Boccardi Capital Systems v. D.E. Shaw Laminar Portfolios , 355 F. App'x 516 ( 2009 )

09-0993-cv
Boccardi Capital Systems v. D.E. Shaw Laminar Portfolios
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO SUM M ARY
ORDERS FILED A FTER JANUARY 1, 2007, IS PERM ITTED AND IS GOVERNED BY THIS COURT’S
LOCAL RULE 32.1 AND FEDERAL RULE OF APPELLATE PROCEDURE 32.1. IN A BRIEF OR OTHER
PAPER IN WHICH A LITIGANT CITES A SUM M ARY ORDER, IN EACH PARAGRAPH IN WHICH A
CITATION APPEARS, AT LEAST ONE CITATION M UST EITHER BE TO THE FEDERAL APPENDIX OR
BE ACCOM PANIED BY THE NOTATION: (SUM M ARY ORDER). A PARTY CITING A SUM M ARY
ORDER M UST SERVE A C O PY O F THAT SUM M ARY ORDER TOGETHER W ITH THE PAPER IN
W HICH THE SUM M ARY ORDER IS CITED O N ANY PARTY NOT REPRESENTED BY COUNSEL
UNLESS THE SUM M ARY ORDER IS AVAILABLE IN AN ELECTRO NIC D ATABASE W HICH IS
PUBLICLY ACCESSIBLE W ITHOUT PAYM ENT OF FEE (SUCH AS THE DATABASE AVAILABLE AT
HTTP://W W W .CA2.USCOURTS.GOV/). IF NO COPY IS SERVED BY REASON OF THE AVAILABILITY
OF TH E O RDER ON SUCH A DATABASE, THE CITATION M UST INCLUDE REFERENCE TO THAT
DATABASE AND THE DOCKET NUM BER OF THE CASE IN W HICH THE ORDER W AS ENTERED.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of
New York, on the 9 th day of December, two thousand nine.
PRESENT:
JOHN M. WALKER, JR.,
REENA RAGGI,
Circuit Judges,
JED S. RAKOFF,
District Judge.*
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BOCCARDI CAPITAL SYSTEMS, INC.,
Plaintiff-Appellant,
v. No. 09-0993-cv
D.E. SHAW LAMINAR PORTFOLIOS, L.L.C.,
Defendant-Appellee.
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*
District Judge Jed S. Rakoff of the United States District Court for the Southern
District of New York, sitting by designation.
APPEARING FOR APPELLANT: RUSSELL I. GLAZER (Kathleen E. Holtz, on the
brief), Troygould PC, Los Angeles, California.
APPEARING FOR APPELLEE: M ICHAEL RIPS (John D. Lovi, Lara E.
Romansic, Justin B. Perri, on the brief), Steptoe &
Johnson LLP, New York, New York.
Appeal from the United States District Court for the Southern District of New York
(George B. Daniels, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment entered on February 9, 2009, is AFFIRMED.
Boccardi Capital Systems, Inc. (“Boccardi”) appeals the dismissal of this diversity
action asserting common-law claims against D.E. Shaw Laminar Portfolios, L.L.C. (“Shaw”)
based on the failure of the parties’ contemplated joint takeover of Riviera Holding
Corporation (“Riviera”), a hotel and casino operator. We review a Rule 12(b)(6) dismissal
de novo, “constru[ing] [the] complaint liberally, accepting all factual allegations in the
complaint as true, and drawing all reasonable inferences in the plaintiff’s favor.” Holmes
v. Grubman, 568 F.3d 329, 335 (2d Cir. 2009) (internal quotation marks omitted). To avoid
dismissal, the complaint must “state a claim to relief that is plausible on its face.” Ashcroft
v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal quotation marks omitted). We assume
familiarity with the facts and the record of prior proceedings, which we reference only as
necessary to explain our decision to affirm.
1. Breach of Contract
Boccardi contends that the district court erred in ruling that it failed to plead facts
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sufficient to state a claim for Shaw’s breach of a “Confidentiality and Use Restriction
Agreement” (the “Agreement”). Boccardi asserts that, pursuant to the Agreement, it
provided Shaw with confidential information, including its business plan for acquiring
control of Riviera, in exchange for which Shaw promised not to divulge the information or
use it other than in connection with the planned joint takeover. The complaint alleges that
Shaw breached the Agreement by purchasing blocks of Riviera stock and later making a
public bid for the company while refusing to permit Boccardi to exercise purported options
to purchase a portion of its stake or to vote its shares.
Boccardi’s claim for breach of contract was properly dismissed. As the district court
observed, the complaint itself asserts that Shaw purchased Riviera stock with Boccardi’s
“assistance and advice,” and “in association with” Boccardi. Am. Compl. ¶ 24. Boccardi
does not dispute that it acquiesced in the purchase; rather, it contends that it did so based “on
conditions that never materialized,” Appellant’s Br. at 27, an apparent reference to its
expectation of a further agreement regarding options. But such an agreement never
materialized, and Shaw is not bound by Boccardi’s mere expectation that it would. See
Joseph Martin, Jr. Delicatessen, Inc. v. Schumacher, 52 N.Y.2d 105, 109, 417 N.E.2d 541,
543 (1981) (noting that “agreement to agree” is unenforceable).
Nor does the complaint allege facts indicating that Shaw relied on Boccardi’s
confidential information in making its subsequent public bid for Riviera. Boccardi claims
to have advised Shaw that such a bid would cause the share price to increase, but even if
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Shaw relied upon this unextraordinary prediction, no factfinder could conclude that it
constituted confidential information within the meaning of the Agreement, which expressly
excluded from that definition “information . . . generally available to the public.” Cf. Buhler
v. Michael P. Maloney Consulting, Inc., 299 A.D.2d 190, 191, 749 N.Y.S.2d 867, 868 (1st
Dep’t 2002) (holding that contact list based on, inter alia, “information that was publicly
available” did not qualify as trade secret).
Because we conclude that Boccardi fails to state a claim for breach of the Agreement,
we need not address its contention that it is now entitled to a share of Shaw’s profits from
the acquired stock. See Appellant’s Br. at 32 (claiming that Shaw “was not at liberty to keep
for itself the property it obtained by using the information”). We note, however, that the
Agreement required Shaw to use Boccardi’s information only to advance the planned joint
takeover and to return or destroy the information if it decided not to participate. The
Agreement did not require Shaw to divest itself of property in that event.
Our conclusion that Boccardi has failed sufficiently to allege a breach of contract
compels a similar conclusion respecting its claim, grounded in the same factual predicate, for
breach of the implied duty of good faith and fair dealing. See National Mkt. Share, Inc. v.
Sterling Nat’l Bank, 392 F.3d 520, 525 (2d Cir. 2004) (“In New York, breach of the implied
duty of good faith and fair dealing is merely a breach of the underlying contract.” (internal
quotation marks omitted)); see also Murphy v. Am. Home Prods. Corp., 58 N.Y.2d 293, 304,
448 N.E.2d 86, 91 (1983).
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2. Breach of Fiduciary Duty
We also agree with the district court that Boccardi failed adequately to plead the
existence of a fiduciary relationship between itself and Shaw. “A fiduciary relationship
exists under New York law when one [person] is under a duty to act for or to give advice for
the benefit of another upon matters within the scope of the relation.” Flickinger v. Harold
C. Brown & Co., 947 F.2d 595, 599 (2d Cir. 1991) (internal quotation marks omitted).
However, “[w]hen parties deal at arm[’]s length in a commercial transaction, no relation of
confidence or trust sufficient to find the existence of a fiduciary relationship will arise absent
extraordinary circumstances.” In re Mid-Island Hosp., Inc., 276 F.3d 123, 130 (2d Cir. 2002)
(internal quotation marks omitted). No such circumstances are pleaded here.
The complaint alleges that Shaw owed Boccardi a fiduciary duty because Shaw agreed
to act as its “underwriter, investment banker and financier.” Am. Compl. ¶ 42. As the
district court correctly observed, however, the complaint’s factual allegations, if proved,
would not establish that Shaw agreed to act as Boccardi’s “financier”; rather, Boccardi
expected to finance its own participation. See id. ¶¶ 19-21. Nor would Shaw’s receipt of
confidential information, without more, transform it into Boccardi’s fiduciary. The cases
Boccardi cites in support of this contention are distinguishable. See, e.g., JPMorgan Chase
Bank, N.A. v. IDW Group, LLC, No. 08 Civ. 9116, 2009 WL 321222, at *10, 12 (S.D.N.Y.
Feb. 9, 2009) (holding duty existed where alleged fiduciary received “a great deal of highly
confidential and sensitive information,” cultivated relationships with principal’s employees,
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and acted as principal’s adviser “in a position of extraordinary trust” (internal quotation
marks omitted)). There is no allegation that Shaw agreed to “act for or to give advice for the
benefit of” Boccardi. Flickinger v. Harold C. Brown & Co., 947 F.2d at 599. Rather,
Boccardi claims that the parties “work[ed] together to acquire control of Riviera.” Am.
Compl. ¶ 28. Finally, Boccardi has not sufficiently alleged the existence of a joint venture
in light of its failure to plead facts suggesting it would have shared in any loss resulting from
Shaw’s investment in Riviera. See Brown v. Cara, 420 F.3d 148, 159-60 (2d Cir. 2005).
3. Constructive Trust and Unjust Enrichment
Boccardi’s quasi-contractual claims, seeking imposition of a constructive trust and
recovery under a theory of unjust enrichment, are precluded by the existence of an express
written agreement governing the subject matter at issue, i.e., Boccardi’s confidential
information. See In re First Cent. Fin. Corp., 377 F.3d 209, 213 (2d Cir. 2004) (“[W]e
conclude that this principle – that the existence of a written agreement precludes a finding
of unjust enrichment – also applies to constructive trust claims . . . .”); City of Yonkers v.
Otis Elevator Co., 844 F.2d 42, 48 (2d Cir. 1988) (“Our disposition of the contract claim also
disposes of the quasi-contractual cause of action, because such relief is unavailable where
an express contract covers the subject matter.”); Clark-Fitzpatrick, Inc. v. Long Island R.R.
Co., 70 N.Y.2d 382, 388, 516 N.E.2d 190, 193 (1987).
4. Leave To Amend
Finally, Boccardi contends that the district court should have afforded it a second
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opportunity to amend its complaint. Ordinarily, we review a denial of leave to amend for
abuse of discretion. See Patane v. Clark, 508 F.3d 106, 113 n.6 (2d Cir. 2007). In this case,
Boccardi never requested leave. Nor has it shown that amendment would have permitted it
to survive dismissal. The additional facts it proffers, if proved, might demonstrate injury
following Shaw’s conduct, but not that Shaw breached the Agreement. The allegation that
Shaw advised Boccardi not to seek other financing is contradicted by the complaint. And the
bare promise that Shaw would “act to protect [its] interests” would be insufficient, even if
proven, to demonstrate the “extraordinary circumstances” required for the creation of a
fiduciary relationship. In re Mid-Island Hosp., Inc., 276 F.3d at 130 (internal quotation
marks omitted). Thus, the district court did not err by dismissing the complaint without
granting leave to amend. See Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 76 (2d
Cir. 1998).
We have considered Boccardi’s remaining arguments on appeal, and we conclude that
they are without merit. Accordingly, the judgment of the district court is AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
By:_______________________
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