Virani v. NLV Financial Corporation et al

UNITED STATES DISTRICT COURT
FOR THE 	ZOZG JAN -5 	PM 3: 14
DISTRICT OF VERMONT CLERH
SANYA VIRANI, 	) lftv-J	BY ______
) 7 '-f"lTY CLERK
Plaintiff, 	)
)
V. 	) 	Case No. 2:24-cv-01150
)
NL V FINANCIAL CORPORATION, 	)
NATIONAL LIFE INSURANCE COMPANY, )
and LIFE INSURANCE COMP ANY OF 	)
THE SOUTHWEST, 	)
)
Defendants. 	)
OPINION AND ORDER
GRANTING DEFENDANTS' MOTION TO DISMISS
FIRST AMENDED CLASS ACTION COMPLAINT AND
GRANTING LEAVE TO AMEND
(Doc. 33)
On October 31, 2024, Plaintiff Sanya Virani ("Plaintiff') brought suit individually
on behalf of herself and as a class action on behalf of those similarly situated
(collectively, "Plaintiffs") against NL V Financial Corporation ("NL V") and its wholly
owned subsidiaries, National Life Insurance Company ("NLIC") and Life Insurance
Company of the Southwest ("LICS") (collectively, "Defendants"). Plaintiff filed a first
amended class action complaint ("FAC") on June 16, 2025. (Doc. 31.) Defendants moved
to dismiss the FAC on July 16, 2025. (Doc. 33.) Plaintiff opposed the motion on August
15, 2025, (Doc. 37), and Defendants replied on August 29, 2025. (Doc. 38.) The court
heard oral arguments on Defendants' motion to dismiss on September 15, 2025,
("September 15, 2025 Hearing"), and took the pending motion under advisement.
Plaintiff is represented by Craig A. Raabe, Esq., Joseph Gentile, Esq., Robert A.
Izard, Esq., Ronen Sarraf, Esq., Seth R. Klein, Esq., and Pietro J. Lynn, Esq. Defendants
are represented by Alan E. Schoenfeld, Esq., Elizabeth Bedrick, Esq., Jessica L. Lewis,
Esq., Justin B. Barnard, Esq., Kendall A. Hoechst, Esq., Ritchie E. Berger, Esq., and
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Timothy Perla, Esq.
I. 	Factual and Procedural Background.
A. 	Allegations in the FAC.
Plaintiff brought suit individually and on behalf of those similarly situated,
namely, those who purchased an Index Universal Life ("IUL") insurance policy from
Defendants and allocated some or all of their policy's value to the Credit Suisse No Cap
Annual Point-to-Point Indexed Strategy ("Balanced Index") and/or the US Pacesetter No
Cap Annual Point-to-Point Indexed Strategy ("Pacesetter Index") (collectively,
"Indices"). 1 To sell these IUL insurance policies ("Policies"), Defendants partner with
independent marketing organizations ("IMOs") to market the Policies, and IMOs then
recruit broker general agencies ("BGAs") who provide support for independent agents,
and the independent agents, in turn, sell the Policies.
On June 2, 2023, Plaintiff communicated with Defendants' agent concerning
purchasing a life insurance policy, and thereafter they continued to communicate for
several months until Plaintiff decided to purchase an IUL policy (the "Policy") from
Defendants and completed and submitted an application for insurance. In doing so, she
selected the Pacesetter Index. On September 8, 2023, LICS issued Plaintiff her Policy,
and the following day, it sent a letter to her home. This letter contained a National Life
Insurance Illustration (the "Illustration"); an Indexed Universal Life Buyer's Guide (the
"Buyer's Guide"); the Policy, No. LS1539788; and the life insurance application
completed by Plaintiff.
The Policy issued to Plaintiff had a base coverage of $2,767,336. Under the
Policy, Plaintiff is responsible for paying expenses which include the monthly cost of
insurance, the monthly expense charge, the monthly policy fee, the monthly accumulated
value charge, and the monthly cost of any riders. The Policy's monthly accumulated
1 No class has been certified in this action, but Plaintiff defines the class as follows: "All persons
who own or owned a SummitLife, PeakLife or FlexLife IUL universal life policy issued by
Defendants and who allocated some or all of the Accumulated Value under those Policies to the
Balanced[] Index and/or the [] Pacesetter Index." (Doc. 31 at 36, ,i 151.)
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value is the net premium plus the sum of any returns from any interest crediting strategies
minus those expenses ("Accumulated Value").
In the FAC, Plaintiff alleges the Policy requires her "to apportion the Accumulated
Value among various [i]nterest [c]rediting [s]trategies offered by Defendants, including
'[f]ixed-[t]erm [s]trategies' and '[i]ndexed [s]trategies' -the returns from which are
credited to the Policy's Accumulated Value." (Doc. 31 at 6, 125.) Plaintiff asserts that
she "allocated 100% of the Accumulated Value under her Policy to the[] Pacesetter
Index." Id. at 25, 1 106.
The Illustration sent to Plaintiff after the Policy was issued provided information
concerning indexed strategies, including the Balanced Index and Pacesetter Index.
Indexed strategies are comprised of notional assets, meaning assets that do not own
stocks, bonds, or any other assets and in which there can be no investment. Instead,
indexed strategies track the returns of underlying assets, which Defendants use to
calculate the amount to credit to an insurance policy's Accumulated Value. Defendants
license the indexed strategies offered under their Policies from the creators of each
indexed strategy.
1. 	The Illustration's Characterization of the Pacesetter Index.
Plaintiff characterizes the Balanced Index Illustration as follows:
The [i]ndex has a 0.5% per annum embedded fee deducted on a daily basis.
The index fee will place a drag on the performance of the index, offsetting
any appreciation of its portfolio, exacerbating any depreciation of its
portfolio[,] and causing the level of the index to decline steadily if the value
of its portfolio remains relatively constant.
Id. at 8, 136. Plaintiff alleges the Illustration expressly characterized the Balanced Index
as "an excess return index, which means that it reflects the return of components net of
the cost of funding a hypothetical investment in them. The [Balanced] Index returns are
likely to be negatively affected by the cost of funding." Id. at 9,136 (emphasis and
internal quotation marks omitted).
Plaintiff describes the Pacesetter Index Illustration as providing the following:
In calculating the performance of the [i]ndex, SG [Americas Securities,
LLC,] deducts a maintenance fee of 0.50% per annum on the level of the
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[i]ndex, and fixed transaction and replication costs, each calculated on a
daily basis. The transaction and replication costs cover, among other things,
rebalancing and replication costs. The total amount of transaction and
replication costs is not predictable and will depend on a number of factors,
including the leverage of the [i]ndex, which may be as high as 200%, the
performance of the components underlying the [i]ndex, market conditions
and the changes in the market environments, among other factors. The
transaction and replication costs, which are increased by the [i]ndex's
leverage, and the maintenance fee will reduce the potential positive change
in the [i]ndex and increase the potential negative change in the [i]ndex.
While the volatility control applied by the [i]ndex may result in less
fluctuation in rates of return as compared to indices without volatility
controls, it may also reduce the overall rate of return as compared to
products not subject to volatility controls.
Id. at , 3 7. Contrary to the Balanced Index, Plaintiff alleges that the Illustration did not
explicitly characterize the Pacesetter Index as an excess return index nor "describe the
investment profile or asset allocation of the[] Pacesetter Index." Id. at 13,, 51.
In the Buyer's Guide, Plaintiff alleges that "Defendants represented that the
returns from the [Pacesetter] Index are from a mix of the returns from U.S. equities, U.S.
government debt[,] and commodities within the agriculture, metals[,] and energy
sectors[.]" (Doc. 31 at 13,, 51.) Plaintiff claims that according to a Societe Generale 2
brochure issued in April 2024, the Pacesetter Index is an excess return index, which
means it derives its returns from investing in futures contracts, producing returns from
three sources. The relevant source of returns that Plaintiff claims the brochure identifies
is "interest earned on the cash (or other) collateral deposited in connection with the
purchases of such a future contract (known as the 'collateral return.')." Id. at, 52
(emphasis omitted). The brochure allegedly states that an excess return index "will not
generate the same returns that would be obtained from investing directly in future
contracts underlying the [i]ndex components because the collateral return is not used in
calculating an excess return index." Id. The brochure is not attached to the FAC.
Plaintiff alleges "Defendants misleadingly stated that the [] Pacesetter Index
returns are from a mix of the returns from U.S. equities, U.S. government debt[,] and
2 Societe Generale is a banking and financial services company.
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commodities while failing to disclose that the [] Pacesetter Index returns were limited to
the excess above the collateral return[,]" id. at 14, ,r 56, and the Buyer's Guide's
"exclusion of the collateral return is effectively a massive undisclosed 'fee."' Id. at ,r 54.
As a result, Plaintiff claims that "[the] Pacesetter Index returns were not calculated or
credited in accordance with the terms of the Policy." Id. at ,r 55.
2. 	The Illustration's Characterization of Return Rates.
Plaintiff alleges that the Illustration contains a chart which provides two sets of
return rates for both Indices. The first set displays return rates, also referred to as
crediting rates, for each of the Indices. The second set displays return rates for each of the
Indices with a 0% floor, no cap, and high participation rate.
With respect to the second set of return rates, the Illustration allegedly states that
"the historical rates shown below are determined by applying the current [c]ap,
[p ]articipation[,] and [f]loor [r]ates to the most recent [twenty] full calendar years of
historical index performance[.]" (Doc. 31 at 10, ,r 43) (emphasis, brackets, and internal
quotation marks omitted). Plaintiff acknowledges that the Illustration contains a
disclaimer which notes that "historical performance of the S&P 500 Index, [Balanced
Index] and[] Pacesetter Index should not be considered a representation of past or future
performance of any of the [i]ndexed [s]trategies available in this policy[.]" Id. (emphasis
and internal quotation marks omitted). The Illustration also allegedly represents that the
historical rates in the chart "do not represent the actual interest that would have been
credited because the [c ]ap [r]ate and [p ]articipation [r]ate would have changed over time
and actual results would have been different." Id. at ,r 44 (emphasis and internal quotation
marks omitted).
Plaintiff alleges that, although the Illustration characterizes its chart as providing
"historical rates" for both Indices based on "[twenty] full calendar years of historical
index performance[,]" id. at ,r 43 (emphasis and internal quotation marks omitted), the
Pacesetter Index did not exist prior to December 10, 2021. Plaintiff asserts that
"[c]onsequently, at most, less than two years of returns could have been based on
historical information." Id. at 14, ,r 59. Similarly, Plaintiff alleges that the Balanced Index
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did not exist prior to November 20, 2017 and, therefore, "less than six years of returns
could have been based on historical information." Id. at 15, ,r 64.
For the Balanced Index only, Plaintiff concedes that the final page of the
Illustration provides the following disclaimer:
No actual investment which allowed the tracking of the performance of the
Index was possible before 11/20/2017. The return results provided herein
are illustrative only and were derived by means of a retroactive application
of a back-casted model designed with the benefit of hindsight. These back-
casted, hypothetical, historical annualized index returns have inherent
limitations. No representation is made that in the future the Index will have
the returns shown. Alternative modeling techniques or assumptions might
produce significantly different results and may prove to be more
appropriate. Actual annualized returns may vary materially from this
analysis. Any effective volatility controls may reduce the overall rate of
return.
(Doc. 31 at 16, ,r 67) (emphasis omitted).
The Illustration allegedly contains no similar language concerning the Pacesetter
Index, which Plaintiff claims renders the Illustration "fraudulent and misleading[,]"
because it "promised that the [] Pacesetter Index returns and crediting rates were based on
historical information[.]" Id. at 15, ,r 61. Plaintiff characterizes the Balanced Index
disclaimer as misleading because, "[d]ue to its reaffirmation that [the Balanced I]ndex's
returns are 'historical,' the 'fine print's' inconsistent and irreconcilable reference to a
'back-casted model' does nothing to mitigate the fraudulent statements in the
Illustration." Id. at 16, ,r 68.
3. 	The Illustration's Displayed Return Rates.
Plaintiff asserts that in an indexed strategy, the participation rate is the percentage
of the annual increase in an indexed strategy that is credited to the Policy's Accumulated
Value, the cap rate is an upper limit on the amount of returns that can be credited from an
indexed strategy's gains, and the floor rate is a lower limit on the amount of returns that
can be credited from an indexed strategy's gains or losses.
With respect to the Pacesetter Index, the second set of return rates in the
Illustration's chart allegedly displays a crediting rate based on a participation rate of
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215%, a floor rate of 0%, and no cap. To achieve a 215% participation rate for the
Pacesetter Index, Plaintiff alleges Defendants "would have to buy more than twice as
many futures contracts than if they were crediting returns based on the performance of[]
Pacesetter Index alone." Id. at 22,195. To attain a 0% floor rate for the Pacesetter Index,
Plaintiff claims Defendants would need to "buy options to hedge against the prospect that
the value of the futures contracts that are designed to replicate the [] Pacesetter Index do
not fall in value." Id. at 23,196. Plaintiff asserts that obtaining a 215% participation rate
and a 0% floor rate for the Pacesetter Index, as allegedly represented in the Illustration's
chart, would require "additional costs" and result in further reduction of the returns
credited under the Policy from the Pacesetter Index. Id. at 1 97. The chart allegedly does
not account for these costs and losses in the displayed return rates, and as a result, "the
represented return is more than double the represented 'historical' return of the
underlying [] Pacesetter Index[,]" rendering the displayed return rates "even more
improbable than the back-cast [Pacesetter] Index returns." (Doc. 31 at 11-12, 231149,
97.)
With respect to the Balanced Index, the second set of return rates in the
Illustration's chart allegedly displays a crediting rate based on a participation rate of
200%, a floor rate of 0%, and no cap. Plaintiff similarly alleges that "the [c]hart only
shows the benefit of a 200% [p]articipation [r]ate and a 0% [f]loor [r]ate without
accounting for the cost of that enhanced participation rate and floor [rate]." Id. at 23, 1
99. Plaintiff therefore likewise claims that "[b]ecause losses are not included in the
crediting rate and not deducted from returns, the represented return is more than double
the represented 'historical' return of the underlying Balanced[] Index[,]" id. at 11, 147,
which makes the Balanced Index's represented return rates "similarly improbable." Id. at
23, 199.
Plaintiff asserts that the crediting rate under Actuarial Guideline 3 49A is the lesser
rate between the applicable interest crediting strategy and the benchmark indexed
3 Actuarial Guidelines are a set of rules used by the insurance industry in the United States.
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account, which at the date of the Illustration was 6.42%. Plaintiff claims the Illustration
displays the Balanced Index and Pacesetter Index as having crediting rates greater than
6.42% when the lesser value of 6.42% would be applied to the Policy. Plaintiff thus
alleges that the Illustration was "designed to suggest that the [I]ndices with excessive
crediting rates existed for twenty years with historical success during that time, which ...
they did not." Id. at 12,, 50.
Plaintiff asserts that Defendants used "a fraudulent sales trick" because the
Illustration's represented returns for the Indices contained "manufactured[] [and]
misleading performance ... based on a highly speculative back-cast model such that
these [I]ndices had less than a 1 in 1,000 chance of performing consistent with the
misleading 'historical' performance." Id. at 2,, 5 (emphasis omitted).
4. 	Plaintiff's Claims.
Plaintiff asserts that she has suffered harm from Defendants' "[m]isleading
[d]escriptions" of the Indices in the Illustration, (Doc. 31 at 25), because she allocated
100% of her Policy's Accumulated Value to the Pacesetter Index and had 0% interest
credited to her account from the allocation period of September 22, 2023, to September
21, 2024. Id. at, 106. Plaintiff can cancel the Policy only by paying a surrender charge,
which is $49,618.33 in the first year of the Policy, which then gradually declines to
$5,202.59 in the tenth year of the Policy, and is finally eliminated by the eleventh year of
the Policy. As a result, Plaintiff claims that she "stands to lose tens of thousands of
dollars in [s]urrender [c]harges if she cancels and surrenders her Policy in the short term,
largely or completely eliminating all of the Policy's Accumulated Value and resulting in
a complete loss of the premiums she has already paid." Id. at 26, , 111. Plaintiff does not
address whether she may change her selection oflndices or whether there is a penalty for
doing so.
In her FAC, Plaintiff asserts three causes of action against Defendants: Breach of
Contract (Count I), Violation of Mass. Gen. Laws ch. 93A § 9(3) and Other States'
Similar Unfair and Deceptive Trade Practices Statutes (Count 11), and Violation of the
Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c)
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(Count III).
B. 	The September 15, 2025 Hearing.
At the September 15, 2025 Hearing, the court dismissed Plaintiffs claims against
Defendants NL V and NLIC without prejudice because Plaintiffs counsel, Seth R. Klein,
Esq., conceded that there were no factual allegations supporting Plaintiffs claims against
them. 4 The court also dismissed, without prejudice, Plaintiffs allegations that the
Illustration's description of volatility controls and statement that "[i]f no index value was
published on the beginning and end dates of the calendar year, then the most recent
previous index value [would be] used to determine the historical rate[]" were misleading
because Attorney Klein stated Plaintiff abandoned these claims. (Doc. 31 at 39, ,i 167)
(internal quotation marks omitted) (first and second alterations in original).
II. 	Conclusions of Law and Analysis.
A. 	Standard of Review.
To survive a motion to dismiss filed pursuant to Fed. R. Civ. P. 12(b)(6), "a
complaint must contain sufficient factual matter, accepted as true, to 'state a claim to
relief that is plausible on its face."' Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Parties must allege sufficient facts
to "nudge[] their claims across the line from conceivable to plausible[.]" Twombly, 550
U.S. at 570. "A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged." Iqbal, 556 U.S. at 678.
The sufficiency of a complaint under Rule 12(b)( 6) is evaluated using a "two-
pronged approach[.]" Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir. 2010) (internal
quotation marks omitted) (quoting Iqbal, 556 U.S. at 679). First, the court discounts legal
conclusions and "[t]hreadbare recitals of the elements of a cause of action, supported by
mere conclusory statements[.]" Iqbal, 556 U.S. at 678. The court is also "not bound to
accept as true a legal conclusion couched as a factual allegation[.]" Id. ( citation omitted).
4 Although only LICS remains as a defendant, this Order and Opinion refers to "Defendants"
because the FAC uses that term.
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Second, the court considers whether the factual allegations, taken as true, "plausibly give
rise to an entitlement to relief." Id. at 679. This second step is fact-bound and context-
specific, requiring the court "to draw on its judicial experience and common sense." Id.
The court does not "weigh the evidence" or "evaluate the likelihood" that a party will
prevail. Christiansen v. Omnicom Grp., Inc., 852 F.3d 195, 201 (2d Cir. 2017).
B. 	Whether the Court Should Consider the Policy and the Illustration.
"In considering a motion to dismiss for failure to state a claim pursuant to Rule
12(b)(6), a district court may consider the facts alleged in the complaint, documents
attached to the complaint as exhibits, and documents incorporated by reference in the
complaint." DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010) (citations
omitted). "Courts have generally held a document to be incorporated by reference where
it has been extensively quoted in the complaint or where the complaint relied on its
terms." Scott v. Romano, 790 F. Supp. 3d 226, 231-32 (W.D.N.Y. 2025) (collecting
cases); see also DeLuca v. AccesslT Grp., Inc., 695 F. Supp. 2d 54, 60 (S.D.N.Y. 2010)
("To be incorporated by reference, the complaint must make 'a clear, definite[,] and
substantial reference to the documents."') ( citations omitted).
At the motion to dismiss stage, a court may also consider a document that is
'"integral' to the complaint[,]" DiFolco, 622 F .3d at 111 (citations omitted), provided it
is "clear on the record that no dispute exists regarding the authenticity or accuracy of the
document[]" and "clear that there exist no material disputed issues of fact regarding the
relevance of the document." Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 2006) (citations
omitted). A document is integral to a complaint when "the complaint 'relies heavily upon
its terms and effect[.]'" DiFolco, 622 F.3d at 111 (quoting Mangiafico v. Blumenthal, 471
F.3d 391, 398 (2d Cir. 2006)).
Here, the F AC incorporates both the Policy and Illustration by reference because
Plaintiff repeatedly references both documents and extensively quotes from them. See
Tavenner v. Int'! Bus. Machs. Corp., 2022 WL 4449215, at *2 (S.D.N.Y. Sept. 23, 2022),
aff'd, 2023 WL 4984758 (2d Cir. Aug. 4, 2023) (holding an arbitration agreement was
incorporated by reference because "the [c]omplaint as well as the [p]arties' briefing
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papers quote extensively from the [a]rbitration [a]greement[]"); Helprin v. Harcourt, Inc.,
277 F. Supp. 2d 327, 331 (S.D.N.Y. 2003) (holding a contractual agreement was
incorporated by reference because "the [c]omplaint makes several substantial references
to the [a]greement, even quoting certain paragraphs of the [a]greement verbatim[]"). The
Policy and Illustration are also integral to the FAC because Plaintiffs breach of contract
claim relies on their terms. See, e.g., Ultimate Nutrition, Inc. v. Leprino Foods Co., 747
F. Supp. 3d 371, 378 (D. Conn. 2024) ("When a claim is for breach of contract, 'the
complaint is deemed to incorporate the contract by reference because the contract is
integral to the plaintiffs' claim."') (citation omitted). The court therefore considers the
Policy and Illustration in ruling on Defendants' motion to dismiss.
C. 	Whether Plaintiff's Breach of Contract Claim Should Be Dismissed
(Count I).
Plaintiff claims Defendants breached the Illustration and the Buyer's Guide in the
following four ways:
[] First, Defendants breached their promise that the [] Pacesetter Index was
a total return fund when in fact it was an excess return fund. As a result, it
had the potential to earn a positive return only after exceeding the break-
even rate.
[] Second, Defendants breached their promise that the [] Pacesetter Index
and the Balanced [] Index had twenty years of historical returns when, in
fact, they had been in existence for only a fraction of that time period and,
therefore, could not have had any historical returns. In fact, these
"historical" returns were a fiction of a back-casting model.
[] Third, Defendants breached their promise that "[i]f no index value was
published on the beginning and end dates of the calendar year, then the
most recent previous index value [would be] used to determine the
historical rate."
[] Fourth, Defendants breached their promise that the[] Pacesetter Index
and the Balanced [] Index had returns and crediting rates based on historical
information, excluding changes in the [c]ap and [p]articipation [r]ates. In
fact, statistical analyses demonstrate that these returns and crediting rates
had less than a 1 in 1,000 chance of success and were a sham.
(Doc. 31 at 39-40, ,i,i 165-68.)
Defendants argue that Plaintiffs breach of contract claims fail because the
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Illustration and the Buyer's Guide are not contracts and because, in any event, the
Plaintiff entered into and was issued the Policy prior to her receipt of the Illustration and
the Buyer's Guide. Under Massachusetts law, an insurance policy and its application
"constitute the entire contract between the parties." Mass. Gen. Laws ch. 175 § 132(3).
Although at the September 15, 2025 Hearing Attorney Klein conceded that "the
[I]llustration is not part of the contract," (Doc. 41 at 23:7), in her opposition, Plaintiff
argues that the Illustration and the Buyer's Guide are parol evidence admissible to fill
gaps in the Policy because they are necessary to define the Indices, which are allegedly
material, undefined contract terms.
Massachusetts law governs Plaintiffs breach of contract claim because the Policy
was applied for and issued in Massachusetts. See Fellows v. Mauser, 302 F. Supp. 929,
933 (D. Vt. 1969) ("The Vermont rule is that the law of the place of the making of the
insurance contract governs its validity, its interpretation[,] and its construction.") (citing
Vermont Mut. Fire Ins. Co. v. Van Dyke, 165 A. 906 (Vt. 1933)). Under Massachusetts
law, when a contract is fully integrated, "[t]he parol evidence rule[] bars the introduction
of prior or contemporaneous written or oral agreements that contradict, vary, or broaden
an integrated writing." Kobayashi v. Orion Ventures, Inc., 42 Mass. App. Ct. 492,496,
678 N.E.2d 180, 184 (1997) (citations omitted). Put differently, in construing fully
integrated contracts, "[Massachusetts courts] give the [contractual] language its plain and
ordinary meaning, without reference to any extrinsic evidence." Siebe, Inc. v. Louis M
Gerson Co., 74 Mass. App. Ct. 544, 550, 908 N.E.2d 819, 825 (2009).
"An integrated agreement is a writing that constitutes a final expression of one or
more terms of an agreement." Coll v. PB Diagnostic Sys., Inc., 50 F.3d 1115, 1123 (1st
Cir. 1995). Massachusetts law provides a presumption of integration: "Where the writing
shows on its face that it is the entire agreement of the parties and 'comprises[]all that is
necessary to constitute a contract, it is presumed that they have placed the terms of their
bargain in this form to prevent misunderstanding and dispute, intending it to be a
complete and final statement of the whole transaction."' Bendetson v. Coolidge, 7 Mass.
App. Ct. 798, 802-03, 390 N.E.2d 1124, 1127 (1979).
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"Where the parties reduce an agreement to a writing which in view of its
completeness and specificity reasonably appears to be a complete agreement, it is taken
to be an integrated agreement unless it is established by other evidence that the writing
did not constitute a final expression." Coll, 50 F .3d at 1123 (internal quotation marks and
citations omitted). "A contract's integration clause ... is a good hint that the parties
intended it to be fully integrated[.]" Guldseth v. Fam. Med. Assocs. LLC, 45 F.4th 526,
535 (1st Cir. 2022) (internal quotation marks omitted) (quoting Realty Fin. Holdings,
LLC v. KS Shiraz Manager, LLC, 86 Mass. App. Ct. 242,247, 18 N.E.3d 350, 355
(2014)).
When a contract is fully integrated, the parol evidence rule permits the
introduction of extrinsic evidence that "elucidates the meaning of an ambiguous contract
term." Kobayashi, 42 Mass. App. Ct. at 496, 678 N.E.2d at 184 (citations omitted). A
contract term is ambiguous if it is "susceptible of more than one meaning[.]" Sullivan v.
Southland Life Ins. Co., 67 Mass. App. Ct. 439,443, 854 N.E.2d 138, 141-42 (2006)
(internal quotation marks and citation omitted). In determining whether there is an
ambiguity, "the court must first examine the language of the contract by itself,
independent of extrinsic evidence concerning the drafting history or the intention of the
parties." Bankv. Thermo Elemental Inc., 451 Mass. 638,648,888 N.E.2d 897,907
(2008) (citation omitted). The court must find the ambiguity on the face of the contract or
in its application, and extrinsic evidence cannot be used to create the ambiguity. See id. at
650, 888 N.E.2d at 908.
The Policy contains an integration clause stating: "Entire Contract[.] On the
Effective Date the entire contract between the parties is this [P]olicy and a copy of the
application and all riders and endorsements, and any amendments thereto, which are
attached at issue." (Doc. 33-5 at 25.) Plaintiff fails to allege that the Policy was not
intended to be the final expression of the parties' agreement. Because the Policy is fully
integrated, the Illustration and the Buyer's Guide are admissible extrinsic evidence only
if an exception to the parol evidence rule applies.
In arguing that the Policy is ambiguous, Plaintiff relies on Kobayashi v. Orion
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Ventures, Inc., which involved a noncom petition clause in a lease agreement that
provided: "Landlord will not permit the operation of any other delis in the [b ]uilding
during the term of this [l]ease." Kobayashi, 42 Mass. App. Ct. at 493, 678 N.E.2d at 182
(internal quotation marks omitted). The court was tasked with determining what
constituted a "deli" under the agreement. Notwithstanding the lease's integration clause,
the court admitted extrinsic evidence to define a "deli" because the term "was not defined
in the lease; nor was it self-defining." Id. at 496, 678 N.E.2d at 184 (citations omitted).
In contrast, the Policy in this case identifies the Indices offered as the "Annual
Point-to-Point Indexed Strategy- US Pacesetter No Cap Rider" and the "Annual Point-
to-Point Indexed Strategy- Credit Suisse No Cap Rider[.]" (Doc. 33-5 at 68, 74.) There
is no ambiguity in these terms, and Plaintiff does not articulate any principled argument
as to why they are susceptible to more than one meaning. Accordingly, the Illustration
and the Buyer's Guide cannot be admitted as extrinsic evidence because the Policy is not
ambiguous. Using the Illustration and the Buyer's Guide to define the Indices beyond the
scope of their definitions in the Policy would broaden the Policy in violation of the parol
evidence rule. See Siebe, Inc., 74 Mass. App. Ct. at 550, 908 N.E.2d at 825 ("[W]hen a
contract is clear and unambiguous, the parol evidence rule bars admission of extrinsic
evidence that would purport to contradict or modify the express terms of the written
contract.") (internal quotation marks and citations omitted). Moreover, Plaintiff entered
into the Policy as a contract before she received the Illustration and the Buyer's Guide
which is fatal to her breach of contract claims.
Because Plaintiffs breach of contract claim arises solely from the Illustration and
the Buyer's Guide, Plaintiff fails to state a plausible claim for breach of contract under
Massachusetts law. Plaintiffs breach of contract claim is therefore DISMISSED.
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D. 	Whether Plaintiff's Violation of Mass. Gen. Laws Chapter 93A and
Other States' Similar Unfair and Deceptive Trade Practices Statutes
Claim Should Be Dismissed (Count II).
In the FAC, Plaintiff alleges that Defendants violated Chapter 93A 5 because "the
allocation of Accumulated Values did not match the substantive qualities of those
strategies as promised and described in the [P]olicies[.]" (Doc. 31 at 40, 1 174.) Plaintiff
alleges Defendants' deceptive conduct consisted of ( 1) stating that "the [] Pacesetter
Index was a total return fund when in fact it was an excess return fund[]" with "the
potential to earn a positive return only after exceeding the break-even rate[]"; (2)
claiming that the Indices had twenty years of historical returns when "these 'historical'
returns were a fiction of a back-casting model[]"; and (3) providing returns and crediting
rates for the Indices based on "historical information" when "statistical analyses
demonstrate that these returns and crediting rates had less than a I in 1,000 chance of
success and were a sham." Id. at 39-40, 11 165-66, 168. Again, each of these alleged
misrepresentations was made after the Policy was issued.
Mass. Gen. Laws 93A provides a private cause of action for consumers who suffer
an injury as a result of unfair or deceptive acts or practices. "A successful claim under
this section [] requires, at a minimum, a showing of ( 1) a deceptive act or practice on the
part of the seller; (2) an injury or loss suffered by the consumer; and (3) a causal
connection between the seller's deceptive act or practice and the consumer's injury."
Casavant v. Norwegian Cruise Line, Ltd., 76 Mass. App. Ct. 73, 76, 919 N.E.2d 165,
168-69 (2009), aff'd, 460 Mass. 500, 952 N.E.2d 908 (2011) (citations omitted).
5 Before bringing a claim for unfair or deceptive trade practices, Mass. Gen. Laws 93A §9(3)
requires a claimant serve the respondent with a demand letter "describing the unfair or deceptive
act or practice relied upon and the injury suffered[.]" Mass. Gen. Laws 93A §9(3). Under the
statute, "[t]he demand requirements ... shall not apply ... if the prospective respondent does not
maintain a place of business or does not keep assets within the commonwealth[.]" Id. In this
case, Plaintiff served a demand letter upon Defendants, which was not required because
Defendants do not maintain a place of business in Massachusetts. See Moronta v. Nationstar
Mortg., LLC, 476 Mass. 1013, 1015, 64 N.E.3d 1287, 1290 (2016) ("[T]he provision clearly
excuses [a] plaintiff from serving a demand letter if the prospective respondent [] lacks a place of
business in Massachusetts[.]").
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Although Massachusetts common law offers "no static definition of the term
'deceptive,"' courts have found a practice is "deceptive" for purposes of Chapter 93A
"when it has the capacity to mislead consumers, acting reasonably under the
circumstances, to act differently from the way they otherwise would have acted (i.e., to
entice a reasonable consumer to purchase the product)." Aspinall v. Philip Morris Cos.,
Inc., 442 Mass. 381, 394, 396, 813 N.E.2d 476,486,488 (2004).
It is well established that a breach of contract alone cannot constitute an unfair or
deceptive trade practice for Chapter 93A purposes. See, e.g., Geis v. Nestle Waters N
Am., Inc., 321 F. Supp. 3d 230,245 (D. Mass. 2018) ("[A] mere breach of contract is not
an unfair or deceptive act or practice.") (citing cases). However, a breach of contract
which is "knowing and intended to secure 'unbargained-for benefits' to the detriment of
the other party[,]" City of Revere v. Bos./Logan Airport Assocs., LLC, 416 F. Supp. 2d
200, 209 (D. Mass. 2005) (quoting NASCO, Inc. v. Pub. Storage, Inc., 29 F.3d 28, 34 (1st
Cir. 1994) ), or "has an extortionate quality that gives it the rancid flavor of unfairness[,]"
Whitman & Co. v. Longview Partners (Guernsey) Ltd., 2015 WL 4467064, at *9 (D.
Mass. July 20, 2015) (internal quotation marks and citations omitted), can constitute an
unfair or deceptive trade practice for a Chapter 93A action.
In the FAC, Plaintiff does not assert that the Illustration or Policy contained any
steering language that induced her to obtain the Policy and deposit her Accumulated
Value into one Index rather than another. She similarly does not claim that she was
coerced into purchasing the Policy rather than obtaining different insurance from a
different company. She also does not contend that Defendants benefitted more from her
selection of the Pacesetter Index as opposed to other available Indices. Against this
backdrop, the Illustration sent to Plaintiff after the Policy was issued cannot plausibly be
alleged to have caused her to "act differently from the way [she] otherwise would have
acted[.]" Aspinall, 442 Mass. at 396, 813 N.E.2d at 488.
For the foregoing reasons, Plaintiff does not state a plausible claim for unfair or
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deceptive trade practices under Chapter 93A, 6 and the claim is DISMISSED.
E. 	Whether Plaintiff's Violation of RICO 18 U.S.C. § 1962(c) Claim
Should Be Dismissed (Count III).
Plaintiff alleges that "[i]n violation of 18 U.S.C. § 1962(c ), Defendants have
conducted or participated, directly or indirectly, in the conduct of the affairs of the
[e]nterprise through a 'pattern of racketeering activity,' as defined by 18 U.S.C.
§1961(5)." (Doc. 31 at 41-42, ,i 182.) "To establish a RICO claim, a plaintiff must show:
(1) a violation of the RICO statute, 18 U.S.C. § 1962; (2) an injury to business or
property; and (3) that the injury was caused by the violation of Section 1962." Cruz v.
FXDirectDealer, LLC, 720 F.3d 115, 120 (2d Cir. 2013) (internal quotation marks
omitted) (quoting DeFalco v. Bernas, 244 F.3d 286, 305 (2d Cir. 2001)). "To establish a
violation of§ 1962(c), in tum, a plaintiff must show that a person engaged in '(1) conduct
(2) of an enterprise (3) through a pattern (4) of racketeering activity."' Id. (quoting
DeFalco, 244 F .3d at 306). Defendants contend that the FAC fails to plausibly plead the
requisite elements of an enterprise, a pattern of racketeering activity, and causation. The
court agrees.
1. 	Whether Plaintiff Plausibly Pleads an Enterprise.
In the FAC, Plaintiff alleges that the IMOs, who market the Policies; BGAs, who
"provide back-office support for independent agents"; and independent agents, who sell
the Policies ("Sales Channel Persons"), are the RICO enterprise members along with
Defendants. (Doc. 31 at 4, ,i 14.) Plaintiff asserts that "[t]he [e]nterprise is directed by
Defendants, who (1) create the Policies, create and disseminate all Illustrations used to
sell the Policies, (2) require that the Sales Channel Persons strictly comply with the
fraudulent scheme concerning the sale of [P]olicies[,] and (3) collect the proceeds of the
[e]nterprise." Id. at 27, ,i 117.
6 Defendants argue that Plaintiff must plead her Chapter 93A claim with particularity because her
"allegations sound in fraud[.]" (Doc. 33 at 33) (citation omitted). The court need not determine
this issue for purposes of ruling on Defendants' motion to dismiss because Plaintiff fails to
satisfy the lesser plausibility pleading standard.
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A RICO enterprise is defined as including "any individual, partnership,
corporation, association, or other legal entity, and any union or group of individuals
associated in fact although not a legal entity[.]" 18 U.S.C. § 1961(4). "To allege such an
association, 'a plaintiff must demonstrate the relationships between the various members
and their roles in the purported RICO scheme."' Blackv. Ganieva, 619 F. Supp. 3d 309,
334 (S.D.N.Y. 2022), aff'd, 2023 WL 2317173 (2d Cir. Mar. 2, 2023) (quoting New York
v. United Parcel Serv., Inc., 2016 WL 4203547, at *3 (S.D.N.Y. Aug. 9, 2016)). "Such an
enterprise need not be a formal corporation, group[,] or organization. Instead, the statute
is satisfied by a showing of a formal or informal group of persons, 'associated for a
common purpose of engaging in a course of conduct' which then functions as a
'continuing unit."' Ferri v. Berkowitz, 678 F. Supp. 2d 66, 73 (E.D.N.Y. 2009) (quoting
United States v. Turkette, 452 U.S. 576, 583 (1981)). To establish a group of persons is
associated for a common purpose, a plaintiff must demonstrate "interpersonal
relationships and a common interest." Boyle v. United States, 556 U.S. 938, 946 (2009)
(citations omitted). The Second Circuit has recently clarified that "RICO covers 'both
legitimate and illegitimate enterprises."' United States v. Kelly, 609 F. Supp. 3d 85, 125
(E.D.N.Y. 2022), aff'd, 128 F.4th 387 (2d Cir. 2025) (quoting Turkette, 452 U.S. at 580-
81).
Plaintiff alleges that Defendants and certain unnamed Sales Channel Persons
engaged in coordinated conduct for the purpose of selling Policies as their common
interest. For the interpersonal relationship requirement, "a plaintiff must demonstrate the
relationships between the various members and their roles in the purported RICO
scheme." United Parcel Serv., Inc., 2016 WL 4203547, at *3 (citations omitted). A
plaintiff fails to plead interpersonal relationships when the complaint is devoid of facts
connecting the enterprise members' actions. A conclusory statement will not suffice. See
Black, 619 F. Supp. 3d at 334-35 (emphasis supplied) (finding plaintiff failed to plausibly
plead interpersonal relationships when complaint made no statements about "any
interpersonal relationship, agreement, collective action, or symbiosis between" the
defendants); Elsevier Inc. v. WH.P.R., Inc., 692 F. Supp. 2d 297,307 (S.D.N.Y. 2010)
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(finding plaintiff failed to plausibly plead interpersonal relationships because complaint
did not allege how defendants knew each other or that they even knew each other);
Dynarex Corp. v. Farrah, 2019 WL 2269838, at *3 (S.D.N.Y. May 28, 2019) (finding
plaintiff failed to plausibly plead interpersonal relationships between defendants because
complaint's allegations were "entirely conclusory" and "there [were] no factual
allegations suggesting [defendants] ... were even aware of each other's existence").
Malek v. AXA Equitable Life Ins. Co., 2023 WL 2682408 (E.D.N.Y. Mar. 29,
2023), appeal dismissed sub nom., Malek v. Feigenbaum, 116 F.4th 118 (2d Cir. 2024), is
instructive. There, a life insurance company moved to dismiss, in part, the plaintiff's
RICO claim which alleged that the insurance company provided misleading information
in order to "manipulate consumers into replacing their life insurance policies with risky,
universal life insurance policies." Id. at *2 (internal quotation marks and citation
omitted). The Malek court dismissed the plaintiff's RICO claim because the complaint
failed to plausibly allege the existence of an enterprise:
The [c]omplaint does not contain factual allegations regarding any
communications [the insurance company] had with any [broker], any
particular incentives [the insurance company] provided to any [broker], or
any concrete information at all regarding the nature of [the insurance
company]'s relationship with any [broker]. The [c]omplaint also does not
contain specific factual allegations as to the conduct of any [broker] ....
Importantly, the [c]om plaint does not include any non-conclusory factual
allegations that any [broker] was aware of [the insurance company]'s
purported scheme or that any [broker] used the sales materials at issue in
order to advance a common purpose with [the insurance company] (as
opposed to, for example, advancing an individual self-interest). The
[c]omplaint also is devoid of factual allegations regarding any relationship
that the [brokers] had with one another - the [c]omplaint does not, for
example, contain allegations that the [brokers] communicated with one
another, coordinated with one another, or maintained interpersonal
relationships with one another.
Id. at 15.
In this case, with respect to each alleged enterprise member's role in selling the
Policies, Plaintiff alleges that "Defendants partner with [IMOs] to market the Policies.
IMOs recruit [BGAs] who provide back-office support for independent agents. The
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independent agents, in tum, sell Policies to policyholders like Plaintiff." (Doc. 31 at 4, ,r
14.) In the FAC, Plaintiff also alleges that "Sales Channel Persons market and sell the
Policies throughout the United States as directed by Defendants." Id. at 27, ,r 118; see
also id. at 27-28, ,r 119 ( explaining the "hierarchical operating and decision-making
structure" of the alleged enterprise). These allegations, however, merely describe the
roles of participants in the process of insurance sales, not membership in a fraudulent
scheme. The FAC does not identify a single communication between the alleged
enterprise members, nor does it describe any specific actions in furtherance of the
allegedly fraudulent scheme other than those attendant in the purchase and sale of
insurance. An enterprise is not plausibly alleged in this manner.
For the foregoing reasons, Plaintiff does not plausibly allege the existence of an
enterprise among Defendants and the Sales Channel Persons.
2. 	Whether Plaintiff Sufficiently Pleads a Pattern of Racketeering
Activity.
To allege mail or wire fraud as predicate acts, a plaintiff must plead, "(i) a scheme
to defraud (ii) to get money or property (iii) furthered by the use of interstate mail or
wires." Williams v. Affinion Grp., LLC, 889 F.3d 116, 124 (2d Cir. 2018) (internal
quotation marks and citations omitted). Defendants contend that Plaintiff fails to allege
with sufficient particularity the first element, a scheme to defraud, which requires
pleading, "(i) the existence of a scheme to defraud, (ii) the requisite scienter (or
fraudulent intent) on the part of the defendant, and (iii) the materiality of the
misrepresentations[.]" United States v. Autuori, 212 F.3d 105, 115 (2d Cir. 2000)
(internal citations omitted).
Plaintiff must plead the circumstances surrounding the alleged scheme to defraud
with particularity because Federal Rule of Civil Procedure 9(b) requires "a party [to] state
with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b).
"To satisfy this requirement[,] the plaintiff must '(l) specify the statements that the
plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the
statements were made, and (4) explain why the statements were fraudulent."' Anschutz
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Corp. v. Merrill Lynch & Co., 690 F.3d 98, 108 (2d Cir. 2012) (quoting Rombach v.
Chang, 355 F.3d 164, 170 (2d Cir. 2004)). A plaintiff must allege sufficient facts to
demonstrate "the time, place, speaker[,] and sometimes even the content of the alleged
misrepresentation." Aetna Cas. & Sur. Co. v. Aniero Concrete Co., 404 F.3d 566, 579 (2d
Cir. 2005) (internal quotation marks omitted). 7 The FAC falls far short of this mark.
"A 'scheme to defraud' is 'a plan to deprive a person of something of value by
trick, deceit, chicane[,] or overreaching.'" Williams, 889 F .3d at 124 ( citations omitted).
"To make out such a scheme, a plaintiff must provide proof of a material
misrepresentation." Id. (citing Neder v. United States, 527 U.S. 1, 25 (1999)). A mail
fraud scheme "requires some element of deception[,]" which "is satisfied where the
mailing itself is misleading or where there is some other deception which the mailing
serves." McLaughlin v. Anderson, 962 F.2d 187, 192-93 (2d Cir. 1992).
"Although sci enter need not be alleged with great specificity, plaintiffs are still
required to plead the factual basis which gives rise to a 'strong inference' of fraudulent
intent." Wexner v. First Manhattan Co., 902 F.2d 169, 172 (2d Cir. 1990) (citations
omitted). "A common method of establishing a strong inference of scienter is to allege
facts showing a motive for committing fraud and a clear opportunity for doing so."
O'Brien v. Price Waterhouse, 740 F. Supp. 276,280 (S.D.N.Y. 1990), ajf'd sub nom.,
O'Brien v. Nat'! Prop. Analysts Partners, 936 F.2d 674 (2d Cir. 1991) (internal quotation
marks and citations omitted). A plaintiff can also plead fraudulent intent with allegations
that "the defendant secretly intended not to perform [a contract] or knew that he could not
perform." Mills v. Polar Molecular Corp., 12 F .3d 1170, 1176 (2d Cir. 1993)
In her F AC, Plaintiff identifies the sole speaker as LICS and the statements as
made in the Illustration. She explains why she contends these statements were materially
7 "But for the other elements of a RICO claim - such as non-fraud predicate acts or ... the
existence of an enterprise - a plaintiffs complaint need satisfy only the short and plain statement
standard of Rule 8(a)." Choi v. 37 Parsons Realty LLC, 444 F. Supp. 3d 411,419 (E.D.N.Y.
2020) (internal quotation marks omitted) (quoting D. Penguin Bros. Ltd. v. City Nat 'l Bank, 587
F. App'x 663,666 (2d Cir. 2014) (alteration in original)). "Malice, intent, knowledge, and other
conditions of a person's mind may be alleged generally." Fed. R. Civ. P. 9(b).
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fraudulent; however, she does not plausibly allege that she was deceived by them, nor
could she have been, because she entered into the Policy before the statements were
made. Moreover, the FAC contains only one conclusory statement regarding Defendants'
sci enter: "At all relevant times, each associate in the [alleged e]nterprise was aware of the
fraudulent scheme to sell the Policies, was a knowing and willing participant in the
fraudulent scheme, and reaped profits therefrom." (Doc. 31 at 31, ,-i 135.) This conclusory
statement does not give rise to a "strong inference" of the alleged enterprise's fraudulent
intent. Wexner, 902 F .2d at 173 (citations omitted).
As Defendants point out, Plaintiff does not allege any motive on the part of
Defendants to misrepresent the Indices because they have no incentive to steer a
consumer to one Index versus another as "[t]here is, for instance, no pleaded monetary
benefit to LICS." (Doc. 33 at 28.) In the FAC, Plaintiff concedes that the Defendants do
not own the Indices and Plaintiffs had five indexed strategies from which to choose. She
does not plausibly allege why Defendants would be motivated to fraudulently
misrepresent only one of the five indexed strategies and to do so only after the Policy was
issued. In the September 15, 2025 Hearing, Mr. Klein argued that Defendants were
motivated to misrepresent the Indices because "[t]hey're getting somebody to pick a fund
that belongs to them as opposed to perhaps a competitor[,]" (Doc. 41 at 42:4-5), but the
FAC is bereft of facts supporting this claim.
For the foregoing reasons, Plaintiff does not plausibly plead that Defendants were
engaged in a pattern of racketeering activity.
3. 	Whether Plaintiff Plausibly Pleads Causation.
The last element of a RICO claim is causation. Cruz, 720 F.3d at 120. For
causation, "a plaintiff must plausibly allege that the RICO violations were (1) 'the
proximate cause of his [or her] injury, meaning there was a direct relationship between
the plaintiff's injury and the defendant's injurious conduct'; and that they were (2) 'the
but-for (or transactional) cause of his injury, meaning that but for the RICO violation, he
[or she] would not have been injured."' Alix v. McKinsey & Co., 23 F.4th 196, 203 (2d
Cir. 2022) (quoting UFCW Loe. 1776 v. Eli Lilly & Co., 620 F.3d 121, 132 (2d Cir.
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2010)).
In her opposition to Defendants' motion to dismiss, Plaintiff argues that, although
she received the Illustration after selecting her Policy, she could have canceled the Policy
within ten days of receiving the Illustration but declined to do so in reliance on the
Illustration. She therefore claims that Defendants' alleged RICO violation caused her
injury because "she was unable to meaningfully exercise her ten-day review and
cancellation rights under the Policy." (Doc. 37 at 39.) The FAC, however, does not state
that Plaintiff had the right to cancel the Policy within a ten-day review period, nor does it
identify this alleged fact as part of her RICO claim. Attorney Klein conceded these
omissions at the September 15, 2025 Hearing. See Doc. 41 at 33:13-19. 8
Because Plaintiff does not plead causation and because "a complaint may not be
amended by advocating a different theory of liability in an opposition brief wholly
unsupported by factual allegations in the complaint[,]" Palm Beach Mar. Museum, Inc. v.
Hapoalim Sec. USA, Inc., 810 F. App'x 17, 20 (2d Cir. 2020) (citing Wright v. Ernst &
Young LLP, 152 F .3d 169, 178 (2d Cir. 1998)), Plaintiffs RICO claim must be
DISMISSED.
F. 	Whether Plaintiff Should Be Granted Leave to Amend the FAC.
Plaintiff requests leave to amend the FAC to the extent that the court grants
Defendants' motion to dismiss. Pursuant to Fed. R. Civ. P. 15(a)(2), courts "should freely
give leave" to amend a complaint "when justice so requires." However, "[l]eave may be
denied 'for good reason, including futility, bad faith, undue delay, or undue prejudice to
the opposing party."' TechnoMarine SA v. Giftports, Inc., 758 F.3d 493, 505 (2d Cir.
2014) (quoting McCarthyv. Dun & Bradstreet Corp., 482 F.3d 184,200 (2d Cir. 2007)).
8 The following discussion transpired at the September 15, 2025 Hearing:
THE COURT: What's the causal connection between the seller's deception and
the buyer's loss?
MR. KLEIN: It goes back to the ten-day period we were discussing.
THE COURT: Okay. Which isn't in the [FAC].
MR. KLEIN: That period is not alleged in the [FAC].
(Doc. 41 at 33:13-19).
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Defendants argue granting Plaintiff leave to amend would be futile because no
additional allegations "would yield a viable claim for the reasons set forth [in their
motion to dismiss]." (Doc. 38 at 15) (citation omitted). At the September 15, 2025
Hearing, Defendants' counsel, Timothy Perla, Esq., further argued that Plaintiff should
not be granted leave to amend because "we've already done two full rounds of motion to
dismiss briefing[.]" (Doc. 41 at 45:5-6.)
"Undue prejudice arises when an 'amendment comes on the eve of trial and would
result in new problems of proof."' Ruotolo v. City ofN.Y, 514 F.3d 184, 192 (2d Cir.
2008) (alteration adopted) (quoting State Tchrs. Ret. Bd. v. Fluor Corp., 654 F.2d 843,
856 (2d Cir. 1981)); see also AEP Energy Servs. Gas Holding Co. v. Bank ofAm., NA.,
626 F.3d 699, 725-26 (2d Cir. 2010) ("Amendment may be prejudicial when ... it would
require the opponent to expend significant additional resources to conduct discovery and
prepare for trial or significantly delay the resolution of the dispute.") (internal quotation
marks and citation omitted). Discovery has not commenced in this case, and a trial date
has not been set. With leave to amend, Plaintiff may be able to remedy at least some of
the FAC's deficiencies. Therefore, granting leave to amend does not prejudice
Defendants and is not futile.
For those reasons, Plaintiff is hereby GRANTED leave to amend and may submit
a proposed Second Amended Complaint within twenty (20) days of the date of this
Opinion and Order consistent with the Federal Rules of Civil Procedure and this court's
Local Rules.
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CONCLUSION
For the foregoing reasons, the court GRANTS Defendants' motion to dismiss the
FAC, (Doc 33), and GRANTS Plaintiff leave to amend.
SO ORDERED.
~
Dated at Burlington, in the District of Vermont, this 2-_ day of January, 2026.
Christina Reiss, Chief Judge
United States District Court
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