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Friedman v. Hartmann

United States District Court for the Southern District of New York
787 F. Supp. 411 (S.D.N.Y. 1992)


Facts

Friedman and other investors (plaintiffs) entered into an agreement with Hartmann (defendant) to invest in the purchase and development of commercial properties in Connecticut. One such property was to become a shopping center. The plaintiffs invested $600,000 to buy the property, and the purchase agreement said that no broker had been involved in the deal. However, the plaintiffs claim that Hartmann and various developers involved in the transaction (defendants) kept secret the fact that they had signed a deal with a broker that would require the payment of a $1 million commission at closing. The plaintiffs sued the defendants to recoup their $600,000 investment under various theories, including fraud and misrepresentation, breach of contract, and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68. The defendants impleaded their attorney, Kathy Priest, her law firm, and James O’Connor (third-party defendants). The defendants claimed that the third-party defendants had committed malpractice by advising the defendants that there was no need to disclose the broker’s commission. As such, the defendants claimed a right of contribution and indemnification from the third-party defendants for the claims against it under Federal Rule of Civil Procedure (FRCP) 14(a), as well as asserting independent claims for negligence and breach of contract. The third-party defendants filed a FRCP 12(b)(6) motion to dismiss for failure to state a claim on which relief can be granted.

Rule of Law

Issue

Holding and Reasoning (Leisure, J.)

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