Opposition Brief — Campoli v. HealthExtras, Inc. (No. 07-82)

ROMANO CAMPOLI,

Petitioner,

vs.

HEALTHEXTRAS, INC.,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

RESPONDENT HEALTHEXTRAS, INC.’S

_ BRIEF IN OPPOSITION

Mary A. GAMBARDELLA

Counsel of Record

EPSTEIN BECKER & GREEN, P.C.

Attorneys for Respondent

HealthExtras, Inc.

One Landmark Square, Suite 1800

Stamford, Connecticut 06901

(203) 348-3737

BEST AVAILABLE COPY

ill

LIST OF PARTIES AND

CORPORATE DISCLOSURE STATEMENT

The Petition states the names of the parties affected by

the Summary Order of the United States Court of Appeals for

the Second Circuit, which is under review.

HealthExtras, Inc. is a publicly traded company. There is

no parent company or publicly held company that owns ten

(10%) percent or more of its stock.

TABLE OF CONTENTS

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STATEMENT OF THE CASE

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B. Procedural Background...........cccccccccocsssocsecesres

THE PETITION FOR WRIT OF CERTIORARI

ne WOU BPE a ccctnensnsvsicarstctoeryenicccaseessesoneens

A. The Court of Appeals Decision Is Not

In Conflict With This Court’s Precedent

And Correctly Found That Campoli’s

First Amended Complaint Did Not Contain

Either Direct Or Inferential Allegations

To Provide Fair Notice Of A Direct Breach

Gar NE SII seirceeencinstnnp ice desaeeatevcincpendinss

B. The Decisions Below Are Consistent

With Those of Other Circuits...........................

C. The Decision Below Is Consistent

With Those of This Court.................................

D. The Petition Does Not Present

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TABLE OF AUTHORITIES

Page(s)

Cases:

Bell Altantic Corp. v. Twombly, 550 U.S. ---,

127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ............. 12, 13, 17

Breiner v. Stone, No. 96-9091, 1997 WL 416942

(2d Cir. July 25, 1997) (unpublished decision)........ 17

Campoli v. Chubb Group of Ins. Companies,

No. 3:04CV 1004, 2006 WL 57391 (D. Conn.

I I i caivlsioresshinunarctadseciahadibuateutoninsdisiecesetes In.2

Campoli v. HealthExtras, Inc., No. 06-0539, 2007

WL 1113655 (2d Cir. (Conn.) April 6, 2007).......... In.1

Conley v. Gibson, 355 U.S. 41,

2 L.Ed.2d 80, 78 S.Ct. 99

ASSIST SC eer On 12, 13, 17, 19, 20, 20n.15

Erickson v. Pardus, --- U.S. ---, 127 S.Ct. 2197,

ee ne Ae We IED op deste rectevickecescnineoneennentes 12, 13

Foman v. Davis, 371\ U.S. 178, 83 S.Ct. 227,

I iid cca di cicsenivnchescamvvcanbicbomne’ 14

Hutton v. Priddy’s Auction Galleries, Inc.,

275 F.Supp.2d 428 (S.D.N.Y. 2003).............0:e00000 13

In re Alstom SA Securities Litigation, 454 F.Supp.2d

a sas estieustacckaiiaanisius 12

In re Initial Public Offering Sec. Litig., 241 F.Supp.2d

- BD, gi aeteesarcee ber ore See ee een OD 13

Leatherman v. Tarrant County Narcotics Intelligence

and Coordination Unit, 507 U.S. 163, 113 S.Ct.

Es Oe a ie FEF CID ctcerntnsrinsatciccesencctorenes 20

McMuonn v. Pirelli Tire, LLC, 161 F.Supp.2d 97

i ete dadoiatamuaenbasenas 8n.9

Vill

Namoury v. Tibbetts, No. 3:04 CV 599, 2005 WL

81615 (D.Conn. Jan. 11, 2005) (unpublished

I asiiiteicetesicesiniiseehileanninbianbisenabaliaiiiabeviiiinaiannnndani 17

Newman v. Silver, 713 F.2d 14

I I IN ila iciicsatietisatpeicbaenitiiamiaceiesisoes 12,17

Opals on Ice Lingerie v. Bodylines, Inc., No. 99 CV

3761, 2002 WL 718850 (E.D.N.Y. March 5, 2002)

Cunpublsahied Gecastont) ..<.ccnceccesesesssccorseccenssenssecsseseseseess 12-13

Rachman Bag Co. v. Liberty Mut. Co., Inc.,

RD, , | 14

Shah v. Inter-Continental Hotel Chicago Operations

Corp., 314 F.3d 278 (7 Cir. 2002).........c2sc.cceseesseee 13

Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002)..... 20

Statutes:

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IE A TI sai iceichcslincpshoninhpessiisonciblaigtcebtedteiaplcitintiicies I

I I TI A ira tiacternadshtaenicdaodipelsnpsaneciisiannbcanidascoaiounian 8n.9

ket | | eae 11, 12, 13, 16, 19, 20, 20n.15

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I Ge I NEB dececcncncsecinentesnctnscsviventensséneius 8n.9

CCRT COTE IS FOND cesrescectocececessiveccsasesevervesenevevese 8n.9

Other Authority:

5 Wright & Miller, Federal Practice and Procedure

i dane elimina 18

James Wm. Moore, et al., Moore's Federal Practice,

| E.R RIO OAD LE RE ETE 13

RESPONDENT HEALTHEXTRAS, INC.’S BRIEF

IN OPPOSITION TO PETITION FOR WRIT

OF CERTIORARI

Respondent, HealthExtras, Inc. (“HealthExtras’’), respect-

fully requests that this Court deny the Petition for a Writ of

Certiorari filed by Petitioner, Romano Campoli (““‘Campoli’”),

seeking review of the Summary Order of the United States

Court of Appeals for the Second Circuit (“Court of Appeals”

or “Second Circuit’).

OPINIONS BELOW

The opinion of the United States Court of Appeals for the

Second Circuit was issued on April 6, 2007, and was not

published. It is set forth by Campoli as Appendix A to the

Petition.’ The opinion of the United States District Court for

the District of Connecticut (“District Court”) was issued on

January 9, 2007, and also was not published. It is set forth by

Campoli as Appendix B to the Petition. ”

JURISDICTION

The United States District Court for the District of

Connecticut in the first instance had diversity jurisdiction

pursuant to 28 U.S.C. § 1332. That Court entered summary

judgment for Respondent HealthExtras, and the judgment

was affirmed by the United States Court of Appeals for the

Second Circuit. The jurisdiction of this Court is invoked

under 28 U.S.C. § 1254 (1).

' The unpublished Second Circuit opinion can also be located at Campoli

v. HealthExtras, Inc., No. 06-0539, 2007 WL 1113655 (2d Cir. (Conn.)

April 6, 2007).

* The unpublished United States District Court opinion can also be

located at Campoli v. Chubb Group of Ins. Companies, No. 3:04CV 1004,

2006 WL 57391 (D. Conn. January 9, 2007).

STATUTES INVOLVED

The Petition accurately sets forth the pertinent statutory

provision purported to be involved; however, Respondent

maintains the Petitioner has inaccurately portrayed the issue

presented.

STATEMENT OF THE CASE

A. Factual Background

Respondent HealthExtras is a provider of pharmacy benefit

management services and supplemental benefits. (A-318

to A-319)’. As a provider of supplemental benefits,

HealthExtras works with financial institutions to market

programs that include insured and uninsured benefits. (A-

319). Primarily, HealthExtras contracts with the benefit

providers, which include insurance companies, with the

broker of record, and with the financial institutions that offer

the programs to their account holders, to provide such

marketing services, as well as some post-enrollment services.

(A-320).

Prior to November 1, 1999, HealthExtras marketed a series

of health and disability programs (“Programs”), which

consisted of underwnitten and non-underwritten benefits. (A-

263 to A-264). HealthExtras marketed these Programs

through financial/credit institutions and other organizations

(“Accounts”) utilizing statement inserts, direct mail, tele-

marketing and the Internet. (A-263 to A-264). HealthExtras

was contractually obligated only to provide to the Accounts,

who in turn would offer to their account holders, Programs

that provided the applicable benefits. (A-263 to A-264).

A second company, The Sklover Group, Inc. (“Sklover”), was

utilized as the Program Manager/Broker, and as such, was

required to satisfy licensure requirements and to perform

* References to the Joint Appendix are designated by the letter “A.”

certain administrative functions. (A-263 to A-264). A third

company, Federal Insurance Company (“Federal”), was

obligated to provide insurance benefits, including, in this

case, the disability benefit. (A-263).

On or about October 5, 1999, HealthExtras entered into

a business arrangement with Federal and Sklover, in which

the parties agreed to provide the services described above, as

part of the HealthExtras Benefit Program. (A-263 to A-264;

A-265 to A-284). This arrangement was confirmed in a letter,

dated October 5, 1999 (“Confirmation Letter”) (A-263 to

A-264), and later reaffirmed in the successor Adminis-

trative and Marketing Services Agreement, dated January 1,

2003 (“Marketing Agreement”) (A-265 to A-284). As the

Marketing Agreement confirms, Federal was the underwriter,

with sole liability on coverage, of a one million ($1,000,000)

dollar disability benefit (“Disability Benefit”) being offered.

(A-319 to A-320; A-323; A-324; A-327 to A-329; A-263 to

A-264; A-265 to A-284).*

Thereafter, Campoli and his wife received from First USA,

along with his credit card statement, an advertisement insert

from HealthExtras advertising the HealthExtras Benefit

Program. (A-285 to A-286; A-335). The insert contained

a disclaimer establishing that the benefits were subject to

the definitions, limitations, and exclusions stated in the

HealthExtras Program Plan Description, and that the policy

was underwritten by Federal, a member insurer of the Chubb

Group of Insurance Companies. (A-286). Campoli enrolled

in the HealthExtras Benefit Program, effective March 1,

2001. (A-287). A Program Summary was indeed provided to

Campoli. (A-287; A-158). The Program Summary likewise

specifically provided that the benefits were “subject to terms

* The Disability Benefit is referred to in the HealthExtras Benefit Plan

Summary and Plan Description as the $1,000,000 Catastrophic Injury and

Disability Benefit. (A-287; A-288).

and conditions described in the Program Plan Description

and in the Master Policies where applicable.” (A-287).

Campoli was provided the Plan Description, which set forth

the Certificate of Insurance Declarations and the Certificate

of Insurance Contract for the Disability Benefit. (A-288 to

A-305). In Section I of the Certificate of Insurance Contract,

entitled “Coverage,” the Plan Description specified that

Federal “will pay the applicable Benefit Amount if an Acci-

dent results in a Loss not otherwise excluded.” (A-292).

Approximately eight months after Campoli was enrolled in

the HealthExtras Benefit Program, he allegedly suffered an

intracerebral hemorrhage to the mght basal ganglia, which

resulted in left hemiparesis, after falling and striking his head

(A-158 to A-159; A-306 to A-309), and made a claim under

the Disability Benefit underwritten by Federal. (A-312;

A-314). Federal initially denied coverage, claiming, based on

medical evidence gathered, that Campoli’s disability was not

caused by accidental injury; i.e., that a hemorrhage caused

the fall and not the other way around. (A-306 to A-309).

Thereafter, Campoli commenced this action by a Complaint

filed in the United States District Court for the Northern

District of Mississippi, challenging the denial of his claim for

disability benefits under the Federal policy. (A-1 to A-41).

The initial Complaint set forth causes of action for breach of

contract and misrepresentation claims against all Defendants,

including HealthExtras.° (A-1 to A-41). The Complaint

merely stated that “Defendants are liable for failing to honor

the policy,” without specifying which allegations and claims

were being made against which of the four defendants. (A-1

to A-41; Complaint, p. 6, paragraph XII). Thus, Campoli’s

statement in the Petition that “the complaint had not pled

expressly that HealthExtras is lable under a breach of

contract theory” is a misleading statement of fact.° (Petition,

p. 3).

In its Answer, HealthExtras denied the allegations, in-

cluding specific denials that it was a party to the subject

contract, and raised standard affirmative defenses, including

“failure of consideration.” (A-42 to A-48). Obviously, such

a pleading should have established for Campoli_ that

HealthExtras viewed this Complaint as potentially asserting

a direct breach of contract claim against it. Clearly, then,

Campoli could have clarified an intention to maintain this

* In his Brief filed with the Second Circuit Court of Appeals, Campoli

then asserted he had intended to raise only a misrepresentation claim, and

not a direct breach of contract claim, against HealthExtras in the initial

Complaint. (Brief of Appellant, p. 1). Yet, what becomes clear is that he

knew such a claim could have been affirmatively asserted much earlier in

the proceedings, and that he had ample opportunity to clarify and/or raise

such a claim against this Respondent at the point Respondent answered

the original Complaint, denying liability for direct breach of contract.

However, as explored in detail in this Opposition, such facts underscore

further the misplaced reliance on an argument that this same claim should

have been “inferred” by Respondent by a reading of the subsequent,

operative Complaint. (Brief of Appellant, pp. 1 and 12-13).

© Further, contrary to Campoli’s assertion, no advertising material is

attached to the initial Complaint, and the documents that are attached

do not indicate that HealthExtras “agre[ed] to provide Campoli a

$1,000,000.00 disability benefit upon Campoli’s [sic] becoming

disabled.” (Petition, p. 3; A-1 to A-41). This assertion is thus another

musstatement of fact.

claim very early in the proceedings — his first, and very

early, opportunity to give HealthExtras fair notice of such

intention.

The case was subsequently transferred to the District of

Connecticut, and the parties filed their Joint Rule 26(f)

Report. (A-54 to A-60; see p. 5). The Joint Rule 26(f) Report

set October 15, 2004, as the deadline to file motions to

amend the pleadings. (A-54 to A-60; see p. 5). However, on

September 27, 2004, Federal moved to compel arbitration,

relying on the arbitration provision contained in the

Disability Benefit’s Plan Description and the underlying

policy (again, the contract at issue), and to stay or dismiss the

action pending arbitration. (A-61 to A-63). The Court granted

the motion as to Federal on November 5, 2004. (A-76 to A-

78). HealthExtras and Sklover refused to voluntarily submit

to arbitration, as all parties acknowledged at that procedural

juncture that these entities were not parties to the insurance

contract. (A-79 to A-81). Campoli did not argue that

HealthExtras, or Sklover for that matter, should be equally

bound to the policy, and thus to the arbitration clause, based

on any claim that they were direct parties to the insurance

contract. (A-68 to A-75). Accordingly, Campoli missed a

second, early opportunity to raise this theory against

Respondent.

Thereafter, a new Joint Rule 26(f) Report was filed, which

set January 5, 2005, as the deadline to file motions to amend

the pleadings. (A-84 to A-90). In describing Campoli’s

claims, the Joint Report expressly provided that HealthExtras

and Sklover were liable for misrepresentation and, in the

alternative, “for breach of contract and for failure to honor

the terms of the policy under a joint venture theory.”

(emphasis added) (A-85). Campoli thereby, as of that point

in time, formally re-characterized his claims, and never

requested that a direct breach of contract claim be referenced

— missing his third, and still timely, opportunity to assert it

a—£_,

against Respondent. (A-85). Based on this Joint Report, the

new scheduling order was entered, and on January 5, 2005,

Campoli sought leave to officially amend his Complaint.

(A-91 to A-92; A-100 to A-147). Leave was granted, and

Campoli filed his First Amended Complaint on March 15,

2005 (A-155; A-156 to A-200), expressly alleging against

HealthExtras two claims; i.e., misrepresentation and joint

venture/vicarious liability, consistent with his references in

the Joint Report. (A-156 to A-200). Conspicuously absent

from the pleading was any claim for breach of contract

against HealthExtras wherein direct liability was alleged

as had been previously suggested in the initial Complaint.

Not only was this opportunity the fourth, missed opportunity

to put Respondent on notice that it was being sued for direct

breach of contract, it also confirmed for HealthExtras that

Campoli knew his direct breach of contract theory lacked

merit and should not be pursued. ’ (A-156 to A-200). Thus,

it bears repeating that, as of this procedural stage, Campoli

had dropped the direct breach of contract claim he originally

pled in the initial Complaint against all Defendants, including

HealthExtras.®

Respondent filed after the close of discovery its Motion for

Summary Judgment, which focused only on the two claims

in the Complaint, briefing only arguments on those two

claims. In its moving papers, in addressing the joint venture

theory, Respondent reiterated that a direct breach of contract

claim against it was not in the case. (A-238). Interestingly,

in his papers opposing summary judgment, Campoli, after

? After the case against Sklover was voluntarily dismissed on August 3,

2005, Campoli again did not seek leave to amend the First Amended

Complaint. (A-212).

* Again, contrary to Campoli’s assertion, the advertising material attached

to the First Amended Complaint does not “promise to pay the

$1,000,000.00 disability benefit or to assure that it was paid.” (A-156 to

A-200). This assertion is a misstatement of fact.

admitting the absence of a direct breach of contract claim

in the operative Complaint, argued that he should be

nevertheless permitted to pursue the contract claim against

Respondent, either on a direct theory of liability, or, in the

alternative, on the theory that Respondent was a guarantor on

the contract — yet another, novel theory never before raised.

(A-556 to A-561; A-674 to A-679). Campoli makes this

argument, but did not even attempt to amend the Complaint

accordingly.

In its Reply papers, Respondent argued:

Noteworthy at this juncture, Campoli admits he failed to

bring a breach of contract claim against [HealthExtras],

but nevertheless argues that the allegations made in

support of his now dismissed misrepresentation claim

suffice to support this independent cause of action

against {HealthExtras]. Irrespective of whether this

Court agrees, Campoli’s critical admissions in his Local

Rule 56(a)(2) statement should be weighed against his

contrary arguments presented in the opposition brief.

Where, as here, a party admits to critical facts in the

Local Rule 56(a)(2) statement, such judicial admissions

can be used against that party in granting summary

judgment.’

® Local Civil Rule 56(a)(1) of the Rules of the United States District

Court for the District of Connecticut requires the moving party to a

motion for summary judgment to annex to the motion a document that

sets forth those material facts, which the moving party contends are

undisputed. These material facts are deemed admitted, unless denied by

the non-moving party in that party’s response, pursuant to Local Civil

Rule 56(a)(2). Where a party admits to the material facts presented, such

judicial admissions can be used against that party in granting summary

judgment. See, e.g., McMunn v. Pirelli Tire, LLC, 161 F.Supp.2d 97,

104, n. 2 (D.Conn. 2001) (where the statement of undisputed facts is

adequately supported to meet the requirements of Fed.R.Civ.P. 56, the

Court considers it as part of the record for ruling on the pending Motion

for Summary Judgment).

(A-571). Campoli admitted that HealthExtras, Federal and

Sklover entered into a business arrangement, whereby Federal

would underwrite the Disability Benefit, that HealthExtras

had no binding authority with respect to the Disability

Benefit, and that HealthExtras had no authority to determine

the validity of, or otherwise handle, any claims arising from

the Disability Benefit. (A-571). Respondent further empha-

sized in its papers that the claim it was a guarantor for

Federal’s contractual obligations was similarly a new theory

Campoli should not be permitted to raise at this procedural

stage. (A-666 to A-670). Even after the Reply papers were

filed, Campoli made no effort to clarify or amend the

pleadings.

During oral argument on the Motion for Summary

Judgment, Campoli’s counsel, realizing the attack on the

sole, remaining claim was meritorious, attempted to argue

before the lower Court that the action should nevertheless

survive, with the Court permitting the action to continue

on the previously withdrawn direct breach of contract claim.

(A-693; A-731 to A-772). After Campoli admitted the Com-

plaint did not contain an express, direct breach of contract

claim against Respondent, the Court thoroughly explored

the fact that Campoli had been presented with numerous

opportunities to clarify that such a claim was intended to be

encompassed by the operative Complaint, despite its pnor

removal, including as recently as Respondent’s Reply papers

wherein Respondent took the position it was no longer in the

case. (A-693; A-731 to A-772). Thus, the presiding Judge,

while he was under no obligation to do so, addressed

Campoli’s verbal attempt to essentially amend his Complaint

on “oral motion” during the summary judgment argument,

and thus be permitted to proceed on a direct breach of

contract claim. (A-693; A-731 to A-772).

10

On January 9, 2006, the District Court granted summary

judgment for HealthExtras on all stated claims. (A-684 to A-

697). Appropriately, the Court rejected Campoli’s eleventh

hour attempt to put the direct breach of contract claim back

into the litigation, and, among other things, cited the

numerous opportunities Campoli had to affirmatively raise

this claim in a more timely fashion prior to the summary

judgment proceedings, along with the damaging admissions

made by Campoli’s counsel on the record relative to

his reasons for not having done so. (Petition, Appendix B,

Memorandum of Decision, pp 16-20; A-684 to A-697).

In sum, after Campoli admitted this claim was not expressly

in the operative Complaint, the Court refused his attempt

to essentially add it by “inference.” (Petition, Appendix B,

Memorandum of Decision, pp 16-20; A-684 to A-697).

B. Procedural Background

HealthExtras filed its Motion for Summary Judgment

in the United States District Court for the District of

Connecticut on August 25, 2005. In his opposition papers,

Campoli affirmatively stated that summary judgment should

enter on the misrepresentation claim. (A-556). This left only

one additional claim against Respondent — the claim that

HealthExtras was vicariously liable for Federal’s breach of

contract based on a joint venture theory. (A-156 to A-200).

The Court granted summary judgment as to this remaining

claim on January 9, 2006. (A-034 te A-697).

Campoli did not appeal the iwweer Court’s dismissal of the

sole, remaining joint venture clasm. Rather, on January 31,

2006, Campoli appealed that part of the District Court’s

ruling, which rejected his argument that the District Court

and Respondent should have inferred from the initial

Complaint and the First Amended Complaint, coupled with

the documents attached thereto, that he intended to proceed

with a claim against HealthExtras for direct breach of

11

contract, and that he should have been permitted to amend

his Complaint at that point in time. (Brief of Appellant, pp.

1-18).

A decision affirming the judgment of the District Court

was entered by the Second Circuit Court of Appeals on

April 6, 2007. On April 25, 2007, the Court denied Campoli’s

petition for rehearing before the Second Circuit. Thereafter,

Campoli filed this Petition, which was docketed by this Court

on July 24, 2007.

THE PETITION FOR WRIT OF CERTIORARI

SHOULD BE DENIED

Campoli cannot point to any reason, not to mention any

compelling reason, to support his demand that this Court

grant his Petition For a Writ of Certiorari. Initially, it bears

emphasizing that the question presented by Campoli in

his Petition does not even accurately reflect the Summary

Order issued by the Court of Appeals for the Second Circuit,

nor the Judgment of the United States District Court for

the District of Connecticut. Specifically, contrary to what

Campoli indicates in his Statement of the Case, the Court of

Appeals did not rule that Campoli was required to state, with

specificity, the “legal theory” upon which a claim for “breach

of contract” was based. Rather, the Court found, in reviewing

de novo the Judgment of the District Court, and especially in

view of the undisputed facts as set forth above, that Campoli

had failed to include in the operative Complaint “a short and

plain statement” of a “breach of contract” claim against

HealthExtras, wherein direct liability was alleged, giving

HealthExtras “fair notice” that the claim existed by the point

of summary judgment, and of the grounds upon which it was

based.

The ruling of the Court of Appeals, as well as that of the

District Court, are in accord with the notice pleading standard

set forth in Rule 8(a) of the Federal Rules of Civil Procedure,

12

and with the precedent of this Court, specifically Conley v.

Gibson, 355 U.S. 41, 47, 2 L.Ed.2d 80, 78 S.Ct. 99 (1957)

(defendant must have fair notice of the nature of plaintiff's

claim). Therefore, with this Court having already addressed

the notice pleading requirements set forth in Fed.R.Civ.P.

8(a), and with there being no conflict between the Summary

Order of the Court of Appeals and the decisions of this Court

and other Circuit Courts, the Petition for a Writ of Certiorari

should be denied.

A. The Court of Appeals Decision Is Not In Conflict

With This Court’s Precedent And Correctly Found

That Campoli’s First Amended Complaint Did Not

Contain Either Direct Or Inferential Allegations

To Provide Fair Notice Of A Direct Breach Of

Contract Claim

Rule 8(a)(2) of the Federal Rules of Civil Procedure

requires a pleading that sets forth a claim for relief to contain

“a short and plain statement of the claim showing that the

pleader is entitled to relief.” In addressing this Rule 8(a), this

Court has stated, “Specific facts are not necessary; the

statement need only ‘give the defendant fair notice of what

the ... claim is and the grounds upon which it rests.’”

Erickson v. Pardus, --- U.S. ---, 127 S.Ct. 2197, 2200, 167

L.Ed. 2d 1081 (2007) (citing Bell Altantic Corp. v. Twombly,

550 US. ---, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007)

(quoting Conley v. Gibson, 355 U.S. 41, 47, 2 L.Ed.2d 80,

78 S.Ct. 99 (1957)) (emphasis added). Accordingly, federal

courts have stated that “federal pleading is by statement of

claim, not by legal theory.” Newman v. Silver, 713 F.2d 14,

15 n. 1 (2d Cir. (NY) 1983); see In re Alstom SA Securities

Litigation, 454 F.Supp.2d 187, 214 (S.D.N.Y. 2006) and

Opals on Ice Lingerie v. Bodylines, Inc., No. 99 CV 3761,

13

2002 WL 718850, at *4 (E.D.N.Y. March 5, 2002) (un-

published decision); see also Shah v. Inter-Continental Hotel

Chicago Operations Corp., 314 F.3d 278, 282 (7" Cir. 2002).

Although Campoli argues that a question of pleading

standards “has been left unresolved for some time,” namely,

“whether a specific legal theory must be stated expressly in

the pleadings,” as stated above, Courts have unequivocally

clarified the requirements of the notice pleading standard.

Specifically, contrary to Campoli’s assertion, Bell Atlantic

Corp. and Erickson do not “leave a gap” that has not been,

but should be, addressed by this Court. In both cases, this

Court made clear that, as stated in Conley v. Gibson, in order

to be sufficient, “the statement need only ‘give the defendant

fair notice of what the ... claim is and the grounds upon

which it rests.’” Erickson, 127 S.Ct. at 2200 (citing Bell

Altantic Corp., 127 S.Ct. at 1964) (quoting Conley, 355 US.

at 47)). Equally established is the principle that, in order

to satisfy the notice pleading requirements of Fed.R.Civ.P.

8(a), a plaintiff need not plead the elements of a claim.

Hutton v. Priddy’s Auction Galleries, Inc., 275 F.Supp.2d

428 (S.D.N.Y. 2003) (citing Jn re Initial Public Offering Sec.

Litig., 241 F.Supp.2d 281, 323 (S.D.N.Y. 2003) (“Rule 8(a)

does not require plaintiffs to plead the legal theory, facts or

elements underlying their claim.”)). Rather, a plaintiff must

expressly provide sufficient factual allegations from which a

defendant may discern the nature of the claim against it. See

James Wm. Moore, et al., Moore's Federal Practice, § 8.04

(3d. ed. 1997) (“Rule 8(a)(2) does not require a claimant to

set forth any legal theory justifying the relief sought on the

facts alleged, but does require sufficient factual averments to

show that the claimant may be entitled to some relief.”’).

'° Unpublished decisions are attached hereto in the Appendix.

a

These principles are simply not at issue here. What is

really at issue is, following a party’s admission that a claim is

not set forth in that party’s Complaint, whether that party is

nevertheless permitted to salvage an action from summary

dismissal by compelling the other party to infer the existence

of the claim, despite prior events such as those presented

here. While Campoli attempts to couch the issue at hand as

one involving the notice pleading standard, it is obvious that

his real challenge is to the Court’s refusal to permit an

untimely, and then prejudicial, amendment. See Rachman

Bag Co. v. Liberty Mut. Co., Inc., 46 F.3d 230, 234 (2d Cir.

1995) (quoting Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct.

227, 9 L.Ed.2d 222 (1962)) (courts have discretion to deny a

request for leave, where the court finds “undue delay, bad

faith or dilatory motive, repeated failure to cure deficiencies

by amendments previously allowed, {or if amendment

would cause] undue prejudice to the opposing party. . . .”’)).

So, to avoid the implication of well established precedent

permitting the lower Court to exercise great discretion in not

permitting such untimely and prejudicial amendments, when

admittedly no good causc existed to do so, Campoli attempts

to couch this argument as one regarding “notice pleading.”

Even if this Court agrees the issue involves the “notice

pleading” standard, it is nevertheless clear that the lower

Court’s ruling was proper and in accordance with well

established and consistent standards. To repeat, the Court

simply ruled that Campoli would not be permitted to

maintain a claim that had to be “inferred” from a collection

of documents at a late procedural stage, despite ample and

timely opportunity to be clear as to his intended claims.

In this regard, the District Court appropriately, and within

its discretion, reyected this attempt, based on, among other

things: (a) the fact that Campoli had withdrawn a previously

included direct breach of contract claim, from which

Respondent was entitled to assume signified this claim/legal

theory no longer existed in the action; (b) the fact that

15

Campoli did not proffer any even remote inferences of his

intention to maintain such a direct claim in any subsequent

filings; (c) the fact that Campoli’s counsel admitted during

oral argument that the claim was absent from the operative

Complaint, and that he admitted to repeated failures to timely

clarify any such intent by stating, among other things: “The

reason I didn’t plead it earlier is it just didn’t occur to me.

My brain didn’t embrace it. When I first filed this claim,

I thought it was a misrepresentation case.” (A-735); and “The

reason I [never pled a breach of contract claim] was, when it

occurred to me that the breach of contract theory was our

best theory, the time for amending had already expired.” (A-

769); and (d) the fact that he had expressly alleged in the

operative Complaint that any attachments thereto supported

the voluntarily dismissed misrepresentation claim, and were

not referenced as supporting any other cause of action.

(Petition, Appendix B, Memorandum of Decision, pp 16-20;

A-684 to A-697). Such a ruling by the District Court was, on

its face, thereby proper and in accordance with judicial

precedent that is anything but “unsettled”. ""

The Second Circuit Court of Appeals likewise properly

applied the well established notice pleading standard. In

particular, the Court noted its de novo review of the District

'' In fact, counsel for Campoli acknowledged that the HealthExtras’

documents “never really said that [HealthExtras was] going to pay if [an

individual becomes] disabled” (A-735), and that his pleading relied on a

joint venture theory to espouse a claim of vicarious liability for Federal’s

direct breach. (A-156 to A-200). Moreover, Campoli acknowledged to

the Court during oral argument on the summary judgment motion that

the Court needed to refer to documents annexed to the Complaint in order

to “find” the essential elements of such a cause of action. (A-735). Yet, as

the District Court aptly pointed out in response, the allegations of the

First Amended Complaint cite to the attachments in support of the cause

of action for misrepresentation. (A-695).

16

Court’s determination of whether Campoli’s complaint

complied with the notice pleading requirements of Fed. R.

Civ. P. 8(a), and held:

“A pleading which sets forth a claim for relief .. . shall

contain ... a short and plain statement of the claim

showing that the pleader, is entitled to relief.”

Fed.R.Civ.P. 8(a). “Such a statement must simply ‘give

the defendant fair notice of what the plaintiff's claim is

and the grounds upon which it rests.’” Swierkiewicz v.

Sorema N.A., 534 U.S. 506, 512 (2002) (quoting Conley

v. Gibson, 355 U.S. 41, 47 (1957))."”

(Petition, Appendix A, Summary Order, p. 3). The Court

reviewed the First Amended Complaint, and found that,

“even under a generous reading,” the Complaint did not

confer “fair notice” to HealthExtras of a putative breach of

contract claim against it.'? (Petition, Appendix A, Summary

Order, p. 3). In support of its decision, the Court further

stated:

No such claim was expressly included in the complaint,

and, as the district court correctly noted, the elements of

such a claim were not implied thereby or by the

documents attached to the complaint. The district court

therefore properly determined that the First Amended

" The Court of Appeals made note of Campoli’s argument that a claim

for breach of contract should be “inferred” as a legal theory from the

complaint and the documents attached thereto, “even though [he]

concedes that he did not include a direct claim for breach of contract in

the First Amended Complaint.” (Petition, Appendix A, Summary Order,

p. 2).

'? The District Court also gave a generous reading of the First Amended

Complaint: “Mr. Campoli’s counsel contends that a generous reading of

his Complaint is appropriate and that, under such a reading, he did plead

a direct breach of contract claim against HEI. The First Amended

Complaint does no such thing.” (Petition, Appendix B, Memorandum of

Decision, p. 18).

17

Complaint failed to include a “short and plain

statement of the claim” that gave fair notice to the

defendant of the substance of the breach of contract

allegations.

(Petition, Appendix A, Summary Order, pp. 3-4) (emphasis

added).

As these Courts recognized, then, the issue of whether the

operative Complaint could be fairly read to include a breach

of contract claim directly against HealthExtras must be

resolved in HealthExtras’ favor. (A-156 to A-200). As this

Court noted in Bell Atlantic Corp., “Without some factual

allegation in the complaint, it is hard to see how a claimant

could satisfy the requirement of providing not only “fair

notice” of the nature of the claim, but also “grounds” on

which the claim rests.” 127 S.Ct. at 1965, n. 3. In addition,

the Second Circuit has instructed that, “in order to prevail

on a claim for breach of contract, one must specify what is

the actual breach.” Namoury v. Tibbetts, No. 3:04 CV 599,

2005 WL 81615, at *3 (D.Conn. Jan. 11, 2005) (unpublished

decision) (citing Breiner v. Stone, No. 96-9091, 1997 WL

416942, at *2 (2d Cir. July 25, 1997) (unpublished decision)

(Second Circuit Court held that it is not sufficient in a breach

of contract claim to allege broad “misrepresentation;” where

plaintiff has failed to allege a specific, expressed undertaking

or promise by the defendant, the claim does not sound in

“breach of contract”)).

Although it is true that the Federal Rules of Civil Pro-

cedure are designed merely to give a defendant “fair notice

of what the plaintiff's claim is and the grounds upon which

it rests,” Conley, 355 U.S. at 47, and, therefore, “federal

pleading is by statement of claim, not by legal theory,”

Newman, 713 F.2d at 15 n. 1, the Court is “not require[d] .. .

18

to fabricate a claim that a plaintiff has not spelled out in his

pleadings,” 5 Wnght & Miller, Federal Practice and

Procedure § 1286 at 559 (2d ed. 1990).

The District Court, applying this precedent, stated in its

ruling:

To the extent that representations by [HealthExtras] are

cited, they are cited in support of a misrepresentation

claim only. And when that pleading turns to a breach

of contract claim, the only breaches cited are breaches

by Federal, for which Mr. Campoli seeks to hold

[HealthExtras] vicariously liable. There is no

allegation that [HealthExtras} and Mr. Campoli entered

into any contract, what the terms of the contract were,

what terms [HealthExtras} (as opposed to Federal)

breached, and how Mr. Campoli was damaged by

{HealthExtras’] (as opposed to Federal’s) breaches.

Yet, these allegations are essential to pleading a breach

of contract claim. Mr. Campoli’s counsel asserts that

he appended to his Complaint the documents that made

up his client’s contract with [HealthExtras], but those

documents are referenced in the complaint as con-

stituting false representations by [HealthExtras], not

contractual undertakings. \“

(Petition, Appendix B, Memorandum of Decision, p. 18)

(emphasis added).

'* The District Court noted that “counsel for Mr. Campoli sought at oral

argument to advance several new theories of liability, including a claim

that HEI committed a direct breach of a contract it had entered into with

Mr. Campoli and also that HEI had contractually guaranteed Federal’s

obligations under its insurance contract with Mr. Campoli.... [T]hese

new theories suffer from a number of evidentiary and conceptual

difficulties. However, the most significant-and ultumately fatal-problem

with these new theories of liability is that they have never been pleaded.”

(Petition, Appendix B, Memorandum of Decision, p. 16).

19

Simply stated, the Summary Order of the Court of Appeals

is patently consistent with this Court’s decision in Conley.

Campoli therefore cannot establish any compelling reason to

warrant the granting of certioran here.

B. The Decisions Below Are Consistent With Those

of Other Circuits

Campoli’s attempt to suggest a conflict exists between the

Summary Order of the Court of Appeals and decisions of

Courts of Appeal from various circuits, including the Second

Circuit, is disingenuous. Nowhere in the Summary Order

does the Court state that legal theories must be pled in order

to satisfy the requirements of Fed.R.Civ.P. 8(a). Campoli’s

attempt to manufacture a conflict among the circuits, merely

by claiming that the Rule 8(a) “is silent” as to whether a

specific legal theory need be pled, masks an agenda that he

knows renders this case unworthy of review. Simply put, the

instant ruling is patently consistent with decisions below, and

properly applies the notice pleading standard set forth in

Conley.

C. The Decision Below Is Consistent With Those

of This Court

Likewise, for those same reasons set forth above, the

Summary Order of the Court of Appeals did not ignore this

Court’s precedent, and its application of such precedent

was not “inconsistent” with the notice pleading standard

established by this Court. (Petition, Appendix A, Summary

Order). Nor did it in any way “rewrite” Fed.R.Civ.P. 8(a).

Rather, the ruling correctly applied the notice pleading re-

quirements set forth in Rule 8(a) and Conley, reviewing the

operative Complaint to determine if it contained “a short

and plain statement of the claim” which gave “fair notice” of

what the claim was and the grounds upon which it rested.

20

In doing so, the lower Court determined, after “a generous

reading,” that the First Amended Complaint simply did not

comply with the required standard.

Also, contrary to Campoli’s assertions, the Second Circuit’s

Summary Order did not “broaden” the requirements of Rule

8(a), nor did it apply “heightened pleading requirements”

beyond that required by Rule 8(a). Again, in keeping with

Rule 8(a) and Conley, the lower Court reviewed the operative

Complaint to determine if it contained “a short and plain

statement of the claim,” which gave “fair notice” of what the

claim was and the grounds upon which it rested. In doing so,

it did not use a heightened pleading standard used by

the lower Courts in Swierkiewicz, supra (application of a

heightened pleading standard for Title VII cases), and in

Leatherman v. Tarrant County Narcotics Intelligence and

Coordination Unit, 507 U.S. 163, 113 S.Ct. 1160, 122

L.Ed.2d 517 (1993) (application of a heightened pleading

standard in a civil nghts action alleging municipal liability),

but which this Court rejected’? Furthermore, Campolhi’s

argument ignores the particular facts of this case; namely,

the numerous events which demonstrated an affirmative

intention mot to pursue this specific claim. While Respondent

maintains a global view of events as a whole is not even

necessary for this Court to deny this Petition, it nevertheless

emphasizes that Campoli’s desire that this Court view the

issue in a vacuum, as if he had never before conducted

himself contrary to his currently articulated intention, under-

scores the lack of merit to his request for Writ of Certiorari.

'S While Campoli insists that HealthExtras had “notice” of “a breach of

contract claim” (Brief, p. 11), he does not even attempt to point to any

“short and plain statement” purportedly giving HealthExtras “fair notice”

of a direct breach of contract claim against it and the grounds upon which

the claim rested, see Fed.R.Civ.P. 8(a); Conley, 355 U.S. at 47. It bears

repeating that, to the contrary, he admits its absence and argues it should

have been “inferred.”

21

D. The Petition Does Not Present An Important Issue

For those same reasons explored in detail above, Campoli

has blatantly failed to establish the existence of any

constitutional or otherwise sufficiently important federal

issue to warrant the grant of certiorari here. The Petition

merely presents objections to the decision below, none of

which are appropriate for this Court’s review or resolution on

this record. Campoli simply disagrees with the lower Courts’

application of this Court’s precedent to the allegations set

forth in his First Amended Complaint. Such a disagreement

is certainly not tantamount to constituting or presenting a

conflict between a decision of any Circuit Court and any

ruling of this Court, or otherwise of posing a significant issue

for resolution. '®

'© Respondent is confused by the final arguments put forth by Campoli

that both the District Court and the Court of Appeals relied on “New

York state law’s pleading requirements in making their respective

determinations.” Simply stated, there is absolutely no basis in law or fact

for this argument.

22

CONCLUSION

Petitioner Campoli fails to satisfy any applicable standard

required for the grant of a Petition for a Writ of Certiorari.

Consequently, based on the foregoing reasons, Respondent

HealthExtras, Inc. respectfully requests that the Petition for a

Writ of Certiorari be denied.

Respectfully submitted,

MARY A. GAMBARDELLA

Counsel of Record

EPSTEIN BECKER & GREEN, P.C.

Attorneys for Respondent

HealthExtras, Inc.

One Landmark Square, Suite 1800

Stamford, Connecticut 06901

(203) 348-3737

APPENDIX

A-l

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

OPALS ON ICE LINGERIE, Designs by Bernadette, Inc.,

Plaintiff,

v.

BODY LINES, INC., d/b/a CURVES,

Defendant.

No. 99 CV 3761({ILG).

March 5, 2002.

David P. Lennon, Esq., Lennon & Klein, P.C., New York.

Michael A. Haskel, Esq., Haskel & Cooper, Garden City.

MEMORANDUM & ORDER

GLASSER, District J.

In this action, plaintiff Opals on Ice Lingerie, Designs

by Bernadette, Inc. (“Opals”) seeks to compel Bodylines,

Inc. d/b/a Curves (“Bodylines”) to submit to an arbitration

pending before the American Arbitration Association

in New York. Opals also seeks a declaration that a

Non-Circumvention Agreement purportedly signed by

Bodylines’s president is binding and enforceable. Bodylines

has filed counterclaims against Opals, seeking declarations

that (i) the agreement is unenforceable and (ii) Bodylines

cannot be compelled to submit to the arbitration. The parties

have now cross-moved for summary judgment. For the

reasons set forth below, Bodylines’s motion is granted, and

Opals’s cross-motion is denied.

BACKGROUND

Opals is a New York corporation with its principal place

of business in Brooklyn, New York. (See DiVito Aff. 44.)

Opals is engaged in the business of designing, manufacturing

A-2

and selling ladies lingerie products. (See id.) Bodylines is a

Nevada corporation with its principal place of business in

California. (See Sautter Aff. 92.) Bodylines markets and

distributes women’s intimate apparel through catalogs,

mail-order, and the Internet. (See id.)

In September of 1997, Irwin Karnick, the president of MZ,

Inc., a catalog/production firm that was providing catalog

services to both Opals and Bodylines, introduced Opals to

Bodylines. (See DiVito Aff. 96; Sautter Aff. 94.) Opals and

Bodylines then began discussing the possibility of Bodylines

selling certain of Opals’s products. (See DiVito Aff. 47;

Sautter Aff. 94.) In the course of negotiating an arrangement,

Bodylines and Opals exchanged certain draft agreements,

including drafts of at least two Non-Circumvention Agree-

ments and a Confidentiality Agreement. (See DiVito Aff.

417-8 & Exs. A-C; Sautter Aff. 9§jS-7 & Exs. A-1, D-E.}

Opals also provided Bodylines with a number of samples

of its products. (See DiVito Aff. 410; Sautter Aff. 98.) In the

end, however, no arrangement was reached between

Bodylines and Opals concerming the sale of Opals’s products

by Bodylines. (See Sautter Aff. 418-9; see also Compl. 417.)

Opals alleges that, not long after providing Bodylines

with samples of its products, Bodylines “misappropriated

Opals[‘s] designs, and proceeded to manufacture and

distnibute product lines of garments substantially identical

to the trade secrets, designs and products belonging to

Opals which were previously furnished to [Bodylines].”

(Compl.418.) Accordingly, on May 18, 1999, Opals served

Bodylines with a demand for arbitration before the American

Arbitration Association in New York, seeking $5 million

in damages from Bodylines as a result of the alleged mis-

appropriation. (See DiVito Aff. Ex. F.) Opals commenced

arbitration proceedings instead of litigation due to a Non-

Circumvention Agreement (the “Agreement’”), which was

purportedly executed by Julie Sautter, Bodylines’s president.

A-3

The Agreement-which, by its terms, limits Bodylines’s nght

to copy, use or modify any of Opals’s products-contains a

provision stating: “Any dispute arising under or relating to

this Agreement shall be submitted to binding arbitration in

the State of New York pursuant to the rules for commercial

arbitrations of the American Arbitration Association.”

(Compl.Ex. A.)

Bodylines, however, refused to submit to the arbitration,

alleging that it never signed the Agreement and that Sautter’s

signature thereon was a forgery. (See DiVito Aff. Ex. G.)

As a result, Opals commenced this action on June 2, 1999,

seeking a declaration that the Agreement is valid and

enforceable, and also seeking to compel Bodylines to submit

to the arbitration. The sole factual basis for the relief sought

by Opals in its Complaint is Bodylines’s purported execution

of the Agreement, which, according to Opals, requires

arbitration of the parties’ dispute. (See Compl. 423-26; see

also id. Prayer For Relief.)

In the meantime, the AAA decided that the issue of arbi-

trability could properly be decided by a panel of arbitrators.

The AAA therefore directed the parties to submit briefs

on this issue. (See DiVito Aff. Ex. G.)' Bodylines, citing

the cost of preparing briefs on the issue, instead chose to

participate in the arbitration, “without prejudice to its

defense.” (December 15, 1999 letter from Peter Mallon, Esq.

to Michael Namias, AAA Executive Administrator, a copy of

which is annexed to DiVito Aff. Ex. G.) Bodylines thereafter

participated in extensive pre-arbitration discovery. (See

DiVito Aff. Exs. H-J.) Nevertheless, shortly after Bodylines

chose not to brief the issue of arbitrability with the AAA,

it commenced an action in California state court in which

' The AAA recognized, however, that it would “abide by any court order

directed against either party to the arbitration which is binding upon the

parties.” (Sautter Aff. Ex. F.)

A-4

it sought a preliminary injunction staying the arbitration. (See

DiVito Aff. Ex. D.) The California court denied Bodylines’s

preliminary injunction motion.? Opals then removed the

California state court action to federal court, and the parties

agreed that the issue of arbitrability would be decided by

this Court. (See Def. Mem. at 4.) Bodylines subsequently

participated in three days of arbitration hearings. (See DiVito

Aff. Exs. K-M.)’ Bodylines continued to present its objec-

tions to the arbitration at those proceedings. (See, e.g., id. Ex.

K at 3.)

DISCUSSION

I. Standard for Summary Judgment

Summary judgment “shall be rendered forthwith if the

pleadings, depositions ... together with the affidavits ...

show that there is no genuine issue as to any material fact and

... the moving party is entitled to judgment as a matter of

law.” Fed.R.Civ.P. 56(c). A “moving party is entitled to

judgment as a matter of law [if] the nonmoving party has

failed to make a sufficient showing on an essential element of

her case with respect to which she has the burden of proof.”

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1985) (internal

quotation marks and citations omitted). In deciding a

summary judgment motion, a court need not resolve disputed

issues of fact, but need only determine whether there is

any genuine issue to be tried. Eastman Mach. Co. v. United

States, 841 F.2d 469, 473 (2d Cir. 1988). A disputed fact is

? Neither party has submitted a copy of the California court’s decision

to this Court. Therefore, on the present record, the Court is unaware of

the reason the California court denied Bodylines’s motion.

> The three days of hearings amounted to only half of the time scheduled

by the AAA for the arbitration. (See November 23, 1999 AAA

Scheduling Order, a copy of which is annexed to DiVito Aff. Ex. G.)

For this reason, it appears that the arbitration has not been concluded,

and that there has been no decision by the arbitrator.

A-5

material only if it might affect the outcome of the suit under

the governing law. A genuine factual issue exists if there

is sufficient evidence favoring the nonmovant such that a

reasonable jury could return a verdict in her favor. Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 248-249 (1986). “In

assessing the record to determine whether there is a genuine

issue of fact, the court is required to draw all inferences in

favor of the party against whom summary judgment is

sought.” Ramseur v. Chase Manhattan Bank, 865 F.2d 460,

465 (2d Cir. 1989).

Il. The Agreement is Unenforceable, and Bodylines Cannot

be Compelled to Submit to Arbitration

Although the parties’ briefs obfuscate the issues, at bottom

this case comes down to one simple point: both parties agree

that Sautter’s signature on the Agreement is a forgery created

by a “photocopy transposition,” i.e., it was “cut” from one

document and “paste[d]” onto the Agreement. (See Sulner

Aff. 96(b) (a copy of which is annexed to the Sautter Aff.

as Ex. G); Sautter Aff. Ex. H; Pl. Reply at 10 n. 4.)°

Accordingly, both the Agreement and the arbitration clause

therein are unenforceable. See, e.v., Orlosky v. Empire Sec.

Sys., Inc., 230 A.D.2d 401, 403, 657 N.Y.S.2d 840, 842 (3d

Dep’t 1997) (“Under [New York] law and general contract

law, a forged signature renders a contract void ab initio.”)

(citing, inter alia, 10 Williston on Contracts § 1139 at 393

(3d ed. 1967)); Oberlander v. Fine Care, Inc., 108 A.D.2d

798, 799, 485 N.Y.S.2d 313, 314-15 (2d Dep’t 1985)

(forgery of signature on contract, if proven, would “invali-

date the entire agreement, including the arbitration clause”

* Opals perversely suggests that Bodylines cut and pasted Sautters’s

signature. (See PI. Reply at 10 n. 4.) Such a suggestion is incredulous, to

say the least; there is absolutely nothing in the record to suggest that

Bodylines had any reason to cut and paste its own president’s signature

from one document to another, and, indeed, it — little sense to

believe that Bodylines would have done so.

A-6

contained therein). And yet in its Complaint, the only basis

upon which Opals seeks to compel Bodylines to submit to

the arbitration is Bodylines’s purported execution of the

Agreement. (See Compl. 9]20-26.) Because the Agreement

and the arbitration clause are void and unenforceable,

it necessarily follows that Bodylines cannot be compelled

to submit to the arbitration pursuant to the terms of the

Agreement.

Opals, recognizing the invalidity of the Agreement,

attempts to convince the Court that the validity of the

Agreement is immaterial. Opals contends that “[uJ]nder the

doctrine of separability, only challenges to the arbitration

agreement are decided by the courts; challenges to the overall

contract must be referred to arbitration.” (Pl. Reply at 4

(citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388

US. 395, 403-04 (1967)).) However, Opals’s reliance on

Prima Paint, and similar cases, is misplaced. As this Court

has previously held:

Where . . . a ‘fraud in the factum’ is alleged, the Prima

Paint notion of the severability of the arbitration clause

has no application. In raising a claim of fraudulent

inducement of contract, a party must argue that its

knowing assent to the terms of the contract followed

from a false promise by the other side. Thus, unless the

specific arbitration provision itself was obtained via a

false promise, the signatory has fairly agreed to submit

disputes to arbitration. By contrast, where fraud in the

factum of the entire contract is alleged, it makes no

sense to apply Prima Paint’s requirement of a specific

attack on the making of the arbitration clause itself. If

no agreement ever arose between the parties, there can

be no severable agreement to «rbitrate. Similarly, if a

party's signature were forged wn a contract, it would be

A-7

absurd to require arbitration if the party attacking the

contract as void failed to allege that the arbitration

clause itself was fraudulently obtained.

Kyung In Lee v. Pac. Buillion (New York) Inc., 788 F.Supp.

155, 157 (E.D.N.Y. 1992) (emphasis added); see also Matter

of Arbitration Between Nuclear Elec. Ins. Lid. & Cent.

Power & Light Co ., 926 F.Supp. 428, 434 (S.D.N.Y. 1996)

(“Where ... a party claims that it never actually manifested

assent to a contract containing an agreement to arbitrate-for

example, because its signature was forged on the contract . . .

that party cannot be forced to arbitrate until it is first

established by a court that the party willingly manifested

assent to the underlying contract.”).°

Opals also argues that Bodylines should be compelled

to submit to arbitration because Bodylines sent a draft

Non-Circumvention Agreement to Opals which contained

an arbitration clause-and thus Bodylines indicated its assent

to arbitration-even though Opals never signed the draft

agreement.° in support of its argument, Opals cites numerous

cases in which courts have held that an agreement to arbitrate

need not have been signed, so long as the agreement demon-

strated an intent by the drafter to consent to arbitration. (See

Pl. Reply at 6-9.) Those cases, however, are inapposite. Here,

the question is not whether Bodylines indicated an intent to

arbitrate any disputes it might have with Opals by virtue of

* There is no doubt that a forged signature on a contract is a “fraud in

the factum.” See, e.g., E. Allan Farnsworth, Contracts § 4.10 (2d ed.

1990) (fraud in the “factum,” or the “execution,” occurs where a mis-

representation goes “to the very character of the proposed contract itself,

as when one party induces the other to sign a document by falsely stating

that it has no legal effect”).

* At oral argument, Opals suggested that it had signed a draft agreement

sent by Bodylines to Opals which contained an arbitration clause. Yet

Opals was unable to direct the Court’s attention to any agreement which

was signed by both Opals and Bodylines.

A-8

the fact that it exchanged draft agreements with Opals.

Rather, the issue to be resolved on these cross-motions for

summary judgment is limited to the claim set forth in Opals’s

Complaint, namely, whether Bodylines can be compelled to

submit to arbitration because of the arbitration clause in the

Agreement. At no time prior to filing its Opposition to

Bodylines’s summary judgment motion did Opals assert that

Bodylines should be compelled to submit to arbitration

because it exchanged draft agreements with Opals. Rather,

Opals has consistently argued that Bodylines should be

compelled to submit to the arbitration because of the

arbitration clause in the Agreement.

Opals therefore cannot succeed on its motion by alleging

_ these new bases for relief, which it has never previously

* raised. Although it is true that the Federal Rules of Civil

Procedure are designed merely to give a defendant “fair

notice of what the plaintiff's claim is and the grounds upon

which it rests,” Conley v. Gibson, 355 U.S. 41, 47 (1957),

and, therefore, “federal pleading is by statement of claim, not

by legal theory,” Newman v. Silver, 713 F.2d 14, 15 n. 1 (2d

Cir. 1983); see also Gins v. Mauser Plumbing Supply Co.,

148 F.2d 974, 976 (2d Cir. 1945) (“particular legal theories

of counsel yield to the court’s duty to grant the relief to

which the prevailing party is entitled, whether demanded or

not’), the Court is “not require[d] . . . to fabricate a claim that

a plaintiff has not spelled out in his pleadings,” 5 Wright &

Miller, Federal Practice and Procedure § 1286 at 559 (2d ed.

1990). Were it otherwise, a defendant would be unable to

“tailor its discovery to prepare an appropriate defense.”

Beckman v. United States Postal Serv., 79 F.Supp.2d 394,

407 (S.D.N.Y. 2000). Thus, courts have consistently ruled

that “it is inappropriate to raise new claims for the first

time in submissions in opposition to summary judgment.” /d.

(citations omitted); accord Caribbean Wholesale & Serv.

Corp. v. U.S. JVC Corp., 963 F.Supp. 1342, 1359 (S.D.NLY.

1997) (“[Plaintiff] in effect is apparently attempting to add

A-9

a claim never addressed, or even hinted at, in the complaint.

Such a step is inappropriate at the summary judgment stage,

after the close of discovery, without the Court’s leave, and

in a brief in opposition to a dispositive motion. Summary

judgment cannot be granted as to this ‘claim’ because it

is not a claim.”); Allen v. West Point-Pepperell, Inc., %v8

F.Supp. 1209, 1224 (S.D.N.Y. 1995) (“A motion for sum-

mary judgment is not the appropriate place to present new

claims which effectively amend the complaint.”) (citation

omitted). As one court has stated:

The potential exposure of the defendants in a litigation

is controlled by the allegations set forth in the initial

pleading. Fairness dictates that defendants be given a

minimum degree of forewarning as to the underlying

basis for the relief sought. Thus, even though the Court

will liberally construe the substance of the information

provided in the complaint and in particular situations

may not require that the specific legal theory be

identified, at least some notion of the grounds justifying

the remedies sought in the proceedings must appear.

Ocaso, S.A., Compania de Seguros y Reaseguros v. P.R.

Mar. Shipping Auth., 915 F.Supp. 1244, 1253 (D.P.R. 1996).

The only “notion of the grounds justifying the remedies

sought” in Opals’s Complaint is the Agreement. Since

the Court has already determined that the Agreement is

unenforceable, the Court finds no basis to compel Bodylines

to arbitrate.’

’ Furthermore, to the extent Opals is impliedly asking the Court for leave

to amend its Complaint, the Court will not do so at this late stage.

See Beckman, 79 F.Supp.2d at 408 (“[ljeave to amend a complaint will

generally be denied when the motion to amend is filed solely in an

attempt to prevent the Court from granting a motion ... for summary

judgment, particularly when the new claim could have been raised

earlier”) (alteration in original) (citations omitted).

A-10

Finally, Opals argues that Bodylines has waived its right

to object to the arbitrability of the parties’ dispute because

(i) Bodylines agreed to submit the issue of arbitrability to the

AAA, and (11) Bodylines extensively participated in the

er**ration up to this point. (See Pl. Mem. at 7-12.) Neither

of u:wse arguments has merit. As to the first point, Opals

directs the Court’s attention to a June 17, 1999 letter from

Bodylines’s counsel to the AAA administrator which al-

legedly indicates that Bodylines submitted the issue of the

arbitrability to the arbitrators for a decision. (See Pl. Mem.

at 9-10.) Nothing in that letter, however, indicates that

Bodylines was willing to submit this issue to the adminis-

trator for a decision. In fact, Opals’s argument is belied by

Bodylines’s later correspondence indicating that it intended

to have a court resolve the issue. (See November 17, 1999

letter from Peter Mallon, Esq. to Michael Namias, AAA

Executive Administrator, a copy of which is annexed to

DiVito Aff. Ex. G.)

Nor is there any merit to Opals’s contention that, by

participating in the arbitration to this point, Bodylines has

waived its mght to contest the arbitrability of the parties’

dispute. In support of its argument, Opals cites New York

Hotel & Motel Trades Council v. Hotel Nikko of New York,

Inc., Nos. 91 Civ. 0795, 91 Civ. 0755, 1991 WL 168284

(S.D.N.Y. Aug. 22, 1991). In Hotel Nikko, the court refused

to find that the defendant had preserved its objection to

the arbitrator’s jurisdiction because (i) no pre-hearing sub-

missions indicated that the defendant contested jurisdiction,

(ii) nothing in the record suggested that the defendant refused

to brief the issue of jurisdiction, (iii) the defendant never

moved for a stay of the arbitration proceedings, and (iv) the

only item in the record indicating that the defendant had

objected to the jurisdiction of the arbitrator was submitted

after the arbitration hearing. See id. at *4-5. Accordingly, the

court held that the defendant’s conduct did not “clearly

evince its objection to jurisdiction.” Jd. at *4.

A-11

In this case, however, Bodylines has repeatedly “evinced

its objection” to the AAA’s jurisdiction. Indeed, numerous

letters from Bodylines indicate its objection to jurisdiction

(see DiVito Aff. Ex. G); Bodylines refused to bref the issue

of jurisdiction before the arbitrator, choosing instead to have

a court resolve the issue (see id.), and, in fact, the arbitrators

never resolved the issue; Bodylines moved for a stay of the

arbitration proceedings (albeit belatedly); and Bodylines

raised the issue of arbitrability before the end of the arbi-

tration proceedings.® flotei Nikko, therefore, lends no support

to Opals’s argument. In fact, given the AAA’s willingness to

proceed with the arbitration despite the jurisdictional issue,

as well as the fact that the California court refused to enjoin

the arbitration, Bodylines likely had little choice but to

participate in the arbitration proceedings, or else risk default.”

At every stage of the proceedings, however, Bodylines has

raised its objection to the jurisdiction of the arbitrators. Thus,

it cannot be said that Bodylines waived its right to contest the

arbitrability of this dispute.

* As such, contrary to Opals’s assertion, Bodylines has not “participate{d]

in an arbitration, with the assurance that if it loses it may later challenge

whether it had ever agreed to arbitration.” (Def. Mem. at 10 n. 7 (quoting

Halley Optical Corp. v. Jagar Int'l Mktg. Corp., 752 F.Supp. 638, 639

(S.D.N.Y. 1990))}.)

> In a footnote, Opals argues that the Califormia court’s denial of

Bodylines’s preliminary injunction motion should estop Bodylines from

arguing that it cannot be compelled to arbitrate the current,dispute. (See

Pl. Mem. at 9 n. 6.) Collateral estoppel, however, cannot preclude

Bodylines from raising this issue, because the California court’s denial of

Bodylines’s preliminary injunction motion was not a final judgment on

the merits. See Flaherty v. Lang, 199 F.3d 607, 613 (2d Cir. 1999) (valid

and final judgment required to implicate collateral estoppel).

A-12

CONCLUSION

For the foregoing reasons, Bodylines’s motion for

summary judgment is granted, and Opals’s cross-motion for

summary judgment is denied. The Clerk of the Court is

directed to close this case.

SO ORDERED.

A-13

United States District Court, D. Connecticut.

Ahmed M. NAMOURY,

Plaintiff

v.

Alfred P. TIBBETTS, Tibbetts Keating & Butler, LLC;

Win B. Mola and Wini Mola Realtors, LLC,

Defendants

No. 3:04 CV 599(WWE).

Jan. 11, 2005.

Leon J. Greenspan, Greenspan & Greenspan, White Plains,

NY, for Plaintiff.

Christopher L. Brigham, Updike, Kelly & Spellacy, P.C.,

New Haven, CT, Jules Lang, Lepofsky, Lepofsky & Lang,

Norwalk, CT, for Defendants.

RULING ON DEFENDANTS’ MOTION TO DISMISS

EGINTON, J.

This action concerns an allegation of legal malpractice and

real estate brokerage inalpractice arising out of defendants’

Alfred P. Tibbetts; Tibbetts Keating & Butler, LLC; Wini

Mola Realtors, LLC and Wini B. Mola’s representation of

plaintiff Ahmed N. Namoury regarding a series of real estate

transactions involving a conveyance of property owned by

plaintiff. Plaintiff has filed a ten-count complaint alleging, as

to all defendants, breach of contract, breach of the covenant

of good faith and fair dealing, breach of fiduciary duty

and violation of CUTPA and, as to defendants Tibbetts

and Tibbetts Keating & Butler, LLC, negligence/legal mal-

practice and, as to defendants, Wini Mola Realtors, LLC and

Wini B. Mola, negligence/real estate brokerage malpractice.

A-14

Defendants Tibbetts and Tibbetts Keating & Butler, 1.LC

timely filed a motion to dismiss counts against them: count

one (breach of contract); count two (breach of the covenant

of good faith and fair dealing) and count five CUTPA).

Defendarits Wini Mola Realtors, LLC and Win B. Mola

timely filed their motion to dismiss counts ayainst them:

count six (breach of contract), count seven (breach of the

covenant of good frith and fair dealing), and count ten

(CUTPA). For the fo.iowing reasons, the Court will deny

defendants Tibbetts and Tibbetts Keating & Butler, LLC’s

motion as to count one and will grant their motion as to count

two and five. Additionally, the Court will deny defendants

Wini B. Mola and Wini Mola Realtors, LLC’s motion to

dismiss count six and will grant their motion as to counts

seven and ten.

I. Background

Consistent with the standard of review for a motion to

dismiss, the Court considers all of the factual allegations to

be true.

In early October, 2001, plaintiff entered into a transaction

whereby he planned to sell a parcel of property located at 79

Valley View Drive, Stamford, Connecticut (“the property”)

to Nettie and Samuel Thomas (“the Thomases”). Plaintiff

engaged Alfred P. Tibbetts (“Tibbetts”), a partner in the

law firm of Tibbetts Keating & Butler, LLC, to represent him

for this sale. At all times relevant to this action, Tibbetts

represented plaintiff.

Wini Mola Realtors, LLC (“WMR”) is a limited liability

company licensed to act as a real estate brokerage and Wini

B. Mola (“WBM”) is the operative broker thereof. WMR

and WBM acted as the real estate brokerage and broker,

respectively, for plaintiffs sale of the property to the

A-15

Thomases. WMR and WBM brought the Thomases to

plaintiff for the Thomases purchase of plaintiff's property

and were paid a brokerage fee of $37,000.00.

The purchase price of the property was $740,000.00 with

the sum of $724,000.00 payable toward the purchase secured

by a note and purchase money mortgage. The Thomases were

the grantees/mortgagors and plaintiff was tne designated

mortgagee. In addition to the note and mortgage, the

Thomases paid $16,000.00 in cash to plaintiff. Prior to the

closing, in early July, 2001, Tibbetts produced a personal

financial statement of the Thomases that indicated that they

were financially able to purchase the property and pay the

note and mortgage pursuant to schedule.

Unbeknownst to plaintiff, there were tax liens and other

judgments against Nettie Thomas prior to and at the time of

the closing, which took place in early October, 2001. In mid-

January, 2002, Nettie Thomas died and Samuel Thomas, as

survivor, became the sole owner of the property. Prior to her

death, the Thomases had individually filed for bankruptcy

and both had tax liens and judgments filed against them.

Upon Nettie’s death, the liens against hcr became liens

against the entire property. Thereafter, Samuel Thomas failed

to make payments and the mortgage went into default. In

July, 2002, in lieu of foreclosure, Thomas reconveyed the

property to plaintiff, who became the holder of the purchase

money mortgage.

In late April, 2003, plaintiff sought to sell the property to

another individual. In order to provide the buyers with a t ‘le

free of encumbrances, plaintiff had to pay off the lien then

attached to the property.

II]. Discussion

The function of a motion to dismiss is “merely to assess

the legal feasability of the complaint, not to assay the weight

of the evidence which might be offered in support thereof.”

Ryder Energy Distribution v. Merrill Lynch Commodities,

Inc., 748 F.2d 774, 779 (2d Cir. 1984). When deciding a

motion to dismiss, the Court must accept all well-pleaded

allegations as true and draw all reasonable inferences in favor

of the pleader. Hishon v. King & Spaulding, 467 U.S. 69, 73,

104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). A complaint should

not be dismissed unless it appears beyond doubt that the

plaintiff can prove no set of facts in support of its claim

which would entitle him to relief. Conley v. Gibson, 355 US.

41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

A. Count One: Sreach of Contract as against Tibbetts

and the Law Firm

Plaintiff's breach of contract claim alleges that, as his

attorneys for the conveyance of property, Tibbetts and

the law firm were obligated to fulfill their responsibilities

in concert with the prevailing custom and practice in

Connecticut. }

Plaintiff's allegations against defendants are based on their

alleged failure to perform their duties as per the contractual

agreement they had established. As part of this duty, it

was Tibbet’s and the law firm’s responsibility to protect

plaintiff's interests and take 2ll steps reasonably necessary in

order to facilitate the real estate transaction. In order to do so,

plaintiff alleges, it was necessary to ascertain that the buyers

of the property were, indeed, capable of such purchase and

that the property, once conveyed, would be free and clear of

all liens and judgments.

A-17

Specifically, plaintiff claims that defendant Tibbetts

should have performed a title search and obtained an actual

credit report of the Thomases, which would have alerted

plaintiff as to the Thomases’ inability to perform pursuant to

the mortgage.

Furthermore, plaintiff claims that defendants breached

their contractual obligations in that they failed to reveal to

plaintiff that the tax liens and judgments levied against Nettie

Thomas attached to the property following her death. Upon

Samuel Thomas’ default, the liens were attached to the

property and plaintiff was liable for the debt in order to sell

the property with clear title to a subsequent buyer. In con-

sideration of the contractual obligations owed to plaintiff,

plaintiff paid reasonable fees to defendants.

The Second Circuit has instructed that in order to prevail

on a claim for breach of contract, one must specify what. is

the actual breach. In Breiner v. Stone, 1997 WL 416942 *2

(2" Cir. (Conn.)), the court stated that it is not sufficient to

allege broad “misrepresentation” or even “legal malpractice.”

If plaintiff has failed to allege a specific, expressed under-

taking or promise by the defendant, the claim does not sound

in “breach of contract.” Instead, the claim is an allegation of

negligence. “When a plaintiff alleges only that the defendant

failed to perform legal services with the requisite level of

care, the complaint sounds in negligence rather than contract.

This is so even if the plaintiff also alleges that he ‘retained’

or ‘engaged’ the services of the lawyer.”

This line between negligence and breach of contract,

however, is often blurred. In Rosato v. Mascardo, 82

Conn.App. 396, 410-411, 844 A.2d 893 (2004), the court

stated:

Whether the plaintiff's cause of action is one for

malpractice depends upon the definition of that word

and the allegations of the complaint. Malpractice is

A-18

commonly defined as the failure of one rendering

professional services to exercise that degree of skill and

learning commonly applied under all the circumstances

in the community by the average prudent reputable

member of the profession with the result of injury,

loss, or damage to the recipient of those services. The

elements of breach of contract are the formation of an

agreement, performance by one party, breach of the

agreement by the other party and damages.

In the complaint, plaintiff describes the contours of the

agreement established between him and defendants. Therein,

plaintiff specifies what comprises defendants’ breach of

contract. Plaintiff claims defendants did not fulfill specific

obligations inherent to the representation of a seller of

property: a thorough title search and a credit report of the

potential buyers. As a result of this breach, plaintiff suffered

monetary damages: the assumption of the Thomases mort-

gage and note following the Samuel Thomas default and the

payment of the tax lien and other judgments against the

property.

Defendants argue that a breach of contract claim must

allege that a defendant promised a specific result, as opposed

to a general statement that the result will be successful.

Defendants claim that no specific result was ever promised.

However, plaintiff does not allege that one was promised.

Instead, plaintiff alleges that he contracted with defendants to

aid him in the sale of his property and that in order to do so,

it is of base necessity to conduct a title search and obtain a

credit report on the potential buyers. This is not a promise

that the transaction will be successful. It is a contractual

arrangement to take the practical steps necessary to undertake

the transaction. Specifying the steps not undertaken by

defendants, plaintiff is not making a general statement

A-19

regarding a leve. « care expected of all attorneys. It is a

specific articulation of the breach of the existing contract and

the resulting damages thereof.

For these reasons, defendants’ motion to dismiss count one

of plaintiff's complaint will be denied.

B. Count Two: Breach of the Covenant of Good Faith

and Fair Dealing as against Tibbetts and the

Law Firm

Defendants also move to dismiss count two of the com-

plaint, namely, that the defendants acted in bad faith when

they breached the contract. For the following reasons, the

Court will grant defendants’ motion to dismiss count two.

In order to prevail on a claim of bad faith, it is necessary

for the complaint to allege a specific act that was performed

purposefully, with a sinister intent. In Buckman v. People

Express, Inc., 205 Conn. 166, 170, 530 A.2d 596 (1987), the

court stated that

Bad faith is defined as the opposite of good faith,

generally implying a design to mislead or to deceive

another, or a neglect or refusal to fulfill some duty or

some contractual obligation, not prompted by an honest

mistake as to one’s nghts or duties ... Bad faith is not

simply bad judgment or negligence, but rather it implies

the conscious doing of a wrong because of dishonest

purpose or moral obliquity ... it contemplates a state

of mind affirmatively operating with furtive design or

i}] wall.

Here, no facts are alleged that would suggest any bad faith

on the part of defendants. Even if it was found that there was

a breach of contract, not all contracts are breached with

a sinister intent. Even though plaintiff alleges specific

A-20

examples of defendants’ breach of contract, he does not

suggest that any of these acts were performed purposefully or

with ill intent.

Within the contours of the complaint, therefore, it is

not possible to read bad faith into plaintiffs allegations.

Defendants’ motion to dismiss count two of the complaint

will be granted.

C. Count Five: CUTPA as to Tibbetts and the Law Firm

Count five of plaintiff's complaint alleges a violation of

the Connecticut Unfair Trade Practices Act (“CUTPA”),

as set forth in Conn. Gen.Stat. Section 42-110b(a). CUTPA

provides penalties for any person or entity that engages in

unfair methods of competition and unfair or deceptive acts or

practices in the conduct of any trade or commerce. In order

to determine what constitutes a violation under CUTPA,

Connecticut has adopted the “cigarette rule:” “(1) Whether

the practice, without necessarily having been previously

considered unlawful, offends public policy as it has been

established by statutes, the common law, or otherwise-

whether, in other words, it is within at least the penumbra of

some common law, statutory, or other established concept of

unfairness; (2) whether it is immoral, unethical, oppressive,

or unscrupulous; (3) whether it causes substantial injury to

consumers, competitors or other business men.” A-G Foods,

Inc. v. Pepperidge Farm, Inc., et al. 216 Conn. 200, 215, 579

A.2d 69 (1990). It is not necessary to meet all three prongs

of the test. Instead, the test contemplates the degree to which

one satisfies one factor. Fabri v. United Technologies

International, Inc., 387 F.3d 109, 120 (2004).

In the present case, plaintiff does not introduce any

allegations of defendants’ behavior that satisfy the prongs

of the “cigarette rule.” Plaintiff does not allege any funda-

mental “unfairness,” “immorality,” or “substantial injury to

consumers” beyond the monetary damages he suffered solely

A-21

as a result of defendants’ breach of the contract. As the Court

does not find that there is any bad faith inherent to

defendants’ conduct, there is no expansive indication of

unfair or deceptive acts that could involve the public.

Plaintiff cannot allege the breach specific and limited to

the narrow, individual circumstances of his contract with

defendants, as he does in count one of the complaint, and

then prevail on a CUTPA claim, which necessarily involves

an overarching negative detriment that affects the public at

large. Defendants’ failure to conduct the searches necessary

to conduct a personal real estate transaction do not touch

upon the interests of the public. Therefore, defendants’

motion to dismiss count five of the complaint will be granted.

D. Counts VI, VIL and X as against Defendants

WBM and WMR

For the reasons set forth in the preceding sections

involving identical claims against Tibbetts and the law firm,

the Court will deny count six of plaintiff's claims against

defendants WMR and WBM. WMR and WBM’s motion

to dismiss counts seven and ten will be granted. As these

defendants argue in their bnef, “Traditionally, a Broker’s

obligation consists of and is limited to procuring a buyer

ready, willing and able to purchase upon terms acceptable to

the plaintiff.” As is evident here, defendants failed to fulfill

this obligation. Despite their representation to the contrary,

they specifically failed to produce a buyer “able” to purchase

plaintiff's property in that they neglected to find out if the

Thomases were, indeed, “able.” Thus, defendants breached

their contractual obligation to plaintiff. However, there is not

an indication of bad faith or sinister intent, nor is there any

evidence of any CUTPA violation.

A-22

Accordingly, the Court will deny the dismissal of count six

(breach of the contract) and grant the dismissal of counts

seven (breach of the covenant of good faith and fair dealing)

and ten (CUTPA).

Ill. Conclusion

Defendants Alfred P. Tibbetts and the Tibbetts Keating

& Butler, LLC’s Motion to Dismiss [Doc. # 12] is DENIED

as to count one and GRANTED as to counts two and five.

Defendants Wini Mola Realtors, LLC and Wini B. Mola’s

Motion to Dismiss [Doc. # 11] is DENIED as to count six

and GRANTED as to counts seven and ten.

SO ORDERED.

A-23

United States Court of Appeals, Second Circuit.

Mark A. BREINER,

Plaintiff-Appellant,

v.

Sheidon STONE,

Defendant-Appellee.

No. 96-9091.

July 25, 1997.

Appeal from the United States District Court for the

District of Connecticut (Covello, Judge ).

Appearing for Appellant: John R. Williams, New Haven,

Connecticut.

Appearing for Appellees: Katherine C. Callahan, Updike,

Kelly & Spellacy, P.C., Hartford, Connecticut.

Present! HONORABLE RALPH kK. _ WINTER,

Chief Judges HONORABLE DENNIS G. JACOBS,

HONORABLE PIERRE N. LEVAL, Circuit Judges.

Mark A. Breiner appeals from Judge Covello’s adverse

grant of summary judgment in a legal malpractice action

against Sheldon Stone. Breiner alleged that Stone, an

attorney not licensed in Connecticut, acted negligently, in

breach of contract, and in violation of the Connecticut Unfair

Trade Practices Act, Conn. Gen.Stat. § 42-110a, et seq.

(“CUTPA”), in his representation of Breiner in connection

with the sale of Breiner’s dental practice.

Breiner argues that the district court erred in determining

that the statute of limitations for his negligence and CUTPA

claims had run and that Connecticut common law barred his

action for breach of contract.

A-24

Breiner’s first argument, that the district court erred

in holding that the statute of limitations for the negligence

and CUTPA claims began to run on the date of the sale of

the dental practice, lacks merit. As noted by the district court,

both the negligence and CUTPA claims are governed by

three-year statutes of limitations. Conn. Gen.Stat. § 52-577

(1995) (governing negligence claim); Conn. Gen.Stat. § 42-

110g(f) (governing CUTPA claim). Both statutes of limi-

tations are “occurrence statute[s], meaning that the time

period within which a plaintiff must commence an action

begins to run at the moment the act or omission complained

of occurs.” §.M.S. Textile Mills, Inc. v. Brown, Jacobson,

Tillinghast, Lahan and King, P.C., 32 Conn.App. 786, 790,

631 A.2d 340 (1993); see Fichera v. Mine Hill Corp., 207

Conn. 204, 212-13, 541 A.2d 472 (1988). Because the

complaint’s allegations that Stone acted negligently and in

violation of CUTPA all refer to actions completed on or

before the sale date, the district court correctly used that date

as the one from which to measure the statute of limitations

period.

Breiner contends on appeal that because Stone allegedly

continued to represent him after the sale date, the statute of

limitations did not begin to run until the conclusion of the

attorney-client relationship. Connecticut law, however, is to

the contrary. “In order to toll the statute of limitations by

reason of continuing tortious conduct, the plaintiff must

allege in his complaint or present facts which reasonably

support an inference of a continuing breach of duty by the

defendant.” Shuster v. Buckley, 5 Conn.App. 473, 478, 500

A.2d 240 (1985) (emphasis added). Therefore, in addition

to alleging the existence of a continuing attorney-client

relationship, one must also allege a “continuing breach” of

the duties engendered by that relationship in order to toll the

statute of limitations period. /d.; see Robbins v. McGuinness,

178 Conn. 258, 261, 423 A.2d 897 (1979). Because Breiner’s

A-25

complaint failed to allege any negligent acts or omissions

occurring after the sale date, the district court correctly

measured the statute of limitations period.

Breiner alternatively argues that because Stone

“fraudulently concealed” from him the existence of a

potential cause of action for malpractice, the tolling provision

of Conn. Gen.Stat. § 52-595 . »plies. “Allegations of

fraudulent concealment, like allegations of fraud, must

satisfy the pleading requirements of Rule 9(b).” Halbrecht v.

Prudential-Bache Properties, Inc., No. CIV. H-90-799(JAC),

1992 WL 336757, at *5 (D.Conn. July 25, 1992). Because

Breiner’s complaint offers only the conclusory allegation that

Stone “fraudulently concealed” information from him,

Breiner has failed to plead fraud with the “particularity” that

Rule 9(b) requires. Fed.R-Civ.P. 9(b). Section 52-595 is

therefore not implicated.

Breiner’s second argument, that his action for breach of

contract is not barred under Connecticut law, is similarly

unavailing. It is true that Connecticut law does not bar

contract claims in all legal malpractice cases. See Mac’s Car

City, Inc. v. DeNigris, 18 Conn.App. 525, 530, 559 A.2d 712

(1989). However, when a plaintiff alleges only that the

defendant failed to perform legal services with the requisite

level of care, the complaint sounds in negligence rather than

contract. Shuster, 5 Conn.App. at 478, 500 A.2d 240. This is

so even if the plaintiff also alleges that he “retained” or

“engaged [the] services” of the lawyer. Jd. The only breach

of contract alleged in Breiner’s complaint is that “the

defendant breached the [] contract by failing to provide

competent legal representation. . . .”” Under Shuster, Breiner’s

complaint sounds tn negligence, not contract, and the district

court correctly held that Breiner’s complaint failed to state a

claim for breach of contract.

We therefore affirm.