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United States District Court, S.D. New York

April 15, 2004.

J. COLODNEY, Plaintiff,

The opinion of the court was delivered by: DENISE COTE, District Judge


Pro se plaintiff Nathan J. Colodney ("Colodney") worked for approximately one year and two months as a Chief Information Officer ("CIO") at Continuum Health Partners ("Continuum"). Colodney brought this diversity*fn1 action on September 17, 2003, against Continuum and seven other defendants alleging, inter alia, defamation, breach of good faith, breach of implied contract, and constitutional and statutory violations, arising from his loss of employment. On November 5, Colodney amended his complaint to add additional claims against the same defendants.*fn2 All eight defendants have moved to dismiss the amended complaint. For the reasons that follow, the motion is granted in part.


  All the facts in this Opinion are taken from the complaint and documents upon which the complaint relies.*fn3 The events at issue principally span the period between March 2001 and August 2002.

  The Hiring Process

  On March 15, 2001, Colodney was interviewed by Continuum*fn4 for a position as its CIO. At the interview, Joseph Szmadzinski ("Szmadzinski"), a consultant to Continuum's technology department, explained that Continuum's technology operations had been outsourced to Cap Gemini Ernst & Young ("CGEY") for a seven-year period starting in December 2000. The CIO would be responsible for managing Continuum's contract with CGEY, and for overseeing the technology department's strategic planning. Szmadzinski informed Colodney that the CIO position would be "steady employment throughout the term of the outsourcing agreement."

  On March 16, Colodney received a tentative job offer from Continuum. On March 23, Colodney returned to Continuum for a follow-up interview with Gail Donovan ("Donovan"), the Interim Chief Operating Officer of St. Luke's-Roosevelt Hospital Center and the Chief Operating Officer of Beth Israel Medical Center (the "Medical Center"). At the meeting, Colodney asked Donovan if Continuum engaged in strategic planning, and whether it had a business plan. Donovan answered yes to both questions. That day, Colodney also met with Pamela Abner ("Abner"), a Human Resources executive at Continuum. Abner explained that Colodney would be required to complete a six-month probationary period, during which his employment could be terminated at any time.

  In a letter from Abner dated March 26 (the "Offer Letter"), Continuum extended to Colodney a formal offer of employment. The Offer Letter described Colodney's salary, job title, and the company's retirement savings plan. Nothing in the Offer Letter referred to a fixed term of employment or to the six-month probationary period. Colodney accepted the job offer, rented out his Virginia home, resigned from his job at the United States Air Force, and relocated to the New York City area.

  Employee Handbook

  Colodney began his employment at Continuum on June 4. On that day, he received a copy of an employee handbook (the "Handbook"). The front page of the Handbook bears the logos of both the Medical Center and Continuum. The Handbook's first page contains a disclaimer that is boxed off and shaded a different color. It states:

  Neither this handbook nor any other Medical Center document, give you right [sic], either express or implied, to remain employed by the Medical Center. Nor does it guarantee any fixed terms and conditions of your employment. Your employment is not for any specific time and may be terminated at will with or without cause and without prior notice, by Medical Center.

  (Emphasis supplied.) The second page of the Handbook describes Continuum as the parent corporation of several hospitals, including the Medical Center.*fn5

  The Handbook provides that its list of "serious violations," which subject an employee to disciplinary actions "up to and including suspension and discharge," is not intended to be "comprehensive." The list includes, inter alia, the misuse of property belonging to the employer; the unauthorized possession, use, and copying of records or "disclosure of information contained in such records to unauthorized persons;" and the "failure or refusal to perform satisfactorily the duties and responsibilities of one's job or related duties as assigned."

  According to Colodney, "the Handbook does not state a single basis for firing for cause." Moreover, Colodney asserts, none of the reasons for his firing are listed.

  2001 Meeting with Internal Audit

  Shortly after commencing his employment at Continuum, Colodney discovered that there was no supporting documentation for the pricing of the CGEY-Continuum outsourcing agreement. Colodney noted this discrepancy to Edward Shapoff ("Shapoff"), Continuum's Chief Financial Officer, who suggested that Colodney contact Continuum's Internal Audit Team from Ernst & Young Accounting ("Internal Audit"). Colodney met with two Ernst & Young auditors, and turned over to them documents associated with Continuum's prior technology budgets. Shapoff left Continuum within sixty days of Colodney's meeting with Internal Audit, and was replaced by Brendan Loughlin ("Loughlin").

  Sometime after Shapoff's departure, Loughlin and Sharon Joy ("Joy"), Continuum's Vice President of Finance, spoke with Colodney regarding his meeting with Internal Audit. Loughlin, in Joy's presence, "scolded" Colodney for turning over Continuum's technology budgets to Internal Audit, and directed Colodney to seek Loughlin's permission before holding any future meetings with Internal Audit. Loughlin explained that reports from Internal Audit were sent directly to the Board of Directors.

  Summer 2002; Szmadzinski Makes Bid to Become CIO

  In early June 2002, Szmadzinski informed Colodney that there was "no future" for Colodney at Continuum and that he should "consider looking elsewhere." On June 22, Szmadzinski, in his role as a consultant to Continuum, completed a study of the outsourcing agreement. He concluded that a new retained organization led by a new CIO was needed to monitor the agreement. Szmadzinski had himself in mind for the new CIO position.

  On July 11, Donovan met with Colodney in the presence of Loughlin, Szmadzinski, and Mark McDougle ("McDougle"), the Chief Operating Officer of Long Island College Hospital. Donovan informed Colodney that, based on Szmadzinski's study of the outsourcing agreement, Szmadzinski would be joining Continuum as the Chief Information Resources Officer (CIRO), effective immediately. Colodney would now report to Szmadzinski. Donovan directed Colodney to turn over his CGEY files to Szmadzinski for copying.

  The following day, Donovan and Colodney met with the Feld Group, a consulting company. Donovan asked the company to bid on the same work she had just awarded to Szmadzinski. At the meeting, Donovan indicated to the Feld Group that, although she was inclined to use Szmadzinski because of his familiarity with Continuum, no decision had been reached regarding who would receive the contract. She stated that she wanted to make a decision as soon as possible, and asked the Feld Group to submit a proposal within three days. Donovan noted that the price of the proposal would be "the key factor" in determining who was awarded the contract. The Feld Group gave their price and stated that there was no room for compromise. Donovan did not disclose to the Feld Group the conversation she had had with Szmadzinski the day before.

  July 2002: Colodnev's Meeting with the Feld Group

  After the meeting and unbeknownst to Donovan, Colodney met privately with the Feld Group representatives. He described to them "what was happening" at Continuum so that the Feld Group could make a "competitive" proposal. Colodney discussed with the Feld Group the "mess" at the technology department caused by Donovan's lack of management skills, described "the roles that each executive played" in the outsourcing agreement, and gave specific examples of Donovan and Loughlin's managerial shortcomings. According to Colodney, since all of this information was already known to Szmadzinski, "nothing was a secret, but it put the two competitors on the same level."

  The Feld Group told Colodney that they were aware that Donovan was being dishonest with them regarding the status of the contract award, and expressed doubt about submitting a bid in light of Donovan's preference for Szmadzinski. Colodney told them that it would be worth it to submit a proposal that "beat all aspects of Szmadzinski's proposal." To that end, Colodney supplied the Feld Group with copies of Szmadzinski's study of the outsourcing agreement in order to "give them a better idea of what they were bidding on." According to Colodney, none of the documents prepared by Szmadzinski was marked proprietary by either Continuum or Szmadzinski. Colodney also informed the Feld Group that their price was "a little high" and that they would "need to do something about it if they were going to beat Szmadzinski."

  Shortly after the Feld Group submitted its proposal, Donovan sent an email to Colodney, Loughlin, and McDougle stating that the Feld Group no longer wanted the job. Colodney expressed his concerns to McDougle regarding Donovan's selection of Szmadzinski, noting that Szmadzinski was the person who had originally negotiated the price and terms of the outsourcing agreement.

  July 22. 2002: Colodney's Meeting with Donovan

  At a July 22 meeting, Donovan informed Colodney that Szmadzinski was his new supervisor. Colodney asked Donovan what would happen to him in the long term, and she assured him that he would have his job. Donovan mentioned that she had heard from the Feld Group that Colodney had indicated to them that Szmadzinski had already been hired for the position on which they were bidding. Colodney denied having told the Feld Group that Szmadzinski had already been hired, but admitted to having made "suggestions" in order to improve the Feld Group's proposal. Donovan also raised the issue of remarks made by Colodney to the Feld Group about her, and asked Colodney to bring any future complaints he may have about her directly to her attention.

  August 13. 2002: Termination of Colodnev's Employment

  On August 13, Colodney was called into Donovan's office. In the presence of Kathy Meyer, Vice President of Continuum, Donovan informed Colodney that he was being terminated "for cause." Donovan told Colodney that she had heard from a "very reliable source" that Colodney had lied to her on July 22 regarding what he had told the Feld Group. She stated that Colodney had made disparaging remarks about senior executives at Continuum, and had released proprietary information to the Feld Group. Donovan asked Colodney if he had anything to say in his own defense; Colodney remained silent. Colodney was escorted out of the building.

  Colodney alleges that Donovan fired him for cause in order to avoid paying him the severance package that Continuum typically provides to "employees with whom it wished to sever an employment relationship" but who were not fired for cause. According to Colodney, Continuum's "corporate human resources policy" provides that employees not fired for cause are entitled to a severance package of "a base amount plus an additional amount for longevity." Colodney also alleges that Donovan fired him for cause in order to cover up her own "fraud" with respect to the Feld Group and her shortcomings as an executive.

  September 2002: Request for Reimbursement

  Colodney traveled to Wisconsin on behalf of Continuum in July 2002. During his employment, Colodney also accrued miscellaneous expenses for travel in and around Manhattan. At the time he was fired, Colodney had not yet submitted his travel vouchers to Continuum for reimbursement. In September 2002, Colodney sought reimbursement for approximately $1,500 in travel expenses he had incurred while employed at Continuum. Continuum denied Colodney's request for reimbursement.


  In his amended complaint, Colodney charges the defendants with breach of good faith (Claims 1-3), defamation (Claims 4-18, 27-29, 31-33), breach of implied contract (Claim 19), negligent supervision (Claims 20-22), fraud (Claim 23), "failure to provide opportunity to transition to COBRA" (Claim 24), intentional infliction of emotional distress (Claim 25), fraudulent inducement (Claim 26), conversion (Claim 30), negligence (Claims 34-36), negligent recruitment (Claim 37), a violation of 42 U.S.C. § Section 1983 ("Section 1983") (Claim 38), a violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et sea., (Claim 39), and a breach of ERISA (Claims 40-41). The defendants have moved to dismiss the amended complaint in its entirety. Many of Colodney's state law claims turn on whether he had an implied contract of employment with Continuum. For that reason, his breach of contract claim will be discussed first. Colodney's federal claims will be addressed last.


  The defendants move to dismiss the amended complaint pursuant to Rules 8(a), 9(b), 12(b)(1) and 12(b)(6), Fed.R.Civ.P. When considering a motion to dismiss, a court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Securities Investor Protection Corp. v. BDO Seidman, LLP, 222 F.3d 63, 68 (2d Cir. 2000); Jaghory v. New York State Department of Education, 131 F.3d 326, 329 (2d Cir. 1997). "Dismissal is inappropriate unless it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him or him to relief." Raila v. United States. 355 F.3d 118, 119 (2d Cir. 2004); Securities Investor Protection Corp., LLP. 222 F.3d at 68. Where, as here, a plaintiff is proceeding pro se, the court has an obligation to "construe [the] pleadings broadly, and interpret them to raise the strongest arguments they suggest." Cruz v. Gomez, 202 F.3d 593, 597 (2d Cir. 2000) (citation omitted); see also Cucco. v. Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000).

  Most of Colodney's claims are governed by the pleading standard set forth in Rule 8(a), Fed.R.Civ.P. Under Rule 8(a), a complaint adequately states a claim when it contains "a short and plain statement of the claim showing that the pleader is entitled to relief." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002) (citing Rule 8(a)(2), Fed.R. Civ. P). Thus, under Rule 8(a)'s liberal pleading standard, a complaint is sufficient if it gives "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Id. (citation omitted). See also Phelps v. Kapnolas, 308 F.3d 180, 186 (2d Cir. 2002).

  Breach of Implied Contract; Breach of Good Faith

  Colodney alleges that he had an implied contract of employment with Continuum and that Continuum breached the contract by terminating his employment. Colodney admits that he had no written employment contract, but alleges that Szmadzinski orally assured him at his initial job interview that Colodney's employment would be for the remainder of the seven-year outsourcing agreement with CGEY. Colodney points to his firing "for cause" as evidence that he had an implied contract of employment with Continuum. Colodney also alleges that the six-month probationary period described by Abner at his final job interview supports the finding of an implied contract.

  Under New York law,*fn6 absent an express agreement of fixed duration, an employment relationship is presumed to be at will, wand may be freely terminated by either party at any time without cause or notice." Horn v. New York Times, 760 N.Y.S.2d 378, 380 (N.Y. 2003) (discussing development of at-will employment jurisprudence). See Baron v. Port Authority of New York and New Jersey, 271 F.3d 81, 85 (2d Cir. 2001). The presumption of at-will employment status may be rebutted, however, if a plaintiff can establish "that the employer made its employee aware of an express written policy limiting the right of discharge and the employee detrimentally relied on that policy in accepting employment." Lobosco. v. New York Telephone Co., 96 N.Y.2d 312, 316 (2001). See Baron, 271 F.3d at 85. Oral assurances in conjunction with "general provisions in the employee manual" are insufficient to state a claim for an implied employment contract. Skelly v. Visiting Nurse Assoc. of Capital Region Inc., 619 N.Y.S.2d 879, 881 (3d Dep't 1994).

  Colodney's amended complaint does not plead sufficient facts to establish a claim for a breach of an implied contract of employment. It identifies no express agreement with a fixed term of employment. For instance, the Offer Letter, which is integral to the complaint, makes no mention that Colodney's position would be guaranteed until the expiration of the seven-year outsourcing agreement with CGEY. Colodney's employment at Continuum must therefore be presumed to be at will.

  Colodney's pleading does not identify any written policy at Continuum which limited the company's right to fire him, or which could be a source of an implied contract. The complaint's description of Szmadzinski's oral representation at the initial job interview to the effect that the CIO position would last the term of the outsourcing agreement is not sufficient to plead the existence of an implied contract of employment. Similarly, neither the fact that Colodney was fired for cause, nor the existence of a probationary period is sufficient to plead the existence of an implied contract. See Harrison v. Indosuez, 6 F. Supp.2d 224, 232 (S.D.N.Y. 1998) (existence of a probationary period "does not indicate an express intention . . . to alter the at will status"); Wolde-Meskel v. Vocational Instruction Project Community Servs., Inc., 950 F. Supp. 101, 104 (S.D.N.Y. 1997) (90-day probationary period during which plaintiff could be fired for any reason did not create exception to at-will employment).

  To the extent that Colodney may seek to rely on the Handbook as a written policy, his complaint would also fail to state a claim.*fn7 The Handbook contained a boxed-off, shaded disclaimer explicitly warning that all employees were employed at will. Where there is "a sufficiently unambiguous disclaimer, conspicuously placed in the employee handbook such that the employee reasonably could be expected to read it," an implied contract claim may be dismissed as a matter of law. See Baron, 271 F.3d at 88 (affirming summary judgment). Colodney's complaint fails to plead sufficient facts to identify any implied contract of employment or to overcome the presumption that he was an at-will employee. Consequently, it does not state a claim for a breach of an implied contract of employment. A plaintiff in New York has no claim for breach of contract where the employment is at will, regardless of whether or not the termination was wrongful or violated public policy. Lobosco, 96 N.Y.2d at 316. Since Colodney's breach of good faith claims assume the existence of a contractual relationship between Colodney and the defendants, they must be construed as an improper attempt to circumvent the traditional at-will employment rule, and must be dismissed as well. Murphy v. American Home Prods. Corp., 461 N.Y.S.2d 232, 237 (N.Y. 1983) (no implied obligation of good faith and fair dealing exists with respect to at-will employment).

  Leave to amend will be "freely given when justice so requires." Rule 15, Fed.R. Civ. P.; see also Simmons v. Abruzzo, 49 F.3d 83, 86-87 (2d. Cir. 1995). This is especially true in the case of pro se plaintiffs. See Davis v. Goord, 320 F.3d 346, 352 (2d Cir. 2003). "Where it appears that granting leave to amend is unlikely to be productive," however, "it is not an abuse of discretion to deny leave to amend." Lucente v. Int'l Bus. Mach. Corp., 310 F.3d 243, 258 (2d Cir. 2002) (citation omitted). Thus, it is appropriate to deny leave to amend if the proposed amendment is fufile. Id.; see also Foman v. Davis, 371 U.S. 178, 182 (1962). In their moving papers, the defendants clearly identified the law that applies to the pleading of a claim for breach of a contract of employment. Since Colodney has not identified in his opposition to this motion any written policy that could be construed as a source of a contract of employment, and since Colodney has not requested leave to amend, leave to amend these claims will not be given because any proposed amendment would be fufile.


  Colodney charges Donovan with negligently terminating his employment because she had an "obligation to conduct a good faith investigation" into the truth of the allegations against Colodney prior to firing him for cause. As stated supra, Colodney's employment with Continuum was at will. New York "neither recognizes a tort of wrongful discharge nor requires good faith in an at-will employment relationship." De Petris v. Union Settlement Assn., 633 N.Y.S.2d 274, 276 (N.Y. 1995). See Rooney v. Tyson, 127 F.3d 295, 296-97 (2d Cir. 1997). Indeed, to allow a negligent discharge claim by an at-will employee would be inconsistent with the well-established principle that an at-will employee may be discharged for any reason or no reason at all. See Horn, 760 N.Y.S.2d at 384. Thus, Colodney's allegation that the defendants violated their duty to conduct a good faith investigation into the reasons underlying his firing fails to state a cognizable cause of action under New York law. The negligence claims are dismissed. Since any repleading of these claims would be fufile, leave to amend these claims will not be given.


  Colodney alleges that Donovan defamed him by telling other Continuum executives that Colodney had: (1) lied to her regarding statements he had made to the Feld Group in July 2002; (2) given away proprietary materials to the Feld Group in July 2002; and (3) made derogatory statements about "undisclosed" Continuum executives in July 2002. Colodney states that Donovan maliciously and falsely concocted each of the three statements in order to "circumvent" Continuum's severance payment policy, "ensure that a stigma attached" to Colodney, and "conceal Donovan's fraud against the Feld Group." In each of the defamation claims, Colodney charges Donovan "or another in Continuum" with repeating each allegedly false statement to different named executives.*fn8 "Defamation, consisting of the twin torts of libel and slander, is the invasion of the interest in a reputation and good name." Albert v. Loksen, 239 F.3d 256, 265 (2d Cir. 2001) (citation omitted). Spoken defamatory words are slander; written defamatory words are libel. Id. Colodney's defamation claim is directed at words spoken by Donovan and "another," and therefore is a claim for slander.

  To successfully state a claim for slander under New York law, a plaintiff must plead: "(i) a defamatory statement of fact, (ii) that is false, (iii) published to a third party, (iv)%of and concerning' the plaintiff, (v) made with the applicable level of fault on the part of the speaker, (vi) either causing special harm or constituting slander per se,*fn9 and (vii) not protected by privilege." Loksen, 239 F.3d at 265-66 (citation omitted).

  Colodney fails to state a cause of action for slander because the facts contained in his own pleading contradict any naked assertion that Donovan's statements about him were false. Colodney's defamation claim concerns his statements to the Feld Group in July 2002, and his subsequent description to Donovan of what he had done. In his pleading, Colodney admits that he gave materials to the Feld Group, that he made disparaging comments to them about Continuum executives, and that he lied to Donovan about what he had said to them. Colodney admits that when Donovan confronted him at their July 22 meeting about the statements he had made to the Feld Group, Colodney did not disclose to her either that he had turned over Szmadzinski's study, or that he had discussed with them how to tailor their proposal to beat Szmadzinski's offer. Thus, Colodney has actually alleged that Donovan's allegedly libelous statements about Colodney were true. A bald assertion that libelous statements are false is insufficient when it is contradicted by more particularized allegations in the pleading. See Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1092 (2d Cir. 1995) (the court need not credit general conclusory allegations that "are belied by more specific allegations of the complaint").

  Because Colodney's pleading demonstrates that Donovan's statements were not false, it is unnecessary to address the other arguments made by the defendants in support of their motion to dismiss these claims.*fn10 Leave to amend is properly denied since any amendment would be fufile. Colodney having himself undermined any allegation that Donovan's alleged libelous statements were false, further litigation regarding Donovan's statements is not warranted.

 Intentional Infliction of Emotional Distress

  Colodney charges defendants with the intentional infliction of emotional distress by "concocting numerous serious false statements" in order to fire Colodney, and for other circumstances surrounding his firing, including having him escorted out of Continuum's offices. Colodney states that the defendants' conduct was "outrageous, intentional, and with utter disregard for the truth," and resulted in Colodney's emotional distress, "physical ailments," and inability to sleep.

  Under New York law, liability for the intentional infliction of emotional distress may be found only where the conduct has been "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized society." Conboy v. AT & T Corp. 241 F.3d 242, 258 (2d Cir. 2001) (citation omitted). See also DeFilippo v. Xerox Corp. 636 N.Y.S.2d 463, 465 (3d Dep't 1996). Colodney has not alleged sufficient facts in his amended complaint that, even if true, would constitute a claim for the intentional infliction of emotional distress. Leave to amend is denied since there is no reason to believe that an amendment would be anything other than fufile.

 Negligent Suervision and Recruitment

  Colodney charges three Continuum executives with failing to exercise "due supervision" over Donovan. According to Colodney, they "knew or should have known that [Donovan] had a propensity to lie and/or conceal information to cover her own ignorance and incompetence." Colodney asserts that, as a result of the executives' failure to supervise, Donovan "felt free to, and did so freely, concoct lies about [Colodney] to unlawfully terminate his employment for cause." Colodney also accuses one of the executives of "negligent recruitment" in hiring Donovan because it was "foreseeable" that Donovan, who lacked the "knowledge, skills, and abilities" to perform the job for which she was hired, would "engage in fraudulent and wrongful behavior," as she did with Colodney.

  A claim for negligent hiring or supervision can only proceed against an employer for an employee acting outside the scope of her employment. See Murns v. City of New York No. 00 Civ. 9590 (DLC), 2001 WL 515201, at *5 (S.D.N.Y. May 15, 2001) (collecting cases). When an employee is acting within the scope of her employment, her employer may be held liable for the employee's negligence only under a theory of respondeat superior and no claim may proceed against the employer for negligent hiring or retention. Karoon v. New York City Transit Authority 659 N.Y.S.2d 27, 29 (1st Dep't 1997). Because the facts alleged by Continuum only support an inference that Donovan was acting within the scope of her employment when she fired Colodney, no claim may proceed against Donovan's employer for the negligent hiring or supervision of Donovan. Leave to amend is denied on the ground of futility.

 Fraudulent Inducement

  Colodney alleges that he was fraudulently induced into accepting the CIO position at Continuum based on the defendants' materially false representations regarding the scope and duration of his employment. Colodney alleges that Continuum executives*fn11 informed him that his employment "was to parallel the CGEY outsourcing agreement term of 7 years," and that he was being hired for a "long-term, stable position." In addition, Colodney alleges that Donovan told him that Continuum had both strategic and business plans. Colodney avers that he relied on those statements in making his decision to resign from his position at the United States Air Force, and to relocate to New York City in order to work for Continuum.

  Under New York law, the elements of fraudulent inducement are: (1) a knowingly false representation of a material fact, and (2) detrimental reliance thereon. Fax Telecommunicaciones Inc. v. AT & T, 138 F.3d 479, 490 (2d Cir. 1998); National Union Fire Ins, Co. v. Worley, 690 N.Y.S.2d 57, 61 (1st Dep't 1999). Reliance means "reasonable" reliance. Remington Rand Corp. v. Amsterdam-Rotterdam Bank, N.V., 68 F.3d 1478, 1484 (2d Cir. 1995).

  Where a fraud claim is brought alongside a breach of contract claim, the plaintiff must distinguish the two by (1) demonstrating a legal duty separate from the duty to perform under the contract, (2) demonstrating a fraudulent misrepresentation collateral or extraneous to the contract, or (3) seeking special damages caused by the misrepresentation and unrecoverable as contract damages. Bridgestone/Firestone, Inc. v. Recovery Credit Services. Inc. 98 F.3d 13, 20 (2d Cir. 1996); see Manning v. Utilities Mut. Ins. Co. Inc. 254 F.3d 387, 400 (2d Cir. 2001). Although ua valid fraud claim may be premised on misrepresentations that were made before the formation of the contract and that induced the plaintiff to enter the contract," Cohen v. Koenig, 25 F.3d 1168, 1173 (2d Cir. 1994), an assertion that defendants made intentionally false statements regarding their intent to fulfill the terms of the contract does not constitute a misrepresentation collateral or extraneous to a contract, Bridgestone/Firestone, 98 F.3d at 19. See Wilmoth v. Sandor, 686 N.Y.S.2d 388, 391 (1st Dep't 1999).

  Colodney's fraudulent inducement claim fails insofar as it relies on his understanding that his employment would last as long as the CGEY outsourcing agreement. This claim is duplicative of his breach of implied contract claim. The crux of both claims is that the defendants promised to hire Colodney for the duration of the CGEY outsourcing agreement, but reneged on that promise by firing him. The fraudulent inducement claim only adds that the defendants intended not to perform the employment contract at the time they offered Colodney the CIO position. A "contract action cannot be converted to one for fraud merely by alleging that the contracting party did not intend to meet its contractual obligations." Rocanova v. Equitable Life Assurance Society of the United States. 612 N.Y.S.2d 339, 343 (N.Y. 1994). Defendants' alleged false promise was not sufficiently collateral or extraneous to the terms of the alleged underlying agreement between the parties to support an independent fraud claim. In addition, the pleadings do not allege "reasonable reliance" on the alleged promise that Colodney would be hired for the term of the CGEY outsourcing agreement. The Offer letter did not contain any definitive term of employment, nor any language tying his employment to the duration of the outsourcing agreement. A written offer of employment lacking any reference to a definite term of employment or the CGEY outsourcing agreement makes Colodney's asserted reliance on the defendants' oral assurances regarding the term of his employment unreasonable as a matter of law.

  Colodney does state a claim for fraudulent inducement, however, to the extent that he alleges that he relied on Donovan's representation that Continuum had strategic and business plans in making his decision to accept the CIO position. The existence of such plans was extraneous to the terms of any agreement between the parties regarding the scope and duration of Colodney's employment. Colodney alleges that, in reliance on Donovan's statement, he resigned from his previous job and relocated to the New York City area. Colodney also alleges that Donovan knew or should have known that her statement was false. As Continuum's Chief Operating Officer, Donovan was in a position to know whether Continuum engaged in strategic and business planning. Accordingly, at this early stage in this action, it cannot be said that Colodney does not state a claim for fraudulent inducement with respect to this prong of his claim.

 Fraud and Conversion

  Colodney alleges that the defendants committed fraud and conversion by refusing to reimburse him for $1,500 in travel expenses that he incurred while traveling on business in July 2002 to Wisconsin and on miscellaneous local travel in and around Manhattan. Colodney alleges that he was "led to believe" that he would be reimbursed for such expenses, but had not yet had a chance to submit travel vouchers prior to his firing. Colodney states that the defendants "maliciously" ignored his requests for reimbursement.

  Colodney does not state a claim for fraud. To prove fraud under New York law, "a plaintiff must show that (1) the defendant made a material false representation, (2) the defendant intended to defraud the plaintiff thereby, (3) the plaintiff reasonably relied upon the representation, and (4) the plaintiff suffered damage as a result of such reliance." Bancrue Arabe et Internationale D'Investissement v. Maryland Nat'l Bank. 57 F.3d 146, 153 (2d Cir. 1995). All claims for fraud are subject to a heightened pleading standard. See Rule 9(b), Fed.R. Civ. P.; Olsen v. Pratt & Whitney Aircraft. Div. of United Technologies Corp., 136 F.3d 273, 275 (2d Cir. 1998).

  Colodney fails to identify with particularity who made the allegedly false representations to him about reimbursement, when they were made, and the nature of the statements. Since there is a possibility that Colodney could cure this defect in his pleading, he will be permitted an opportunity to amend in order to provide this specificity.

  Colodney does state a claim for conversion. "Conversion is any unauthorized exercise of dominion or control over property by one who is not the owner of the property which interferes with and is in defiance of a superior possessory right of another in the property." Schwartz v. Capital Liquidators, Inc. 984 F.2d 53, 53-54 (2d Cir. 1993) (per curiam) (citation omitted). "Where the original possession is lawful, a conversion does not occur until the defendant refuses to return the property after demand or until he sooner disposes of the property." Schwartz 984 F.3d at 54 (citation omitted). See also King v. Fox. No. 97 Civ. 4134 (RWS), 2004 WL 68397, at *7 (S.D.N.Y. Jan. 14, 2004).

  Continuum was the lawful possessor of any money due and owing to Colodney for his business travel expenses. Colodney adequately alleges that he made several requests for reimbursement after he was fired, but that Continuum denied his requests. Colodney's conversion claim does not duplicate his breach of contract claim, since he seeks damages wholly apart from contractual damages.

 Section 1983

  Colodney asserts that the defendants violated Section 1983 by terminating his employment based on the allegedly disparaging comments about Continuum executives that he made to the Feld Group. Colodney locates the Section 1983 violation in the First Amendment's right to free speech.

  In order to state a claim under Section 1983, a plaintiff must allege that he was injured by "either a state actor or a private party acting under color of state law," Ciambriello v. County of Nassau, 292 F.3d 307, 323 (2d Cir. 2002), and that such conduct deprived the plaintiffs of a right, privilege, or immunity secured by the Constitution or laws of the United States, Dwares v. City of New York, 985 F.2d 94, 98 (2d Cir. 1993).

  Continuum is not a state actor. Colodney does not allege that Continuum executives acted under color of state law. Even reading his pleading liberally, Colodney does not state a cause of action under Section 1983. Because any amendment to this claim would be fufile, leave to amend shall not be given. ERISA Claims

  Colodney charges the defendants with violating ERISA. According to Colodney, Donovan made false statements about him for the purpose of firing him for cause so that the defendants could "evade" paying Colodney severance pay "as dictated by Continuum's corporate policies." Colodney claims that he is owed at least one year of severance "in accordance with [Continuum's] actual practices established for the payment of executives."

  ERISA grants federal courts jurisdiction over all claims by an "employee welfare benefit plan" beneficiary who seeks to "recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B) & (e)(1). The term "employee welfare benefit plan" has been held to apply to "most, but not all," employer obligations to pay severance benefits. Schonholz v. Long Island Jewish Medical Center, 87 F.3d 72, 75 (2d Cir. 1996). As both the Supreme Court and the Second Circuit have emphasized, "ERISA applies only where such an undertaking or obligation requires the creation of an ongoing administrative program." Id. For instance, a single lump-sum severance payment program is not an employee benefit plan under ERISA because it "requires no administrative scheme whatsoever to meet the employer's obligation." Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 12 (1987); see James v. Flet/Norstar Fin. Group, Inc., 992 F.2d 463, 467-68 (2d Cir. 1993) (employer's payment of sixty days' salary following employees' last day of work did not create an employee welfare benefit plan under ERISA).

  In his amended complaint, Colodney does not allege the existence of a qualified ERISA plan at Continuum or a denial of benefits under such a plan. The amended complaint's reference to a "corporate human resources policy" does not allege the existence of a benefit plan covered by ERISA. Moreover, even if the complaint had alleged the existence of a qualified ERISA plan, ERISA generally requires a beneficiary to exhaust a plan's administrative remedies before bringing a suit for benefits. See, e.g., Burke v. Kodak Retirement Income Plan, 336 F.3d 103, 107 (2d Cir. 2003) (survivor income benefits). Colodney does not allege that he sought administrative review of his purported ERISA claim.

  Accordingly, Colodney's ERISA claims are dismissed, and leave to amend will not be given. In their moving papers, the defendants provided Colodney with adequate notice of the deficiencies in his ERISA claim. In his opposition papers, Colodney did not address these deficiencies, or seek leave to amend his pleadings.

 COBRA Health Coverage

  Colodney charges the defendants with failing to provide him with "the opportunity to transition to [the Congressional Omnibus Budget Reconciliation Act ("COBRA"), 29 U.S.C. § 1161-68] health insurance coverage."*fn12 According to Colodney, he was left without healthcare insurance, and thus could not visit a physician on "several occasions" when he was sick. Colodney alleges that he "unnecessarily endured the pain and suffering of severe allergies and numerous infections" due to his lack of health insurance.*fn13

  COBRA permits an employee to continue to receive health benefits at the group rate even after the termination of his employment.*fn14 See 29 U.S.C. § 1161(a), 1163; Local 217 v. MHM, Inc., 976 F.2d 805, 809 (2d Cir. 1992). The statute sets out deadlines by which the employer must notify the health plan administrator of the employee's termination; by which the administrator must notify the employee of his rights to continued coverage under the plan; and by which the employee must elect his right to continue coverage under COBRA. 29 U.S.C. § 1166 (a)(2), 1162(a)(4). A plan administrator's failure to comply with COBRA'S notice provisions entitles a beneficiary to statutory damages of up to $100 per day. 29 U.S.C. § 1132(c)(1). Statutory damages for a failure to give notice are not available against an employer who is not the plan administrator. 29 U.S.C. § 1132 (c)(3).

  Colodney may be able to state a claim for relief under COBRA, but his pleading is deficient in several respects: Colodney fails to (1) allege the existence of a qualified healthcare plan governed by COBRA; (2) name the plan administrator as a defendant; and (3) allege that his employer is the plan administrator if no separate administrator has been designated. Accordingly, Colodney's COBRA claim is dismissed without prejudice to his amendment of this claim.


  For the reasons stated above, the defendants' motion to dismiss the amended complaint is granted in part. It is hereby

  ORDERED that the following claims are dismissed with prejudice: breach of good faith (Claims 1-3), defamation (Claims 4-18, 27-29, 31-33), breach of implied contract (Claim 19), negligent supervision (Claims 20-22), intentional infliction of emotional distress (Claim 25), negligence (Claims 34-36), negligent recruitment (Claim 37), 42 U.S.C. § 1983 (Claim 38), and violations of ERISA (Claims 39-41).

  IT IS FURTHER ORDERED that the fraud claim in connection with reimbursement for $1,500 in business travel expenses (Claim 23) and the COBRA claim (Claim 24) are dismissed without prejudice to being amended by May 7, 2004.

  IT IS FURTHER ORDERED that the plaintiff has stated a cause of action under New York law for (1) fraudulent inducement with respect to the assertion that Colodney relied on Donovan's statements regarding the strategic and business plans in accepting employment (Claim 26), and (2) conversion with respect to the $1,500 in business travel expenses incurred by Colodney while employed by Continuum (Claim 30).


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