Opinion ID: 537196
Heading Depth: 3
Heading Rank: 1

Heading: Circumstances Constituting Fraud

Text: 17 The district court found no infirmity in Ouaknine's pleading of time, place, speaker, and content of misrepresentation with respect to the Perry Street project. We agree that allegations in the complaint sufficiently linked MacFarlane, Perry West, MacFarlane Perry, and Greenberg to representations in the offering memorandum and partnership agreement delivered in connection with the Perry Street project. We have held that reference to an offering memorandum satisfies 9(b)'s requirement of identifying time, place, speaker, and content of representation where, as here, defendants are insiders or affiliates participating in the offer of securities. DiVittorio, 822 F.2d at 1247; Luce, 802 F.2d at 55. With respect to the MacFarlane 95th project and the nonrecourse note, the district court held that the complaint adequately identified the alleged misrepresentations, the maker, and what the defendants hoped to gain from the misrepresentations. Again, we agree that the allegations were sufficient with respect to MacFarlane, Perry West, MacFarlane Perry, and Greenberg. 18 The amended complaint, however, failed to adequately particularize time, place, and content of misrepresentation with respect to defendant MacFarlane Development, the entity affiliated with MacFarlane, which was to undertake construction of the cooperative apartments at the Perry Street location. The amended complaint identifies MacFarlane Development simply as a New York corporation, [which] is an affiliate of MacFarlane and MacFarlane Perry and undertook the construction of the Perry Street Project, Amended Complaint p 7, and alleges no more about MacFarlane Development. This allegation alone is insufficient to link MacFarlane Development to the misrepresentations in the offering memorandum or partnership agreement. See DiVittorio, 822 F.2d at 1248-49 (even with aid of rule dispensing with requirement of specific connection between insiders or affiliates and fraudulent representations, allegations merely that defendant is an affiliate and contracted to perform work are insufficient to link affiliate with representations in offering memorandum). Because the amended complaint alleges no misrepresentations whatsoever by MacFarlane Development, whether with respect to the Perry Street project, the MacFarlane 95th project, or the nonrecourse note, the district court properly dismissed all fraud counts with respect to MacFarlane Development under rule 9(b).