United States District Court, D. Connecticut
RULING AND ORDER ON MOTION TO DISMISS
VICTOR
A. BOLDEN UNITED STATES DISTRICT JUDGE
On
August 4, 2017, UCF I Trust 1 (“UCFT”) and UC
Funding I, L.P., Trustee (“UCF Trust”) (together,
“Plaintiffs”) sued Berkowitz, Trager &
Trager, LLC (“Berkowitz, Trager & Trager” or
“Defendant”), alleging breach of contract, breach
of the implied covenant of good faith and fair dealing, and
negligent misrepresentation, based on an opinion letter
authored by Berkowitz, Trager & Trager that allegedly
induced Plaintiffs to make a mezzanine loan to Park Square
West Member Associates, LLC that eventually resulted in a
loss of approximately $13, 000, 000. Complaint, dated Aug. 4,
2017 (“Compl.”), ECF No. 1.
On May
1, 2018, the Court granted Berkowitz, Trager &
Trager's motion to dismiss this Complaint for failure to
state a claim upon which relief can be granted, but granted
Plaintiffs leave to file an Amended Complaint, to the extent
they were able to address the deficiencies identified by the
Court. Ruling on Motion to Dismiss, dated May 1, 2018
(“Ruling”), ECF No. 29.
On May
31, 2018, Plaintiffs filed an Amended Complaint. Amended
Complaint, dated May 31, 2018 (“Am. Compl.”), ECF
No. 33.
On July
18, 2018, Berkowitz, Trager & Trager moved to dismiss the
Amended Complaint for failure to allege sufficient facts upon
which relief may be granted. Motion to Dismiss
Plaintiffs' Am. Compl., dated July 18, 2018
(“Def.'s Mot.”), ECF No. 37; Memorandum in
Support of Def.'s Mot., dated July 18, 2018
(“Def.'s Mem.”), ECF No. 38.
For the
reasons explained below, the Court GRANTS
Defendant's motion to dismiss and
DISMISSES the Amended Complaint with
prejudice.
I.
FACTUAL AND PROCEDURAL BACKGROUND
UCFT, a Delaware statutory trust with its principal place of
business in Boston, Massachusetts, makes secured mezzanine
loans.[1] Am. Compl. ¶¶ 3-4. UCF Trust, a
limited partnership with a principal place of business in
Dover, Delaware, is the trustee of UCFT. Id. ¶
5. Berkowitz,, Trager & Trager, a law firm organized as a
Connecticut limited liability company, has its principal
place of business in Westport, Connecticut. Id.
¶ 6.
A.
Factual Allegations
The
parties' familiarity with the facts of this case, which
are set forth in the Court's May 1, 2018 Ruling, is
presumed. See Ruling at 2-5. The Court therefore
only addresses any new and relevant allegations in
Plaintiffs' Amended Complaint in the discussion below.
B.
Procedural History
UCFT
filed a Complaint in this Court on August 4, 2017, claiming
breach of contract, breach of the covenant of good faith and
fair dealing, and negligent misrepresentation against
Berkowitz, Trager & Trager. See Compl.
On
September 25, 2017, Berkowitz, Trager & Trager moved to
dismiss, arguing that UCFT had failed to state a claim upon
which relief can be granted because (1) UCFT was not
Berkowitz, Trager & Trager's client; (2) a third
party beneficiary of a written contract cannot recover for a
breach of the implied covenant of good faith and fair
dealing; and (3) UCFT's claim for negligent
misrepresentation is barred by the statute of limitations.
First Motion to Dismiss, dated Sept. 25, 2017, ECF No. 14, at
1-2. Berkowitz, Trager & Trager argued that it “did
not represent UCF, and in fact was adverse to UCF in its role
representing Park Square West Member Associates, LLC as
borrower and [Berkowitz's] other clients in connection
with this transaction.” Id. at 2. Berkowitz,
Trager & Trager therefore argued that UCF cannot bring a
claim based in contract related to Berkowitz, Trager &
Trager's attorney-client relationship with the Park
Square West Entities, and any claim based in tort must fail
because the applicable three-year statute of limitations had
passed. Id. at 2, 6, 8, 15, 17.
On
October 16, 2017, Plaintiffs opposed the motion to dismiss.
Plaintiffs' Opposition, dated Oct. 16, 2017, ECF No. 16.
On May
1, 2018, the Court granted Berkowitz, Trager &
Trager's motion to dismiss the Complaint for failure to
state a claim upon which relief can be granted. See
Ruling. The Court found that: (1) Plaintiffs do not have a
viable contract claim either because their claim sounded in
tort or the Opinion Letter issued by Berkowitz, Trager &
Trager was not a contract, id. at 11; (2) Plaintiffs
do not have a claim as a third-party beneficiary of any
contract between Berkowitz, Trager & Trager and Park
Square West Member Associates, LLC, PSWMA I, LLC, PSWMA II,
LLC and Seaboard Realty, LLC (the “Park Square West
Entities”), in part, because Plaintiffs did not allege
that they were intended third-party beneficiaries of that
attorney-client relationship, id. at 12; (3)
Plaintiffs lack a viable claim based on the covenant of good
faith and fair dealing for the same reasons they lack a
viable breach of contract claim, id. at 15; and (4)
that the Complaint did not sufficiently allege that they
reasonably relied on Berkowitz, Trager & Trager's
advice, id. at 15-16.
The
Court, however, granted Plaintiffs leave to file an Amended
Complaint within thirty days of its decision, to the extent
Plaintiffs were able to address deficiencies identified by
the Court. Id. at 17.
On May
31, 2018, Plaintiffs filed an Amended Complaint. Am. Compl.
On July
18, 2018, Berkowitz, Trager & Trager moved to dismiss the
Amended Complaint for failure to allege sufficient facts upon
which relief may be granted. Def.'s Mot.; Def.'s Mem.
On
August 20, 2018, Plaintiffs opposed the motion. Memorandum of
Law in Opposition to Def.'s Mot., dated Aug. 20, 2018
(“Pls.' Mem.”), ECF No. 43.
On
September 7, 2018, Berkowitz, Trager & Trager filed a
reply in further support of its motion to dismiss. Reply,
dated Sept. 7, 2018, ECF No. 45.
II.
STANDARD OF REVIEW
A
complaint must contain a “short and plain statement of
the claim showing that the pleader is entitled to
relief.” Fed.R.Civ.P. 8(a). Any claim that fails
“to state a claim upon which relief can be
granted” will be dismissed. Fed.R.Civ.P. 12(b)(6). In
reviewing a complaint under Rule 12(b)(6), a court applies a
“plausibility standard” guided by “two
working principles.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009).
First,
“[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice.” Id.; see also Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (“While a
complaint attacked by a Rule 12(b)(6) motion to dismiss does
not need detailed factual allegations . . . a plaintiff's
obligation to provide the ‘grounds' of his
‘entitle[ment] to relief' requires more than labels
and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.” (internal citations
omitted)). Second, “only a complaint that states a
plausible claim for relief survives a motion to
dismiss.” Iqbal, 556 U.S. at 679. Thus, the
complaint must contain “factual amplification . . . to
render a claim plausible.” Arista Records LLC v.
Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (quoting
Turkmen v. Ashcroft, 589 F.3d 542, 546 (2d Cir.
2009)).
When
reviewing a complaint under Federal Rule of Civil Procedure
12(b)(6), the court takes all factual allegations in the
complaint as true. Iqbal, 556 U.S. at 678.
The court also views the allegations in the light most
favorable to the plaintiff and draws all inferences in the
plaintiff's favor. Cohen v. S.A.C. Trading
Corp., 711 F.3d 353, 359 (2d Cir. 2013); see also
York v. Ass'n of the Bar of the City of N.Y., 286
F.3d 122, 125 (2d Cir.) (“On a motion to dismiss for
failure to state a claim, we construe the complaint ...