MEMORANDUM AND ORDER

NAOMI BUCHWALD, District Judge

Plaintiff Global Energy and Management, LLC ("Global Energy" or "plaintiff"), brings this suit against defendants Xethanol Corporation ("Xethanol"), Christopher D'Arnaud-Taylor, Jeffrey Langberg, Lawrence S. Bellone and Robin Buller, alleging fraudulent inducement. Defendant Xethanol now moves to dismiss pursuant to Rules 8(a), 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. Xethanol further moves for sanctions against plaintiff and its counsel, pursuant to Rule 11. For the reasons set forth below, Xethanol's motion to dismiss is granted. However, plaintiff is granted leave to amend its complaint one final time to address the pleading deficiencies in the Third Amended Complaint, provided that plaintiff's counsel pays $5,000 to Xethanol to partially offset its legal fees arising from the instant motion. Xethanol's motion for sanctions under Rule 11 is denied.

BACKGROUND

Global Energy is a Connecticut limited liability company. (Compl. ¶ 1.) Xethanol is a Delaware corporation. (Id. ¶ 2.) The complaint does not set forth the states of which the individual defendants are citizens, but it does allege that none is a Connecticut citizen (id. ¶ 4), and defendants do not argue otherwise.

Plaintiff claims that Xethanol and the individual defendants represented "orally on many telephone calls and in innumerable meetings that Xethanol could manufacture cellulosic ethanol (ethanol made from garbage and wood as opposed to ethanol made from corn or sugar) in a commercially profitable manner," that Xethanol "owned patents and other technology from which it could manufacture ethanol from bio-mass in a profitable manner," and that it was "currently producing" six million gallons of ethanol per year. (Compl. ¶ 10.) The complaint lists eight instances between January 2005 and June 8, 2006 when defendants made such representations, including in Xethanol press releases, in an article appearing in Fortune Small Business magazine, in an SEC filing, and during three meetings between Global Energy and Xethanol employees at Xethanol's New York offices. (Id. ¶¶ 10(a)-10(h).)

On June 23, 2006, plaintiff entered into an "organizational agreement" and an "operating agreement" with Xethanol, pursuant to which they formed a Delaware limited liability company called NewEnglandXethanol, LLC ("NewEnglandXethanol"). (6/25/08 Harrison Aff. Ex. C at 3.) NewEnglandXethanol was created to "develop and operate facilities for the production of ethanol" in various New England states. (Id.) Global Energy agreed to contribute a total of $1.5 million toward the capitalization of NewEnglandXethanol in three installments — an initial installment of $250,000 upon execution of the agreements; a second installment of $250,000 payable within 90 days thereafter, and a final installment of $1,000,000 payable whenever Xethanol and Global Energy approved NewEnglandXethanol's construction of the first ethanol-production facility. (Id.) Pursuant to the agreements, Global Energy and Xethanol were each to own a 50% membership interest in NewEnglandXethanol. (Id.) In addition, Xethanol issued to Global Energy a warrant to purchase 20,000 shares of Xethanol common stock at a purchase price of $6.85 on or after June 23, 2007. (Id.)

Plaintiff alleges that defendants made representations to induce plaintiff to rely upon them, and that those representations "were false and known by defendants to be false when they were made." (Compl. ¶¶ 11-12.) Plaintiff seeks the following relief: (a) a judgment compelling defendants to repay the $250,000 investment that plaintiff claims to have ultimately invested in NewEnglandXethanol; (b) plaintiff's lost profits stemming from that investment; (c) consequential damages; (d) pre-judgment interest; (e) costs of the lawsuit; and (f) "such other relief as the Court may hold just and equitable." (Id. ¶ 13.)

DISCUSSION

On a motion to dismiss for failure to state a claim, the issue is whether the plaintiff has established a "plausible entitlement to relief." Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S. Ct. 1955, 1974 (2007). To survive dismissal, "the plaintiff must provide the grounds upon which [its] claim rests through factual allegations sufficient to raise a right to relief above the speculative level," ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (internal quotation marks omitted), and justify "a reasonable expectation that discovery will reveal evidence" of liability, Bell Atl. Corp., 127 S. Ct. at 1959. In deciding a motion to dismiss, a court must accept as true the factual allegations of the complaint, drawing all reasonable inferences in the light most favorable to the plaintiff. See In re NYSE Specialists Sec. Litig., 503 F.3d 89, 95 (2d Cir. 2007). However, "conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss."Smith v. Local 819 I.B.T. Pension Plan, 291 F.3d 236, 240 (2d Cir. 2002).

Under New York law, to state a claim for fraudulent inducement, a plaintiff must allege (1) a representation of a material fact; (2) that was untrue; (3) that was known to be untrue or made with reckless disregard for the truth; (4) that was offered to deceive another or induce him to act; (5) upon which that other party relied to its injury. Aetna Cas. and Sur. Co. v. Aniero Concrete Co., Inc., 404 F.3d 566, 580 (2d Cir. 2005). Further, in alleging fraudulent inducement, a party must state the circumstances "with particularity." Fed.R.Civ.P. 9(b); Aetna Cas., 404 F.3d at 580. That is, a plaintiff must "[a]dequately specify the statements it claims were false or misleading, give particulars as to . . . [how the alleged statements] were fraudulent, state when and where the statements were made, and identify those responsible for the statements."Miller v. Holtzbrinck Publishers, LLC, No. 08 Civ. 3508 (HB), 2008 WL 4891212, at *4 (S.D.N.Y. Nov. 11, 2008) (quotingHoffenberg v. Hoffman Pollock, 248 F. Supp. 2d 303, 310-11 (S.D.N.Y. 2003)).

Xethanol argues that although plaintiff has had three chances to amend its complaint, plaintiff's allegations still fail to satisfy Rule 9(b) because the complaint does not set forth how those statements are fraudulent. (Oral Arg. Tr. at 3.) We find Xethanol's argument persuasive on this point.

Of the eight allegedly false statements listed in the complaint, several are insufficient on their face to support a claim of fraudulent inducement. For instance, statements that "Xethanol Corporation seeks to become a leader in the emerging biomass-to-ethanol industry" (Compl. ¶ 10(c)), that Xethanol's "mission is to convert biomass that is currently being abandoned or land filled into ethanol" (id.), and that "the pooling of Xethanol management with a world class scientific team . . . [would] accelerate development and deployment of its biomass technologies" (id. ¶ 10(b)) are forward-looking and not actionable. See, e.g., Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994) ("[S]tatements will not form the basis of a fraud claim [under New York law] when they are mere `puffery' or are opinions as to future events.").

As for the remaining statements, even if some parts of them could have been actionably false and misleading, plaintiff fails to explain in what respects the statements at issue were untrue. Instead, the complaint states simply, "The representations made by defendants to Tyrol and the other Global representatives were false and known by defendants to be false when they were made." (Compl. ¶ 11.) Given that a central purpose of Rule 9(b) is to "provide detailed notice of the fraud claim to the defending party," plaintiff's blanket allegation of falsity here is simply too conclusory. See Jeffrey A. Parness and Jerry E. Smith,Moore's Federal Practice § 9.03 (3d ed. 2008); see also Pilarczyk v. Morrison Knudsn Corp., 965 F. Supp. 311, 321 (N.D.N.Y. 1997) (conclusory allegations that statements in defendant's annual report were misleading were insufficient because complaint failed to specify exact statements claimed to be fraudulent and why they were fraudulent) (citing San Leandro Emergency Med. Group Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 812 (2d Cir. 1996)). Xethanol is entitled to know what statements plaintiff claims are untrue, and in what ways plaintiff alleges those statements are untrue. The Third Amended Complaint does not provide this information.

Having found that plaintiff's complaint does not satisfy Rule 9(b), we must next decide whether to grant Xethanol's motion to dismiss the case with prejudice. Xethanol argues that because plaintiff has been afforded three opportunities to correct the deficiencies in its complaint, it should not be given yet another bite at the apple. This argument has some appeal, considering that Xethanol's lawyers have written plaintiff's counsel no fewer than four letters setting forth the Rule 9(b) pleading standard and identifying the numerous problems with plaintiff's various complaints. (See June 17, 2008 Affidavit of Katherine B. Harrison in Support of Defendant Xethanol Corporation's Motion for Sanctions Pursuant to Rule 11 Exs. B, F, J, O.)

In considering Xethanol's argument, we are mindful of a fundamental precept of the American legal system — that an attorney is an agent for his client, and thus the client is bound by failures of that attorney within the scope of his agency. See Link v. Wabash R.R. Co., 370 U.S. 626, 633-34 (1962) (plaintiff "voluntarily chose this attorney as his representative in the action, and he cannot now avoid the consequences of the acts or omissions of this freely selected agent").

However, we are also aware of the harsh consequences to plaintiff were we to dismiss its case based on pleading deficiencies. We believe such an outcome means focusing too much on the quality of plaintiff's counsel and not enough on the quality of plaintiff's claims. We therefore will grant Xethanol's motion to dismiss, but we also will afford plaintiff one final opportunity to amend its complaint, as permitted under Rule 15(a). Plaintiff should make certain that its next complaint alleges, with specificity, which statements by defendants it claims are false, and in what way each of those statements is false. Plaintiff's next complaint also should state, as precisely as possible, when and where the allegedly fraudulent statements were made, and identify the individuals who made those statements.

Nevertheless, while we believe it is appropriate to grant plaintiff leave to amend its complaint one final time, we also want to mitigate the additional expenses that Xethanol has incurred that are attributable to plaintiff's counsel's failure to plead his client's case properly in one of his first four attempts. Therefore, we condition our grant of leave to amend on plaintiff's counsel paying Xethanol $5,000 in attorney's fees.

Finally, we deny Xethanol's motion for Rule 11 sanctions against Global Energy and its counsel. Although we agree that the complaint is legally insufficient as currently pleaded, we do not believe plaintiff's allegations are entirely without evidentiary support or frivolous to such an extent that Rule 11 sanctions are appropriate.

CONCLUSION

As to the remaining individual defendants, plaintiff states that it has not yet served any of them with the Third Amended Complaint, apparently because it does not have their addresses. (Opp. at 6 n. 2.) If plaintiff elects to file a Fourth Amended Complaint, Xethanol's counsel is directed to respond to plaintiff's interrogatories seeking the addresses of the remaining individual defendants within one week of that filing, assuming that plaintiff's counsel concludes that service upon Xethanol headquarters would be insufficient for the individual defendants, and assuming that Xethanol's counsel will not accept service on their behalf.

IT IS SO ORDERED.