Opinion ID: 7011483
Heading Depth: 2
Heading Rank: 2

Heading: Standing of LCA in the Second Action

Text: LCA next argues that the district court erred in concluding that LCA lacks standing to assert the claims it pleads in the second action. We review the district court’s dismissal of the complaint for lack of standing de novo, construing all the allegations in the complaint in favor of LCA. Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) (“For purposes of ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.”). In the second action, LCA asserts claims against PC for (1) breach of the Operating Agreement based on PC’s alleged failure to make capital and additional contributions to Excimer, and (2) promissory estoppel based upon PC’s alleged promise to make such contributions. The district court held that LCA does not have standing to assert these claims because they do not represent a direct injury to LCA. Rather, the district court concluded, these claims properly belong to Excimer and thus can only be asserted by LCA in a derivative action on Excimer’s behalf. Cabrini, 197 F.R.D. at 97. Because joinder of Excimer, a necessary and indispensable party, would defeat its diversity jurisdiction, the district court dismissed the second action. Id. at 98. We have stated that “the critical question posed by the direct injury test is whether the damages a plaintiff sustains are derivative of an injury to a third party. If so, then the injury is indirect; if not, it is direct.” Laborers Local 17 Health & Benefit Fund v. Philip Morris, Inc., 191 F.3d 229, 238-39 (2d Cir.1999). However, where the plaintiffs injury is direct, the fact that another party may also have been injured and could assert its own claim does not preclude the plaintiff from asserting its claim directly. In the corporate context, we have explained that “[ujnder New York law, a shareholder may bring an individual suit if the defendant has violated an independent duty to the shareholder, whether or not the corporation may also bring an action.” Ceribelli v. Elghanayan, 990 F.2d 62, 63 (2d Cir.1993) (citation omitted). The district court found LCA’s injury to be indirect, or derivative, stating that “[i]n its complaint, LCA does not seek to recover the additional contributions it claims it made to Excimer due to the P.C.’s alleged breach of its agreement to make capital and other contributions. Rather,, LCA seeks to recover the money it claims the P.C. failed to contribute to Excimer.” Cabrini, 197 F.R.D. at 97. LCA’s complaint, however, arguably supports the opposite conclusion. In Count One, LCA explains that it contributed to Excimer $1,092,089.86 and that under the Operating Agreement, PC was required to pay half of what LCA paid. Thus, PC was obligated to pay $546,044.93, but it only paid $50,826, thereby leaving $495,218.93 unpaid. The last paragraph of Count One states that “[LCA] has been damaged by the refusal of [PC] to pay the amount demanded of it, by having lost the additional amounts contributed by [LCA] to Excimer.” (emphasis added). Thus, the district court’s statement that “LCA does not seek to recover the additional contributions it claims it made to Excimer” is questionable since, construing the complaint in LCA’s favor, as we must, this may well be what LCA is arguing. In other words, LCA appears to claim that, as a result of PC’s breach of the Operating Agreement, LCA contributed $495,218.93 over and above that which it was contractually obligated to pay, and it is now seeking to recover that amount from PC. Such a claim would seek recovery for a direct injury to LCA that is independent of any injury Excimer may have suffered. However, LCA is not specific in alleging the nature of the “additional amounts” it allegedly contributed or in providing the factual predicate for its claim of a direct injury. ■ The long-settled rule of pleading instructs “that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The complaint in its current form does not sufficiently contain specific allegations of fact from which we can infer a cognizable claim of direct injury separate and distinct from the injuries allegedly suffered by Excimer. However, it cannot be said beyond doubt at this point that no set of facts can be proved by LCA to support a claim that it suffered a direct injury as a result of PC’s breach of the Operating Agreement. Accordingly, we vacate the dismissal of the second action and remand the case to the district court to allow LCA an opportunity to amend its complaint to plead its claims of a direct injury with greater particularity.