Henneberry v. Sumitomo Corp. of America

• Decision Date: 12 July 2007
• Docket Number: No. 04 Civ. 2128(PKL).,04 Civ. 2128(PKL).
• Citation: 532 F.Supp.2d 523
• Parties: William HENNEBERRY, Plaintiff, v. SUMITOMO CORPORATION AMERICA, Robert Graustein, Sumitomo Corporation, and John Does nos. 1-50 (fictitiously named individuals), Defendants.
• Court: U.S. District Court — Southern District of New York

Page 523

532 F.Supp.2d 523

William HENNEBERRY, Plaintiff, v. SUMITOMO CORPORATION AMERICA, Robert Graustein, Sumitomo Corporation, and John Does nos. 1-50 (fictitiously named individuals), Defendants.

No. 04 Civ. 2128(PKL).

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

July 12, 2007.

COPYRIGHT MATERIAL OMITTED

Mendes & Mount LLP, John M. Deitch, Esq., Newark, NJ, for Plaintiff.

Slier Wilk LLP, Stephen D. Hoffman, Esq., Stuart M. Riback, Esq., Pamela L. Kleinberg, Esq., New York, NY, for Defendants Sumitomo Corporation of America and Robert Graustein.

OPINION AND ORDER

LEISURE, District Judge.

This action arises out of a failed investment transaction between plaintiff William Henneberry, the Chairman and majority common stock shareholder of Smartix International Corp. ("Smartix"), and defendant Sumitomo Corporation of America ("SCOA"), Robert Graustein, a Senior Vice president of SCOA, and Sumitomo Corporation ("Sumitomo"), SCOA's parent company. In a complaint dated March 17, 2004, plaintiff asserted causes of action against all defendants for (1) detrimental reliance on the alternative bases of promissory estoppel and negligent misrepresentation; (2) breach of fiduciary duty; (3) slander per se; (4) tortious interference with prospective economic advantage; (5) injurious falsehood; and (6) breach of contract. Defendants SCOA and Robert Graustein then moved, in lieu of an answer, for dismissal of the action on all counts for failure to state a claim upon which relief could be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).

In an Opinion and Order dated April 27, 2005, the Court granted the motion to dismiss all of the aforementioned claims as against SCOA and Graustein, save the slander per se claim. Henneberry v. Sumitomo Corp. of Am., No. 04 Civ. 2128(PKL), 2005 WL 991772 (S.D.N.Y. Apr.27, 2005) [hereinafter Henneberry I]. In an Opinion and Order dated May 3, 2005, the Court granted Sumitomo's motion to dismiss all claims against it pursuant to Rule 12(b)(6). Henneberry v. Sumitomo Corp. of Am., No. 04 Civ. 2128(PKL), 2005 WL 1036260 (S.D.N.Y. May 3, 2005). In both of those Orders, plaintiff was given twenty days to seek leave to replead his complaint.

On May 16, 2005, Henneberry timely filed a motion pursuant to Federal Rule of Civil Procedure 15(a), seeking leave to file an amended complaint re-asserting all of the prior claims against SCOA and Graustein except for breach of contract. In its opposition to that motion, SCOA¹ cross-moved for partial summary judgment as to Henneberry's claims for promissory estoppel and negligent misrepresentation, in the event that the Court were to find that those claims were pleaded adequately in Henneberry's proposed amended complaint. In an Opinion and Order dated February 21, 2006, Henneberry's motion was granted in part and denied in part, and SCOA's cross-motion was denied. Henneberry v. Sumitomo Corp. of Am., 415 F.Supp.2d 423 (S.D.N.Y.2006) (Leisure, J.) [hereinafter Henneberry II]. Specifically, Henneberry's motion for leave to amend his complaint to assert a claim for promissory estoppel as to his $100,000 loan to Smartix based on SCOA's alleged promise to make a $3-5MM Investment in Smartix, as well as to assert a claim of slander per se were granted, and SCOA's cross-motion for summary judgment as to Henneberry's claims for promissory estoppel was denied. Henneberry's motion for leave to amend his complaint to assert alternative bases for a promissory estoppel action was denied, as was his motion for leave to amend his complaint to assert claims for negligent misrepresentation, breach of fiduciary duty, injurious falsehood, and tortious interference with prospective economic advantage. Again, Henneberry was granted twenty days to seek leave to replead those causes of action denied by the Court.

Henneberry now brings yet another motion pursuant to Rule 15(a), seeking leave to file an amended complaint ("Third Amended Complaint"), asserting causes of action against SCOA for (1) detrimental reliance on the basis of promissory estoppel; (2) negligent misrepresentation; (3) fraudulent misrepresentation; (4) defamation (slander per se); (5) tortious Interference with prospective economic advantage; and (6) breach of fiduciary duty. Most of these causes of action have been brought before; only the claim for fraudulent misrepresentation is new. SCOA requests that the Court deny plaintiff's motion to amend the complaint in its entirety and not permit any further attempts to replead.

On April 17, 2007, Henneberry also Med a motion to lift the stay of discovery that has been in place since this Court issued Orders imposing the stay on June 10, 2004 and August 17, 2005. Specifically, he requested that the Court lift the stay as to the two claims not dismissed in Henneberry II. (Pl.'s Mem. Req. Lift of Stay 6.) Defendants oppose this motion, claiming that a lift in the stay of discovery would be unduly burdensome given their perceived likelihood that the plaintiff's motion for leave to amend the complaint would be denied. (Def.'s Mem. Opp. Req. Lift of Stay at 2, 5-6.)

For the reasons set forth herein, Henneberry's motion for leave to amend his complaint is GRANTED IN PART AND DENIED IN PART. His motion to lift the stay of discovery is GRANTED.

BACKGROUND

Henneberry includes with his motion papers his Third Amended Complaint, which` seeks to remedy the deficiencies in the prior two complaints. Leave to amend a complaint will be denied if the amended complaint could not withstand a motion to dismiss. See Daugherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 88 (2d Cir.2002) ("An amendment to a pleading will be futile if a proposed claim could not withstand a motion to dismiss pursuant to Rule 12(b)(6)."). The Court thus — as it did in Henneberry II — accepts as true all of the proposed complaint's factual allegations and draws all reasonable inferences in favor of plaintiff. See Pits, Ltd. v. Am. Express Bank Int'l 911 F.Supp. 710, 713 (S.D.N.Y.1996) (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Comas v. Hassett, 886 F.2d 8, 11 (2d Cir.1989)). Accordingly, the following background information and repleaded allegations are drawn from the Third Amended Complaint and do not constitute findings of fact by the Court.

I. The Parties

Plaintiff William Henneberry is a creative marketing entrepreneur specializing in developing new ways to market and use credit cards. (Third Am. Compl. ¶¶ 10-11.) He has worked frequently with large corporations, athletic teams, and credit card companies (Third Am. Compl. ¶¶ 15-19), and won numerous awards for his work (Third Am. Compl. ¶ 20). For five years prior to the venture giving rise to this action, plaintiff worked as a consultant for Major League Baseball and Master-Card, earning between $10,000 and $25,000 per month. (Third Am. Compl. ¶¶ 19, 240.) At all times relevant to this action, Henneberry was the Chairman and majority common stock shareholder of Smartix, a privately held New York corporation. (Third Am. Compl. ¶¶ 12-13, 21-22.) As Chairman, Henneberry was entitled to an annual salary of $150,000. (Third Am. Compl. ¶ 21.) As of September 9, 2003, Henneberry owned 1,740,666 shares of Smartix stock. (Third Am. Compl. ¶ 23.) Defendant SCOA is a New York corporation and a wholly owned subsidiary of former defendant Sumitomo. (Third Am. Compl. ¶¶ 4, 36-38.) Defendant Robert Graustein is a New York resident who was a Senior Vice President of defendant SCOA at all times relevant to this lawsuit. (Third Am. Compl. ¶¶ 5, 39.)

II. Smartix and the SmartFan Program

According to the Third Amended Complaint, Henneberry became introduced to Smartix while performing due diligence into Smartix as a consultant for Master-Card. (Third Am. Compl. ¶ 25.) Smartix was created to develop with MasterCard an electronic ticketing promotion program for Major League Baseball which would, inter alia, allow season ticket holders to sell unused tickets on the internet and at designated kiosks located at baseball stadiums (the "SmartFan" program). (Third Am. Compl. ¶¶ 24, 27-28.) The SmartFan program was tested with the Boston Red Sox and the St. Louis Cardinals baseball teams. (Third Am. Compl. ¶ 29.) Henneberry was then given permission by MasterCard to work for Smartix. (Third Am. Compl. ¶ 26.) Smartix's SmartFan program was funded, in part, through investments made by MasterCard, and Master-Card later became a sponsor of the SmartFan program. (Third Am. Compl. ¶ 28.) However, Smartix also solicited additional investments from other private individuals and groups in order to support its further development. (Third Am. Compl. ¶¶ 30-31.) These, additional investors included Cramer Berkowitz Partners, L.P. and SCOA. (Third Am. Compl. ¶¶ 31, 35.)

III. SCOA's Involvement With Smartix

Henneberry and Smartix became involved with SCOA's Corporate Business Development Division (the "CBDD"). (Third Am. Compl. ¶¶ 39-41.) The CBDD is a special group at SCOA that provided guidance, special expertise, and advice to small companies like Smartix. (Third Am. Compl. ¶ 40.) This included assistance in development of a business plan for Smartix, formulation of budgets, staffing, presenting Smartix to investors, training of Smartix staff on making presentations to investors, and locating additional investors. (Third Am. Compl. ¶ 41.) Messrs. Frank and Graustein, who were both employed in the CBDD, controlled all information concerning SCOA's interest in investing in Smartix and SCOA's search for outside investment. (Third Am. Compl. ¶ 52.)

A. Spring of 2002 Investment Agreement

At some point SCOA considered investing in Smartix. As a part of SCOA's due diligence performed in anticipation of investing in Smartix, SCOA conducted an economic valuation of Smartix and valued the company at $10 million, or $1.50 per share. (Compl.¶¶ 62-63.) In the spring of 2002, SCOA agreed to invest between $3...