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United States District Court, N.D. New York

April 15, 2004.

SEARS PETROLEUM & TRANSPORT CORP. and SEARS OIL CO., INC., Plaintiffs, -v- ICE BAN AMERICA, INC. a/k/a NATURAL SOLUTIONS CORP., ICE BAN, USA, INC. and THE ESTATE OF GEORGE JANKE, through Lisa Knuth, as representative of the Estate of George A. Janke, Defendants, IMUS, INC. and SEARS ENVIRONMENTAL APPLICATIONS COMPANY, L.L.C., Nominal Defendants

The opinion of the court was delivered by: HOWARD MUNSON, Senior District Judge


This diversity action was commenced by plaintiffs Sears Petroleum & Transport Corp. and Sears Oil Co., Inc. ("Sears") against Ice Ban America, Inc., Ice Ban USA, Inc., and George Janke, the primary shareholders in the Ice Ban companies, to recover for fraud, breach of contract, patent infringement, breach of fiduciary duty and violations of the Lanham Act, 15 U.S.C. § 1121. The case was originally instituted in New York State Supreme Court (County of Oneida), and removed to federal court by the defendants. Plaintiffs assert that the late George Janke fraudulently induced them into creating a Limited Liability Company ("the L.L.C.") named Sears Environmental Applications Company, ("SEACO") for the purpose of selling and distributing a revolutionary de-icing product trade named "Ice Ban" by representing that Ice Ban USA, Inc. ("USA") was either a licensee or owner of the pertinent patent (collectively the"Toth/918 patents") for the de-icing agent.

  Plaintiffs allege that neither USA nor Janke owned or controlled these patents, and further maintain that based on this fraudulent representation, plaintiffs loaned SEACO over $300,000 and expended $100,000 on "management services." Plaintiffs also maintain that even though the SEACO creation agreement provided that SEACO would have an exclusive license to sell "Ice Ban" within the New England states, defendants violated this agreement by permitting other parties to market "Ice Ban" within these States.

  On September 28, 1999, defendants moved to dismiss the amended complaint on the grounds that the court lacked jurisdiction over defendants George Janke and USA and Ice Ban America, Inc., and that plaintiffs failed to plead fraud as to each of the defendants with the amount of particularity required by Fed.R.Civ.P. 9(b). Additionally, although not included in their formal motion, but in their Memorandum of Law defendants, requested the court to stay this action pending the outcome of a second action between the parties hereto in Florida state court.

  In his decision of May 15, 2000, on that motion, The Honorable Frederick J. Scullin, Jr. denied defendants' request to stay this action as well as the motion to dismiss the amended complaint against George Janke for lack of personal jurisdiction; and the motion to dismiss the amended complaint for failure to plead fraud with the specificity as to George Janke and Ice Ban America, Inc.

  Defendants' motions to dismiss the amended complaint for lack of personal jurisdiction as to USA and for failure to plead with the particularity required by Fed.R.Civ.P. 9(b) were denied without prejudice and plaintiffs were given 60 days of limited discovery, and then 30 days from the close of discovery to file a second amended complaint. Defendants would thereupon have 30 days to make application by letter brief to dismiss this claim.

  By order dated March 27, 2002, Chief Judge F.J. Scullin, Jr., reassigned this action to the Honorable Howard G. Munson.

  Plaintiffs filed a second amended complaint on August 10, 2000, however, defendants did not make an application by letter brief to dismiss the two claims pending against Ice Ban, USA, Inc., within 30 days after this complaint was filed.

  While it is true that an amended complaint ordinarily supersedes a prior complaint, and renders it of no legal effect, International Controls Corp. v. Vesco, 556 F.2d 665, 668 (2d Cir. 1977), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 758 (1978). It is also true that if the amended complaint also contains new matter, the defendant may bring a second motion under Rule 12 to object to the new allegations only. FBN Food Services. Inc. v. Derounian, 6 F.R.D. 11, 13-14 (N.D. Ill. 1946). Nevertheless, the amended complaint does not automatically revive all the defenses and objections the defendant may have waived in a first motion to dismiss or to challenge the sufficiency of the amended complaint with arguments that were previously considered and decided by the court in the first motion to dismiss. Nor may defendant advance arguments that could have been made in the first motion to dismiss but neglected to do so. Id.; Gilmore v. Searson/American Express, 811 F.2d 108, 112 (2d Cir. 1987).

  After obtaining various documents relating to USA, from counsel in Florida, plaintiffs' counsel decided that limited discovery would be unnecessary and so notified defendants' counsel. (5/22/01 Affidavit of Ted H. Williams, Esq. p., 2, Dock. # 84).

  Plaintiffs' second amended complaint merely sought to correct insufficient allegations in the targeted issues of jurisdiction and fraud regarding defendant USA. It did not revive defendants' right to challenge the sufficiency of the prior complaint or defenses already denied. Defendants answered the second amended complaint on September 5, 2000, and an amended answer on September 21, 2000.

  On May 8, 2001, defendants filed a motion seeking dismissal of the Second Amended Complaint as against USA., pursuant to Federal Rules of Civil Procedure 12(2) judgment on the pleadings, and 12(b)(2) — lack of jurisdiction over USA. However, the Rule 12(b)(2) portion of the motion was untimely and could not be considered because defendants served their answer to the amended complaint prior to making their motion. Tyco. Instruments Limited v. Walsh, 2003 WL 553580, at *2 (S.D.N.Y Feb. 27, 2003). Plaintiffs opposed defendants' motion. Federal Rule of Civil Procedure 12(2) provides that, after the pleadings are closed, any party may move for judgment on the pleadings provided the trial of the action is not delayed.

  Because a judgment on the pleadings focuses on the pleadings themselves, and not on matters outside of the pleadings such as affidavits, a motion for judgment on the pleadings is not well-suited for the determination of whether the court lacks personal jurisdiction over defendant Ice Ban USA, Inc. in this action. Matters relating to personal jurisdiction often are not apparent on the face of the pleadings, and a court considering a challenge to its jurisdiction with respect to a defendant may well need to receive affidavits and other relevant matters outside the pleadings in determining the jurisdictional facts of a case.

  Rule 12(2) further provides that "[i]f, on motion for judgment on the pleadings, matters outside of the pleadings are presented to and not excluded by the court, the motion will be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

  Since the parties hereto had presented matters outside the pleadings to, and not excluded by the court, it was decided that defendants' motions would be treated as one for summary judgment and disposed of as provided in Rule 56. The parties were then provided with appropriate time periods to submit materials they considered pertinent to deciding the summary judgment motion.

  Having converted defendants' motion for judgment on the pleadings, and having provided the parties with an opportunity to submit additional material, the court will now consider the merits of the motion for summary judgment. DISCUSSION

  Summary judgment is proper if, viewing all the facts of record in a light most favorable to the non-moving party, no genuine issue of material fact remains for adjudication. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505, 2509-11, 91 L.Ed.2d 202 (1986). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there must be no genuine issue of material fact." Samules v. J. Mockry, 77 F.3d 36, 36 (2d Cir. 1996).

  The non-movant may defeat summary judgment only by producing sufficient facts showing that there is a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Furthermore, the non-movant "`will have his allegations taken as true, and receive the benefit of the doubt when his assertions conflict with the movant.'" Piesco. v. City of New York, 933 F.2d 1149, 1154 (2d Cir.) (quoting 10 Wright, Miller & Kane, Federal Practice and Procedure, § 2716 (1933)), cert. denied, 502 U.S. 921, 112 S.Ct. 331, 1116 L.Ed.2d 272 (1991).

  Nevertheless, courts have cautioned that Federal Rule of Civil Procedure 5 6(e) expressly provides that a plaintiff opposing summary judgment may not rely on his complaint to defeat the motion, and that litigants should be on notice from the very publication of Rule 56(e) that a party faced with a summary judgment motion "may not rest upon the mere allegations or denials" of the party's pleadings and that if the party does not respond properly, summary judgment, if appropriate, shall be entered. Graham v. Lewinski, 848 F.2d 342, 344 (2d Cir. 1988) (quoting Fed.R.Civ.P. (56(e)).

 Personal jurisdiction as to defendant George A. Janke:

  Plaintiffs have the burden of establishing this court's jurisdiction over defendants Janke and USA. In re Magnetic Audiotape Antitrust Litigation v. BASF AG Aktiegesellschaft, 171 F. Supp.2d 179, 183 (S.D.N.Y. 2001). Should the proponent fail to satisfy this burden, the court must dismiss the action. Richmond v. Fredericksburg & Potomac Railroad Co., 945 F.2d 765, 768 (4th Cir. 1991).

  The exercise of personal jurisdiction in diversity cases is governed by the law of the forum state. Arrowsmith v. United Press International, 320 F.2d 219 (2d Cir. 1963) (en banc); Braman v. Mary Hitchcock Memorial Hospital, 631 F.2d 6 (2d Cir. 1980).

  The New York State jurisdictional law, CPLR § 302, or long arm statute, provides in relevant part:

  [A] court may exercise personal jurisdiction over a non-domiciliary . . . who in person or through an agent:


1. Transacts business within the state or contracts anywhere to supply goods or services in the state; or
2. Commits a tortious act within the state . . . or
3. Commits a tortious without the state causing injury to a person or property within the state . . . if he
(i) regularly does or solicits business or, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.
4. owns, uses or possesses any real property situated within the state.
  This court's exercise of personal jurisdiction over a non-domiciliary defendant must satisfy constitutional due process as well as the relevant state statute. Hedlund v. Products from Sweden, Inc., 698 F. Supp. 1087, 1090 (S.D.N.Y. 1988). A court's exercise of jurisdiction over a non-domiciliary defendant comports with due process if a party has sufficient minimum contacts with it such that maintenance of the suit does not offend traditional notions of fair play and justice. International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed.2d 154, 158, 90 L.Ed. (1945); Burger King Corporation v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). New York's long-arm statute, which permits jurisdiction over non-residents reflects those due process concerns. Kreutter v. McFadden Oil Corporation, 71 N.Y.2d 460, 527 N.Y.S.2d 195, 198 (1998). Because the statute does not extend jurisdiction as far as may be constitutionally possible, Hedlund, 698 F. Supp. at 1090 (S.D.N. Y. 1988), this court's exercise of personal jurisdiction over defendant George A. Janke and USA pursuant to CPLR § 302 would accord with due process.

  It is apparent that the crux of this litigation is whether defendant Janke and/or Ice Ban USA, had ownership of the Toth /918 patents which would give them the right to create or manufacture the trade named Ice Ban deicing agent that was to be distributed and sold under the terms of the L.L.C. agreement. Plaintiffs allege that Janke's supposed ownership of these patents was the critical inducement to enter the L.L.C. agreement and caused them to sustain considerable monetary damages as a result. Janke's non-ownership of these patents is the source of controversy with the defendants.

  On a summary judgment motion, the non-movant will have his allegations taken as true, and receive the benefit of the doubt when his assertions conflict with the movant. United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L. ED.2d 176 (1962).

  The record in the instant case discloses that the trade named Ice Ban deicing agent was developed in Budapest, Hungary in the mid-1980s' by Jeno Toth, Joseph Szeles, Sr. and Otto Engenhoffer. The developers patented the deicing agent in Hungary and other European countries. It was also patented in the United States as an "anti-freeze composition substitute for making surfaces free of snow and ice, comprising . . . a waste concentrate of [the] alcohol industry." (collectively the "Toth Patents"). The United States patent was issued to the three Hungarian inventors on June 30, 1987 as U.S. Patent No. 4,676,918 ("the 918 Patent") entitled "Anti-Freeze Composition Suitable For Making Surface Free of Snow and Ice."

  In a document signed by the various parties thereto on May 31, 1994 and/or June 10, 1994, Jeno Toth, Otto Egenoffer and the successors in interest to Joseph Szeles, Sr., Joseph Szeles, Jr. and Gabriella Szeles sold the Toth/918 patents to Karl and Barbara Ronaszeki. The agreement called for the purchasers to pay the sellers $750,000 on or before the one year from the execution of the sale agreement. The purchasers had the right to extend the payment due date for an additional 90 day period if necessary.

  A document entitled "Assignment Agreement" was entered between defendant George Janke and Karl and Barbara Ronaszeki on May 28, 1994. This agreement assigned the Toth/918 patents rights to Janke. This Assignment Agreement may have been only an agreement to agree as its last paragraph recites that "[t]his draft will be finalized in a final assignment formally setting forth the terms and conditions outlined above."

  This Assignment Agreement is the basis for George A. Janke's claim that he purchased the rights to the Toth/918 patents from Karl and Barbara Ronaszeki, and subsequently assigned these rights to Ice Ban USA, Inc. However, in an unrefuted written statement dated November 13, 1998, Peter Toth, Otto Bgenhoffer and Josef Szeles confirmed unequivocally that they have not individually, collectively, nor their predecessors in ownership received any money or other compensation whatsoever as a result of the agreement to sell the Toth/918 patents entered with Karl and Barbara Ronaszeki. (Sears Affidavit — Exhibit M).

  Non-payment of the agreed upon sale price for the Toth/918 patents by Karl and Barbara Ronaszeki constituted a failure of consideration which voided their purchase agreement with the original holders of the Toth/918 patents, leaving them without the right to sell this patent to George A. Janke or any other party.

  In spite of these facts, George A. Janke constantly assured the plaintiffs that he owned the rights to the Toth/918 patents, and assigned them to USA. The assurances were made during meetings in Florida as well as letters and telephone calls from there, and during a joint sales and promotion conference in Rome, New York on or about August 27, 1998. At a breakfast meeting during this conference, Janke repeatedly orally affirmed to Howard P. Sears, President of plaintiff Sears, that he had purchased the Toth/918 patents that was now owned by his corporation USA. He also tried to dissuade Howard P. Sears from making an upcoming trip to Hungary to meet the inventors of the patent. (Sears Affidavit ¶ 18).

  Additionally, in October, 1998 Howard P. Sears discovered that in a letter dated September 8, 1998, another Ice Ban attorney, James M. McCann, Jr., of the Florida law firm Ackerman, Senterfitt & Eidson, wrote to Jozef Szeles Jr. attempting to purchase the Toth/918 patents.

  Although George A. Janke is now deceased, the New York State Dead Man's Statute (CPLR 4519) does not preclude the court's consideration of statements allegedly made by him which have been offered in opposition to defendant's motion for summary judgment. Phillips v. Kantor & Co., 31 N.Y.2d 307, 315, 338 N.Y.S.2d 882 (1972); Mover v. Briggs, 47 A.D.2d 66, 366 N.Y.S.2d 352 (1st Dept. 1975).

  In making these alleged misrepresentations at the Rome, New York meeting with Sears, Janke committed a tort within New York state. De Clerg v. Perue, 78 A.D.2d 706, 432 N.Y.S.2d 285 (3rd Dept. 1980). A tort is deemed committed in New York when a non-resident makes a false representation in the state and causes a resident to rely thereon, causing injury. Id., Bialek v. Racal-Milgo, 545 F. Supp. 25, 35 (S.D.N.Y. 1982). Janke's intentional and allegedly tortious actions were aimed at New York and he knew that injury would be felt there by plaintiffs in the state in which they conduct business. Under the circumstances, Janke could have "reasonably anticipated being haled into court there" to answer for the authenticity of the statements he made to Howard P. Sears concerning his and/or USA's ownership of the Toth/918 patents. World-Wide Volkswagen Corporation v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1982). An individual injured in New York need not go to Florida to seek redress from a person who, though residing in Florida, knowingly causes an injury in New York. Defendant Janke was a primary participant in the alleged wrongdoing intentionally directed at a New York business, and jurisdiction over him is valid on that basis. Janke's allegedly tortious act within New York State conferred personal jurisdiction over him pursuant to New York CPLR § 302(a)2. Bernstein v. Kelso & Company, Inc., 231 A.D.2d 314, 324, 659 N.Y.S.2d 276, 283 (1st Dept. 1997).

 Personal jurisdiction as to defendant Ice Ban USA. Inc.:

  § 302(a)1 New York CPLR provides that a defendant who has "transacted business" in New York may be sued on any cause of action arising out of that transaction. See Hoffritz For Cutlery, Inc. v. Amajac, Ltd., 753 F.2d 55, 58-59 (2d Cir. 1985). Proof of one transaction in New York is sufficient to invoke jurisdiction under New York's long-arm statute, even though the defendant never entered New York, so long as defendant's activities in New York were purposeful and there is a substantial relationship between the transaction and the claim asserted. Clarendon National Insurance Company v. Lan, 2001, 152 F. Supp.2d 506 (S.D.N.Y. 2001); Kreuttedr v. McFadden Oil Corporation, 71 N.Y.2d 460, 527 N.Y.S.2d 195 (1988).

  In assessing whether one meeting satisfies the test of CPLR § 302(a)1, New York requires some "purposeful activities" within the state and the existence of an articularly nexus between the business transaction and the cause of action sued upon. Hvide Marine International v. Employees Insurance of Wausau, 724 F. Supp. 180, 183 (S.D.N.Y. 1989). The determining factor is the nature and quality of defendant's contacts; that is, the more meaningful the contacts to the relationship of the parties, the more likely it is that the court will find a 302(a)1 transaction sufficient to establish personal jurisdiction. Central Locating Service, Ltd, v. Southern Bell Telephone & Telegraph Co., 1990 WL 178995 at *2 (N.D.N.Y. Nov. 16, 1990).

  As the sole incorporator, chief executive officer and principal shareholder of USA, the alleged owner of the Toth/918 patent, George Janke and USA had a significant financial interest in inducing the plaintiffs to enter the L.L.C. agreement which called for the purchase and distribution of USA's deicing product. As president of USA, he continuously misrepresented his or his corporation's ownership of the Toth/918 patents to plaintiffs in both correspondence on corporate letterhead and by telephone, and courts have found that telephone and mail contacts with New York alone are sufficient to confer jurisdiction when the "center of gravity" of the business transacted was in New York. See Wilhelmshaven Acquisition Corporation v. Asher, 810 F. Supp. 108, 112 (S.D.N.Y. 1993); Parker-Bernet Galleries, Inc. v. Franklyn, 26 N.Y.2d 13, 308 N.Y.S.2d 327 (1970); Otterbourg, Steindler, Houston & Rosen, P.C. v. Shreve City Apartments, Ltd., 140 A.D.2d 327, 543 N.Y.S.2d 978 (1st Dept. 1989). Additionally, he made these representations on his own and his corporation's behalf, to Howard P. Sears personally at their Rome, New York meeting in August 1997.

  It is clear that the center of gravity of this case was New York. Plaintiffs were located in New York, negotiations leading to the formation of a Limited Liability Company with Ice Ban America, Inc. and Imus took place in New York, the L.L.C. was formed in accordance with the laws of New York (ARTICLE II — 2.4), and the choice of law governing the terms and provisions of the agreement was New York law (Applicable Law, 11.6). As USA chief executive officer, George Janke directed mail and telephone calls to New York that misrepresented ownership of the Toth/918 patent, and, while in New York, personally repeated them to the plaintiffs.

  It is also clear that defendant corporation USA, through the actions of its president George Janke, transacted business in New York, and is subject to jurisdiction in New York State under the terms of § 302(a)1 of its long-arm statute.

 Plaintiffs' allegations of fraud: Rule 9(b) of the Federal Rules of Civil Procedure requires that in all allegations of fraud the circumstances constituting the fraud must be stated with particularity. Shields v. Cititrust Bancorp, Inc., 23 F.3d 1124, 1127-28 (2d Cir. 1994). In ruling on a motion to dismiss under Rule 9(b), "the court must read the complaint generously, and draw all inferences in favor of the pleader." Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir. 1989). The court must deny a motion to dismiss under Rule 9(b) as long as some of the allegations of fraud are adequate. Norstar Bank v. Pepitone, 742 F. Supp. 1209, 1213 (E.D.N.Y. 1990). Rule 9(b) is satisfied if the complaint gives enough information to enable defendants to frame a responsive pleading and assure that a sufficient basis exists for the allegations made. Epstein v. Hass Securities Corp., 731 F. Supp. 1166, 1180 (E.D.N.Y. 1990); Morrow v. Black, 742 F. Supp. 1199, 1205 n. 16 (S.D.N.Y.1990)("Conclusory allegations that the defendant's conduct was fraudulent or deceptive is not enough.")

  There are three goals satisfied by Rule 9(b): "(1) providing a defendant fair notice of plaintiff's claim, to enable preparation of a defense; (2) protecting a defendant from harm to his reputation or goodwill; and (3) reducing the number of strike suits." DiVittorio v. Equidyne Extractive Industries, Inc., 822 F.2d 1242, 1247 (2d Cir. 1987). Thus, Rule 9(b) "inhibits the filing of a complaint as a pretext for discovery of unknown wrongs." Gross v. Diversified Mortgage Investors, 431 F. Supp. 1080, 1087 (S.D.N.Y. 1977). In Decker v. Massey-Ferguson, Ltd., 681 F.2d 111, 114 (2d Cir. 1982), the Second Circuit applied a straightforward test to determine the sufficiency of a claim based upon fraud; the complaint need only allege the existence of facts and circumstances sufficient to warrant the pleaded conclusion that fraud had occurred. In so doing, the plaintiff's attorneys would be stating "the circumstances constituting fraud . . . with particularity" as required by Rule 9(b). Id. at 119.

  A satisfactory allegation includes "(1) specific facts; (2) sources that support the specific facts; and (3) a basis from which an inference of fraud may be fairly drawn." Crystal v. Foy, 562 F. Supp. 422, 425 (S.D.N.Y. 1983). Realistically, a plaintiff "cannot be expected to plead a defendant's actual state of mind." Devanev v. Chester, 813 F.2d 566, 568 (2d Cir. 1987). Therefore, Rule 9(b) was designed to allow a certain degree of generality in alleging scienter. Id. at 568. However, plaintiffs are still required to "plead the factual basis which gives rise to a `strong inference' of fraudulent intent." O'Brien v. National Property Analysts Partners, 936 F.2d 674, 676 (2d Cir. 1991); Ouaknine v. MacFarland, 897 F.2d 75, 80 (2d Cir. 1990); Wexner v. First Manhattan Co., 936 F.2d 169, 172 (2d Cir. 1990). A "strong inference of fraudulent intent" may be established either "(a) by alleging facts to show that defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness." Shields v. Citytrust Bancorp, 25 F.3d 1124, 1128 (2d Cir. 1994)

  While the plaintiff is obliged to plead those events and facts that evince a strong inference that the defendant intended to defraud, it is not appropriate to focus solely on the particularity requirement in fraud cases under 9(b), and a balance must be sought with the simplicity required by Fed.R.Civ.P. 8 that the pleadings should contain a "short and plain" statement of the claim or defense and with each averment should be "simple, concise and direct." United States v. Gleb, 783 F. Supp. 748, 757 (E.D.N.Y. 1991). Rule 9(b) does not require nor make legitimate the pleading of detailed evidentiary matter. The Second Circuit expresses this same view that "F.R.Civ.P. 9(b) must be reconciled with F.R.Civ.P. 8(a)(2) . . ." Denny v. Barber, 576 F.2d 465, 469 (2d Cir. 1978). See Michael v. Clark Equipment Company, 380 F.2d 351, 352 (2d Cir. 1967)(plaintiff pled fraud with sufficient particularity even though plaintiff alleged numerous and inconsistent theories of fraud); Jurban v. Musikahn, 673 F. Supp. 108, 111-12 (E.D.N. Y. 1987)(plaintiff pled fraud with sufficient particularity under Security and Exchange Act even though amended complaint did not specify the fraudulent words of corporation president or date they were uttered); Anderson v. Lowery, 667 F. Supp. 105, 108 (S.D.N.Y. 1987)(allegations of scienter need not be made with great specificity). "[A]verments of fraud do not have to contain a precise statement of all the elements of the fraud but need only set forth the facts with sufficient particularity to apprise defendant fairly of the charge. Union Mutual Live Insurance Company v. Simon, 22 F.R.D. 186, 187 (E.D.Pa. 1958).

  Defendants assert that plaintiffs' complaint states that they relied upon certain misrepresentations regarding defendants' ownership of the Toth/918 patent when they entered into the Operating Agreement, but the complaint does not allege with any specificity or particularity any alleged fraudulent misrepresentation by George Janke, U.S.A, or Ice Ban America, Inc. The complaint also makes only vague statements of opinion and ownership and is confusing and contradictory.

  Defendants further maintain that plaintiffs have not alleged specific dates on which representations were made, and the person who made them and to whom. Nor have they alleged any and all specific factual representations and the reasons and basis for believing these factual representations were false.

  An examination of plaintiff's second amended complaint discloses that it has met the requirements or Rule 9(b) in detailing the defendants' alleged fraud. For instance paragraph 36 recites that on October 21, 1997 that Janke, through his secretary, Ann M. Owen, sent to Ronald Francis, Treasurer of Sears Oil, what Janke represented to be a copy of the assignment of the ['918] Patent from Karl and Barbara Ronaszeki to Janke dated May 28, 1994. The purported assignment was recorded in the PTO on March 17, 1997 at Reel 8401, Frame 0354. Paragraph 43 states that, subsequently, by letter dated August 13, 1998, Janke represented to Howard P. Sears that "I purchased the rights to the [918] Patent and the original Hungarian and European patents in June, 1994, from Karl & Barbara Ronaszeki who in turn purchased those patents from the registered owners of the Toth, et al. [sic]."

  The complaint further sets forth that plaintiff's reliance on such representations, they, Imus and Ice Ban America, Inc. entered into an agreement leading to the formation under New York State law, of the Sears Environmental Applications Company, L.L.C. on July 8, 1998, for undertaking the sale and distribution of the de-icing agent in the New England states under the name Ice Ban. The terms of the agreement also provided that Sears Oil progressively loaned the new corporation $300,000 in cash and spent well over $100,000 in management time on its business. When considering the entire complaint, these allegations by the plaintiff met the Rule(b) requirement to plead fraud with particularity as to defendant George Janke.

  As to defendant USA, the complaint alleges in paragraph 14, that its President, George Janke, in continuing to misrepresent its ownership of the Toth/918 patent, on or about August 31, 1996, USA entered into an agreement that purported to license defendant Ice Ban, America, Inc. to sell USA's product in parts of the State of New York.

  Paragraph 15 asserts that in September 1997, USA, through George Janke entered negotiations with the plaintiff, on its own behalf, asserting USA's Right to Substitute Itself for Defendant Ice Ban America, Inc. in a proposed L.L.C. Agreement for the sale of Ice Ban products in New York.

  Paragraph 16 maintains that on or about May 6, 1998, USA, through George Janke, USA gave written assurance to Howard Sears that USA would stand behind the proposes LLC Agreement with Ice Ban America, Inc. and would provide "or have provided" Ice Ban to the LLC.

  Paragraph 18 states that in October 1997, as part of Sears' negotiations with Ice Ban America, Inc., USA required Sears to enter into a Confidentiality Agreement in response to Sears' due diligence request for information relating to the ownership of the Toth/918 patent. USA's conduct caused loans and management expenses to be made by Sears Oil based on defendants' misrepresentations that they owned or controlled the ['918'] Patent, resulting in damages to the plaintiffs.

  The plaintiff is at liberty to refuse to be pinned down to a single theory of fraud; and inconsistency is not a tenable objection to a pleading. See > Fed.R.Civ.P. 8(e)(2). There is no justification in the Federal Rules for an order to plaintiff to set forth a cause of action clearly. In the first place there is no requirement under the Rules that a complaint state a cause of action. The only relevant requirement is that of stating a claim upon which relief may be granted. See > Rules 8(e). Michael v. Clark Equipment Company, 380 F.2d 351, 352 (2d Cir. 1967).

  An examination of plaintiffs' second amended complaint shows that it has met the essential requirements for detailing defendants' alleged fraud complaint are sufficient to meet the requirements of Rule 9(b). It specifically alleges the contents, representations, the facts misrepresented, the identity of the persons who made the misrepresentations and plaintiffs' reliance upon the representations and consequent damages resulting therefrom. Although plaintiffs may not have pinpointed the exact time and place of every representation, they have given sufficient notice of the time period during which these representations were made. This appears sufficiently specific in the present case to give defendants adequate notice of the claims against them for fraud and fraudulent intent, and to prepare an effective defense. Therefore, the court finds that the second amended complaint complies with the specific pleading requirements of Rule 9(b).

  Accordingly, defendants' motion for summary judgment to dismiss the second amended complaint due to the court's lack of jurisdiction over defendants George Jake and Ice Ban USA, Inc., and the incomplete fraud allegations in plaintiffs' second amended complaint is DENIED.



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