MEMORANDUM OF DECISION AND ORDER
On February 19, 2014, the Plaintiffs Schwartzco Enterprises, LLC (“Schwartzco”), a New York limited liability company; the Meat House — Roslyn LLC (“TMH Roslyn”), a New York limited liability company; and Arnold M. Schwartz, an individual resident of New
Each of the Defendants defaulted, except for Brown, a managing member of MHF. Only one claim, the fifteenth cause of action sounding in an alleged violation of the New York Franchise Sales Act, N.Y. Gen. Bus. Law §§ 680 et seq. (the “NYF-SA”), directly referenced Brown.
On July 24, 2014, Brown moved pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ.P.”) 9(b) to dismiss the complaint for failure to plead with the requisite particularity.
On September 19, 2014, the Plaintiffs cross-moved pursuant to Fed.R.Civ.P. 15(a) for leave to file an amended complaint. The proposed amended complaint contains 21 causes of action, none of which are specifically directed toward Brown alone.
In opposing the Plaintiffs’ cross-motion to amend the complaint, Brown primarily contests the futility of the proposed causes of action. Indeed, Brown does not argue that the proposed amendment was prompted by bad faith on the part of the Plaintiffs or thаt the Plaintiffs unduly delayed in seeking leave to amend. Rather, Brown conclusorily asserts that he “would certainly be prejudiced by allowing such an amendment, which consists no less than pages and often reads as a legal brief, because it would force him to expend significant additional resources in responding thereto and unnecessarily delay his rightful dismissal from this litigation.” (Brown’s Reply Br., at 10.) The Court notes that to the extent the proposed amended complaint contains legal argu"ments, Brown has had ample opportunity to respond to those arguments, thereby minimizing any prejudice.
Where, as here, the Plaintiff seek to amend his complaint while a motion to dismiss is pending, a court “has a variety of ways in which it may deal with the pending motion to dismiss, from denying the motion [to dismiss] as moot to considering the merits of the motion in light of the amended complaint.” Roller Bearing Co. of Am., Inc. v. Am. Software, Inc.,
“As the [Plaintiffs do not seek to add new defendants and [Brown] had sufficient opportunity to respond to the proposed amended complaint, the merits of the motion to dismiss will be considered in light of the proposed amended complaint.” Haag v. MVP Health Care,
I. BACKGROUND
Unless otherwise stated, the following facts are drawn from the proposed amended complaint, and construed in a light most favorable to the non-moving parties, the Plaintiffs.
A. The Parties
Schwartz, a surgeon, is the 100% owner of Schwartzco.
The Meat House franchise system includes butcheries that prepare and sell retail meats, fíne cheeses, wine, groceries, prepared foods, and other gourmet food items.
TMH Management was established by The Meat House franchise system to manage The Meat House stores and franchises. Rosberg and the non-party Jason Parent (“Parent”) are the co-founders and members of TMH Management, and Ros-berg is its registered agent.
TMH Ventures was established by The Meat House franchise system to facilitate investment in and development of The Meat House brand. According to a 2012 Franchise Disclosure Documents (“FDDs”), TMH Ventures “is an operar tions management company created to undertake joint business ventures with Area Developers in California, Florida, Oklahoma and New York.” Rosberg and Brown are co-founders and members of TMH Ventures, and Rosberg is its registered agent.
MHF was established by the Meat House franchise system for the purpose of selling Meat House franchises. MHF is the franchisor and holder of the trademark for The Meat House franchise system. Rosberg is MHF’s registered agent. Ros-berg is also allegedly a “control” person of MHF under § 691(3) of the NYFSA.
The non-party Parent is the Managing Member and President of MHF and co-founder and member of TMH Management and TMH Ventures. Parent is also allegedly a “control” person of MHF under § 691(3) of the NYFSA.
Brown is the Chief Businesses Development Officer, Executive Vice President of Sales & Marketing, and a Managing Mеmber of MHF, as well as an officer of TMH Management and TMH Ventures. He is a co-founder and member of TMH Ventures. Brown is also allegedly a “control” person of MHF under § 691(3) of the NYFSA.
• Miller was another principal of the Meat House, but has since declared bankruptcy. The Plaintiffs are pursuing their claims against Miller in an adversarial bankruptcy proceeding.
B. Factual History
Beginning in early 2010, the Defendants allegedly pursued Schwartz, the sole investor in Schwartzco, to induce him to invest in acquisition rights to franchise and develop The Meat House stores in Westchester, New York; New York City; and Long Island.
The Defendants allegedly targeted Schwartz through his nephew, Cary Tober, a low-level employee in the Meat House franchise system. The Plaintiffs ultimately invested more than $2 million in The Meat House franchise system.
According to the Plaintiffs, the Defendants made “material false misrepresentations (and/or omissions)” verbally and in writing to the Plaintiffs; “used false, inflated, and misleading cherry-picked information, and generated numerous fraudulent financial spreadsheets and financial statements about the Meat House’s cur
The Plaintiffs point to the individual defendants, including Brown, as “active participants” “independent of the [Defendant] entities” in the fraudulent scheme. {Id. at ¶11.)
The Plaintiffs contend that, as a result of the Defendants’ fraudulent scheme, they entered into various agreements with certain of the Defendants and opened an area development entity and ultimately one franchised location, TMH-NY, in Roslyn, New York.
Despite the fact that TMH-NY was fully funded by Schwartzco, TMH Ventures reserved a 5% ownership interest for itself and the Defendants appointed TMH Management as its sole “manager.” In this way, the Defendants retained equity and control over TMH-NY without bearing any financial risk. The Defendants allegedly abused their fiduciary responsibilities and funneled Schwartz’s money towards opening TMH-NY as an expensive “show piece”' location unable to operate at a profit.
•According to the Plaintiffs, Brown and Rosberg were “directly responsible” for feeding Tober with much of the data that was utilized in misrepresentations to Schwartz, including financial information regarding operational expenses, profits, and build-out costs, in order to create a false and overly favorable impression of The Meat House franchise system. {Id. at ¶ 70.) As stated in the proposed amended complaint,
Brown, Rosberg, and Parent allegedly had access to complete information regarding how each of the franchise and company-owned units were performing, as well as the costs associated with opening and operating a franchise unit. With regard to Brown, he allegedly knew what the true profit and loss information, as well as the true cost of building-out and operating a unit was. He also knew what was permissible under the FTC Act, and the NYFSA, with respect to prohibited “earnings claims,” and the requirement fоr adequate disclosure before offering to sell or selling a franchise (or at least should have known, although ignorance of the law is no excuse). Defendant Brown personally, repeatedly and directly presented Plaintiffs with fraudulent information in order to induce Plaintiffs into entering a joint venture with Defendants, entering into an Area Development Agreement, and multiple Franchise Agreements. Mr. Brown also omitted information from in-person and e-mail discussions with Plaintiffs that rendered the information presented to Plaintiffs materially misleading. Specifically, this information included profit and loss figures, revenue figures, profit margins for specific Meat House locations, anticipated costs including opening and “build out” costs for a new Meat House location, and the profitability and viability of the business as a whole. Mr. Brown was directly involved in providing (or failing to properly provide) Plaintiffs with the required Franchise Disclosure Documents (FDDs)— documents that contained materially false or inaccurate information which he knew to be false. Mr. Brown was involved in the mismanagement of the joint venture (e.g. hired an incompetent manager a full year before it was appropriate to do so; involved himself in daily operations and planning of the joint venture under the Operating Agreement.
(Id. at ¶ 74.)
The Defendants further allegedly extrapolated “averages” from cherry-picked store locations and periods of time; annualized those amounts to create highly inflated revenues and profits; and grossly underestimated costs of opening units in expensive markets by utilizing avеrage rents from locations that were not indicative of what it would cost to operate a franchise in more expensive markets. (Id. at ¶ 76.)
On or about Wednesday, June 16, 2010, Schwartz attended a presentation with approximately ten employees and principals of The Meat House franchise system, including Rosberg, Brown, and Parent. The presentation included'representations that the Meat House locations currently in operation generated in excess of three million dollars in sales per year. Parent, Brown, and Rosberg repeated the statement, alleged to be false, that The Meat House locations had a return on investment (“ROI”) of 12% to 20%. Rosberg, Brown, and Parent also “touted a model for multiple units in a given area, suggesting that not only were 10 or 20 units viable in a geographical area (including, Long Island, Mr. Schwartz’s then potential “territory”), but that each unit opened, with a ROI of 12 to 20%, would fund the opening of successive units.” (Id. at ¶ 90.) The Plaintiffs maintain that Brown “was the individual who orchestrated the meeting and he led a great deal of the discussion that took place,” (Id. at ¶ 92.) although they fail to provide significant, if any, detail in this respect.
Following the meeting, Brown emailed Schwartz, stating as follows:
Arnie,
On behalf of The Meat House crew, thanks very much for taking the trip up and spending time with us. We are highly confident it will prove to be a very worthwhile investment of time and energy.
I will circle back with Cary to make sure you have everything you need for analysis. I believe you do, but if anything else pops up, please do not hesitate to contact me or anyone еlse on the team. Very much looking forward to the potential of working with you to dominate the NYC/Long Island marketplace ...”
(Id. at ¶ 100.)
Schwartz was also encouraged to visit store locations, and he visited one in Avon, Connecticut, which was held out by the Defendants to be a successful store. Brown subsequently emailed Schwartz stating that “Avon’s success is certainly indicative of the market opportunity across the board.” (Id. at ¶ 96.) Avon has since ceased operations, for reasons unexplained.
In June of 2010, the Defendants forwarded to the Plaintiffs an FDD and then an amended FDD in October of 2010. Item 7 of the 2010 FDD stated that.franchisees would be able to open up a franchise location for an investment between $270,000 and $950,000 — amounts which included the $120,000 franchise fee, and which Parent, Brown and Rosberg allegedly knew were not correct. In this regard, the Defendants ultimately spent more than $1.2 million of the Plaintiffs’ money to open up the first franchise location on Long Island.
The Plaintiffs contend that the Defendants violated New York, New Hampshire, and federal law when they solicited the Plaintiffs to invest in the franchise system without first providing the Plaintiffs with a FDD.
The Operating Agreement contained an arbitration provision. That provision provides, in pertinent part: “In the event that any dispute should arise among the parties hereto with fеspect to any matter covered by this Agreement, the parties hereto shall resolve such dispute in accordance with the procedure set forth in this Article XII.” The arbitration provision further requires arbitration to be held in Nassau County, New York State, administered by the American Arbitration Association (“AAA”), and held before a single arbitrator.
The Plaintiffs characterize their investment in The Meat House Franchise system as a “financial disaster” for them. (Id. at ¶ 8.) According to the Plaintiffs, the Defendants “drained Plaintiffs of their money, went far ‘over-budget,’ mismanaged the only unit that opened (in Roslyn, NY), failed to open multiple units as required by their own agreements, and utilized Plaintiffs’ money for the purposes of enriching themselves, and creating an unworkable and expensive ‘show piece’ location to try and sell other ‘would-be’ franchisees into buying into the system.” (Id.).
According to the Plaintiffs, Brown “ultimately made many of the key decisions concerning the Roslyn location, as he selected key employees of the Roslyn location, was involved in the selection of the location itself (and selling it), and was generally heavily involved in its operations, and in his dual role with the joint venture.” (Id. at ¶ 139.)
By October 2012, less than ten months after the opening of the Roslyn Store, the parties, through a termination agreement, agreed to remove TMH management as the manager of that store. (Id. at ¶ 181.) Thereafter, Schwartzco operated the Roslyn Store.
On January 5, 2014, the Roslyn Store closed operations permanently. (Id. at ¶ 195.)
C. Procedural History
By letters dated December 20, 2013 and January 6, 2014, the Plaintiffs invoked the dispute resolution prоvisions of the Operating Agreement and/or other related agreements. The Defendants did not comply-
On February 19, 2014, the Plaintiffs commenced a separate action against TMH Management, TMH Ventures, Meat House Franchising, LLC, Rosberg, and Brown, entitled Schwartzco Enterprises, LLC et al. v. TMH Management, LLC et al., bearing Index No. U.S.D.C., E.D.N.Y., 2:14-cv-1084 (ADS)(GRB). The defendants in that action, save for Brown, are in default.
Also, as noted above, on February 19, 2014, the Plaintiffs commenced this action. In this action, Brown is the only defendant not in default.
As noted above, on July 24, 2014, Brown moved to dismiss the complaint as against him for failure to comply with Fed. R.Civ.P. 9(b).
On August 4, 2014, the Plaintiffs commenced an arbitration against the Defendants, including Brown, before the AAA, entitled Schwartzco Enterprises, LLC, et al. v. TMH Management, LLC et al., AA Case No. 01-14-0001-1207, based on the same transactions and occurrences as alleged here. Brown has declined to partid-
On August 5, 2014, the Plaintiffs filed a separate action in the Federal District Court for the Eastern District of New York against Parent under the index no. 14-ev-4631. That case was deemed related to this case, and subsequently assigned to this Court.
By letter dated August 7, 2014, in this action, the Plaintiffs asked the Court to hold Brown’s motion to dismiss in abeyance until resolution of their anticipated application to stay this action pending arbitration.
On August 12, 2014, the Court denied that request.
On September 19, 2014, the Plaintiffs moved pursuant to Fed.R.Civ.P. 15(a) for leave to a file an amended complaint. Although the Plaintiffs also respond to Brown’s motion to dismiss, the Plaintiffs seеk to reserve their rights to move to stay this action and/or compel Brown to arbitrate their claims.
The proposed amended complaint includes causes of action for (1) fraudulent inducement/omission; (2) fraud; (3) negligent misrepresentation; (4) breach of fiduciary duty; (5) aiding and abetting fraud; (6) civil conspiracy; (7) breach of contract; (8) gross negligence; (9) violations of the NYFSA; (10) violations of the New York Consumer Protection Act, N.Y. Gen. Bus. Law § 349(a) (the “NYCPA”); (11) violations of the New Hampshire Consumer Protection Act, N.H.Rev.Stat. Ann. Ch. 358-A (the “NHCPA”); and (12) breach of the covenant of good faith and fair dealing. Each of these causes of action is proposed to be asserted against Brown, except for the breach of contract action, presumably because Brown is a non-signatory to the Operating Agreement.
II. DISCUSSION
A. The Legal Standard, on a Motion to Dismiss
Although Brown’s motion is not formally styled under Fed.R.Civ.P. 12(b)(6), in light of the necessary futility analysis below, the rules applicable to motions made thereunder are applicable here.
In considering a motion to dismiss made pursuant to Rule 12(b)(6), the court must accept the factual allegations in the complaints as true and draw all reasonable inferences in favor of Plaintiff. Bolt Electric, Inc. v. City of New York,
A pleading need not contain “ ‘detailed factual allegations,’ ” but must contain more than “an unadorned, the-defendant-
This liberal pleading standard is modified by Rule 9(b), which requires a plaintiff asserting fraud claims to meet a heightened pleading standard. While Rule 8(a) usually requires only a “short and plain statement of the claim showing that the pleader is entitled to relief,” Fed.R.Civ.P. 8(a), a plaintiff asserting fraud must “state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). Rule 9(b) is satisfied when the complaint specifies “the time, place, speaker, and content of the alleged misrepresentations;” how the misrepresentations were fraudulent; and the details that “ ‘give rise to a strong inference that the defendant ] had an intent to defraud, knowledge of the falsity, or a reckless disregard for the truth.’” Cohen v. S.A.C. Trading Corp.,
However, under Rule 9(b) “[mjalice, intent, knowledge, and other condition of mind of a person may be averred general^ ly.” Fed.R.Civ.P. 9(b). Nonetheless, “plaintiffs] must allege facts that give rise to a strong inference of fraudulent intent.” Nakahata v. New York-Presbyterian Healthcare Sys., Inc.,
B. The Fraud and Fraudulent Inducement Claims
Under New York law, to state a claim for fraud, a plaintiff must demonstrate: (1) a misrepresentation or omission of material fact; (2) which the defendant knew to be false; (3) which the defendant made with the intention of inducing reliance; (4) upon which the plaintiff reasonably relied; and (5) which caused injury to the plaintiff. Wynn v. AC Rochester,
As the Plaintiffs concede, claims of fraud must be pled with particularity and “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Rombach v. Chang,
Here, in the Court’s view, there is little doubt that the Plaintiffs adequately allege scienter, intent to induce reliance; reasonable reliance, and injury. The closer question concerns whether Plaintiffs have adequately pleaded misrepresentations or omissions of material fact with the requisite specificity. The Court finds that they have not.
The Court acknowledges the various emails, spreadsheets, and power-point files that the Plaintiffs contend contained falsified or misleading figures regarding the profitability of The Meat House franchise system (Amended Compl., at ¶ 105.) The Court further recognizes that while the Plaintiffs do not set forth specifics as to Brown’s individual role in the alleged fraudulent scheme — the proposed amended complaint is peppered with the following terms: “defendants”; “individual defendants;” “The Meat House Parties;” and the “Meat House Principiáis]” and when the Plaintiffs attempt to set forth specific names, they repeatedly do so through collective phrases such as “Mr. Parent, Mr. Brown, and Mr. Rosberg” — this type of “group pleading” is appropriate where, as here, the Plaintiffs seeks to state a common law fraud claim, as opposed to a federal securities law claim. Am. Fin. Int’l Group-Asia v. Bennett, No. 05 Civ. 8988(GEL),
However, it does not follow that Rule 9(b) grants an aggrieved party “license to base claims of fraud on speculation and conclusory allegations.” Shields v. City-trust Bancorp, Inc.,
In this regard, the Court finds that while the Plaintiffs have identified a number of. financial figures in emails and spreadsheets which they contend were fraudulent in content, they fail to plead the circumstances constituting the fraud with the specificity required of Rule 9(b). In other words, while the Plaintiffs identify the “who” — albeit in collective terms; the “what;” and the “when” of the fraudulent scheme, they fail to adequately allege “how” and/or “why” the relevant state
Rather, the Plaintiffs cast an exceedingly wide net. According to the Plaintiffs, it seems each single figure fed to them by the Defendants wаs fraudulent. However, this “everything but the kitchen sink” pleading, which does little to explain the ways certain figures touted by the Defendants were inflated or distorted, is insufficient under the heightened pleading requirements of Rule 9(b).
Of importance, Fed.R.Civ.P. 9(b) “is intended to provide a defendant with fair notice of a plaintiffs claim, to safeguard a defendant’s reputation from improvident charges of wrongdoing, and to protect a defendant against the institution of a strike suit.” In re Bristol-Myers Squibb Sec. Litig.,
In this case, the concern about “fair notice” applies with full force. The original complaint is 32 pages and 161 paragraphs in length. In the face of a motion to dismiss based on their alleged failure to comply with Rule 9(b), the Plaintiffs seek to rely on the proposed amended complaint, which is 74 pages and 308 paragraphs in length, replete with repetitive and conclusory allegations. Tellingly, the paragraphs specific to the fraudulent inducement and fraud causes of action number, respectively, in the single digits. However, the proposed amended complaint does little, if anything, to build on the initial complaint in terms of alleging the “how” or “why” of the alleged fraudulent scheme. Faced with the Plaintiffs’ pleading treatise, it is little wonder that Brown, in his reply papers, can muster few substantive arguments against the Plaintiffs’ claims sounding in fraud aside from those based on Rule 9(b).
To be clear, the Court is not imposing, nor could it, a requirement on the Plaintiffs that they must plead with absolute precision the “how” or “why” the relevant statements or representations were fraudulent. Without access to the Defendants’ boоks or to meaningful discovery, the Court cannot conceive how the Plaintiffs could provide details with such precision.
The Court also acknowledges that those allegations of fraud based on “information or belief’ may be sufficient under Rule 9(b) if they are based on matters “peculiarly within the opposing party’s knowledge.” Lichtenstein v. Reassure Am. Life Ins. Co., No. 07-CV-1653 (DLI)(LB),
Here, the Plaintiffs fail to satisfy even this relaxed standard. Most of the Plaintiffs’ allegations based on “information and belief’ smack of conclusoriness. (See e.g.
Two examples warrant special attention. First, the Plaintiffs allege “[ujpon information and belief, [the] Defendants had a sеcond set of books, or figures, that they kept to themselves, indicating the true value of their franchise, and what the typical units were making.” (Id. at ¶ 79.). However, the Plaintiffs provide no “statement of facts” supporting this serious accusation.
Similarly, the Plaintiffs allege that “[ujpon information and belief, prior to the solicitation and fraudulent inducement of Mr. Schwartz, the individual Defendants engaged in the same pattern of concocting overly ‘rosy’ financial spreadsheets, touting profitability, and then extrapolating what a prospective franchisor could expect to “earn” based upon that false data, and sending it, or otherwise showing it, to other prospective franchisees. In other words, Mr. Schwartz was not the first person that the individual Defendants engaged in the same practice with.” (Id. at ¶ 91) (emphasis added). However, this far-reaching accusation, devoid of a supporting “statement of facts,” could lead to precisely the type of improvident reputation harming that Rule 9(b) is designed to discourage.
Nor are Plaintiffs’ claims sounding in fraud salvaged by Schwartz’s affidavit submitted in opposition to Brown’s motion to dismiss. In a typical Rule 12(b)(6) motion, the Court is limited to consideration of the pleadings and documents incorporated in or annexed thereto. The scenario in a Rule 9(b) context is no different. Work While U-Wait, Inc. v. Teleasy Corp., No. CIV.A. 2:07-00266(DAF),
Furthermore, even if the Court construed the allegations against Brown contained in Schwartz’s affidavit as if they were contained in the proposed amended complaint, the Court would nonetheless find that the Plaintiffs fail to satisfy Fed. R.Civ.P. 9(b) with respect to their fraud and fraudulent inducement claims. Schwartz’s affidavit characterizes Brown as “the consummate salesman” and “mouthpiece” for the Defendants (Schwartz Affid., at ¶¶ 6, 53); accuses him of “personally” providing him with false and misleading information concerning The Meat House franchise system, although he concedes that Brown was not personally sending the emails that allegedly contain falsified information, (id. at ¶¶ 7, 37.); describes him as “vocal” about the potential profitability of the franchise system, (id. at ¶ 27.); and states that Tober related to him that Brown and Rosberg provided much of the faulty information supporting the various financial models (id. at ¶ 33.). These “allegations” do little, if anything, to build upon the paucity of allegations in the proposed amended complaint of “how” and/or “why” the relevant representations and statements were fraudulent.
For the foregoing reasons, the Court finds that the Plaintiffs’ proposed causes of actions sounding in fraud and fraudulent inducement against Brown are subject to dismissal under Fed.R.Civ.P. 9(b).
Finally, given that the Plaintiffs attempted to cure any defects in their initial cоmplaint with respect to these claims but have still failed to state a claim for relief, the Court declines to afford the Plaintiff an opportunity to replead these claims. See Foman v. Davis,
C. The Negligent Misrepresentation Claim
To state a claim for negligent misrepresentation under New York law, a
In this case, the overarching claim of fraud permeates several of the claims for relief, including the claim for negligent misrepresentation under New York law. The Court notes that “whether Rule 9(b) applies to negligent misrepresentation claims divides the circuit courts of appeals.” Denver Health & Hosp. Auth. v. Beverage Distributors Co., LLC,
In this circuit, in recent years, many district courts have proceeded on the assumption that “the Second Circuit has not explicitly ruled- on whether Rule 9(b), Fed. R.Civ.P. applies to New York negligent misrepresentation claims.” J & R Electronics Inc. v. Bus. & Decision N. Am., Inc., No. 12 CIV. 7497(PKC),
Perceiving Second Circuit law on this issue to be unsettled, most -courts have opted to apply Rule 9(b) to the negligent misrepresentation claim at issue, Ebusinessware,
However, the aforementioned cases all engaged in unnecessary handwringing in light of post -Eternity Global Second Circuit precedent on this issue, namely Aetna Cas. & Sur. Co. v. Aniero Concrete Co.,
Regardless of the muddled history in this circuit concerning the question whether Rule 9(b) applies to claims for negligent misrepresentation under New York law, it is clear that Aetna now controls, and, for that reason, the Court will subject the Plaintiffs’ negligent misrepresentation claim under New York law to Rule 9(b) scrutiny. However, the Court finds that the 'Plaintiffs’ proposed claim for negligent misrepresentation against Brown withstands Rule 9(b) scrutiny.
First, the Plaintiffs adequately plead that the Defendants made negligent misrepresentations to them and that they reasonably relied on these misrepresentations. The fact that Brown may not have made any of the alleged misrepresentations himself does not absolve him, as a matter of law, for liability for negligent misrepresentations. “While it is settlеd that ‘[t]he group pleading doctrine is an exception to the requirement that the fraudulent acts of each defendant be identified separately in the complaint,’ this does not imply that the group pleading doctrine applies only to fraud claims; rather, it applies whenever Rule 9(b) applies, which is whenever the alleged conduct of defendants is fraudulent in nature. Because negligent misrepresentation is a type of fraud, the group pleading doctrine does apply to negligent misrepresentation claims.” King Cnty., Wash. v. IKB Deutsche Industriebank AG,
Turning to whether the Plaintiffs adequately plead that they “stood in some special relationship [with the Defendants] imposing a duty of care on the [Defendant’s] to render accurate information,” courts “have proceeded with marked caution because, under New York law, ‘determining whether a special relationship exists ordinarily requires a fact-intensive, case-by-case inquiry.’ ” Tomoka Re Holdings, Inc. v. Loughlin, No. 03 CIV. 4904(NRB),
In making this determination, courts consider three factors: “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,
Here, the Plaintiffs have sufficiently alleged that the Defendants held a unique and special expertise with respect to The Meat House Franchise system; that the Plaintiffs, as a prospective participant in that system, had a special relationship of trust with the Defendants, and that the Defendants were aware that their statements regarding The Meat House franchise system would be relied upon by the Plaintiffs. See Hughes v. Ester C Co.,
The Court notes that a “special relationship” is more likely to exist if, as here, the misrepresented facts were “peculiarly within the Defendants’] knowledge.” LBBW Luxemburg S.A v. Wells Fargo Sec. LLC,
Accordingly, the Court finds that the Plaintiffs’ proposed causes of actions sounding in negligent misrepresentation against Brown are not subject to dismissal under Fed.R.Civ.P. 9(b) and that part of the Plaintiffs’ cross-motion for leave to amend to assert that claim is granted.
D. The Breach of Fiduciary Duty Claims
The Plaintiffs raise a number of claims sounding in breach of fiduciary duty against Brown.
As a preliminary matter, the Court notes that, as is the case with claims for negligent misrepresentation, “[f]iduciary-duty claims not sounding in fraud are not subject to Rule 9(b)’s heightened pleading standard.” Gardner v. Major Auto. Companies, Inc., No. 11-CV-1664 (FB)(VMS),
With this principle in mind, the Court finds that the Plaintiffs’ proposed claims for' breach of fiduciary duty sound in fraud. Granted, “not every claim based on dishonesty necessarily sounds in fraud,” In re Grumman Olson Indus., Inc.,
For this reason, the fact that the Plaintiffs engage in “group pleading” is not, by itself, fatal to their proposed breach of fiduciary duty claims. “[T]he group pleading doctrine applies to breach of fiduciary duty claims that are rooted in
Nor are the Plaintiffs’ claims in this regard barred simply because each of the allegations supporting the breach of fiduciary duty claims mirror those supporting the Plaintiffs’ breach of contract claims. Notably, the Plaintiffs allege that Brown owed a fiduciary duty to Schwartzco “pursuant to the Operating Agreement, (Amended Compl., at ¶ 225.) and breached his fiduciary duty “by making warranties and representations under the Operating Agreement” and by “breaching the Operating Agreement.”” (id. at ¶228, 233.).
Typically, “[w]here a fiduciary duty is based upon a comprehensive written contract between the parties, a claim for breach of fiduciary duty is duplicative of a claim for breach of contract” and must be dismissed. Alitalia Linee Aeree Italiane, S.p.A. v. Airline Tariff Publ’g Co.,
However, the rule barring dupli-cative claims of breach of fiduciary duty and breach of contract is only applicable where the two claims are asserted against a common defendant. See Sun Products Corp. v. Bruch, No. 10 CIV. 4816(SAS),
Nonetheless, the Court is of the view that the Plaintiffs’ proposed breach of fiduciary duty claims fail as a matter of law because the Plaintiffs have not plеad with particularity the existence of a fiduciary duty between Brown and them. As noted above, according to the proposed amended complaint, Brown owed a fiduciary duty to Schwartzo “pursuant to the Operating Agreement.” (Amended Compl., at ¶ 225.) However, the Plaintiffs cite no authority, and the Court has uncovered none, that a non-signatory, such as Brown, to a contract may be liable for breach of a fiduciary duty arising out of that contract. Further, even if a non-signatory could be held hable in this way, the Plaintiffs point to no specific language of the Operating Agreement triggering such a duty. Accordingly, the Court dismisses the Plaintiffs’ claims against Brown for breach of fiduciary duty.
Although the Court has found that the Plaintiffs adequately alleged a “special relationship” with the Defendants, including Brown, for purposes of their negligent misrepresentation claim, the Plaintiffs have not alleged enough to demonstrate a “fiduciary relationship” between them and the Defendants, including Brown. See King Cnty., Wash. v. IKB Deutsche Indus
The Court also holds that the Plaintiffs’ claims for aiding and abetting breach of fiduciary duty must be dismissed, because, under New York law, “ ‘[a] claim for aiding and abetting a breach of fiduciary duty requires ... a breach by a fiduciary of obligаtions to another.’ ” UniWorld Capital, L.P. v. Preferred Fragrance, Inc., No. 13 CIV. 7204(PAE),
E.The Civil Conspiracy-Fraud Claim
The proposed amended complaint alleges that Brown was involved in a civil conspiracy to commit the underlying fraud.
At the outset, the Court notes that “[a plaintiffs] pleading of a conspiracy, apart from the underlying acts of fraud, is properly measured under the more liberal pleading requirements of Rule 8(a).” M.E.S., Inc. v. Safeco Ins. Co. of Am., No. 10-CV-02798 (PKC)(VMS),
In any event, however, “[a] claim for civil conspiracy is only actionable if the complaint states a claim for the underlying tort.” Corbett v. eHome Credit Corp., No. 10-CV-26 (JG)(RLM),
F. The Civil Conspiracy-Breach of Fiduciary Duty Claim
Again, “in order to adequately plead a claim for civil conspiracy, a plaintiff must establish first the underlying tort that the parties have conspired to commit.” Hilton Head Holdings b.v. v. Peck, No. 11 CIV. 7768(KBF),
G. The Breach of Duty of Care Claim
The Plaintiffs also propose to assert a claim for breach of duty of care owed to them by the Defendants.
However, here, the Plaintiffs assert that the Defendants “breached their duty of care by making warranties and representations under the Operating Agreement, including warranting that they had completed all necessary due diligence into the business, operations of the franchise agreements, and that the total capital contribution was sufficient to cover all costs to build-out the Roslyn Store as well as two other locations.” (Amended Compl., at 61.) Fairly read, this claim is rooted in fraud and Rule 9(b) applies irrespective of the formal styling of the claim as one seeking redress for a breach of the duty of care.
However, whether viewed under Rule 9(b) or Rule 8(a), the Court finds thát the Plaintiffs’ proposed breach of duty of care claim fails as a matter of law for the same reason the proposed breach of fiduciary duty claim failed — namely the failure to adequately plead the existence of a duty of care. Indeed, the Plaintiffs allege that Brown owed a duty of care to them “pursuant to the Operating Agreement” and “breached [his] duty of care by making warranties and representations under the Operating Agreement.” (Amended Compl., at 61.) However, again, as Brown is a non-signatory to the Operating Agreement, the Plаintiffs cannot engraft a duty of care owed by Brown to the Plaintiffs thereunder. Accordingly, the Court dismisses the Plaintiffs’ proposed breach of duty of care claims against Brown and that part of the Plaintiffs’ cross-motion for leave to amend to assert that claim is denied as futile.
H. Gross Negligence
The Plaintiffs allege that the misconduct of the Defendants, including Brown, rises to the level of gross negligence because it “exceeded the bounds of ordinary negligence.” (Amended Compl., at ¶ 272.)
“To state a claim for gross negligence under New York law, [a plaintiff] must establish four elements: (1) the existence of a duty; (2) a breach of that duty; (3) ‘injury as a result thereof;’ and (4) conduct that ‘evinces a reckless disregard for the rights of others or ‘smacks’ of intentional wrongdoing.’ ” Purchase Partners, LLC v. Carver Federal Sav. Bank,
Further, “a claim for gross negligence does not require the heightened pleading requirements of Rule 9(b).” Saltz v. First Frontier, LP, 782 F.Supp.2d
As gleaned from the proposed amended complaint, the Plaintiffs plead a duty of care, separate and apart from the Operating Agreement, owed by the Defendants to them. Purchase Partners, LLC,
At first glance, it would appear that the Plaintiffs have stated a claim, as required by Rule 8(a), for gross negligence under New York law. However, where the claim, such as gross negligence, is not rooted in fraud, the Plaintiffs cannot hide behind “group pleading” of the sort here that fails to distinguish between the defendants, including Brown. Atuahene v. City of Hartford,
Accordingly, the Court grants that part of Brown’s motion to dismiss the proposed gross negligence claim and that part of the Plaintiffs’ cross-motion for leave to amend to assert that claim is denied as futile.
I. The NYFSA Claim
As noted above, the Plaintiffs also allege violations on the part of Brown of' the NYFSA, namely Sections 683 and 687. The NYFSA regulates the registration of franchises in New York State and enumerates detailed requirements for companies establishing, advertising, and selling franchises. These requirements are designed to provide prospective franchisees with accurate information regarding a given franchise offering and to prevent fraud in the sale of franchises. N.Y. Gen. Bus. Law. at § 680. “Given the Franchise Sales Act’s remedial goals, courts have held that its anti-fraud provisions should be interpreted liberally.” Vysovsky v. Glassman, No. 01 CIV. 2531(LMM),
As a preliminary matter, the Court notes that the fact thаt this claim is statutory in nature does not, by itself, preclude application of Fed.R.Civ.P. 9(b). “Were th[at] the case, Rule 9(b) would not apply
Curiously, the parties fail to cite, and the Court has uncovered no case law directly addressing whether claims brought under the NYFSA must comply with the heightened pleading standards of Fed. R.Civ.P. 9(b). A case coming close to addressing this question, Zaro Licensing, Inc. v. Cinmar, Inc.,
On the one hand, the fact that “the [NYFSA] was enacted specifically to prevent, combat and protect the franchisee from rampant franchise sales fraud,” A.J. Temple Marble & Tile, Inc.,
The answer to the presence of § 683 in the NYFSA, of course, may be that Rule 9(b) applies to claims brought under certain sections of the NYSFA, namely the anti-fraud provisions, and not to others, namely the disclosure provisions. Stated otherwise, the question of the application of Rule 9(b) to the NYFSA is likely not an “all or nothing” answer.
However, the Court need not decide whether the Plaintiffs proposed NYF-SA claim against Brown is subject to the heightened pleading requirements of Rule 9(b) or the liberal notice pleading requirements of Rule 8(a). This is because, with respect to the alleged violations of § 683 and of § 687 of the NYFSA, the Plaintiffs satisfy either standard.
First, as to § 683 of the .NYFSA, the proposed amended complaint asserts that the Defendants
fail[ed] to make proper disclosure or provide a prospectus prior to selling or attempting to sell the franchises to Plaintiffs, (2) fail[ed] to register an offering prospectus with the N.Y. [Attorney Generalas Office, and (3) fail[ed] to disclose “financial performance representations” in the proper manner (e.g. by failing to include them in an offering prospectus, with a proper statement setting forth the data methods and computations upon which the financial performance representations were based) (4) fail[ed] to provide the most current year’s financial performance information, and (5) allow[ed] disclosure to become “stale” and not providing new disclosure for 2011 prior to the execution of the Aug. 3, 2011 agreement for the Roslyn store.
With respect to the alleged violations of § 687 of the NYFSA, the Plaintiffs allege that the Defendants “ma[de] false or materially misleading oral and written representations” (Id. at ¶ 276.) In the Court’s view, the Plaintiffs set forth sufficient factual allegations to state a violation of § 687 of the NYFSA.
To be sure, for purposes of their NYF-SA claim, the Plaintiffs engage in precisely the type of “group pleading” that was fatal to their gross negligence claims. However, it not clear that such pleading is prohibited with respect to NYSFA claims, particularly given the statute’s provision for “control person” liability under § 691(3) for an individual merely by virtue of their position in an entity liable for NYSFA violations. That subsection provides: “A person who directly or indirectly controls a person liable under this article, a partner in a firm so liable, a principal executive officer or director of a corporation so liable, a person occupying a similar status or performing similar functions, and an employee of a person so liable, who materially aids in the act of transаction constituting the violation, is also liable jointly and severally with and to the same extent as the controlled person, partnership, corporation or employer.”
Section 691(3) further provides that “[i]t shall be a defense to any action based upon such liability that the defendant did not know or could not have known by the exercise of due diligence the facts upon which the action is predicated.” Id. However, even if Brown had invoked this language here, at the motion to dismiss stage, the Court cannot opine on the merits to any-such defense to the NYFSA action.
As a final matter, the Court finds that the Plaintiffs have adequately plead a request under Section 691 of the NYFSA “for rescission, with interest at six percent per year from the date of purchase, and reasonable attorney fees and court costs” based on the “wil[l]ful” conduct of the Defendants, which only requires a claim of intentional conduct. (See Amended Compl., at ¶¶ 284, 286); see Mister Softee, Inc. v. Tsirkos, No. 14 CIV. 1975(LTS)(RLE),
For the foregoing reasons, the Court denies that part of Brown’s motion to dismiss the proposed NYFSA claim and that part of the Plaintiffs’ cross-motion for leave to amend to assert that claim is granted.
J. The NYCPA Claim
As noted above, the Plaintiffs also propose to allege a claim under the New York Consumer Protection Act, N.Y. Gen. Bus. Law § 349(a) (the “NYCPA”) аgainst Brown. That statute provides that “[d]e-ceptive acts or practices in the conduct of any business, trade or commerce or in furnishing of any service in this state are hereby declared unlawful.” “To state a claim under § 349, a plaintiff must allege: (1) the act or practice was consumer-oriented; (2) the act or practice was mislead
“It is not necessary for the plaintiff to demonstrate that the defendant acted intentionally or with scienter.” Chiste v. Hotels.com L.P.,
“[B]ecause § 349 extends well beyond common-law fraud to cover a broad range of deceptive practices, and because a private action under § 349 does not require proof of the same essential elements (such as reliance) as common-law fraud, an action under § 349 is not subject to the pleading-with-particularity requirements of Rule 9(b), but need only meet the bare-bones notice-pleading requirements of Rule 8(a).” Pelman ex rel. Pelman v. McDonald’s Corp.,
The consumer-oriented element of a N.Y. GBL § 349 claim “ ‘has been construed liberally.’ ” Kapsis v. Am. Home Mortg. Servicing Inc.,
Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A.,
Instead, the critical question is whether “the acts or practices have a broad[] impact on consumers at large.” Id.; see e.g-., Riordan v. Nationwide Mut. Fire Ins. Co.,
That said, “[f]or a claim to classify as ‘consumer-oriented,’ a plaintiff must plead and prove injury to the public generally, rather than to himself alone.” Newman v. Mor, No. 08CV658 (RJD)(CLP),
In this case, although not argued by Brown, the Courts finds that the Plaintiffs have failed to plausibly allege that any alleged deceptive acts or practices orches
The Plaintiffs allege that the Defendants’ conduct “impact[ed]” the public (Amended Compl., at ¶ 290.) and “have damaged other similarly situated New York consumers, including but not limited to three other MHF franchisees in New York.” (Id. at ¶ 291.). It is not clear whether this type of “group pleading” is permissible under the NYCPA. However, even assuming “group pleading” may be appropriate in this regard, the facts alleged do not support the conclusion that the complained-of conduct was “consumer-oriented,” even under notice pleading standards. Compare Corbin v. Wilson, No. 10-CV-3156 (NGG)(RER),
Indeed, the Plaintiffs’ statements concerning the “impact” of the Defendants’ allegedly unlawful, conduct is conclusory language that, in essence, “[impermissibly] parrots decisions of the New York Court of Appeals.” Corbin,
Furthermore, the transactions described in the proposed amended complaint, like securities transactions,- were undertaken as investments, not purchased as goods or services to be consumed or used, and so fall outside of the statute’s protection. See e.g., Gray v. Seaboard Sec., Inc.,
K. The NHCPA claim
The New Hampshire Consumer Protection Act, N.H.Rev.Stat. Ann. Ch. 358-A (the “NHCPA”) “is a comprehensive statute whose language indicates that it should be given broad sweep.” Roberts v. General Motors Corp.,
It shall be unlawful for any person to use any unfair method of competition or any unfair or deceptive act or practice in the conduct of any trade or commerce within this statе.
N.H.Rev.Stat. § 358-A:2. “Although the NHCPA provides a non-exclusive list of prohibited conduct, the statute precludes only those ‘types of [acts] therein particularized.’ ” In re Methyl Tertiary Butyl Ether (MTBE) Products Liab. Litig.,
Although the substantive requirements of the NHCPA are governed by the laws of New Hampshire, “any pleading requirements are governed by federal law, which controls procedural matters in diversity cases.” Leonard v. Abbott Labs., Inc., No. 10-CV-4676 (ADS)(WDW),
Here, this Court is bound by the law of Second Circuit. See Northwestern Mut. Life Ins. Co. v. Banc of America Securities LLC,
The lone case on point in this circuit, Leonard, coincidentally was decided by this Court. In that case, the Court applied Rule 8(a) to the plaintiffs’ NHCPA claim. In doing so, this Court relied in part on the “the similarities” between the NYCPA and the NHCPA, including the fact that neither required elements of reliance or scienter.
Of relevance here, courts in the First Circuit, where New Hampshire is situated, apply a more searching analysis to determine whether the underlying factual allеgations supporting the NHCPA claim, in fact, sound in fraud. See e.g., Gwyn v. Loon Mountain Corp., No. 01-00214-B,
In this case, the Plaintiffs allege that Brown “materially aided in the acts of the transactions constituting the violations of the NHCP and FTC Franchise Rule by MH Franchising by, among other things, making the aforementioned false or materially misleading oral and written representations as to the future financial performance of [the] Plaintiffs’ prospective locations, of existing franchisee locations, and of corporate locations.” (Amended Compl., at ¶ 301.) The Plaintiffs further allege that Brown “made the aforementioned false or materially misleading statements of fact regarding the profits, losses and revenues of franchisee locations and corporate-owned Meat House stores during 2009 and 2010, and financial projections regarding Plaintiffs’ return on their investment, and made the aforementioned false statements in their FDD.” (Id.) Given that these allegations mirror the allegations supporting the fraud claims, application of Rule 9(b) would appear to be appropriate, notwithstanding the ruling in Leonard.
Further, is not clear whether this type of “group pleading” is permissible under the NHCPA. The fact that New Hampshire law pertaining to limited liability companies provides that the “debts, obligations, and liabilities of a limited liability company, whether arising in contract, tort, or otherwise, shall be solely the debts, obligations, and liabilities of the limited liability company” and “[n]o member or manager of a limited liability company shall be obligated personally for any such debt, obligation, or liability of the limited liability company solely by reason of being a member or acting as a manager of the limited liability company,” N.H.Rev.Stat. Ann. § 304-C:23 (emphasis added), counsels against the permissibility of “group pleading” under the NHCPA. See generally Mbahaba v. Morgan,
However, even assuming that “group pleading” may be appropriate and that Rule 8(a) is more appropriately applied to the Plaintiffs’ proposed claim under the NYCPA, the claim fails on another ground — that is, it does not properly fall into any of the enumerated categories under the NHCPA. That statute prohibits the following conduct:
I. Passing off goods or services as those of another;
II. Causing likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services;
III. Causing likelihood of confusion or of misunderstanding as to affiliation, connection or association with, or certification by, another;
IV. Using deceptive representations or designations of geographic origin in connection with goods or services;
V. Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that such person does not have;
VI. Representing that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used or secondhand;
VII. Representing that goods or. services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;
VIII. Disparaging the goods, services, or business of another by false or misleading representation of fact;
IX. Advertising goods or services with intent not to sell them as advertised;
X. Advertising goods or services with intent not to supply reasonably expecta-ble public demand, unless the advertisement discloses a limitation of quantity;
X-a. Failing to disclose the legal name, street address, and telephone number of the business under RSA 361-B:2-a;
XI. Making false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions; or
XII. Conducting or advertising a going out of business sale:
(a) Which lasts for more than 60 days;
(b) Within 2 years of a going out of business sale conducted-by the same person at the same location or at a different location but dealing in similar merchandise;
(c) Which includes any goods, wares, or merchandise purchased or received 90 days prior to commencement of the sale or during the duration of the sale and which are not ordinarily sold in the seller’s course of business;
(d) Which includes any goods, wares, or merchandise ordered for the purpose of selling or disposing of them at such sale and which are not ordinarily sold in the seller’s course of business;
(e) Which includes any goods, wares, or merchandise consigned for the purpose of selling or disposing of them at such sale; .
(f) Without conspicuously stating in any advertisement for any such sale, the date such sale is to commence or was commenced;
(g) Upon the conclusion of which, that business is continued under the same name or under a different name at the same location; or
(h) In a manner other than the name implies.
XIII. Selling gift certificates having a face value of $100 or less to purchasers which contain expiration dates. Gift certificates having a face value in excess of $100 shall expire when es-cheated to the state as abandoned property pursuant to RSA 471-C. Dormancy fees, latency fees, or any other administrative fees or service charges that have the effect of reducing the total amount for which the holder may redeem a gift certificate are prohibited. This paragraph shall not apply to season passes.
XIV. Pricing of goods or services in a manner that tends to create or maintain a monopoly, or otherwise harm competition.
N.H.Rev.Stat. Ann. § 358-A:2. Effective January 1, 2015, the NHCPA will also prohibit “XV. Failure of a facility, as defined in RSA 161-M:2, or person to comply with the provisions of RSA 161-M regarding the senior citizens bill of rights” and “XVI. Failing to deliver home heating fuel in accordance with a prepaid contract.”
Of course, the above-mentioned categories of conduct are non-exhaustive. N.H.Rev.Stat. Ann. § 358-A:2 (“Such unfair method of competition or unfair or deceptive act or practice shall include, but is not limited to, the following ... ”) (emphasis added). However, again, “the statute precludes only those ‘types of [acts] therein particularized.’ ” In re Methyl Tertiary Butyl Ether (MTBE) Products
In the present case, the gravamen of the proposed amended complaint is that the Defendants, including Brown, pitched certain investment ventures directly to the Plaintiffs, and induced them to invest by making false and misleading representations about the financial profitability of The Meat House franchise system and the Plaintiffs’ ability to obtain a return on those investments. In the Court’s view, such allegations do not fall within “the type” of conduct proscribed by the NHCPA.
Accordingly, the Plaintiffs have failed to plead sufficient allegations to establish the liability of Brown under the NHCPA. That part of Brown’s motion to dismiss the proposed NHCPA claim is granted and that part of the Plaintiffs’ cross-motion for leave to amend to assert that claim is denied as futile.
L. The Breach of Duty of Good Faith and Fair Dealing claim
To establish a claim for breach of the duty of good faith and fair dealing: “(1) [the] defendant must owe plaintiff a duty to act in good faith and conduct fair dealing; (2)[the] defendant must breach that duty; and (3) the breach of duty must proximately cause [the] plaintiffs damages.” Champagne v. United States,
It follows then that, under New York law, “a non-signatory cannot be held liable for breach of the implied covenant of good faith and fair dealing, because there is no contract between the two parties under which to find such an implied term.” Atari, Inc. v. Games, Inc., No. 04 CIV. 3723(JSR),
While it is true that a non-signatory can be named as a defendant if he or she “is in privity with the plaintiff or has assumed the obligations of the contract,” ESI, Inc. v. Coastal Corp.,
Accordingly, ' the proposed claim for breach of the covenant of good faith and fair dealing is dismissed as to Brown. That part of Brown’s motion to dismiss this claim is granted and that part of the-Plaintiffs’ cross-motion for leave to amend to assert that claim is denied as futile.
Based on the foregoing reasons, Brown’s motion to dismiss pursuant to Rule 9(b), considered as directed at the proposed amended complaint, is granted in part and denied in part. In particular, Brown’s motion to dismiss is denied as to the Plaintiffs claims for (1) negligent misrepresentation under New York law and (2)violations of the NYFSA. Brown’s motion is otherwise granted.
Concurrently, the Plaintiffs motion pursuant to Rule 15(a) for leave to file an amended complaint is granted in part and denied in part. The motion is granted as to the Plaintiffs claims for negligent misrepresentation and violations of the NYF-SA.
SO ORDERED.