The opinion of the court was delivered by: SWEET
Third-party defendant Conboy, Hewitt, O'Brien & Boardman ("Conboy") has moved to dismiss the third-party complaint of defendants and third-party plaintiffs Arnold S. Alperstein and Goldstick, Weinberger, Feldman, Alperstein & Tashoff, P.C. (collectively "Alperstein"), pursuant to Fed.R.Civ.P. 8, 9(b) and 12(b)(6), on the grounds that the third-party complaint fails to plead fraud with particularity and fails to state a claim upon which relief may be granted. For the following reasons, Conboy's motion to dismiss the complaint will be granted.
In 1980, plaintiff Quintel Corp., N.V. ("Quintel") commenced an action against Citibank and others for their alleged violations of federal securities laws in connection with Quintel's investment in Flag Associates, L.P. ("Flag"), a real estate limited partnership. The complaint alleges that the general partners of Flag and Citibank made certain misrepresentations to Quintel upon which it relied in investing in Flag. Quintel alleges, among other things, that certain of the defendants failed to disclose their ownership of approximately 80 acres of undeveloped land adjacent to the property being acquired by Flag, that Quintel's funds were used to purchase the undeveloped land but that the defendants would retain ownership and control of the 80 acres. Subsequently, the general partners of Flag entered into a settlement agreement with Quintel.
After serving an answer to the complaint, Citibank served and filed a third-party complaint against H. R. Gajria ("Gajria"), the sole beneficial owner of Quintel. The third-party complaint states two claims for relief. The first claim alleges, that Gajria and Citibank entered into an "ISD Real Estate Investment Advisory Service Acquisition Agreement ("ISD Agreement") with Citibank, whereby Gajria appointed Citibank his agent and attorney in-fact for certain purposes. It is further alleged that, pursuant to the ISD agreement, Gajria agreed to indemnify Citibank from any actions, claims or demands arising from any real estate investment made by Citibank on Gajria's behalf. Citibank seeks complete indemnification from Gajria upon any claims made by Quintel. The second claim for relief seeks monies owed to Citibank for an alleged overdraft by Gajria.
Citibank also served and filed a third-party complaint against Alperstein seeking contribution with respect to the state claims asserted by Quintel. Alperstein's motion to dismiss the third-party complaint was denied in an opinion dated October 18, 1983.
In 1982, Quintel and Gajria commenced a separate action against Arnold S. Alperstein, and Goldstick, Weinberger, Feldman, Alperstein & Taishoff, P.C., attorneys who represented them in connection with their investment in Flag. Quintel and Gajria allege that the Alperstein defendants were negligent in their representation. In October, 1983, this court consolidated the two actions for trial. In December, 1983, the Alperstein defendants moved for leave to implead the general partners and their counsel, Conboy. By order and opinion dated December 23, 1983, this court granted in part the Alperstein defendant's motion to implead Conboy. The court denied the motion to the extent that it sought to implead the settling defendant general partners.
In January, 1984, the Alperstein defendants served their third-party complaint upon Conboy seeking indemnification and contribution for any damages that the Alperstein defendants may ultimately be adjudged liable to pay Quintel and Gajria. On March 16, 1984, Conboy's motion to dismiss was heard.
The Alperstein Third-Party Action
The third-party complaint filed by Alperstein against Conboy states that this court has jurisdiction pursuant to section 27 of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa, 28 U.S.C. § 1331, and principles of pendent and ancillary jurisdiction. The complaint realleges the allegations of the two prior actions and alleges:
19. Upon information and belief, an agreement was reached between Citibank, Alperstein and Conboy, which resulted in the allocation of the legal work that had to be completed on behalf of the Limited Partnership, Quintel and Gajria. Pursuant to that agreement Alperstein and Goldstick relied upon Conboy and Citibank to protect the limited partner's interest in the Flag transaction.
20. As title counsel, Conboy was or should have been aware of the additional 80 acres and the fact that Quintel was excluded from ownership of those acres.
21. Conboy understood or should have understood that it was responsible for insuring that the additional 80 acres would also inure to the benefit of Quintel, the limited partner of Flag. At the very least, Conboy should have made full disclosure to Quintel and/or Alperstein and Goldstick of the existence of the 80 acres of undeveloped land and the General Partner's intentions to exclude that land from the Limited Partnership.
22. Upon information and belief, Conboy also knew that a significant portion of the contribution of Quintel to the Limited Partnership was being used to purchase the additional 80 acres.
23. Upon information and belief, Conboy charged for these "legal services."
24. By reason of the agreement between Citibank, Conboy and Alperstein wherein Conboy agreed to represent Quintel and the General Partners in Flag's purchase of the Florida property, Conboy owned a fiduciary obligation to both Quintel, as the limited partner, and Alperstein, as Quintel's attorney, to act in the best interest of Quintel.
25. By virtue of the aforesaid acts, Conboy and the General Partners willfully disregarded their fiduciary obligations to Quintel and Alperstein by acting contrary to the best interests of Quintel in that they have, without the prior knowledge or consent of Quintel or Alperstein:
(a) entered into self-dealing contractual arrangements which were manifestly not in the best interest of Quintel or Alperstein;
(b) conveyed the undeveloped land which should rightfully be the property of Flag from Garrin Properties to Queens Park Land Developers, another partnership composed of the General Partners;
(c) dissipated the assets of Flag by utilizing the capital of Flag contributed by Quintel to acquire the undeveloped land without providing any corresponding benefit to Quintel or Flag; and
(d) taken for themselves undisclosed compensation in the form of the undeveloped land.
Alperstein alleges two causes of action against Conboy for indemnification and contribution. He bases these claims primarily on: (1) a breach of fiduciary duty owed Quintel, Gajria or Alperstein arising out of an agreement to allocate legal work, and (2) aiding and abetting the alleged securities fraud of the Flag general partners. In addition to its allegation that Conboy aided and abetted the general partners' ...