DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS Plaintiffs bring this action against Defendants Labaton Sucharow LLP (“Labaton”), Christopher J. Keller (“Keller”) and Lawrence A. Sucharow (“Sucharow”), asserting claims for fraudulent inducement (Count I) and negligent misrepresentation (Count II) against Labaton and Keller, and aiding and abetting fraudulent inducement (Count III) against Sucharow. Plaintiffs’ claims arise from representations that the Defendants allegedly made to induce Plaintiffs’ signing the Universal Settlement Agreement on August 15, 2015. (See Dkt. No. 1 (“Compl.”)). Defendants move to dismiss Plaintiffs’ Complaint on the grounds that Plaintiffs (1) released all claims against Defendants and (2) failed to plead the elements of each of their claims. (Dkt. No. 17 (“Br.”); Dkt. No. 24 (“Rep. Br.”)). For the reasons stated below, Defendants’ motion is GRANTED in part and DENIED in part. BACKGROUND I. Parties Plaintiff Gerard Sillam (“Sillam”) is a French businessman and a French citizen who lives and works in Paris, France. (Compl. 13). Plaintiff Aldric Saulnier (“Saulnier”) is a French attorney and a French citizen who lives and works in Paris, France. (Id. 14). Defendant Labaton is a limited liability partnership registered in New York and its primary practice is representing plaintiffs in class action lawsuits. (Id. 15). Defendant Keller is a New York lawyer and a partner and Chairman at Labaton (Id. 16), Defendant Sucharow is a New York lawyer and a partner and Chairman Emeritus at Labaton (Id. 17). II. Labaton Engages Sillam as an Independent Contractor For purposes of this motion, all well-pleaded facts in the complaint are presumed true. In 2005, Labaton hired Sillam as an independent contractor. (Id. 29). The agreed arrangement between Labaton and Sillam was that Sillam would refer its contacts at certain investment funds (“UCITS funds”) to Labaton as potential plaintiffs in securities class actions, and Labaton would pay Sillam a referral fee of 15 percent of the total fees paid to Labaton in connection with any matter for which Labaton represented a client referred by Sillam. (Id.). The Descoubes/Saulnier Agreement. Defendant Keller allegedly instructed Sillam to retain a lawyer who would collect the fees on Sillam’s behalf. (Id. 30). Sillam retained Jean Marc Descoubes (“Descoubes”) (Id. 33), and on February 21, 2006, Labaton and Descoubes executed an agreement providing that Descoubes would refer clients and in exchange would receive 15 percent of the net attorneys’ fee Labaton earned when that client was appointed as Lead Plaintiff (the “Descoubes Agreement”). (Id. 34). Plaintiffs allege that Labaton did not really expect Descoubes to refer any clients; rather, Labaton expected them from Sillam and that the Descoubes Agreement was only to facilitate payment of referral fees from Labaton to Sillam. (Id. 35). Descoubes later assigned all his right, title and interest and rights under this agreement to Plaintiff Saulnier. (Id. 37). The Sillam Agreement. Two months later, on April 25, 2006, Labaton and Sillam executed their own agreement (the “Sillam Agreement”). (Id. 36). The Sillam Agreement provided that Labaton would pay Sillam a “success fee” for each investment fund client referred by Sillam who ultimately engaged Labaton, as well as an award of additional fees contingent on whether the referral became Lead Plaintiff or retained Labaton as Lead Counsel. (Id. 36(b-c)). Sillam was also to receive a monthly payment of $6,000 for his services, which amount would be credited against any success fees. (Id. 36(d)). III. Sillam Refers Dozens of Clients Who Retain Labaton Sillam began by setting up dozens of meetings for Labaton with many investment fund clients across Europe. (Id. 38). Sillam also organized a conference in Paris in March 2007 to promote Labaton to various French asset managers and advertised the conference in the French press. (Id. 39). Plaintiffs referred over a dozen investment funds to Labaton. (Id. 40). Five of these referrals retained Labaton to represent them against Vivendi, S.A. in a securities class action that was filed in the Southern District of New York, In re Vivendi, No. 02 Civ. 5571 (S.D.N.Y.). (Id. 42). In addition, five other referred funds retained Labaton to file proofs of claims in connection with other class action lawsuits (id. 45) and several others retained Labaton to represent them in litigation against the Royal Dutch Shell in the Netherlands (id. 46). Three other referred funds exclusively engaged Labaton to monitor their portfolios. (Id.
44-45). Plaintiffs estimate that Labaton earned millions of dollars in fees as a result of these referrals. (Id. 47). IV. The Arrangement Sours and Plaintiffs Sue Labaton in France In Spring 2007, the relationship between Labaton and Plaintiffs soured. (Id. at 50). First, Labaton asked Sillam to take a cut on his fee to “share” a portion with another of Labaton’s referral sources, Pietro. (Id. 51). Next, Labaton allegedly refused to pay Plaintiffs the referral fees and contract bonus associated with the Vivendi class action. (Id. 52). Sillam filed suit against Labaton in Paris; he sought payment of the referral fees and claimed that Labaton had defrauded him.1 (Id. 53). Plaintiffs do not allege that Saulnier also filed suit, and it is unclear whether Saulnier either joined Sillam’s lawsuit or filed his own action. However, a settlement in 2009 resolved the fee disputes of both Plaintiffs in this action, Sillam and Saulnier. V. The 2009 Settlement Plaintiffs settled with Labaton on December 31, 2009. (Id. 54; see Dkt. Nos. 16-3, 23-7). As part of the settlement, Plaintiffs executed two agreements, as follows: The Saulnier Settlement. The agreement between Labaton, Descoubes, Saulnier, and the legal representative of Descoubes and Saulnier2 (“Saulnier Settlement”) provided, inter alia, that: (1) Labaton would pay Saulnier 30 percent of the gross contingency fee for referred clients in the Vivendi class action (Compl. 56(a)); (2) Labaton would pay Saulnier 15 percent of the gross fee earned in any matter in which Labaton represented a client referred by Sillam within five years of the agreement (id. 56(b)); (3) Labaton would produce verifiable documents regarding Labaton’s fee structure for every matter in which Labaton represented any of the potential clients during the five-year term, as well as any pending matters where Labaton is representing referred clients (id. 56(c-d)); and (4) Labaton would provide Saulnier with a semiannual verified declaration disclosing whether any referred clients retained Labaton in any litigation anywhere in the world in the previous six months. (Id. 56(e)). If Labaton failed to report that it had been retained by a referred client, Saulnier’s payment would increase from 15 percent to 30 percent. (Id. 56(f)). The Saulnier Settlement also set forth “Referral Rules” that would apply ostensibly to comport with the “New York State Bar ethics.” (Dkt. No. 16-3, at 2). These “Referral Rules” were that referral fees would only be paid to “referring counsel [Saulnier] upon the satisfaction of two events; 1.) The referring counsel must agree to undertake work or assume responsibility to do designated work as requested and/or assigned by the referred firm (Labaton); and 2.) Such involvement by the referring counsel shall be in each instance, subject to client approval after full disclosure by Labaton of the contemplated referral relationship, and a consideration of options by said client.” (Id.). In exchange, Saulnier agreed not to make “any disparaging remarks” about Labaton “to French or US federal or state regulators, members of the French or US federal or state judiciary, or any Bar Association” (Compl. 57) and waived and released all claims, against Labaton including claims arising out of the assigned Descoubes Agreement. (Id. 56(g)). The Sillam Settlement. The agreement between Labaton, Sillam, and Sillam’s legal representatives provided that Labaton would pay Sillam $400,000 in exchange for Sillam’s dismissing his lawsuit in France and signing a waiver and release of all claims against Labaton, including any claims arising out of the 2006 Sillam Agreement (the “Sillam Settlement,” together with the Saulnier Settlement, the “Settlement Agreements”). (Id. 59). VI. The Labaton/Keller Declarations Plaintiffs allege that, despite the Settlement Agreements, Labaton entered into engagements with clients referred by Sillam, and then lied and concealed those engagements to avoid paying Plaintiffs. Specifically, Plaintiffs alleged that Defendant Keller submitted five declarations to Saulnier as agent of Labaton declaring that, “Since the execution of the Agreement, Labaton Sucharow has not been retained by any ‘Potential Clients’ as defined in ‘Exhibit No. 1′ of the Agreement, attached hereto” (together, the “Declarations”). (Id 61). Keller sent these Declarations to Plaintiffs on January 21, 2011, on June 9, 2011, on February 14, 2012, on July 16, 2013, and on July 8, 2015. (Id. 62). The five-year period set forth in the Saulnier Settlement ended December 31, 2014, before the last such declaration was sent. VII. The Universal Settlement Agreement On August 15, 2015, Labaton, Sillam, and Saulnier3 entered into a new, global settlement agreement, pursuant to which Plaintiffs agreed to relinquish their rights under the earlier Settlement Agreements in exchange for payment in the amount of $99,999.99 (the “Universal Settlement Agreement”). (Id. 64). The Universal Settlement Agreement included the following release: This Universal Settlement includes a release by [Saulnier and Sillam], not just for any and all claims or potential claims which either or both could possibly bring under The Settlements [of 2009], but also includes a release and waiver by [Saulnier and Sillam] regarding any claim or potential claim [Saulnier and Sillam] have or could possibly have against Labaton or any of its partners, agents or representatives… The Parties to this Universal Settlement understand, acknowledge and agree that upon the timely satisfaction of “The Consideration” made by Labaton as set forth herein, [Saulnier and Sillam] shall universally and forever release and waive any claim or potential claim which could possibly be brought in any jurisdiction anywhere in the world for all time arising out of or in any way related to The Settlements, as well as any other claim or potential claim [Saulnier and Sillam] have or could possibly have against Labaton or any of its partners, agents or representatives. (Dkt. No. 16-6 (“Universal Settlement Agreement”), at 1-2). A year later, on August 23, 2016, Plaintiffs and Labaton amended the Universal Settlement Agreement, by executing an addendum in which Labaton agreed to pay Sillam €5,000, and Plaintiffs agreed to relinquish their interest in certain fees owed to Labaton in connection with a litigation filed in Milan, Italy. (Compl.
