Weida Freight System, Inc., Plaintiff, v. LLC (2026)

Order

Pending before the Court are two pre-motion conference requests for motions for reconsideration filed by two defendants in this action, Benjy Goldstein and TruRide Tech, LLC (“TruRide”) (collectively, “Moving Defendants”), seeking reconsideration of the Court's April 1, 2026 ruling on Moving Defendants’ motions to dismiss. (ECF No. 62 ¹ .) Plaintiff Weida Freight System, Inc. (“Weida”) filed a letter responding in opposition. (ECF No. 67.)

For the reasons explained below, reconsideration is not the proper vehicle for challenging this Court's exercise of admiralty or diversity jurisdiction because the Moving Defendants did not, in their motions to dismiss, move to dismiss for lack of subject matter jurisdiction. As discussed below, Moving Defendants may challenge subject matter jurisdiction after Weida files its forthcoming second amended complaint by April 20, 2026.

First, parties cannot use a motion for reconsideration as a vehicle either to relitigate or litigate anew issues they did not brief in their original motion. In their motions for reconsideration, both Mr. Goldstein and TruRide challenge the Court's admiralty jurisdiction. (See ECF No. 65, Goldstein Motion for Reconsideration, at 2 (“Weida's fraud in the inducement claim is not subject to the Court's admiralty jurisdiction”); ECF No. 66, TruRide Motion for Reconsideration, at 3 (“[T]he Court lacks admiralty jurisdiction over Weida's successor liability claim”)). But neither Mr. Goldstein nor TruRide challenged the Court's admiralty jurisdiction in their motions to dismiss, (see ECF Nos. 52-1, 59-1), despite the amended complaint explicitly invoking admiralty jurisdiction under 28 U.S.C. § 1333. (ECF No. 38, Amended Complaint, ¶¶ 6-7.) Although a motion for reconsideration is not the proper vehicle for presenting new arguments,² defendants are free to seek dismissal for lack of subject matter jurisdiction as a standalone motion to be filed after Weida files its forthcoming second amended complaint. See Kontrick v. Ryan, 540 U.S. 443, 455 (2004) (“A litigant generally may raise a court's lack of subject-matter jurisdiction at any time.”).

Second, to the extent there is lingering confusion about the nature of Weida's fraud-related claims, Weida's forthcoming second amended complaint should provide clarity. For each claim, Weida should plead, with precision, (i) whether the claim is brought as a federal maritime claim, a New York state claim, or both; (ii) whether the claim is brought as an equitable claim or tort; and (iii) the specific theory of fraud, such as fraud, fraud in the inducement, or fraudulent transfer based on sufficient factual allegations.³

Third, contrary to the argument presented in Mr. Goldstein's pre-motion conference letter for reconsideration, fraud-related maritime claims are not, by default, maritime torts and analyzed under the maritime tort jurisdictional framework set forth in Grubart. See Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 534 (1995) (holding that “a party seeking to invoke federal admiralty jurisdiction pursuant to 28 U.S.C. § 1333(1) over a tort claim must satisfy conditions both of location and of connection with maritime activity” (emphasis added)). For example, the Second Circuit has held that an equitable claim of “fraudulent transfer, in certain circumstances” falls under “federal admiralty jurisdiction,” which “encompass[es] equitable claims.” Atlanta Shipping Corp. v. Chem. Bank, 818 F.2d 240, 248 (2d Cir. 1987). Similarly, fraud in the inducement may be asserted as an equitable claim insofar as it seeks equitable remedies, such as rescission. See Barkley v. United Homes, LLC, 848 F. Supp. 2d 248, 276 (E.D.N.Y. 2012), aff'd sub nom. Barkley v. Olympia Mortg. Co., 557 F. App'x 22 (2d Cir. 2014).

The Court agrees with Mr. Goldstein that admiralty jurisdiction for a traditional maritime tort claim of fraud must generally be analyzed under the two-pronged test in Grubart. A fraud-related maritime claim brought as an equitable claim, however, is not analyzed under the Grubart framework because an equitable claim is not “a tort claim.” See Grubart, 513 U.S. at 534. Moreover, when the object of the fraud, as alleged in this action, is the dispossession of maritime cargo subject to a maritime lien, the fraud-related claim may be derivative of claims related to the enforcement of the maritime lien. Supreme Court precedent suggests that defendants cannot evade the Court's admiralty jurisdiction simply by standing on land while fraudulently dispossessing the plaintiff of maritime cargo subject to a maritime lien:

The issue of fraud arises in connection with the attachment as a means of effectuating a claim incontestably in admiralty. To deny an admiralty court jurisdiction over this subsidiary or derivative issue in a litigation clearly maritime would require an absolute rule that admiralty is rigorously excluded from all contact with nonmaritime transactions and from all equitable relief, even though such nonmaritime transactions come into play, and such equitable relief is sought, in the course of admiralty's exercise of its jurisdiction over a matter exclusively maritime. It would be strange indeed thus to hobble a legal system that has been so responsive to the practicalities of maritime commerce and so inventive in adapting its jurisdiction to the needs of that commerce.

Swift & Co. Packers v. Compania Colombiana Del Caribe, S.A., 339 U.S. 684, 691 (1950). Because “admiralty is not seized of jurisdiction to correct a fraud simply because it is a fraud,” an admiralty court can “protect its jurisdiction from being thwarted by a fraudulent transfer.”⁴ Id. at 867-68.

In sum, Mr. Goldstein's argument that “the Court lacks admiralty jurisdiction over Weida's fraud in the inducement,” (ECF No. 65 at 2), is an oversimplification because the jurisdictional analysis turns on whether fraud in the inducement is pled as an equitable claim or a tort.

Fourth, even if, as Mr. Goldstein urges, the Court were to analyze Weida's fraud in the inducement claim as a New York state claim, the claim would certainly survive.⁵ Mr. Goldstein argues that, under New York state law, Weida's fraud claims fail because, in Mr. Goldstein's view, (i) Weida alleged only an intent to breach a contractual obligation in the future, which is insufficient to state a fraud claim; (ii) Weida did not allege any actionable misrepresentations; (iii) Weida failed to adequately plead justifiable reliance; and (iv) Weida failed to plead damages. (ECF No. 52-1.)

None of Mr. Goldstein's arguments for dismissal are meritorious given that the Court assumes as true Weida's allegations at the motion to dismiss stage, and Weida's allegations of the fraudulent scheme at issue are thoroughly pled. Under New York state law, the elements of both fraud and fraud in the inducement permit an omission to serve as a basis for such claim:

Under New York law, to state a claim for fraud, a plaintiff must demonstrate: (1) a misrepresentation or omission of material fact; (2) which the defendant knew to be false; (3) which the defendant made with the intention of inducing reliance; (4) upon which the plaintiff reasonably relied; and (5) which caused injury to the plaintiff. Wynn v. AC Rochester, 273 F.3d 153, 156 (2d Cir.2001).

Similarly, under New York law, an action for fraudulent inducement requires the demonstration of: “(1) a material misrepresentation or omission that induced the party to sign the contract; (2) scienter; (3) reliance; and (4) injury.” Davidowitz v. Patridge, No. 08 CV 6962(NRB), 2010 WL 5186803, at *7 (S.D.N.Y. Dec. 7, 2010).

Schwartzco Enters. LLC v. TMH Mgmt., LLC, 60 F. Supp. 3d 331, 344 (E.D.N.Y. 2014) (citation modified) (emphasis added).

In its Memorandum and Order denying defendants’ motion to dismiss, this Court identified the alleged fraudulent scheme “in which Mr. Goldstein and Mr. Sultan induced Weida to enter into the May 2024 Payment Plan Agreements and thereby transfer the Liened Cargo subject to Weida's maritime lien, all the while knowing that these ‘assets had already been sold to a third-party weeks before’ and that ‘Jetson would have no way of making the payments set forth in [the May 2024 Payment Plan Agreements].’ ” (ECF No. 62 at 24-25 (quoting Am. Comp. ¶¶ 82-83)). Weida's allegations that (i) Mr. Goldstein knew the Liened Cargo “had already been sold to a third-party weeks before” and (ii) “Jetson would have no way of making the payments” because it was severely undercapitalized, (see Am. Comp. ¶¶ 82-83), are material omissions and sufficient, at the motion to dismiss stage, to survive dismissal under New York state law. Mr. Goldstein's other arguments, that Weida failed to allege justifiable reliance or damages, make little sense and fail because, as alleged, Weida relied upon defendants’ assurances to relinquish possession of millions of dollars’ worth of maritime cargo and was never repaid by Jetson. (See Am. Comp. ¶¶ 23, 38, 39, 47.)

For the reasons discussed in this Order, Mr. Goldstein and TruRide's requests to file motions for reconsideration are respectfully DENIED. After Weida files its forthcoming second amended complaint, defendants may (i) seek dismissal of any new claim set forth in the forthcoming second amended complaint, and (ii) seek dismissal of any claim for lack of subject matter jurisdiction.

So ordered.

FOOTNOTES

1.   Pincites in this Memorandum & Order refer to the page numbers as generated by CM/ECF.

2.   TruRide's motion for reconsideration is plainly improper because it seeks reconsideration on the basis of a newly unearthed document that “Mr. Goldstein produced in discovery” “[t]his week.” (ECF No. 66 at 2.) The Court cannot reconsider arguments that were never presented in the first instance. Nor is this newly unearthed document referenced in or “integral to” the complaint and thus cannot be considered in a Rule 12(b)(6) motion under which defendants moved to dismiss the claims at issue here. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002).

3.   Although Weida's claims may be brought in the alternative and regardless of consistency under Federal Rule of Civil Procedure 8(d), Weida shall ensure that the jurisdictional ground for each of its claims is sound. Also, as the Court noted in its April 1, 2026 Memorandum and Order, Weida cannot rely on identical facts and legal theories for purely duplicative fraud and fraud in the inducement claims. (See ECF No. 62 at 25.)

4.   The Court is mindful of the bizarre outcome from an extremely rigid application of the Grubart framework: An equitable fraud in the inducement claim related to dispossession of maritime freight subject to a maritime lien would be analyzed under federal maritime law, but a traditional fraud claim alleging the same could only be alleged under state law.

5.   A fraud in the inducement claim under New York state law appears less favorable to defendants than a similar federal maritime claim. Under New York state law, a plaintiff can recover both damages and rescission for a fraud in the inducement claim:A claim for damages sustained as a result of fraud or misrepresentation in the inducement of a contract or other transaction, shall not be deemed inconsistent with a claim for rescission or based upon rescission. In an action for rescission or based upon rescission the aggrieved party shall be allowed to obtain complete relief in one action, including rescission, restitution of the benefits, if any, conferred by him as a result of the transaction, and damages to which he is entitled because of such fraud or misrepresentation; but such complete relief shall not include duplication of items of recovery.N.Y. C.P.L.R. § 3002(e); see also Barkley v. United Homes, LLC, 848 F. Supp. 2d 248 (E.D.N.Y. 2012) (recognizing that N.Y. C.P.L.R. § 3002(e) creates “a reversal of the traditional ‘election of remedies’ doctrine”), aff'd sub nom. Barkley v. Olympia Mortg. Co., 557 F. App'x 22 (2d Cir. 2014).

Kiyo A. Matsumoto United States District Judge Eastern District of New York