alleged contract. It generally asserts that Morgan Stanley did not comply
with the terms of the agreement that it entered into with Plaintiffs. But
the Amended Complaint fails to identify the exact terms breached as a
result of Rare Medium's acts.
Plaintiffs' tortious interference with contractual relations claim is
defective for another reason. Under New York law, such a claim must plead
that a defendant used wrongful means" to induce the third party to breach
the contract. See Guard-Life Corp. v. S. Parker Mfg. Corp., 406 N.E.2d 445,
448-49 (N.Y. 1989); accord NBT Bancorp, Inc., et al v. Fleet/Norstar
Financial Group, Inc., 664 N.E.2d 492, 495-96 (N.Y. 1996). "Wrongful
means" includes physical violence, fraud, or misrepresentation, civil
suits and criminal prosecutions, and some degrees of economic pressure.
But it does not include persuasion alone, even if it is knowingly
directed at interference with the contract. See Guard-Life, 406 N.E.2d at
449. The Court dismissed the claim for tortious interference with
contractual relations in the Original Complaint because Plaintiffs failed
to sufficiently allege wrongful means. See Wolff 171 F. Supp.2d at 359.
In the Amended Complaint, Plaintiffs allege that Rare Medium used
wrongful means when it fraudulently misrepresented to Morgan Stanley that
the Attempted Transactions were not permissible under the Merger
Agreement, and that it would take legal action to prevent them from
occurring. (Am. Compl. ¶¶ 38, 54, 62.
To set out a claim for fraudulent misrepresentation the Plaintiffs must
plead the following elements: (i) that the defendant made a false
misrepresentation about a material fact, (ii) the defendant knew the
representation was false, (iii) the defendants intended that the
plaintiff rely on the statement and the plaintiff did rely in the course
of his ignorance, and (iv) damages resulted from the misrepresentation.
See Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994). Federal Rule of
Civil Procedure 9(b) provides that fraud must be stated with
particularity. See Fed. R. Civ. P. 9(b); see also, Koenig, 25 F.3d at
1173; Quaknine v. MacFarlane, 897 F.2d 75, 79 (2d Cir. 1990). "To pass
muster under [R]ule 9(b), the complaint must allege the time, place,
speaker, and sometimes even the content of the alleged misrepresentation."
Quaknine, 897 F.2d at 79. Rule 9(b) requires that at a minimum,
Plaintiffs allege who made the allegedly false statements, the contents
of such statements, and to whom such statements were made. See Thacker
v. Medaphis Corp., No. 97 Civ. 2849, 1998 WL 64595, at *2, 5 (S.D.N.Y.
Sept. 30, 1998). The Amended Complaint merely alleges that Rare Medium
fraudulently misrepresented to Morgan Stanley that the Attempted
Transactions were not permitted, and that Rare Medium would not permit
the transaction. (Am. Compl. ¶ 62.) Such allegations, without more,
do not meet the standard required under Rule 9(b). Cf. Koenig, 25 F.3d
at 1173 (holding that plaintiffs complied with Rule 9(b) when they
specified who made the false statement, and the precise dates and place of
meeting where the statement was made)
Even if Plaintiffs' allegations were sufficient for a claim of
fraudulent misrepresentation under Rule 9(b), Plaintiffs still fail to
allege any facts to support their contention that Rare Medium believed
that the Attempted Transactions were permissible under the Merger
Agreement. Although Plaintiffs allege that Rare Medium "knew" that the
Attempted Transactions were permitted (Am. Compl. ¶ 62), this
Court, even on a motion to dismiss, is not
required to accept conclusory
allegations characterizing the state of mind of another person. See
R.C.M. Executive Gallery Corp. v. Rols Capital Co., No. 93 Civ. 8571,
1997 WL 27059, *8 (S.D.N.Y. Jan. 23, 1997) (citing Papasan v. Allain,
478 U.S. 265, 286 (1986)). This pleading deficiency is exactly the same
as that found by the Court when it considered Rare Medium's motion to
dismiss the Original Complaint. See Wolff, 171 F. Supp. at 360 (holding
that this Court even on a Rule 12(b)(6) motion is not required to
accept conclusory allegations, in particular allegations characterizing
or attributing a state of mind of another person). Accordingly, Rare
Medium's motion to dismiss Plaintiffs' tortious interference with
contract claim is granted.
E. TORTIOUS INTERFERENCE WITH PROSPECTIVE BUSINESS ADVANTAGE
To establish a tortious interference with prospective business
advantage plaintiff must plead the following elements: (i) there is a
business relation with a third party, (ii) defendant interfered with
those business relations, (iii) the defendants acted with the sole
purpose of harming the plaintiff or used dishonest, unfair, or improper
means, (iv) and an injury to the relationship resulted. See Purgess v.
Sharrock, 33 F.3d 134, 141 (2d Cir. 1994). Tortious interference with
prospective business advantage requires more culpable conduct on the part
of the defendant" than tortious interference with contractual relations.
NBT Bancorp, 664 N.E.2d at 496. Plaintiffs' claim for tortious
interference with prospective business advantage in the Original
Complaint was dismissed in the November 2001 Order because the Court
found that the misrepresentation alleged to support the claim was
identical to the misrepresentation alleged to support Plaintiffs'
tortious interference with contract claim. See Wolff, 171 F. Supp.2d at
361. The Amended Complaint contains the same deficiencies.
Like the Original Complaint, Plaintiffs base the two respective claims
for tortious interference with contractual relations and tortious
interference with business prospective on the same alleged
misrepresentation. (Am. Compl. ¶ 70.) The Court specifically stated
that the Original Complaint was deficient because it based the torts
claims on the same alleged misrepresentation. See Wolff, 171 F. Supp.2d
at 361. The Court clearly stated that "more culpable conduct on the part
of the defendant is required" to sufficiently plead a tortious
interference with business prospective claim. See id. at 360. Moreover,
Plaintiffs' tortious interference with business prospective claim is also
deficient for the same reason as their tortious interference with
contractual relations claim: both fail to plead the alleged fraudulent
misrepresentation with particularity. See Fed. R. Civ. P. 9(b); Koenig,
25 F.3d at 1173.
Accordingly, Rare Medium's motion to dismiss Plaintiffs' claim of
tortious interference with prospective business advantage is granted.
Because the Court has previously granted the Plaintiff's opportunity to
replead and they have failed to cure the deficiencies found in the
Original Complaint, the Amended Complaint is dismissed with prejudice.
See Faulkner v. Verizon Communications, Inc., 189 F. Supp.2d 161, 174
(S.D.N.Y. 2002) (dismissing plaintiffs' amended complaint with prejudice
because plaintiffs were already given an opportunity to replead and still
failed to state a cognizable legal claim)
III. CONCLUSION AND ORDER