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Kaye Dentistry, PLLC v. Turchin

United States District Court, S.D. New York

June 13, 2014

ANDREW TURCHIN, DMD et al., Defendants.


JESSE M. FURMAN, District Judge.

Plaintiff Kaye Dentistry, PLLC ("Kaye Dentistry"), a dentistry practice in New York, New York, brings claims for breach of contract and fraud against dentist Andrew Turchin and his dentistry practice, Andrew Turchin, DMD, PC (collectively, "Defendants") arising out of Kaye Dentistry's purchase of substantially all the assets of Dr. Turchin's dentistry practice. Defendants now move to dismiss the Amended Complaint pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons stated below, Defendants' motion is GRANTED, and the Amended Complaint is dismissed in its entirety.


The following facts are taken from the Amended Complaint and the asset purchase agreement governing the transaction in question (Decl. Thomas M. Mullaney (Docket No. 21), Ex. A (the "Purchase Agreement")), which the Court may consider on this motion to dismiss. See, e.g. , LaFaro v. N.Y. Cardiothoracic Grp., PLLC , 570 F.3d 471, 475 (2d Cir. 2009); Chambers v. Time Warner, Inc. , 282 F.3d 147, 152-53 (2d Cir. 2002).

On February 2, 2012, Plaintiff agreed to purchase from Defendants certain assets associated with Dr. Turchin's dentistry practice. (Am. Compl. ¶ 5 (Docket No. 18)). The price of the deal was $1.7 million plus the value of the Turchin practice's accounts receivable. ( Id. ; Purchase Agreement § 1.1). The Purchase Agreement defined the assets to be sold - the "Practice Assets" - as "all of the assets, real, personal and mixed, tangible or intangible, wherever located, owned by, used by or held for use by [Andrew Turchin, DMD, PC] in connection with the [dentistry] Practice, " other than specifically defined "[e]xcluded" assets not relevant here. (Purchase Agreement § 1.2). The agreement included a non-exhaustive list of the Practice Assets, one of which was "the complete list of the Practice's active' patients ( i.e. , seen in the last five years), which list will be delivered at closing." ( Id. § 1.2(ii)). The Practice Assets also included "[a]ll of Seller's goodwill associated with the Practice, including trade names, service marks, business phone numbers, internet domains and any website of Seller." ( Id. § 1.2(iv)).

Significantly, the Purchase Agreement also provided for a due diligence period, during which the parties were to "perform a detailed accounting of the Practice Assets." ( Id. § 9.1(viii)). The due diligence provision granted Plaintiff the right to "inspect the Premises, assets, books and records, accounts receivable and other relevant information of Seller reasonably required... to complete its due diligence investigation." ( Id. ). The diligence period was to last two weeks and, if at any time during this period Plaintiff "determine[d] not to move ahead with the transaction for any reason, " it had the right to cancel the transaction. ( Id. ). Plaintiff did perform at least some due diligence, and the transaction ultimately closed on March 2, 2012. (Am. Compl. ¶¶ 8, 14-15). On that day, Plaintiff paid the agreed-upon price, and Defendants delivered to Plaintiff, among other things, its list of active patients. ( Id. ¶ 14-15).

The patient list, however, proved disappointing. Although the document listed 4, 481 names, Plaintiff discovered that 2, 296 of the names were either patients who "had not been seen within five years of the date of the Purchase Agreement or were duplicate names." ( Id. ¶ 18). Accordingly, Plaintiff filed the instant lawsuit, complaining that the assets that it purchased generated "less revenue than they would have" had Plaintiff received a complete list of 4, 481 patients and that it would not have paid as much as it did had Plaintiff known "the true facts." ( Id. ¶¶ 20, 31). On those bases, Plaintiff asserts claims for breach of contract and fraud. ( Id. ). Plaintiff also alleges a second breach of contract claim, based on putatively unpaid obligations relating to certain "pre-paid work in progress, " "CitiHealth deposits, " "[o]verstated accounts receivable, " "[s]crap metal which defendants wrongfully sold, " and "[d]ental equipment and oven which defendants wrongfully removed from plaintiffs' office." ( Id. ¶¶ 35(d), 35(e)).

On November 11, 2013, Defendants filed a motion to dismiss. (Docket No. 14). Thereafter, the Court ordered Plaintiff to file any amended complaint by December 2, 2013, and noted that Plaintiff would not be given any further opportunity to amend the complaint to address the issues raised by the motion to dismiss. (Docket No. 17). Plaintiff timely amended the initial complaint, after which Defendants filed the present motion to dismiss pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. (Docket Nos. 18, 19).


A motion pursuant to Rule 12(b)(6) challenges the sufficiency of the allegations in the complaint. See ATSI Commnc'ns, Inc. v. Shaar Fund, Ltd. , 493 F.3d 87, 98 (2d Cir. 2007). To survive such a motion, a complaint must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (citing Twombly , 550 U.S. at 556). More specifically, the plaintiff must allege sufficient facts to show "more than a sheer possibility that a defendant has acted unlawfully." Id. If the plaintiff has not "nudged [his or her] claims across the line from conceivable to plausible, [the] complaint must be dismissed." Twombly , 550 U.S. at 570. The Court first addresses the breach of contract claims, and then turns to the fraud claim.

A. Breach of Contract

To make out a claim for breach of contract under New York law, a complaint must allege "(1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages." Eternity Global Master Fund Ltd. v. Morgan Guaranty Trust Co. , 375 F.3d 168, 177 (2d Cir. 2004) (internal quotation marks omitted). "Causation is an essential element of damages in a breach of contract action; and, as in tort, a plaintiff must prove that a defendant's breach directly and proximately caused his or her damages." Nat'l Market Share, Inc. v. Sterling Nat'l Bank , 392 F.3d 520, 525 (2d Cir. 2004) (emphasis omitted). As noted, Plaintiff brings two breach of contract claims, which the Court will consider in turn.

1. Patient List Breach

The basis for Plaintiff's first contract claim is the putatively deficient patient list it received from Defendants at closing. A simple review of the Purchase Agreement, however, reveals that the claim fails as a matter of law. Nowhere in the Purchase Agreement did Defendants represent that the list was to include a certain number of patients. The agreement merely obligated Defendants to deliver "the complete list of the Practice's active' patients" at closing (Purchase Agreement § 1.2(ii)), and the Amended Complaint does not allege that Defendants failed to do that. Nowhere does the Amended Complaint state that Defendants failed to deliver Plaintiffs with a list, and nowhere does it claim that the list as delivered omitted any active patients. ( See Defs.' Mem. Law Supp. Mot. Dismiss ("Defs.' Mem. Law") (Docket No. 23) 3). The gravamen of Plaintiff's claim is simply that the list included names that were not those of "active patients, " as some of the names on the list were duplicates, and others were of patients ...

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