Pullman v. Alpha Media Publ'g, Inc.

Full title: Jaclinn PULLMAN, Plaintiff, v. ALPHA MEDIA PUBLISHING, INC., et al.…

Court: UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Date published: Jan 11, 2013

12-CV-1924 (PAC)(SN) (S.D.N.Y. Jan. 11, 2013)

Opinion

12-CV-1924 (PAC)(SN)

01-11-2013

Jaclinn PULLMAN, Plaintiff, v. ALPHA MEDIA PUBLISHING, INC., et al., Defendants.

SARAH NETBURN, United States Magistrate Judge.

REPORT AND RECOMMENDATION SARAH NETBURN, United States Magistrate Judge.

TO THE HONORABLE PAUL A. CROTTY:

Plaintiff Jaclinn Pullman ("Pullman") brings this action under New Jersey law asserting claims for common law fraud, violation of the New Jersey Consumer Fraud Act ("NJCFA"), N.J. Stat. Ann. § 56:8-1 et seq., piercing the corporate veil, and punitive damages. The theory of her case is that Maxim Magazine ("Maxim") misrepresented to her that it was an owner of the Maxim Bungalows when it was not, that she purchased two Maxim Bungalow timeshares relying on that misrepresentation, and that she was damaged as a result when the project went bankrupt as part of an alleged Ponzi scheme.

Pullman sues three groups of defendants. The first is Alpha Media Group, Inc. ("Alpha Media"), formerly known as Dennis Publishing, Inc. ("Dennis Publishing"), (Compl. ¶¶ 25-26), the publishers of Maxim. Alpha Media is a "wholly owned subsidiary" of Alpha Media Group Holdings ("AMGH"), an entity not named in this action. (Id. ¶ 27.) The second group is the two Quadrangle defendants: (1) Quadrangle Group, LLC, a "private investment management and advisory firm," (id. ¶ 31), which formed AMGH "for the sole purpose of acquiring the assets of Dennis Publishing, including Maxim Magazine and related trademarks" (id. ¶ 27); and (2) Peter Ezersky ("Ezersky") a "managing partner" of Quadrangle Group, LLC (id. ¶¶ 39-40). The third is Stephen Colvin ("Colvin"), the former chief executive officer of Dennis Publishing. (Id. ¶¶ 36-37.)

The three groups of defendants have moved to dismiss Pullman's complaint pursuant to Rules 12(b)(6), 12(b)(7), and 9(b) of the Federal Rules of Civil Procedure. Because I conclude that Pullman's claims against Alpha Media and Quadrangle Group, LLC for common law fraud and violation of the NJCFA are plausible and pled with sufficient particularity, I recommend that their motions to dismiss be DENIED as to those claims. Because I also conclude that Pullman has not pled plausible theories of fraud or violation of the NJCFA against Colvin or Ezersky, I recommend that their motions to dismiss be GRANTED. Because neither piercing the corporate veil nor punitive damages are causes of action under New Jersey law, I recommend that defendants' motions to dismiss be GRANTED as to all parties on those two claims. Finally, I recommend that all defendants' motions to dismiss for failure to join an indispensable party be DENIED.

FACTUAL BACKGROUND

I. The Purchase Giving Rise to the Alleged Fraud

The following facts are assumed to be true for the purposes of this motion.

Pullman began purchasing timeshare interests in 1998. (Compl. ¶ 111.) In 2007, she traded a week she owned in one of her timeshares for a weeklong stay at the Sun Village Resort and Spa ("Sun Village") in the Dominican Republic. (Id.) On June 22, 2007, she began her stay at Sun Village. (Id.)

During this one week period, Pullman was solicited by an unidentified person to invest in a newly announced "Maxim Bungalow[s] projects in Cofresi and Juan Dolio" in the Dominican Republic, scheduled to open in September and October of 2007, respectively. (Id. ¶ 112.) She "was told" by that unidentified person that Maxim was an "owner" and "large" investor in the Maxim Bungalows. (Id. ¶ 113.) While exploring the possibility of investment, Pullman toured one of the bungalow sites and was "impressed with the upscale beautifully designed two bedroom model apartment that she was shown." (Id. ¶ 119.)

After touring this site, Pullman attended a "Maxim Bungalows informational meeting" where she was shown, and later emailed, a promotional video entitled "Right Time, Right Place." (Id. ¶ 120.) The theme of the video was that the "right time" to invest was "now" and the "right place" to invest was in the Maxim Bungalows in the Dominican Republic. (Id. ¶ 121.) Pullman found that this video would lead "a reasonable viewer to believe that Maxim was an owner of the Maxim Bungalows in partnership with the Elliott Company" (the "Elliotts"). (Id. ¶ 122.) At that meeting, she also was given an over 300-page book entitled "Maxim Bungalows Dominican Republic Residential Beneficial Interest Documents - DRAFT" (the "Maxim Draft Book"). (Id. ¶ 123.) The Maxim Draft Book contained various documents associated with the Maxim Bungalows project, including the Homeowners' Association formation documents. (Id. ¶ 124.) It did not disclose that Maxim was not an owner of the Maxim Bungalows, had only licensed its trademark to the actual owners of the project, and could terminate that license upon certain conditions, but it did state that the project could be renamed by the company that was "creating the Condominium Regime." (Id. ¶¶ 125-27.)

After receiving these materials, Pullman had several discussions about her potential investment with Roger Walser ("Walser"), "her Maxim Bungalows sales representative." (Id. ¶ 128.) Walser assured her that the Maxim Bungalows were a "'safe' investment." (Id. ¶ 133.) He made various representations about her purchase that reinforced the idea that Maxim was an owner, discussing "Maxim's desire, as an owner to capitalize on the world renowned Maxim name to 'fill the resort with the Maxim readership.'" (Id. ¶ 129; see id. ¶¶ 130-33.) Walser also reassured Pullman that any renaming of the Maxim Bungalows would still include the word "Maxim," (id. ¶ 130), and indeed that the only way Maxim would remove the Maxim name was if it sold "[its] interest in the Maxim Bungalows[,] which would require the approval of the Homeowners' Association" (id. ¶ 131).

In her complaint, Pullman does not allege that Walser was an employee or agent of the defendants. In her opposition papers, however, she states that Walser "represented himself to [her] as an employee of the [Sun Village] resort, owned by the Elliotts, which had just obtained a major sales agreement with Maxim Magazine making them the exclusive sales agents of the Maxim Bungalows." (Plaintiff's Alpha Media Opposition Brief ("Pl. Alpha Media Opp. Br.") at 8; see Plaintiff's Colvin Opposition Brief ("Pl. Colvin Opp. Br.") at 8.) (emphases in original). This representation led Pullman to believe that Walser "had authority to sell Maxim Bungalows on behalf of Maxim." (Pl. Alpha Media Opp. Br. at 8-9.) Elsewhere in her complaint, Pullman explains that the Elliotts were resort developers and were charged with "the construction and management of the Maxim Bungalows project." (Compl. ¶ 53.) She states that the Elliotts entered into a license agreement with Alpha Media to use the Maxim trademark in connection with the Maxim Bungalows. (Id. ¶¶ 57, 59.) The Elliotts are not named as defendants in Pullman's complaint.

After her discussions with Walser, but still during her June 2007 stay, an unnamed person offered Pullman the "Founder's Phase price" to invest in the Maxim Bungalows. (Id. ¶¶ 5, 135, 137.) This price reflected a 33 percent discount, but only "if she signed her purchase documents immediately and put a deposit on her credit card." (Id. ¶ 135.) Pullman agreed to the terms and signed the purchase documents with an agent of Ocean Palms Real Estate (SVG) ("Ocean Palms"). (Id. ¶¶ 136-39.) That agent represented to Pullman that Ocean Palms, as a "joint Maxim-Elliott Company," was an owner of the Maxim Bungalows. (Id. ¶ 137.) Pullman agreed to a purchase price of $124,620. (Id. ¶ 138.) Pullman made this purchase because "she felt secure investing alongside 'Maxim,' a large media company which would take every step possible to ensure that [its] 'valuable' name was protected including, at minimum, a thorough investigation of the Elliotts." (Id. ¶ 136.) Before leaving Sun Village, Pullman paid a refundable $5,000 deposit. (Id. ¶ 139.) She was told she was legally entitled to a fifteen day "cooling off" period before sending a check for her final payment to the Maxim Bungalows sales office. (Id. ¶ 140.)

When Pullman returned home to New Jersey, she further investigated Maxim's connection to the Maxim Bungalows and visited webpages linked from the maxim.com website that contained information about the project. (Id. ¶ 141.) She states that the maxim.com website and the pages linked to the Maxim Bungalows did not provide the material terms of the Licensing Agreement, or disclose that Maxim was solely a "passive trademark licensor" in the Bungalows and not an owner. (Id. ¶¶ 142-43.) Pullman found that the pages were misleading to an "average consumer" and to her, and that an average consumer viewing them would have assumed Maxim was the owner of the Bungalows. (Id. ¶¶ 142-44.) During this fifteen day period, Pullman also examined Maxim Bungalows brochures that she had been provided, which also did not disclose that Maxim's role in the project was solely that of a "'passive trademark licensor' who could terminate the Maxim Bungalows license agreement at any time after June 30, 2007." (Id. ¶ 158; see id. ¶¶ 144, 271-72.)

Because Pullman "did not find information which was contrary to the representations that Walser or the Maxim Bungalows marketing materials had made," (id. ¶ 144), she decided to finalize her purchase, and in June 2007 she sent a check for $119,620 to the Maxim Bungalow's sales office at Sun Village in the Dominican Republic (id. ¶¶ 5, 145). Pullman later discovered, "when examining a copy of her canceled check," that it had been sent from the Maxim Bungalows sales department to be deposited in a bank account in the United States. (Id. ¶ 145.) In November 2007, Walser called Pullman at her home and solicited her to purchase the "last remaining penthouse unit" at the Maxim Bungalows. (Id. ¶ 146.) Pullman declined. (Id.)

Plaintiff states that she lost her money when the Maxim Bungalows were revealed to be a Ponzi scheme and were foreclosed upon in the Fall of 2009. (Id. ¶¶ 13-19, 229.) It was then that she learned Maxim considered itself solely a "'passive trademark licensor' of the Maxim brand name to the Maxim Bungalows resort project and not an owner." (Id. ¶ 9.) Upon learning of this perceived misrepresentation, Pullman brought suit.

II. Procedural History

Pullman filed her complaint in the Superior Court of New Jersey on December 21, 2011. (Docket Number ("Doc. No.") 1.) On February 14, 2012, Quadrangle removed the case to the United States District Court for the District of New Jersey on the basis of diversity jurisdiction and with the consent of all defendants. (Id.) The case subsequently was transferred to this Court upon Pullman's motion. (See Doc. Nos. 5, 8.) On April 13, 2012, the Honorable Paul A. Crotty referred the case to the Honorable James C. Francis IV for general pretrial supervision and dispositive motions. Defendants then moved to dismiss the complaint. On August 30, 2012, the motions were fully briefed. On September 24, 2010, the referral was reassigned to my docket for a report and recommendation.

DISCUSSION

I. Standard of Review

In considering a motion to dismiss pursuant to Rule 12(b)(6), a court takes "factual allegations [in the complaint] to be true and draw[s] all reasonable inferences in the plaintiff's favor." Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009) (citation omitted). Although a complaint ordinarily need not contain detailed factual allegations, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Because pro se litigants "are entitled to a liberal construction of their pleadings, [their complaints] should be read to raise the strongest arguments that they suggest." Green v. United States, 260 F.3d 78, 83 (2d Cir. 2001) (citation and internal quotation marks omitted).

In determining the sufficiency of a complaint, the Court may consider "the factual allegations in [the] complaint, . . . documents attached to the complaint as an exhibit or incorporated in it by reference, . . . matters of which judicial notice may be taken, [and] documents either in plaintiffs' possession or of which the plaintiffs had knowledge and relied on in bringing suit." Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993).

II. Choice-of-Law

The parties assume, at least for the purposes of these motions, that New Jersey law governs this action. (Pl. Colvin Opp. Br. at 7 n.6; Alpha Media Br. at 1 n.1; Colvin Br. at 9 n.4; Quadrangle Reply Br. at 5 n.5.) Because "implied consent . . . is sufficient to establish choice of law," the Court will assume New Jersey law governs for the purposes of these motions. Krumme v. WestPoint Stevens Inc., 238 F.3d 133, 138 (2d Cir. 2000) (internal quotation marks and citations omitted). See also Axis Specialty Ins. Co. v. Brickman Group Ltd., LLC, 458 F. App'x 220, 224 n.6 (3d Cir. 2012) ("Both parties assume that their claims should be resolved under Pennsylvania's substantive law, and we accept that choice of law for purposes of our analysis.").

III. Common Law Fraud

Pullman's first cause of action is for common law fraud. The essence of her claim is that the defendants fraudulently misrepresented to her that Maxim was an owner of the Maxim Bungalows when it was not, and that she relied on that misrepresentation to her detriment: indeed, that she would not have purchased two Maxim Bungalow timeshares but for that misrepresentation. The Court's task is to determine whether Pullman has pled enough facts with sufficient particularity to survive a motion to dismiss under Rule 12(b)(6) and the heightened pleading requirements of Rule 9(b).

A. Applicable Law

Under New Jersey law, a plaintiff seeking to prove fraud must establish five elements: "(1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages." Gennari v. Weichert Co. Realtors, 691 A.2d 350, 367 (N.J. 1997) (citation omitted). "Misrepresentation and reliance are the hallmarks of any fraud claim, and a fraud cause of action fails without them." Banco Popular N. Am. v. Gandi, 876 A.2d 253, 261 (N.J. 2005).

Federal Rule of Civil Procedure 9(b) provides an additional requirement that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." "Particularity" means that the complaint must "specify the statements [the plaintiff] claims were false or misleading, give particulars as to the respect in which plaintiff contends the statements were fraudulent, state when and where the statements were made, and identify those responsible for the statements." Suez Equity Investors, L.P. v. Toronto-Dominion Bank, 250 F.3d 87, 95 (2d Cir. 2001) (citation omitted). Thus, "allegations [of fraud] must be supported by the pleadings of specific facts tending to show that, at the time the defendant made the asserted representations and promises, it never intended to honor its stated intentions." Sekisui Am. Corp. v. Hart, 12 Civ. 3479 (SAS), 2012 WL 5039682, at *2 (S.D.N.Y. Oct. 17, 2012) (citation omitted; alteration in original). "Malice, intent, knowledge and other conditions of a person's mind may be alleged generally." Fed. R. Civ. P. 9(b). "Where multiple defendants are asked to respond to allegations of fraud, the complaint should inform each defendant of the nature of his alleged participation in the fraud." DiVittorio v. Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir. 1987).

B. Application of Law to Alpha Media Defendants

Alpha Media argues that Pullman fails to allege fraud adequately because she: (1) cannot attribute fraudulent statements to Alpha Media; (2) has not established its duty to disclose its role as trademark licensor to her; (3) has not adequately pled reasonable reliance; and (4) has not pled with particularity.

(1) Claims Asserted in Pullman's Briefs

A threshold issue is whether Pullman may actually plead a theory of fraudulent misrepresentation. Alpha Media argues that Pullman's claim is for fraudulent concealment, and she should not be permitted to change her theory to one of fraudulent misrepresentation for the first time in her opposition papers. (Alpha Media Reply Br. at 1-2.) But Pullman alleges misrepresentation in her complaint. To be sure, her complaint has numerous instances where she discusses defendants' alleged omissions and failures to act. (See, e.g., Compl. ¶¶ 149-229.) But her complaint also includes numerous pleadings of misrepresentation. (Compl. ¶¶ 7-8; 165, 213- 14, 229; see Pl. Alpha Media Opp. Br. at 6.) Early in her complaint, she alleges that "Maxim was misrepresented to the investors, including [Pullman], as an owner of the Maxim Bungalows resorts who had made a large investment in the projects." (Compl. ¶ 7.) She begins her first cause of action for common law fraud by pleading that defendants "engaged in a scheme intended to and which did mislead and defraud . . . [Pullman]," (id. ¶ 150), discusses how Maxim was responsible for the misrepresentations she alleges, (id. ¶¶ 195-96), and closes her discussion of this claim by alleging that she "relied upon the intentional fraudulent misrepresentations made by Maxim when making her Maxim Bungalows purchase decision and as a result [she] suffered injury and damages" (id. ¶ 229).

But even if Pullman had not pled misrepresentation in her complaint, she states in her opposition papers that she intended to plead it, and does in fact assert it there. (Pl. Alpha Media Opp. Br. at 6.) While a counseled plaintiff may not make allegations in an opposition to a motion to dismiss that do not appear in the complaint, see, e.g., Kiryas Joel Alliance v. Village of Kiryas Joel, 11 Civ. 3982 (JSR), 2011 WL 5995075, at *5 (S.D.N.Y. Nov. 29, 2011); Islam v. Goord, 05 Civ. 7502 (RJH), 2006 WL 2819651, at *1 n.2 (S.D.N.Y. Sept. 29, 2006), pro se pleadings are held to a "less stringent standard[] than formal pleadings drafted by lawyers." Haines v. Kerner, 404 U.S. 519, 520-21 (1972).

Consequently, a pro se litigant may raise a claim for the first time in her opposition papers, and the Court will consider it in the motion to dismiss. Philippeaux v. United States, 10 Civ. 6143 (NRB), 2011 WL 4472064, at *4 (S.D.N.Y. Sept. 27, 2011) (considering new claims and facts pled by pro se plaintiff in opposition to motion to dismiss); see also Loccenitt v. City of New York, 11 Civ. 5651 (PAC)(HBP), 2012 WL 3822213, at *2 (S.D.N.Y. Sept. 4, 2012) (adopting magistrate judge's recommendation to construe plaintiff's new factual allegations in opposition brief as amending complaint); Shmueli v. City of New York, 03 Civ. 1195 (PAC), 2007 WL 1659210, at *7 (S.D.N.Y. June 7, 2007) (deeming factual allegations contained in briefs to supplement amended complaint because of plaintiff's pro se status); cf. Le Grand v. Evan, 702 F.2d 415, 416 n. 2 (2d. Cir. 1983) ("In view of the canon that a pro se litigant's papers should be liberally construed and the § 1983 pro se form complaint's direction that the plaintiff attach necessary additional sheets, we read the complaint to adopt the factual allegations in the memorandum.") (citation omitted). Pullman does allege fraudulent misrepresentation in her complaint. But even if the precise nature of her claim was uncertain, Pullman clearly alleges some type of fraud; as a pro se plaintiff, she is permitted to clarify in her opposition papers the allegations of fraud that she sought to bring.

(2) Attributing the Fraudulent Statements

Alpha Media argues that Pullman fails to attribute any alleged misrepresentations directly to it. (Alpha Media Reply Br. at 2.) To be clear, Alpha Media is not arguing that statements made by Maxim could not be attributed to it; indeed, it states that at all relevant times Alpha Media published Maxim. (Alpha Media Br. at 4.) Rather, it argues that the individuals who allegedly claimed that Maxim was an owner of the Maxim Bungalows were not connected to Maxim, and the advertisements, brochures and other material Pullman discusses were not produced by Maxim or, at least, did not state Maxim owned the Maxim Bungalows. Pullman has, however, pled sufficient connections between Maxim (and Alpha Media) and the fraudulent misrepresentations to survive Alpha Media's motion to dismiss.

Alpha Media argues that Pullman's claim fails because Maxim was not in fact an owner of the Maxim Bungalows. (Alpha Media Reply Br. at 4) (stating "you cannot give what you do not have"). It argues that because defendants did not have ownership rights in the Maxim Bungalows, they could not sell ownership interests through the Elliotts or Walser. (Id. at 4) (discussing that the Maxim Bungalows License Agreement, attached to complaint, gives the Elliotts only "the right and license to use the Maxim Marks . . . .") (emphasis in original). But Pullman acknowledges that defendants did not have ownership rights to the Maxim Bungalows. (See, e.g., Compl. ¶¶ 7-9, 126, 142, 226.) Indeed, that is the theory of her case: Alpha Media fraudulently misrepresented that it was an owner of Maxim Bungalows when it was not. As discussed below, Pullman does not need to allege Alpha Media was an owner of Maxim Bungalows to put forth a theory of agency; Maxim did not need to be an owner for Walser to portray it as such, and for Maxim to be liable. (Cf. Alpha Media Reply Br. at 4.)

Finally, Alpha Media argues that Pullman does not allege that it "made any false statements to her."¹ (Alpha Media Br. at 10) (emphasis in original). This argument fails because Pullman has plausibly connected Maxim (and Alpha Media) to the fraudulent misrepresentations through its publications, statements made by alleged agents and other circumstantial evidence.

1 Alpha Media makes this argument in opposition to a theory of fraudulent concealment. Because the Court understands Pullman to have pled fraudulent misrepresentation, Alpha Media's objections are read to apply to this theory instead.

Pullman has alleged that she was told that Maxim owned the Maxim Bungalows by agents of Maxim. (Pl. Alpha Media Opp. Br. at 8-9.) In her complaint, she states that Walser told her that Maxim was "an owner" of the Maxim Bungalows, (Compl. ¶¶ 129-33), and in her opposition papers she connects Walser to Maxim by stating that Walser represented himself as an employee of Maxim Bungalows' exclusive sales agent (Pl. Alpha Media Opp. Br. at 8).² She also alleges that the Ocean Palms real estate agent, from whom she purchased the timeshares, represented to her that Ocean Palms was a "joint Maxim-Elliott Company." (Compl. ¶ 137.) These statements are made more credible by the other, albeit unnamed, individuals who connected Maxim to the Bungalows by claiming Maxim was an owner. (Id. ¶¶ 113, 120-22.) Taking her allegations as true, Pullman has alleged an agency relationship between Maxim and Walser, and Maxim and the Ocean Palms realtor. See NCP Litig., Trust v. KPMG LLP, 901 A.2d 871, 879 (N.J. 2006) (agent's fraud is imputed to alleged principal); see also Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 755-56 (1998) (citing Restatement that "a master is subject to liability for torts of servants committed while acting in the scope of their employment").

2 This fact, pled in Pullman's opposition papers, will be considered by the Court. Loccenitt, 2012 WL 3822213, at *2; Philippeaux, 2011 WL 4472064, at *4; Shmueli, 2007 WL 1659210, at *7. Alpha Media argues that Pullman has no good faith basis to allege that she believed Walser was its agent because of the changes in her pleadings over time as to whom he worked for. (Alpha Media Reply Br. at 6.) But rather than deception, these changes reflect Pullman's evolving understanding of his relationship to Maxim as she acquired additional information about her case. (Pl. Alpha Media Opp. Br. at 8-9.)

Pullman also provides other evidence making more plausible her belief that Maxim owned the Maxim Bungalows. She arrived on the Maxim Bungalows webpages by following links from maxim.com. (Compl. ¶¶ 141-44; Pl. Alpha Media Opp. Br. at 15 n.14.) The documents and video that she was provided were from individuals claiming that Maxim was an owner, they displayed the Maxim name, and they discussed Maxim's role and involvement in the Maxim Bungalows. (Compl. ¶¶ 120, 123, 158.) She pleads that these documents did not say Maxim was not an owner, which merely confirmed her understanding that Maxim was an owner. (See id.) An absence of contradictory facts in these documents supports the plausibility of crediting the statements of Walser and the real estate agent.

Pullman's claim also survives under an alternative theory of apparent agency.³ Under New Jersey law, to recover against a principal under apparent authority, a plaintiff must plead that: "(1) the appearance of authority has been created by the conduct of the alleged principal and not solely by the conduct of the putative agent; (2) the plaintiff has relied on the agent's apparent authority to act for a principal; and (3) the reliance was reasonable under the circumstances." Capriglione v. Radisson Hotels, Int'l, Inc., 10 Civ. 2456 (AET), 2011 WL 4736310, at *4 (D.N.J. Oct 5, 2011) (citation omitted); see Lobiondo v. O'Callaghan, 815 A.2d 1013, 1018-19 (N.J. Super. App. Div. 2003).

3 Pullman does not allege a theory of apparent agency in her complaint, but the Court will address her discussion of it in her opposition papers. Philippeaux, 2011 WL 4472064, at *4.

Pullman has plainly established the appearance of authority by the conduct of Maxim's putative agents through her allegations concerning Walser and the Ocean Palms realtor. But Pullman also has established the appearance of authority by the conduct of the alleged principal, Maxim, through documents linking Maxim to the Maxim Bungalows. (Pl. Colvin Opp. Br. at 10; Compl. ¶¶ 120-24.)⁴ Beyond these materials previously discussed, she connects Walser to Maxim by noting that the exclusive sales agent agreement he mentioned was also mentioned in the promotional video she was shown at the Maxim Bungalows informational meeting. (Pl. Colvin Opp. Br. at 10.) She adds that she was "inundated with marketing materials bearing the Maxim marks including the Maxim Bungalows mark which she also viewed on the Maxim Magazine website." (Id. at 10.) Pullman relied on statements by Walser and the Ocean Palms realtor, but she also relied on indicia of authority that originated from Maxim. Restatement (Third) of Agency § 2.03 (2006) ("Apparent authority is the power held by an agent or other actor to affect a principal's legal relations with third parties when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal's manifestations."); Restatement (Second) of Agency § 267 (1958) ("One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for the harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.")

4 Although Colvin addresses the issue of apparent authority in greater detail than Alpha Media, and Pullman replies to it in greater detail there as well, the arguments of those briefs will be examined here, when discussing Alpha Media. (See Colvin Reply Br. at 3; Pl. Colvin Opp. Br. at 10.)

Courts interpreting New Jersey agency law have found similar evidence provides sufficient appearance of authority to allege a principal's liability — even without an actual agency relationship. Gizzi v. Texaco, Inc., 437 F.2d 308, 309-10 (3d Cir. 1971) (although no actual contractual relationship existed, appearance of authority could be created by putative principal's insignia and slogan prominently displayed on putative agent's service station, and putative principal's nationwide advertising campaign; questions of apparent authority are questions for jury); Mayflower Transit, LLC v. Prince, 314 F. Supp. 2d 362, 377 (D.N.J. 2004) (summary judgment not appropriate when putative principal's logo was on truck that picked up goods and boxes in which goods were placed, and party arguing theory met with person who identified himself as putative principal's sales manager); In re NorVergence, Inc., 384 B.R. 315, 368 (Bankr. D.N.J. 2008) (finding apparent authority claim survived motion to dismiss when plaintiff's complaint alleged putative principal knowingly allowed putative agent to utilize the principal's logo on agent's brochures, among other facts); Mercer v. Weyerhaeuser Co., 735 A.2d 576, 592-94 (N.J. Super. Ct. App. Div. 1999) (finding summary judgment for defendant unwarranted because, among other facts: (1) involvement of putative principal was important to plaintiff's purchase decisions; (2) when plaintiff saw putative agent's advertisement it always had putative principal's name and logo with it; and (3) plaintiff was told by agent's salesman that agent was division of principal); see also Am. Soc. of Mechanical Eng'rs, Inc. v. Hydrolevel Corp., 456 U.S. 556, 566 (1982) ("principal is liable for an agent's fraud though the agent acts solely to benefit himself, if the agent acts with apparent authority"). Taking Pullman's evidence as true, it creates a plausible claim for Maxim's apparent authority, supported by the assertions of Walser and the Ocean Palms realtor.

Defendants argue that Pullman could not have relied upon their apparent authority because she was unaware of it when she purchased Maxim Bungalows timeshares. (Colvin Reply Br. at 4.) They argue that Pullman pleads that Walser's ability to act as an agent to sell Maxim Bungalows was granted by a licensing agreement from Maxim, but she was not aware of that agreement until after her purchase. (Id. at 4.) Pullman cites sufficient additional evidence suggesting Maxim's apparent authority, however, which she encountered before she purchased the timeshares and upon which she relied. (See, e.g., Pl. Colvin Opp. Br. at 10; Compl. ¶¶ 120-24.)

Defendants also argue that Pullman's reliance was unreasonable. (Colvin Reply Br. at 4-5.) They make three points; each fails to persuade. First, they argue Pullman was unreasonable because her purchase contract was with an unrelated company. But the Ocean Palms realtor from whom she bought the timeshares told Pullman that her company was jointly owned by Maxim, making it reasonable for Pullman to believe Maxim was connected to the contract. (Compl. ¶ 137.) Second, they argue Pullman was unreasonable because she was an experienced timeshare investor who would not believe that Walser could contractually bind non-parties. But Pullman's belief is rendered considerably more reasonable because Walser said that he worked as an agent of Maxim, his authority seemed corroborated by the promotional video, and every other person with some sort of apparent authority to discuss the Maxim Bungalows stated Maxim was an owner. (Compl. ¶¶ 3-14, 120-34, 136-37, 141-44; Pl. Alpha Media Opp. Br. at 10; Pl. Colvin Opp. Br. at 10.) Third, they argue Pullman was unreasonable because she was fully aware of facts she now claims were concealed, namely that Alpha Media was a trademark licensor and that there was a risk the license could be terminated. (Colvin Reply Br. at 4-5.) But Pullman does not claim these facts were concealed; indeed, she pleads them in her complaint. (See, e.g., Compl. ¶¶ 2, 12, 114, 126-31, 133.) She alleges that she knew Alpha Media was a trademark licensor; her argument is that she also thought it was more. She pleads she knew there was risk involved in her purchase; her argument is that she decided the risk was manageable because of her belief that Maxim, as an owner, was backing the project with the value it had invested in its brand. As is discussed more fully below, Pullman's reliance was reasonable. See Automated Salvage Transport, Inc. v. NV Koninklijke KNP BT, 106 F. Supp. 2d 606, 619 (D.N.J. 1999) (jury could find reasonable reliance when plaintiffs testified they relied on appearance of authority and stated they would not have entered into the transaction but for defendants' participation).

(3) The Duty to Disclose

Alpha Media argues that Pullman has not alleged any facts that establish defendants' duty to disclose that Maxim was a "passive trademark licensor." (Alpha Media Br. at 9; see Alpha Media Reply Br. at 6.) "[W]here a claim for fraud is based on silence or concealment, New Jersey courts will not imply a duty to disclose, unless such disclosure is necessary to make a previous statement true or the parties share a 'special relationship.'" Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1185 (3d Cir. 1993) (collecting cases) (affirming district court's determination that party had no duty to disclose to business partner its intent to compete in a joint venture); Peterpaul v. Reger, 07 Civ. 1312 (JLL), 2007 WL 4570321, at *4 n.16 (D.N.J. Dec. 26, 2007) ("[T]here can be no fraudulent concealment absent a duty to disclose."). The fraud Pullman alleges, however, is that of misrepresentation not omission. (Pl. Alpha Media Opp. Br. at 6.) Whether or not defendants owed a duty to disclose is not dispositive for liability under a theory of misrepresentation.

(4) Reasonable Reliance

Alpha Media argues that Pullman has not alleged reasonable reliance. Reasonable reliance is "indispensable to any claim of fraud" under New Jersey law. Arcand v Brother Int'l Corp., 673 F. Supp. 2d 282, 305 (D.N.J. 2011). "A party reasonably relies on a misrepresentation" if, among other factors, "the facts to the contrary were not obvious or did not provide a warning . . . ." Id. at 305-06 (internal quotation marks omitted). Pullman alleges that she was not aware that defendants: (1) were not owners of the Maxim Bungalows; (2) were "solely a passive trademark licensor" in the Maxim Bungalows; and (3) could terminate the License Agreement for cause any time after June 30, 2007. (Compl. ¶ 226.) She alleges that she would not have purchased an interest in the Maxim Bungalows if she had known these facts, and thus would not have lost the money she invested as a result of the alleged Ponzi scheme. (Id, ¶¶ 227-29.)

The facts alleged in the complaint support the reasonableness of Pullman's reliance, including: (1) unnamed individuals who stated that Maxim was an owner of the Bungalows; (2) Walser and the Ocean Palms real estate agent who stated that they were agents of, or employed by, Maxim and that Maxim owned the Bungalows; (3) Walser who stated that the only way Maxim would remove its name from the Bungalows was if it sold its interest, which required the Homeowners' Association's approval; (4) the supporting Maxim materials, which provided the impression of ownership; and (5) the Maxim website, which was linked to the Maxim Bungalows webpages. At this stage, the Court need not decide the truth of these allegations. Rather, while taking them as true, the Court finds Pullman's reliance was reasonable.

Alpha Media makes four arguments, however, for why Pullman's alleged reliance was not reasonable. (See Alpha Media Br. at 12.) First, Alpha Media argues that Pullman's reliance on defendants to uncover the Elliotts' and Catledge's purported fraud was unreasonable because "[t]here is no allegation that Defendants knew of or had access to information prior to Plaintiff's purchase that they could have shared with Plaintiff that would have prevented Plaintiff from making her purchase." (Id. at 16-17.) There plainly were facts within Alpha Media's possession that, if fairly represented, would have caused Pullman to rethink her purchase: to wit, that Maxim was not in fact an owner of the Maxim Bungalows. Moreover, while she pleads that she expected Maxim to have performed "a thorough investigation of the Elliotts," (Compl. ¶¶ 136, 159), and that she expected "Maxim would do everything in its power to protect the Maxim name and thus [Pullman's] investment value," (id. ¶ 151), these additional pleadings are not central to her reliance. The core of her fraud claim is that Maxim represented itself as the owners of the Maxim Bungalows, and she relied on that representation to her detriment. It is about representations that Maxim allegedly made, not Maxim's alleged failures to investigate or the alleged fraud of non-parties like the Elliotts or Catledges.

Second, Alpha Media argues that Pullman's reliance was not reasonable because Pullman had admitted on prior occasions that the risks associated with her purchase of a Maxim Bungalows timeshare were known and obvious to her, and that she knew Maxim was a trademark licensor. (Alpha Media Br. at 13.) Alpha Media argues that unreasonableness is established by comparing Pullman's allegations in this complaint to those allegedly contradictory statements in prior proceedings. (Id.)

When a litigant makes multiple factual allegations in related actions "that blatantly contradict" the complaint in the subsequent action, a court is presented with the "rare occasion" when the need to accept as true allegations in the complaint is obviated, and the court may consider the prior inconsistent allegations binding upon the party in the subsequent action. Palm Beach Strategic Income, LP v. Salzman, P.C., 10 Civ. 261 (JS)(AKT), 2011 WL 1655575, at *5-6 (E.D.N.Y. May 2, 2011), aff'd on other grounds, 457 F. App'x 40 (2d Cir. 2012); see also Munno v. Town of Orangetown, 391 F. Supp. 2d 263, 268-69 (S.D.N.Y. 2005) (taking judicial notice of "affidavits and/or pleadings submitted by plaintiff and letters written by plaintiff's counsel . . . as these public documents allegedly contain statements by plaintiff which contradict the factual allegations contained in the Complaint"). This is not that "rare occasion."

The statements Alpha Media asks the Court to consider can be grouped under two headings: (1) statements that suggest Pullman knew that her investment was risky and invested anyway; and (2) statements that suggest Pullman knew Maxim was solely a passive trademark licensor and could terminate that license. But neither group "blatantly contradicts" Pullman's complaint, and moreover, Pullman's reliance despite the alleged contradictions was not unreasonable.

Regarding the first group of statements, Alpha Media quotes prior proceedings when Pullman stated she "knew of the inherent risks associated with investing in a timeshare," (Alpha Media. Br. at 13), and she knew that it was "very risky"⁵ (Alpha Media. Br. at 15). In her complaint, however, she does not contradict those statements. She does not, for example, plead that she did not know the investment was risky. Moreover, an assessment of the risk fits into her theory of the case. Pullman pleads that she had prior positive experiences with timeshares when they were "with major brands," and like in those instances, it was Maxim's status as a "large company with a prominent brand" who also owned the bungalows that induced her to invest. (Pl. Alpha Media Opp. Br. at 16-18; see Compl. ¶¶ 111, 114, 136, 151.) The reasonableness of Pullman's decision is not reduced or contradicted by her acknowledgement that, although timeshare investment is risky, she still decided to invest: she thought Maxim's presence decreased the risk. This is different from cases cited by Alpha Media when the allegations actually were inconsistent. See, e.g., Jones v. Intelli-Check, Inc., 274 F. Supp. 2d 615, 634 (D.N.J. 2003) (finding plaintiffs could not argue reasonable reliance on defendant's position that its accounting was proper when they had pled prior awareness that defendant's accounting methods were improper).

5 From the same proceeding, Alpha Media also quoted a Judge as asking if Pullman felt she had "received any kind of false statements of any kind" and Pullman as replying in the negative. (Alpha Media Br. at 15.) But whether Pullman knew of the alleged fraud at the time of those statements does not affect whether her current action for uncovered fraud should survive a motion to dismiss.

Regarding the second group of statements, Alpha Media quotes a prior letter in this action where Pullman stated she knew defendants could "one day" terminate the use of their name, but she "never dreamed that 'one day' could be before [her] purchase check even cleared the bank in July of 2007." (Alpha Media Br. at 13-14.) Alpha Media also quotes from prior proceedings when Pullman stated she knew the resort had entered into "a major licensing and sales agreement with Maxim Magazine," and that there was a "chance of Maxim Magazine one day pulling its sponsorship." (Id. at 14) (emphasis in brief). Again, these statements do not "blatantly contradict" Pullman's pleadings. In her complaint, she explains that she learned that Maxim Bungalows could be renamed, (Compl. ¶ 127), asked Walser what that meant, (id. ¶ 128), and he replied that any new name would have the word "Maxim" in it, (id. ¶ 130), and removing the name would happen only if Maxim sold its interest, which required the approval of the Homeowners' Association (id. ¶ 131). These are not "blatant contradictions," but rather explain why it was reasonable for her to think investing was safe although she knew Maxim theoretically could pull itself out of the investment or the name theoretically could be changed.

Pullman also never pleads that she thought Maxim was solely a licensor; rather, she pleads that she thought the resort had entered into a major licensing and sales agreement with Maxim. (Id. ¶¶ 2, 12, 114, 126-31, 133; Pullman Alpha Media Opp. Br. at 18.) Pullman's statements plausibly could show that, although Pullman knew Maxim was a trademark licensor, she did not know that was the sum total of Maxim's involvement in the Maxim Bungalows — especially when compared with various affirmations by alleged agents that Maxim was an owner. Unlike the cases cited by Alpha Media, this is not a "blatant contradiction." Cf. Jones, 274 F. Supp. 2d at 634; Palm Beach, 2011 WL 1655575, at *5-6 (finding amended complaint "blatantly contradict[ed]" three previous complaints and the brief opposing prior motion to dismiss; weighing against plaintiff the fact that it had not "even attempted to explain its behavior" and was not appearing pro se), aff'd on other grounds, 457 F. App'x 40, 43 (2d Cir. 2012); Munno 391 F. Supp. 2d. at 269 (finding documents outside complaint contradicted factual allegations contained in complaint). Pullman is, moreover, entitled to greater leniency in interpreting her pleadings because she appears pro se. Pullman has not "blatantly contradicted" herself, and defendants have not established persuasive reasoning for why this is the "rare occasion" where a court should look beyond the current allegations — or for why Pullman's reliance was not reasonable.

Third, Alpha Media argues that Pullman's reliance on the promotional video and Maxim Draft Book to establish Maxim's ownership was not reasonable. (Alpha Media Reply Br. at 7-8.) Alpha Media argues that the video could not be reasonably relied upon because Maxim's name was not mentioned until the eight minute mark, and it stated that the Maxim Bungalows would "join the Elliott portfolio of developments and fractional ownership opportunities," instead of stating that Maxim was the owner of Maxim Bungalows. (Id. at 8.) But Pullman argues it was reasonable to rely on the video because it also included "an almost five (5) minute highlight of the Maxim Media Empire to illustrate the power of the Maxim Brand to promote the Maxim Bungalows," and described the Dennis Publishing-Elliott relationship as a "partnership without disclosing that the partnership was solely a licensing agreement." (Pl. Alpha Media Opp. Br. at 17.) This is a factual dispute with arguments on both sides. But a defendant's motion to dismiss should not be granted when the determination of reasonable reliance involves a highly fact-specific inquiry, and the interpretation of the facts is in dispute. See Limpit Acquisition, LLC v. Fed. Fin. Group, Inc., 04 Civ.A. 3884 (JAG), 2006 WL 288076, at *2, *4 (D.N.J. Feb 6, 2006) (denying defendants' motion for partial summary judgment on New Jersey common law fraud claim; "determination of Plaintiff's reasonable reliance on Defendant's alleged misrepresentations depends on resolving underlying disputes as to material facts"). Moreover, Pullman's reliance was based on other documents and statements that made more plausible her understanding of the video.

Alpha Media also argues that selective quotes from the Maxim Draft Book made unreasonable Pullman's reliance on Walser's statement that Maxim was an owner. It quotes that an entity named Promotora Sauco, S.A. ("Sauco"), which was organized under the laws of the Dominican Republic:

is under contract to acquire ownership of that certain real property and the improvements located thereon at Cofresi Beach, Municipality of Puerto Plata, Province of Puerto Plata . . . more particularly set out in the plan attached as Exhibit "A" to the Purchase Agreement for Residential Beneficial Interest (the "Purchase Agreement") to which the disclosure relates (the "Property"). As more fully discussed in Section 6 below, Sauco intends to dedicate the Property to a condominium regime to be established and to be known as "Sun Village Maxim Bungalows , Cofresi" or by such other name as Sauco, in its discretion, may choose (such condominium regime, the "Condominium" and/or "Condominium Regime") . . . . Management of the Condominium Regime shall be vested in a condominium association to be established by operation of law in

the Dominican Republic and to be known as "Sun Village Maxim Bungalows, Cofresi Condominium Association" or by such other name chosen by Sauco, in its discretion, (the "Condominium Association"). Sauco shall be the sole member of the Condominium Association .

(Alpha Media Reply Br. at 8) (emphases in brief). Alpha Media argues that this should have put Pullman on notice that Walser incorrectly portrayed Maxim as an owner who would have difficulty changing the Maxim Bungalows' name. (Id. at 8-9.) But the quoted text does not foreclose the possibility that Maxim was an owner of the Maxim Bungalows, or even that Maxim was connected to Sauco. It does seem to show that it was easier for Sauco to change the Bungalows' name than Walser suggested. But Pullman did not have the benefit of specific lines highlighted and offset when examining a more than 300-page document that also was a "Draft." Alpha Media's objection asks the Court to decide it would have been more reasonable to rely on select statements in the Maxim Draft Book than on direct assurances from a purported Maxim agent. It asks the Court to privilege Alpha Media's interpretation over the plaintiff's. This is not the Court's job on a motion to dismiss. "[O]ne who engages in fraud, [moreover], may not urge that one's victim should have been more circumspect or astute." Jewish Ctr. of Sussex Cnty. v. Whale, 432 A.2d 521, 524 n.1 (N.J. 1981) (rejecting defendant's argument that plaintiff's reliance was unreasonable).

Fourth, Alpha Media argues, generally, that Pullman's "fraud claim clearly fails for her failure to plead reasonable reliance." (Alpha Media Br. at 17.) But for the reasons discussed above, Pullman's failure is not nearly so apparent.

(5) Particularity

Finally, Alpha Media argues that Pullman's complaint of fraud should be dismissed because it fails to meet the heightened pleading standard of Rule 9(b). Under this heightened standard, Pullman must allege with particularity the circumstances of fraud. Fed. R. Civ. P. 9(b). "[T]his standard imposes an obligation on plaintiff to specify the statements it claims were false or misleading, give particulars as to the respect in which plaintiff contends the statements were fraudulent, state when and where the statements were made, and identify those responsible for the statements." Suez Equity Investors, L.P., 250 F.3d at 95 (citation omitted).

The underlying rationale behind Rule 9(b), however, is to put defendants on notice of the precise misconduct alleged so that they can properly defend themselves against potentially spurious charges affecting their reputations. See Buckley v. Deloitte & Touche USA LLP, 06 Civ. 3291 (SHS), 2007 WL 1491403, at *11 (S.D.N.Y. May 22, 2007); Gelles v. TDA Indus., Inc., 90 Civ. 5133 (MBM), 1991 WL 39673, at *5-6 (S.D.N.Y. Mar. 18. 1991) (Rule 9(b) does not require that the plaintiff set out all evidence in the complaint or "plead fraud with the detail of a desk calendar or a street map."). A court must remember that Rule 9(b)'s requirement of particularity must always be harmonized with Rule 8(a)'s flexibility in pleading. Ouaknine v. Macfarlane, 897 F.2d 75, 79 (2d Cir. 1990); In re Initial Pub. Offering Sec. Litig., 241 F. Supp. 2d 281, 326-27, 327 n.47 (S.D.N.Y. 2003). This means that every element of the who, what, where, why and when of the fraud does not need to be pled with utmost detail so long as the scheme of fraud itself is specifically and particularly pled.

A liberal reading of Pullman's allegations set forth a tale of fraud with sufficient particularity to put Alpha Media on notice and provide it with an opportunity to defend the suit. Essentially her claim is that during a one week stay at the Sun Village Resort and Spa in the Dominican Republic, beginning on June 22, 2007, Pullman was solicited to purchase timeshares in the Maxim Bungalows by individuals who held themselves out as agents of Maxim and represented to her that Maxim was an owner of the project. These solicitations were supported by other promotional materials linking Maxim to the Maxim Bungalows and online links from maxim.com to the Maxim Bungalows webpages.

Pullman identifies the statements she claims were false and misleading with particularity, describing discussions between her and individuals like Walser and the Ocean Palms realtor who specifically said Maxim was an owner of the Bungalows. She corroborates those statements with references to the specific "Right Place, Right Time" video and the specific 300-page book titled "Maxim Bungalows Dominican Republic Residential Beneficial Interest Documents - Draft." She even includes a copy of the video with her motion papers. She also details her examination of the maxim.com links that led her to the Maxim Bungalows webpages. While she does not provide exact URL links for each of those Bungalow webpages, that is because "the webpages were seamlessly integrated with the Maxim Magazine website and therefore [Pullman] did not know if she ever left the Maxim Magazine website." (Pl. Alpha Media Opp. Br. at 15 n.14.)

Pullman has described why she finds those statements fraudulent, alleging that they misrepresented to her that Maxim owned the Maxim Bungalows when it did not. She has situated the fraud, describing that it occurred at the Sun Village Resort and Spa, Dominican Republic, during a one week period from June 22, 2007 until June 29, 2007. (Id. at 24.) She has identified two of the speakers, Walser and the Ocean Palms realtor. She has described the purpose of the scheme: to induce visitors to Sun Village Resort and Spa to invest in the Maxim Bungalows timeshare project by using the well-known Maxim brand. The details in these allegations provide notice of the alleged fraud, permit defendants to respond, and show that Pullman's claim is not frivolous. See In re Initial Pub. Offering Sec. Litig., 241 F. Supp. 2d at 325; Mount Snow, Ltd. v. Alli, 12 Civ. 022 (WKS), 2012 WL 1957560, at *2-3 (D. Vt. May 30, 2012).

Alpha Media argues that Pullman has not sufficiently specified when those misrepresentations were made and by whom. (Alpha Media Br. at 23-24.) But a one week period at a discrete and specified location is sufficiently particular to put defendants on notice about when and where the alleged misconduct occurred. See Faberware, Inc. v. Groben, 764 F. Supp. 296, 303 (S.D.N.Y. 1991) ("While the dates and exact contents of all the mailings have not been detailed . . . . [t]he Court concludes that plaintiff has pled sufficient detail to put [defendants] on notice of the mail fraud claims against them."). It is true that the person who solicited Pullman, and the person with whom she met during the Maxim Bungalows information meeting, remain unnamed at this point. But Pullman has named Walser and the Ocean Palms real estate agent. See Trugman-Nash, Inc. v. New Zealand Dairy Bd., 942 F. Supp. 905, 924 (S.D.N.Y. 1996) ("While plaintiffs do not identify the allegedly mendacious Western Dairy employee by name, the identity of the representative speaking with plaintiffs . . . [was] peculiarly within [defendant's] knowledge."). To contrast, in Bezuszka v. L.A. Models, Inc., 04 Civ. 7703 (NRB), 2006 WL 770526, at *12-13 (S.D.N.Y. Mar. 24, 2006), cited by Alpha Media, the plaintiffs did not allege at all who made the fraudulent misrepresentations or when they were made. Pullman's complaint is significantly more particular.

Alpha Media next states that in a multi-defendant action, "Rule (9)(b) is not satisfied where the complaint vaguely attributes the alleged fraudulent statements to 'defendants.'" Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993). Pullman, however, has specifically tied Maxim (and Alpha Media) to the fraud. Walser represented himself as working for the exclusive sales agents of Maxim Bungalows and stated Maxim was an owner of Maxim Bungalows. The Ocean Palms real estate agent said the Maxim Bungalows were a "joint Maxim-Elliott Company." See Trugman-Nash, Inc., 942 F. Supp. at 924.

The cases cited by Alpha Media illustrate the difference between Pullman's particular pleading and allegations that fail to identify specific defendants. In Mills, 12 F.3d at 1174-75, the complaint did not link the alleged fraudulent statements to particular defendants. In Fisher v. APP Pharm., LLC, 783 F. Supp. 2d 424, 433 (S.D.N.Y. 2011), the plaintiff failed to differentiate among the named defendants, but rather made allegations against "[d]efendants." This troubled the court because the failure to differentiate meant that each defendant was not informed "of the circumstances surrounding the fraudulent conduct with which he individually stands charged." Id. (citation omitted). In contrast, Pullman's linkage of the misrepresentations of clearly identified persons in a clearly identified place and time to Maxim puts Alpha Media on notice of the fraudulent misrepresentation Pullman's claim alleges.

C. Application of Law to Quadrangle Group, LLC

Pullman asserts two theories of liability against Quadrangle Group, LLC. First, she alleges its direct connections to the fraud. Second, she alleges liability based on a theory of piercing the corporate veil or agency.

(1) Construing Motion to Dismiss as Motion for Judgment on Pleadings

As a threshold matter, Pullman contends that Quadrangle's motion to dismiss should be construed as a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) because it already answered her complaint. (Plaintiff's Quadrangle Opposition Brief ("Pl. Quadrangle Opp. Br.") at 5.) This argument is unavailing. Magistrate Judge Francis granted Quadrangle leave to file a motion to dismiss, and thus the motion is properly before the Court. (Doc. No. 32.) In any event, a post-answer motion to dismiss under Rule 12(b)(6) is permissible when a defendant has raised the complaint's failure to state a claim upon which relief can be granted as an affirmative defense in the answer. See, e.g., Molnlycke Health Care AB v. Dumex Med. Surgical Prods. Ltd., 64 F. Supp. 2d 448, 449 n.1 (E.D. Pa. 1999) (resolving post-answer motion to dismiss when defendant raised failure to state a claim as an affirmative defense in its answer); Doolittle v. Ruffo, 882 F. Supp. 1247, 1257 n.9 (N.D.N.Y. 1994) (same); Jennings Oil Co., Inc. v. Mobil Oil Corp., 80 F.R.D. 124, 127 n.4 (S.D.N.Y. 1978) (same); Charles A. Wright & Arthur R. Miller, 5C Federal Practice and Procedure § 1361 (3d ed. 2004) (collecting cases).

(2) Pullman's Theory of Quadrangle's Direct Liability

Pullman's theory of direct liability against Quadrangle Group, LLC ("Quadrangle") is that Quadrangle controlled Maxim when Maxim made the misrepresentations at issue and participated directly in that fraud to increase the value of the acquisition. (Compl. ¶¶ 32, 40, 205-06, 224.) This asserts a claim because, although Pullman cannot establish that Quadrangle fully acquired Maxim before her purchase, she has sufficiently pled that Quadrangle controlled Maxim before her purchase and participated directly in the fraud.

(a) Quadrangle's Alleged Ownership

Pullman alleges that Quadrangle acquired Maxim before her purchase of the Maxim Bungalows. She pleads that she signed her purchase documents on June 22, 2007, but the sale was not finalized until July 7, 2012, while also alleging that Quadrangle finalized its acquisition of Maxim sometime between June and August of 2007. (Compl. ¶ 205; Pl. Quadrangle Opp. Br. at 6-7.) Pullman argues that the precise date when Quadrangle acquired Maxim is not known to her and is uniquely in Quadrangle's possession. She further alleges that the exact date of the Maxim sale was "intentionally blurred by the Defendants as a means of confusing the ownership of Maxim, as well as the liability for the fraudulent acts committed during this time period, including the publishing of the misleading Maxim Bungalows advertisement." (Compl. ¶ 206.)

Pullman cannot plausibly argue that Quadrangle finalized the acquisition of Maxim before her purchase because she has attached a document to her complaint showing that it had not. (Plaintiff's Quadrangle Opposition Declaration ("Pl. Quadrangle Opp. Decl."), Exhibit ("Ex.") I.) That document, a copy of a page from the Federal Register, shows that on July 9, 2007, the Federal Trade Commission granted Quadrangle early termination of the waiting period statutorily required before "mergers or acquisitions" could be "consumm[ated]." Id. Pullman suggests "that since [her] purchase never closed . . . her purchase date encompassed the period after Quadrangle purchased Dennis Publishing." (Pl. Quadrangle Opp. Br. at 7, 15.) But whether Pullman "closed" her Bungalows purchase has little impact on whether Quadrangle influenced the misrepresentation that led Pullman to purchase.

Pullman does, however, allege that Quadrangle's acquisition of Dennis Publishing was "multi-staged" and actually began before her purchase. (Id. at 15.) She argues that the time when Quadrangle took control of Maxim is different than when the companies were fully merged, and that that time can be determined only through discovery. (Id. at 17.) She supports this claim through allegations suggesting that Quadrangle had begun to acquire Maxim before her purchase: (1) there was a "transfer of ownership of certain Maxim marks in November of 2006" (id. at 16); (2) an attorney-letter indicated that the ownership structure of Dennis Publishing changed before the execution of the Maxim Bungalows License Agreement on November 27, 2006 (id.); and (3) on June 13, 2007, Alpha Media and Alpha Media Holdings were registered in Delaware (id. at 17). As corroboration, she pleads that "Colvin's bio on the Daily Beast website, [stated] he implemented the sale to the multi-layered Quadrangle controlled AMG entities just a few months after the public announcement of the Maxim Bungalows projects," (Compl. ¶ 294), an event that seemingly could have been before Pullman's purchase, when already there were public links to the Maxim Bungalows from maxim.com and Pullman had been provided the promotional video (see id. ¶¶ 81-82).

Pullman also alleges that Quadrangle contemplated its acquisition of Maxim before she made her purchase: (1) a September 2006 Radar online article stated "Kent Brownridge with the backing of Quadrangle would be acquiring Dennis Publishing" (Pl. Quadrangle Opp. Br. at 16); (2) a May 2007 announcement stated that Quadrangle would be involved in purchasing Dennis Publishing (id.); and (3) "other publications stated Quadrangle would acquire Dennis publishing (id. at 16-17).⁶ Quadrangle's public announcements that it was acquiring Dennis Publishing could suggest its interest in controlling Maxim as soon as possible, supporting Pullman's allegations of earlier control. But those announcements also could simply show that by those dates Quadrangle had not yet taken control. Based on a liberal reading of the entirety of these allegations, however, Pullman has sufficiently pled that Quadrangle had some control over Maxim before Pullman made her timeshare purchases. She should be permitted discovery to ascertain the extent of that involvement.

6 Quadrangle argues that these documents should not be considered in the motion to dismiss because they are not referenced in her complaint. (Quadrangle Reply Br. at 6.) They are, however, discussed in Pullman's opposition papers. (See Pl. Quadrangle Opp. Br. at 16-17.) Facts pled by a pro se litigant in papers opposing a motion to dismiss are properly before the Court. Philippeaux, 2011 WL 4472064, at *4.

(b) Quadrangle's Alleged Participation in the Fraud

Pullman also alleges that Quadrangle participated in the fraud. She pleads that Quadrangle created AMGH, and its subsidiary AMG, "for the sole purpose of acquiring the assets of Dennis Publishing, including Maxim Magazine." (Compl. ¶ 27; see Pl. Quadrangle Opp. Br. at 9.) She pleads that these entities were under Quadrangle's control, (Pl. Quadrangle Opp. Br. at 10), and that Quadrangle used its assets to "market and promote the sales of Maxim Bungalows" (id. at 1). She provides a theory for why Quadrangle would do this, pleading that Maxim, as "controlled" by Quadrangle, "continued the deception of Maxim being an owner of the Maxim Bungalows to inflate the assets of Maxim in order to facilitate the debt deals which allowed Quadrangle to purchase the assets of Dennis Publishing with borrowed funds." (Compl. ¶ 295.) This theory also helps explain Quadrangle's interest in promoting the Maxim Bungalows before its final acquisition of Maxim.

Pullman connects Quadrangle to Maxim's specific misrepresentations to her. She alleges that "[t]he misleading Maxim Bungalows advertisement was published in the Dennis Publishing publications after Quadrangle acquired Dennis Publishing." (Id. ¶ 35; see id. ¶ 296) (emphasis in original). There is some confusion in Pullman's pleadings as to what advertisements she refers to and when she viewed them. Defendants specifically focus on a statement in her complaint that she "did not view the advertisement or read the editorial prior to finalizing her Maxim Bungalows purchase." (Compl. ¶ 267; see Quadrangle Br. at 8.) But while acknowledging that there were publicity materials that Pullman did not view or rely on before her purchase, it remains clear that Pullman has alleged that Quadrangle had control of Maxim before her purchase, used that control to promote the Maxim Bungalows sales, and Pullman viewed Maxim promotional materials like the video, Maxim Draft Book, brochures, and Maxim website before her purchase. (See Compl. ¶ 271.) When there are different potential interpretations for what a pro se litigant tries to express, and ambiguity in the complaint, that issue should be resolved in the pro se litigant's favor on a motion to dismiss. Sharpe v. Conole, 386 F.3d 482, 484 (2d Cir. 2004); Headley v. Fisher, 06 Civ. 6331 (PAC)(KNF), 2010 WL 2595091, at *2 (S.D.N.Y. June 28, 2012) ("Specifically in the context of a pro se plaintiff, the Court should interpret the pleadings liberally and construe them as to raise the strongest arguments they suggest.") (internal quotation marks and citation omitted).

Quadrangle also argues that Pullman does not attribute a single misrepresentation directly to it. (Quadrangle Br. at 7.) But Pullman's allegation is not that Quadrangle directly deceived her into purchasing the Maxim Bungalows; rather, it is that Quadrangle controlled the entities that deceived her, and directed them in that deceit to increase the value of its investment. It is that Maxim's misrepresentations were done at Quadrangle's behest. Pullman has pled Quadrangle's participation in the fraud with sufficient particularity to put Quadrangle on notice of the allegations against it.

(3) Piercing the Corporate Veil and Principles of Agency

Pullman argues, in the alternative, that the corporate veil should be pierced to hold Quadrangle liable for the actions of Alpha Media in the Maxim Bungalows fraud. (Pl. Quadrangle Opp. Br. at 8.) She has alleged sufficient facts under this theory of liability.

Under New Jersey law, to pierce the corporate veil, a plaintiff must show that: "(1) one corporation is organized and operated as to make it a mere instrumentality of another corporation, and (2) the dominant corporation is using the subservient corporation to perpetrate fraud, to accomplish injustice, or to circumvent the law." Bd. of Trustees of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 171 (3d Cir. 2002) (citation omitted). The purpose of piercing the corporate veil "is to prevent an independent corporation from being used to defeat the ends of justice, to perpetrate fraud, to accomplish a crime, or otherwise to evade the law . . . ." Id. at 171 (citing State, Dep't of Envtl. Prot. v. Ventron Corp., 468 A.2d 150, 164 (N.J. 1983)). It is a "tool of equity." Bd. of Trustees, 296 F.3d at 171 (citation omitted). Factors to be considered in deciding whether to pierce the veil include:

gross undercapitalization . . . failure to observe corporate formalities, non-payment of dividends, the insolvency of the debtor corporation at the time, siphoning of funds of the corporation by the dominant stockholder, non-functioning of other officers or directors, absence of corporate records, and the fact that the corporation is merely a facade for the operations of the dominant stockholder or stockholders.

Id. (internal quotation marks and citation omitted).

Pullman alleges that Quadrangle and Alpha Media essentially functioned as one entity under the control of Quadrangle and with much of the same management. (Pl. Quadrangle Opp. Br. at 10-11.) Pullman also alleges that Quadrangle was engaged in and hid the fraud: "Quadrangle controlled Maxim continued the deception of Maxim being an owner of the Maxim Bungalows to inflate the assets of Maxim in order to facilitate the debt deals[,] which allowed Quadrangle to purchase the assets of Dennis Publishing with borrowed funds." (Compl. ¶ 295; see id. ¶¶ 26, 206, 218-225; see also id. ¶¶ 299-302, 309, 316-17.) She specifically alleges that Quadrangle created the "complex nested ownership structure of shell companies to own the Dennis Publishing assets after the leveraged buyout" to make Quadrangle seem "far removed from the Maxim Bungalows fraud" and "render it judgment proof" (Pl. Quadrangle Opp. Br. at 9; see Compl. ¶¶ 27-28).

When viewed in the light most favorable to Pullman, her allegations that Quadrangle and Alpha Media failed to maintain formal barriers between management structures, shared managers, and used Alpha Media to perpetrate fraud, provide a plausible claim that has been pled with particularity. Bd. of Trustees, 296 F.3d at 172-73 (request to pierce corporate veil found sufficiently particular when defendants failed to maintain formal barriers between management structures and used subservient corporation to perpetrate fraud).

Quadrangle also can be held liable for this fraud, without piercing the corporate veil, under general agency principles. Phoenix Canada Oil Co. v. Texaco, Inc., 842 F.2d 1466 (3d Cir. 1988). To hold a principal liable for the acts of its subsidiaries under agency law, total domination over the subsidiary does not need to be proven. Phoenix Canada Oil Co., 842 F.2d at 1477; Royal Indus. Ltd. v. Kraft Foods, Inc., 926 F. Supp. 407, 412 (S.D.N.Y. 1996). But there must be "a relationship between the corporation and the cause of action. Not only must an arrangement exist between the two corporations so that one acts on behalf of the other and within the usual agency principles, but the arrangement must be relevant to the plaintiff's claim of wrongdoing." Phoenix Canada Oil Co., 842 F.2d at 1477; Royal Indus. Ltd., 926 F. Supp. at 412 ("Suing a parent corporation on an agency theory is quite different from attempting to pierce the corporate veil. In the first instance, the claim against the parent is premised on the view that the subsidiary had authority to act, and was in fact acting, on the parent's behalf-that is, in the name of the parent."). Put another way, "a parent corporation may become a party to its subsidiary's contract under an agency theory if the parent's conduct manifests an intent to be bound by the contract." Oy Noresin AB v. ICC Indus., Inc., 91 Civ. 1748 (MBM), 1991 WL 161367 (S.D.N.Y. Aug. 16, 1991).

Pullman has sufficiently pled the necessary relationship by alleging that Alpha Media (and Maxim) acted on Quadrangle's behalf to further the fraud. She alleges that Maxim was ultimately controlled by Quadrangle, (Compl. ¶¶ 23, 26-28, 32-33), and that Quadrangle Group, LLC formed AMGH, with its subsidiary Alpha Media, to acquire the assets of Dennis Publishing (id. ¶¶ 27-28). She further alleges that: (1) the misleading "advertisement" she relied on was published after Quadrangle controlled Maxim (id. ¶¶ 35, 271); (2) AMGH, Alpha Media Group and Dennis Publishing, Inc. "did not have a separate business identity and shared the same corporate executive officers and principal places of business" (id. ¶ 29); and (3) "key agreements between [Dennis Publishing and Quadrangle] were all executed by Quadrangle partners," and in some of them Quadrangle partners signed on behalf of Alpha Media Group, Inc. (Pl. Quadrangle Opp. Br. at 10-11).

These allegations are sufficient for Pullman's claim to survive Quadrangle's motion to dismiss. See Graco, Inc. v. PMC Global, Inc., 08 Civ. 1304 (FLW), 2009 WL 904010, at *12 (D.N.J. Mar. 31, 2009) (denying motion to dismiss when plaintiffs described scheme where related corporate defendants worked closely to accomplish common goal of promoting new business; "determination of whether there is a sufficient relationship with or control over affiliates for the purposes of proving agency is a question of fact, [and] the Court [therefore] must deny Defendants' request to dismiss"); Automated Salvage Transport, 106 F. Supp. 2d at 626 (evidence that one entity created another and maintained it as a "division" supports agency relationship); Expediter Int'l of Washington, Inc. v. Direct Line Cargo Mgmt. Servs., Inc., 995 F. Supp. 468, 482 (D.N.J. 1998) (denying summary judgment on misappropriation of trade secret claims because jury could find that defendant acted as a principal to influence or control business practices of affiliates, and that "self-characterized 'family of companies[]' jointly participated in freight dealings and shared both stock ownership and employees"); see also Phoenix Canada Oil Co, 842 F.2d at 1476-78 (remanding case when facts suggested that principal drafted contract and participated in business dealings of subsidiary, and entities shared several officers and directors).

D. Application of Law to Colvin

Pullman alleges that Colvin, the former Chief Executive Officer ("CEO") of Alpha Media when it was known as Dennis Publishing, (Compl. ¶¶ 36-37), participated in the Maxim Bungalows fraud by "sign[ing] the various key Maxim Bungalow documents including the Maxim Bungalows licensing agreement and [being] the Dennis Publishing 'front man' for the Maxim Bungalows to the investors and to the media" (id. ¶ 38). She argues that this evidence shows Colvin "had knowledge of the misrepresentations and omission of material facts being made in the advertising of the Maxim Bungalows as well as participated in the perpetuation of the false information with [his] own statements in the media and to investors." (Id. ¶ 318.) Pullman does not seem to be alleging Colvin was personally liable for Alpha Media's alleged fraudulent acts, but rather would hold him liable for his own alleged misrepresentations.⁷ Taking Pullman's allegations as true, however, they fail to establish Colvin's fraud and should be dismissed.

7 Under New Jersey Law, CEOs' may be held liable for their own fraudulent misrepresentations. News Am. Mktg. In-Store Servs., LLC v. Anidjar, 09 Civ. 6070 (WJM), 2010 WL 3040118, at *5 (D.N.J. Aug 4, 2010); see Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3d Cir. 1978) ("A corporate officer is individually liable for the torts he personally commits and cannot shield himself behind a corporation when he is an actual participant in the tort.").

(1) Attributing Statements to Colvin and Reasonable Reliance

Pullman's claim fails because she either has not shown Colvin's statements were fraudulent misrepresentations or has not shown her reliance.

First, Pullman alleges that Colvin misrepresented Maxim's status when he stated that Maxim was in "partnership" to develop the Maxim Bungalows: at a speech, (Compl. ¶ 61; Plaintiff's Colvin Opposition Declaration ("Pl. Colvin Opp. Decl.") Ex. F; Pl. Colvin Opp. Br. at 10), at a meeting, (Compl. ¶ 290), and in a May 29, 2007 press release when he expressed Maxim's "delight[] to be in partnership with Elliott to create these superb 5 star destinations on this truly wonderful Caribbean island" (id. ¶ 291). In the context of the overarching scheme of misrepresentation, it seems plausible that Colvin meant to misrepresent "ownership" when he used "partnership." But unlike her pleadings against Alpha Media, Pullman does not provide additional statements by Colvin to suggest this interpretation of his use of "partnership." In the end, however, Pullman's allegations based on these statements fail because she does not plead she actually relied on Colvin's statements in making her purchase; she fails to show she was even aware of them at the time.

Second, Pullman alleges that Colvin misrepresented Maxim's status when, in an affidavit for a different lawsuit, he denied that Alpha Media was a franchisor and explicitly stated that Alpha Media "merely licensed the Maxim Marks in developing the Maxim Bungalows timeshares." (Id. ¶ 88.) But this seems to be a true statement. Moreover, it was made after Pullman purchased her timeshare interests, and therefore Pullman cannot allege her reliance on it. (Colvin Br. at 6; see Compl. ¶¶ 68-72, 84-88.)

Third, Pullman makes a conclusory allegation that Colvin knew the misrepresentations he made were false because he "knew Dennis Publishing was not the owner of the Maxim Bungalows and did not make a large equity investment in the Maxim Bungalows projects." (Pl. Colvin Opp. Br. at 12) (emphasis in original). This statement cannot establish fraud because it does not plead wrongdoing. It is undoubtedly true that Colvin "knew" Maxim did not own the Maxim Bungalows. But Colvin's knowledge that Maxim did not own the Maxim Bungalows does not establish that he was trying to misrepresent that it did.

Indeed, the majority of Pullman's allegations against Colvin establish his involvement in the Maxim Bungalows project, but not that he misrepresented Maxim's ownership; alleging fraud requires more than pleading guilt by association. Pullman pleads that Colvin executed the Maxim Bungalows Licensing Agreement, (Compl. ¶¶ 166, 174, 282-83; Pl. Colvin Opp. Br. at 12), but this does not show fraud. Indeed her theory of the case is that there was a licensing agreement but there also were affirmative misrepresentations suggesting Maxim was more than a licensor. Similar misrepresentations are not present in her allegations against Colvin. She pleads that Colvin participated in, and profited from, the sale of Maxim to Quadrangle Group, LLC. (Compl. ¶ 294; Pl. Colvin Opp. Br. at 12, 14; see Pullman Colvin Opp. Decl. Ex. G.) This might provide motive, but does not show misrepresentation. She pleads that Colvin was at the Maxim Bungalows resort in June of 2007, (Compl. ¶ 286; Pl. Colvin Opp. Br. at 12.), and appeared in a promotional video for Maxim Bungalows "in a segment shot during the Miss Maxim contest held at the Sun Village Resort in 2006" (Pl. Colvin Opp. Br. at 13).⁸ But this establishes presence, not fraud.

8 While Pullman alleges that she watched this video before she made her purchase decision, she has not alleged any material statements in the video that were made by Colvin and that she relied upon in her purchase decision. (See Pl. Colvin Opp. Br. at 13.)

Fourth, Pullman argues Colvin is liable under a theory of apparent authority for the statements made by Maxim's agents. Although the statements by apparent agents like Walser do connect Alpha Media to the fraud, they do not link, or even mention, Colvin. Pullman also cannot show any relevant statements by Colvin as the alleged principal that she relied upon in her decision to credit Maxim's apparent agents. See Sylvan Learning Sys., Inc. v. Gordon, 135 F. Supp. 2d 529, 546 (D.N.J. 2000) (finding no voluntary acts or manifestations by defendants that misled plaintiffs into believing relationship of authority existed).

(2) Duty to Disclose

If Pullman's claim for fraud was based on omission, it would also fail because she has not established any duty on Colvin's part to disclose statements to her. Pullman alleges that Colvin failed to disclose pertinent information on numerous occasions: (1) he "did not ensure that Maxim registered the Maxim Bungalows mark in the Dominican Republic" (Compl. ¶ 178); (2) he did not take "necessary steps" to enforce quality control provisions in the licensing agreement (id. ¶ 285); (3) he "purposely overlooked the Elliott Company's financial irregularities, the poor condition of Elliott[s'] existing resort, and the co-mingling of investor funds between projects" (id. ¶ 287); and (4) he "knew that Dennis Publishing would be sold prior to the collapse of the Maxim Bungalows Ponzi scheme" (id. ¶ 293). She has not, however, alleged any type of relationship between her and Colvin that would obligate his disclosure of those facts to her. See, e.g., Premier Pork LLC v. Westlin, Inc., 07 Civ.A. 1661, 2008 WL 724352, at *12 (D.N.J. Mar. 17, 2008) (fraud claim dismissed when plaintiff did not "allege the existence of any kind of 'special relationship' between Plaintiff and any defendant"). In the alternative, Pullman argues that a duty to disclose can arise when an omission is "contrary to a representation actually made by the defendant," but cites a case for that proposition that is interpreting state consumer protection statutes. In re Philips/Magnavox Television Litig., 09 Civ. 3072, 2012 WL 3522787, at *10 (D.N.J. Sept. 1, 2010). Pullman, moreover, has not alleged actual misrepresentations by Colvin that would necessitate a corrective disclosure.

(3) Scienter

Pullman has failed to allege sufficiently that Colvin acted with fraudulent intent or took any action knowing or believing it was false. See, e.g., Minutto v. Genesis Advisory Servs., Inc., 11 Civ.A. 3391 (ES), 2012 WL 1085807, at *6 (D.N.J. Mar. 29, 2012) (dismissing fraud complaint because plaintiff did not demonstrate that defendant had knowledge of statement's falsity); Wiatt v. Winston & Strawn, LLP, 10 Civ.A. 6608 (JLL), 2011 WL 2559567, at *17-18 (D.N.J. Jun. 27, 2011) (same). It is not enough to simply state that Colvin knew the misrepresentations were false because he "knew Dennis Publishing was not the owner of the Maxim Bungalows and did not make a large equity investment in the Maxim Bungalows projects." (Pl. Colvin Opp. Br. at 12) (emphasis in original). Such a statement lacks allegations to support it. See Ashcroft, 556 U.S. at 678-79 (claims that are "supported by mere conclusory statements do not suffice . . . [w]hile legal conclusions can provide the framework of a complaint, they must be supported by factual allegations"). While statements of "knowledge" under 9(b) can be averred generally, they still must meet the minimum pleading standards of Rule 8. Id. at 686-87 ("Rule 9 merely excuses a party from pleading discriminatory intent under an elevated pleading standard. It does not give him license to evade the less rigid — though still operative — strictures of Rule 8.").

(4) Particularity

Pullman has not described Colvin's alleged misrepresentations with the particularity Rule 9(b) requires. In her opposition papers, Pullman identifies a who, what, when, where and how of fraud that situates Alpha Media, but not Colvin. (Pl. Colvin Opp. Br. at 20-22.) She also does not specifically connect Colvin to the fraud in her complaint's recitation of the allegations for fraud. (Id. at 4-6.) Rather she discusses Alpha Media and Maxim, and she refers to "defendants" in general. But "[w]here multiple defendants are asked to respond to allegations of fraud, the complaint should inform each defendant of the nature of his alleged participation in the fraud." DiVittorio, 822 F.2d at 1247.

When Pullman does discuss Colvin, she similarly lacks sufficient particularity. Among other allegations, she states that "Colvin was the individual who executed the Maxim Bungalows Licensing Agreement which allowed the fraudulent scheme to be branded with the world renowned Maxim name," that his "various appearances in person, in print, and on video exude[] his enthusiasm for the Maxim Bungalows project," and that he "did not take the necessary steps to ensure that Felix Dennis fulfilled his obligation." (Pl. Colvin Opp. Br. at 23.) These suggest the contours of a theory of fraud, but do not fill in the details with the particularity Rule 9(b) requires to put defendants on notice of the specific acts of which they are accused. Suez Equity Investors, L.P., 250 F.3d at 95 (complaint must "specify the statements [plaintiff] claims were false or misleading, give particulars as to the respect in which plaintiff contends the statements were fraudulent, state when and where the statements were made, and identify those responsible for the statements") (citation omitted).

E. Application of Law to Ezersky

Pullman fails to establish the material misrepresentation and reliance elements necessary to state a claim for common law fraud against Ezersky, a managing partner at Quadrangle Group, LLC. Her theory of liability is that Ezersky is rendered culpable because he "raised the funds necessary to execute the fully leveraged buyout of Dennis Publishing," (Compl. ¶ 40), and that he "had knowledge of the misrepresentations and omission of material facts being made in the advertising of the Maxim Bungalows as well as participated in the perpetration of the false information with [his] own statements in the media and to investors" (id. ¶ 318). Beyond these general allegations, however, she has not provided any specific misrepresentations that Ezersky made and upon which she relied.

She pleads that Ezersky: (1) "must have known of the fraud based on the fact that the Maxim Bungalows mark was never registered nor was an application submitted to register the mark by Dennis Publishing" (Pl. Quadrangle Opp. Br. at 24); (2) acquired the Dennis assets for Quadrangle (Compl. ¶ 40); and (3) "participated in the over-inflation of the Dennis Publishing assets to obtain funding that appears to have been greater than the purchase price, especially if Felix Dennis received shares in Alpha Media Group Holdings" (Pl. Quadrangle Opp. Br. at 25). Missing in these pleadings are actual misrepresentations made by Ezersky, her reliance upon those misrepresentations, or indeed the particularity that Rule 9(b) requires.

IV. New Jersey Consumer Fraud Act

Pullman's second claim against the three groups of defendants is for violation of the New Jersey Consumer Fraud Act ("NJCFA"). She alleges that Maxim engaged in consumer fraud through false advertising and unconscionable business practices. The Court's task is to determine whether Pullman fails to plead enough facts with sufficient particularity to survive a motion to dismiss under Rule 12(b)(6) and the heightened pleading requirements of Rule 9(b).

A. Connections to New Jersey

As a threshold matter, defendants argue that the NJCFA should not apply to Pullman's claim because she was solicited and viewed the relevant timeshare materials in the Dominican Republic. (Colvin Reply Br. at 7.) Pullman has, however, alleged sufficient connections to New Jersey.

Pullman is a resident of New Jersey. (Compl. ¶¶ 5, 200.) She alleges defendants had general connection to the state because "[a]ll of the Quadrangle entities conducted business in the state of New Jersey." (Id. ¶ 34.) She also alleges defendants furthered the fraud in New Jersey: (1) defendants "committed fraud in the sales and advertising of the Maxim Bungalows, in the State of New Jersey, with the intent to induce New Jersey consumers to purchase Maxim Bungalows real estate products" (id. ¶ 4); and (2) Maxim "magazines were sold and distributed to consumers within the State of New Jersey," and New Jersey consumers were targeted for sales because visitors could "choose 'New Jersey' from a drop down subscription menu" on the various Dennis Publishing websites (id. ¶ 24).

Pullman also finalized her purchase while in New Jersey. She "visited the Maxim controlled websites [from New Jersey] to research the Maxim Bungalows projects," and "mailed her Maxim Bungalows purchase payment to the Maxim Bungalows sales office" from New Jersey. (Compl. ¶ 45; see id. ¶ 141). Moreover, Pullman "was solicited to purchase Maxim Bungalows timeshare interests over the telephone" while in New Jersey, (id. ¶¶ 145-46), and the Maxim promotional video was later emailed to her "so that she could show her friends when she returned home to New Jersey" (id. ¶ 120).

Pullman has alleged sufficient connections with New Jersey to entitle her to the protections afforded under the NJCFA. Defendants' precedent does not argue for a contrary result. See Nirmul v. BMW of N. Am., LLC, 10 Civ. 5586 (SDW), 2011 WL 5195801 (D.N.J. Oct. 31, 2011) (plaintiffs lacked standing when they were not citizens of New Jersey and their only connection to state was that defendant was headquartered there).

B. Applicable Law

Under the NJCFA, a plaintiff must allege with particularity three elements: "(1) an unlawful practice by the defendant; (2) an ascertainable loss by plaintiff; and (3) a causal nexus between the first two elements — defendant's allegedly unlawful behavior and the plaintiff's ascertainable loss." Szymczak v. Nissan N. Am., Inc., 10 Civ. 7493 (VB), 2011 WL 7095432, at *16 (S.D.N.Y. Dec. 16, 2011) (citation omitted); see also S. Jersey Gas Co. v. Mueller Co., Ltd., 09 Civ. 4194 (RBK) (JS), 2011 WL 5873028, at *7 (D.N.J. Nov. 18, 2011) ("It is well settled that a claim under the New Jersey Consumer Fraud Act must satisfy the specificity requirement of [Rule] 9(b).") (internal quotation marks and citations omitted). "The history of the Act is one of constant expansion of consumer protection." Gennari, 691 A.2d at 364. Indeed, "the [NJCFA] is remedial legislation to be construed liberally in favor of consumers." Arcand, 673 F. Supp. 2d at 298 (citation omitted).

C. Application of Law to Alpha Media

Alpha Media contends that Pullman does not adequately allege a violation of the NJCFA because she fails to: (1) allege Alpha Media engaged in unlawful conduct under the NJCFA; (2) allege a causal connection between Alpha Media's conduct and her ascertainable loss; and (3) plead the alleged fraud with sufficient particularity.

(1) Unlawful Conduct

The question for the Court is whether the alleged misrepresentations constitute an "unlawful practice" under the NJCFA. The statute states that:

[t]he act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice . . . ."

N.J.S.A. § 56:8-2.

"The NJCFA creates three categories of unlawful practices: affirmative acts, knowing omissions, and violations of state regulations." Arcand, 673 F. Supp. 2d at 296. The common thread is "[the] capacity to mislead." Cox v. Sears Roebuck & Co., 647 A.2d 454, 462 (N.J. 1994) (citing Fenwick v. Kay Am. Jeep, Inc., 371 A.2d 13, 16 (N.J. 1977)). Allegations of an affirmative act — a misrepresentation — do not require a showing of intent or even actual deceit or fraud. Cox, 647 A.2d at 462; Leon v. Rite Aid Corp., 774 A.2d 674, 677 (N.J. Super. Ct. App. Div. 2001); Gennari, 691 A.2d at 365 ("One who makes an affirmative misrepresentation is liable even in the absence of knowledge of the falsity of the misrepresentation, negligence, or the intent to deceive."). Rather, unlawful conduct is established when the plaintiff shows that the statement is "not factually accurate and was made in the connection or sale of merchandise." Arcand, 673 F. Supp. 2d at 299.

Alpha Media argues that it did not engage in unlawful conduct under the NJCFA because it did not have a duty to disclose. (Alpha Media Br. at 17-18.) But, again, this misstates Pullman's claim; although the Court potentially faces two inchoate types of consumer fraud — misrepresentation and omission — Pullman has expressly disclaimed a theory predicated on omission. (Pl. Alpha Media Opp. Br. at 6, 22-23.) When active misrepresentation can be found, an alleged failure to disclose does not "convert the claim into one of omission" under the NJCFA. Arcand, 673 F. Supp. 2d at 298.

Alpha Media also argues that Pullman has not attributed to it any material misrepresentations. (Alpha Media Reply Br. at 9.) Pullman has linked Maxim to the alleged misstatements, however, through Walser and the Ocean View Real Estate Agent. (Compl. ¶¶ 128, 137; Pl. Alpha Media Opp. Br. at 8.) She also has shown that those misrepresentations were material to her purchase decision. (Compl. ¶¶ 229, 271.); see also supra.

Pullman alleges that she relied on "Maxim Bungalows marketing and advertising materials[,] which included the [Maxim Draft Book,] the various Maxim websites and the . . . Maxim promotional video, when she made her Maxim Bungalows purchase decision." (Id. ¶ 271.) She alleges these materials were provided to aid her purchase decision, and made her believe Maxim was an owner of the Maxim Bungalows, which in turn convinced her to purchase timeshares. (Id. ¶¶ 122, 143-44, 228-29, 271, 273.) This is an unlawful practice under the NJCFA; Maxim was not an owner of the bungalows but the materials inducing Pullman's purchase made Maxim seem like it was. Folbaum v. Rexall Sundown, Inc., A-244-2T1, 2004 WL 3574116, at *4 (N.J. Super. Ct. App. Div. May 4, 2004) ("A misrepresentation constitutes an unlawful practice if it is a materially false statement of fact made to induce the buyer to make the purchase."); see Vibra-Tech Eng'rs, Inc. v. Kavalek, 849 F. Supp. 2d 462, 499 (D.N.J. 2012) (unlawful practice when defendants induced plaintiffs to purchase equipment at higher price than necessary); Gennari, 691 A.2d at 366 (defendant's misrepresentations were material to the transaction when defendant's agents misled plaintiffs and defendant controlled marketing, advertising and sale of homes).

Pleadings sufficient for finding common law fraud, moreover, often are sufficient for finding "unlawful practice" under the NJCFA. Construcciones Haus Soceidad v. Kennedy Funding Inc., 07 Civ. 0392 (PGS), 2008 WL 1882857, at *5 (D.N.J. Apr. 24, 2008); see Prof'l Cleaning and Innovative Bldg. Servs., Inc. v. Kennedy Funding, Inc., 245 F. App'x 161, 166 (3d Cir. 2007) ("The averments supporting the common-law fraud claim overlap with those supporting the NJCFA claim . . . ."); Royale Luau Resort, LLC v. Kennedy Funding, Inc., 07 Civ. 1342 (HAA), 2008 WL 482327, at *5 (D.N.J. Feb 19, 2008) ("The same analysis with regard to [plaintiff's NJCFA] claim applies here such that [plaintiff's] common law fraud claim also survives [d]efendants' motion to dismiss."). Pullman has sufficiently pled an "unlawful practice" under the NJCFA.

(2) Casual Connection

Alpha Media argues that Pullman fails to allege a causal connection between its unlawful conduct and her ascertainable loss. Alpha Media bases its argument on Pullman's statement that she "did not view the advertisement or read the editorial prior to finalizing her Maxim Bungalows purchase." (Alpha Media Br. at 18.) But it is plain from Pullman's complaint that this particular statement refers back to the specific advertisements and editorial in the immediately preceding paragraphs. It is not intended to function as a general disavowal of any causal connection between Maxim's publicity materials and her loss.

Pullman has alleged a connection between Alpha Media's unlawful conduct and her loss. She incorporates by reference into her NJCFA cause of action all her prior allegations, (Compl. ¶ 230), which include references to the specific promotional materials upon which she relied (id. ¶¶ 120, 123, 141). Reading a few paragraph further into her second cause of action, moreover, Pullman alleges that she "relied on other Maxim Bungalows marketing and advertising materials which included the 'Maxim [Draft] Book,' the various Maxim websites and the 'Right-Time, Right-Place' Maxim promotional video, when she made her Maxim Bungalows purchase decision," (id. ¶ 271), and that she "would not have made her Maxim Bungalows purchase if she had known that Maxim was not an owner of the Maxim Bungalows" (id. ¶ 273; see also Pl. Alpha Media Opp. Br. at 17). She has pled a connection and her loss. Alpha Media simply is incorrect when it states that "nowhere in the Complaint does [Pullman] explain how the ascertainable loss is attributable to the [Defendant's allegedly] unlawful conduct." (Alpha Media Br. at 19) (citation omitted).

Alpha Media also argues that Pullman's allegation (among other allegations) that she did not know Maxim was an owner of the Maxim Bungalows was unsupported and indeed contradicted by her testimony in other actions. (Id. at 19.) But Pullman has sufficiently pled that she did not know Maxim was an owner. Her statements in other hearings do not "blatantly contradict" her allegations in this complaint. Palm Beach, 2011 WL 1655575, at *5-6; see also supra pp. 19-22.

Relatedly, Alpha Media argues it would be unreasonable for Pullman to rely on the Maxim Draft Book because it was marked as "Draft," and unreasonable to rely on the Maxim Bungalows webpages that were linked from maxim.com "without following up with anyone to confirm the nature of the arrangement between Defendants and the Resorts." (Alpha Media Br. at 19-20.) But Pullman was not looking at either of these items in a vacuum. Rather, it was the consistent portrayal of the Maxim Bungalows as Maxim's property — from sales representatives to marketing materials — that made her reliance reasonable. (See Pl. Alpha Media Opp. Br. at 20.) Pullman does not need to exhaust every conceived avenue of inquiry for her complaint to survive a motion to dismiss.

Finally, Alpha Media argues that Pullman fails to plead a causal nexus between its alleged failure to disclose the License Agreement and the purported cause of her loss. (Alpha Media Br. at 20.) But this case is about misrepresentation, not failure to disclose. Pullman has linked Alpha Media to unlawful conduct under the NJCFA and to her loss.

(3) Particularity

Alpha Media argues that Pullman's NJCFA claim should be dismissed for a lack of particularity. Claims under the NJCFA are also governed by the particularity requirements of Rule 9(b). Daloisio v. Liberty Mut. Fire Ins. Co., 754 F. Supp. 2d 707, 709 (D.N.J. 2010) (citation omitted). "Rule 9(b) merely requires that the Complaint provide[ ] sufficient information for the Defendant[s] to prepare a defense as to the particular allegations of fraud." See Charles v. Lawyers Title Ins. Corp., 06 Civ. 2361 (JAG), 2007 WL 1959253, at *9 (D.N.J. July 3, 2007) (internal quotation marks and citation omitted) (relying on Rolo v. City Investing Co. Liquidating Trust, 155 F.3d 644, 658 (3d Cir. 1998) (abrogation on other grounds recognized by Forbes v. Eagleson, 228 F.3d 471 (3d Cir. 2000))).

Pullman's NJCFA claim is pled with sufficient particularity. By itself, a claim predicated on the Maxim Draft Book would not necessarily survive the particularity inquiry because Pullman has not pled that the book was actually drafted by Maxim and has not connected Maxim to the unnamed person who gave her the book. The promotional video seems a closer call, as it described the Maxim "partnership," but it also has many of the same issues with particularity. At the least, Pullman has pled with particularity that she made her purchase after viewing misleading advertisements and representations on a website owned by Maxim, during the fifteen day cooling-off period after returning from the Dominican Republic on June 29, 2007, and that during that period she also viewed Maxim Bungalows brochures with the Maxim logo that also led her to believe Maxim owned the bungalows. This is misrepresentation pled with sufficient particularity.

Because the Court finds that the alleged violations of the NJCFRA are sufficiently pled, it need not consider at this time whether Maxim's alleged conduct is also actionable as an (unbriefed) unconscionable commercial practice under the NJCFA. Beth Schiffer Fine Photographic Arts, Inc. v. Colex Imaging, Inc., 10 Civ. 05321, 2012 WL 924380, at *15 (D.N.J. Mar. 19, 2012).

D. Application of Law to Quadrangle Group, LLC

Quadrangle argues that the NJCFA claim against it should be dismissed because Pullman "cannot demonstrate that [Quadrangle] had any involvement with any representations that were allegedly made to [Pullman]." (Quadrangle Reply Br. at 7.) But the Court's analysis of Alpha Media's liability has established representations that were "unlawful activity" under the NJCFA. And its analysis of Quadrangle's liability for common law fraud has established that Pullman successfully ties such unlawful conduct directly to Quadrangle and provides cognizable alterative theories of liability for the conduct based on piercing the corporate veil and agency.

Quadrangle also argues that Pullman cannot establish a causal connection, focusing on the marketing and advertising materials that she did not view. (Id. at 8.) Pullman has sufficiently pled, however, that she based her purchase decision on other materials that she did view. Relatedly, Quadrangle takes issue with Pullman's attempt to buttress her causal connection by pleading that "other Maxim Bungalows purchasers did consider [the advertising materials she did not view] in their purchase decision which fueled the growth of the Ponzi scheme until it finally collapsed," increasing the damages that she suffered. (Id. at 8.) The Court does not need to consider whether this allegation supports a causal connection because one already has been established. Pullman "relied on other Maxim Bungalows marketing and advertising materials[,] which included the [Maxim Draft Book,] the various Maxim websites and the 'Right-Time, Right-Place' Maxim promotional video, when she made her Maxim Bungalows purchase decision," (Compl. ¶ 271), and "would not have made her Maxim Bungalows purchase if she had known that Maxim was not an owner of the Maxim Bungalows" (id. ¶ 273).

E. Application of Law to Colvin and Ezersky ⁹

9 Pullman's allegations against Colvin and Ezersky are found in her "Third Cause of Action: Piercing the Corporate Veil Against Colvin and Ezersky." (Compl. ¶¶ 277-319.) But a reading of her complaint shows that she actually is arguing a theory of personal liability and tort participation under the NJCFA, and not a theory of corporate veil piercing. (Id. ¶ 279) ("New Jersey courts have found it unnecessary to pierce the corporate veil . . . if the individual directly participated in the conduct giving rise to the [NJCFA] liability."). Indeed, she does not argue a theory of corporate veil piercing against Colvin or Ezersky when opposing their motions to dismiss either, (see Pl. Colvin Opp. Br. at 22-23; Pl. Quadrangle Opp. Br. at 23-25), although she does argue a piercing the corporate veil theory against Quadrangle Group, LLC (Pl. Quadrangle Opp. Br. at 8).

Pullman argues that Colvin and Ezersky are personally liable under the NJCFA. New Jersey courts have permitted individual liability when an "individual ha[s] engaged in conduct prohibited by the [NJ]CFA." Allen v. V and A Bros., Inc., 26 A.3d 430, 441 (N.J. 2011).

Pullman relatedly argues that Colvin and Ezersky are personally liable under the "tort participation theory." (Pl. Colvin Opp. Br. at 22-23; Pl. Quadrangle Opp. Br. at 23-25.) Under New Jersey law, "a corporate officer can be held personally liable for a tort committed by the corporation when he or she is sufficiently involved in the commission of the tort." Saltiel v. GSI Consultants, Inc., 788 A.2d 268, 272 (N.J. 2002). "A predicate to liability is a finding that the corporation owed a duty of care to the victim, the duty was delegated to the officer and the officer breached the duty of care by his own conduct." Id. Indeed, the "essence" of the theory is that the corporate officer was "sufficiently involved in the commission of the tort." Id. Moreover, when the underlying cause of action is for tortious conduct (e.g. for fraud), a plaintiff must plead "an independent duty of care separate and apart from the contract between the parties." Vukovich v. Haifa, Inc., 03 Civ. 737, 2007 WL 655597, at *11 (D.N.J. Feb 27, 2007); see S. Broward Hosp. Dist. v. Medquist Inc., 516 F. Supp. 2d 370, 395-96 (D.N.J. 2007) (dismissing complaint for failure to plead independent duty).

Pullman has failed to allege that Colvin individually engaged in an unlawful practice; indeed, she has not tied Colvin to any advertisement that she relied upon in making her purchase. Her evidence consists of two types. First, she cites purportedly misleading advertisements and editorials that she did not view before making her purchase decision. (Compl. ¶ 267.) Second, she cites marketing materials that she did view before making her purchase — the promotional video, the Maxim Draft Book, pictures of the construction site, and information on the Maxim website — but alleges only that Colvin appeared in the promotional video. (Pl. Colvin Opp. Br. at 13.) She does not show, or even allege, that Colvin's appearance misrepresented, constituted an unlawful practice, or led to her ascertainable loss beyond conclusory statements that Colvin participated in the fraud. (Compl. ¶¶ 281, 318.) Regardless of whether her claim is for false and misleading advertisement or unconscionable business practice, (Pl. Colvin Opp. Br. at 20), Pullman has not connected Colvin to an alleged violation. See, e.g., Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007) (affirming dismissal of NJCFA claim when plaintiff "failed to show that Home Depot's alleged unlawful practice caused her loss"); Dist. 1199F Health and Welfare Pension Plan v. Janssen, L.P., 784 F. Supp. 2d 508, 530 (D.N.J. 2011) ("Plaintiffs do not allege sufficiently how Defendants' allegedly fraudulent promotion of Risperdal for off-bale uses caused Plaintiffs to suffer injury."). Relatedly, Pullman has failed to establish a duty of care owed by Alpha Media, that the duty of care was delegated to Colvin, or that Colvin personally engaged in conduct that would have breached a duty of care under a theory of tort participation.

Pullman also has failed to establish Ezersky's personal liability under the NJCFA. She has not alleged that Ezersky played a role in creating the marketing or advertising materials she considered before making her Maxim Bungalows purchase.

Pullman argues that Ezersky is personally liable under the "tort participation theory." (Pl. Quadrangle Opp. Br. at 23-25.) Pullman pleads that Ezersky knew that the Maxim Bungalows were acquired from Dennis Publishing, and that he "must have known of the fraud based on the fact that the Maxim Bungalows mark was never registered nor was an application submitted to register the mark by Dennis Publishing." (Id. at 24.) She further alleges that he participated in the over-inflation of Dennis Publishing assets to obtain funding for Quadrangle that was greater than the purchase price. (Id. at 25.) Pullman's claim against Ezersky fails for the same reason her common law fraud claim against him fails: she has not pled Ezersky's involvement in the actual unlawful practices upon which she relied.

V. Piercing the Corporate Veil Against Defendants Colvin and Ezersky

To the extent Pullman intends to plead "piercing the corporate veil" as an independent cause of action, that claim should be dismissed because it does not exist as a free-standing claim. See Pulaski Constr. Co., Inc. v. Air Frame Hangers, Inc., 950 A.2d 868, 878 (N.J. 2008).

VI. Punitive Damages

To the extent Pullman intends to plead punitive damages as a substantive claim, and not as a remedy, that claim should be dismissed. See Hassoun v. Cimmino, 126 F. Supp. 2d 353, 372 (D.N.J. 2000) ("Punitive damages are a remedy incidental to [a] cause of action, not a substantive cause of action in and of themselves.") (collecting cases). Punitive damages are available to Pullman, however, should she prevail on a claim and satisfy the standard for awarding such damages.

VII. Failure to Join Required Parties

Defendants argue that Pullman's complaint should be dismissed for failure to join required parties. Under Federal Rule of Civil Procedure 12(b)(7), an action must be dismissed for failure to join a party under Rule 19. Rule 19 sets forth a two-step test for determining whether the Court must dismiss an action for the failure to join an indispensable party. First, the Court must determine whether an absent party belongs in the suit, i.e., whether the party qualifies as a "required" party under Rule 19(a). A person is "required" if:

(A) in that person's absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:

(i) as a practical matter impair or impede the person's ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest

Fed. R. Civ. P. 19(a). If a party does not qualify as required under Rule 19(a), then the Court need not proceed to step two and decide whether its absence warrants dismissal under Rule 19(b). See Associated Dry Goods Corp. v. Towers Fin. Corp., 920 F.2d 1121, 1123 (2d Cir. 1990).

Second, if a person is "required" under Rule 19(a) but cannot be made a party to the action for jurisdictional or other reasons, the Court must decide whether, "in equity and good conscience, the action should proceed among the existing parties or should be dismissed." Fed. R. Civ. P. 19(b) (citing four factors to consider); Viacom Int'l, Inc. v. Kearney, 212 F.3d 721, 725 (2d Cir. 2000).

Applying this analytical framework, the Court concludes that the Elliotts and Impact entities are not required parties under Rule 19(a), and therefore the Court need not inquire further into the equities.

Alpha Media — joined by all other defendants — argues that Pullman's failure to join the Elliotts and the Impact entities will create "substantial risk of Defendants' incurring inconsistent obligations," (Alpha Media Br. at 21), and therefore they are required within the meaning of Rule 19(a)(1)(B)(ii). Their argument fails for three reasons.

First, Rule 19(a)(1)(B)(ii) requires that the absent party "claims an interest" in the subject of the suit before a court will consider the risk of inconsistent obligations. Peregrine Myanmar Ltd. v. Segal, 89 F.3d 41, 49 (2d Cir. 1996) (Defendant's joinder argument failed because third-party had not claimed interest relating to subject of action, and defendant's "attempt to assert on behalf of the [third-party] its supposed concern about the dilution of its interest . . . falls outside the language of the rule. It is the absent party that must 'claim an interest.'"); Aguinaga v. UBS AG, 09 Civ. 03261 (RJH), 2010 WL 5093433, at *10 (S.D.N.Y. Dec. 14 2010) (party is not "required" within the meaning of Rule 19(a)(1)(B) if it does not claim an interest) (collecting cases). Defendants cannot claim an interest for the Elliotts and Impact entities when they have not themselves claimed an interest relating to the subject of this action.

Second, even if the absent parties had claimed an interest, Rule 19(a)(1)(B)(ii) focuses on whether the existing parties would be subject to "double, multiple, or otherwise inconsistent obligations." "Inconsistent obligations occur when a party is unable to comply with one court's order without breaching another court's order concerning the same incident." Fed. Ins. Co. v. SafeNet, Inc., 758 F. Supp. 2d 251, 258 (S.D.N.Y. 2010) (citation omitted). In this case, defendants have not established that the non-parties' absence will leave any existing party unable to comply with a court order.

It is critical, moreover, that the inconsistent obligations be " caused by the non-party's absence in the case." MasterCard Int'l Inc. v. Visa Int'l Serv. Ass'n, Inc., 471 F.3d 377, 388 (2d Cir. 2006) (emphasis in original). Pullman alleges theories of fraud based on Maxim's misrepresentations to her, and seeks a remedy from Maxim. No other entities are necessary to determine Maxim's liability, and accordingly, there is no indication that the absence of other entities will cause Maxim to face inconsistent obligations. Newbro v. Eberhard, 03 Civ. 7238 (LAP), 2004 WL 936800, at *2 (S.D.N.Y. Apr. 30, 2004) (finding that when plaintiff alleged improper actions by defendants, presence of third party was not necessary to avoid risks of multiple or inconsistent obligations to defendants); Barclays Bank PLC v. Vena, 87 Civ. 3621 (JFK), 1988 WL 96012, at *1 (S.D.N.Y. Aug. 30, 1988) (denying motion to dismiss action against guarantors of obligations when plaintiff elected to pursue action against non-party guarantor in state court, and defendants faced potential indemnification claim by non-party guarantor).

Third, a "long-standing principle of federal law is that a plaintiff does not need to include all joint tortfeasors as defendants in a single lawsuit." Nelligan ex rel. Estate of Proia v. Cmty. Gen. Hosp. of Sullivan Cnty., 240 F.R.D. 123, 125 (S.D.N.Y. 2007) (collecting cases); Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1623 (plaintiff may sue one or more tortfeasors without joining the others; plaintiff need not join principles with agents or parents with subsidiary corporations).

In the alternative, Alpha Media argues that complete relief cannot be afforded because "the primary relief sought by [Pullman] is to set aside her contract with Ocean Palms," and Ocean Palms has not been joined. (Alpha Media Br. at 23); see Fed. R. Civ. P. 19(a)(1)(A). The complaint is plain, however, that Pullman's primary relief is for the compensatory and punitive damages that flow from a successful fraud claim; these can be afforded without delving into the validity of the contract. (Compl. ¶¶ 229, 276, 319, 323.)

The cases Alpha Media cites are unavailing. In Dernick v. Bralorne Res., Ltd., 639 F.2d 196, 199 (5th Cir. 1981), the court found that the party, which defendant sought to join, was not indispensable. In Global Discount Travel Servs., LLC v. Trans World Airlines, Inc., 960 F. Supp. 701, 709-10 (S.D.N.Y. 1997), the court was motivated by a concern that a judgment in defendants favor would not protect it from identical claims by a third-party.¹⁰ That concern is not present in this case because no one but Pullman can assert her claim for fraud against Maxim, there is little risk of another court deciding Maxim's liability for this fraud, and this fraud claim does not require interpretation of the terms of a contract in a way that would be persuasive authority for another court.

10 That third-party also had the right to seek liquidated damages of $10 million if defendant was found to have materially breached the contract.

Alpha Media's evocation of prior cases when Pullman described other parties as indispensable is not dispositive. (Alpha Media Br. at 22.) Pro se plaintiffs are accorded greater leeway in interpreting their allegations; the fact that Pullman used the term "indispensable" does not mean she intended it in the Rule 19 legal sense. Defendants, moreover, have failed to persuade the Court that it should look to Pullman's representations in prior cases to resolve this case.

Because the Court finds that the Elliotts and the Impact entities are not required parties, the Court need not proceed to step two of the analysis. Cont'l Cas. Co. v. Am. Home Assurance Co., 05 Civ. 7874 (LTS)(JCF), 2008 WL 1752231, at *6 (S.D.N.Y. Apr. 14, 2008). Defendants motion to dismiss Pullman's claim under Rule 12(b)(7) should be denied.

CONCLUSION

For the reasons discussed above, the motions to dismiss under Rule 12(b)(6) brought by Alpha Media and Quadrangle should be DENIED as to the claims for common law fraud and violation of the NJCFA, but GRANTED as to the claims against them for piercing the corporate veil and punitive damages. The motions to dismiss under Rule 12(b)(7) brought by Alpha Media and Quadrangle should be DENIED. The motions to dismiss brought by Colvin and Ezersky should be GRANTED in their entirety.

NOTICE OF PROCEDURE FOR FILING OBJECTIONS

TO THIS REPORT AND RECOMMENDATION

The parties shall have fourteen days from the service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed. R. Civ. P. 6(a), (d) (adding three additional days when service is made under Fed. R. Civ. P. 5(b)(2)(C), (D), (E), or (F)). A party may respond to another party's objections within fourteen days after being served with a copy. Fed. R. Civ. P. 72(b)(2), Such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Paul A. Crotty at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Crotty. The failure to file these timely objections will result in a waiver of those objections for purposes of appeal. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).

SO ORDERED.

/s/_________

SARAH NETBURN

United States Magistrate Judge DATED: New York, New York

January 11, 2013