86 F. Supp. 3d 268
S.D.N.Y.2015Background
- On November 15, 2009, Williams, Engelhard, and Bridges signed an NFLPA SRA; Engelhard/ESM paid Duckett $17,500 as an expense advance.
- On the same date, the SRA Disclosure Form disclosed payments to Duckett for recruiting, listing him as recipient of 33% of net proceeds.
- Williams acknowledged and approved the SRA Disclosure Form, indicating awareness of payments to recruiters.
- Duckett filed suit in NY Supreme Court on March 20, 2014; Williams removed the case to federal court on April 29, 2014.
- Amended complaint (May 29, 2014) asserts breach of contract, declaratory judgment, and punitive damages; seeks 33% of proceeds.
- Court grants motion to dismiss, holding the SRA Disclosure Form is not a binding contract for Duckett and dismisses related claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the SRA Disclosure Form create a binding contract for Duckett? | Duckett argues he is a third-party beneficiary entitled to 33% of net proceeds. | Williams contends the form is a disclosure instrument, not a contract with Duckett. | No binding contract; form is a disclosure, not a meeting of minds. |
| Can breach of contract and declaratory judgment claims survive? | Claims stem from entitlement under the SRA Disclosure Form. | No enforceable contract to Duckett; third-party beneficiary theory fails. | These claims must be dismissed. |
| Is the fraudulent inducement claim adequately pleaded under Rule 9(b)? | Defendant falsely promised payment to Duckett for services. | Statements were not alleged with the requisite reliance or falsity tied to damages. | Dismissed for lack of detrimental reliance and failure to plead with specificity. |
| Are the contract and fraud claims improperly duplicative under Merrill Lynch doctrine? | Fraud claim stands alongside contract claim. | No separate duty or collateral misrepresentation evident. | Dismissed as lacking a separate duty/collateral misrepresentation or special damages. |
| Should the plaintiff be given leave to amend? | Amendment could cure deficiencies. | Amendment would be futile given the pleading deficiencies. | Leave to amend denied. |
Key Cases Cited
- Opals on Ice Lingerie v. Bodylines Inc., 320 F.3d 362 (2d Cir. 2003) (meeting of the minds is required for a valid contract)
- Vacold LLC v. Cerami, 545 F.3d 114 (2d Cir. 2008) (legal nature of contract formation is decided as a question of law)
- Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F. Supp. 2d 162 (S.D.N.Y. 2011) (initial contract interpretation is a court’s legal question)
- Terwilliger v. Terwilliger, 206 F.3d 240 (2d Cir. 2000) (elements of breach of contract in New York law)
- Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173 (2011) (existence of contract required for third-party beneficiary)
- Merrill Lynch & Co. Inc. v. Allegheny Energy, Inc., 500 F.3d 171 (2d Cir. 2007) (parallel fraud and contract claims require separate duties or special damages)
- Gaia House Mezz LLC v. State Street Bank & Trust Co., 720 F.3d 84 (2d Cir. 2013) (detrimental reliance requires change of position causing substantial detriment)
- Aristocrat Leisure Ltd. v. Deutsche Bank Tr. Co. Ams., 618 F. Supp. 2d 280 (S.D.N.Y. 2009) (detrimental reliance analysis in misrepresentation claims)
- Sira v. Morton, 380 F.3d 57 (2d Cir. 2004) (pleading attached writings considered in motion to dismiss)