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Microbanc, LLC v. Inspiremd, Inc.

United States District Court, S.D. New York

February 23, 2017

MICROBANC, LLC, and TODD SPENLA, Plaintiffs,
v.
INSPIREMD, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          LAURA TAYLOR SWAIN United States District Judge.

         Plaintiffs Microbanc, LLC (“Microbanc”), and Todd Spenla (together with Microbanc, “Plaintiffs”), brought this case asserting common-law contract and fraud causes of action against Defendant InspireMD, Inc. (“InspireMD”), in the Supreme Court of the State of New York, from which InspireMD removed the case to this Court. (Docket entry no. 1 (Notice of Removal) & Ex. A (Summons and Verified Complaint (“Compl.”).) This Court has subject-matter jurisdiction pursuant to 28 U.S.C. § 1332(a).

         InspireMD now moves, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss the Complaint for failure to state a claim. The Court has considered the parties' submissions in connection with the instant motion carefully and, for the following reasons, InspireMD's motion to dismiss is granted.

         Background

         The following recitation of facts is drawn from the Complaint, the well-pleaded factual content of which is taken as true for purposes of this motion to dismiss, as well as from the contracts between the parties upon which two of Plaintiffs' claims are based, as the contracts are either attached to, or explicitly referenced in, the Complaint, and are therefore incorporated by reference.[1]

         Microbanc is an investment banking group specializing in introducing potential investors to start-up companies seeking to raise capital. (Compl. ¶ 7.) Microbanc has assigned its rights to pursue any and all of its claims and causes of action to Spenla, who is a managing member of Microbanc. (Id. ¶ 9.) InspireMD is a medical device manufacturer that was developing proprietary stent system technology. (Id. ¶ 8.)

         On May 7, 2008, Microbanc and InspireMD entered into a Financial Advisory & Management Consulting Agreement (the “Consulting Agreement”) by which InspireMD retained Microbanc “to render financial advisory and management consulting services” and to provide InspireMD access to investments arranged by Microbanc.[2] (Compl. ¶ 10; docket entry no. 9, Declaration of Jonathan D. Pressment, Esq. (“Pressment Decl.”), Ex. B (Consulting Agreement), ¶ 1.) The Consulting Agreement specified that it was a “non-exclusive agreement for a period of 6 months.” (Consulting Agreement ¶ 2.) It also provided that, if InspireMD were funded by any “Sources” introduced by Microbanc, Microbanc would pay a commission based on a formula set forth in the Consulting Agreement. (Consulting Agreement ¶ 4; Compl. ¶ 11.)

         The Consulting Agreement also contained a clause stating: “No provision of this Agreement may be amended, modified or waived, except in a writing signed by all of the parties hereto.” (Consulting Agreement ¶ 10(e).)

         The Consulting Agreement expired according to its terms six months after it came into effect, on November 7, 2008. (See Consulting Agreement ¶ 2.) However, Plaintiffs allege that, on or about December 1, 2009, Microbanc and the founder of InspireMD “agreed to extend the Consulting Agreement . . . through May of 2010.” (Compl. ¶ 12.) The Complaint does not allege whether this agreement was written or oral, and Plaintiffs have not proffered any further evidence regarding the alleged agreement to extend the Consulting Agreement's term in connection with this motion practice.

         On December 16, 2009, Microbanc organized a meeting between InspireMD and Palladium Capital Advisors LLC (“Palladium”). (Compl. ¶ 14.) As a result, in July 2010, March 2011, and April 2012, Palladium arranged multiple rounds of financing for InspireMD, totaling over $24 million. (Compl. ¶¶ 16-20.) Microbanc alleges that it is owed compensation under the Consulting Agreement based on the Palladium financing. (Compl. ¶¶ 21-22.)

         In early May 2010, Microbanc arranged a separate $200, 000 investment in InspireMD. (Compl. ¶ 23.) InspireMD asked Microbanc to transfer those funds, but allegedly told Microbanc that a new agreement would be necessary to define Microbanc's fee, because the Consulting Agreement was not in effect at that time. (Compl. ¶¶ 26, 28.) Plaintiffs allege that this representation by Microbanc was false when made. (Compl. ¶ 28.) The Complaint alleges that InspireMD told Microbanc that the prior Consulting Agreement was not in effect and a new agreement was required for the investment transaction because InspireMD was preparing to execute a reverse merger “in a deal in which Microbanc was . . . not the consultant and/or finder.” (Compl. ¶ 26.) However, the Complaint alleges, the reverse merger was pursuant to an agreement between InspireMD and Palladium, the firm introduced to InspireMD by Microbanc. (Compl. ¶ 27.)

         On May 13, 2010, InspireMD and Spenla executed a Finder Fees Agreement (the “Finders Agreement”).[3] (Pressment Decl., Ex. C (Finders Agreement).) The Finders Agreement states that the Finder (a defined term referring solely to Spenla) is entitled to 9% of the amount of any investment from an investor the Finder introduced to InspireMD. (Finders Agreement ¶ 7.) The Finders Agreement also states that the Finder's entitlement to any fee “is subject to the prior written consent of” InspireMD, which must be given “prior” to the Finder “approaching” any potential investor. (Finders Agreement ¶ 3.) The Complaint does not allege that the prior written consent of InspireMD was sought or obtained by Spenla as to any investment. However, the Complaint alleges that, under the Finders Agreement, Microbanc is owed 9% of the financing arranged between InspireMD and Palladium. (Compl. ¶¶ 43-45.)

         Discussion

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A proper complaint cannot simply recite legal conclusions or bare elements of a cause of action; there must be factual content plead that “allows the ...


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