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United States Regional Economic Development Authority, LLC v. Matthews

United States District Court, D. Connecticut

April 17, 2017

UNITED STATES REGIONAL ECONOMIC DEVELOPMENT AUTHORITY, LLC, Plaintiff,
v.
GERRY D. MATTHEWS and MATTHEWS COMMERCIAL PROPERTIES, LLC, Defendants.

          RULING ON DEFENDANTS' MOTION TO DISMISS

          CHARLES S. HAIGHT, JR. SENIOR UNITED STATES DISTRICT JUDGE.

         This case is brought pursuant to the Court's diversity of citizenship subject matter jurisdiction. The Court initially ordered Plaintiff to establish by affidavit the citizenship of each party as of the date Plaintiff commenced the action [Doc. 7]. Plaintiff filed affidavits from which the Court concluded that the Complaint sufficiently and accurately alleged complete diversity of citizenship, so that jurisdiction existed in this Action [Doc. 10].

         Defendants now move pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss the Complaint for failure to state a claim upon which relief can be granted, Doc. 14 ("Defs. Br."). Plaintiff opposes that motion, Doc. 20 ("Pl. Br."). Defendants filed a reply brief, responding to Plaintiff's opposition, Doc. 22 ("Reply Br."). This Ruling resolves Defendants' motion.

         I. INTRODUCTION

         On a motion by defendant to dismiss, the Court "must accept as true all of the allegations contained in a complaint, " Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The facts alleged in this Plaintiff's Complaint tell a simple if dishonorable tale.

         Non-party Joseph Walsh was the managing member of Plaintiff United States Regional Economic Development Authority, LLC ("USREDA"). Defendant Gerry D. Matthews owned and operated Defendant Matthews Commercial Properties LLC ("MCP"), an entity engaged in the brokerage of commercial real estate. Gerry Mathews asked Walsh to wire funds for the purposes of repairing a property in Nantucket, Massachusetts owned by Gerry Matthews's brother Robert V. Matthews and to satisfy real estate taxes on Robert's Nantucket property so that it could be sold. Walsh complied with Gerry Matthews's request. By means of four wire transfers between April 15, 2013 and July 26, 2013, USREDA sent a total of $529, 843 to MPC. Defendants did not use the funds for the stated purposes. They have failed and refused to repay any part of the amounts received from Plaintiff.

         I accept each of these well-pleaded facts as true, and that the described events occurred. Defendants contend on this motion that notwithstanding the occurrence of those events, Plaintiff has failed to state a legal claim against Defendants, and thus, Defendants owe nothing to Plaintiff. The question presented to the Court is whether Plaintiff has stated any legal claims against Defendants.

         II. FACTUAL BACKGROUND

         The facts recounted in this Part are derived from Plaintiff's Complaint, [Doc. 1], and accepted as true on this motion.

         From April 15, 2013 through July 26, 2013, Joseph Walsh, the managing member of USREDA, caused a total of $529, 843 to be wired to MCP. Doc. 1 ¶ 5. These funds were solicited by Defendants and Robert Matthews "ostensibly for the purpose of repairing property" owned by Robert Matthews in Nantucket, Massachusetts and "to satisfy outstanding real estate taxes" on the property. Id. ¶ 6. The funds were needed to fix the property in order for it to be sold to a buyer in exchange for cash and a yacht. Id. Walsh met with Gerry Matthews both at his home and at MCP's offices in Connecticut to discuss the funds. Id. ¶ 7. Gerry Matthews represented that both he and MCP were assisting Robert Matthews in the sale of the property, the sale was imminent, and the funds would be repaid in the short-term. Id. Gerry Matthews also stated that if the funds from the sale of the house were insufficient, then he would repay any shortfall. Id. Based on these representations, USREDA caused the funds to be sent to MCP. Id. ¶ 8.

         Plaintiff alleges that "[u]pon information and belief" little, if any, of those funds were actually used for the property at issue. Doc. 1 ¶ 9. Instead, MCP and Gerry Matthews used the funds to divert them to, "among other things, cash withdrawals of as much as $19, 000 at one time, Gerry's mother Barbara Matthews and payment of a personal Chase Bank credit card account." Id. In addition, MCP wired $225, 000 to an entity called Bonaventure 22 LLC. Id. As of the filing of the Complaint on June 30, 2016, none of the funds have been repaid by Defendants and Defendants have not explained why the funds were not used for the purpose represented to Walsh and USREDA. Id. ¶ 10.

         Plaintiff requests a judgment against Defendants in the amount of $529, 843 with interest from the date the funds were each wired, plus the costs and disbursements of this Action. Doc. 1 at 3. Plaintiff's Complaint does not detail any specific causes of action against Defendants and consists of ten numbered paragraphs. See id.

         Defendants' Rule 12(b)(6) motion to dismiss the Complaint invokes the phrasing of the Rule, viz, "for failure to state a claim upon which relief can be granted." The Notice of Motion spells out Defendants' theory: They contend that "in its complaint, the plaintiff has failed to plead the necessary elements of any recognized cause of action, including breach of contract, fraudulent misrepresentation and negligent misrepresentation." Doc. 14 at 1.

         III. STANDARD OF REVIEW

         The Federal Rules of Civil Procedure require that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Rule 8(d)(1) requires that "[e]ach allegation must be simple, concise, and direct" and directs that "[n]o technical form is required." Fed.R.Civ.P. 8(d)(1). Although a complaint need not provide detailed factual allegations to survive a motion to dismiss made pursuant to Federal Rules of Civil Procedure 12(b)(6), a plaintiff must set forth sufficient factual allegations, accepted as true, that "state[s] a claim to relief that is plausible on its face." Ashcroft, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (internal quotation marks omitted). The Court is guided by "'[t]wo working principles'" in applying this standard. Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Iqbal, 556 U.S. at 678).

         First, all factual allegations in the Complaint must be accepted as true and all reasonable inferences must be drawn in Plaintiff's favor. See Id. The Court need not credit "legal conclusions" or "threadbare recitals of the elements of a cause of action supported by mere conclusory statements." Id. (quoting Iqbal, 556 U.S. at 678) (internal quotation marks and alteration omitted). Second, "a complaint that states a plausible claim for relief" will survive a motion to dismiss and "[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. (quoting Iqbal, 556 U.S. at 679) (internal quotation marks omitted). "Dismissal under Federal Rule of Civil Procedure 12(b)(6) is appropriate when 'it is clear from the face of the complaint, and matters of which the court may take judicial notice, that the plaintiff's claims are barred as a matter of law.'" Associated Fin. Corp. v. Kleckner, 480 F.App'x 89, 90 (2d Cir. 2012) (summary order) (quoting Conopco, Inc. v. Roll Int'l, 231 F.3d 82, 86 (2d Cir. 2000)).

         IV. DISCUSSION

         Defendants at bar begin their brief with the blunt indictment that "the plaintiff has completely failed to satisfy the pleading requirement of Rule 8(a)(2)." Defs. Br. at 4. As explained supra, Rule 8(a)(2) provides: "A pleading that states a claim for relief must contain: . . . a short and plain statement of the claim showing that the pleader is entitled to relief." Defendants' motion to dismiss the Complaint presses the contention that the pleading fails to satisfy the notice requirements of Rule 8(a)(2). Their brief lays out that theory in cursory fashion:

Not only does the Plaintiff's complaint fail to specifically identify any particular cause of action, it also completely fails to set forth the necessary elements of any cognizable cause of action, such as breach of contract, fraudulent misrepresentation or negligent misrepresentation. The allegations of the ...

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