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Oswell v. Morgan Stanley Dean Witter & Co.

June 18, 2007


The opinion of the court was delivered by: Simandle, District Judge


This matter is before the Court upon the motion to dismiss of Defendants Morgan Stanley (incorrectly named as "Morgan Stanley Dean Witter & Co.") and Venture Holdings, Inc. (incorrectly named as "Morgan Stanley Gaming Companies Holdings, Inc.").*fn1 The matter relates to an alleged agreement between plaintiff Audrey Oswell ("Oswell") and Morgan Stanley in which Morgan Stanley allegedly made certain promises in exchange for Oswell's assistance in the purchase of a parcel of land in Atlantic City, New Jersey and the planned development of that land into a $1 billion hotel resort and casino. The Complaint contains six counts: (1) breach of contract/breach of implied covenant of good faith and fair dealing (Count One); (2) misappropriation of trade secrets and novel ideas (Count Two); (3) tortious interference with prospective economic advantage (Count Three); (4) unjust enrichment (Count Four); (5) promissory estoppel (Count Five); and (6) fraud (Count Six). Morgan Stanley's motion seeks dismissal under Fed. R. Civ. P. 12(b)(6) and 9(b).

For the reasons set forth below, Morgan Stanley's motion will be granted in part and denied in part. The Court will grant Morgan Stanley's motion and dismiss without prejudice Counts Three (tortious interference), Four (unjust enrichment) and Six (fraud). The Court will deny Morgan Stanley's motion with respect to Counts One (breach of contract), Two (misappropriation of trade secrets) and Five (promissory estoppel). The Court will also grant Oswell leave to amend her Complaint to cure certain deficiencies in a manner that is consistent with this Court's opinion.*fn2


A. The Parties

Plaintiff Audrey S. Oswell is a 27-year veteran of the casino gaming industry and, until March 27, 2006, was the chief executive officer for Resorts International Hotel ("Resorts") in Atlantic City, New Jersey. (Complaint ¶ 4.) Oswell is also the former President and CEO of the Casino Association of New Jersey, serving from January 2005 through May 2006. (Id.) According to the Complaint, during this time Oswell "gained a wealth of knowledge and experience in the casino industry, including specific knowledge of the contacts, operations and practices necessary to operate a casino in Atlantic City, New Jersey." (Id.) Defendants are Morgan Stanley, a financial institution, and its wholly-owned subsidiary Ventura Holdings, Inc. (Id. at ¶¶ 2-3.)

B. The Underlying Facts

According to her Complaint, while employed at Resorts, Oswell was introduced to an individual named Sam Sobel ("Sobel"), a principal owner of a 20-acre tract of land in Atlantic City adjacent to the Showboat Casino (the "Property"). (Compl. ¶ 5.) In the course of her discussion with Sobel, Oswell learned that the Property was for sale. (Id.) After allegedly determining that her current employer Resorts was not looking to expand its operations or purchase the Property and sensing a potentially lucrative opportunity, Oswell began exploring the possibility of obtaining the Property on her own or in concert with another group of investors. (Id. at ¶¶ 5-6.) In furtherance of this plan, in the Summer of 2005, Oswell met with one or two potential financial backers and, in November of 2005, Oswell met with Michael Weinstein to discuss his potential involvement in the food and beverage side of a casino that would be developed on the Property. (Id. at ¶ 7.) Weinstein, in turn, introduced Oswell to two other potential financial backers. (Id.)

In December 2005, Oswell was introduced to Michael Garrity ("Garrity") of Morgan Stanley. (Id.) Garrity and Oswell discussed her plan for the Property and Oswell inquired into whether Morgan Stanley would be interested in providing financial support. (Id.) According to the Complaint, the "discussions and plans were to be kept confidential, so as not to alert other possible investors who might be interested in the Property." (Id.) During their initial meeting, Garrity indicated to Oswell that Morgan Stanley had engaged in preliminary discussions with Hard Rock International, Inc. ("Hard Rock") to develop a casino in Atlantic City, including talks with Hard Rock and an individual named Tom Scannapieco (a partner in an entity that owned the Property) about purchasing the Property. (Id. at ¶¶ 8-9.) According to the Complaint, Garrity stated that Morgan Stanley was "skeptical that Mr. Scannapieco had the authority to consummate the deal" and considered Oswell to have "an inside track on obtaining the Property." (Id. at ¶ 9.) Upon hearing this, Oswell then provided Garrity with certain information, including information about the partnership that owned the Property and that it was Sobel --- and not Scannapieco -- who had control over any deal to sell the Property. (Id.)

In January 2006, Morgan Stanley allegedly indicated that it was committed to working with Oswell to acquire the Property. (Id. at ¶ 10.) As a result, Oswell ceased looking for financial backers. (Id.) In furtherance of the deal, Oswell obtained tax maps, environmental studies and "relevant access issues" related to the Property after conferring with Mr. Sobel, all of which Morgan Stanley had indicated that it had been unable to obtain during its dealings with Hard Rock. (Id.) Oswell also indicated that she could introduce Garrity to Sobel. (Id.)

As work on acquiring the Property progressed, Garrity told Oswell "on several occasions" that if she left her employment at Resorts and obtained an agreement from Resorts to release her from her non-compete agreement, "the deal would proceed as planned." (Id. at ¶ 11.) According to the Complaint, Garrity also "assured [Oswell] that he had full authority from Morgan Stanley to commit to this arrangement." (Id.) Ultimately the parties agreed that, rather than Morgan Stanley providing Oswell with the funds necessary to buy the Property, Morgan Stanley would buy the Property and hire Oswell as President and CEO of a new venture that would develop a casino on the site. (Id. at ¶ 12.) Oswell would serve as President and CEO "under a fixed term contract" and "would be given a significant ownership stake in the Property." (Id.) In addition, in her new role, Oswell "would be given responsibility for overseeing the project during the construction phase and beyond" and be responsible for recruiting potential development partners, assembling a management team, and "setting up the business." (Id.) Moreover, according to Oswell, at the request of Garrity, Oswell provided Garrity with a term sheet for her employment agreement with Morgan Stanley. (Id.) The next month, in February of 2006, according to the Complaint, Garrity again stated that if Oswell left her employment with Resorts and obtained a release from her non-compete agreement, Morgan Stanley would proceed with the deal as previously agreed. (Id. at ¶ 13.) In March of 2006, Oswell resigned from her position at Resorts and obtained the requested release. (Id. at ¶ 14.)

Following Oswell's resignation at Resorts, Morgan Stanley refused to honor its alleged commitment to Oswell, claiming that Morgan Stanley was concerned that if it hired Oswell it would be sued by Resorts. (Id. at ¶ 15.) Less than two months later, in May of 2006, Morgan Stanley publicly announced that it had closed a deal to purchase the Property from Mr. Sobel for $74 million and planned to build a $1 billion hotel resort and casino on the site. (Id.) According to the Complaint, a May 18, 2006 newspaper article named Hard Rock as the likely contender for the operational role of Morgan Stanley's planned casino. (Id.) According to the Complaint, Oswell was forced to seek employment elsewhere. (Id. at ¶ 18.)

C. Procedural History

On October 13, 2006, Oswell filed this action in Superior Court of New Jersey - Law Division, Atlantic County. The Complaint contains six counts: (1) breach of contract/breach of implied covenant of good faith and fair dealing; (2) misappropriation of trade secrets and novel ideas; (3) tortious interference with prospective economic advantage; (4) unjust enrichment; (5) promissory estoppel; and (6) fraud.

On December 4, 2006, Morgan Stanley, citing this Court's jurisdiction over this matter under 28 U.S.C. § 1332, removed this action to this Court. [Docket Item No. 1.] On December 22, 2006, Morgan Stanley filed this motion, a motion to dismiss under Fed. R. Civ. P. 12(b)(6) and (9)(b). [Docket Item No. 6.] Oswell filed opposition on January 19, 2007 to which Morgan Stanley timely replied. [Docket Item Nos. 14, 15.] This Court heard oral argument on February 15, 2007. The Court has considered all the submissions of the parties including the April 26, 2007 letter from counsel for Morgan Stanley and the May 11, 2007 response received from counsel for Oswell discussed in footnote two, supra.

Meanwhile, the closely-related case of Resorts Int'l Hotel, Inc. v. Morgan Stanley, et al., Civil No. 07-0105 (RBK), was filed in this Court and was subsequently consolidated with the present case for pretrial purposes by Consent Order filed March 1, 2007. Resorts was not a party to the present case or to the present motion.


A Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief may be granted must be denied "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." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). A district court must accept any and all reasonable inferences derived from those facts and must view all allegations in the complaint in the light most favorable to the plaintiff. See Scheuer, 416 U.S. at 236; Unger v. Nat'l Residents Matching Program, 928 F.2d 1392 (3d Cir. 1991); Glenside West Corp. v. Exxon Co., U.S.A., 761 F. Supp. 1100, 1107 (D.N.J. 1991); Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994).

In the complaint, it is not necessary for the plaintiff to plead evidence, and it is not necessary to plead the facts that serve as the basis for the claim. See Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977). When a motion to dismiss is before the court, the question for the court is not whether plaintiff will ultimately prevail; rather, it is whether he or she can prove any set of facts in support of their claims that would entitle them to relief. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). Therefore, in deciding a motion to dismiss, a court should look to the face of the complaint and decide whether, taking all of the allegations of fact as true and construing them in a light most favorable to the non-movant, plaintiff's allegations state a legal claim. Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990). While the court is required to take all of the allegations of fact as true, the court, however, is "not required to credit bald assertions or legal conclusions alleged in the complaint." Jones v. Intelli-Check, Inc., 274 F. Supp. 2d 615, 625 (D.N.J. 2003).


A. Breach of Contract/Breach of Covenant of Good Faith and Fair Dealing (Count 1)

In Count I of the Complaint, Oswell claims breach of contract and breach of the implied covenant of good faith and fair dealing. (Complaint ΒΆΒΆ 20-23.) Specifically, Oswell claims that she had a valid and binding contract with Morgan Stanley which provided that, in exchange for her "information, contacts, and services in brokering the deal" for the Property, Morgan Stanley agreed to "make her a member/partner on the deal and to employ her as President and CEO pursuant to a fixed term agreement with substantial ...

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