Mid Atl. Framing, LLC v. Varish Constr., Inc., 3:13–CV–01376 (MAD/DEP).

• Decision Date: 24 July 2015
• Docket Number: No. 3:13–CV–01376 (MAD/DEP).,3:13–CV–01376 (MAD/DEP).
• Citation: 117 F.Supp.3d 145
• Parties: MID ATLANTIC FRAMING, LLC, on behalf of itself and all other similarly situated beneficiaries of trust funds received, or to be received by defendant Varish Construction, Inc. Under Article 3–A of the New York Lien Law, Plaintiff, v. VARISH CONSTRUCTION, INC.; AVA Realty Ithaca, LLC; AVA Development, LLC; Tom Varish, individually: Ajesh Patel, individually; 359 Hospitality Associates, LLC; Seneca Supply, LLC d/b/a the Duke Company ; and "John Doe No. 1" through "John Doe No. 20", inclusive, as those persons and entities having an interest in real property located at 359 Elmira Road, Ithaca, New York, and being designated as Tax Parcel Nos.: 128.–1–8 and 129.–1–9 on the Land and Tax Map of the City of Ithaca, Tompkins County, New York, and a portion of Tax Parcel Nos.: 129–1–10.2, 129.–1–1–1, 129.–1–6.2 and 129.–1–7.2 on the Land and Tax Map of the City of Ithaca, Tompkins County, New York, and/or the trust funds received, or to be received by Varish Construction, Inc. for the improvement of said property, Defendants.
• Court: U.S. District Court — Northern District of New York

117 F.Supp.3d 145

MID ATLANTIC FRAMING, LLC, on behalf of itself and all other similarly situated beneficiaries of trust funds received, or to be received by defendant Varish Construction, Inc. Under Article 3–A of the New York Lien Law, Plaintiff,

v.VARISH CONSTRUCTION, INC.; AVA Realty Ithaca, LLC; AVA Development, LLC; Tom Varish, individually: Ajesh Patel, individually; 359 Hospitality Associates, LLC; Seneca Supply, LLC d/b/a the Duke Company ; and "John Doe No. 1" through "John Doe No. 20", inclusive, as those persons and entities having an interest in real property located at 359 Elmira Road, Ithaca, New York, and being designated as Tax Parcel Nos.: 128.–1–8 and 129.–1–9 on the Land and Tax Map of the City of Ithaca, Tompkins County, New York, and a portion of Tax Parcel Nos.: 129–1–10.2, 129.–1–1–1, 129.–1–6.2 and 129.–1–7.2 on the Land and Tax Map of the City of Ithaca, Tompkins County, New York, and/or the trust funds received, or to be received by Varish Construction, Inc. for the improvement of said property, Defendants.

No. 3:13–CV–01376 (MAD/DEP).

United States District Court, N.D. New York.

Signed July 24, 2015.

Marco & Sitaras, PLLC, George Sitaras, Esq., of Counsel, New York, NY, for Plaintiff.

Cooper Erving & Savage LLP, Brian W. Matula, Esq., of Counsel, Albany, NY, for Defendants AVA Realty Ithaca, LLC, AVA Development LLC, and Ajesh Patel.

MEMORANDUM–DECISION AND ORDER

MAE A. D'AGOSTINO, District Judge.

I. INTRODUCTION

Plaintiff commenced this action on November 5, 2013, seeking damages in connection with a construction project in which Plaintiff performed work as a subcontractor of Varish Construction, Inc. (together with owner/principal, Tom Varish, collectively "Varish") on property owned at the time by AVA Realty Ithaca, LLC (together with AVA Development LLC and Ajesh Patel, collectively "AVA"); Varish and AVA are co-defendants in this action. See Dkt. No. 1.

Currently before the Court are (1) AVA's motion for partial judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, and (2) Plaintiff's cross-motion for leave to file a second amended verified complaint.

II. BACKGROUND

A. Procedural Posture

AVA filed the instant Rule 12(c) motion on June 2, 2014. See Dkt. No. 31. In response to Plaintiff's letter motion submitted on June 6, 2014, the Court issued a Text Order on June 9, 2014, resetting the deadlines as to the pending motion for judgment on the pleadings. See Dkt. No. 37. The deadlines for the responsive pleading and reply were reset to July 30, 2014, and August 5, 2014, respectively. See id. Both the responsive cross-motion and the reply were timely filed. See Dkt. Nos. 48–50.

On September 9, 2014, the Court issued a Text Order staying this case pending the resolution of the U.S. Bankruptcy Case in the Middle District of Pennsylvania¹ involving Varish Construction, Inc. See Dkt. No. 57. The bankruptcy case has since been resolved, and this Court accordingly lifted the stay on June 11, 2015. See Dkt. No. 63. Varish has not appeared to defend against the present action.

B. Factual Background

In September 2012, Plaintiff entered into a subcontract with Varish, whereby Plaintiff would furnish and install certain framing and carpentry work for the construction of "Fairfield Inn and Suites," located at 359 Elmira Road, Ithaca, New York 14850. See Dkt. No. 48–3 at ¶¶ 17–18. The primary contract was executed between Varish and AVA; the subcontract price was $721,000. See id.

"During the course of the project, Varish directed Plaintiff to perform extra work in the amount of $11,740.00, thereby adjusting the contract price upward to $732,740.00." Id. at ¶ 19. Plaintiff claims that it substantially completed the work required under the subcontract, but was paid only $115,000, leaving a remaining balance of $617,740 still due to Plaintiff. Id. at ¶ 20. On March 28, 2013, Plaintiff filed a Notice of Mechanic's Lien in Tompkins County against the property in the amount of $600,960. See id. at ¶ 92.

On June 12, 2013, AVA filed a petition in the state supreme court in Tompkins County seeking summary discharge of the mechanics lien. See id. at ¶ 102. The court dismissed the petition because it did not find the lien to be facially defective.See Dkt. No. 31–7. Plaintiff claims that Varish and AVA falsely represented, both to the state supreme court and the Wilmington Savings Fund Society ("WSFS"),² that AVA had paid Varish in full for Plaintiff's work. See id. at ¶ 104. Plaintiff alleges that these false statements were fraudulently made to give the appearance that no funds were due to Varish from AVA at the time Plaintiff's lien was filed; the purpose of the fraud being to procure the discharge of the lien. See id. at ¶¶ 105–06. Plaintiff asserts that (1) AVA knew of the falsity of the statements or had a hand in crafting them; (2) AVA submitted these false certifications to WSFS to obtain advances on the building loan; and (3) these advances were due in trust to Plaintiff but never paid. See id. at ¶¶ 112–14.

AVA commenced a state-court action in Tompkins County on September 24, 2014, seeking a declaratory judgment that the mechanics lien asserted by Mid Atlantic is null and void because all contractual obligations between AVA and the primary contractor (Varish) had been fulfilled. See Dkt. No. 31–8. On August 14, 2015, Plaintiff's counsel informed this Court that its motion to dismiss the state-court action had been granted. See Dkt. No. 54. Consequently, AVA's abstention argument for the dismissal of Plaintiff's ninth count for foreclosure is moot.

The remainder of AVA's motion for partial judgment on the pleadings seeks dismissal of Plaintiff's tenth and twelfth counts of the amended complaint and the denial of Plaintiff's motion for leave to file a second amended complaint. Specifically, AVA argues that the tenth cause of action for fraud and the twelfth cause of action for aiding and abetting fraud and breach of fiduciary duty should be dismissed on the grounds of res judicata, or in the alternative, for failure to state a claim. See Dkt. No. 31–1.

III. DISCUSSION

A. Standard of Review

1. Judgment on the Pleadings

The standard of review for a Rule 12(c) motion for judgment on the pleadings is the same as for a motion to dismiss under Rule 12(b)(6). See Johnson v. Rowley, 569 F.3d 40, 43–44 (2d Cir.2009). A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure challenges the legal sufficiency of the non-movant's claim for relief, without regard to the merits of the claim. See Patane v. Clark, 508 F.3d 106, 111–12 (2d Cir.2007) ; Global Network Commc'ns, Inc. v. City of New York, 458 F.3d 150, 155 (2d Cir.2006). When determining the legal sufficiency of a claim, a court must accept as true all well-pleaded allegations contained within the pleading as construed most favorably to the claimant. See ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.2007) (citation omitted). This presumption of truth does not extend to "mere conclusory" legal statements. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted).

To withstand a Rule 12(b)(6) motion to dismiss, a pleading must contain "a short and plain statement of the claim," with sufficient factual "heft to ‘sho [w] that the pleader is entitled to relief.’ " Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–57, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (alterations in original) (quoting Fed.R.Civ.P. 8(a)(2) ). "Factual allegations [contained in the pleading] must be enough to raise a right of relief above the speculative level." Id. at 555, 127 S.Ct. 1955. But this standard does not call for a determination of probability and may indeed be satisfied even if "actual proof of those facts" alleged is improbable. Id. at 570, 127 S.Ct. 1955. "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Ultimately, "when the allegations in a complaint, however true, could not raise a claim of entitlement to relief," Twombly, 550 U.S. at 558, 127 S.Ct. 1955, or where a plaintiff has "not nudged [its] claims across the line from conceivable to plausible, [the] complaint must be dismissed[,]" id. at 570, 127 S.Ct. 1955.

"Generally, consideration of a motion to dismiss under Rule 12(b)(6) is limited to consideration of the complaint itself" unless all parties are given a reasonable opportunity to submit extrinsic evidence. Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir.2006) ; Robinson v. Town of Kent, No. 11 Civ. 2875, 2012 WL 3024766, *4 (S.D.N.Y. July 24, 2012) (citing Roth v. Jennings, 489 F.3d 499, 509 (2d Cir.2007) ) ("[A] district court generally must confine itself to the four corners of the complaint and look only to the allegations contained therein."). However, "the Court may consider documents attached as an exhibit thereto ... that are ‘integral’ to plaintiff's claims, ... and matters of which judicial notice may be taken." Thomas v. Westchester Cty. Health Care Corp., 232 F.Supp.2d 273, 275 (S.D.N.Y.2002) (citations omitted); see also Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002) (alteration in original) (quoting Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir.1993) ). "[A] plaintiff's reliance on the terms and effect of a document in drafting the complaint is a necessary prerequisite to the court's consideration of the document on a dismissal motion; mere notice or possession is not enough." Chambers, 282 F.3d at 153 (footnote omitted).

2. Leave to Amend a Complaint

Leave to amend a complaint "shall be freely given when justice so requires [,]" and a district court has broad discretion to determine whether such leave is appropriate. Fed.R.Civ.P. 15(a) ; see also Ruffolo v. Oppenheimer & Co., 987 F.2d 129, 131 (2d Cir.1993) (per curiam). A decision...