defendants also assert that Plaintiff has
failed to allege why the January 2103 letter was unsatisfactory or
what further information he requires.
Plaintiff counters that in his opposition to the Connors
Defendants’ Motion to Dismiss, he did explain why the January 2013
letter was insufficient—that he does not

understand the “four (4)

tables that appear to be some kind of summary of numbers for
Western

New

York

Immediate

Care

Buy

Out.”

Dkt

#26

at

28.

Significantly, however, such an allegation does not appear in the
Amended Complaint. And, “it is axiomatic” that a complaint “cannot
be amended by the briefs in opposition to a motion to dismiss.”
O’Brien v. Nat’l Prop. Analysts Partners, 719 F. Supp. 222, 229
(S.D.N.Y. 1989) (citing Jacobson v. Peat, Marwick, Mitchell & Co.,
445 F. Supp. 518, 526 (S.D.N.Y. 1977); Car Carriers, Inc. v. Ford
Motor Co., 745 F.2d 1101, 1107 (7th Cir. 1984) (although the
district court had “relied on the plaintiffs’ briefs to embellish
the conclusory allegations of the complaint,” it must limit its
review “to the well-pleaded allegations of the complaint”), cert.
denied, 470 U.S. 1054 (1985)); see also In re Cocoa Servs., L.L.C.,
No. 17-11936-JLG, 2018 WL 1801240, at *11 (Bankr. S.D.N.Y. Apr. 13,
2018) (holding that “none of the facts and legal theories that the

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[t]rustee introduced in his [o]pposition can cure the deficiencies
in the [c]omplaint”) (collecting cases). Moreover, as the Connors
Defendants pointed out, if Plaintiff did not understand those
tables, he should have requested a clarification and not started a
Federal lawsuit. See Dkt #33 at 20.
In sum, the Court finds that Plaintiff has not plausibly
pleaded “a failure or refusal by the partner with the books,
records,

profits

or

other

assets

of

the

partnership

in

his

possession to account to the other partner or partners[,” Adam v.
Cutner & Rathkopf, 238 A.D.2d 234, 241, 656 N.Y.S.2d 753, 758 (1st
Dep’t

1997)

(quotation

marks

omitted;

emphasis

supplied).

Therefore, the Court finds that dismissal of Count Fifteen is
warranted.
V.

Conclusion
For the foregoing reasons, the Court accepts in part and

rejects in part the R&R (Dkt #41). The Court grants the Motions to
Dismiss (Dkt ##7, 8, 20 & 21) in their entirety. The Court
accordingly

dismisses

the

Amended

Complaint

(Dkt

#13)

with

prejudice. The Clerk of Court is directed to close this case.
SO ORDERED.
S/Michael A. Telesca
HON. MICHAEL A. TELESCA
United States District Judge
Dated:

February 25, 2019
Rochester, New York.
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