Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

KINSEY v. CENDANT CORPORATION

August 10, 2005.

DOUGLAS KINSEY, Plaintiff,
v.
CENDANT CORPORATION, FAIRFIELD RESORTS INC., and FFD DEVELOPMENT COMPANY, L.L.C., Defendants.



The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge

OPINION

The plaintiff Douglas Kinsey ("Kinsey") has moved pursuant to Rule 15(a), Fed.R.Civ.P., for leave to file a Second Amended Complaint ("SAC") against the defendants Cendant Corporation ("Cendant"), Fairfield Resorts Inc. ("Fairfield") and FFD Development Company, L.L.C. ("FFD") (collectively the "Defendants"). The Defendants have moved to sanction Kinsey pursuant to Rule 11, Fed.R.Civ.P. For the reasons set forth below, both motions are denied.

  Prior Proceedings

  Kinsey commenced this action on January 26, 2004 by filing a complaint (the "Complaint") against Fairfield, FFD, Cendant and the Cendant Corporation Employee Stock Purchase Plan (collectively the "Initial Defendants"), alleging a violation of ERISA, securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and various common law claims, as well as a state law claim against the Initial Defendants for their purported failure to pay Kinsey for accrued, unused vacation benefits.

  The Initial Defendants moved to dismiss the Complaint on March 26, 2004. Kinsey filed an Amended Complaint on April 23, 2004 in which he abandoned, inter alia, the ERISA claims and dropped the Cendant Corporation Employee Stock Purchase Plan as a defendant, and the Defendants moved to dismiss the claim for securities fraud (Count 1), breach of fiduciary duty (Count 3), breach of the implied duty of good faith and fair dealing (Count 4), fraud and deceit (Count 5), unjust enrichment (Count 8) and the negligence claim (Count 7) to the extent that claim was based on gross negligence.

  In an opinion and order issued on November 16, 2004 (the "November 16 Opinion"), familiarity with which is assumed, the Court granted Defendants' motion in full, dismissing Counts 1, 3, 4, 5 and 8 of the Amended Complaint and Count 7 in part. See Kinsey v. Cendant Corp., No. 04 Civ. 0582, 2004 WL 2591946, at *19 (S.D.N.Y. Nov. 16, 2004). Kinsey also was granted leave to move to file a second amended complaint. See id.

  On December 16, 2004 Kinsey moved for leave to file the SAC which abandoned the claim for securities fraud and common law claims for breach of the implied duty of good faith and fair dealing and unjust enrichment and restated the claims for breach of fiduciary duty (Count 2), fraud and deceit (Count 3), and gross negligence (Count 5). (See SAC ¶¶ 107-133, 146-52). The remaining claims in the SAC were included in the Amended Complaint and were not the subject of Defendants' motion to dismiss. They include claims for breach of contract (Count 1), negligent misrepresentation (Count 4), failure to pay wages (Count 6) and declaratory judgment (Count 7).

  The Defendants moved for sanctions, and both motions were heard and marked fully submitted on March 23, 2005.

  The Facts

  The facts set forth in the November 16 Opinion derived from the Complaint remain essentially unchanged as alleged in the SAC. The additional allegations in the SAC will be discussed below.

  The Applicable Standard For Amendment

  Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend a complaint "shall be freely given when justice so requires." The federal courts, however, have interpreted Rule 15 to permit such amendments only when (1) the party seeking the amendment has not unduly delayed, (2) when that party is not acting in bad faith or with a dilatory motive, (3) when the opposing party will not be unduly prejudiced by the amendment, and (4) when the amendment is not futile. See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); see Mackensworth v. S.S. Am. Merchant, 28 F.3d 246, 251 (2d Cir. 1994); Prudential Ins. Co. v. BMC Indus., Inc., 655 F. Supp. 710, 711 (S.D.N.Y. 1987). "[I]t is well established that leave to amend a complaint need not be granted when amendment would be futile." Ellis v. Chao, 336 F.3d 114, 126 (2d Cir. 2003) (citing Foman, 371 U.S. at 182). See Nowakowski v. Kohlberg, No. 89 Civ. 5621, 1991 U.S. Dist. LEXIS 107, at *5 (S.D.N.Y. Jan. 8, 1991). An amendment is considered futile if the amended pleading fails to state a claim or would be subject to a successful motion to dismiss on some other basis. See, e.g., S.S. Silberblatt, Inc. v. East Harlem Pilot Block, 608 F.2d 28, 42 (2d Cir. 1979); Freeman v. Marine Midland Bank-New York, 494 F.2d 1334, 1338 (2d Cir. 1974).

  More specifically, a proposed amendment to a pleading is deemed to be futile if "it could not withstand a motion to dismiss pursuant to Rule 12(b)(6)." Oneida Indian Nation of New York v. City of Sherrill, 337 F.3d 139, 168 (2d Cir. 2003) (citing Ricciuti v. N.Y.C. Transit Auth., 941 F.2d 119, 123 (2d Cir. 1991)). See Aniero Concrete Co. v. New York City Construction Auth., Nos. 84 Civ. 9111, 95 Civ. 3506, 1998 WL 148324, at *7 (S.D.N.Y. Mar. 30, 1998); Finlay v. Simonovich, No. 97 Civ. 1455 (AJP) (DAB), 1997 WL 746460, at *4 (S.D.N.Y. Dec. 2, 1997). For the purposes of evaluating futility, the 12(b)(6) standard is applied: All well pleaded allegations are accepted as true, and all inferences are drawn in favor of the pleader. See Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993).

  Kinsey has acknowledged that amendment is futile if the proposed amended complaint would not survive a motion to dismiss. See Pl. Mem. at 2; Nowakowski, 1991 U.S. Dist. LEXIS 107, at *5. According to the Defendants, the claims for fraud, breach of fiduciary duty and gross negligence in the SAC are legally defective under ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.