ALKI PARTNERS, L.P., Alki Fund, Ltd., Plaintiffs-Appellants, v. Lars WINDHORST, Peter A. Ogrisek, Robert B. Hersov, Credit Suisse Group AG, Frederick Ruiz, Defendants-Appellees,
No. 11-1071-cv.
United States Court of Appeals, Second Circuit.
March 21, 2012.
PRESENT: DENNIS JACOBS, Chief Judge, DENNY CHIN, and SUSAN L. CARNEY, Circuit Judges.
Accordingly, we affirm the district court‘s ruling that there was no duty to defend.
2. Duty to Indemnify
Plaintiffs do not dispute that Vermont courts would follow the law of other jurisdictions and analyze the duty to indemnify with respect to the true facts as determined by the court, rather than the allegations of the complaint. See, e.g., Servidone Constr. Corp. v. Security Ins. Co. of Hartford, 64 N.Y.2d 419, 424, 488 N.Y.S.2d 139, 142, 477 N.E.2d 441 (1985) (noting that under New York law “duty to defend is measured against the allegations of pleadings but the duty to pay is determined by the actual basis for the insured‘s liability to a third person“). Nor do they take issue with defendant‘s assertion that plaintiffs conceded defendant‘s statement of undisputed facts below. These undisputed facts establish that Rusty Nail employees “grabbed” Murphy, “lifted” him off the ground, “rushed” him through the club, and then “threw” him down the stairs. Appellee App. at 23. The facts further establish that the employees made a “choice to inflict pain” on Murphy through “brutal, aggressive & violent behavior.” Id. at 24. These facts clearly demonstrate that the claim arose out of an assault or battery.
Plaintiffs contend that the statement of Rusty Nail employee Heath Dalley creates issues of material fact sufficient to preclude summary judgment. We disagree. Assuming Dalley‘s statement is properly considered on summary judgment, see
3. Conclusion
We have considered plaintiffs’ remaining arguments and conclude that they are without merit. The judgment is therefore AFFIRMED.
Brian D. Graifman, Gusrae, Kaplan, Bruno & Nusbaum PLLC, New York, NY, for Plaintiffs-Appellants.
James A. Beha, II (Christopher Allegaert and Howard Chen, on the brief), Allegaert Berger & Vogel LLP, New York, NY, for Defendants-Appellees Windhorst, Ogrisek, and Hersov.
Michael T. Sullivan, Sullivan & Worcester LLP (Stuart Alan Krause, Zeichner Ellman & Krause LLP, on the brief), New York, NY, for Defendants-Appellees Credit Suisse Group AG and Frederick Ruiz.
Plaintiffs-Appellants Alki Partners, L.P., and Alki Fund, Ltd., appeal the grant of the defendants’ motions to dismiss the complaint. We assume the parties’ familiarity with the underlying factual allegations, the procedural history of the case, and the issues on appeal.
Like the district court, we assume the truth of the well-pleaded factual allegations in the First Amended Complaint, as well as the allegations that Plaintiffs argue they would include in a putative second amended complaint.
Even if Plaintiffs had asserted a claim for misrepresentation, their allegations would still fail to state an actionable claim for relief. The requisite elements of a securities fraud claim involving statements or omissions are: (1) a material misrepresentation or omission, (2) scienter, (3) a connection with the purchase or sale of a security, (4) reliance, (5) economic loss, and (6) loss causation. Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 341-42, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005).
Plaintiffs have not alleged any fact to show that Hersov made any statement to them that was materially false or misleading. The First Amended Complaint has no factual allegation at all regarding statements made by Hersov. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (holding that a complaint must plead “enough facts” to “raise a right to relief above the speculative level” and state a “plausible” claim); accord Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (holding that “naked assertion[s] devoid of ‘further factual enhancement,‘” and “unadorned, the-defendant-unlawfully-harmed-me accusation[s]” are insufficient to state a claim for relief that is plausible).
Similarly, the First Amended Complaint is devoid of any factual allegation regarding any allegedly false statement made by Ogrisek. The only potentially relevant allegation bout him was that he was one of the managing directors of Vatas; but that is insufficient to make him personally liable absent a link between him and the fraudulent misstatement or omission. See Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir.1993). Plaintiffs’ new allegations against Ogrisek—that he signed two Schedule 13G reports and one Schedule 13D report relating to RMDX stock held by Vatas—are also insufficient because Plaintiffs have not alleged facts showing that those reports were materially false and have not established the “requisite proximate relation[ship]” between those statements and Plaintiffs’ purchases of RMDX stock. See Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 158, 128 S.Ct. 761, 169 L.Ed.2d 627 (2008).
Likewise, Plaintiffs have failed to allege facts sufficient to show that Windhorst made any materially false statement. Plaintiffs allege that Windhorst‘s assurance that Vatas would buy the shares from Plaintiffs was false because Vatas did not ultimately buy all of Plaintiffs’ shares. But the failure to perform a promise “does not constitute fraud if the promise was made with a good faith expectation that it would be carried out.” Luce v. Edelstein, 802 F.2d 49, 56 (2d Cir.1986); accord Mills, 12 F.3d at 1176. Plaintiffs have not alleged facts tending to demonstrate that Windhorst‘s statement was made in bad faith—nor could they, because Vatas initially purchased the shares as per the agreement. See Elliott Assocs., L.P. v. Hayes, 141 F.Supp.2d 344, 355-56 (S.D.N.Y.2000) (reasoning that the defendant‘s initial performance is “compelling evidence [that] negat[es] any inference of fraudulent intent“), aff‘d 26 Fed.Appx. 83 (2d Cir.2002) (summary order).
Plaintiffs allege that Windhorst falsely stated that Vatas could not buy the RMDX shares on the open market. But no facts are alleged to establish falsehood. In any event, the alleged statement was not material. Plaintiffs entered into this arrangement because Vatas promised to pay Plaintiffs $0.05 to $0.10 profit for every share that Plaintiffs purchased. It did not matter whether Vatas‘s charter precluded it from making its own open-market purchases of the shares. See Mills, 12 F.3d at 1175 (holding that a “statement cannot be fraudulent if it did not affect an investment decision of the plaintiff“).
Plaintiffs allege that they were not informed that other investors were also involved in the alleged scheme to manipulate the market. This allegation does not state a claim. Plaintiffs participated in the scheme because of the per-share profit they were guaranteed under the agreement with Vatas. That other investors were allegedly also making that same profit (or more, or less) was immaterial.
Plaintiffs have not stated a fraud claim against Credit Suisse and its employee, Ruiz. Plaintiffs allege that they were not informed that Vatas‘s account had been frozen; but they have not established that Credit Suisse was under any obligation to inform them of a client‘s account status.
Even if Plaintiffs sufficiently alleged materially false statements by Credit Suisse and Ruiz, the claim would still fail for lack of scienter: “intent to deceive, manipulate, or defraud.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 319, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) (quotation marks omitted). To plead scienter, a plaintiff must “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind“—i.e., fraudulent intent.
The district court did not err in denying Plaintiffs leave to amend their complaint. The district court considered the “new” factual allegations Plaintiffs might include in a second amended complaint and concluded that those allegations
We have considered all of Plaintiffs’ other arguments and find them to be without merit. Accordingly, the judgment of the district court is AFFIRMED.