1 

NOT FOR PUBLICATION [Dkt. No. 29] 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW JERSEY 

CAMDEN VICINAGE 

DAVE DONACHY, et al., 

 Plaintiffs, 

 v. 

INTRAWEST U.S. HOLDINGS, 

INC., and PLAYGROUND 

DESTINATION PROPERTIES, INC., 

 Defendants. 

 

Civil Action No. 

10-4038 (RMB/KMW) 

OPINION 

Appearances: 

Benjamin F. Johns, Esquire 

Joseph G. Sauder, Esquire 

Chimicles & Tikellis, LLP 

One Haverford Centre 

361 West Lancaster Avenue 

Haverford, Pennsylvania 19041 

 Attorneys for Plaintiffs 

Aaron Van Nostrand, Esquire 

Cory M. Gray, Esquire 

Greenberg Traurig LLP 

200 Park Avenue 

Florham Park, New Jersey 07932-0677 

 Attorneys for Defendants 

BUMB, UNITED STATES DISTRICT JUDGE: 

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 Plaintiffs Dave Donachy, Carol Donachy, Anthony DiMeglio, 

Susan DiMeglio, Andrew Wingfield, Charlene Wingfield, Richard 

Kucharski, Suzanne Kucharski, Vincent LaRocca, Donna LaRocca, 

and Ali Imtiaz (“Plaintiffs”) bring this suit in their own 

names, and on behalf of a class of similarly situated 

individuals, against Defendants Intrawest U.S. Holdings, Inc. 

(“Intrawest”) and Playground Destination Properties, Inc. 

(“Playground”) (collectively the “Defendants”).1

 Defendants 

have moved for judgment on the pleadings and to strike 

Plaintiffs’ class action allegations. For the reasons that 

follow, Defendants’ motion for judgment on the pleadings is 

GRANTED. Because this Court dismisses Plaintiffs’ individual 

claims, and class allegations are not viable unmoored to any 

viable individually named Plaintiffs, Plaintiffs’ class claims 

are also dismissed. 

I. Background

Plaintiffs are eleven individuals from New Jersey, New 

York, and Connecticut, who purchased condominium units in a 

luxury resort called “Veranda” on the island of Turks and 

Caicos.2

 See FAC ¶¶ 21-25. Defendants marketed and sold the 

 

1

 Plaintiffs’ First Amended Complaint (“FAC”) refers to Intrawest and 

Playground collectively as “Intrawest.” (FAC ¶ 18.) The Court refers 

to these parties collectively as “Defendants.” 

2

 The allegations contained in the Amended Complaint are 

 accepted as true for purposes of the motion for judgment on 

 the pleadings.

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units to individuals and were compensated on a commission 

basis. (FAC at ¶¶ 23, 33.) 

 In connection with their purchases, Plaintiffs were 

required to pay a deposit equal to 20% of the ultimate purchase 

price. (FAC at ¶ 25.) According to Plaintiffs, prior to 

making the deposits, Defendants represented that the deposit 

would be safe from any “unforeseen circumstances.” (FAC at ¶ 

26.) Specifically, Plaintiffs allege that Defendants utilized 

a marketing brochure, which represented that: “Veranda will 

require only a 20% down payment and these funds will be held in 

an interest-bearing trust account, ensuring you are protected 

from any unforeseen circumstances, right through the 

construction period.” (FAC ¶ 27; see Pl. Ex. A to Compl.)3

Defendants’ representatives also are alleged to have repeatedly 

assured Plaintiffs over the telephone and by e-mail “that their 

deposits would be safe in all circumstances.” Id. Plaintiffs’ 

agreements with Cherokee Ltd. (“Cherokee”), the seller of the 

condominium units, however, contain an acknowledgment that no 

representations made by Cherokee or its agents influenced or 

induced Plaintiffs to enter into the purchase agreements and 

 

3

 The brochure was attached as an exhibit to Plaintiffs’ First Amended 

Complaint. This Court may consider materials attached to a complaint, 

like the brochure, on a motion to dismiss. See ALA, Inc. v. CCAIR, 

Inc., 29 F.3d 855, 859 (3d Cir. 1994)(“When reviewing a complaint, a 

court should consider not only the allegations contained in the 

complaint itself but also the exhibits attached to it which the 

complaint incorporates pursuant to Fed. R. Civ. P. 10(c).”). 

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disclaim reliance on “any information or forecasts of any 

nature whatsoever” including in promotion material provided to 

Plaintiffs. (Pl. Ex. B to Compl. at 11.3.)4 

 Notwithstanding this disclaimer, Plaintiffs claim that 

they relied on the representation that their deposits would be 

safe and made deposits for purchase of the condominiums to 

Cherokee. (See, e.g., FAC ¶ 41.) Plaintiffs’ agreements with 

Cherokee provided that the deposit could be utilized in funding 

costs related to the condominium development, but would 

otherwise be held by Cherokee’s attorneys in an interest 

bearing account. (See e.g. FAC Ex. B.) The agreement provides 

for the deposit to be refunded in the event Cherokee failed to 

complete its obligations under the agreement, but does not 

otherwise provide for a refund of the deposit. (See e.g. FAC 

Ex. B.) Some Plaintiffs paid their deposits in installments. 

(FAC ¶ 41, 53.) It is unclear from the FAC whether Defendants 

continued to repeat the alleged misrepresentations to the 

Plaintiffs who paid in installments, between the installments. 

However, it is clear that, after making the deposits, all of 

the Plaintiffs allege that they were again reassured that their 

deposits would be safe. (See e.g. FAC ¶¶ 42, 43, 55.) But, 

despite the assurances made by Defendants, Cherokee exhausted 

 

4

 The Plaintiffs attached a copy of the named Plaintiffs’ agreements 

with Cherokee. Because the agreements between Plaintiffs and Cherokee 

were attached to the First Amended Complaint, this Court may consider 

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the deposits and filed for bankruptcy, without completing the 

condominium project. (FAC ¶ 28, 29.) The named Plaintiffs now 

seek the recovery of their individual deposits, which range in 

size from $70,180 to $135,180. 

II. Standard

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.” Sheridan v. NGK 

Metals Corp., 609 F.3d 239, 262-63, n.27 (3d Cir. 2010) 

(quoting Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1949 

(2009) (internal quotation marks omitted)). “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.” Id. (quoting 

Iqbal, 129 S.Ct. at 1949). 

 The Court conducts a three-part analysis when reviewing a 

claim: 

 First, the court must “tak[e] note of the elements a 

plaintiff must plead to state a claim.” Iqbal, 129 S.Ct. 

at 1947. Second, the court should identify allegations 

that, “because they are no more than conclusions are not 

entitled to the assumption of truth.” Id. at 1950. 

Finally, “where there are well-pleaded factual 

allegations, a court should assume their veracity and then 

determine whether they plausibly give rise to an 

entitlement for relief.” Id.

 

 them on a motion to dismiss. See ALA, Inc., 29 F.3d at 859. 

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Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010); 

see also Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 

2009)(“ . . . [A] complaint must do more than allege the 

plaintiff’s entitlement to relief. A complaint has to ‘show’ 

such an entitlement with its facts.”). 

 Claims premised on fraud must, under Federal Rule of Civil 

Procedure 9(b) (“Rule 9(b)”), do more. Plaintiffs claiming 

fraud or mistake must allege, at a minimum, the “who, what, 

when, where and how” of the events at issue, “or otherwise 

inject precision or some measure of substantiation into a fraud 

allegation.” In re Suprema Specialties, Inc. Sec. Litig., 438 

F.3d 256, 276, (3d Cir. 2006); Frederico v. Home Depot, 507 

F.3d 188, 200 (3d Cir. 2007). Where allegations of fraud are 

brought against multiple defendants, the complaint must “plead 

with particularity . . . the [specific] allegations of fraud” 

applicable to each defendant. MDNet, Inc. v. Pharmacia Corp., 

147 F. App’x 239, 245 (3d Cir. 2005). 

III. Discussion

 Plaintiffs, on behalf of themselves and a purported class 

of similarly situated individuals, allege five causes of action 

against Defendants: (1) violation of the New Jersey Consumer 

Fraud Act (“NJCFA”); (2) violation of Connecticut’s Unfair 

Trade Practices Act (“CUTPA”); (3) violation of Section 349 of 

the New York General Business Law (“NY Section 349”); (4) 

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negligent misrepresentation; and (5) unjust enrichment. These 

claims all arise out of Defendants’ alleged misrepresentations 

regarding the safety of Plaintiffs’ deposits and Plaintiffs’ 

loss of the deposit moneys. The Court addresses each claim in 

turn before turning to the viability of Plaintiffs’ class 

allegations. 

 A. Plaintiffs’ NJCFA Claim

 Plaintiffs claim that Defendants made both material 

misrepresentations and omissions concerning the safety of 

Plaintiffs’ deposits, causing Plaintiffs to suffer the loss of 

their deposits. Those allegations can be divided into three 

categories: (1) allegations based on the brochure’s 

representation that the deposit would be safe from all 

unforeseen circumstances; (2) allegations of generalized 

statements by Defendants that that Plaintiffs’ deposits would 

be “safe in all circumstances”; and (3) a generalized 

allegation that Defendants failed to disclose material 

information concerning the deposits. Defendants have moved for 

dismissal of Plaintiffs’ NJCFA claim based on Plaintiffs’ 

alleged failure to plead with particularity pursuant to Rule 

9(b) and failure to allege causation. 

 Claims under the NJCFA are subject to the heightened 

pleading requirements of Rule 9(b). FDIC v. Bathgate, 27 F.3d 

850, 876 (3d Cir. 1994)(applying Rule 9(b) to NJCFA claim). 

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More generally, in order to state a claim under the NJCFA, a 

plaintiff must demonstrate three elements: (1) unlawful conduct 

by the defendant; (2) an ascertainable loss by the plaintiff; 

and (3) a causal relationship between the unlawful conduct and 

the loss. The first element may be satisfied through either: 

“an affirmative misrepresentation, even if not made with 

knowledge of its falsity or with an intent to deceive; the 

knowing omission or concealment of a material fact, accompanied 

by an intent that others rely upon the omission or concealment; 

or a violation of a specific regulation promulgated under the 

NJCFA.” Billings v. Am. Exp. Co., No. 10-3487, 2011 WL 

5599648, at *9 (D.N.J. Nov. 16, 2011). 

 A pervasive defect of the FAC is that Plaintiffs lump the 

two Defendants together referring to them collectively as 

“Intrawest.” (FAC at ¶ 18.) Under Rule 9(b), however, 

Plaintiffs are required to detail the allegations of fraud 

against each defendant individually. MDNet, 147 F. App’x at 

245. Plaintiffs’ failure to do so here is fatal to the FAC. 

Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Young, No. 91 

Civ. 2923, 1994 WL 88129, at *7 (S.D.N.Y. Mar. 15, 

2004)(“Sweeping references to the collective fraudulent actions 

of multiple defendants will not satisfy the particularity 

requirements of Rule 9(b).”); Esposito v. I-Flow Corp., No. 10-

cv-3883, 2011 WL 5041374, at *4 (holding that a “complaint that 

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lumps together numerous defendants does not provide sufficient 

notice of which defendants allegedly made the 

misrepresentations.”)(quotations and citation omitted). 

 Even assuming this defect were corrected, Plaintiffs’ 

Complaint still contains deficiencies that would warrant 

dismissal of all but Plaintiffs’ first NJCFA claim. Only 

Plaintiffs’ allegations based on the brochure would survive 

9(b) scrutiny. While Plaintiffs have not provided the exact 

timing of when the brochure was provided to each plaintiff, 

they have otherwise injected enough precision into their claims 

to satisfy Rule 9(b). Plaintiffs have: indicated the specific 

portion of a specific document they claim constitutes a 

misrepresentation5

; alleged that they received the brochure 

prior to making their deposits; and alleged that the brochure 

was provided to them by Defendants. However, Plaintiffs second 

 

5

 Defendants did not present argument on, and, therefore, this Opinion 

does not resolve, the question of whether the brochure’s 

representation regarding the deposit was, in fact, a 

misrepresentation. The brochure represented that “Veranda will 

require only a 20% down payment and these funds will be held in an 

interest bearing trust account, ensuring you are protected from any 

unforeseen circumstances, right through the construction period.” 

According to the Plaintiffs’ purchase agreements, the deposits were to 

be held in a trust account by Cherokee’s attorneys, but could be 

utilized to meet expenses related to the construction of the 

condominiums. Plaintiffs have not alleged that the deposits were not 

held in the manner promised or utilized for any improper purpose, only 

that the deposits were not as safe as allegedly represented. The 

nature of that representation is key. Defendants only represented in 

the brochure that the deposits would be safe from unforeseen 

circumstances, not all circumstances. Based on the sales agreements, 

and the risk inherent in any construction project, the possibility 

that the deposits could be exhausted but the project uncompleted 

appears to be a foreseeable and known risk. 

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and third claims would fail. Plaintiffs have failed to provide 

the who6, what, when, where, and how, or otherwise provide 

factual detail, regarding Plaintiffs’ second claim - the 

allegedly repeated misrepresentation that the deposits would be 

“safe in all circumstances.” These allegations simply do not 

provide sufficient notice under Rule 9(b). With respect to the 

third claim, the alleged omissions, Plaintiffs were required, 

and failed, to allege what material facts Defendants knew and 

failed to disclose concerning the risks associated with the 

deposits. In re Magnesium Oxide Antitrust Litig., No. 10-5943, 

2011 WL 5008090, at *26 (D.N.J. Oct. 20, 2011)(holding that a 

plaintiff, under Rule 9(b), must plead a specific omission of a 

material fact and the defendant’s knowledge of it); Hughes v. 

Panasonic Consumer Elecs. Co., No. 10-846, 2011 WL 2976839, at 

*12-14 (D.N.J. July 21, 2011)(finding that the complaint had 

failed to allege the defendants’ awareness of, and failure to 

 

6

 In contrast to the brochure, which, for notice purposes, it is 

sufficient that Plaintiffs allege that it was distributed by a 

specific Defendant, for this claim, Plaintiffs must offer some 

identifying detail as to what specific individuals made these 

misrepresentations. This is because, while Rule 9(b) generally 

requires that the plaintiff identify the specific individual who made 

the misrepresentation at issue, claims of misrepresentation based on a 

standardized document, like the one alleged here, do not require the 

same level of precision to put the defendant on sufficient notice 

under Rule 9(b). See Gilmore v. Southwestern Bell Mobile Sys., 

L.L.C., 210 F.R.D. 212, 224 (N.D.Ill. 2001)(holding that, while 

generally “the identity of the person who made the misrepresentation” 

must be alleged, that Plaintiff need not do so in the context of a 

“mass mailing”); 3525 N. Reta, Inc. v. FDIC, No. 10 C 3087, 2011 WL 

62128, at *3 (N.D.Ill. Jan. 6, 2011)(“When the alleged 

misrepresentations are contained in standardized documents of a single 

corporate defendant, Rule 9(b) does not require that the actual author 

of the documents be specifically identified.”). 

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disclose, a material fact where it only conclusorily asserted 

such). They have instead only offered the conclusory assertion 

that Defendants knew and failed to disclose material facts 

concerning the safety of the deposits. (FAC ¶ 127.) 

Therefore, even assuming Plaintiffs had properly delineated 

their allegations as against the two defendants, only 

Plaintiffs’ allegations based on the brochure would be 

sufficient to satisfy Rule 9(b). 

 All three categories of allegations also fail to properly 

allege causation as required. While claims under the NJCFA do 

not require a demonstration of reliance by the plaintiff, the 

causal nexus element still requires that a plaintiff allege 

that, but for the alleged misrepresentation, it would not have 

suffered the loss at issue. Maniscalco v. Brother Int’l Corp., 

627 F. Supp. 2d 494, 503-04 (D.N.J. 2009)(holding that, for 

purposes of satisfying the causal nexus requirement, “it is 

sufficient if a plaintiff avers that ‘had the alleged [d]efect 

been disclosed, consumers would not have purchased [defendant's 

product].’”)(citation omitted); Zebersky v. Bed Bath & Beyond, 

Inc., No. 06-CV-1735, 2006 WL 3454993, at *3 (D.N.J. Nov. 29, 

2006)(holding that misrepresentation must have induced purchase 

to meet causal nexus requirement); Acrand v. Brother Int’l

Corp., 673 F. Supp. 2d 282, 304 (D.N.J. 2009)(finding that an 

allegation that the plaintiffs would not have made the 

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purchases at issue but for the alleged misrepresentations at 

issue to be sufficient to satisfy the NJCFA’s causation 

requirement); In re Bayer Corp. Combination Aspirin Products 

Marketing and Sales Practices Litig., 701 F. Supp. 2d 356, 380 

(E.D.N.Y. 2010)(“Courts have found it sufficient where 

plaintiffs claim that but for defendant's misrepresentations 

they never would have purchased defendant's products. CFA 

plaintiffs have fallen short, however, where they alleged a 

price inflation theory, which New Jersey courts have found 

insufficient to show the requisite ascertainable loss or 

causation.”)(interpreting NJCFA). Plaintiffs have not alleged 

that, had the truth regarding these alleged misrepresentations 

and omissions been disclosed, they would not have agreed to 

purchase the condominiums, or, in the case of deposits made in 

installments, continued making deposit payments. Neither have 

they alleged that, had the truth been disclosed following their 

deposits, when Plaintiffs claim that these misrepresentations 

were instead repeated, that they would have sought, and been 

able to obtain, a refund of their deposits. See Wiatt v. 

Wingston & Strawn, LLP, No. 10-6608, 2011 WL 2559567, at *7-8 

(D.N.J. June 27, 2011)(finding that plaintiffs had failed to 

adequately plead causation in negligent misrepresentation claim 

where alleged misrepresentations occurred after transfers that 

were basis for loss claim were made and plaintiffs had not 

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sufficiently pled that they would have “demanded” and 

“recovered” the funds at issue if truth had been disclosed). 

Therefore, Plaintiffs’ NJCFA claim must be dismissed for this 

additional reason. 

 B. Plaintiffs’ CUTPA Claim

 CUTPA claims are similarly subject to heightened pleading 

under Rule 9(b) when they are based on fraud and similarly 

require that plaintiffs demonstrate that the alleged unfair 

practice caused the plaintiffs’ injury. Empower Health LLC v. 

Providence Health Solutions LLC, No. 3:10-CV-1163, 2011 WL 

2194071, at *5-6 (D.Conn. June 3, 2011)(holding that Rule 9(b) 

applies to CUTPA claims premised on fraud); Haesche v. Kissner, 

640 A.2d 89, 94 (Conn. 1994)(holding that a plaintiff in a 

CUTPA failure to warn case could not demonstrate causation 

because he could not show that he would not have purchased the 

product at issue if the defect had been properly disclosed). 

 Plaintiffs’ CUTPA claims are based on the same conduct as 

their NJCFA claims. Defendants argue, and Plaintiffs do not 

dispute, that Plaintiffs’ CUTPA claim, as pled, is subject to 

Rule 9(b). Therefore, this Court will apply Rule 9(b) to 

Plaintiffs’ CUTPA claim. Defendants contend that Plaintiffs’ 

CUTPA claim has the same Rule 9(b) and causation infirmities as 

Plaintiffs’ NJCFA claim. Because both claims are based on the 

same allegations and subject to the same Rule 9(b) and 

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causation pleading requirements, this Court agrees. 

Plaintiffs’ CUTPA claims are therefore dismissed. 

 C. Plaintiffs’ NY Section 349 Claim

 Plaintiffs’ NY Section 349 claim is premised on the same 

alleged misrepresentations described above. Defendants concede 

that this claim is not subject to the heightened pleading 

requirements of Rule 9(b). They are correct. Pelman ex rel. 

Pelman v. McDonald’s Corp., 396 F.3d 508, 511 (2d Cir. 2005). 

Plaintiffs claiming a violation of NY Section 349 must allege 

that the “defendant is engaging in an act or practice that is 

deceptive or misleading in a material way and that plaintiff 

has been injured by reason thereof.” Goshen v. Mut. Life Ins. 

Co. of New York, 774 N.E.2d 1190, 1195 (N.Y. 2002). Applying 

this rule, courts have required that plaintiffs demonstrate 

that the allegedly deceptive conduct is the “but for” cause of 

the alleged injury. City of New York v. Smokes-Spirits.com, 

Inc., 911 N.E.2d 834, 839 (N.Y. 2009). While affording 

plaintiffs a broad ability to “address commercial misconduct”, 

the territorial reach of section 349 is limited: “the deception 

of a consumer must occur in New York.” Goshen, 774 N.E.2d at 

1195. Notably, the statute’s reach “does not turn on the 

residency of the parties” – only the locus of the transaction. 

Id. at 1196 (emphasis added). 

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 Defendants argue, and this Court agrees, that Plaintiffs’ 

claim is deficient in two respects. First, for the reasons 

described above, Plaintiffs were required, but failed, to 

establish that the alleged misrepresentations were the “but 

for” cause of their injuries. Second, though Plaintiffs 

include New York residents, Plaintiffs have not alleged that 

any of the named Plaintiffs were deceived in New York, as 

required. Therefore, Plaintiffs’ section 349 claim must be 

dismissed. 

 D. Plaintiffs’ Negligent Misrepresentation Claim

 Plaintiffs’ negligent representation claim is based on two 

allegations. First, Plaintiffs claim that Defendants made 

misrepresentations regarding the safety of the deposits because 

they should have known that the deposits at issue would not be 

safe in the event Cherokee went bankrupt. Second, the FAC also 

vaguely alludes to representations made by Defendants regarding 

the financial health of Cherokee. (FAC ¶ 154, “Intrawest’s 

representations regarding the financial health of Cherokee (the 

construction company) were incorrect statements.”). Plaintiffs 

claim that these statements were incorrect, that Defendants 

were negligent in making them, and that Plaintiffs justifiably 

relied on them to their detriment. (FAC ¶ 154-56.) The parties 

dispute whether a claim of negligent misrepresentation must be 

pled under Rule 9(b). However, because Plaintiffs’ negligent 

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misrepresentation claim is specifically alleged as a separate 

claim, it is not subject to Rule 9(b)’s heightened pleading 

requirements, notwithstanding the significant overlap in 

allegations between the claims. In re Suprema Specialties, 

Inc. Sec. Litig., 438 F.3d at 272-74 (holding that Rule 9(b) 

does not apply to negligence based misrepresentation claims); 

Kirtley v. Wadekar, No. 05-5383, 2006 WL 2482939, at *2 (D.N.J. 

Aug. 25, 2006)(holding that, where negligent misrepresentation 

is alleged as its own cause of action, it is not subject to 

Rule 9(b)).7

 

 

7

 In In re Suprema Specialties, Inc. Sec. Litig., the Third Circuit 

found that Rule 9(b) did not apply to claims predicated on negligent 

misrepresentations. That decision was premised on the Circuit’s 

finding that such claims did not “sound in fraud” because “the 

reputational concerns that animate” the Rule “are not implicated when 

a defendant stands accused of nothing more than negligence.” 438 F.2d 

at 274. 

 This Court observes that the decision did not examine the reputational 

consequences of allegations of higher degrees of negligence, or 

whether, as a general matter, allegations of negligence, in the 

business context, may have similar reputational consequences as 

allegations of intentional fraud. See Baltimore County v. Cigna 

Healthcare, 238 F. App’x 914, 925 (4th Cir. 2007)(finding that the 

same reputational concerns were present in negligent misrepresentation 

as in intentional fraud)(in dissent). 

 Neither did the decision address whether negligent misrepresentation 

claims might qualify for heightened pleading under Rule 9(b)’s 

heightened pleading requirement for allegations of mistake. Breeden 

v. Richmond Community College, 171 F.R.D. 189, 199 (M.D.N.C. 

1997)(noting that rule 9(b) applies to allegations fraud and mistake 

and should therefore apply to negligent misrepresentation claims, 

which arise out of a party’s misunderstanding of a pertinent 

fact)(abrogated by Baltimore County v. Cigna Healthcare, 238 F. App’x 

914 (4th Cir. 2007)(finding that negligent misrepresentation claim did 

not require pleading with particularity but with dissent citing 

positively to Breeden); Baltimore, 238 F. App’x at 925 (noting that 

Rule 9(b) is not limited to intentional fraud because it covers “fraud 

and mistake”)(in dissent). 

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 Defendants contend, and Plaintiffs do not dispute that the 

viability of the negligent misrepresentation claim should be 

judged based on the laws of New York, Connecticut, and New 

Jersey, the three states in which the named Plaintiffs reside. 

Because the parties do not dispute the application of these 

bodies of law, this Court will apply them in assessing this 

claim. See Transportes Ferreos de Venezuela II CA v.NKK 

Corp., 239 F.3d 555, 560 (3d Cir. 2001)(applying New Jersey law 

where there was no dispute as to its application). 

 In order to state a negligent misrepresentation claim, 

under all three states’ laws, the plaintiff must allege, among 

other elements, (a) the furnishing of a false statement (Masone 

v. Levine, 382 N.J. Super. 181, 187 (N.J.Super.Ct.App.Div. 

2005); Mandarin Trading, Ltd. V. Wildenstein, 944 N.E.2d 1104, 

1109 (N.Y. 2011); Williams Ford, Inc. v. Hartford Courant Co., 

657 A.2d 212, 220 (Conn. 1995)), (b) reasonable reliance on 

that statement (Id.), and (c) that the false statement was the 

proximate cause of the loss at issue. McCabe v. Ernst & Young, 

 Finally, the decision did not address the notice concerns that also 

motivate the Rule. Generally, the only elemental difference between a 

negligent misrepresentation and a fraud claim is that the latter 

requires a specific fraudulent intent. In re Student Finance Corp., 

02-11620, 2004 WL 609329, at *3 (D.Del. Mar. 23, 2004)(“The only 

difference between an action for fraud and negligent misrepresentation 

is that, with a claim of negligent misrepresentation, the plaintiff 

need not plead that the defendant knew or believed this his or her 

statement was false or that she proceeded in a reckless disregard for 

the truth.”). Intent, unlike the other elements of a fraud claim, may 

be plead generally. Rule 9(b)(“Malice, intent, knowledge, and other 

conditions of a person’s mind may be alleged generally.”). 

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LLP, 494 F.3d 418, 438 (3d Cir. 2007)(holding that negligent 

misrepresentation requires that the misrepresentation be the 

proximate cause – i.e. a substantial contributing factor to the 

loss); Amusement Indus., Inc. v. Stern, 786 F. Supp. 2d 758, 

776 (S.D.N.Y. 2011)(holding that, under New York law, 

plaintiffs must allege transaction causation – that, but for 

the defendant’s wrongful acts, the plaintiffs would not have 

entered into the transaction that resulted in their losses); 

Johnson v. Chesebrough-Pond’s USA Co., 918 F. Supp. 543, 548-49 

(D. Conn. 1996)(holding that, for a negligent misrepresentation 

claim under Connecticut law, a plaintiff must show at least 

“but for” causation). 

 Defendants argue, among other things, that Plaintiffs’ 

negligent misrepresentation claim fails to meet Twombly/Iqbal’s 

test for plausibility and fails to properly allege causation. 

First, with respect to Plaintiffs’ claim of alleged 

misrepresentations concerning Cherokee’s financial health, 

Plaintiffs have failed to point to any statements by Defendants 

concerning Cherokee’s financial health that were false. This 

deficiency is fatal to this claim of negligent 

misrepresentation. Second, both that claim, and Plaintiffs’ 

claim based on the alleged assurances of safety by Defendants, 

fail to adequately plead proximate causation. As discussed 

 

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above, Plaintiffs have failed to plead that the alleged 

misrepresentations were the “but for” cause of the alleged 

injuries. Therefore, Plaintiffs’ negligent misrepresentation 

claim must be dismissed in its entirety on this basis.8

 

 E. Plaintiffs’ Unjust Enrichment Claim

 Plaintiffs’ unjust enrichment claim is premised on the 

same conduct as their other claims. Defendants argue that this 

claim must be dismissed for three reasons: (1) failure to 

satisfy Rule 9(b); (2) failure to establish, for the New Jersey 

Plaintiffs, that those Plaintiffs expected remuneration from 

Defendants at the time the deposits were made, and for the 

remaining Plaintiffs, failure to establish that the benefits 

conferred upon Defendants, the commissions paid to them by 

Cherokee, were direct; and (3) failure to meet Twombly/Iqbal. 

 1. Defendants’ Rule 9(b) Argument 

 This Court agrees with Defendants’ first argument, in 

part. To the extent Plaintiffs’ claim is premised on 

 8

 Defendants made two additional arguments in passing with respect to 

Plaintiffs’ negligent misrepresentation claim: (1) that Plaintiffs 

failed to allege reasonable reliance in light of the disclaimer of 

reliance contained in the agreement with Cherokee; and (2) that 

Plaintiffs’ negligent misrepresentation claim fails under New York law 

because New York law requires, and Defendants lacked, a special 

relationship of confidence and trust with Plaintiffs. Because this 

Court dismisses this claim on other bases, it need not address these 

arguments. The Court notes, however, that, Defendants cited no 

authority for the former argument and little else beyond a bare 

citation for the latter. 

If Defendants wish the Court to consider these arguments in the 

future, they should furnish the Court with appropriate authority and 

more detailed legal argument. 

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allegations sounding in fraud, it must be dismissed for failure 

to satisfy the requirements of Rule 9(b) for the reasons 

discussed above. Similarly, however, as discussed above, to 

the extent it is premised on allegations of negligence, it need 

not satisfy Rule 9(b). 

 2. Defendants’ Directness of Benefit / Expectation 

of Remuneration Argument 

 With respect to Defendants’ second argument, this Court 

agrees, in part. Defendants again argue that Plaintiffs’ unjust 

enrichment claim’s viability depends upon the law of the three 

states in which the named Plaintiffs reside, with the named 

Plaintiffs subject to the law of the state of their residency. 

Again, because Plaintiffs do not dispute the application of 

these laws to the named Plaintiffs, this Court will apply those 

laws in considering the viability of Plaintiffs’ claim in the 

manner proposed by Defendants. See Transportes Ferreos, 239 

F.3d at 560. 

 a. New Jersey Law 

 Under New Jersey law, the New Jersey Plaintiffs were 

required, and failed, to allege that they expected remuneration 

from Defendants when they made the purchases at issue. Amgro, 

Inc. v. Lincoln Gen’l Ins. Co., 361 F. App’x 338, 346 n.10 (3d 

Cir. 2010)(stating the general rule that, under New Jersey law, 

an unjust enrichment claim requires that the plaintiff show 

 

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21 

that it expected remuneration from the defendant at the time it 

conferred a benefit); In re Philips/Magnavox Television Litig., 

No. 09-3072, 2010 WL 3522787, at *10 (D.N.J. Sept. 1, 

2010)(holding that a plaintiff must show that it expected 

remuneration at the time it conferred a benefit upon the 

defendant)(applying New Jersey law). Therefore, dismissal of 

the New Jersey Plaintiffs’ unjust enrichment claim is 

warranted. 

 b. New York Law 

 New York law, in contrast, allows for looser claims of 

unjust enrichment, allowing claims to proceed without privity, 

or “direct dealing”. Waldman v. New Chapter, Inc., 714 F. 

Supp. 2d 398, 403 (E.D.N.Y. 2010)9

. What New York law does 

require is subject to some dispute. While the New York Court 

of Appeals has made clear that the relationship between the 

parties cannot be “too attenuated” (Id. at 403-04 (citing to 

the New York Court of Appeals)), there is debate about the 

closeness of this relationship necessary to establish a claim. 

 

9

 Defendants cite several cases that appear to require a more direct 

relationship between the parties to state a claim for unjust 

enrichment under New York law. Bangkok Crafts Corp. v. Capitolo di 

San Pietro in Vaticano, 331 F. Supp. 2d 247, 256 (S.D.N.Y. 2004); 

Sperry v. Crompton Corp., 810 N.Y.S.2d 498, 500 (N.Y. App. Div. 2006); 

Sybelle Carpet & Linoleum of Southampton, Inc. v. East End 

collaborative, Inc., 562 N.Y.S.2d 205, 206-07 (N.Y. App. Div. 1990). 

These cases all pre-date the decisions of the New York Court of 

Appeals in Sperry v. Crompton Corp., 8 N.Y.3d 204 (N.Y. 2007) and 

Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173 (N.Y. 2011), in 

which the Court of Appeals made clear that such a direct relationship 

was not required. Sperry, 8 N.Y.3d at 215 (rejecting a privity 

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22 

See Georgia Malone & Co., Inc. v. Ralph Rieder, 86 A.D.3d 406 

(N.Y. App. Div. 2011). 

 That debate centers on the decision of the New York Court 

of Appeals in Mandarin Trading Ltd. v. Wildenstein. Id. 

There, the New York Court of Appeals held that, although 

privity was not required to sustain an unjust enrichment claim, 

a claim would not be supported where “the connection between 

the parties is too attenuated.” 16 N.Y.3d 173, 182 (N.Y. 2011). 

The Court held that the unjust enrichment claim failed this 

requirement because it lacked “allegations that would indicate 

a relationship between the parties, or at least an awareness” 

by the defendant of the plaintiff’s existence. Id. It further 

held that “there are no indica of an enrichment that was unjust 

where the pleadings failed to indicate a relationship between 

the parties that could have caused reliance or inducement.” 

Id. at 182. Several courts have interpreted the decision as 

requiring that, to satisfy the relationship element, the 

plaintiff must allege more than mere awareness of the plaintiff 

by the defendant, but that the relationship could have caused 

reliance or inducement on the plaintiff’s part. Barbagallo v. 

Marcum LLP, No. 11-CV-1358, 2011 WL 5068086, at *13 (E.D.N.Y. 

Oct. 25, 2011); Georgia Malone, 86 A.D.3d at 409. That notion 

was hotly disputed in dissent in Georgia Malone & Co., Inc. v. 

 requirement); Mandarin, 16 N.Y.3d at 182-83. 

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Ralph Rieder, with the dissent arguing that only knowledge or 

awareness of the plaintiff by the defendant was required. Id.

at 500 (in dissent). 

 This Court interprets Mandarin to require a plaintiff to 

allege a relationship that is not overly attenuated and no more 

or less.10 While Mandarin made clear that a lack of awareness 

by the defendant of the plaintiff would doom the claim, it did 

not hold that the minimal showing of mere awareness would 

necessarily satisfy the relationship requirement. Mandarin, 16 

N.Y.23d at 182. Neither did it hold that the far more 

substantial showing of “a relationship between the parties that 

could have caused reliance or inducement” was necessary to 

satisfy the relationship requirement. Id. The lack of a 

relationship capable of causing reliance or inducement was 

addressed in the context of assessing whether plaintiffs had 

alleged an enrichment that was unjust. Id. at 182-83. In that 

case, and on those facts, the lack of such a relationship was 

fatal to the plaintiff’s claim that the enrichment would cause 

an injustice. Id. (“Moreover, under the facts alleged, there 

are no indicia of an enrichment that was unjust where the 

pleadings failed to indicate a relationship . . .”). 

 

10 A same or similar approach appears to have been taken in Vertex Const. 

Corp. v. T.F.J. Fitness, L.L.C.. No. 10-CV-683, 2011 WL 5884209, at 

*5 (E.D.N.Y. Nov. 23, 2011). 

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 Therefore, whether a plaintiff has alleged a sufficient 

closeness of relationship must be determined on the facts 

alleged. Here, Defendants are alleged to have directly 

solicited Plaintiffs to make investments, Plaintiffs made the 

investments, and Defendants were compensated based on those 

investments with commissions. On those facts, the relationship 

between the New York Plaintiffs and Defendants is not so 

attenuated as to require dismissal on this basis. Even under 

the more exacting standard of a relationship capable of causing 

reliance or inducement, required by other courts but not this 

Court, Plaintiffs have alleged sufficient facts for the New 

York Plaintiffs to survive a motion to dismiss on this basis 

under New York law. 

 c. Connecticut Law 

 Similarly, Connecticut law does not require that the 

benefit be conferred directly by the plaintiff on the 

defendant. Town of New Hartford v. Connecticut Resources 

Recovery Auth., 970 A.2d 592, 618 (Ct. 2009)( “Although unjust 

enrichment typically arises from a plaintiff's direct transfer 

of benefits to a defendant, it also may be indirect, involving, 

for example, a transfer of a benefit from a third party to a 

defendant when the plaintiff has a superior equitable 

entitlement to that benefit.”). Accordingly, the Court will 

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not dismiss the Connecticut Plaintiffs’ unjust enrichment claim 

on this basis. 

 3. Defendants’ Twombly/Iqbal Argument 

 Despite this Court’s findings above, the unjust enrichment 

claims must be dismissed on Twombly/Iqbal grounds. Under all 

three states’ laws, a finding of unjust enrichment requires 

that there be some injustice. Banco Espirito Santo De 

Investimento, S.A. v. Citibank, N.A., No. 03 Civ. 1537, 2003 WL 

23018888, at *17 (S.D.N.Y. Dec. 22, 2003)(holding that, under 

New York law, if there are no facts supporting a finding of an 

injustice, then there can be no claim of unjust enrichment); 

Cent. Reg’l Employees Benefit Fund v. Cephalon, Inc., No. 09-

3418, 2010 WL 1257790, at *5 (D.N.J. Mar. 29, 2010)(requiring 

an injustice under New Jersey law); Town of New Hartford, 970 

A.2d at 609 (requiring that retention of the benefit be unjust 

under Connecticut law). 

 Where, as here, Plaintiffs have failed to aver allegations 

sufficient to support the underlying conduct on which the 

unjust enrichment claim is based, there is no injustice and 

Plaintiffs’ unjust enrichment claim must be dismissed. See

Steamfitters Local Union 420 Welfare Fund v. Philip Morris, 

Inc., 171 F.3d 912, 937 (3d Cir. 1999)(dismissing unjust 

enrichment claim where court had dismissed underlying tort 

claims upon which it was based due to lack of causation); Noble 

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Sys. Corp. v. Alorica Cent., L.L.C., 543 F.3d 978, 987 (8th 

Cir. 2008)(dismissing unjust enrichment claim where underlying 

claims had been dismissed); Cleary v. Philip Morris Int’l, 656 

F.3d 511, 517 (7th Cir. 2011)(“What makes the retention of the 

benefit unjust is often due to some improper conduct by the 

defendant. And usually this improper conduct will form the 

basis of another claim against the defendant in tort, contract, 

or statute. So, if an unjust enrichment claim rests on the same 

improper conduct alleged in another claim, then the unjust 

enrichment claim will be tied to this related claim—and, of 

course, unjust enrichment will stand or fall with the related 

claim.”); Central Regional, 2010 WL 1257790, at *5 (dismissing 

unjust enrichment claim where there was no showing of causation 

in underlying torts); Allianz Risk Transfer v. Paramount 

Pictures Corp., No. 08 Civ. 10420, 2010 WL 1253957, at *10 

(S.D.N.Y. March 31, 2010)( “Here, because all underlying fraud 

claims are to be dismissed, the claim for unjust enrichment 

must also be dismissed.”)(applying New York law); Delino v. 

Platinum Cmty. Bank, No. 09-CV-00288, 2009 WL 2366513, at *8 

(S.D.Cal. July 30, 2009)(dismissing unjust enrichment claim for 

lack of a showing of unjustness, where the court had dismissed 

plaintiffs’ claim upon which the unjust enrichment claim was 

predicated). 

 F. Plaintiffs’ Class Allegations

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 Defendants have also moved for dismissal of Plaintiffs’ 

class allegations. Defendants argue that class treatment was 

inappropriate for two reasons: (1) that the class action was 

not superior to individual litigation because Plaintiffs’ nonstatutory state law claims would require complex choice of law 

issues; and (2) that common issues did not predominate because 

the alleged misrepresentations were non-uniform and because 

there were individualized issues of causation. 

 The Court need not resolve these issues at this time. 

Because this Court dismisses all of Plaintiffs’ individual 

claims, and Plaintiffs’ purported class has not yet been 

certified, Plaintiffs’ class allegations must also be 

dismissed. Bass v. Butler, 116 F. App’x 376, 385 (3d Cir. 

2004)(dismissing class claim where individual claims had been 

dismissed pre-certification); In re Aspartame Antitrust Litig., 

No. 2:06-CV-1732, 2008 WL 4724094, at *8 (E.D.Pa. Aug. 11, 

2008)(dismissing entire action where no class had been 

certified and all the claims of the class representatives had 

been dismissed); Kruse v. Wells Fargo Home Mortgage, Inc., No. 

02-CV-3089, 2006 WL 1212512, at *9 (E.D.N.Y. May 3, 

2006)(holding that, where the named plaintiffs are dismissed 

prior to class certification, the case must be dismissed as 

moot). 

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 However, in the interests of judicial economy, the Court 

notes that it is highly skeptical of the suitability of 

Plaintiffs’ claims for class treatment for two reasons. First, 

Plaintiffs are unlikely to be able to satisfy the class action 

predominance requirement, which requires that common questions 

of law or fact predominate over individualized inquiries. In 

re LifeUSA Holding Inc., 242 F.3d 136, 144 (3d Cir. 

2001)(citing to Rule 23). To the extent Plaintiff relies on 

claims of misrepresentation by Defendants in non-standardized 

communications, the alleged misrepresentations will require 

individualized proof. Id. at 146-47 (3d Cir. 2001)(finding 

common issues did not predominate where alleged 

misrepresentations were non-uniform). And all of Plaintiffs’ 

claims of misrepresentation will require individualized 

causation inquiries. Int’l Union of Operating Eng’rs Local No. 

68 Welfare Fund v. Merck & Co., Inc., 929 A.2d 1076, 1087 (N.J. 

2007)(recognizing that proof of an NJCFA claim, like the one 

here, requires inquiry into the individualized decision-making 

of each purchaser); Nafar v. Hollywood Tanning Sys., Inc., 339 

F. App’x 216, 222-23 (3d Cir. 2009)(same); Demmick v. Cellco 

P’ship, No. 06-2163, 2010 WL 3636216, at *17 (D.N.J. Sept. 8, 

2010)(recognizing that the NJCFA causation element generally 

depends upon proof of the individual motivations of the 

plaintiffs). 

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 Second, it is questionable whether Plaintiffs could meet 

Rule 23’s requirement that the class action device be superior 

to individual litigation. In re LifeUSA Holding Inc., 242 F.3d 

at 143-44. The superiority of the class action here is 

undercut by the potential need to apply 50 different state laws 

to Plaintiffs’ non-statutory state law claims. Plaintiffs 

argue in a letter submission that the recently decided case of 

Sullivan v. DB Investments, Inc., 667 F.3d 273, 301-03 (3d Cir. 

Dec. 20, 2011) supports the notion that variations in state law 

do not defeat the commonality and predominance necessary to 

sustain a Rule 23(b)(3) class action. But that case stands for 

two more limited propositions: (1) that those requirements are 

not defeated where the varying state laws can be grouped into 

common manageable patterns; and (2) those concerns, because 

they largely relate to manageability, are further diminished in 

the settlement class context, where there are no manageability 

issues. Id. Here, litigation of the Plaintiffs’ non-statutory 

state law claims would likely require the application of many 

different states’ laws with varying elements and it is unclear 

that these states could be successfully broken into subgroups 

with common elements. Briefing the unjust enrichment and 

negligent misrepresentation claims of the three states at issue 

on the motion to dismiss has already exposed the difficulty in 

finding common ground between various states’ common law 

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claims, given the oftentimes subtle differences between the 

states. It is questionable, under these circumstances, in a 

non-settlement class, that the class action is a superior 

mechanism to litigate these claims, particularly given the fact 

that Plaintiffs’ claims appear to be significant enough to 

support individual litigation. In re Community Bank of N. Va., 

418 F.3d 277, 309 (3d Cir. 2005)(“The presence of certain class 

members with significant . . . claims may counsel against a 

finding of superiority, but these individuals can opt-out and 

pursue their claims individually.”); Gray v. Bayer Corp., No. 

08-4716, 2011 WL 2975768, at *11 (D.N.J. July 21, 2011)(raising 

the same concern in rejecting class certification). 

IV. Conclusion

 For all these reasons, Plaintiffs’ First Amended Complaint 

is DISMISSED without prejudice. Because this Court cannot say 

that leave to amend would be futile, and given the liberal 

standard of amendment, Plaintiffs are granted thirty days to 

amend their complaint. Prof’l Benefit Consultants, Inc. v. 

Claims and Benefits Mgmt., Inc., No. 4962, 2011 WL 6012932, at 

*4 (D.N.J. Dec. 1, 2011). An appropriate order will follow the 

issuance of this Opinion. 

 s/Renée Marie Bumb 

 RENÉE MARIE BUMB 

 United States District Judge 

Dated: March 14, 2012

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