intent, and thus support the allegation of conscious misbehavior in satisfaction of the scienter element of fraud. The Court disagrees.
The additional facts alleged in the Proposed Amended Complaint do not "constitute strong circumstantial evidence of conscious misbehavior or recklessness" and, thus, do not permit a strong inference of fraud. Acito, 47 F.3d at 52. Even reading the Complaint generously and drawing all inferences in favor of the Plaintiff, the plain and unequivocal language of the Letter Agreement requesting advertising spots in exchange for trade credits makes no mention of either an earlier agreement on a trade credit/cash ratio or any other obligation to pay cash by Defendant. If anything, this letter is a warning to Plaintiff that Defendant was placing the ads on a trade credit only basis. Thus, the letter is not an indication that Defendant Players fraudulently induced Plaintiff to run the advertisements. Accordingly, Plaintiff's Proposed Amended Complaint fails to provide the needed support to establish the scienter element of fraud.
Plaintiff's Memorandum of Law and Proposed Amended Complaint also fail to adequately establish that SKR justifiably relied on Players alleged fraudulent misrepresentation in the Letter Agreement. Reliance, which is a crucial element of any fraud claim, must be justifiable under the circumstances. Royal Am. Managers, Inc. v. IRC Holding Corp., 885 F.2d 1011, 1016 (2d Cir. 1989); Carte Blanche (Singapore) PTE., Ltd. v. Diners Club Int'l, Inc., 758 F. Supp. 908, 916 (S.D.N.Y. 1991). Courts have repeatedly rejected claims of justifiable reliance where the representation relates to matters not peculiarly within the defendant's knowledge and the plaintiff "has the means of knowing, by the exercise of ordinary intelligence, the truth, or the real quality of the subject of the representation." Mallis v. Bankers Trust, 615 F.2d 68, 80-81 (2d Cir. 1980), cert. denied, 449 U.S. 1123, 67 L. Ed. 2d 109, 101 S. Ct. 938 (1981); Banque Arabe ET Int'l v. Md. Nat. Bank, 57 F.3d 146, 156-57 (2d Cir. 1995); Royal Am. Managers, 885 F.2d at 1016; Grumman Allied Indus., Inc. v. Rohr Indus., Inc., 748 F.2d 729, 737 (2d Cir. 1984); Congress Fin. Corp., 790 F. Supp. at 470-71. Here, the matter of trade credits was not peculiarly within the defendant's knowledge, as the term appears in both of the contracts between the parties and the Plaintiff admits in its pleadings that it negotiated with the Defendant on the subject. (Def's Mem. Law, Ex. A; Pl.'s Mem. Law, Proposed Am. Compl. P P 49, 50, 51.) Furthermore, although Plaintiff had the means of ascertaining the validity of the representations in the Letter Agreement by contacting the Defendant and inquiring about the trade credits language, it failed to do so. As such, Plaintiff cannot now complain that it justifiably relied on Players misrepresentation and the Court finds, as a matter of law, that any reliance by the Plaintiff under the circumstances was unjustified.
Because Plaintiff's Proposed Amended Complaint fails to plead adequately the required elements of scienter and justifiable reliance, granting Plaintiff leave to amend would be futile. Accordingly, Plaintiff's request for leave to amend is denied.
Defendant's Motion to Dismiss is GRANTED. Plaintiff's request for leave to amend is DENIED.
Dated: New York, New York
September 30, 1996
DEBORAH A. BATTS
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