Elhannon, LLC et al v. The F.A. Bartlett Tree Expert Company

Filing 25

OPINION AND ORDER granting in part and denying in part 10 Motion to Dismiss. Counts II, VI and VIII are dismissed without prejudice. The court grants plaintiff leave to amend complaint within 30 days. Signed by Judge William K. Sessions III on 8/28/2015. (law)

UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT
ELHANNON LLC, ELHANNON
WHOLESALE NURSERIES, LLC, and
ELHANNON WHOLESALE NURSERIES,
INC.,
Plaintiffs,
v.
THE F.A. BARTLETT TREE EXPERT
COMPANY,
Defendant.

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Case No. 2:14-cv-262

Opinion and Order
Plaintiff Elhannon Wholesale Nurseries, Inc. as successor
to Plaintiff Elhannon Wholesale Nurseries LLC, as successor, in
turn, to Plaintiff Elhannon LLC (collectively “Elhannon”)
brought this suit against Defendant F.A. Bartlett Tree Expert
Company (“Bartlett”).

Elhannon’s Complaint, ECF No. 1, contains

eight claims: (I) Breach of Contract, (II) Breach of Implied
Covenant of Good Faith and Fair Dealing, (III) Negligence, (IV)
Negligent Misrepresentation, (V) Intentional
Misrepresentation/Fraud, (VI) Fraud in the Performance, (VII)
Violation of New York’s General Business Law, and (VIII)
Punitive/Exemplary/Multiple Damages.

Pursuant to Federal Rule

of Civil Procedure 12(b)(6), Bartlett moves to dismiss all but
the breach of contract claim contained in Count I.

ECF No. 10.

For the reasons set forth below, Bartlett’s motion is granted in
part and denied in part.
without prejudice.

Counts II, VI, and VIII are dismissed

The Court grants Elhannon leave to amend its

Complaint within 30 days of this Order.
I.

Standard of Review
To survive a motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6) a complaint “must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (quoting Bell Atlantic. Corp. v. Twombly, 550 U.S. 544,
570 (2007)).

A court evaluating a motion to dismiss must accept

the facts alleged in the complaint as true and draw all
reasonable inferences from those facts in favor of the nonmoving party.

McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184,

191 (2d Cir. 2007).
legal conclusions.

This assumption of truth does not apply to
Davis v. Vermont Dep’t of Corrections, 868

F. Supp. 2d 313, 321 (D. Vt. 2012).

A plaintiff’s factual

allegations “must be enough to raise a right to relief above the
speculative level, on the assumption that all the allegations in
the complaint are true (even if doubtful in fact).”

Twombly,

550 U.S. at 555 (internal citation omitted).
II.

Factual Background

The Court’s description of the factual background accepts
all facts alleged by Elhannon’s Complaint as true, as it must at
2

this stage of the proceedings.

According to the Complaint,

Elhannon is a wholesale tree-growing and selling operation with
several locations and offices in the state of New York.
1 ¶ 1.

ECF No.

It sells trees across the United States to private

homeowners, developers, commercial entities, governmental
entities, architects, landscapers, and others.

Id. ¶ 2.

Bartlett is a Connecticut corporation with offices in Manchester
Center, Vermont.

According to Elhannon, Bartlett holds itself

out as the world’s leading tree care company for both
residential and commercial clients.

Id. ¶ 3.

The parties first entered into a contractual relationship
in 2007 when Bartlett agreed to provide an “Integrated Pest
Management” (“IPM”) program for Elhannon at each of Elhannon’s
six nursery locations.

Id. ¶ 10.

That contract and subsequent

contracts committed Bartlett to inspect and treat all of
Elhannon’s trees as part of a thorough plant healthcare program
that Bartlett calls its “MoniTor” program.

Id. ¶ 12.

Elhannon

selected Bartlett to provide its tree care service because of
Bartlett’s national reputation and the protection and assurance
that Bartlett’s name and reputation provided.

Id. ¶ 17.

At a meeting at Elhannon’s offices in Petersburg, New York
in November of 2007, Jeromy Gardner of Bartlett’s Manchester,
Vermont office made a presentation to Elhannon designed to
convince Elhannon to engage Bartlett to provide an IPM program.
3

Id. ¶ 18.

Mr. Gardner outlined a program that would take care

of all disease and pests at all six Elhannon locations,
encompassing approximately eight hundred and fifty acres.
Bartlett would inspect the nursery, analyze the results, and
develop and implement an integrated, comprehensive pesticide,
disease, and fertilizer program.

Id. ¶ 19.

Elhannon agreed

that Bartlett was to have complete control and was to be paid
per treatment, or “mobilization.”

Id.

The mobilization

timeframe was under Bartlett’s complete discretion and any work
needed per mobilization was to be performed by Bartlett without
limitation.

Id.

The proposal Mr. Gardner sent to Elhannon

stated that Bartlett would collect soil samples from all of
Elhannon’s nursery locations, implement an IPM program, and
inspect and treat all trees.

Id. ¶ 25.

Elhannon relied on

Bartlett’s experience and expertise in tree care and did not
attempt to direct, guide, or limit the proposal or Bartlett’s
activities in any way.

Id. ¶ 27.

Elhannon assumed and expected

that the contract encompassed whatever needed to be done and
that Bartlett would in fact do whatever needed to be done.

Id.

¶ 29.
Elhannon subsequently entered into a series of contracts
identical or similar to the first contract through 2013, all of
which were drafted by Bartlett.

Id. ¶ 34.

Elhannon paid the

fees demanded with each contract except for the July 2013
4

contract because it was an “exercise in complete futility” and
“Mr. Gardner knew that it was an exercise in futility and was
performed for ‘show’ only.”

Id. ¶ 35.

Elhannon contends that

over the years Bartlett not only consistently failed to perform
but it failed in almost every respect to meet the commitments
made in its “Mission Statement,” including failing to care for
Elhannon’s trees, to act with “full honesty, integrity, and
fairness,” to be “dependable,” and to “communicate openly” with
Elhannon.

Id. ¶ 36.

Elhannon also contends that Bartlett never

had any intention to provide a quality IPM program and took
deliberate steps over a period of years to conceal its true
intentions, for example by promising when issues arose that it
had everything under control and would take care of the problems
reported.

Id. ¶ 37.

Elhannon claims that despite their seven-year relationship
and the terms of all of the parties’ contracts, Bartlett never
performed a comprehensive inspection of all Elhannon locations,
never treated all trees or anything beyond a small fraction, and
never instituted an IPM program.

Id. ¶ 38.

Bartlett relied on

a spraying technician, Jason Graham, rather than an arborist to
inspect the trees on the same days he was scheduled to do his
limited sprayings.

Id. ¶ 39.

Elhannon claims that this was not

the bona fide inspection program called for in the contracts.
Id.
5

From 2008 to 2010 Elhannon did not attempt to verify that
Bartlett was fulfilling its duties under the contracts and
assumed that Bartlett was indeed performing its inspections and
executing a spraying program as needed.

Id. ¶ 40.

In 2010,

Elhannon representatives noticed scale and larvae on its trees.
Id. ¶ 41.

Mr. Gardner said he would take care of the problem

himself but he did not show up and Mr. Graham was left on his
own.

Id. ¶¶ 42-43.

Mr. Gardner claimed he was ill at the time

and when the parties met in 2011 to discuss the 2012 contract,
Mr. Gardner promised to revise the program and do anything
necessary to correct deficiencies caused by his absence during
the 2011 season.

Id. ¶¶ 44-46.

Mr. Gardner continued to fail

to correct the problems and they simply became worse over time
as insect and disease issues had become visible and widespread
throughout the entire nursery, costing Elhannon sales and
damaging its reputation.

Id. ¶¶ 48-50.

Mr. Gardner continued to promise to address the problems in
various ways and consistently failed to do so.

Id. ¶¶ 51-59.

For example, Bartlett promised that it would spray the entire
nursery but Mr. Graham covered only a small portion of two of
the six nurseries.

Id. ¶¶ 54-55.

Mr. Graham allegedly falsely

stated that he was spraying only one side of the trees because
the chemicals would “walk.”

Id. ¶ 57.

Mr. Graham also stated

that Mr. Gardner had limited him to only two days of spraying
6

and that he was unable therefore to come back again to complete
the job.

Id. ¶ 58.

Elhannon claims that Mr. Gardner used a chemical in
September of 2013 that is banned in New York “in a desperate
effort to address the exploding pest problem.”

Id. ¶ 60.

specific chemical is not identified in the Complaint.

The

Moreover,

Elhannon alleges that Mr. Gardner was not licensed to spray in
New York and there was no paperwork to document the New York
sprayings he performed.

Id.

According to Elhannon, Bartlett

then allegedly falsified records in order to hide the illegal
spraying.

Id. ¶ 68.

Elhannon also claims that Bartlett falsified spraying
records to indicate that Elhannon’s entire nursery was sprayed
on given dates even though it was not and that Bartlett’s
employees falsely reported the application of pesticides.
¶¶ 65-66.

Id.

Moreover, Bartlett improperly billed Elhannon for

work done for other Bartlett clients.

Id. ¶ 67.

That Bartlett

never intended to perform the contract as promised, according to
Elhannon, is further demonstrated by Bartlett’s failure to bring
equipment necessary to use horticultural oil as a means of pest
control as called for in the contracts between the parties.
¶ 69.

Id.

Mr. Graham, who is no longer employed at Bartlett, told

Elhannon’s owner, Jim Sutton that the program for Elhannon was
never an IPM program.
7

The contracts between the parties contained an arbitration
clause.

Elhannon claims that Bartlett refused to negotiate,

arbitrate, or mediate when counsel for Elhannon contacted
Bartlett.
Finally, Elhannon claims that it had to destroy trees as a
result of Bartlett’s failures and its net loss from pest
infestations alone exceeds $8 million.

Id. ¶ 75.

However, the

full extent of Elhannon damages is still unknown and could be
several million dollars more.
In its motion Bartlett acknowledges a “bona fide
contractual dispute with the Plaintiffs” and argues that the
parties’ disagreement arises solely out of their contractual
relationship.

ECF No. 10-1 at 8.

Bartlett also alleges that

its performance under the contracts was more than satisfactory.
III. Discussion
A. Choice of Law
Jurisdiction in this case is based on diversity of the
parties.

“It is well established that federal courts determine

governing law in diversity actions by looking to choice of law
principles in the forum state.”

Evergreen Bank, N.A. v.

Sullivan, 980 F. Supp. 747, 750 (D. Vt. 1997).

When contractual

parties have not specified the state law to be applied in a
given case, Vermont uses the test laid out in Restatement
(Second) Conflict of Laws § 188 (the “Restatement”) to determine
8

which state has the most significant relationship to the
transaction and the parties.

Id.; see also McKinnon v. F.H.

Morgan & Co., 750 A.2d 1026, 1028 (Vt. 2000) (“This Court has
adopted the Restatement (Second) of Conflicts for choice-of-law
questions in both tort and contract cases.”).

The Restatement

considers five factors in determining the law applicable
including: (1) the place of contracting, (2) the place of
negotiation of the contract, (3) the place of performance, (4)
the location of the subject matter of the contract, and (5) the
domicil, residence, nationality, place of incorporation, and
place of business to the parties.

Restatement (Second) Conflict

of Laws § 188.
Bartlett argues that the Court should apply New York law
because it has the most significant contacts with the case.
Every factor but the fifth factor weighs in favor of applying
New York law: the contracts were negotiated in New York, the
contracts called for performance at Elhannon’s nurseries in New
York, the contracts were performed at that location, and the
subject matter of the contracts (the trees in the nurseries)
were located in New York.

Two of the Plaintiffs are New York

Corporations and all three have offices in New York.

While, on

the other hand, Bartlett is a Connecticut Corporation with an
office in Vermont, the Court is persuaded that the balance of
the factors weighs heavily in New York’s favor, especially since
9

Bartlett, the only party not domiciled in New York, is not
objecting to the application of New York law.

Elhannon does not

argue that the law of some other state should apply and appears
to agree that New York law is appropriate since it brought a
claim under the New York General Business Law.
Accordingly, the Court will apply New York law in
evaluating this motion.
B. Count II - Breach of Implied Covenant of Good Faith and
Fair Dealing
Bartlett first argues that Elhannon’s claim for breach of
the implied covenant of good faith and fair dealing is
duplicative of its breach of contract claim.

The covenant is

read into every contract under New York law but it is not
distinct from the contract itself.

Ellington Credit Fund, Ltd.

v. Select Portfolio Servicing, Inc., 837 F. Supp. 2d 162, 205
(S.D.N.Y. 2011).

As a general rule, therefore, “the cause of

action alleging breach of the implied covenant is duplicative of
a cause of action alleging breach of contract.”

Id. (quoting

Page Mill Asset Mgmt v. Credit Suisse First Boston Corp., No. 98
Civ. 6907(MBM), 2000 WL 35557, at *8 (S.D.N.Y. March 30, 2000)).
New York law “does not recognize a separate claim for breach of
the implied duty of good faith and fair dealing based on the
same facts as a claim for breach of contract.”

DiCroce v. Wells

Fargo Bank, N.A., No. 13-CV-1768 (SLT)(RLM), 2014 WL 4904458, at
10

*8 (E.D.N.Y. Sept. 30, 2014) (internal quotation omitted).

A

good faith claim will be dismissed as redundant if it merely
pleads that the defendant did not act in good faith in
performing its contractual obligations.

MBIA Ins. Co. v. GMAC

Mortg. LLC, 914 N.Y.S.2d 604, 612 (N.Y. Sup. Ct. 2010).

A claim

can be maintained in conjunction with a breach of contract claim
“only if the damages sought by the plaintiff[s] for breach of
the implied covenant are not intrinsically tied to the damages
allegedly resulting from breach of contract.”

Ellington Credit

Fund, 837 F. Supp. 2d at 205 (internal quotation omitted).
The Court acknowledges that there may be circumstances that
permit a plaintiff to maintain claims for both breach of
contract and breach of the implied covenant of good faith and
fair dealing.

This is not a case, however, in which Bartlett

“exercise[d] a contractual right as part of a scheme to realize
gains that the contract implicitly denies or to deprive the
other party of the fruit (or benefit) of its bargain.”

Elmhurst

Dairy, Inc. v. Bartlett Dairy, Inc., 949 N.Y.S.2d 115, 118 (N.Y.
App. Div. 2012) (internal citation omitted).

Nor is this a case

involving an additional agreement with a third party.

Research

Found. of State Univ. of New York v. Nektar Therapeutics, No.
1:09-CV-1292 GLS/CFH, 2013 WL 2145652, at *8 (N.D.N.Y. May 15,
2013).

11

Here, Elhannon’s claim for breach of the implied covenant
is essentially identical to its claim for breach of contract.
The paragraph describing the actions constituting Bartlett’s
breaches states:
Specifically, Bartlett breached the contracts by: not
inspecting; not diagnosing; not treating; not providing a
“thorough plant health care program”; not providing a
“MoniTor” program; intentionally or negligently
underspraying, or not fully, adequately, sufficiently,
and/or efficaciously spraying; and not providing an IPM,
all as contracted for and promised; and also by billing
Elhannon for work done for other Bartlett clients and
spraying banned chemicals on Elhannon's property; and also
by refusing to negotiate, mediate, or arbitrate the abovedescribed dispute.
ECF No. 1 ¶ 86.

The paragraph describing breach of the implied

covenant of good faith includes the same facts.

Id. ¶ 91.

only difference between the two is that Count II states that

The

Bartlett “exhibited bad faith” and adds in clauses claiming
Bartlett did not intend or decided not to take the various

12

actions described in Count I. 1

Count II thus rests on the same

facts as Count I and appears to seek the same damages.
Alternative pleading is generally permitted by the Federal
Rules of Civil Procedure.

Marino v. Bank of Am. Home Loans, No.

2:11-cv-241, 2013 WL 6528521, at *4 (D. Vt. Dec. 10, 2013).
However, New York law treats the implied covenant of good faith
and fair dealing as a part of every contract.

Elhannon may

therefore maintain any allegations related to Bartlett’s lack of
good faith and fair dealing as an alternative theory within its
breach of contract claim but not as a separate cause of action.
See Barbara v. Marinemax, No. 12-CV-0368(ARR), 2012 WL 6025604,
1

Count II states:
Bartlett exhibited bad faith, and has thereby breached this
covenant, by, among other things, not inspecting and not
intending to inspect, or deciding not to inspect; not
diagnosing and not intending to diagnose, or deciding not
to diagnose; not treating and not intending to treat, or
deciding not to treat; not providing a "thorough plant
health care program" and not intending to provide such, or
deciding not to provide such; not providing a "MoniTor"
program and not intending to provide such, or deciding not
to provide such; intentionally or negligently underspraying
or not to fully, adequately, sufficiently, and/or
efficaciously spraying, or deciding not to fully,
adequately, sufficiently, and/or efficaciously spray; and
not providing an IPM or not intending to provide an IPM, or
deciding not to provide such, all as contracted for and
promised; and also by billing Elhannon for work done for
other Bartlett clients and spraying banned chemicals on
Elhannon's property; and also by refusing to negotiate,
mediate, or arbitrate the above-described dispute as per
the terms of Bartlett's own contract.

ECF No. 1 ¶ 91.
13

at *17 n.10 (E.D.N.Y. Dec. 4, 2012) (explaining that even though
the plaintiffs did not allege a claim for breach of the implied
covenant as a separate cause of action the court could
nevertheless consider it “in-the-alternative” to their breach of
contract claim).
Count II is accordingly dismissed as duplicative without
prejudice.

Elhannon may, however, amend its complaint to

clarify if it relies on any allegations that are not part of the
contract to support this claim.
C. Count III – Negligence
Next, Bartlett challenges Elhannon’s claim for negligence,
arguing that it also is duplicative of Elhannon’s claim for
breach of contract.

Under New York law it is “well-established”

that a simple breach of contract is not a tort unless a legal
duty independent of the contract itself has been violated.
Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 516 N.E.2d 190,
194 (N.Y. 1987); see also New York Univ. v. Continental Ins.
Co., 662 N.E.2d 763, 767 (N.Y. 1995) (“[A] defendant may be
liable in tort when it has breached a duty of reasonable care
distinct from its contractual obligations, or when it has
engaged in tortious conduct separate and apart from its failure
to fulfill its contractual obligations.”).

This independent

legal duty must “spring from circumstances extraneous to, and
not constituting elements of, the contract.”
14

Clark-Fitzpatrick,

516 N.E.2d at 194.

However, the independent duty nevertheless

may be connected with and dependent upon the contract.

Id.

A plaintiff fails to state a claim for negligence when the
complaint merely restates in slightly different language the
“implied” contractual obligations asserted in the cause of
action for breach of contract.

Id.

It is not enough to allege

that the defendant failed to exercise “due care” in performing
the contract.

Id.

“Merely charging a breach of a ‘duty of

care’, employing language familiar to tort law, does not,
without more, transform a simple breach of contract into a tort
claim.”

Id.; see also Torres v. Baum, No. 1:10-CV-

1385(LEK/RFT), 2011 WL 2532945, at *5 (N.D.N.Y. June 24, 2011)
(“[W]hen the legal duty springs from the contract or is
dependent upon the contract, such as failing to exercise ‘due
care’ in performing those terms, then the breach is not a
tort.”).
Elhannon’s negligence claim alleges that Bartlett owed
Elhannon a duty to “properly, competently, and reasonably
inspect; diagnose; treat (spray); provide a ‘thorough plant
health care program’; provide a ‘MoniTor’ program; provide an
IPM; to not bill Elhannon for work done for other Bartlett
clients; and to not spray banned chemicals on Elhannon’s
property.”

ECF No. 1 at 95.

Elhannon notes that this claim

also encompasses its allegations that Bartlett falsified
15

spraying records and used an unlicensed sprayer.

ECF No. 19 at

4.
Bartlett’s alleged “duties” to inspect, diagnose, treat,
provide a health care program, provide a MoniTor program, and
provide an IPM program clearly are promises embedded within the
contract because they go to the heart of Bartlett’s alleged
agreement to provide tree care.

These “duties” are not

independent and therefore must be dismissed as duplicative.
The alleged “duties” to not bill Elhannon for work done for
other Bartlett clients, to not spray banned chemicals, to not
falsify spraying records, and to use a licensed sprayer present
a different case.

According to Elhannon’s Sur-reply, these

facts and circumstances are independent because none of the
contracts say that Bartlett will not spray banned chemicals,
fraudulently misbill Elhannon, falsify spraying records, or use
unlicensed sprayers.

ECF No. 19 at 4-5.

While Count I’s

description of the ways Bartlett breached the contract includes
some of these allegations, the Court is persuaded that they
spring from circumstances extraneous to the contracts between
the parties.

Thus Elhannon may maintain a cause of action for

negligence based on duties independent from the contracts at
issue in this case.
Accordingly, the Court denies Bartlett’s motion with
respect to Count III.
16

D. Count IV – Negligent Misrepresentation/Fraud
To state a claim for negligent misrepresentation under New
York Law a plaintiff must adequately plead five elements: (1)
the defendant had a duty, as a result of a special relationship,
to give correct information, (2) the defendant made a false
representation that it should have known was incorrect, (3) the
information supplied in the representation was known by the
defendant to be desired by the plaintiff for a serious purpose,
(4) the plaintiff intended to rely and act upon it, and (5) the
plaintiff reasonably relied on it to his or her detriment.
Hydro Investors, Inc. v. Trafalgar Power Inc., 227 F.3d 8, 20
(2d Cir. 2000).

The court considers three factors to determine

if a special relationship and duty exist: “whether the person
making the representation held or appeared to hold unique or
special expertise; whether a special relationship of trust or
confidence existed between the parties; and whether the speaker
was aware of the use to which the information would be put and
supplied it for that purpose.”

Suez Equity Investors, L.P. v.

Toronto–Dominion Bank, 250 F.3d 87, 103 (2d Cir. 2001) (quoting
Kimmell v. Schaefer, 675 N.E.2d 450, 454 (N.Y. 1996)).
Specialized knowledge usually arises due to the speaker’s status
as a professional, such as an accountant or an engineer, with a
particular background in the subject of the alleged

17

misrepresentation.

JP Morgan Chase Bank v. Winnick, 350 F.

Supp. 2d 393, 400 (S.D.N.Y. 2004).
However, where the duty arises in commercial contexts in
which a contract exists, the duty attendant to that special
relationship must also “spring from circumstances extraneous to,
and not constituting elements of the contract, although it may
be connected with and dependent upon the contract.”
(quoting Clark-Fitzpatrick, 516 N.E.2d at 194)).

Id. at 401

In other

words, “[i]f the only interest at stake is that of holding the
defendant to a promise, the courts have said that the plaintiff
may not transmogrify the contract claim into one for tort.”

Id.

(quoting Hargrave v. Oki Nursery, Inc., 636 F.2d 897, 899 (2d
Cir. 1980)).
Elhannon’s Complaint states that Bartlett’s representations
relevant to its negligent misrepresentation claim include
promising that Bartlett “could, and would a) inspect; b)
diagnose; c) treat; d) provide a ‘thorough plant health care
program’; e) provide a ‘MoniTor’ program; f) fully, adequately,
sufficiently, and/or efficaciously spray; and g) provide an
IPM.”

ECF No. ¶ 100.

For the same reasons described above,

these promises constitute elements of the contract.
Elhannon also argues that there is a difference between
what Elhannon promised it could do and what Elhannon promised it
would do.

This is largely a distinction without a difference in
18

this case.

Whichever view of the facts the Court takes, both

boil down to the same result: holding Elhannon to the promises
it made in the contract between the parties.
However, Elhannon has alleged other facts sufficient to
state a claim for negligent misrepresentation based on
Bartlett’s alleged expertise and repeated assurances that
Elhannon would receive a total tree care program.

According to

Elhannon, Bartlett held itself out as an expert with specialized
knowledge related to tree care.

Elhannon gave Bartlett complete

control to do whatever needed to be done to diagnose and treat
any and all problems in each of Elhannon’s nurseries.

Elhannon

also sufficiently alleged that it relied on Bartlett’s
representations about its expertise to its detriment.
Moreover, Bartlett made several additional specific
representations separate and apart from those contained in the
contracts including, at a minimum: (1) in 2011 that Bartlett
would “take care of” the emerging disease and pest problem, a
statement, (2) in 2011 that it would revise and correct its
program to eradicate the disease and pest problem, (3) in March
2013 that it would “take care of” the burgeoning disease
outbreak, and (4) in June 2013 that it would spray the entire
Elhannon nursery and fix the growing disease and pest problem.
ECF No. 12 at 18.

These representations are collateral to the

contract and also support Elhannon’s claim for negligent
19

misrepresentation.

Elhannon has likewise sufficiently alleged

that it relied on these representations to its detriment.
Accordingly, Bartlett’s motion is denied with respect to
Count III.
E. Count V – Intentional Misrepresentation/Fraud
Elhannon describe Counts V as a claim for fraudulent
inducement.

To prove fraud under New York law 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.”

Ellington Credit Fund, 837 F. Supp.

2d at 196-97 (S.D.N.Y. 2011) (quoting Bridgestone/Firestone,
Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 19 (2d Cir.
1996)).
Applying New York law, the Second Circuit has found where
“a fraud claim arises out of the same facts as Plaintiff's
breach of contract claim, with the addition only of an
allegation that defendant never intended to perform the precise
promises spelled out in the contract between the parties, the
fraud claim is redundant and the plaintiff’s sole remedy is for
breach of contract.”

Catamount Radiology, P.C. v. Bailey, No.

1:14-CV-213, 2015 WL 3795028, at *6 (D. Vt. June 18, 2015)
(quoting Telecom Int'l Am., Ltd. v. AT & T Corp., 280 F.3d 175,
20

196 (2d Cir. 2001)).

When, as is the case here, a fraud claim

is stated in conjunction with a breach of contract claim a
plaintiff must either (1) demonstrate a legal duty separate from
the duty to perform under the contract, (2) demonstrate a
fraudulent misrepresentation collateral or extraneous to the
contract, or (3) seek special damages that are caused by the
misrepresentation and unrecoverable as contract damages.
Ellington Credit Fund, 837 F. Supp. 2d at 197-98.
Claims of fraud must be plead with particularity pursuant
to Rule 9(b) of the Federal Rules of Civil Procedure.

Fed. R.

Civ. P. 9(b) (“In alleging fraud or mistake, a party must state
with particularity the circumstances constituting fraud or
mistake.

Malice, intent, knowledge, and other conditions of a

person’s mind may be alleged generally.”)

Accordingly, the

Complaint must “(1) detail the statements (or omissions) that
the plaintiff contends are fraudulent, (2) identify the speaker,
(3) state where and when the statements (or omissions) were
made, and (4) explain why the statements (or omissions) are
fraudulent.’”

Ellington Credit Fund, 837 F. Supp. 2d at 197

(quoting Harsco Corp. v. Segui, 91 F.3d 337, 347 (2d Cir.
1996)).

Allegations that are conclusory or unsupported by

factual assertions are insufficient.

Id.

The Complaint states that Bartlett’s representations and
promises relevant to its fraud claim include that Bartlett would
21

inspect, diagnose, treat, provide a “thorough plant health care
program,” provide a “MoniTor” program, spray, and provide an IPM
program.

ECF No. 1 ¶ 107.

Once again, these are the exact

promises within the contract that Elhannon claims Bartlett
failed to perform.

The Complaint states that Bartlett’s

promises were false, Bartlett knew they were false when made,
and Bartlett had no intention of carrying them out.
109.

Id. ¶¶ 108-

Elhannon argues its Complaint states a claim beyond an

allegation that Bartlett never intended to perform the contract
but the Court is hard pressed to see this distinction in the
Complaint itself.

Simply put, the face of Complaint alleges

that Bartlett did not intend to perform the contract when it
promised it would do so.

This alone would be insufficient to

state a separate claim of fraud.

Sudul v. Computer Outsourcing

Servs., 868 F. Supp. 59, 62 (S.D.N.Y. 1994) (“[W]here a fraud
claim arises out of the same facts . . ., with the addition only
of an allegation that defendant never intended to perform the
precise promises spelled out in the contract between the
parties, the fraud claim is redundant and plaintiff’s sole
remedy is for breach of contract.”)
However, Elhannon has sufficiently alleged that Bartlett
also made collateral or extraneous misrepresentations that
induced Elhannon to sign the contracts in the first place and to
continue to engage Bartlett year after year, namely that it had
22

special and extensive expertise as described above.

ECF No. 19

at 7; see Ross v. DeLorenzo, 813 N.Y.S.2d 756, 760 (N.Y. App.
Div. 2006) (“[M]ere misrepresentation of an intention to perform
under [a] contract is insufficient to allege fraud . . . .
Conversely, a misrepresentation of material fact, which is
collateral to the contract and serves as an inducement for the
contract, is sufficient to sustain a cause of action alleging
fraud.”) (emphasis added) (quoting WIT Holding Corp. v. Klein,
724 N.Y.S.2d 66 (N.Y. App. Div. 2001)); New York Univ., 662
N.E.2d at 767 (“Where a party has fraudulently induced the
plaintiff to enter into a contract, it may be liable in tort . .
. .”).
Other collateral misrepresentations that may have
potentially induced Elhannon’s renewal of the contract include
statements by Mr. Gardner such as: (1) his statement that he
would “take care of” a particular insect outbreak, (2) his 2011
promise to revise the program, (3) his 2013 promise to “take
care of” an insect outbreak, (4) his statement that it was “not
too late” to address the bug problem, (5) his promise to
“personally inspect” Elhannon’s entire nursery, (6) his promise
to “check in” with Elhannon every time he henceforth came to
inspect, (7) his assertion that sprayers have to wait to spray
until the insects are fully hatched, and (8) his promise to
spray the entire nursery.

Mr. Graham’s statement that the
23

chemicals would “walk” was also potentially a collateral,
inducing statement.
While Count V does not mention Bartlett’s expertise or any
of these potentially collateral representations specifically, it
does incorporate by reference all of the allegations stated
above it.

When the Court reads Count V in the context of the

Complaint as a whole, it finds allegations described with
sufficient particularity as required by Rule 9(b) to conclude
that Elhannon has stated a claim for fraud.

Thus Bartlett’s

motion to dismiss is denied with respect to Count V.
F. Count VI – Fraud in the Performance
Count VI is described as “Fraud in the Performance.”

The

parties discuss Counts V and VI in the same sections of their
briefs and at times elide any distinctions between the two.
Count VI states that “Bartlett’s fraudulent refusal or failure
to carry out its duties under the contracts directly and
proximately caused Elhannon’s harm, losses, and/or damages.”
ECF No. 1 ¶ 11.

On the face of the Complaint, Count VI is thus

another claim for fraud focused on the same duties as described
in the contract.

New York law requires a claim for “fraud in

the performance” that reiterates a claim for breach of contract
to be dismissed.

See Wolf v. Glazer, 191 N.Y.S.2d 532, 533

(N.Y. App. Term 1959) (“The fraud alleged constitutes, at most,

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fraud in the performance of the contract.

Under such pleadings

a cause of action is alleged only for breach of contract.”).
However, other allegations in the Complaint may ultimately
be sufficient to state a claim for fraud beyond fraudulent
inducement described above in Count V.

For example, Elhannon

alleges elsewhere that Bartlett falsified spraying records,
falsified billing records, and billed Elhannon for work done
outside of New York and for other Bartlett clients.

At this

point, however, Elhannon has not stated any of these allegations
with the particularity required by Rule 9(b).
Accordingly, Count VI is dismissed without prejudice.
Elhannon may amend its Complaint if it wishes to describe other
examples of Bartlett’s potentially fraudulent behavior with
particularity.
G. Count VII -

Violation of New York’s General Business Law

New York law prohibits “[d]eceptive acts or practices in
the conduct of any business, trade or commerce or in the
furnishing of any service.”

N.Y. Gen. Bus. Law § 349.

To state

a cause of action under § 349, a plaintiff must demonstrate
that: (1) the defendant’s deceptive acts were directed at
consumers, (2) the acts are misleading in a material way, and
(3) the plaintiff has been injured as a result.
Goldsmith, 230 F.3d 518, 521 (2d Cir. 2000)

25

Maurizio v.

The threshold question in § 349 cases is often whether or
not the act in question was “consumer-oriented,” and Bartlett’s
motion focuses on this element of Elhannon’s claim.

Exxonmobil

Inter-Am., Inc. v. Advanced Info. Eng'g Servs., Inc., 328 F.
Supp. 2d 443, 447 (S.D.N.Y. 2004).

“Consumer-oriented conduct

does not necessarily require repetition or a pattern of
deceptive behavior, but to state a claim of consumer-oriented
deception, a plaintiff must allege that the disputed acts or
practices have a broader impact on consumers at large.”

Id.

Private contract disputes, unique to the parties would not fall
within the ambit of the statute.

Oswego Laborers’ Local 214

Pension Fund v. Marine Midland Bank, N.A., 647 N.E.2d 741, 744
(N.Y. 1995); see also Spirit Locker, Inc. v. EVO Direct, LLC,
696 F. Supp. 2d 296, 301 (E.D.N.Y. 2010) (“[C]ourts have stated
consistently that unique private transactions between
sophisticated business parties do not give rise to liability
under the statute.”).

While the “consumer-oriented act” prong

does not preclude the application of § 349 to disputes between
businesses per se it does severely limit it.
Supp. 2d at 448.

Exxonmobil, 328 F.

In short, though businesses may sometimes

bring § 349 claims, they may do so only where the defendant’s
deceptive conduct is, at least to some extent, directed at nonbusiness consumers.

Spirit Locker, 696 F. Supp. 2d at 304.

Liability attaches primarily where a party’s misrepresentations
26

are boilerplate and have the potential to be repeated in order
to deceive numerous similarly situated buyers.

Id.

Elhannon has alleged sufficient facts to demonstrate that
Bartlett’s actions were potentially consumer-oriented.

While

Elhannon is a large tree farm and not an individual consumer,
Elhannon’s Complaint claims that its contract with Bartlett was
a “form contract” that Bartlett “used and uses with all
customers or clients” and was “not a form negotiated
specifically between Bartlett and Elhannon.”

ECF No. 1 ¶ 124.

Rather, it contained Bartlett’s “standard boilerplate.”

Id.

Elhannon also alleges that with respect to the subject of the
contract, Elhannon was an unsophisticated purchaser and Bartlett
was a sophisticated seller.

Id. ¶ 123.

Finally, Elhannon

alleges that the transaction between the parties and the
services Bartlett offered were not unique but rather “are
offered by Bartlett, every day, to the consuming public at
large.”

Id. ¶ 125.

Accepting these factual allegations as

true, as it must at this stage, the Court is persuaded that
Bartlett’s activity was consumer-oriented.

This issue obviously

represents an ongoing factual dispute but Elhannon’s allegations
are sufficient for purposes of this motion.
Proof that Bartlett’s actions were directed to consumers
does not end the inquiry.

Elhannon has also sufficiently stated

allegations relevant to the other prongs namely that Bartlett
27

engaged in an act or practice that was deceptive or misleading
in a material way and that Elhannon has been injured by reason
thereof.

Oswego, 85 N.E.2d at 25.

Accordingly, Bartlett’s

motion to dismiss Count VII is denied.
H. Count VIII - Punitive/Exemplary/Multiple Damages
Under New York Law, it is “well settled” that punitive
damages may not be asserted as a separate cause of action.
Henry v. Concord Limousine, Inc., No. 13-cv-0494(JS)(WDW), 2014
WL 297303, at *5 (E.D.N.Y. Jan. 24, 2014).

Elhannon does not

argue that its request for punitive damages may remain a
separate claim, rather it asserts that it still has a potential
right to recover punitive damages as a remedy.

Count VIII is

dismissed but this dismissal is without prejudice to Elhannon
continuing to seek punitive damages as a remedy for Bartlett’s
allegedly tortious conduct.
I. The Court’s Dismissals Are Without Prejudice
Bartlett cites Cortec Industries, Inc. v. Sum Holding L.P.,
949 F.2d 42 (2d Cir. 1991) to argue that all of Elhannon’s
claims should be dismissed with prejudice because Elhannon is
“unable to allege any fact[s] sufficient to support [them].”
Id. at 48.

Bartlett argues that tort claims duplicative of

breach of contract claims should be dismissed with prejudice.
Here there is simply no reason to depart from this Court’s
general practice of giving plaintiffs an opportunity to cure
28

defects in their pleading.

To dismiss any claim with prejudice

would be entirely premature at this point.

Therefore all of the

claims dismissed as described above are dismissed without
prejudice.
Conclusion
Bartlett’s motion to dismiss is granted in part and denied
in part.
prejudice.

Counts II, VI, and VIII are dismissed without
The Court grants Elhannon leave to amend its

Complaint within 30 days of this Order.
DATED at Burlington, in the District of Vermont, this 28th
day of August, 2015.
/s/ William K. Sessions III
William K. Sessions III
District Court Judge

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