Motion for Leave in Cresco Labs New York, Llc, a New York limited liability company, Cresco Labs Llc, An Illinois Limited Liability Company v. Fiorello Pharmaceuticals, Inc., a New York corporation, Eric Sirota, Susan Yoss, John Does 1

On May 11, 2018 a Motion-Secondary was filed involving a dispute between Cresco Labs Llc, An Illinois Limited Liability Company, Cresco Labs New York, Llc, A New York Limited Liability Company, and Eric Sirota, Fiorello Pharmaceuticals, Inc., A New York Corporation, John Does 1 - 10, Susan Yoss, for Commercial Division in the District Court of New York County.

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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
------------------------------------------------------------------X
CRESCO LABS, NEW YORK, LLC, a New York
limited liability company, and CRESCO LABS LLC, Index No.: 652343/2018
an Illinois limited liability company, Hon. Andrew Borrok

Plaintiffs, Mot. Seq. No. 009

-against-

FIORELLO PHARMACEUTICALS, INC., a New York
corporation,

Defendant.
------------------------------------------------------------------X

DEFENDANT’S MEMORANDUM OF LAW IN OPPOSITION
TO PLAINTIFFS’ MOTION FOR LEAVE TO AMEND THE AMENDED COMPLAINT

IZOWER FELDMAN, LLP
Attorneys for Defendants Fiorello
Pharmaceuticals, Inc
11 Broadway, Suite 615
New York, New York 10004

1325 Franklin Ave., Suite 255
Garden City, NY 11530
Tel: (646) 688-3232
Fax: (646) 304-7071
On the brief
Ronald D. Lefton
Rachel Izower-Faddé
Stephanie R. Feldman

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TABLE OF CONTENTS

TABLE OF AUTHORITIES ................................................................................. ii

PRELIMINARY STATEMENT .............................................................................1

FACTUAL BACKGROUND .................................................................................3

PROCEDURAL HISTORY ....................................................................................4

A. Court Denies Preliminary Injunction ...................................................5

B. Court Dismisses Claims for Breach of Contract
and Unjust Enrichment .......................................................................5

C. Discovery and the Proposed SAC .......................................................7

LEGAL STANDARD .............................................................................................8

POINT I. The Proposed Unjust Enrichment Claim is Devoid of Merit ........... 12

A. There Is No Nexus Between The “Loss” Alleged And
Any Value Received By Sirota or Yoss ............................................12

B. The Unjust Enrichment Claim Duplicates The Contract Claim ......... 16

C. Sirota and Yoss Cannot Be Liable For Actions Taken In Their
Corporate Capacity ...........................................................................19

D. Contract-Type Damages Are Impremissible For
Unjust Enrichment ............................................................................23

POINT II. Plaintiffs’ Cannot Bring Nonparties Yoss and Sirota Into This
Action Through A Motion For Leave To Amend ...................... 25

CONCLUSION ....................................................................................................28

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TABLE OF AUTHORITIES

Cases

180 Water St. Assocs., L.P. v. Lehman Bros. Holdings, Inc.,
7 A.D.3d 316 (1st Dep’t 2004).....................................................................24

Catanese v Lipschitz,
44 AD.2.d 579 (2d Dep’t 1974) ..................................................................25

Chung Tai Printing (China) Co. Ltd. v. Florence Paper Corp.,
No. 651101/2019, 2020 WL 554362 (NY Sup Ct NY Cty 2020) ................ 19

Cityside Archives, LLC v. Greenspoon Marders, LLP,
No. 652532/2019, 2020 WL 70393 (NY Sup Ct NY Cty Jan. 7, 2020) ....... 19

Corsello v. Verizon N.Y., Inc.,
18 N.Y.3d 777 (2012) .................................................................................12

E.J. Brooks Co. v Cambridge Sec. Seals,
31 N.Y.3d 441 (2018) ..................................................................... 12, 14, 15

Estate of Brown v Pullman Group,
60 A.D.3d 481 (1st Dep’t 2009) ..................................................................10

Fallon v. McKeon,
230 A.D.2d 629 (1st Dep’t 1996) .................................................................25

Goodstein Constr. Corp v City of N.Y.,
80 N.Y.2d 366 (1992) .................................................................................24

Gottwald v. Sebert,
172 A.D.3d 445 (1st Dep’t 2019) ..................................................................9

Glob. Liberty Ins. Co. v. Tyrell,
172 A.D.3d 499 (1st Dep’t 2019) ..................................................................9

IDT Corp. v. Morgan Stanley Dean Witter & Co.,
12 N.Y.3d 132 (2009) ........................................................................... 13, 14

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Hitzig v. Borough-Tel Serv., Inc.,
168 A.D.2d 276, 277 (1st Dep’t 1990) ................................................... 26, 27

J.T. Magen & Co., Inc. v. Nissan N. Am., Inc.,
178 A.D.3d 466 (1st Dep’t 2019) ................................................................16

Kats v E. 13th St. Tifereth Place, LLC,
73 A.D.3d 706 (2d Dep’t 2010) ..................................................................22

Lopinyukelis II, LLC v. Merch. Captial Funding, LLC,
38 Misc. 3d 1226(A) (Kings Cty. Sup. Ct. 2013) ........................................20

LYNX Cap. Partners of NJ, LLC v. Bardown Cap. LLC,
2019 WL 5309748, No. 650722/2019 (NY Cty. Sup. Ct. 2019) ................ 19

Manhattan Real Estate Equities Grp. LLC v. Pine Equity NY, Inc.,
27 A.D.3d 323 (1st Dep’t 2006) ....................................................................8

Markwica v. Davis,
64 N.Y.2d 38 (1984) ...................................................................................17

Martin H. Bauman Assocs., Inc. v. H & M Int'l Transp., Inc.,
171 A.D.2d 479, 484, (1st Dep’t 1991) ........................................................24

MG W. 100 LLC v St. Michael's Protestant Episcopal Church,
127 AD3d 624 (1st Dep’t 2015) ............................................................. 16,24

Mobil Oil Corp. v Joshi,
202 A.D.2 318 (1st Dep’t 1994) .....................................................................9

Montanaro v. Weichert,
145 A.D.3d 1563 (4th Dep’t 2016) ...............................................................9

Natixis Funding Corp. v. GenOn Mid-Atl., LLC,
181 A.D.3d 481 (1st Dep’t 2020) ................................................................11

Paul v. Ultimate Anesthesia, PLLC,
No. 157603/2014, 60 Misc.3d 1213(A) (Sup Ct N.Y. Cty 2018)................. 21

iii

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Perez v Paramount Communications, Inc.,
92 N.Y.2d 749 (1999) .................................................................................26

Rapay v Chernov,
2017 WL 892372 (SDNY Mar. 6, 2017) .....................................................22

Ragto, Inc. v Schneiderman,
69 A.D.2d 815 (2d Dep’t 1979) aff’d, 49 NY2d 975 (1980)........................ 11

Randall’s Is. Aquatic Leisure, LLC v. City of New York,
92 A.D.3d 463 (1st Dep’t 2012); lv denied 19 N.Y.3d 804 (2012) .............. 16

Slocum Realty Corp. v. Schlesinger,
162 A.D.3d 939 (2d Dep’t 2018) ............................................................... 18

Sound Communications, Inc. v. Rack & Roll, Inc.,
88 A.D.3d 523 (1st Dep’t 2011) ..................................................................20

Stern v. H. DiMarzo, Inc.,
77 A.D.3d 730 (2d Dep't 2010) ...................................................................22

Stillman v. Kalikow,
31 A.D.3d 431 (2d Dep’t 2006) ....................................................................8

Travelers Ins. Co. v. Ferco, Inc.,
122 A.D.2d 718 (1st Dep’t 1986) ...................................................................9

Wald v. Graev,
137 A.D.3d 573 (1st Dep’t 2016) ........................................................... 20, 22

Walter & Rosen, Inc. v Pollack,
101 A.D.2d 734 (1st Dep’t 1984) ................................................................10

WDF, Inc. v. Trustees of Columbia Univ.,
170 A.D.3d 518 (1st Dep’t 2019) ..................................................................8

Worldwide Servs., Ltd. v. Bombardier Aerospace Corp.,
No. 14 civ 7343 ER, 2015 WL 5671724 (SDNY Sept. 22, 2015)................ 17

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Yonker v Amol Motorcycles, Inc.,
161 A.D.2d 638 (2d Dep’t 1990) ................................................................26

Yu Tian Li v. Louis & Chan Rest.,
170 A.D.3d 424 (1st Dep’t 2019) .................................................................18

Statutes
N.Y. B.C.L. § 626 .................................................................................................21
N.Y. B.C.L. § 719 .................................................................................................21
N.Y. B.C.L. § 720 .................................................................................................21
N.Y.C.P.L.R. § 1003 ................................................................................. 25, 26, 27
N.Y. C.P.L.R. § 2221 ...................................................................................... 26, 27
N.Y.C.P.L.R. § 3024 .............................................................................................11
N.Y.C.P.L.R. § 3211(a) ..........................................................................................9

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PRELIMINARY STATEMENT

Defendant Fiorello Pharmaceuticals, Inc. (“Fiorello”) opposes the grossly

belated application of Plaintiffs Cresco Labs and Cresco Labs NY (together

“Cresco”) to revive the very claim of unjust enrichment against Susan Yoss and Eric

Sirota that this Court previously dismissed. That dismissal in May 2019 was not

appealed by Cresco. Instead, 9 months later, they seek to reassert the unjust

enrichment claim by now asserting the amount of consideration Yoss and Sirota

received from a third party, GTI, for the shares of Fiorello which they individually

owned. This disregards the basis of this Court’s prior dismissal. It was not the

failure to allege a particular amount of consideration received. Rather, it was that

whatever the amount, that consideration paid by GTI was not at the expense of

Cresco. That remains equally true of Cresco’s proposed amendment.

It is undisputed that the Fiorello stock that Yoss and Sirota sold was owned

exclusively by them as individuals., Nothing in the February 14, 2018 Equity

Purchase Letter of Intent (“LOI”), or anywhere else, granted Cresco any interest in

those shares, nor restricted their disposition or transfer in any way. There was no

lock up nor other provision that required Yoss and Sirota either to recommend any

definitive agreement that might have been negotiated or compelled them to tender

their shares to Cresco. At no time did Cresco obtain any interest in the Fiorello stock

owned by its shareholders including Yoss and Sirota.

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It was on this basis that this Court dismissed Cresco’s contract damage claim

for breach of the LOI. Cresco did not appeal from that dismissal and the time to

have done so is long expired. By reason of this Court’s prior order, all that remains

of Cresco’s case is a claim that Fiorello breached an exclusivity provision in the LOI.

(A tortious interference claim also survived but Cresco now withdraws said claim

and Fiorello consents to that withdrawal.) Even taking the allegations of breach as

true—and therefore ignoring the unequivocal evidence to the contrary that there was

no breach—no alleged breach of exclusivity unjustly enriched Yoss or Sirota. The

entirely separate sale of stock in a separate transaction agreed months after the LOI

expired and which did not close until 17 months later, was not at Cresco’s expense.

Moreover, the price that Cresco agreed to pay to unrelated others to purchase

stock of a different entity is neither tethered to the LOI with Fiorello nor of any

benefit to Yoss and Sirota. Now, as in its original amended pleading, there is no

causal nexus between any consideration received by Yoss and Sirota and any

expense incurred by Cresco in acquiring stock of a different entity.

Nor can Sirota and Yoss’s conduct in connection with the LOI impose

retroactive limitations on their property rights or force them to personally bear the

failure of a potential transaction negotiated in their corporate capacities. But this is

exactly what Cresco seeks to do. Cresco’s belated application for leave to amend

should be denied.

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FACTUAL BACKGROUND

This action arises from the February 14, 2018 LOI between Cresco, and

Fiorello. (Ex. 1).1 Fiorello operates in New York under a vertically integrated

license issued by NY’s Department of Health (“DOH”) for the cultivation,

processing, and sale of medical cannabis. (Ex. A, ¶15). The LOI was to negotiate a

potential acquisition of 100% of the shares of Fiorello from all 17 of its shareholders.

(Ex. 1). Fiorello is not defined a seller. (Id.) The LOI was executed by Fiorello and

not individually by any shareholder. (Id.)

The LOI required that the parties complete due diligence and draft and execute

definitive agreement(s), “at the earliest possible date but not later than thirty (30)

business days from the date of the execution of the LOI (unless otherwise extended

by the mutual terms of the Parties).” (Id.) Any Definitive Agreement would then be

subject to approval by all of: (i) the Boards of Directors of each company, (ii)

Cresco’s members, (iii) DOH and (iv) all of Fiorello’s individual shareholders, all

as conditions of closing. (Id.) The LOI is silent as to what might happen if less than

100% of Fiorello’s shareholders agreed to sell. (Id.) None of the purported sellers

were parties to the LOI even though it explicitly contemplated a stock purchase

transaction, not a corporate merger. There was no “lock up” or other provision

1
References to numbered exhibits (“Ex.”) are to the exhibits to the accompanying Affirmation of
Rachel Izower-Fadde (“RIF Aff.”); lettered exhibits are those attached to Stephen Ascher’s
Affirmation in support of leave to amend, NYSCEF 148.
3

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requiring the members of Fiorello’s board of directors or officers (including Sirota

and Yoss) to sell their shares.

March 29, 2018 was the 30th business day in which to negotiate and execute

a Definitive Agreement to then propose to Fiorello shareholders. 2 March 29, 2018

passed without completion of due diligence, without reaching a Definitive

Agreement and with a host of open issues remaining. (Ex. A, ¶¶ 43-45.) Fiorello

promptly notified Cresco that the LOI had expired. (Id.)

In April 2018 Fiorello began discussions with other parties, while continuing

discussions with Cresco. (Id., ¶¶ 47-51.) In late June 2018, after an auction process

in which Cresco participated, Fiorello and its 17 shareholders each agreed to sell to

GTI pursuant to a merger agreement subject to DOH approval. (Id., ¶¶ 53-54).

DOH did not approve the sale to GTI, including, as the DOH wrote to Fiorello,

because Fiorello was not operational, any sale would constitute an impermissible

sale of the non-transferable license. (Ex. 2.) The transaction contemplated by the

LOI suffered this same defect and would not have been approved. (Ex. 1.)

Fiorello spent the following months becoming operational. Fiorello submitted

2
For the first time Cresco now asserts that the LOI expired on March 30, 2018, not March 29.
Cresco’s changed position ignores the LOI’s February 14, 2018 effective date, defined in its first
paragraph, repeated on the bottom of each page and typed into the signature block before
presenting the LOI to Fiorello for execution. (Ex. 1). Cresco now insists that the date Fiorello
countersigned the LOI (February 15) is the date from which the exclusivity period should be
counted. Notably the date of signature has always been known to Cresco. Regardless, Cresco’s
new theory is unavailing; Fiorello did not discuss a potential transaction with any third party prior
to April 1, 2018.
4

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a renegotiated merger agreement which DOH approved in August 2019; 17 months

after the LOI had expired. (Ex. A, ¶¶ 54-55; Ex. 3).

Since June 2019, Sirota and Yoss have resided in Florida. (Ex. A, ¶¶ 10-11).

Neither are still employed by GTI or by Fiorello although they both are members of

Fiorello’s board of directors. (Ex. 4).

PROCEDURAL HISTORY

Cresco commenced this action on May 11, 2018, but did not file any

complaint until June 26, 2018. It contemporaneously sought to enjoin Fiorello from

entering into or performing an agreement with any other party to sell its license,

assets, or stock to any other entity. (RIF Aff, ¶¶ 10-11.)

A. The Court Denies Preliminary Injunction

The Court denied provisional relief, finding no likelihood of success on the

merits. The Court found no meaningful agreement to enforce and that the LOI was

merely an agreement to try and convince the shareholders to sell their stock. (RIF

Aff., ¶12; Ex. 5, 4:5-8, 12-16, 11:19–13:13.).

B. The Court Dismisses Plaintiffs’ Claims for Breach of Contract and
Unjust Enrichment

On November 20, 2018, Cresco filed an Amended Complaint, setting forth

claims for (1) breach of the LOI exclusivity provision; (2) breach of contract for the

sale of Fiorello’s stock; (3) tortious interference with contract; and (4) unjust

enrichment against Yoss and Sirota.

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On May 24, 2019, the Court dismissed Cresco’s breach of contract claim for

the sale of Fiorello’s stock, limited the tortious interference claim to the alleged

separate breach of the exclusivity provision, and dismissed the claim against Yoss

and Sirota, for unjust enrichment. (Ex. 6.)

The Court dismissed Plaintiffs’ breach of contract claim pertaining to the sale

of Fiorello’s stock (Id., p. 8), finding, among other things: (1) the LOI is a Type II

preliminary agreement, “expressly contemplate[ing] further negotiations and a

subsequent Definitive Agreement,” and that (2) there was “no meeting of the minds

here as to the final terms of the agreement,” with material issues still being

negotiated and an amended LOI required if negotiations regarding a Definitive

Agreement were to continue[.]” (Id. (citations omitted).) The Court thus ruled that

the parties’ communications “unequivocally demonstrate that the parties never

reached agreement as to the terms of the prospective deal. In short, the LOI in this

case is an agreement to agree as to a prospective deal that never came to fruition.”

(Id., p. 9.)

With regard to unjust enrichment, the Court found that Plaintiffs failed to

allege how Yoss and Sirota derived any benefit at Cresco’s direct expense to support

such claim:

Here, the complaint fails to allege that Eric Sirota and Susan Yoss were
enriched at Cresco’s expense. The complaint asserts that, “[a]s
substantial shareholders in Fiorello, Sirota and Yoss stand to benefit
from Fiorello’s breaches of contract by receiving a large proportion of
6

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the additional compensation that Fiorello would receive from selling
itself to a third party rather than to Cresco” (Amended Complaint ¶ 66
[emphasis added]). Cresco has failed to allege that Eric Sirota and
Susan Yoss actually benefited in any way at Cresco’s expense, or that
Cresco suffered any cognizable loss (Edelman v Starwood Capital
Group, LLC, 70 AD3d 246, 251 [1st Dept 2009]).

(Id., pp. 11-12.)

On October 15, 2019, the Court amended its Decision and Order (hereinafter,

the “Amended Decision and Order”), and specified that the claims against Yoss and

Siorta for unjust enrichment having been dismissed, they are no longer parties to the

action. (Ex. 7, p. 13.) On October 18 Notice of Entry was filed and served. Cresco

did not appeal nor seek reargument.

C. Discovery and the Proposed SAC

Fiorello answered and asserted counterclaims against Cresco including breach

of the LOI confidentiality provisions. Fiorello also asserted affirmative defenses

including Cresco’s own failure to perform. Party and nonparty document discovery

and depositions ensued. To date, 12 depositions have been taken including Yoss,

another Fiorello Board member, two of Fiorello preferred shareholders, and three

GTI executives. (RIF Aff. ¶19.)

Cresco’s proposed SAC distorts the discovery record to allege negotiations

with GTI and Liberty Health Sciences (“Liberty”) that did not occur. 3 Regardless

3
The testimony is unequivocal that there were no discussions of any possible transaction between
Fiorello and GTI until April 2018, after the LOI had expired. (RIF Aff. ¶¶ 28-37, Exs. 8-12).
Further, Cresco’s CEO has admitted that Cresco, not Fiorello, was negotiating with Liberty and
7

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of whether such allegations support the alleged breach of exclusivity, they have no

relevance to a proposed claim of unjust enrichment against Yoss and Sirota.

LEGAL STANDARD

This Court has already dismissed the very unjust enrichment claim against the

very individuals that Cresco now seeks to replead. Cresco’s allegations are neither

newly discovered–having long been known and available to Plaintiffs—nor do they

save Plaintiffs’ unsupportable unjust enrichment claim.

Plaintiffs bear the burden of establishing the merit of the proposed amendment

because the Court has already considered and dismissed their claim. Manhattan

Real Estate Equities Grp. LLC v. Pine Equity NY, Inc., 27 A.D.3d 323 (1st Dep’t

2006) (upholding denial of leave to amend to add defendant). Leave to amend

should be denied where the proposed amendment is “palpably insufficient” or

“clearly devoid of merit.” WDF, Inc. v. Trustees of Columbia Univ., 170 A.D.3d

518, 519 (1st Dep’t 2019) (upholding denial of leave to amend where new

allegations were “merely additional details” elaborating on matters previously

alleged); Stillman v. Kalikow, 31 A.D.3d 431, 432 (2d Dep’t 2006) (affirming denial

of leave to amend where unjust enrichment was not adequately stated).

disclosed confidential information during the Exclusivity Period. Liberty then made unsolicited
offers to Fiorello which were never pursued. (RIF Aff, ¶¶ 39-49, Exs.13-19.) No transaction with
Liberty ever occurred and Yoss and Sirota received no consideration from Liberty (and none is
alleged).

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Plaintiffs do not begin on a clean slate. Consequently, their citations miss the

mark. In none of Plaintiffs’ cited cases did the courts grant leave to resurrect claims

against the same proposed defendants who previously had been dismissed on the

law. See e.g., Glob. Liberty Ins. Co. v. Tyrell, 172 A.D.3d 499, 500 (1st Dep’t 2019)

(parties added were not previously named or dismissed); Gottwald v. Sebert, 172

A.D.3d 445, 446 (1st Dep’t 2019) (no new or dismissed parties added); Montanaro

v. Weichert, 145 A.D.3d 1563 (4th Dep’t 2016) (new defendant was not previously

named or dismissed).

Cresco must make an affirmative showing of merit to resurrect its unjust

enrichment claim. It cannot rely on conclusory allegations that are contrary to the

evidentiary record adduced to date. See, Mobil Oil Corp. v Joshi, 202 A.D.2 318,

318-19 (1st Dep’t 1994); Travelers Ins. Co. v. Ferco, Inc. 122 A.D.2d 718, 719-20

1st Dep’t 1986) (When leave is sought to amend pleadings properly dismissed

pursuant to CPLR 3211(a), the court must be satisfied that there are sufficient

grounds to support the proposed amendment; holding showing of merit not satisfied

where amendment is indistinguishable from or substantially the same as its

forerunner.)

Cresco cannot satisfy this standard. The new allegations merely detail the

consideration Sirota and Yoss received from GTI for the sale of their personal

Fiorello stock (Ex. 1, ¶55) and, other allegedly “substantial personal benefits from

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the merger transaction with GTI that they would not have received under the

Agreement with Cresco,” including an indemnification by GTI for this litigation,

fees for “consulting services,” and salaries. (Id., ¶56.) These added details neither

significantly alter the claim this Court dismissed as insufficient, nor address those

legal deficiencies. As the Court held, “Cresco has failed to allege that Eric Sirota

and Susan Yoss actually benefited in any way at Cresco’s expense, or that Cresco

suffered any cognizable loss.” (Exs. 6 and 7, p. 11) (emphasis added). The Court’s

rationale remains unaffected.

Nor has Cresco provided evidentiary support for its allegations regarding the

benefits Sirota and Yoss received from GTI. The proposed SAC is unverified,

contains allegations “on information and belief” (prefatory paragraph & ¶¶ 10-11,

38, 56 & 70), and is supported only by an attorney affirmation. This too is fatal to

its motion. See, e.g., Walter & Rosen, Inc. v Pollack, 101 A.D.2d 734, 734 (1st

Dep’t 1984) (internal citations omitted) (denying leave to amend where “plaintiffs

offered no evidence to support their proposed amended complaint, relying solely on

an attorney’s affirmation”); Estate of Brown v Pullman Group, 60 A.D.3d 481, 482

(1st Dep’t 2009) (leave to amend previously dismissed counterclaims properly

denied where proposed amendment was unsupported by affidavit of merit or verified

pleading).

Even were the allegations in the proposed SAC true (they are not) and had

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Cresco provided the required evidentiary support (it has not), it “would be futile at

this stage to allow it to correct its pleadings pursuant to CPLR 3024 as there is no

reason to believe that it could buttress its pleadings with facts sufficient to make out

a prima facie case.” Ragto, Inc. v Schneiderman, 69 A.D.2d 815, 816 (2d Dept

1979) affd, 49 NY2d 975 (1980). See, also, Natixis Funding Corp. v. GenOn Mid-

Atl., LLC, 181 A.D.3d 481 (1st Dep’t 2020) (upholding denial of leave to amend

where amendment would be futile).

Fatal to Cresco’s proposed amendment:

(1) Cresco did not bestow any benefit on Yoss and Sirota and did not incur

any expense that benefitted them.

(2) The subject matter of the proposed unjust enrichment claim is duplicative

of the alleged breach of exclusivity.

(3) Cresco cannot recover from Sirota and Yoss personally for actions taken

in their corporate capacities.

(4) The damages sought wrongly assumes a contract with Sirota and Yoss for

the sale of their shares.

Cresco has not alleged a viable claim for unjust enrichment and has not

satisfied the applicable standard for granting leave to replead the very claim the

Court already considered and dismissed.

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POINT I. THE PROPOSED UNJUST ENRICHMENT CLAIM IS DEVOID
OF MERIT

To sustain an unjust enrichment claim, “plaintiff must show that (1) the other

party was enriched, (2) at [plaintiff’s] expense, and (3) that it is against equity and

good conscience to permit [the other party] to retain what is sought to be recovered”

E.J. Brooks Co. v Cambridge Sec. Seals, 31 N.Y.3d 441, 455-56 (2018) (internal

citations and quotations omitted).

Unjust enrichment, or an action in quasi-contract, is available only in
unusual situations when, though the defendant has not breached a
contract nor committed a recognized tort, circumstances create an
equitable obligation running from the defendant to the plaintiff. Typical
cases are those in which the defendant, though guilty of no wrongdoing,
has received money to which he or she is not entitled.

Id. at 455. This doctrine is “not a catchall cause of action to be used when others

fail.” (Corsello v. Verizon N.Y., Inc., 18 N.Y.3d 777, 790, (2012)).

A. There Is No Nexus Between The “Loss” Alleged And Any Value
Received By Sirota or Yoss

The “enrichment” in question was not at Plaintiffs’ expense. As this Court

found, the Amended Complaint “fail[ed] to allege that Eric Sirota and Susan Yoss

were enriched at Cresco’s expense,” that is, that “Cresco has failed to allege that Eric

Sirota and Susan Yoss actually benefited in any way at Cresco’s expense, or that

Cresco suffered any cognizable loss.” (Exs. 6 & 7, p. 11). That Fiorello and Cresco

have each consummated transactions with third parties does not change this analysis.

Cresco’s argument that the proposed SAC “incorporate[s] precisely the

18 of 35
FILED: NEW YORK COUNTY

Case Info

Judge

Andrew Borrok Track Judge’s New Case

Case No.

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Document Filed Date

June 05, 2020

Case Filing Date

May 11, 2018

County

Parties

AKIN GUMP STRAUSS HAUER & FELD LLP Attorney for the Defendant
ASCHER, STEPHEN L Attorney for the Plaintiff
BALDINI, STEPHEN M Attorney for the Defendant
CRESCO LABS LLC, an Illinois limited liability company Plaintiff
Cresco Labs New York, LLC, a New York limited liability company Plaintiff
Eric Sirota Defendant
FEDORNAK, MELISSA TAKARA Attorney for the Plaintiff
FELDMAN, STEPHANIE R Attorney for the Defendant
Fiorello Pharmaceuticals, Inc., a New York corporation Defendant
HIPP, JASON PORTWOOD Attorney for the Plaintiff
IZOWER-FADDE, RACHEL LOIS Attorney for the Defendant
IZOWER-FADDE, RACHEL LOIS Attorney for the Defendants
Izower Feldman, LLP Attorney for the Defendant
IZOWER LEFTON, LLP Attorney for the Defendant
JOHN DOES 1 - 10 Defendant
LEFTON, RONALD DANIEL Attorney for the Defendant
MARKOU, POPPY ELIZABETH Attorney for the Defendant
MARKOU, POPPY ELIZABETH Attorney for the Defendants
Re, John C. Attorney for the Plaintiff
Susan Yoss Defendant
VILLASANA, DENNIS MICHAEL Attorney for the Defendant
BENJAMIN RAH Attorneys for Plaintiffs
FRED WEINSTEIN Attorneys for Plaintiffs
JEROME LEVY Attorney
RICHARD ZAHNLEUTER Attorney
ARIELLE KANE Attorney
MICHAEL HELSEL Attorney
JOSEPH LUCOSKY Attorney
Jason P.Hipp Attorney
KATHERINE LIU Attorney
HOWARD GODNICK Attorneys for Defendants
DINA WEINSTEIN Attorney
DAVID WEINSTEIN Attorney
HAROLD RICHMAN Attorney
KATHERINE LEE Attorney
JASON RIEGERT Attorney
Michael Bass Attorney
NANCY RICHMAN Attorneys for Plaintiffs
MICHAEL BASS Attorney
LYNN SHAFRAN Attorney
JOSEPH HEPPT Attorney
MARK CASH Attorney
ERICA HOLLAND Attorneys for Defendants

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Motion-Secondary: Cresco Labs New York, Llc, a New York limited liability company, Cresco Labs Llc, An Illinois Limited Liability Company v. Fiorello Pharmaceuticals, Inc., a New York corporation, Eric Sirota, Susan Yoss, John Does 1 - 10

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