the roll-up is dismissed as well, for failing to satisfy the pleading requirements of Credit Alliance v. Arthur Andersen & Co., 65 N.Y.2d 536, 493 N.Y.S.2d 435, 483 N.E.2d 110 (1985).
Plaintiffs allege that Spengler Carlson negligently failed to advise plaintiffs that the Lenders holding the Mortgage to NCC X and NCC XI-A had not consented to the roll-up by June 30, 1989. In addition, Spengler Carlson also failed to unwind the transaction after learning that Talansky's votes in NCC II and VII were improperly included by Talansky to achieve the necessary majority of votes to approve the roll-up. (Compl. at PP 382-396). Spengler Carlson argues that plaintiffs' allegations fail to state a claim because Spengler Carlson owed a duty of care only to United Growth, not to the roll-up partnerships or to plaintiffs and therefore cannot be liable for negligence. The Court agrees.
Spenger Carlson was hired by United Growth for the sole purpose of preparing the roll-up memorandum. Spenger Carlson's did not owe a duty to inform the individual plaintiffs who made up the ten partnerships agreeing to the roll-up of their right to rescind because a lender of two of the NCCs had not consented. Under the Credit Alliance test, Spengler Carlson could not have reasonably expected that plaintiffs would rely on United Growth's counsel to inform plaintiffs of the alleged lack of lender consent. Plaintiffs have not claimed that when Spengler Carlson produced the United Growth PPM, Spengler Carlson knew plaintiffs would rely on Spengler Carlson to inform them if any of the Lenders failed to consent so that plaintiffs could exercise their right to rescind. Plaintiffs understood or should have understood that their interests would not be represented and protected by Spengler Carlson. Accordingly, plaintiffs' claim of negligence against United Growth's counsel Spengler Carlson for failing to inform plaintiffs of their right to rescind is dismissed. 493 N.Y.S.2d 435, 443 (1985); see also Ossining Union Free School Dist. v. Anderson LaRocca Anderson, 73 N.Y.2d 417, 541 N.Y.S.2d 335, 539 N.E.2d 91 (1989) (Credit Alliance test does not apply only to accountants).
With respect to plaintiffs' allegation that Spengler Carlson was negligent in failing to unwind the transaction when it knew there was an insufficient majority of proper votes, it was United Growth's not Spengler Carlson's decision to close the deal. Accordingly, plaintiffs' negligent claim against Spengler Carlson based on those allegations is also dismissed.
8. Ackermans' Injunctive Relief
Talansky moves to dismiss plaintiffs' claim which seeks, inter alia, to remove the general partners of United Growth. That motion is denied at this time because plaintiffs' allegations have sufficiently demonstrated a factual basis for that claim.
It is well settled that recoupment is a claim that a defendant may maintain against a plaintiff as a set off to plaintiff's recovery. 6C. Wright, A. Miller & M Kane, Federal Practice and Procedure § 1401, at 10 (1990). The purpose of recoupment and the reason it can revive a time-barred claim is to deter a plaintiff from waiting to file his or her action until a defendant's defenses to the action are time-barred. CPLR § 203:9, Practice Commentary, at 159. A necessary and important condition to a defendant's right of recoupment is the actual filing of a complaint by a plaintiff. Even assuming a plaintiff has a right to revive time-barred claims defensively under a recoupment theory, the right only applies when a defendant raises claims against the plaintiff. In this case, plaintiffs rely on recoupment to revive their time barred claims even though none of the defendants except Travelers have filed claims against any of the plaintiffs.
This Court will not permit plaintiffs to preemptively rely on recoupment, an inherently defensive devise, in a quasi offensive manner and before defendants have filed any claims against plaintiffs in this Court. Accordingly, plaintiffs may not revive their time-barred claims by the defensive doctrine of recoupment.
Having dismissed plaintiffs federal claims, the Court may in its discretion decline to consider plaintiffs' remaining common law claims for lack of subject matter jurisdiction. United Mine Workers of America. v. Gibbs, 383 U.S. 715, 726, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966); 28 U.S.C. § 1367(c)(3). In this case, in light of the numerous parties and claims and because this case has already been removed from New York State Court and finally, because plaintiffs may be entitled to revive their time-barred federal claims under a theory of recoupment should defendants decide to file counter-claims against plaintiffs, and in the interests of judicial economy, convenience and fairness to the litigants, the Court elects to retain this case. See Carnegie-Mellon University v. Cohill, 484 U.S. 343, 108 S. Ct. 614, 619, 98 L. Ed. 2d 720 (1988) (in determining whether to exercise pendent jurisdiction, court should consider "the values of judicial economy, convenience, fairness, and comity"); Enercomp, Inc. v. McCorhill Publishing, Inc., 873 F.2d 536, 545 (2d Cir. 1989)(affirming district court's exercise of pendent jurisdiction, and reiterating that dismissal of claims under federal law "does not automatically mandate dismissal of pendent state claims.").
The parties are directed to complete all discovery by January 4, 1993. A joint pretrial Order must be submitted to the Court by January 25, 1993. A final pretrial conference is scheduled for February 1, 1993, at 8:30 a.m.
Dated: New York, New York
September, 9, 1992.
LOUIS J. FREEH, U.S.D.J.