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Microbanc, LLC v. Inspiremd, Inc.

United States District Court, S.D. New York

January 22, 2018

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

          MEMORANDUM ORDER AND OPINION

          LAURA TAYLOR SWAIN, UNITED STATES DISTRICT JUDGE.

         Plaintiffs Microbanc, LLC (“Microbanc”), and Todd Spenla (collectively, “Plaintiffs”), bring this action against Defendant InspireMD, Inc. (“InspireMD”), asserting common-law contract and fraud claims. On February 23, 2017, this Court issued a Memorandum Opinion and Order (docket entry no. 21, the “February Opinion”) granting Defendant's motion to dismiss Plaintiffs' complaint in its entirety. In the February Opinion, the Court granted Plaintiffs permission to move for leave to replead two breach of contract claims. (Id. at 8.) The February Opinion did not grant Plaintiffs permission to replead their unjust enrichment, quantum meruit, and fraud claims. (Id.)

         Plaintiffs now move to amend all of the claims in their original complaint, and to substitute Mr. Spenla's estate as a plaintiff following Mr. Spenla's death in November 2016. (Docket entry no. 25, the “Motion.”) The Court has carefully considered the parties' submissions as to both motions and, for the reasons that follow, Plaintiffs' motion for leave to amend is denied, and their motion to substitute Mr. Spenla's estate as a plaintiff is denied as moot.

         Background

         The Court assumes the parties' familiarity with the underlying facts of this case, which are laid out in detail in the February Opinion. (February Opinion at 1-4.) The following abbreviated recitation of facts is drawn from Plaintiffs' Amended Complaint (docket entry no. 24-1, the “AC”), the well-pleaded factual allegations of which are taken as true for purposes of this motion practice, and from exhibits to Plaintiffs' AC, which are incorporated by reference.

         On May 7, 2008, Microbanc and InspireMD entered into a Financial Advisory & Management Consulting Agreement (the “May 2008 Consulting Agreement”) under which Microbanc was engaged for a six-month period to provide “financial advisory and management consulting services” and arrange access to investments. (AC ¶¶ 13-14; docket entry no. 24-3, Ex. A (May 2008 Consulting Agreement), ¶¶ 1, 2.) The May 2008 Consulting Agreement 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.” (May 2008 Consulting Agreement ¶ 10(e).)

         Microbanc alleges that InspireMD “agreed with [Microbanc] to extend and/or renew” the Consulting Agreement “both orally and through the exchange of and assent to written communications, documents, drafts of proposed contracts and emails and by continuing to conduct themselves in a manner consistent [with] their agreement that the May 7, 2008 Consulting Agreement would continue to govern the ongoing relationship between the parties.” (AC ¶¶ 16, 19.) Microbanc also alleges that Mr. Spenla and InspireMD's founder agreed to a new Consulting Agreement with the same terms and conditions of the May 2008 Consulting Agreement. (AC ¶ 20.) Microbanc alleges this new agreement was memorialized in a written agreement dated December 1, 2009 (the “December 2009 Consulting Agreement”) with the exact same terms and conditions as the May 2008 Consulting Agreement. (AC ¶ 21; docket entry no. 25-2, Ex. D (December 2009 Consulting Agreement).) The December 2009 Consulting Agreement is unsigned. (December 2009 Consulting Agreement at 5.) Microbanc alleges that InspireMD gave Microbanc “false assurances” to induce Microbanc into believing that a new written consulting agreement was unnecessary because the parties “had already agreed to extend/renew their existing agreement.” (AC ¶ 87; see also AC ¶¶ 36-37.) At the same time, Microbanc alleges that InspireMD falsely asserted that the parties had in fact agreed to extend the May 2008 Consulting Agreement or enter into the new December 2009 Consulting Agreement. (AC ¶ 35.)

         On December 16, 2009, Microbanc's agent James Burchetta organized a meeting between InspireMD and Palladium Capital Advisors LLC (“Palladium”). (AC ¶ 30.) As a result, Palladium arranged multiple rounds of financing for InspireMD totaling over $24 million. (AC ¶¶ 44-49.) Microbanc claims it is owed compensation under the May 2008 Consulting Agreement based on the Palladium introduction. (AC ¶¶ 50-51.) Microbanc alleges that InspireMD concealed its discussions with Palladium to prevent Microbanc from collecting a fee. (AC ¶ 34.)

         In early May 2010, Microbanc arranged a separate $200, 000 investment in InspireMD from an investor named Wallace Simon. (AC ¶ 52.) Microbanc alleges that InspireMD informed Microbanc that it would not pay any fees arising from the Simon investment until Microbanc executed a new Finders Agreement with InspireMD. (AC ¶ 54.) As a result, Microbanc executed the May 16, 2010, Finders Agreement (the “Finders Agreement”), which contains a condition precedent that any finder's fee “is subject to the prior written consent of” InspireMD, and must be given “prior” to the finder “approaching” any potential investor. (AC ¶¶ 55-56; docket entry no. 26-2, Ex. I (Finders Agreement), ¶ 3.) The Finders Agreement provides that the Agreement “supersedes all discussions and exchanges or correspondence verbally or in writing, which may have taken place before its execution.” (Finders Agreement ¶ 18.) The Finders Agreement also prohibits waiver or modification of its terms “except by an express agreement in writing signed by the party against whom enforcement of such waiver or modification is sought.” (Finders Agreement ¶ 21.)

         Microbanc claims that it was “deceived/coerced” into executing the Finders Agreement. (AC ¶ 89.) Microbanc also alleges that the Finders Agreement was drafted to “memorialize [InspireMD's] prior finders agreement with Microbanc and to be applicable retroactively to introduction(s) of and investments by investors such as Wallace Simon and Palladium.” (AC ¶ 57.) Microbanc claims that the “exchange of written documents, agreements and electronic communications exchanged between the parties individually and/or collectively” satisfy the condition precedent for the Finders Agreement. (AC ¶ 58.) Microbanc also alleges that InspireMD waived the condition precedent in connection with both the Wallace Simon and Palladium introductions. (AC ¶ 59.)

         Microbanc avers that at “all relevant times” from May 7, 2008 to May 2010, it “continued to seek appropriate investors to introduce to InspireMD pursuant to the terms and conditions of the May 2008 Consulting Agreement.” (AC ¶ 15.) Microbanc claims that it “completely” executed and performed its obligations under the May 2008 and December 2009 Consulting Agreements, and that it “substantially” executed and performed its obligations under those same agreements “in a manner that was unequivocally referable to and could only be explained by” either the extension of the May 2008 Consulting Agreement, or the formation of a new identical December 2009 Agreement. (AC ¶¶ 40-42.)

         Discussion

         Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend should be freely granted when justice so requires. Fed.R.Civ.P. 15(a). While granting or denying such leave is within the discretion of the district court, Reisner v. General Motors Corp., 511 F.Supp. 1167, 1171 (S.D.N.Y. 1981), leave to amend will generally be granted unless: (1) there is evidence of undue delay, bad faith, dilatory motive, or repeated failures to cure deficiencies by amendments previously allowed; (2) allowing amendment would cause undue prejudice to the opposing party; or (3) the amendment would be futile. Foman v. Davis, 371 U.S. 178, 182 (1962). A proposed amendment to a pleading would be futile if it could not withstand a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Ballard v. Parkstone Energy, LLC, No. 06 CV 13099, 2008 WL 4298572, at *3 (S.D.N.Y. Sept. 19, 2008). Thus, “[l]eave to amend may be denied on grounds of futility if the proposed amendment fails to state a legally cognizable claim or fails to raise triable issues of fact.” AEP Energy Servs. Gas Holding Co. v. Bank of America, N.A., 626 F.3d 699, 726 (2d Cir. 2010) (citation omitted).

         Under the Rule 12(b)(6) standard, the Court accepts as true the non-conclusory factual allegations in the complaint and draws all reasonable inferences in the plaintiff's favor. Roth v. Jennings, 489 F.3d 499, 501 (2d Cir. 2007). To survive a motion to dismiss, a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. v. Twombly, 550 U.S. 544, 570 (2007). However, a “pleading that offers labels and conclusions or a formulaic recitation of elements of a cause of action will not do.” Iqbal, 556 U.S. at 678 (internal quotation marks and citations omitted). When determining the sufficiency of a claim under Rule 12(b)(6), “a district court may consider the facts alleged in the ...


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