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Kontonotas v. Hygrosol Pharmaceutical Corp.

June 16, 2009

GEORGE KONTONOTAS
v.
HYGROSOL PHARMACEUTICAL CORPORATION AND SPIRO SPIREAS



The opinion of the court was delivered by: Jacob P. Hart United States Magistrate Judge

ORDER AND OPINION

I. Introduction

In this case as originally filed, plaintiff George Kontonotas ("Kontonotas") sought to recover from defendants Hygrosol Pharmaceutical Corporation ("Hygrosol"), and Spiro Spireas moneys he claims are due to him for acting as a broker between the defendants and United Research Laboratories and Mutual Pharmaceutical Co., Inc. ("URL/Mutual"). He asserted a claim for breach of contract against Hygrosol, and claims for unjust enrichment/quantum meruit against both defendants.

Kontonotas now seeks leave to amend his complaint. He seeks to add as an additional defendant Sanford Bolton, who is the only Hygrosol shareholder besides Spireas. He also intends to add a fraud claim against all defendants, and to seek a finding that all monies received by defendants from URL/Mutual are to be held in a constructive trust for him. As explained below, his motion will be granted in part and denied in part.

II. Relevant Law

A court may permit the filing of an amended complaint, and leave to amend should be granted freely when justice so requires. Fed. R. Civ. Pr. 15(a). Outright refusal to grant leave to amend, without any justifying reason, is an abuse of the trial court's discretion. Foman v. Davis, 371 U.S. 178, 182 (1962).

Among the grounds that could justify a denial of leave to amend are undue delay, bad faith, dilatory motive, prejudice, and futility. Id.; U.S. v. Duffus, 174 F.3d 333, 337 (3d Cir. 1999); In re Burlington Coat Factory Securities Litigation, 114 F.3d 1410 (3d Cir. 1997); Lorenz v. CSX Corp., 1 F.3d 1406, 1414 (3d Cir. 1993).

Here, Defendants argue only that the amendment would be futile. Futility of amendment means that the amended complaint, if filed, would fail to state a claim upon which relief could be granted, based upon the same standard of legal sufficiency as under Rule 12(b)(6). In re Burlington Coat Factory Securities Litigation, supra, at 114 F.3d 1434; Breyer v. Meissner, 23 F. Supp.2d 540, 542 (E.D. Pa. 1998).

A claim may be dismissed under Rule 12(b)(6) only if it appears beyond doubt that the plaintiff could prove no set of facts in support of the claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Moreover, as set out in Breyer v. Meissner, although the court is not required to accept legal conclusions made by the party seeking amendment:

"[T]he court must consider only those facts alleged in the complaint and accept all of the allegations as true." ALA, Inc. v. CCAIR, Inc., 29 F.3d 885, 859 (3d Cir. 1994) (citing Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.E.2d 59 (1984)). The plaintiff is entitled to the benefit of "every favorable inference that can be drawn from those allegations." Schrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir. 1991).

23 F. Supp.2d at 542.

III. Discussion

A. The Fraud Claim

Kontonotas alleges that the defendants fraudulently represented to him that he would be the only person to receive a commission for revenues URL/Mutual paid to Hygrosol. Proposed Second Amended Complaint at ΒΆ 59. Actually, however, according to Kontonotas, the defendants had previously entered an ...


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