Blanchard v. Katz
The case involves plaintiffs' common law fraud and Rule 10b-5 claims against defendants Harrison M. Lasky, Lon B. Rubin, and Aron B. Katz. Plaintiffs invested in a limited partnership, alleging that the defendants made false and misleading financial projections by overstating revenues and understating expenses, specifically regarding repair costs for the roof and air conditioning, and marketing/vacancy expenses. The initial complaint was dismissed for failing to plead fraud with particularity under Fed.R.Civ.P. 9(b). The amended complaint also failed to provide sufficient factual allegations to support the defendants' knowledge of the alleged misrepresentations, despite specifying some details. The court found that the plaintiffs' allegations were conclusory and lacked a minimum factual basis for scienter. Therefore, the defendants' motion to dismiss the entire complaint with prejudice was granted, including the federal securities fraud claim and the state law claims due to a lack of pendent jurisdiction.