Boyd v. Osborn

JOSEPH BOYD, Plaintiff, v. STEPHEN M. OSBORN, ESQ., Defendant.

No. 21-CV-6651-FPG

United States District Court, W.D. New York

May 6, 2022

DECISION AND ORDER

HONFRANK P. GERACI, JR., United States District Judge

INTRODUCTION

On September 7, 2021, Plaintiff Joseph Boyd (“Boyd”) filed this action in the Supreme Court of the State of New York, Monroe County, against Defendant Stephen M. Osborn Esq. (“Osborn”) asserting a claim for defamation per se under New York law. ECF No. 1 at 10-16. Osborn removed the action to this Court pursuant to 28 U.S.C § 1332(a) based upon diversity of citizenship between the parties and an amount-in-controversy in excess of the sum or value of $75, 000. Id. at 2.

On December 6, 2021, Osborn filed a motion to dismiss pursuant to Federal Rule of Civil Procedure (“FRCP”) 12(b)(6), ECF No. 5, and, in response, Boyd filed a cross-motion to amend the complaint with an attached Proposed Amended Complaint (“PAC”). ECF No. 8. For the reasons that follow, Osborn's motion to dismiss is GRANTED and Boyd's motion to amend is DENIED.

BACKGROUND

The Court draws the following facts from the PAC, ECF No. 8-3 and accepts them as true to evaluate whether amendment would be futile. Case v. Anderson, No. 16 CIV. 983 (NSR), 2017 WL 3701863, at *6 (S.D.N.Y. Aug. 25, 2017) (“The central inquiry for the Court when considering a motion to dismiss in tandem with a motion to amend is, therefore, whether the proposed amended complaint can survive the motion to dismiss.”).

Joseph Boyd is a professional financial advisor who resides in the Rochester, New York area. ECF No. 8-4 ¶ 3. In 2020, one of Boyd's clients made an investment in a company called Quantum Loop Solutions, Inc. (“QLS”). Id. ¶¶ 1, 7. Thereafter, Boyd was elected to QLS's Board of Directors “[i]n his capacity as a financial advisor” to his client-investor. Id. ¶ 8.

Around late-September or early-October of that year, Boyd learned of “possible theft of corporate funds” by QLS's President, who was also a member of the Board of Directors, which prompted him to act. Id. ¶¶ 9-10. First, Boyd “attempted to call a meeting of the Board of Directors.” Id. ¶ 11. Additionally, he took further “protective action” by transferring money out of a QLS bank account which “contained funds belonging to the investor whom he represented.” ECF No. 8-4 ¶ 8. Boyd transferred these “minority investor[ ] funds” into a separate bank account-a preexisting account that also was in the name of QLS-until such time as there could be an investigation.” Id. ¶ 12. Boyd “was a signatory” on the account from which he removed the funds. Id. ¶ 11. He had been given this designation “for purposes of protecting minority investors in QLS.” Id. Boyd did not have any control over the account into which he transferred the funds, which, as stated above, was a preexisting QLS account. Id. ¶ 15. He made the transfer of the funds for “safekeeping” until an investigation could be undertaken because he had an “obligation to protect” the minority investor. ECF No. 8-4 ¶ 15.

Attorney Stephen Osborn, Esq. was retained as “QLS's legal counsel” and “as an advisor to the corporation.” Id. ¶¶ 18, 21. Though he “claimed to be the corporation's attorney, ” Osborn is licensed to practice law in California, but not in New York. Id. ¶¶ 21, 32. In his capacity as an advisor to QLS, Osborn sent an email to the Board of Directors on October 10, 2020 “in which he attacked [Boyd's] motives in attempting to call a Board meeting and then falsely stated that [Boyd] had engaged in ‘attempted theft' and ‘illegal actions.'” Id. ¶ 14. Boyd attached a redacted version of that email to the PAC.^[1] ECF No. 8-4 at 12-15. In redacted form, the email reads as follows:

Dear Board Members of Quantum Loop Solutions, Inc.,

My name is Steve Osborn. I am a partner at Mintz. Mintz is outside corporate counsel for Quantum Loop Solutions, Inc. (the “Company”).

Ben Weiner, as Chief Executive Officer of the Company, asked me to review . . .

...

Mr. Boyd's illegal actions appear to be personally motivated based upon his quest to control this company without the right to do so. ...

An unauthorized transfer of corporate funds would be embezzlement, which is more commonly known as theft. This action has both criminal civil implications for the perpetrator.

Sincerely yours,

Steve Osborn

Id.

Boyd alleges that Osborn's statements about Boyd in the email were “absolutely false.” Id. ¶ 14. After receiving Osborn's email, Boyd “immediately” responded to Osborn and “informed him that the funds were in a [QLS] account.” ECF No. 8-4 ¶ 16. This response, “placed [Osborn] on notice within one hour of sending his October 10, 2020 email . . . that his statements were false.” Id. ¶ 23. However, despite receiving this Boyd's message, Osborn “made no effort whatsoever to withdraw his false statements.” Id.

On October 13, 2020, the CEO of QLS “noticed a Board meeting” at which the slated agenda called for “[d]iscussion and decision on action after Special Meeting with Joe Boyd.” Id. ¶¶ 19, 24. The meeting email invitation indicated that “[a]ll members except Joe Boyd are asked to attend.” Id. ¶ 24. After learning of the meeting, Boyd “objected to his exclusion” and was “permitted to attend.” ECF No. 8-4 ¶ 26.

The meeting was held on October 15, 2020. Id. ¶ 26. During the meeting, Osborn “continued to make [the] same defamatory and false statements about theft and unlawful conduct by [Boyd] to the Board members of QLS-despite having been provided information that the statements were false.” Id. ¶ 27. In response, Boyd “directly confronted” Osborn “as to the falsity of his statements, ” explaining why it was “clear” that Osborn's statements were false. Id. ¶ 29. Rather than disagree, Osborn “begrudgingly” admitted that “his factual statements ‘might' be false, ” doing so to “save face.” Id. ¶ 29. For instance, at one point during the meeting, Osborn conceded, “to some extent your comments are fair, ” and also stated “I don't have all the facts.” ECF No. 8-4 ¶ 30.

Osborn's “publication of his false statements to the QLS Board”-both via email and at the special Board meeting-“could easily have destroyed [Boyd's] career and livelihood as a financial advisor and make it impossible for him to provide for his family.” Id. ¶ 18. “At a minimum, ” Osborn's statements “destroyed any potential for [Boyd] to work with those QLS Board members who received the absolutely false and defamatory false statements about him.” Id. ¶ 18. Osborn demonstrated a “lack of good faith” in his accusations about Boyd, and his “conduct [was] particularly egregious” because he knew when he made the statements “that . . . Boyd is a professional financial advisor who depends on his reputation and trustworthiness for his livelihood.” Id. ¶¶ 21, 32.

Based on the above allegations, Boyd brings a state-law claim against Osborn for defamation per se. Id. ¶¶ 1, 34. He seeks five million dollars in compensatory damages, punitive damages, and recovery of attorney's fees, costs, and expenses. ECF No. 8-4 at 9.

DISCUSSION

Osborn moved to dismiss the complaint pursuant to FRCP 12(b)(6) for failure to state a claim upon which relief can be granted. Boyd responded by moving to amend the complaint.

I. Motion to Dismiss Standard

In deciding a motion to dismiss, a court “must accept as true all of the factual allegations contained in the complaint, ” BellAtl. Corp. v. Twombly, 550 U.S. 544, 572 (2007) (quoting another source), and “draw all reasonable inferences in Plaintiff's favor.” Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The application of this standard is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.

“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). “Where a document is not incorporated by reference, the court may [nevertheless] consider it where the complaint ‘relies heavily upon its terms and effect,' thereby rendering the document ‘integral' to the complaint. Id. (citing Mangiafico v. Blumenthal, 471 F.3d 391, 398 (2d Cir.2006)) (additional citation omitted). A court also must ensure that there are no disputes “regarding the authenticity or accuracy of the document, ” nor any dispute regarding the document's relevancy. Id. (citing Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir.2006)).

II. Leave to Amend Standard

“Rule 15(a)(2) instructs that a court ‘should freely give leave [to amend] when justice so requires.'” Willis v. Rochester Police Dep't, No. 15-CV-6284-FPG, 2018 WL 4637378, at *2 (W.D.N.Y. Sept. 27, 2018) (quoting Grullon v. City of New Haven, 720 F.3d 133, 139-40 (2d Cir. 2013)). A court may, however, deny leave to amend where such amendment would be “futile.” Id. Amendment is futile if the proposed claim “could not withstand a motion to dismiss pursuant to Rule 12(b)(6).” Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 88 (2d Cir. 2002).

“When-as in this case-a motion to amend is filed in response to a pending motion to dismiss, ‘a court has a...