Lesavoy v. Gattullo-Wilson

170 F. App'x 721
CourtCourt of Appeals for the Second Circuit
DecidedMarch 2, 2006
DocketNo. 05-3011-CV
StatusPublished
Cited by10 cases

This text of 170 F. App'x 721 (Lesavoy v. Gattullo-Wilson) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lesavoy v. Gattullo-Wilson, 170 F. App'x 721 (2d Cir. 2006).

Opinion

SUMMARY ORDER

Plaintiff-Appellant Lisa Lesavoy appeals from an order of May 16, 2005, dismissing this action.1 Previously, the district court had granted the motion of Defendants-Appellees Renee GattulloWilson and Salomon Smith Barney, Inc. (collectively, “SSB”) to dismiss all eight counts of Lesavoy’s complaint against them, and it is that order which Lesavoy challenges on appeal. We assume the parties’ familiarity with the facts of this case, its relevant procedural history, and the issues on appeal.

We review de novo a district court’s grant of a motion to dismiss pursuant to Rule 12(b)(6), construing the complaint in the light most favorable to the plaintiff, accepting its well-pleaded allegations as true and drawing all inferences in plaintiffs favor. Kavowras v. N.Y. Times Co., 328 F.3d 50, 54 (2d Cir.2003). ‘We may affirm the dismissal only if it appears beyond doubt that the plaintiff! ] can prove no set of facts in support of [her] claim[s] which would entitle [her] to relief.” Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 395 F.3d 25, 31 (2d Cir.) (internal quotation marks omitted and third alteration in original), cert. granted, — U.S. -, 126 S.Ct. 34, 162 L.Ed.2d 932 (2005). “ ‘[T]he issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.’ ” Todd v. Exxon Corp., 275 F.3d 191, 198 (2d Cir.2001) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)).

In a thorough opinion, the district court dismissed counts three through eight of the complaint, all of which “plead fraud in various forms,” because (among other reasons) Lesavoy failed to plead those claims with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure, which provides, “In all averments of fraud or mistake, the circum[723]*723stances constituting fraud or mistake shall be stated with particularity.” Fed. R.Civ.P. 9(b). Before dismissing her complaint, the district court had given Lesavoy an opportunity to amend the complaint to provide the specificity required by Rule 9(b) and had explicitly cautioned her that “any dismissal of any of the causes of action in the amended complaint shall be without further leave to amend.”

Lesavoy’s complaint does not identify the false statements, or failures to speak under an obligation to do so, that give rise to her fraud allegations against SSB. Nor does the complaint articulate specific facts from which an inference of fraudulent intent on SSB’s part can be drawn. Accordingly, having already given Lesavoy an opportunity to cure these defects, the district court properly dismissed counts three through eight for failure to comply with Rule 9(b). See First Capital Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 178 (2d Cir.2004) (affirming the dismissal of an amended complaint because the allegedly fraudulent acts of which plaintiffs complained “were not pled with sufficient particularity”). The district court also properly dismissed count two — Lesavoy’s RICO claim — on the basis of Rule 9(b), “[a]s the allegations primarily rest upon the predicate acts of mail fraud, wire fraud, and fraud on a financial institution” and so “must be pled with particularity.” See Satinwood, 385 F.3d at 178 (“[A]ll allegations of fraudulent predicate acts [under RICO] are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b).”).

In the remaining count, count one, Lesavoy alleged that SSB aided and abetted Defendant John Lane’s breach of his fiduciary duty to the trusts and trust beneficiaries. Unlike the other counts discussed above, count one is not governed by the pleading requirements of Rule 9(b). Instead, the allegations of count one are judged under the notice-pleading standard of Rule 8. See, e.g., Swierkiewicz v. Sorema N.A, 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002).

To plead her aiding-and-abetting claim properly under New York law,2 Lesavoy was required to allege the following elements: “(1) a breach by a fiduciary of obligations to another, (2) that the defendant knowingly induced or participated in the breach, and (3) that plaintiff suffered damage as a result of the breach.” Kaufman v. Cohen, 307 A.D.2d 113, 760 N.Y.S.2d 157, 169 (N.Y.App.Div.2003). The district court identified four breaches of fiduciary duty by Lane that SSB was alleged to have aided and abetted in the complaint:

(1) that Comart was unnecessarily interposed as an introducing broker, effectively increasing the cost of executing each trade for the Trusts without conferring any additional benefit;
(2) that all commodities futures and options trades required Petit’s express written consent, and that they were executed without this consent;
(3) that funds were transferred between the Trusts; and
(4) that trades were accepted that exposed the Trusts to a risk of loss, greater than net assets.

For a variety of reasons, the district court held that Lesavoy had not properly pleaded an aiding-and-abetting claim against SSB as to any of the aforementioned breaches of fiduciary duty.

[724]*724With respect to the second, third, and fourth alleged breaches described above, we agree with the district court that Lesavoy has not properly pleaded the elements of an aiding-and-abetting claim against SSB. In particular, the Court agrees with the district court that the trust documents (which were incorporated by reference in Lesavoy’s complaint) do not support her conclusory assertion that prior written consent was required for approval of each trade. Indeed, the trust documents expressly stated that “[n]o person ... or firm dealing with the Trustees ... shall be required to investigate the authority of the Trustees for entering into any transaction.” We also agree, as the district court rightly noted, that evidence referenced in or incorporated into the complaint rebutted Lesavoy’s assertion that SSB aided transfers between the trusts. See Feick v. Fleener, 653 F.2d 69, 75 (2d Cir.1981) (“Since the documents upon which [plaintiffs] based their claim show on their face absence of any grounds for relief, dismissal was proper.”). Finally, as a matter of law, SSB was not responsible for the riskiness of the trustee’s trades because it did not have authority to place trades without authorization from the trustee. See De Kwiatkowski v. Bear, Stearns & Co., Inc.,

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Bluebook (online)
170 F. App'x 721, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lesavoy-v-gattullo-wilson-ca2-2006.