21-188 (L) Goney v. SuttonPark Capital LLC, et al.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER Rulings by summary order do not have precedential effect. Citation to a summary order filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a document filed with this court, a party must cite either the Federal Appendix or an electronic database (with the notation “summary order”). A party citing a summary order must serve a copy of it on any party not represented by counsel.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 2nd day of November, two thousand twenty-one.

PRESENT: John M. Walker, Jr., Guido Calabresi, Steven J. Menashi, Circuit Judges. ____________________________________________

Rodney Goney, Lori Goney, T.N., through his Power of Attorney,

Plaintiffs-Appellants-Cross-Appellees,

v. Nos. 21-188, 21-1101

SuttonPark Capital LLC, SuttonPark Structured Settlements LLC

Defendants-Appellees-Cross-Appellants,

Edward Stone,

Defendant-Appellee. ____________________________________________ For Plaintiffs-Appellants- Cross-Appellees: FARVA JAFRI, Jafri Law Firm, Armonk, NY.

For Defendants-Appellees- Cross-Appellants: JENNIFER L. BEIDEL (Stephanie L. Denker, John Gekas, Christie R. McGuinness, John F. Stoviak, on the brief), Saul Ewing Arnstein & Lehr LLP, New York, NY.

For Defendant-Appellee: ANTHONY J. PROSCIA (Brett A. Scher, on the brief), Kaufman Dolowich & Voluck LLP, Woodbury, NY. 1

Appeal from a judgment of the United States District Court for the Southern

District of New York (Hellerstein, J.).

Upon due consideration, it is hereby ORDERED, ADJUDGED, and

DECREED that the judgment of the district court is VACATED and the case is

REMANDED for further proceedings.

Plaintiffs-Appellants-Cross-Appellees Lori Goney and Rodney Goney (“the

Goneys”), along with their minor grandson T.N. through his power of attorney,

appeal the judgment of the district court granting the motions to dismiss of

Defendants-Appellees-Cross-Appellants SuttonPark Capital LLC and SuttonPark

2 Structured Settlements LLC (“SuttonPark”) and Defendant-Appellee attorney

Edward Stone (“Stone”). We assume the parties’ familiarity with the underlying

facts, the procedural history of the case, and the issues on appeal.

I

On July 13, 2020, the Goneys filed suit against SuttonPark and Stone,

alleging violations of law in connection with the sale of Lyndsy Noell’s annuity to

SuttonPark. Lyndsy Noell is the Goneys’ adult daughter; T.N. is Lyndsy’s son. The

Goneys allege that SuttonPark harmed them and T.N. when SuttonPark induced

Lyndsy to sell her annuity by, among other things, plying her with controlled

substances, extorting her, and isolating her and T.N. physically and

psychologically from her family. The Goneys allege legal malpractice and breaches

of fiduciary duty against Stone, who appears to have been retained to secure a

settlement against SuttonPark for Lyndsy.

On January 19, 2021, a day before the parties were scheduled to be heard at

oral argument—already twice delayed—the district court granted SuttonPark’s

and Stone’s motions to dismiss the Goneys’ complaint. Goney v. SuttonPark Cap.

LLC, No. 20-CV-5387,

(S.D.N.Y. Jan. 19, 2021). In its order, the

3 district court did not address the Goneys’ requests for leave to file an amended

complaint. The Goneys sought such leave in a footnote in their response in

opposition to SuttonPark’s motion to dismiss, which was filed on August 10, 2020,

and did so again in the concluding paragraphs of their response in opposition to

Stone’s motion to dismiss, which was filed on August 25, 2020.

On appeal, the Goneys challenge the district court’s dismissal of their

complaint without leave to file an amended complaint and point to information

they seek to add by amendment, should they receive an opportunity to do so. They

explain, for example, that they would provide evidence regarding the scope of

Rodney Goney’s power of attorney over T.N., which they argue would support

the Goneys’ standing to bring claims on T.N.’s behalf. The Goneys also reference

additional facts that may serve to support their RICO claim against SuttonPark,

and additional evidence of wrongdoing by Stone that may support claims not

considered in the district court’s order dismissing their complaint.

We hold that the district court erred in denying the Goneys leave to amend

their complaint without explanation and without inquiring into what the Goneys

sought to add in an amended complaint and whether such amendment would

4 affect the sufficiency of their claims. Accordingly, we vacate the district court’s

judgment dismissing the case and remand for the district court to consider the

Goneys’ request for leave to amend.

II

The Federal Rules of Civil Procedure permit a party to amend his or her

complaint with “the court’s leave,” which “should [be] freely give[n] … when

justice so requires.” Fed. R. Civ. P. 15(a)(2). On appeal, “[w]e review the denial of

leave to amend a complaint under an abuse of discretion standard.” Jin v. Metro.

Life Ins. Co.,

(2d Cir. 2002). Generally, “[i]n the absence of any

apparent or declared reason” for denying such leave, “the leave sought should, as

the rules require, be ‘freely given’” such that an “outright refusal to grant the leave

without any justifying reason” amounts to “abuse of … discretion.” Foman v. Davis,

(1962) (quoting Fed. R. Civ. P. 15(a)); see also Jin,

(“Outright refusal to grant the leave without any justifying reason for the denial is

an abuse of discretion.”). Although the abuse-of-discretion standard is deferential,

it “does not permit” the district court “to force us to guess at what reasons may

justify its decision.” Asset Mgmt. Assocs. of N.Y., Inc. v. Emerson Telecomm. Prods.

5 LLC,

(2d Cir. 2010). When the district court’s order “is barren

of any justification as to why leave to amend might have been denied,” this court

“cannot conduct even a deferential review of that order.”

We have also explained that “the lack of a formal motion is not sufficient

ground for a district court’s dismissal without leave to amend, so long as the

plaintiff has made its willingness to amend clear,” McLaughlin v. Anderson,

(2d Cir. 1992), and we have held that a district court abuses its

discretion when it ignores such a request and provides no reason for the denial.

For example, in Oliver Schools, Inc. v. Foley, the request was “easily inferable from

counsel’s statement to the court” that a fatal pleading defect “could be taken care

of” and the plaintiff’s desire to amend “was hardly a surprise to the defendants.”

, 253 (2d Cir. 1991). We therefore concluded that the district court

should have granted leave to amend. Id.

To be sure, in some cases we have said that a request for leave to amend

may be denied “implicitly,” Gurary v. Winehouse,

(2d Cir. 2000),

particularly when we determine on appeal that amendment would be futile, see,

e.g., In re Tamoxifen Citrate Antitrust Litig.,

(2d Cir. 2006),

6 abrogated on other grounds by F.T.C. v. Actavis, Inc.,

(2013). We do not

make such a determination here.

III

In this case, we believe the district court was required at least to consider

the Goneys’ request for leave to amend and whether such an amendment could

address the shortcomings of the complaint that the district court identified. The

Goneys’ requests for leave to amend were not so informal that consideration of the

requests was unwarranted. Yet the district court’s order made no reference to

those requests. The order “is barren of any justification” for the denial of leave to

amend, and that is an abuse of discretion. Asset Mgmt. Assocs.,

.

On appeal, the Goneys represent that amendment could cure the

deficiencies identified by the district court in its order granting the defendants’

motions to dismiss. For example, the district court concluded that “[t]he Goneys

… lack standing to sue on behalf of [T.N.]” because “[n]owhere in the complaint

is it alleged that the Goneys are acting as [T.N.]’s guardian.”

, at

*2. But the Goneys represent that their power of attorney over T.N.—referenced in

footnote 6 of Paragraph 15 of the Complaint, App’x 23—includes the power to sue

7 on his behalf. The Goneys also suggest that additional evidence of wrongdoing by

Stone could be included in an amended complaint to support the allegation that

Stone “colluded with SuttonPark.” Appellants’ Br. 4.

We reach no conclusion on appeal about whether the additional allegations

would be sufficient to overcome a motion to dismiss. But the district court erred

in not affording the Goneys an opportunity to seek leave to amend by identifying

these additional factual allegations. Accordingly, we vacate the district court’s

judgment dismissing the case and remand for the district court to consider the

Goneys’ request for leave to amend in the first instance.

* * *

We VACATE the judgment of the district court and REMAND for further

proceedings consistent with this order. Because the case will return to the district

court, we DISMISS the related appeal in No. 21-1101 regarding the denial of

SuttonPark’s motion to strike and DENY as moot the Goneys’ motion to dismiss

that appeal.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court

8