United States District Court, S.D. New York
July 15, 2004.
ELMIRA KALIC DRASKICEVIC, a/k/a ELMIRA KALIC, Plaintiff,
ENTERSPORT MANAGEMENT, INC., and MARC FLEISHER, Defendants.
The opinion of the court was delivered by: DENISE COTE, District Judge
OPINION AND ORDER
On October 27, 2003, Elmira Kalic Draskicevic ("Draskicevic"),
a citizen of Serbia and Montenegro, commenced this action against
Entersport Management Inc., a New York corporation, and Marc
Fleisher, a resident of the State of New York (collectively,
"Entersport"), alleging breach of contract, unjust enrichment and
fraud based on Entersport's failure to pay her fees due under a
contract. Entersport now moves to dismiss the fraud claim against
it. For the following reasons, the motion is granted. Background
The following facts are taken from the Complaint. On or about
January 7, 1998, Entersport, a sports management company that
specializes in representing professional basketball players,
entered into a contract with Draskicevic (the "Contract").
Pursuant to the Contract, Draskicevic agreed to assist Entersport
in recruiting a basketball player named Mirsad Turkcan
("Turkcan") in exchange for which Draskicevic would receive fifty
percent of any fees collected by Entersport for negotiating
Turkcan's contracts. Entersport has since received fees in excess
of $500,000 for representing Turkcan. Draskicevic claims she has
received almost none of the fees owed to her under the Contract.
On February 23, 2004, the defendants moved to dismiss the fraud
claim pursuant to Rule 12(b)(6). Entersport argues that
Draskicevic's fraud claim is duplicative of her claim for breach
of contract. Draskicevic claims that her fraud claim is
independent of the breach of contract because: (1) Entersport
breached a fiduciary duty separate from the duty to perform under
the contract; (2) there are special damages related to the fraud
claim that cannot be recovered as contract damages; and (3)
Entersport made false "statements of intent."
A court may dismiss an action pursuant to Rule 12(b)(6) only if
it "appears beyond doubt, even when the complaint is liberally
construed, that the plaintiff can prove no set of facts which would entitle [her] to relief." Jaghory v. New York State Dep't
of Educ., 131 F.3d 326, 329 (2d Cir. 1997) (citation omitted).
In construing the complaint, the court must "accept all factual
allegations in the complaint as true and draw inferences from
those allegations in the light most favorable to the plaintiff."
Id. "Given the Federal Rules' simplified standard of pleading,
a court may dismiss a complaint only if it is clear that no
relief could be granted under any set of facts that could be
proved consistent with the allegations." Swierkiewicz v. Sorema,
N.A., 534 U.S. 506, 514 (2002).
Under New York law,*fn1 a fraud claim will not lie if it
arises "out of the same facts as plaintiff's breach of contract
claim." Telecom Intl. America, Ltd. v. AT&T Corp.,
280 F.3d 175, 196 (2d Cir. 2001) (citation omitted). Even with the
addition of the allegation that the "defendant never intended to
perform" the contract, "the fraud claim is redundant and
plaintiff's sole remedy is for breach of contract." Id. In
order to maintain a fraud claim arising from a breach of
contract, a plaintiff must plead: (1) "a legal duty separate from
the duty to perform under the contract"; (2) "a fraudulent
misrepresentation collateral or extraneous to the contract"; or
(3) "special damages that are caused by the misrepresentation and
unrecoverable as contract damages." Bridgestone/Firestone v.
Recovery Credit Servs., 98 F.3d 13, 20 (2d Cir. 1996).
Draskicevic contends that her fraud claim is premised on a
fiduciary relationship between the parties, and is therefore
independent of the breach of contract claim. To state a claim for
breach of fiduciary duty under New York law, a plaintiff must
plead: (1) the existence of a fiduciary duty between the parties;
(2) defendant's breach of that duty and (3) damages suffered by
the plaintiff which were proximately caused by the breach. SCS
Communs., Inc. v. Herrick Co., 360 F.3d 329, 342 (2d Cir. 2004).
Where parties to a contract deal in an "arms-length" commercial
transaction, a fiduciary relationship will not be found "absent
extraordinary circumstances." Mid-Island Hosp., Inc. v. Empire
Blue Cross and Blue Shield, 276 F.3d 123, 130 (2d Cir. 2002)
(citation omitted). Thus, a conventional business relationship
"without more" is not converted into a fiduciary relationship "by
mere allegation". Oursler v. Women's Interart Center,
566 N.Y.S.2d 295, 297 (1st Dep't 1991); see also Northeast General
Corp. v. Wellington Advertising, Inc., 82 N.Y.2d 158, 164-65
Draskicevic does not allege circumstances that give rise to a
fiduciary relationship between herself and Entersport.
Draskicevic contends that the Contract "by its nature created" a
relationship of trust. This claim is made without any further
support or evidence that there was a fiduciary relationship.
Draskicevic contends that promising to make payments on an
agreement is indicative of a fiduciary relationship. Entersport's duty to make payments to Draskicevic arises out of
language in the Contract and does not create a fiduciary
relationship. Lastly, Draskicevic argues that an implied duty of
good faith in the Contract suggests a fiduciary relationship.
Under New York law, an implied duty of good faith exists in all
contracts and does not by itself create a fiduciary relationship.
See Reuben H. Donnelley Corp. v. Mark I Mktg. Corp.,
893 F. Supp. 285, 290 n. 1 (S.D.N.Y. 1995). Accordingly, nothing in
Draskicevic's pleadings supports a finding that the contract was
anything other than an "arm-length" commercial transaction.
Draskicevic argues that she suffered $250,000 in special
damages caused by Entersport's fraud that she cannot recover as
contract damages. Specifically, Draskicevic claims that she gave
up lucrative opportunities as a result of Entersport's fraud.
Rule 9(g) requires that special damages be specifically stated in
pleadings. Hogan v. Wal-Mart Stores, Inc., 167 F.3d 781, 783
(2d Cir. 1999). Draskicevic does not provide any explanation or
present any evidence to substantiate her claim for special
damages. Accordingly, Draskicevic fails to allege special damages
with the necessary specificity.
Finally, Draskicevic contends that the defendants made false
"statements of intention," to wit, that Entersport falsely agreed
to make payments to Draskicevic under the contract, and falsely
implied that it was negotiating the contract in good faith.
"[S]imply dressing up a breach of contract claim by further
alleging that the promisor had no intention, at the time of the contract's making, to perform its obligations thereunder, is
insufficient to state an independent tort claim." Telecom, 280
F.3d at 196 (collecting cases).
Draskicevic relies on Graubard Mollen Dannett & Horowitz v.
Moskovitz, 86 N.Y.2d 112 (N.Y. 1995), in support of her claim.
In Graubard, the New York Court of Appeals concluded that
summary judgment was properly denied on a fraud claim by
observing that a "false statement of intention is sufficient to
support an action for fraud, even where that statement relates to
an agreement between the parties." Id. at 122. The fraud claim
was brought with a breach of contract claim based on a contract's
"best efforts" clause. Id. Draskicevic's reliance on Graubard
is misguided. A more recent case in the New York Court of
Appeals, New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308,
316-19 (N.Y. 1995), confirms that the standard articulated in
Bridgestone remains the governing law. See International
CableTel v. Le Groupe Videotron Ltee, 978 F. Supp. 483, 488-90
(S.D.N.Y. 1997) (collecting cases).
Defendant's motion to dismiss the fraud claim is granted.