OPINION. & ORDER
Between 1998 and 2001, defendant General Electric Capital Corporation (“GECC”) had a lending relationship with two entities affiliated with Minnesota businessman Thomas Petters. In 2008, Ritchie Capital Management, LLC and the other five plaintiffs
Ritchie, which allegedly lost $157 million from its 2008 investments with Petters, now sues GECC. Ritchie principally alleges that- GECC had .discovered Petters’ Ponzi scheme in 2000, but chose not to disclose the fraud in order, to ensure that GECC would recover its investment. Ritchie brings three state-law causes of action against GECC: aiding and abetting fraud, civil conspiracy to commit fraud, and negligence.
GECC. now moves to dismiss the Complaint in its entirety. For the reasons that follow, the Courl^grants GECC’s motion.
1. Background
A. Factual Background
Ritchie’s allegations are set out in detail below, but it is useful first to summarize Ritchie’s core allegations, which are: (1) “By October 2000, GECC had uncovered (and could have ended) what would'turn out by September 2008 to be the third largest Ponzi scheme in U.S. business his
1. Petters’ Scheme
Petters began his Ponzi scheme in 1998. Id. ¶ 5. The scheme was a “fraudulent purchase order financing scheme,” in which Petters solicited loans from private investors ostensibly to enable his companies to finance the purchase of brand-name consumer electronics merchandise. Id. ¶ 18. Petters represented to these lenders that their loans would be repaid when his companies sold these electronics to big-box retailers like Costco Wholesale Corporation (“Costco”). Id. ¶ 19. To induce lenders to make the requested loans, Petters would provide a copy of a purported purchase order, pursuant to which a Costco subsidiary, National Distributors, would buy the electronics as soon as Petters Company, Inc. (“PCI”) had the goods. Id. ¶ 20. The authorities eventually discovered — in fall 2008 — that this was all a Ponzi scheme. Id. ¶¶ 1, 5
2. GECC’s Lending Relationships with Petters, and GECC’s Discoveries
On March 26, 1998, GECC entered into a credit agreement with another Petters corporation, Petters Capital, Inc. Id. ¶ 24. Specifically, GECC entered into a revolving credit facility (“the Petters Capital Line”) to fund Petters Capital’s purchases of electronics for resale to big-box retailers like Costco. Id. In exchange for providing funding, GECC received various fees, including a “success fee” ranging from 10 to 30 percent of Petters Capital’s gross profit margin on the sale of merchandise. Id. ¶ 25.
On December 17, 1999, GECC entered into a $55 million line of credit with a second Petters affiliate, Red Tag (“the Red Tag Capital Line”). Id. ¶ 29. This revolving credit facility had “the similar purpose” of funding electronics purchases. Id.
a. The Petters Capital Line
Around this time, Petters drafted and presented a generic letter of recommendation (about himself) to Richard Menczynski, a GECC executive in charge of the Petters accounts. Id. ¶¶28, 30. Petters asked that GECC issue this letter of recommendation. Id. ¶ 30. GECC complied: It issued the recommendation letter on its letterhead, dated January 4, 2000, and addressed “To Whom It May Concern” (the “January 2000 recommendation letter”). Id. ¶¶ 30-31. The letter described Petters Capital as “an excellent customer” that had “performed well” and described Petters “[o]n a personal level ... to be of high character and possessing strong moral values.” Id. ¶ 31. Ritchie alleges that “[e]ven after GECC discovered Petters’ fraudulent purchase order financing scheme, GECC never told Petters to cease his use of the January 2000 Letter nor asked with whom it had been shared.” Id. ¶ 32.
By October 2000, Petters owed GECC more than $45 million under the Petters Capital Line. Id. ¶ 38. On October 23, 2000, with payments owed to GECC past due, Paul Feehan of GECC contacted Costco to request verification of the amounts Costco owed Petters Capital. Id. ¶ 39. Costco replied that its records did not confirm the amounts set forth by GECC. Id. GECC then sent Costco copies of the National Distributors purchase orders.
Although Petters Capital owed GECC more than $45 million that was due October 27, 2000, Ritchie’s Complaint alleges that Feehan (on behalf of GECC) agreed to an extension “in order to give Petters time to induce third parties to make loans to PCI that would be used' to pay off GECC.” Id. ¶44. Specifically, the Complaint alleges:
These conversations, culminated in GECC’s tacit agreement to knowingly and voluntarily participate in a common scheme to fraudulently induce third parties to loan PCI the money that was needed to pay debts owed to GECC by using false transaction documents, and to conceal PCI’s fraudulent Costco purchase order financing- scheme from present and future lenders to PCI and related companies, in consideration for Feehan’s knowing and voluntary participation in this common scheme. Petters represented to Feehan: “I tell you what, I’ll make you look like a hero, I promise you, on the Petters [Capital] situation and the RedTag situation.”
Feehan knew and understood from the plain meaning of the words used in his conversations with Petters between October 24 and October 27, 2000; that Petters was offering to obtain the approximately $45 million needed to pay Petters Capital’s debts to GECC by means of PCI’s fraudulent purchase order financing scheme that GECC had obtained actual knowledge of as a result of the Costco Discovery and make Feehan look like a hero, in consideration for Feehan’s voluntary participation and complicity in a common scheme to use false purchase order transaction documents and intentional misrepresentations about Petters’. relationship with GECC to fraudulently induce prospective lenders to loan PCI at least $45 million and for GECC’s assistance in concealing PCI’s fraudulent Costco purchase order financing scheme from current and prospective lenders.
Feehan and GECC accepted Petters’ offer and entered into a corrupt agreement with Petters, PCI and Petters Capital under which GECC agreed to take concerted action for the unlawful purpose of allowing PCI to perpetuate its fraudulent Costco purchase .order financing scheme and to use money obtained by PCI by means of using false transaction documents to promptly pay the approximately $45 million owed by Petters Capital to GECC as of October 24, 2000, and “earn” GECC a windfall in the form of substantial “success fees” on transactions that GECG knew were not legitimate. Feehan agreed to do just that and play ball with Petters to benefit GECC to the detriment of future Petters lenders such as Plaintiffs.
Id. ¶¶ 45-47.
As for repayment of the Petters Capital Line, Ritchie alleges that, on October 24, 2000, Petters sent GECC “at least seven worthless checks in the amount of $5 million each and one check in the amount of $3.5 million.” Id. ¶ 48. GECC agreed to hold those checks until Petters told GECC that he had obtained sufficient funds for those checks to clear. Id. However, Ritchie-also alleges that, the same day, Petters sent Feehan nine checks, each for $5
The Complaint further alleges that, on October 27, 2000, “Petters and GECC fraudulently induced” Universal Capital Partners (“Universal Capital”) to loan PCI $15 million based on misrepresentations about an agreement between Petters and Circuit City. Id. 52. Specifically, Petters “falsely represented” that PCI had the opportunity to buy $50 million worth of consumer goods from Circuit City for $28 million. Id. “To induce Universal Capital to request a $15 million loan from GECC under Universal Capital’s credit agreement with GECC, ... Petters intentionally misrepresented to Universal Capital that PCI would be contributing the $13 million balance of the purchase price” for the Circuit City goods. Id. 53. On October 27, Universal Capital requested, and GECC granted, a $15 million loan for Universal Capital to provide to PCI. Id. ¶¶ 54-55. This $15 million was transferred to PCI’s bank account, and thén “immediately transferred from that account to an account in the name of GECC.” Id. ¶ 56. When GECC loaned $15 million 'to Universal Capital, it knew that PCI did not have the funding to contribute its $13 million share for the Circuit City transaction. Id. ¶ 57. And by October 31, 2000, GECC knew that PCI had obtained $15 million through false transaction documents and that PCI used the proceeds of Universal Capital’s $15 million loan “to pay debts that Petters Capital owed to GECC.” Id. ¶ 58. ,
' Ritchie alleges that — “[b]y means of false transaction documents-, intentional misrepresentations and GECC’s knowing, voluntary and substantial assistance” — ■ PCI was able to fraudulently induce new loans in order to repay the $45 million it owed GECC. Id. ¶59. By December 8, 2000, Petters had repaid GECC. Id. However, as part of the “corrupt agreement” between Petters and GECC, “GECC did not file a UCC-3 termination statement with the Minnesota Secretary of State to terminate the UCC-1 financing statement that GECC had filed with respect to Petters Capital in. March 1998.” Id. ¶60, And, Ritchie alleges, by leaving the GECC UCC-1 financing statement on record, GECC knowingly participated in a scheme with Petters to “create the false appearance that Petters Capital and GECC had an ongoing debtor/creditor relationship after December 8, 2000, with the intent to fraudulently induce prospective lenders to make purchase order financing loans to PCI and related companies in reliance on intentional misrepresentations of material facts concerning PCI’s relationships with GECC.” Id.
b. The Red Tag Capital Line
As for the Red Tag Capital Line, between October 27, 2000, and March 20, 2001, GECC received more than $14.5 million in payments from Red Tag. Id. ¶ 61. On December 20, 2000, Red Tag requested a substantial loan advance from GECC to finance the purchase of goods and sell them to Costco. Id. ¶ 62. Feehan asked Petters how GECC would know if Petters was merely trying to obtain new loans to pay off the debts that Petters Capital had incurred in paying $45 million to GECC under the Petters Capital Line. Id. ¶ 63. Petters sent Feehan copies of 11 checks (from National Clothing Co., Inc. (“National Clothing”)) ostensibly to prove that Costco -had paid PCI. Id. ■ ¶¶ 64-65. Upon receiving these checks, Feehan instructed Jack Morrone-to call the bank on which
On December 27, 2000 — seven days after GECC * discovered that these checks were fraudulent — Red Tag informed GECC that Red Tag’s auditor, Ernst & Young LLP (“E .& Y”), was auditing ijts financial statements. Id. ¶ 69. Red Tag requested that GECC provide E & Y with certain information, including the nature of any defaults. Id. ¶ 70. As .of January 1, 2001, Red Tag still owed GECC millions of dollars. Id. ¶71, On January 30, 2001, GECC informed E & Y that Red Tag had committed a “Net Worth Covenant Event of Default,” but, Ritchie alleges, deliberately omitted the fraudulent check default, because disclosure would have (1) exposed Petters’ fraudulent scheme, and (2) imperiled GECC’s odds of recouping its investment. Id. ¶¶ 72-75.
By March 20, 2001, Red Tag’s credit facility was satisfied in full, thus ending GECC’s lending relationship with Petters and his companies. Id. ¶ 61.
3.Allegations Involving Other Entities
Ritchie makes a series of allegations, that are not relevant here. In short, these, allegations are that, between 2000 and 2003, GECC “substantially assist[ed]” Petters in his fraudulent dealings that affected a series of entities not plaintiffs here: the Westford/Epsilon funds; Granite Investors Fund, L.P.; Equitec Group, LLC; and Lancelot Investors Fund, Ltd. See id. ¶¶ 79-94. Because these allegations do not concern Ritchie, are not otherwise relevant, and are confusing, the Court .does not discuss them further.
4.Ritchie’s Lending Relationship with Petters
“Between February 1, 2008 and May 9, 2008, Petters fraudulently induced Plaintiffs to make a series of loans to Petters and one or more of his companies totaling $189 million.” Id. ¶ 101. Plaintiffs lost at least $157 million “[a]s a, direct and proximate cause of GECC’s decision to join” Petters’ fraud and to conspire with him. Id. ¶ 102.
5.The Civil and Criminal Proceedings Involving Petters and his Entities
Petters’ criminal trial started in October 2009; until that trial, plaintiffs did not discover, and could not have discovered, GECC’s actions in aiding Petters. Id. ¶ 103. . Petters was. convicted and sentenced to 50 years in prison. See United States v. Thomas J. Petters, No. 08 Cr. 364(RHK)(AJB) (D.Minn.); see generally U.S. Dep’t of Justice, News Release: Tom Petters sentenced to 50 years in federal prison for orchestrating $3.7 billion Ponzi scheme, Apr: 8, 2010, available at http:// www.justice.gov/usao/mn/econ/econ0413. pdf (last visited August 3,2015).
Bankruptcy proceedings have also been ongoing as to PCI and other Petters-affiliated entities. On October 8, 2010, Douglas Kelley, as Bankruptcy Trustee, filed a Complaint in the Minnesota Bankruptcy Court against GECC seeking turnover of any and all transfers and payoffs made by PCI, Petters Capital, or any other affiliate of PCI to GECC on the grounds that they constituted “property of the estate to be recovered and administered by the trustee” and preserved for the benefit of defrauded creditors. See No. 10 Bk. 4418 (D.Minn.Bankr.Ct.), Dkt. 1. The Trustee’s Complaint alleged, inter alia, 13 counts of fraudulent transfer, and sought to recover nearly $300 million from GECC. Id.
B. Procedural Background
On September 23, 2014, Ritchie filed suit against GECC in New York State Supreme Court in Manhattan, initiating the suit by means of a Summons with Notice. Dkt. 1, Ex. A. On October 29, 2014, GECC filed its notice of removal. Dkt. 1. On November 14, 2014, GECC filed a motion with the JPML, seeking the transfer and consolidation of four actions pursuant to 28 U.S.C. § 1407. See Dkt. 7. On November 24, 2014, GECC moved this Court for a stay of all pretrial proceedings until the JPML ruled on GECC’s consolidation motion. See Dkt. 8-10. On November 26, 2014, Ritchie moved for remand to state court, arguing that GECC’s notice of removal was untimely. See Dkt. 14-16.- After the parties briefed these motions, the Court denied Ritchie’s remand motion and otherwise granted GECC’s motion to stay. Dkt. 33. The Court found the removal timely because Ritchie’s Summons with Notice did not state its citizenship, which meant that the removal clock did not begin to run until Ritchie informed GECC of its citizenship; GECC timely removed the following day. Dkt. 34.
On February 4, 2015, the JPML declined to consolidate the four Petters-related actions against GECC. See Dkt. 37. This litigation then moved forward. On March 11, 2015, Ritchie filed its Complaint. Dkt. 42. On April 6, 2015, GECC filed its motion to dismiss, Dkt. 45, along with a brief, Dkt. 48 (“GECC Br.”), and an accompanying declaration, Dkt. 46. On May 15, 2015, Ritchie filed a brief in opposition to GECC’s motion. Dkt. 54 (“Ritchie Br.”). And on June 5, 2015, GECC filed a reply brief in further support of its motion, Dkt. 56 (“GECC Reply Br.”), along with a declaration, Dkt. 56-1.
II. Applicable Legal Standards
A. Rule 12(b)(6)
To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
In considering a motion to dismiss, a district court must “accept[] all factual claims in the complaint as true, and draw[] all reasonable inferences in the plaintiffs favor.” Lotes Co. v. Hon Hai Precision Indus. Co.,
B. Rule 9(b)
As to claims alleging fraud, Federal Rule of Civil Procedure 9(b) imposes a heightened pleading standard; Such claims must “state with particularity the circumstances constituting fraud.” Fed. R.Civ.P. 9(b). To satisfy Rule 9(b), “a complaint must ‘allege facts that give rise to a strong inference of fraudulent intent.’ ” Berman v. Morgan Keegan & Co.,
III. Discussion
The Court analyzes Ritchie’s negligence claim first, and then addresses its aiding and abetting fraud claim as well as its civil conspiracy claim.
A. Ritchie’s Negligence Claim
As an initial matter, Ritchie’s negligence claim is time-barred: New York imposes a three-year statute of limitations for negligence claims. See N.Y. CPLR § 214(4) (“The following actions must be commenced within' three years: ... an
In any event, on the merits, Rit-chie’s allegations do not state a claim. To prevail on a negligence claim, a plaintiff must establish “(1) a duty owed by the defendant to the plaintiff, (2) a breach thereof, and (3) injury proximately resulting therefrom.” Solomon ex rel. Solomon v. City of New York,
Ritchie does not allege that it had any direct communication, interaction, or involvement with GECC. As a result, Ritchie pleads that the basis for GECC’s duty to Ritchie is that GECC “had a special relationship with Petters and his companies,” which created duties to “foreseeable lenders that Petters would prey upon.” Compl. ¶ 131. However, New York recognizes only certain, well-established “special relationships”: (1) employers with respect to their employees, (2) owners of premises with respect to those who occupy those premises, (3) common carriers with respect to their patrons, (4) hosts who serve alcoholic beverages to their guests, and (5) parents with respect to their children. See, e.g., Rabin v. Dow Jones & Co., No. 14 Civ. 4498(JSR),
Ritchie argues that “[a] special relationship can arise where, as here, the defendant ‘occupies a special position of confidence .and trust with the injured party such that reliance on the negligent misrepresentation is justified.’ ” Ritchie Br. 19 (quoting E*Trade Fin. Corp. v. Deutsche Bank AG, No. 05 Civ. 0902(RWS),
B. Ritchie’s Claims of Aiding and Abetting Fraud, as well as Civil Conspiracy
GECC argues that Ritcjiie’s two remaining claims should be dismissed because Ritchie lacks standing to bring them as only the Petters Bankruptcy Trustee may do so, and because, even if Ritchie has standing, its allegations fail to' state a claim. The Court addresses standing first, and then the merits.
1. Whether Ritchie Has Standing
GECC argues that Ritchie lacks standing .to sue GECC for aiding and abetting fraud and for civil conspiracy, because those causes of action are property of the Petters bankruptcy estates — and the Pet-ters Trustee has already asserted these claims against GECC. GECC Br. 8-15. GECC notes that, this year, two courts have already found that claims in analogous cases are property of the Petters bankruptcy estates. See Gecker v. Gen. Elec. Capital Corp., No. 14 Civ. 8447(SIS),
a. Applicable Legal Principles
The Bankruptcy Code defines “property of the estate” as comprising, inter alia, “all legal or equitable interests of the debtor in property as of the commencement of the cáse.”' 11 U.S.C. § 541(a)(1); Such 'interests include “causéis of action possessed by the debtor at the time of filing,” Jackson v. Novak (In re Jackson),
Significant here, to promote the orderly resolution of all claims and prevent creditors from racing to the courthouse to achieve preferential, recoveries, the, bankruptcy trustee “has ‘exclusive standing*, to assert causes of action belonging to the estate.” Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC,
“If a claim is a general one, with no particularized injury arising from it, and if that claim could be-brought by any creditor of the debtor, the trustee is
As noted, two recent cases have ápplied these principles in Petters-related litigation. In one, Ritchie was the plaintiff; in the other, GECC was the defendant; but in both, the courts found that the causes of action were property of the Petters Bankruptcy Trustee. In the first, the plaintiffs — the same Ritchie entities that are plaintiffs here — brought claims for aiding and abetting fraud, civil conspiracy, and unjust enrichment. Opportunity Fin.,
A Minnesota state court held that these causes of action were property of the Petters bankruptcy estates:
Plaintiffs allege facts that are virtually identical to the allegations contained in the Trustee’s adversarial proceeding against Defendants. It is the same story: Defendants were early investors; obtained rates of return too good to be true; knew that the dummy paper purchase orders were bogus; knew Petters was using late-invested money to pay early investors; and met with Petters in December 2007, confronting him and demanding accelerated loan repayment. Importantly, Plaintiffs’ and Trustee’s accusations are also similar in what they do not allege: they do not allege any duty owed by Defendants to Plaintiffs; they do not allege any misconduct or misrepresentations by Defendants to Plaintiffs. In that way, they are wholly distinguishable from either Manville III or Picard where the defendants (investment managers and insurance agents) themselves were alleged to have made misrepresentations and themselves alleged to owe a legal duty to the plaintiffs. Here, Plaintiffs and Defendants were strangers to one another.
Id. at *13-14.
In the second case, the plaintiff lent money to Petters in 2007 and 2008, and sought to recover the money it lost, argu
Here, plaintiffs complaint against GECC alleges that Ark was injured by the same conduct that the Petters Trustee, in. its complaint against GECC, alleged harmed the bankruptcy estates: furthering the Ponzi scheme by concealing information that, if disclosed, would have exposed that the Petters enterprises were a fraud [ ]. While the causes of action, legal theories and damages amounts asserted by the Petters. Trustee differed from those asserted here by plaintiff, “the injury for which relief is sought” is not “peculiar and personal” to Ark, but “general and common to the corporation and creditors.” [Koch Ref. v. Farmers Union Cent. Exch., Inc.,831 F.2d 1339 , 1348 (7th Cir.1987)]. Put another way, the GECC conduct that plaintiff alleges caused Ark to suffer harm-is the same conduct that any entity that invested in the Petters entities (at least after 2003) could claim caused it to suffer harm. The conduct alleged, and the resulting harm, is not unique to Ark....
[A]ll of plaintiffs claims against GECC depend on GECC’s alleged misconduct with respect to the Petters bankruptcy estates. Plaintiff itself had no direct dealings in this case with GECC and suffered no unique harm. Thus, we agree with defendant that plaintiff lacks authority to bring the claims in her complaint. To find otherwise would be to allow plaintiff to “artfully plead- [her] way out of bankruptcy court.” [Nat’l Am. Ins. Co. v. Ruppert Landscaping Co.,187 F.3d 439 , 442 (4th Cir.1999).]
Gecker,
b. Application
To call these recent cases analogous to the present one seems almost an understatement. For all intents and purposes, these two recent cases are identical to this one. In all three cases, later lenders of Petters sued earlier lenders who had allegedly discovered Petters’ fraud but failed to report it. See Compl. ¶¶ 1, 6; Opportunity Fin.,
The Court therefore agrees, in full, -with the cogent analyses of the other two courts to recently address these issues: Ritchie’s
Making this conclusion even clearer, the Petters Trustee actually made these allegations, against GECC in its adversary proceeding. The Petters Trustee asserted claims of actual and constructive fraudulent transfer, unjust .enrichment/equitable disgorgement, , and related causes of action against GECC arising,out GECC’s lending relationship with Petters Capital and Red Tag. See, e.g., No. 10 Bk. 4418 (D.Minn.Bankr.Ct.), Dkt. 1 (Complaint); No. Ó8 Bk. 45257 (D.Minn.Bankr.Ct.), Dkt. 1733. Ritchie now attempts to re-litigate — but for its sole benefit, rather than for all creditors’ benefit — the same series of events. The Petters Trustee’s Complaint and Rit-chie’s Complaint share the following core allegations:
— GECC lent to Petters Capital and Red Tag, and the credit agreements provided for GECC to be paid suc- ' cess fees. :Tr. Compl. ¶¶ 29-33; Ritchie Compl. ¶¶ 24, 61. ■
— In mid-2000, Petters Capital purposely misrepresented to GECC that accounts receivable from Costco secured payment of the outstanding loans owed to GECC. Tr. Compl. 62; Ritchie Compl. 33.
—■ In response to Feehan’s concerns about nonpayment, GECC contacted Costco directly and learned that the purchase orders were not Costco’s — and thus that Petters was operating a fraud. Tr. Compl. 62; Ritchie Compl. 39-42.
— Before GECC received $45 million in payments, GECC knew of Petters’ fraudulent scheme, including forged and fraudulent purchase orders and checks. Tr. Compl. ¶¶ 62; Ritchie Compl. ¶¶ 40, 44, 45, 47.
— In connection with a Red Tag financing request in December 2000, Petters sent GECC copies of Costco checks, GECC checked with the bank, and the bank told GECC the checks had been issued for different amounts. Tr. Compl. 62; Ritchie Compl. ¶¶ 65-67.
— GECC deliberately used its leverage to obtain payments — inequitable conduct that benefited GECC to the detriment of other stakeholders, including other creditors. Tr. Compl. ¶ 166; Ritchie Compl. ¶¶ 47, 68,109,112.
The foregoing demonstrates that, although the names of the causes of action asserted by the Petters Trustee and Ritchie may vary somewhat, the allegations underpinning, them overwhelmingly overlap. Individual creditors may not avoid standing requirements through “artful repleading of [fraudulent conveyance] claims.” Madoff,
Here, Ritchie’s putative claims unavoidably have the same focus as the Petters Trustee’s claims. This confirms that only the Petters Trustee has standing to bring these claims — claims that it brought, and settled. And the bankruptcy court approved that settlement — without objection from Ritchie. See No. 08 Bk. 45257 (D.MinmBankr.Ct.), Dkt. 1733 (Order Approving Settlement Agreement, June 28, 2012).
Finally, Ritchie’s arguments to the contrary are unavailing. Its first — that the Petters Trustee lacks standing to assert these claims — is refuted by the foregoing account, which makes clear that these causes of action are property of the Pet-ters estates and were, in fact, asserted by the Petters Trustee. Ritchie protests that the Petters estates suffered “absolutely no damage,” Ritchie Br. 7, but courts have routinely found harm to the debtor based on its inability to repay its creditors. See, e.g., Opportunity Fin.,
Ritchie’s second argument is that the Petters Trustee is barred from bringing these claims against GECC because of the Wagoner Rule and the related doctrine of in pari delicto. The thrust of these doctrines is that a bankrupt wrongdoer may be barred from pursuing damages claims against its - “partners in crime” — third parties who participated in the unlawful conduct.*'’ Thus, “when a bankrupt corporation has joined with a third party in defrauding its .creditors, the trustee cannot recover against .the third party for the damage to the creditors.” Shearson Lehman Hutton, Inc. v. Wagoner,
These two doctrines have no application here. First,' as noted, the claims asserted by Ritchie are property of the Petters estates-claims that the Petters Trustee had standing to, and did, assert. See In re Madoff,
2. Whether Ritchie’s Allegations State a Claim on the Merits
The Court also finds that, on the merits,Ritchie’s allegations do not state a claim. The Court therefore dismisses on this alternative ground, too.
a. Aiding and Abetting Fraud
To state a claim for aiding and abetting fraud, a plaintiff .must show “ ‘(1) the existence of an underlying fraud; (2) knowledge of this fraud on the part of the aider and abettor; and (3) substantial assistance by the aider and abettor in achievement of the fraud.’ ” Anwar v. Fairfield Greenwich Ltd.,
Focusing on the third prong, a “defendant provides substantial assistance only if [she] affirmatively assists, helps conceal, or by virtue of failing to act when required to do so enables [the fraud] to proceed.” JP Morgan Chase Bank v. Winnick,
Ritchie’s failure to plead proximate cause is unsurprising, given the facts that (1) GECC finished lending to Petters in 2001 and Ritchie did not start lending to Petters until 2008, see Compl. ¶¶ 61, 101; (2) Ritchie does not allege that GECC ever contacted or communicated with Ritchie; and (3) Ritchie alleges (and thus admits) that GECC was repaid with funds from “[o]ther [l]enders,” rather than from Rit-chie, id. at p. 13, header F. The essence of Ritchie’s Complaint is that GECC could have, but did not, expose Petters’ fraud, and thus likely end it. Id. 2, 6. Given Ritchie’s allegations, GECC’s role was at most a but-for cause of Ritchie’s losses; Petters, of course, was the proximate cause of Ritchie’s losses.. Id. ¶ 101.(“Between February 1, 2008 and May 9, .2008, Petters fraudulently induced Plaintiffs to make a series of loans to Petters and one or more of his companies totaling $189 million.”) (emphasis added). Because allegations amounting to but-for causation are insufficient, Winnick,
b. Civil Conspiracy
To state a claim for civil conspiracy, a plaintiff must “demonstrate the primary tort, plus the following four elements: (1) an agreement between two or more parties; (2) an overt act in furtherance of the agreement; (3) the parties’ intentional participation in the furtherance of a plan or purpose; and (4) resulting damage or injury.” Uni-World Capital, L.P. v. Preferred Fragrance, Inc.,
Focusing on the second prong, the overt act requirement, a plaintiff must allege facts indicating that an overt act “was done in furtherance of an agreement to commit unlawful acts.” Stutts v. De Dietrich Grp., No. 03 Civ. 4058(ILG),
Ritchie pleads five possible acts by-GECC: (1) failing, to report Petters’ fraud to regulators or law enforcement, see Compl- ¶ 107; (2) declining to “exercis[e] any remedies or enforcing any obligations in connection with numerous defaults under the RedTag and Petters Capital Credit Facilities,” id. ¶ 108; (3) “failing] to withdraw or correct its January 2000 Recommendation Letter,” id. ¶ 114; (4) allowing its UCC-1 financing statement to remain on file after Petters’ repayment of the Petters Capital Line, in order to “create the false appearance that Petters Capital and GECC had an ongoing” lending relationship, id. ¶¶ 60, 96; and (5) issuing the letter to E & Y in January 2001,' id. ¶ 108.
The first three alleged acts are clearly not overt acts; they are examples of inaction. In each case, GECC failed to do something: it allegedly failed to report Petters to the authorities, to enforce contractual rights, and to withdraw a recommendation letter. These are not acts at all. Indeed, the Complaint repeatedly uses the term “forgo,” which connotes a failure to act. Id. . -
107, 108. And as to the non-withdrawal of the recommendation letter, ■ the Complaint literally describes it as “GECC’s inaction;” Id. ¶ 32. Other Petters-related lawsuits have similarly found such allegations “nothing more than inaction” and “nothing more than a failure to act.” Palm Beach Fin. Partners,
CONCLUSION
For the' foregoing reasons, the Court grants GECC’s motion to dismiss the Complaint with prejudice. The Clerk of Court is respectfully directed to terminate the motion pending at docket number 45, and to close this case.
SO ORDERED.
Notes
. These are Ritchie Capital' Management, Ltd.; Ritchie Special Credit Investments, Ltd.; Rhone Holdings II, Ltd,; Yorkville .Investment I, L.L.C.; and Ritchie Capital Structure Arbitrage Trading, Ltd. See Dkt. 1, Ex, A.
. The Court's account of the facts is drawn from .Ritchie’s Complaint. Dkt. 42 ("Compl.”). The Court may, "also take judicial notice’ of relevant matters of public record." Giraldo v. Kessler,
. On April 10, 2015, the Court transferred a different ease to the District of Minnesota that also involves these Ritchie plaintiffs and the fallout from the Petters fraud. See Ritchie Capital Mgmt., L.L.C. v. U.S. Bank Nat. Ass’n, No. 14 Civ. 8513(PAE),
. Both parties primarily apply New York law, and Second Circuit case law, to this dispute.' See, e.g., GECC Br. 11, 16, 20, 25; Ritchie Br. 6, 10, 12, 16, 19. In any event, GECC helpfully — and correctly — explains that, to the extent that other states (like Minnesota and Illinois) might also have an interest in this dispute, the same substantive law would obtain under these states’ laws. See GECC Br. 16 n. 10‘. Ritchie does not dispute that point; it relies on New York law. See, e.g., Ritchie Br. 6, 10, 12, 16, 19. .
. Cf. Edwards & Hanly v. Wells Fargo Sec. Clearance Corp.,