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Allison v. Clos-Ette Too, LLC

United States District Court, S.D. New York

September 15, 2014

CLAIRE ALLISON, Plaintiff,
v.
CLOS-ETTE TOO, LLC, CLOS-ETTE, LLC, and MELANIE CHARLTON FASCITELLI, Defendants.

REPORT AND RECOMMENDATION

JAMES C. FRANCIS, IV, Magistrate Judge.

The plaintiff, Claire Allison, brings this action against Clos-ette Too, LLC ("C2"), Clos-ette, LLC, and Melanie Charlton Fascitelli, asserting seventeen causes of action arising from an employment relationship. Specifically, the plaintiff asserts claims of breach of contract and quasi-contract (Claims 1-8); fraud (Claims 9-11); promissory estoppel (Claim 12); failure to pay proper wages as required by the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (the "FLSA"), and New York Labor Law ("NYLL") (Claims 13-16); and privacy infringement in violation of the New York Civil Rights Law ("NYCRL") (Claim 17). The defendants now move pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss all claims against Ms. Fascitelli and Clos-ette, as well as all claims against C2 that do not sound in contract. The plaintiff opposes the motion to dismiss and cross-moves for leave to amend the complaint. For the following reasons, I recommend that the defendants' motion be granted in part and denied in part, and the plaintiff's motion be denied.[1]

Background

According to the Complaint, Clos-ette is a "successful high-end custom closet design company" that provides services to wealthy clients and celebrities. (Compl., ¶ 8). C2 is its "wholly owned subsidiary, " that sells closet and organizational accessories modeled after those used by Clos-ette. (Compl., ¶ 10; Memorandum of Law in Support of Defendants C2 and Melanie Fascitelli's Motion to Dismiss ("Def. Memo. 1"), at 2). C2 is a Delaware limited liability company and Clos-ette is a New York limited liability company; both operate from the same office in New York City. (Compl., ¶¶ 2-3). In November 2011, Ms. Allison responded to a posting for a job listed as the "Chief Operating Officer" of C2. At the time, she was working as Vice President of Asset Management at Lone Star Funds ("Lone Star"). (Compl., ¶ 15). On March 15, 2012, she met with Ms. Fascitelli, the founder and chief executive of both Clos-ette and C2, to discuss the employment opportunity. (Compl., ¶¶ 4, 5, 16). They did not agree on a position title for the plaintiff at that time. (Compl., ¶ 16).

After the interview, Ms. Allison began working in her spare time for C2, devoting up to forty hours per week to creating a growth plan for the company. (Compl., ¶¶ 16, 18). Ms. Fascitelli gave Ms. Allison a company e-mail address on May 21, 2012. (Compl., ¶ 21). On June 13, 2012, she wrote an e-mail stating that Ms. Allison would transition to the position of Director of Business Development for C2 upon the completion of a round of fund-raising. (Compl., ¶ 24). Soon after, Ms. Allison requested a salary of $200, 000 annually as well as a 10% membership interest in C2. (Compl., ¶ 30). Ms. Fascitelli orally agreed on September 5, 2012, but changed her mind one day later and instead offered Ms. Allison $150, 000. (Compl., ¶¶ 30-31). Ms. Allison agreed to the lower salary. (Compl., ¶ 31).

In October 2012, Ms. Allison and Ms. Fascitelli signed an agreement memorializing the employment terms, reducing the equity participation to 8%. (Compl., ¶ 33). Shortly thereafter, they agreed on a vesting schedule for Ms. Allison's equity in C2, with 3% vesting immediately and the remaining 5% vesting at different future milestones. (Compl., ¶ 34).

Ms. Allison was terminated from Lone Star in December 2012. (Compl., ¶ 35). At that time, she had not been paid any salary for her work at C2, and on January 17, 2013, she inquired about the unpaid salary. (Compl., ¶ 36). Ms. Fascitelli responded that the plaintiff was being paid with a "membership interest." (Compl., ¶ 36). On April 4, 2013, Ms. Allison wrote an e-mail to Ms. Fascitelli stating that she would no longer work for C2 but would retain her equity interest. (Compl., ¶ 38). Ms. Fascitelli responded by telling the plaintiff that her equity interest had not vested and she had no ownership, but offered her a one-half percent interest for "helping with the business plan." (Compl., ¶¶ 38-39). Ms. Allison rejected the offer. (Compl., ¶ 39). The plaintiff alleges that C2 is worth between twelve and thirty million dollars. (Compl., ¶¶ 25-26).

The plaintiff filed the instant action in New York Supreme Court, and it was removed to this Court on March 10, 2014. The motions to dismiss were filed on June 9, 2014. The plaintiff responded by opposing the motions and filing a cross-motion to amend, which did not include a proposed amended complaint.

Discussion

A. Motion to Amend

As an initial matter, the motion to amend should be denied. Rule 15 of the Federal Rules of Civil Procedure provides that courts should "freely give" leave to amend "when justice so requires." Fed.R.Civ.P. 15(a)(2); see also Foman v. Davis, 371 U.S. 178, 182 (1962); Aetna Casualty & Surety Co. v. Aniero Concrete Co., 404 F.3d 566, 603-04 (2d Cir. 2005). However, it is within "the sound discretion of the court" to determine whether to grant or deny leave to amend. John Hancock Mutual Life Insurance Co. v. Amerford International Corp., 22 F.3d 458, 462 (2d Cir. 1994). Any motion to amend should be accompanied by a proposed amended complaint. Segatt v. GSI Holding Corp, No. 07 Civ. 11413, 2008 WL 4865033, at *4 (S.D.N.Y. Nov. 3, 2008). While failure to include the proposed amendment is not necessarily fatal to the motion, the court may deny leave when it is unclear what changes are proposed. See id.; Gulley v. Dzurenda, 264 F.R.D. 34, 36 (D. Conn. 2010) (noting that court should have proposed pleading to properly evaluate whether to grant leave to amend); Schwab v. Nathan, 8 F.R.D. 227, 228 (S.D.N.Y. 1948) ("[C]ommon sense dictates the necessity of having before the Court the proposed amendment."). Thus, if the "failure to attach a copy of the proposed amendment forces the court and opposing party to go through the original pleading page by page and compare it to the proposed amendments to determine what changes are to be made, " the court may deny leave. 1 Motions in Federal Court § 5:218. Since the plaintiff has neither submitted a proposed amended complaint nor made sufficiently clear which facts and claims she seeks to add, the motion for leave to amend should be denied. The factual allegations analyzed below are therefore drawn exclusively from the plaintiff's original complaint.

B. Motion to Dismiss

To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, "a complaint must contain sufficient factual matter... to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While a complaint need not make "detailed factual allegations, '" it must contain more than mere "labels and conclusions' or [f]ormulaic recitation[s] of the elements of a cause of action.'" Id . (quoting Twombly, 550 U.S. at 555). A complaint with "naked assertions' devoid of further factual enhancement'" is insufficient. Id . (quoting Twombly, 550 U.S. at 557). Further, where the complaint's factual allegations permit the court to infer only a possible, but not a plausible, claim for relief, it fails to meet the minimum standard. Id. at 679. In ruling on a motion to dismiss, the court's task "is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.'" GVA Market Neutral Master Ltd. v. Veras Capital Partners Offshore Fund, Ltd., 580 F.Supp.2d 321, 327 (S.D.N.Y. 2008) (quoting Eternity Global Master Fund Ltd. v. Morgan Guaranty Trust Co. of New York, 375 F.3d 168, 176 (2d Cir. 2004)).

In assessing a motion to dismiss, a court must take as true the factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor. Erickson v. Pardus, 551 U.S. 89, 93-94 (2007); DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 110-11 (2d Cir. 2010). However, a court is "not bound to accept as true a legal conclusion couched as a factual allegation.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).

The plaintiff alleges a total of seventeen causes of action against the three defendants. I will analyze her common law claims first and then turn to statutory claims. I will begin with the fraud allegations because their viability is relevant to resolving the claims based on piercing the corporate veil in order to reach Ms. Fascitelli and Clos-ette.

1. Fraud

Ms. Allison alleges fraud, fraudulent inducement, and fraudulent concealment against all three defendants, claiming that Ms. Fascitelli never intended to pay her and purposely kept that information from her in order to receive the benefit of Ms. Allison's work. (Compl., ¶¶ 93-111).

When a claim for fraud is predicated on the same facts as a breach of contract claim, it must allege circumstances beyond the breach itself. Under New York law, a plaintiff must (i) "demonstrate a legal duty separate from the duty to perform under the contract; or (ii) demonstrate a fraudulent misrepresentation collateral or extraneous to the contract; or (iii) seek special damages that are caused by the misrepresentation and unrecoverable as contract damages." Bridgestone/Fireston e, Inc. v. Recovery Credit Services, Inc., 98 F.3d 13, 20 (2d Cir. 1996) (internal citations omitted); accord B&M Linen, Corp. v. Kannegiesser, USA, Corp., 679 F.Supp.2d 474, 480 (S.D.N.Y. 2010). Absent breach of a duty separate from or in addition to a breach of the contract, fraud claims based on misrepresentations about the future or lack of sincerity when entering the contract should be dismissed as redundant. See First Bank of Americas v. Motor Car Funding, Inc., 257 A.D.2d 287, 291, 690 N.Y.S.2d 17, 20-21 (1st Dep't 1999); Gordon v. Dino De Laurentiis Corp., 141 A.D.2d 435, 436; 529 N.Y.S.2d 777 (1st Dep't 1988).

Here, the plaintiff fails to allege any facts supporting fraud beyond her claim that Ms. Fascitelli never intended to pay her. (Compl., ¶¶ 95, 101-102, 108-109).To support this contention, the plaintiff proffers only the fact that another person affiliated with C2, Tom Achtemichuk, was not paid until after Ms. Allison ceased working for C2. (Compl., ¶¶ 32, 108). But the timing of Mr. Achtemichuk's compensation is no indication of fraudulent intent beyond the allegation that Ms. Fascitelli "was not sincere when [she] promised to perform the contract." First Bank of Americas, 257 A.D.2d at 291, 690 N.Y.S.2d at 2. Therefore, the plaintiff's fraud claims are "simply [] breach of contract claim[s] in the ...


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