The opinion of the court was delivered by: Honorable Paul A. Crotty, United States District Judge:
USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: _________________
MEMORANDUM OPINION & ORDER
Plaintiffs Peter Gianoukas ("Gianoukas"), Doris Gianoukas, and Nicholas Tarsia ("Tarsia") bring this action against Defendants Peter Campitiello, Esquire ("Campitiello"), Levy & Boonshoft, P.C. ("L&B"), David M. Levy, Esquire ("Levy"), Stephen Boonshoft, Esquire ("Boonshoft") and East West Acquisitions, LLC ("EWA"), asserting various claims arising out of a number of allegedly fraudulent securities transactions.
Defendants Levy and Boonshoft, as individuals, move pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the two claims asserted against them, for breach of fiduciary duty and negligence. They also move for sanctions and attorneys' fees under Rule 11. Levy and Boonshoft contend that they did not owe the Plaintiffs a fiduciary duty nor did they have a duty to supervise Campitiello.
For the following reasons, Levy and Boonshoft's motion to dismiss is GRANTED and their motion for sanctions and attorneys' fees is DENIED.
Levy and Boonshoft are lawyers and officers of L&B, a New York professional services corporation. (Amended Complaint ("Am. Compl.") ¶¶ 9-11.) At times relevant to this action, Campitiello, who is also a lawyer, was a partner in, and employed by, L&B. (Id. ¶ 8.) The Amended Complaint alleges five separate fraudulent transactions:
(1) Codine(x), (id. ¶¶ 41-68); (2) Pay Pad, (id. ¶¶ 69-87); (3) LIMPE, (id. ¶¶ 88-106); (4) Acellus, (id. ¶¶ 107-16); and (5) UTTI, (id. ¶¶ 117-34). Throughout the Amended Complaint, Campitiello is portrayed as the architect of the fraudulent transactions which bilked Plaintiffs out of in excess of $400,000. He did this as an employee of L&B, and used L&B's escrow account to receive funds from the Plaintiffs and thereafter funds were disbursed from the account to consummate the fraud. The Amended Complaint does not allege that Levy and Boonshoft were involved in, or knew of, the fraud.*fn1
II. Plaintiffs' Amended Complaint
Plaintiffs' Amended Complaint advances six claims. The first three claims, for violations of the Securities Exchange Act of 1934, fraud and conspiracy, are asserted against Campitiello and EWA and are based on the five fraudulent transactions. (Id. ¶¶ 153-84.) Plaintiffs' fifth claim alleges that Campitiello and L&B committed legal malpractice by giving erroneous advice regarding the legality of the five transactions and by failing to disclose various conflicts of interest. (Id. ¶¶ 204-18.)
Plaintiffs' fourth claim, for breach of fiduciary duty, is asserted against Campitiello, Levy, Boonshoft and L&B. Plaintiffs contend that Campitiello, Levy, Boonshoft and L&B breached their duties as escrow agents through their handling of funds transferred by the Plaintiffs into the L&B escrow account. (Id. ¶¶ 185-203.) The sixth*fn2 claim is for negligence based on the alleged failure of Levy, Boonshoft and L&B to supervise Campitiello and ensure he was not violating the law or his ethical obligations as an attorney. (Id. ¶¶ 219-27.)
III. Motion to Dismiss Standard
When considering a motion to dismiss made pursuant to Federal Rule of Civil Procedure 12(b)(6), "the court is to accept as true all facts alleged in the complaint" and "draw all reasonable inferences in favor of the plaintiff." Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 237 (2d Cir. 2007). But "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice..While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Ashcroft v. Iqbal, __ U.S. __, 129 S.Ct. 1937, 1949-50 (2009). To avoid dismissal, the complaint must contain "enough facts to state a claim to relief that is ...