Searching over 5,500,000 cases.

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.

Prieto v.

December 29, 2005


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


Presently before the Court is the motion by defendants and Charles Smith ("Smith") (collectively, "Defendants") to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, Defendants' motion is granted and the Amended Complaint is dismissed.


Plaintiff Mark Prieto ("Plaintiff") is a former employee of Essentially, Plaintiff alleges that breached various employment-related contracts with Plaintiff and that Smith made false representations to Plaintiff with the intent to induce Plaintiff to enter into these agreements. Plaintiff's allegations arise out of four contracts. On July 1, 2002, Plaintiff entered into an Employment Agreement, pursuant to which Plaintiff's employment with was to continue from July 1, 2002 through January 1, 2005, and Plaintiff was to receive an annual salary of not less than $250,000, together with stock option rights to purchase 1,250,000 shares of stock to vest over a defined period of time. (Compl. ¶¶ 11-12.) On or about July 31, 2002, Plaintiff entered into a Stock Option Agreement, pursuant to which Plaintiff received options to purchase 1,492,500 shares of stock in (Id. ¶ 13.)

Thereafter, on October 30, 2002, Plaintiff entered into a Management Continuity Agreement which provided in part that "'[i]n the event that there is a Change in Control of the Company' Plaintiff 'shall be entitled to receive from the company' a lump sum payment representing 5% of the value of the assets sold, and salary continuation for 36 months and other ancillary benefits which included immediate vesting of stock options. In addition, the agreement provided that the company shall pay all costs incurred in Plaintiff enforcing the provisions of this agreement." (Id. ¶ 14.)

Finally, on May 22, 2003, Plaintiff entered into a Release Agreement whereby he agreed to release from "all liabilities previously incurred, except for the benefits contained in the Management Continuity Agreement in exchange for receipt of $203,676.90." (Id. ¶ 15.)

Plaintiff alleges that failed to honor its obligations under all four of these agreements "with the purpose of inducing Plaintiff to continue employment with them when they had no intention of honoring any of the negotiated agreements." (Id. ¶ 16.)The Amended Complaint asserts four claims of breach of contract, one ERISA violation, one claim under the New York Labor Law, and one claim for fraud. Defendants move to dismiss the Amended Complaint in its entirety on several grounds, including that Plaintiff cannot establish subject matter jurisdiction. Plaintiff opposes the motion and, alternatively, moves for leave to amend. Because the Court finds that Plaintiff has failed to allege a basis for federal jurisdiction, whether it be diversity or ERISA, and because the Court further declines to exercise supplemental jurisdiction over the remaining state law claims, Defendants' motion is granted and the case is dismissed.


I. Applicable Law and Legal Standards

The court may not dismiss a complaint under Rule 12(b)(6) unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. King v. Simpson, 189 F.3d 284, 286 (2d Cir. 1999); Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996). The Court must accept all factual allegations in the proposed complaint as true and draw all reasonable inferences in favor of the plaintiff. King, 189 F.3d at 287; Jaghory v. New York State Dep't. of Educ., 131 F.3d 326, 329 (2d Cir. 1997).

Although a court in deciding a Rule 12(b)(6) motion is generally limited to considering the facts alleged in the complaint, a district court may also consider documents attached to the complaint or incorporated in it by reference. See, e.g., Stuto v. Fleishman, 164 F.3d 820, 826 n. 1 (2d Cir. 1999). In addition, a court may also consider documents outside the pleadings if they are "integral" to the complaint and upon which the complaint relies. See International Audiotext Network, Inc. v. American Tel. and Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995) ("Although the amended complaint in this case does not incorporate the Agreement, it relies heavily upon its terms and effect; therefore, the Agreement is 'integral' to the complaint, and we consider its terms in deciding whether [plaintiff] can prove any set of facts that would entitle it to relief."). Courts apply this exception where, as here, a plaintiff sues primarily on the basis of a document, such as a contract, and only attaches selected portions of that document, or fails to attach the document at all. See id.; see also Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991) ("In addition, we have held that when a plaintiff chooses not to attach to the complaint or incorporate by reference a prospectus upon which it solely relies and which is integral to the complaint, the defendant may produce the prospectus when attacking the complaint for its failure to state a claim, because plaintiff should not so easily be allowed to escape the consequences of its own failure.") (citing I. Meyer Pincus and Assocs., P.C. v. Oppenheimer & Co., 936 F.2d 759, 762 (2d Cir. 1991)).

In the instant case, the Amended Complaint refers to various contracts that are integral to Plaintiffs' claims and quotes select provisions but does not attach copies as exhibits. The Proposed Second Amended Complaint, however, does attach the contracts as exhibits. Accordingly, pursuant to the authority as stated above, in deciding Defendants' motion under Rule 12(b)(6), the Court will consider the contracts in their entirety.

II. The Court Lacks Subject Matter Jurisdiction Over ...

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.