The opinion of the court was delivered by: Honorable Paul A. Crotty, United States District Judge
This family dispute involves an allegation by siblings Elizabeth Robb Bice, Clare Robb Wenk, Edward Robb, and Barbara Robb (collectively "Plaintiffs") that their brother, Defendant George E. Robb, Jr., reneged on a promise made more than two decades ago to their father, George E. Robb, Sr., to manage the family business "for the benefit of family members." (Complaint, filed Mar. 14, 2002, ¶ 2.) In 2007, they commenced this action seeking to impose a constructive trust on the proceeds of Defendant's sale of his controlling interest in the business six years earlier in 2001.*fn1
(Compl. ¶ 3.) Defendant moves to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, Defendant's motion is granted and the complaint is dismissed.
I. Facts Alleged in the Complaint
Prior to October 1985, Robb Sr. was the controlling shareholder of RPM Securities Co., Inc. ("RPM"), a New York Stock Exchange specialist firm that his father had helped found in 1925.
(Compl. ¶¶ 4, 12-13.) Robb Sr. managed the company to benefit his family members by providing employment or gifting company shares. (Compl. ¶ 14.) In 1984, Robb Sr., facing health concerns, began soliciting offers for his controlling share, receiving bids from financial services firms. (Compl. ¶¶ 15-16.) In 1985, Robb Sr. rejected more lucrative offers in order to accept a $35 million leveraged buy-out bid from his 31-year-old son, Robb Jr., so that the business would remain a family asset. (Compl. ¶¶ 18-19.) Plaintiffs contend that Robb Sr. only agreed to the sale after Robb Jr. "expressly promised that he would manage the business to enhance the welfare of the family." (Compl. ¶ 20.) Subsequent to that agreement, the deal closed and Robb Jr. assumed control of the corporation.
According to the Complaint, "[a]lmost immediately upon assuming control of the company, Robb Jr. breached the trust that his father had placed him" by terminating or suppressing the promotion of family members, diminishing their stockholdings, and generally neglecting the business. (Compl. ¶¶ 21-22.) These actions caused relations between father and son to deteriorate, as Robb Sr. grew despondent over Robb Jr.'s management of the company. (Compl. ¶ 23.) Ultimately, in September 1991, Robb Sr. revoked a will under which Robb Jr. was to have been the trustee, replacing it with a new will that bequeathed his entire estate to his wife, Clare, and, in the event that she predeceased him, to all of his children (presumably including Robb Jr.) in equal shares. (Compl. ¶ 23.) George Sr. died on October 12, 1991. There is no allegation that Robb Sr. ever instituted an action against Robb Jr. for breach of contract.
RPM was purchased by and merged into LaBranche & Co., Inc. ("LaBranche"), with the approval of its thirteen stockholders, on March 15, 2001. (Compl. ¶ 28.) In the proxy statement describing the merger agreement, Robb Jr. was listed as the controlling shareholder, with 36,000 shares or a 51.36% interest in the company. (Compl. ¶ 26.) Per the merger agreement, Robb Jr. exchanged these shares for 3,556,008 shares of LaBranche common stock and 53,355.08 shares of preferred stock worth nearly $180 million. (Compl. ¶ 30.)
The Complaint alleges that, despite selling his family business for an economic windfall, Robb Jr. failed to make any meaningful distribution to his siblings from the proceeds. (Compl. ¶ 31.) Instead, Robb Jr. established The GR Family LLC (the "LLC") with eight members: two of Robb Jr.'s children and six of his siblings (including the four Plaintiffs). (Compl. ¶¶ 32-33.) On the date the family members were added to the LLC, May 30, 2001, each individual account contained 4,000 LaBranche shares worth $157,920. (Compl. ¶ 33.) This amount represented approximately 0.1% of the total number of LaBranche shares Robb Jr. received as consideration for the merger. (Compl. ¶ 34.) Since funding the LLC, Robb Jr. has refused his siblings' requests for information about its purpose or terms. (Compl. ¶ 36.) Though Robb Jr. led them to believe that their shares would be worth a significant sum after seven years, on March 12, 2007, 4,000 shares of LaBranche stock were worth $31,480. (Compl. ¶¶ 36, 38.)
II. The Parties' Arguments
Plaintiffs claim that the oral promise by Robb Jr. to his father to "manage the company to benefit the family" was legally enforceable because Robb Sr. agreed to the 1985 leveraged buy-out in reliance on that promise. (Compl. ¶¶ 39-50.) That promise was violated, they claim, when Robb Jr. "manag[ed] the company to the detriment of family members and failed to share the proceeds of its sale." (Compl. ¶ 43.) As the intended beneficiaries of that promise (Compl. ¶ 41), Plaintiffs now seek to enforce their rights. They claim that Robb Jr. was unjustly enriched when, in violation of his promise, he retained substantially all of the proceeds of the 2001 sale, and seek the imposition of a constructive trust as to those proceeds. (Compl. ¶¶ 39-45.)
In response, Defendant points to certain portions of the Complaint that allege that he breached his purported obligations to Plaintiffs "almost immediately" after the 1985 transaction, rendering the constructive trust claim time-barred. (Def. Mem. 2.) Defendant also claims that the alleged oral promise to manage a company for the benefit of family is unenforceable for vagueness. (Def. Mem. 2.) Defendant further contends that the promise is unenforceable because Robb Sr. sold his shares to Robb Jr. in an integrated and comprehensive written agreement that nullified collateral oral commitments. (Def. Mem. 2, 9.) Finally, Defendant claims that ...