The opinion of the court was delivered by: BARBARA JONES, District Judge
Before the Court are Third-Party Defendants' motion to dismiss
Third-Party Plaintiff's Complaint pursuant to Federal Rules of Civil
Procedure 9(b) and 12(b)(6) and Plaintiffs' motion for reconsideration of
this Court's Order vacating the previously entered default judgment
against Defendant Cuddlecoat, Inc.
("Cuddlecoat"). For the reasons set forth below, Third-'Party
Defendants' motion to dismiss is GRANTED in part and DENIED-in part and
Plaintiffs' motion for reconsideration is DENIED.
Defendant Warren Corporation ("Warren") is a private company engaged
principally in the manufacture of fabrics and clothing. Defendant
Cuddlecoat, until 1996, was engaged in the business of finishing fabrics
and manufacturing clothing. Certain of Cuddlecoat's employees were
members of the International Ladies' Garment Workers' Union, and
Cuddlecoat was required to make payments to Plaintiff I.L.G.W.U. National
Retirement Fund ("the Fund") pursuant to the Employee Retirement and
Income Security Act ("ERISA").
Cuddlecoat was a customer of Warren and entered into a series of
security and other agreements with Warren. In 1995, Warren commenced suit
against Cuddlecoat, seeking to foreclose on its security. In January
1996, while the suit between Warren and Cuddlecoat was still pending, an
involuntary Chapter 11 bankruptcy petition was filed against Cuddlecoat.
The Fund and the New York Coat, Suit Dress, Rainwear & Allied Workers
Union, Local 89-221-1, UNITE, AFL-CIO ("the Union") each filed separate
claims in the bankruptcy proceeding.
After the bankruptcy petition was filed, Warren and Cuddlecoat settled
their individual litigation in an agreement
under which Warren became the sole shareholder of Cuddlecoat. The
timing and operation of that agreement remain in dispute between the
parties to this action. The committee of unsecured creditors brought an
adversary proceeding in the bankruptcy action seeking to hold Warren
responsible for various creditors' claims against Cuddlecoat. Warren
negotiated a settlement of the creditors committee's claims, and
exchanged mutual releases with the Union. Warren did not obtain a release
from the Fund, and the Union's release did not name the Fund as an entity
included in the release.
Warren alleges that it did not obtain a specific release from the Fund
because David Greenwald, an associate with Defendant Lewis, Greenwald,
Clifton & Nikolaidis, P.C. ("Lewis Greenwald"), stated that the
Union's release would bind the Fund. Lewis Greenwald represented the
Union in the settlement negotiations. Cuddlecoat was formally dissolved
on September 23, 1998 and the bankruptcy proceeding was dismissed eleven
In 2001, the Fund filed this action seeking to recover money owed to
the Fund pursuant to ERISA.*fn1 In response, Warren asserted a
counter-claim against the Fund and filed a third-party action against the
Union and Lewis Greenwald. Defendant
Cuddlecoat failed to answer Plaintiff's Complaint and failed to
appear or otherwise move with respect to the Complaint. Plaintiffs moved
for default judgment against Cuddlecoat on or about October 17, 2p01. The
Court granted the motion for default judgment on October 25, 2001.
On October 26, 2001, the Court received a letter from Defendant Warren,
asking that the Court either deny Plaintiff's motion for default judgment
against Cuddlecoat or, in the alternative, grant Warren an extension of
time to answer on Cuddlecoat's behalf. Upon learning that the Court had
granted Plaintiffs' motion for default judgment, Warren moved, pursuant
to Local Rule 6.3, for reconsideration of the default judgment entered
against Cuddlecoat. In a telephone conference on January 25, 2002, the
Court granted Warren's motion and vacated the default judgment.
Plaintiffs now move for reconsideration of that decision.
In or about March 2002, Warren moved pursuant to Fed.R.Civ.P. 15 and
21 to file and serve an amended answer, counterclaim, and third-party
complaint. Plaintiffs opposed this motion. In a Memorandum and Order,
dated June 3, 2002, Magistrate Judge Eaton granted the motion.
Third-Party Plaintiffs now move to dismiss Warren's Third-Party
Warren's Third-Party Complaint ("Warren Complaint") brings claims
against the Union and Lewis Greenwald for fraud, negligent
misrepresentation, and civil conspiracy. Essentially, Warren claims that
the Third-Party Defendants the Union and their counsel Lewis
Greenwald purposely misrepresented that the Settlement Agreement
and releases resolved all claims by the Fund. The Warren Complaint also
claims that the Union breached the 1997 Settlement Agreement with ...