Opinion
No. 00 Civ. 0133 (GBD).
December 2, 2004
OPINION
Plaintiff brings suit alleging breach of contract, breach of express and implied warranties, negligence, and fraudulent misrepresentation. Defendant Comtrade Corporation ("Comtrade") asserted cross-claims against Agri-Mark, Inc. ("Agri-Mark") and Berkshire Dairy and Food Products, Inc. ("Berkshire"). Defendant Agri-Mark filed a motion to dismiss plaintiff's complaint and Comtrade's cross-claims pursuant to Fed.R.Civ.P. 12(c). For the reasons stated below, defendant Agri-Mark's motion to dismiss is granted.
I. Background
Plaintiff Inter Impex S.A.E. ("Inter Impex") is an Egyptian corporation that imported skim milk powder into Egypt. Plaintiff alleges that in December of 1997, it entered into an agreement with defendants Comtrade and Berkshire to purchase 175 metric tons of skim milk powder ("Agreement"). Subsequently, defendants Comtrade and Berkshire invoiced plaintiff for this shipment. On December 18, 1997, pursuant to this Agreement, plaintiff provided a letter of credit for $309,750 payable to Comtrade for the shipment made on or before December 31, 1997. Plaintiff alleges that payment of this letter of credit "was assigned to defendants Berkshire and Agri-Mark for the Shipment." Complaint at 3, ¶ 10. Thereafter, the shipment was made in containers carrying 7000 bags of skim milk powder as per the packing list. Plaintiff claims that the packing list indicated that the milk powder was "padded in the three-ply paper bags with polyliner of 25 kgs. net each" and that the product was produced by Agri-Mark, Inc. Id. at 3, ¶ 11. The shipment arrived in Egypt on January 27, 1998 and was discovered damaged on February 12, 1998. Plaintiff claims that the damage to the shipment was due to improper packaging in violation of the Agreement and letter of credit. Id. at 3, ¶ 13.
Inter Impex filed suit against defendants Comtrade, Berkshire and Agri-Mark on January 7, 2000. Defendant Comtrade subsequently asserted cross-claims against defendants Agri-Mark and Berkshire. Comtrade alleges that it entered into an agreement with "Berkshire for the purchase of the Shipment in December 1997 to be manufactured, packaged and shipped to Plaintiff by Cross-Defendants in compliance with the rules, regulations and requirements of the Commodity Credit Corporation and the United States Department of Agriculture ("USDA")." Comtrade's Answer and Cross-Claims at 6, ¶ 26. Comtrade further maintains that Berkshire and Agri-Mark employed a forwarding agent to prepare the packing list and weight list who subsequently "misdescribed the packaging of the Shipment provided and shipped by" Berkshire and Agri-Mark. Id. at 6, ¶¶ 28-29. Comtrade alleges that the shipment was, in fact, not shipped with a polyliner and that the packing and closure of the bags provided by Berkshire and Agri-Mark were not in accordance with the agreement of purchase, invoices, Letter of Credit or the rules, regulations, requirements and standards of the USDA or for export packaging.Id. at 6, ¶ 29-30. Comtrade argues that Berkshire and Agri-Mark are to be held liable for all of plaintiff's claims and, therefore, must indemnify Comtrade for any liability.
Plaintiff Inter Impex and cross-claimant Comtrade assert four causes of action against defendants Berkshire and Agri-Mark including: breach of contract; breach of express and implied warranty; negligence; and fraudulent misrepresentation. In its motion to dismiss, Agri-Mark argues that it was not a party to plaintiff's contract with Comtrade and Berkshire and therefore cannot be held liable for breach of contract. Agri-Mark asserts that any negligence claim must be dismissed because plaintiff's complaint and defendant Comtrade's cross-claim only allege damages resulting in `economic loss.' Agri-Mark argues that allegations of economic loss are insufficient to maintain a cause of action under a theory of express or implied warranty. Lastly, Agri-Mark asserts that plaintiffs and Comtrade have not sufficiently pled a fraudulent misrepresentation claim.
Plaintiff Inter Impex and cross-claimant Comtrade submitted a joint memorandum of law in opposition to Agri-Mark's motion and further moved to amend their pleadings.
II. Discussion
In evaluating a motion for judgment on the pleadings, this Court accepts the allegations in the complaint as true and will construe them in the light most favorable to the non-movant. See King v. Am. Airlines, Inc., 284 F.3d 352, 355 (2d Cir. 2002). All reasonable inferences will be drawn in favor of that party.See Patel v. Searles, 305 F.3d 130, 134-35 (2d Cir. 2002). "A complaint will only be dismissed if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. at 135 (internal quotations omitted), quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
A. Breach of Contract
Plaintiff's first cause of action alleges that the "improper packaging was in violation of the Agreements and letter of credit by the Defendants." Complaint at 3, ¶ 13. Plaintiff, however, has failed to allege that defendant Agri-Mark was a party to that Agreement. On the contrary, plaintiff has specifically alleged that it "entered into an agreement unto Defendants Comtrade and Berkshire for the purchase of 175 metric tons +/-3% of skim milk powder. . . ."Id. at 2, ¶ 7 (emphasis added). Plaintiff has also failed to allege that Agri-Mark was a party to the letter of credit, stating instead that "Plaintiff provided its letter of credit in the amount of $309,750.00 payable to Defendant Comtrade." Id. at 3, ¶ 9 (emphasis added). In Alaska Textile Co., Inc. v. Chase Manhattan Bank, N.A., 982 F.2d 813 (2d Cir. 1992), the Second Circuit described the basic function of letters of credit
Plaintiff alleges only that "[u]pon information and belief payment of the letter of credit was assigned to the Defendants Berkshire and Agri-Mark for the shipment." Complaint at 3, ¶ 10.
In its classic form, the letter of credit is only one of three distinct relationships between three different parties: (1) the underlying contract for the purchase and sale of goods between the buyer ("account party") and the seller ("beneficiary"), with payment to be made through a letter of credit to be issued by the buyer's bank in favor of the seller; (2) the application agreement between the bank and the buyer, describing the terms the issuer must incorporate into the credit and establishing how the bank is to be reimbursed when it pays the seller under the letter of credit; and (3) the actual letter of credit which is the bank's irrevocable promise to pay the seller-beneficiary when the latter presents certain documents . . . that conform with the terms of the credit. The great utility of the letter of credit derives from the fact that these three relationships are utterly independent of one another.Id. at 815. Plaintiff in the present case fails to allege that Agri-Mark acted as either the account party, the beneficiary, or the bank in the creation of the letter of credit. Cross-claimant Comtrade likewise fails to allege that Agri-Mark was a party to either the purchase agreement or the letter of credit.
Rather, plaintiff Inter Impex and cross-claimant Comtrade rely solely on Inter Impex's sole allegation that "the letter of credit was assigned to the Defendants Berkshire and Agri-Mark for the Shipment." Id. at 3, ¶ 9. This claim, however, is bald, conclusory and unsupported by any factual allegations of a specific assignment agreement. An assignment is a separate agreement between the assignor and the assignee which merely transfers the assignor's contract rights, leaving them in full force and effect as to the party charged.Citibank, N.A. v. Tele/Resources, Inc., 724 F.2d 266, 269 (2d Cir. 1983) (citing Molina v. Barany, 56 N.Y.S.2d 124, 132 (1945). Plaintiff fails to allege any such agreement. Plaintiff attempts to support this conclusory allegation by submitting the declaration of Fouad Abouelezz, cross-claimant Comtrade's president. In his declaration, Abouelezz asserts that the "Letter of Credit was assigned and paid to the Defendants Berkshire and Agri-Mark for Shipment. See Robbins collection letter to the bank (Exhibit 4)." Declaration of Fouad Abouelezz Pursuant to FRCP Rule 12(c) and 15 at 3, ¶ 8. Upon examination, however, the Robbins Fleisig Forwarding, Inc. letter attached as Exhibit 4, upon which cross-claimant Comtrade relies, does not identify defendant Agri-Mark as the assignee of the letter of credit. Indeed, Agri-Mark is not named in the entire document.
Even if plaintiff had sufficiently alleged the existence of an assignment agreement, plaintiff and cross-claimant still fail to allege that they were a party to such an agreement, giving them privity with defendant Agri-Mark, or that Comtrade transferred their beneficiary status under the letter of credit to Agri-Mark and, therefore, were owed duties by Agri-Mark. Plaintiff's sole allegation of assignment does not specify whether plaintiff is alleging an assignment of the proceeds of the letter of credit or a transfer of the letter of credit. "The distinction between transfer of a letter of credit and assignment of the proceeds is significant, for a transfer effectuates a more complete change. The transferee is effectively substituted for the original beneficiary, an assignment of proceeds, by contrast, changes only the party entitled to receive payment of the proceeds." Die-Matic Tool Company v. Advanced Air Support Services, Inc., 1993 WL 764520, *3 (S.D.N.Y. 1993) (internal citations and quotations omitted). Indeed, plaintiff does not distinguish whether the alleged assignment of the letter of credit constituted an assignment of rights as well as a delegation of duties.
Perhaps more frequently than is the case with other terms of art, lawyers seem prone to use the word "assignment" inartfully, frequently intending to encompass within the term the distinct (concept) of delegation. . . . An assignment involves the transfer of rights. A delegation involves the appointment of another to perform one's duties.Contemporary Mission, Inc. v. Famous Music Corporation, 557 F.2d 918, 924 (2d Cir. 1977) (citing J. Calamari J. Perillo, Contract § 254 (1970). Plaintiff's sole allegation of assignment is therefore deficient in claiming a transfer of Comtrade's beneficiary status or that the `assignment' was also a delegation of duties. Plaintiff's allegation, therefore, is insufficient to claim that Agri-Mark was contractually bound to them or owed them any duties.
Plaintiff Inter Impex and cross-claimant Comtrade make no factual allegations that support a finding of a contractual agreement, either oral or written between either of them and Agri-Mark. They allege the existence of two agreements and one letter of credit: (1) the Agreement between Inter Impex, Comtrade and Berkshire for the purchase of the skim milk powder (Complaint at 2, ¶ 7); (2) the agreement between Comtrade and Berkshire for the purchase of the shipment in December 1997 (Comtrade's Cross-Claims at 6, ¶ 26); and (3) the letter of credit paid by Inter Impex to Comtrade (Complaint at 3, ¶ 9). Although plaintiff and cross-claimant argue that Agri-Mark participated in the packaging and shipping of the skim milk powder, Comtrade's sole assertion that "[c]learly, there exist[s] a contractual relationship between Comtrade Corp. and Agri-Mark," is unsupported by any factual allegations. Plaintiff's and Comtrade's breach of contract claim against Agri-Mark is therefore dismissed. Plaintiff's and cross-claimant's bald assertions and conclusory allegations of an assignment of the letter of credit cannot support an inference that a contract existed between them and defendant Agri-Mark. Without a contractual relationship, there can be no alleged breach. See Hotel Aquarius, B.V. v. PRT Corporation, 1992 WL 391264 *6 (S.D.N.Y. 1992) (finding that plaintiff may not claim defendant breached a contract to which it was not a party);see also Blank v. Noumair, 658 N.Y.S.2d 88 (N.Y.App.Div. 1997) (finding that plaintiff's breach of contract cause of action was properly dismissed inasmuch as the defendant was not a party to the agreements in question).
B. Breach of express and implied warranties
Similarly, plaintiff's second cause of action alleging "breaches of express warranties in the purchase agreement and the implied warranties of fitness" must be dismissed. An express warranty is an "affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis for the bargain." N.Y.U.C.C. Law § 2-313 (McKinney 1997). Plaintiff and cross claimant have failed to sufficiently allege that Agri-Mark was a party to either the purchased agreement or the letter of credit. Most importantly, their allegations also fail to show that Agri-Mark made any express warranties to either Inter Impex or Comtrade. Plaintiff and cross-claimant's breach of express warranty claim is therefore dismissed. See Fireman's Fund Ins. Co. v. New York General Mechanical, Inc., 1992 WL 119162 (W.D.N.Y. 1992) (dismissing plaintiffs' claims of breach of express warranties because plaintiffs failed to offer any evidence of any warranty made by either defendant).
Defendant further argues that plaintiff's and cross claimant's allegation of breach of implied warranty of fitness must also be dismissed. In New York, products are sold with an implied warranty of fitness that the product is "fit for the ordinary purposes for which goods are used." Colon v. BIC USA, Inc., 199 F.Supp.2d 53, 95 (S.D.N.Y. 2001) (citing Denny v. Ford Motor Co., 639 N.Y.S.2d 250, 261-62, 87 N.Y.2d 248, 662 N.E.2d 730). The warranty of fitness "provides for a minimal level of quality." Id. Furthermore, the implied warranty of fitness does not arise in every consumer sale, but only when the seller knows or has reason to know the particular purpose for which a buyer requires goods, and also knows or should know that the buyer is relying on the seller's special knowledge. See Abraham v. Volkswagen of America, Inc., 795 F.2d 238, 249 (2d Cir. 1986). No showing of privity is required in personal injury actions for breach of implied warranty, see Colon, 199 F.Supp.2d at 95. However, in non-personal injury actions, "privity must necessarily exist because the creation of the warranty requires a direct exchange between buyer and seller." Abraham, 795 F.2d at 249. Thus, "[u]nder New York law, absent privity of contract, a purchaser cannot recover mere economic loss against a manufacturer under a theory of breach of implied warranty."Hubbard v. General Motors Corp., 1996 WL 274018 (S.D.N.Y. 1996) (quoting Westchester County v. General Motors Corp., 555 F.Supp. 290, 294 (S.D.N.Y. 1983)); see also Arthur Jaffe Associates v. Bilsco Auto Service, Inc., 58 N.Y.2d 993, 461 N.Y.S.2d 1007 (1983); Lexow Jenkins, P.C. v. Hertz Commercial Leasing Corp., 504 N.Y.S.2d 192, 193-94 (2d Dep't 1986).
Section 2-318 of the New York Uniform Commercial Code states that "[a] seller's warranty whether express or implied extends to any natural person if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of warranty. A seller may not exclude or limit the operation of this section." N.Y.U.C.C. § 2-318 (McKinney's 1993) (emphasis added).
Economic loss is defined as damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits, without any claim of personal injury or damage to other property. See Champlain Enterprise, Inc. v. United States 945 F.Supp 468, 474 (N.D.N.Y. 1996) (internal citations and quotations omitted); see also Gus Catering, Inc. v. Menusfot Systems, 762 A.2d 804, 807 (Vt. 2000) (citing Economic Loss in Products Liability Jurisprudence, 66 Colum. L.Rev. 917, 918 (1966)); see also Fennell v. Green 77 P.3d 339 (Utah Ct.App. 2003); see also Arell's Fine Jewelers, Inc. v. Honeywell, Inc. 566 N.Y.S.2d 505, 509, 170 A.D.2d 1013 (App Div. 1991) (finding that "[a]lthough definitions may differ semantically, the essence of economic loss is that it is occasioned by the failure of the product to perform at the level of performance expected by the buyer, resulting in a loss of the bargain).
Plaintiff in the present case has not alleged either the existence of privity with defendant Agri-Mark or personal injury. Rather, plaintiff's demands damages in the amount of $150,000. Similarly, Comtrade alleges neither privity nor personal injury and seeks only to have Agri-Mark indemnify them for plaintiff's economic loss. Absent any allegations of privity of contract or personal injury, plaintiff and cross claimant fail to sufficiently state a claim for breach of implied warranty. Their breach of implied warranty claims are dismissed.
C. Negligence
Plaintiff alleges that the "damages to the Shipment were the result of the negligent packaging of and sealing of the Shipment by the Defendants" and that as a result, plaintiff suffered damages in the amount of $150,000.00. Complaint at 3, 4 ¶¶ 13, 19. Comtrade similarly cross-claimed. Defendant Agri-Mark seeks to dismiss plaintiff's negligence claim for also failing to allege that any loss was sustained other than economic loss.
The general rule under New York law is that economic loss is not recoverable under a theory of negligence or strict products liability. See County of Suffolk v. Long Island Lighting Co., 728 F.2d 52, 62 (2d Cir. 1984) ("New York law holds that a negligence action seeking recovery for economic loss will not lie."); Hemming v. Certainteed Corp., 97 A.D.2d 976, 976, 468 N.Y.S.2d 789, 790 (4th Dep't 1983) (finding that "the economic loss rule applies equally to negligence and strict liability causes of action and includes the direct and consequential damages which may result from product nonperformance").
A limited exception to the economic loss rule exists, however, for claims of negligent performance of contractual services.See American Telephone and Telegraph Co. v. New York City Human Resources Admin., 833 F.Supp. 962, 983 (S.D.N.Y. 1993);see also Ajax Hardward Mfg. Corp. v. Industrial Plants Corp., 569 F.2d 181, 185 (2d Cir. 1977) ("[n]egligent performance of a contract may give rise to a claim sounding in tort as well as one for breach of contract"). This exception to the economic rule, however, applies only to contracts for services and not contracts for the provision of goods. See American Telephone and Telegraph Co., 833 F. Supp at 983; see also Consolidated Edison Co. of New York Inc. v. Westinghouse Elec. Corp., 567 F.Supp 358, 365 (S.D.N.Y. 1983). Even if plaintiff's allegation that "the damages to the Shipment were the result of the negligent packaging of and sealing of the Shipment by the Defendants" could arguably be interpreted as one for services, plaintiff has failed to allege any contractual relationship with defendant Agri-Mark. Absent sufficient allegations of any contract, let alone one for contractual services, plaintiff's negligent performance of contractual services claim must fail.
Furthermore, even if plaintiff and cross-claimant were able to allege that a contract existed with defendant Agri-Mark for the provision of services, they must also demonstrate that Agri-Mark breached a duty distinct from, or in addition to, the breach of contract. See American Telephone and Telegraph Co., 833 F.Supp at 984(citing Clark-Fitzpatrick, inc. v. Long Island R.R. Co., 70 N.Y.2d 382, 389, 521 N.Y.S.2d 653, 65657, 516 N.E.2d 190, 193-94 (1987) for the proposition that "a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated"); see also Asian Vegetable Research Dev. Center v. Institute of Int'l Educ., 944 F.Supp. 1169, 1181 (S.D.N.Y. 1996) (finding that the alleged failure of a contractor to perform his duties did not give rise to negligence or gross negligence claims under New York law but arose only from contractual obligations). Plaintiff and cross-claimant, however, do not allege that Agri-Mark breached any independent duty other than that emanating from the asserted contractual relationship between them. Inter Impex's and Comtrade's negligence claim is inextricably tied to their breach of contract claim and must be dismissed. See Papa v. New York Tel. Co., et al., 72 N.Y.2d 879, 881, 532 N.Y.S.2d 359, 528 N.E.2d 512 (1988) (negligence claim dismissed where no duty independent of alleged contract was pleaded); see also Hargrave v. Oki Nursery, Inc., 636 F.2d 897, 899 (2d Cir. 1980) ("If the only interest at stake is that of holding the defendant to a promise, the courts have said that the plaintiff may not transmogrify the contract claim into one for tort"). Inter Impex's claim and Comtrade's cross claim of negligence is therefore dismissed.
D. Misrepresentation
Lastly, plaintiff alleges that the defendants "misrepresented the packaging of the Shipment" and that the plaintiff relied upon this representation and was damaged as a result. Complaint at 4, ¶ 21-22. To prevail on a fraudulent misrepresentation claim under New York law, a plaintiff must show: (1) that the defendant made a misrepresentation; (2) as to a material fact; (3) which was false; (4) and known to be false by the defendant; (5) that the misrepresentation was made for the purpose of inducing the plaintiff to rely on it; (6) that the plaintiff rightfully did so rely; (7) in ignorance of its falsity; (8) to his injury. See Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994); see also Murray v. Xerox Corp., 811 F.2d 118, 121 (2d Cir. 1987); Brown v. Lockwood, 432 N.Y.S.2d 186, 193 (2d Dep't 1980). The failure to fulfill a promise to perform future acts is not ground for a fraud action unless there existed an intent not to perform at the time the promise was made. See Cohen, 25 F.3d at 1172; Chase Manhattan Bank, N.A. v. Perla, 411 N.Y.S.2d 66, 68 (4th Dep't 1978).
Similar to plaintiff's other claims against Agri-Mark, its fraudulent misrepresentation claim is not supported by sufficient factual allegations. Plaintiff appears to base its misrepresentation claim against Agri-Mark on the packing list and weight list that accompanied the shipment. Plaintiff claims that these shipping documents represented that the skim milk powder was "padded in three-ply paper bags with polyliner of 25 kgs. net each" and that-the "[p]roduct [was] produced by Agri-Mark, Inc. 958 Riverdale Street, W. Springfield, MA 01089 U.S.A." Id. at 3, ¶ 11. Plaintiff, however, has not alleged that Agri-Mark knew this statement was false. Plaintiff has not alleged that Agri-Mark made this statement for the purpose of inducing Inter Impex to rely on it. Although plaintiff states that it "relied upon the representation of the Defendants of packaging for the Shipment and was damaged as a result," plaintiff offers no further factual allegations to support this contention. Plaintiff does not proffer, for example, how it could have seen and relied upon the shipping documents, or any statement made by Agri-Mark or allegedly received after the goods were already shipped.
Comtrade's cross-claims similarly fail to sufficiently allege their reliance on the shipment's packaging. Comtrade alleges that the "packing and closure of the bags in the shipment provided by Cross-Defendant were not in accordance with the agreement of purchase, invoices, Letter of Credit or the rules, regulations, requirements and standards of USDA or for export packaging." Cross Claims at 6, ¶ 30. As neither plaintiff nor cross-claimant have sufficiently pled that Agri-Mark was a party to any of these agreements or documents, their fraudulent misrepresentation claim is factually unsupported.
In fact, cross-claimant Comtrade alleges that Agri-Mark and Berkshire "employed as their forwarding agent Robbins Fleisig Forwarding, Inc. and that "the forwarding agent misdescribed the packaging of the Shipment provided and shipped by the Cross-Defendants." Cross Claims at 6, ¶ 28. Cross-claimant further asserts that "[b]oth the packing list and the weight list prepared by the forwarding agent stated that the Shipment was "packed in 3 ply paper bags with polyliner of 25 kgs net each" whereas the Shipment was not shipped with a polyliner. . . ." Cross-Claims at 6, ¶ 29. Accepting these allegations as true for the purpose of this motion, Comtrade actually alleges reliance upon a representation made by the Freight Forwarder, not Agri-Mark. Agri-Mark's motion to dismiss plaintiff's and Comtrade's fraudulent misrepresentation claim is therefore granted.
E. Leave to File an Amended Complaint
Plaintiff and cross-claimant also moved to amend their complaint. Defendant Agri-Mark opposes such a motion as futile. A review of plaintiff's proposed Amended Complaint and Comtrade's proposed Amended Answer to the Complaint and Cross Claims ("Amended Answer and Cross Claims") shows that despite additional allegations, plaintiff's Amended Complaint and Comtrade's Amended Answer and Cross-Claims suffer from the same deficiencies present in the original complaint and answer and would similarly fail to withstand motions to dismiss under Fed.R.Civ.P. 12(b)(6) for failure to state a claim.
Plaintiff's proposed Amended Complaint alleges, inter alia that "[t]he Producers of the shipment was to be Defendant Agri-Mark who was also to be the beneficiary of the USDA subsidy and guarantee of payment." Amended Complaint at 2, ¶ 7. This allegation, however, is still insufficient to establish that Agri-Mark was a party to a contract with either Inter Impex or Comtrade. Specifically, the Amended Complaint and Amended Answer and Cross Claims continue to allege that the purchase agreement that initiated this entire transaction was between Inter Impex, Comtrade and Berkshire. Amended Complaint at 2, ¶ 7, Amended Cross Claims at 2, ¶ 9. Agri-Mark is still not alleged to have been a party to this agreement. Furthermore, both continue to allege that the letter of credit for $309,750.00 was made payable to Comtrade, not Agri-Mark. Amended Complaint at 3, ¶ 10, Amended Cross Claims at 2-3, ¶ 9. Lastly, plaintiff's proposed Amended Complaint still alleges that "Robbins Fleisig Forwarding, Inc. prepared the misrepresented packing list and weight list and forwarded it to the bank for collection of the Letter of Credit proceeds," Amended Complaint at 2, ¶ 12, the same allegation in Comtrade's original Cross Claim. There are no additional allegations that support Inter Impex's and Comtrade's contention that Agri-Mark was a party to a contract with either of them, and subsequently breached that contract. As such, their claims of breach of contract, breach of express and implied warranty and negligence are still insufficient and would be dismissed for failure to state a claim.
Plaintiff's restatement of its fraudulent misrepresentation claim would similarly fail. Although plaintiff and Comtrade have added language to support the necessary scienter on the part of Agri-Mark, their claims still fail to allege an actual misrepresentation by Agri-Mark. Plaintiff alleges that the "Defendants misrepresented the packaging of the shipments in their agreements, invoices and packing list and weight list, which were material to plaintiff's agreement to purchase and pay for the shipment in the Letter of Credit it supplied Defendants." Amended Complaint at 6, ¶ 25. This allegation of fraudulent misrepresentation, which still groups all of the defendants together, fails the particularity requirement of Fed.R.Civ.P. 9(b) which requires a complaint to: 1) specify the fraudulent statements; 2) identify the speaker; 3) state where and when the statements were fraudulent; and 4) explain why the statements were fraudulent. See Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993). "[W]hen a plaintiff charges more than one defendant with fraud, Rule 9(b) requires that the plaintiff specify as to each defendant what was said, in what form, to whom, when and where, and the respect in which the statement was fraudulent." Polychronis Liaros v. Vaillant 1996 WL 88559, * 10 (S.D.N.Y. 1996) (citing Oukanine v. MacFarlane, 897 F.2d 75, 79 (2d Cir. 1990) (emphasis added). Furthermore, as discussed supra, plaintiff and Comtrade have provided insufficient allegations to demonstrate that Agri-Mark is a party to any of these agreements, contracts, or invoices. Lastly, as plaintiff's Amended Complaint adopts Comtrade's allegation that Robbins Fleisig Forwarding, Inc. prepared the misrepresented packing list and weight list, without further factual allegations, it cannot attribute that misrepresentation to Agri-Mark.
Despite the liberal policy toward amendment embodied in Rule 15(a) of the Federal Rules of Civil Procedure, "leave to amend should not be granted where it is futile." Bruce v. Martin, 702 F.Supp. 66, 69 (S.D.N.Y. 1988); see Foman v. Davis, 371 U.S. 178, 192 (1962); Albany Ins. Co. v. Esses, 831 F.2d 41, 45 (2d Cir. 1987). For example, leave to amend is properly denied when the amended complaint "would not survive a motion to dismiss."Prudential Ins. Co. of America v. BMC Indus., Inc., 655 F.Supp. 710, 711 (S.D.N.Y. 1987); see also S.S. Silberblatt, Inc. v. East Harlem Pilot Block-Building 1 Housing Dev. Fund Co., 608 F.2d 28, 42 (2d Cir. 1979); Health-Chem Corp. v. Baker, 915 F.2d 805, 810 (2d Cir. 1990) ("where . . . there is not merit to the proposed amendments, leave to amend should be denied") Id. Still lacking additional allegations sufficient to support their claims, plaintiff's and cross-claimant's motion to amend in the manner proposed is denied as futile.
SO ORDERED.