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Case 2:12-cv-01059-SRC-CLW Document 62 Filed 07/11/13 Page 1 of 3 PageID: 347

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

ALBERT KENNEY,

Plaintiff,

v.

M2 WORLDWIDE, LLC et al.,

Defendants.

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Civil Action No. 12-1059 (SRC)

OPINION & ORDER

CHESLER, District Judge

This motion comes before the Court on the motion to dismiss the First Amended

Complaint (“FAC”) by Defendants Michael Kalfus and Robin Kalfus (collectively,

“Defendants”). For the reasons stated below, the motion will be granted in part and denied in

part.

In brief, this case arises from a dispute over alleged misappropriation of three market

analysis methods created by Plaintiff Albert Kenney (“Plaintiff”). This matter was removed to

this Court from the Superior Court of New Jersey on February 22, 2012. Plaintiff subsequently

sought leave to file an amended complaint, which was granted. The FAC asserts seven claims:

1) tortious interference with prospective economic advantage; 2) misappropriation of trade

secrets, pursuant to N.J.S.A. § 56:15-1; 3) breach of contract; 4) fraud in the inducement; 5)

fraud; 6) declaratory judgment; and 7) conversion. Defendants now move to dismiss this

pleading. The FAC alleges that Michael Kalfus and Robin Kalfus are the sole members of

Defendant M2 Worldwide, LLC, a limited liability corporation organized under the laws of the

Case 2:12-cv-01059-SRC-CLW Document 62 Filed 07/11/13 Page 2 of 3 PageID: 348

State of New Jersey.

Defendants first move to dismiss the FAC on the ground that New Jersey law shields the

owners of a LLC from personal liability for acts performed in their roles as members of a LLC.

As Plaintiff contends, this is incorrect. In Saltiel v. GSI Consultants, Inc., 170 N.J. 297, 303

(2002), the New Jersey Supreme Court held: “the essence of the participation theory is that 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.” The FAC alleges that Defendants

were both personally involved in the commission of various torts against Plaintiff. Plaintiff has

pled sufficient facts to support viable claims against Defendants for personal liability for acts

performed in their roles as corporate officers, pursuant to Saltiel.

In reply, Defendants argue that the FAC asserts no tort claims, but only contract claims.

This does not fit the FAC, which does not allege a written contract and plainly asserts most

claims under tort theories. Indeed, only one count asserts a breach of contract claim against the

LLC. The remaining counts assert claims based on fraud, misappropriation of trade secrets,

tortious interference, and conversion. At this stage, this Court cannot conclude that “[t]he

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dispute clearly arises out of and relates to the contract and its breach.” Wasserstein v. Kovatch,

261 N.J. Super. 277, 286 (N.J. Super. Ct. App. Div. 1993).

Defendants next argue that the fraud claims must be dismissed for failure to meet the

particularity requirement of Federal Rule of Civil Procedure 9(b). Defendants are correct that the

FAC fails to make any factual allegations to support any fraud claims against Robin Kalfus.

Defendants’ reply brief argues only that the the FAC fails to state sufficient facts to support fraud

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It is not clear on what theory Count Six, the declaratory judgment claim, is predicated.

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Case 2:12-cv-01059-SRC-CLW Document 62 Filed 07/11/13 Page 3 of 3 PageID: 349

claims against Robin Kalfus, and it does not continue to support the argument that the fraud

claims against Michael Kalfus are insufficient under Rule 9(b). The FAC pleads facts with

sufficient particularity to support fraud claims against Michael Kalfus, but not Robin Kalfus. As

to the fraud claims against Robin Kalfus, the motion to dismiss will be granted in part, and Count

Five will be dismissed without prejudice. The motion to dismiss the FAC will otherwise be

denied.

For these reasons,

IT IS on this 11th day of July, 2013, hereby

ORDERED that Defendants’ motion to dismiss the First Amended Complaint (Docket

Entry No. 48) is GRANTED in part and DENIED in part; and it is further

ORDERED that, as to Count Five against Robin Kalfus only, the motion to dismiss is

GRANTED, and Count Five against Robin Kalfus is hereby DISMISSED without prejudice;

and it is further

ORDERED that, as to all other counts in the First Amended Complaint, the motion to

dismiss is DENIED.

s/ Stanley R. Chesler
Stanley R. Chesler, U.S.D.J

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