Cole v. Iconix International Inc. — Entry #32
Case: Cole v. Iconix International Inc. nysd · 1:25-cv-09357
filed November 10, 2025
What this document is
Docket entry #32 · filed April 27, 2026
Who is involved
- ICONIX BRAND GROUP, INC
- Neil Cole
- Seth Horowitz
Why we have it
We follow this case because it names a company we track, although that company is not a party:
- CleanSpark: its project “Dalton” appears in a filing in this case.
…............................................9 Dalton v. Educ. Testing Serv., 87 N.Y.2d 384 (1995)…
A free copy from the RECAP archive of federal court filings (mirrored at the Internet Archive), retrieved September 28, 2026. Federal court filings are public records.
Document text
31 page(s), 69,599 characters, converted from the PDF's text layer · plain text.
Full text
Case 1:25-cv-09357-MKV Document 32 Filed 04/27/26 Page 1 of 31
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
NEIL COLE,
Plaintiff,
v. Case No. 1:25-cv-09357
ICONIX INTERNATIONAL INC. f/k/a/
ICONIX BRAND GROUP, INC., and
SETH HOROWITZ,
Defendants.
PLAINTIFF NEIL COLE’S MEMORANDUM OF LAW
IN OPPOSITION TO ICONIX INTERNATIONAL INC.’S
PARTIAL MOTION TO DISMISS THE AMENDED COMPLAINT
Case 1:25-cv-09357-MKV Document 32 Filed 04/27/26 Page 2 of 31
TABLE OF CONTENTS
PRELIMINARY STATEMENT...................................................................................................... 1
FACTUAL BACKGROUND ......................................................................................................... 3
ARGUMENT .................................................................................................................................. 6
I. The Complaint States a Claim for Breach of the Advancement Agreement (Count
III). .............................................................................................................................6
II. The Complaint States a Claim for a Breach of the Implied Covenant of Good Faith
and Fair Dealing (Count IV). ....................................................................................9
A. The Complaint States an Obstruction-Based Implied Covenant Claim. ........... 9
B. The Complaint States a Recoupment-Based Implied Covenant Claim........... 12
III. The Complaint States a Claim for Unjust Enrichment (Count V)...........................16
IV. The Complaint States Claims for Punitive and Consequential Damages. ..............20
A. The Complaint States a Claim for Punitive Damages..................................... 20
B. The Complaint States a Claim for Consequential Damages. .......................... 24
CONCLUSION ............................................................................................................................. 25
i
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TABLE OF AUTHORITIES
Cases
25 Bay Terrace Assocs., L.P. v. Pub. Serv. Mut. Ins. Co., 144 A.D.3d 665 (2d Dep’t 2016) ........ 20
900 Unltd., Inc. v. MCI Telecom. Corp., 626 N.Y.S.2d 188 (1st Dep’t 1995) .............................. 19
AEA Middle Mkt. Debt Funding LLC v. Marblegate Asset Mgt., LLC, 214 A.D.3d 111
(1st Dep’t 2023) .........................................................................................................................11
Agerbrink v. Model Serv. LLC, 155 F. Supp. 3d 448 (S.D.N.Y. 2016) .................................... 18
Ashland Mgt. v Janien, 82 N.Y.2d 395 (1993).............................................................................. 24
Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., Inc., 448 F.3d 573 (2d Cir.
2006) ......................................................................................................................................... 16
Bi-Economy Mkt., Inc., v. Harleysville Ins. Co. of N.Y., 856 N.Y.S.2d 505 (2008) ................ 24, 25
Botbol v. Frosch Intl. Travel Inc., 222 A.D.3d 471 (1st Dep’t 2023) ........................................... 12
Brown v. Cara, 420 F.3d 148 (2d Cir. 2005) ................................................................................. 15
Campione v. Campione, 942 F. Supp. 2d 279 (E.D.N.Y. 2013) .................................................... 19
Coggins v. Cnty. of Nassau, 988 F. Supp. 2d 231 (E.D.N.Y. 2013) ................................................ 3
Cohen v. Dunne, 2017 WL 4516820 (S.D.N.Y. Sept. 27, 2017) ................................................... 20
Cohen v. S.A.C. Trading Corp., 711 F.3d 353 (2d Cir. 2013) ....................................................... 19
Cordero v. Transamerica Annuity Serv. Corp., 39 N.Y.3d 399 (2023) ......................................... 15
Dalton v. Educational Testing Serv., 87 N.Y.2d 384 (1995) ....................................................11, 12
Deerfield Commc’ns Corp. v. Chesebrough-Ponds, Inc., 68 N.Y.2d 954 (1986) ......................... 21
DNF Assocs., LLC v. HSBC Bank USA, N.A., 2024 WL 3426777 (S.D.N.Y. July 16, 2024) ....... 25
Dorset Indus., Inc. v. Unified Grocers, Inc., 893 F. Supp. 2d 395 (E.D.N.Y. 2012) ......... 12, 14, 15
Frio Energy Partners, LLC v. Fin. Tech. Leverage, LLC, 680 F. Supp. 3d 322
(S.D.N.Y. 2023) ........................................................................................................................ 17
Gallo v. Inter-Con Security Systems Inc., 2021 WL 3913539 (S.D.N.Y. Sept. 1, 2021) ................ 8
ii
Case 1:25-cv-09357-MKV Document 32 Filed 04/27/26 Page 4 of 31
Gipe v. DBT Xpress, LLC, 150 A.D.3d 1208 (2d Dep’t 2017) ...................................................... 24
Harsco Corp. v. Segui, 91 F.3d 337 (2d Cir. 1996). ........................................................................ 7
Havel v. Kelsey-Hayes Co., 83 A.D.2d 380 (4th Dep’t 1981) ...................................................... 12
Hobish v. AXA Equitable Life Ins. Co., 43 N.Y. 3d 442 (2025) .................................................... 21
IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132 (2009) .................................... 19
In re Alexander, 2026 WL 74280 (S.D.N.Y. Jan. 9, 2026) ........................................................... 22
Jia Chen v. Antel Communications, LLC, 2015 WL 5793404 (E.D.N.Y. Sept. 30, 2015) ............. 9
Joseph Sternberg, Inc. v. Walber 36th St. Assocs., 187 A.D.2d 225 (1st Dep’t 1993) .................. 17
Kaplan Grp. Investments LLC v. A.S.A.P. Logistics Ltd., 694 F. Supp. 3d 374 (S.D.N.Y. 2023) . 10
Kermanshah v. Kermanshah, 580 F. Supp. 2d 247 (S.D.N.Y. 2008) ............................................ 19
Liu Jo S.P.A. v. Jenner, 630 F. Supp. 3d 501 (S.D.N.Y. 2022) .......................................................11
Manhattan Motorcars, Inc. v. Automobili Lamborghini, S.p.A., 244 F.R.D. 204
(S.D.N.Y. 2007) ........................................................................................................................ 12
Marky’s Martial Arts, Inc. v. FC Online Marketing, Inc., 2022 WL 18276016
(S.D.N.Y. Sept. 16, 2022) ......................................................................................................... 23
Martin Hilti Fam. Tr. v. Knoedler Gallery, LLC, 137 F. Supp. 3d 430 (S.D.N.Y. 2015) ............. 20
Matter of Legion of Christ, Inc. v. Town of Mount Pleasant, 151 A.D.3d 858 (2d Dep’t 2017) .. 13
Matusovsky v. Merrill Lynch, 186 F. Supp. 2d 397 (S.D.N.Y. 2002) ............................................ 19
Mid-Hudson Anesthesiologists, P.C. v. St. Luke’s Cornwall, 2026 WL 734947
(S.D.N.Y. March 16, 2026) ..................................................................................................... 23
Perlbinder v. Vigilant Ins. Co., 190 A.D.3d 985 (2d Dep’t 2021) .......................................... 20, 21
Premium Prods., Inc. v. O’Malley, 246 A.D.3d 948 (2d Dep’t 2026) .......................................... 23
Quintanilla v. WW Int’l, Inc., 541 F. Supp. 3d 331 (S.D.N.Y. 2021) ............................................ 13
Rocanova v. Equitable Life Assur. Socy. of U.S., 83 N.Y.2d 603 (1994) ................................ 21, 23
Singh v. City of New York, 139 N.Y.S.3d 307 (2020) .................................................................... 13
iii
Case 1:25-cv-09357-MKV Document 32 Filed 04/27/26 Page 5 of 31
Smart Coffee, Inc. v. Sprauer, 140 N.Y.S.3d 376 (Civ. Ct. N.Y. 2021) ........................................ 23
Suffolk Sports Ctr., Inc. v. Belli Constr. Corp., 212 A.D.2d 241 (2d Dep’t 1995) ........................ 22
Union Bank, N.A. v. CBS Corp, 2009 WL 1675087 (S.D.N.Y. June 10, 2009) ............................ 17
URP Maiden Lane LLC v. Valley National Bank, 244 A.D.3d 509 (1st Dep’t 2025) ................... 10
Zicherman v. State Farm Fire & Cas. Co., 698 F. Supp. 3d 564 (E.D.N.Y. 2023) ....................... 20
iv
Case 1:25-cv-09357-MKV Document 32 Filed 04/27/26 Page 6 of 31
PRELIMINARY STATEMENT
In 2021, a federal jury acquitted Plaintiff Neil Cole of a sprawling securities fraud
conspiracy concerning false allegations of misconduct while Cole was the CEO of Defendant
Iconix Brand Group (“Iconix), a company he founded. The entire endeavor was orchestrated by a
supposedly spurned and vindictive Iconix executive, Seth Horowitz. In 2025, Cole’s horrific, near-
decade long ordeal ended when the U.S. Court of Appeals for the Second Circuit dismissed the
entire criminal case against him on the basis of his acquittal. As is typical for senior executives,
Iconix was contractually obligated to assist Cole with his defense of these proceedings, including
primarily by indemnifying his legal costs. But Iconix not only failed to comply with that obligation
(despite a Court order requiring it to do so)—which forced Cole to spend millions of his own
dollars defending himself against these false allegations—it also took every opportunity to harm
Cole and seek to secure his conviction, all in effort to scapegoat and serve its own financial
interests. To name the most egregious examples: it withheld evidence that it knew exculpated him,
obstructed his ability to prepare for and respond to the government’s investigation, and forced his
trusted legal counsel to withdraw from its representation at a hugely critical moment. As made
clear in the Complaint in this action, this conduct amounts to claims sounding in breach of contract,
quasi-contract, and longstanding principles of equity and fairness. Iconix moves to dismiss certain
of these claims at the pleadings-stage, but its arguments are meritless.
First, Iconix takes issue (in part) with what are its straight-forward and unambiguous
contractual obligations to indemnify Cole. Specifically, Iconix was obligated to indemnify Cole’s
legal costs pursuant to two separate sources of contractual obligations: (i) the Company’s By-
Laws; and (ii) a separate Advancement Agreement Iconix and Cole entered into (when Iconix
failed to comply with its obligations under the By-Laws). Through the instant motion, Iconix seeks
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to dismiss claims that it breached the latter Advancement Agreement; it does not move to dismiss
claims that it breached the By-Laws. But its arguments as to the Advancement Agreement simply
misread the agreement and the Complaint.
Second, Iconix moves to dismiss the Complaint’s claim for breach of the implied covenant
of good faith and fair dealing. This claim similarly contains two components, i.e., that Iconix
breached its implied obligation to (i) refrain from actively harming its executives’ abilities to
defend themselves in actions for which they are indemnified; and (ii) return electively recouped
executive compensation when its basis for recoupment disappears. Iconix primarily argues that
these obligations are not contained in a contract—but that is precisely why they make out an
implied claim. Iconix then challenges the veracity of the facts the Complaint alleges to establish
why Iconix’s conduct in harming Cole’s defense and seeking his recoupment were not in good
faith and were not fair dealing. But this is not Iconix’s opportunity to present its (inaccurate) view
of the facts—that is for the jury to decide.
Third, Iconix moves to dismiss the claim for unjust enrichment concerning its retention of
improperly recouped funds. Iconix again argues that the claim should fail because Cole’s
entitlement to a return of the recouped funds is not contained in a contract. But again, that is
precisely why the Complaint brings this as a quasi-contract claim based in equity and fairness.
And Iconix can proffer no argument—especially one cognizable at this stage—as to why it is fair
for Iconix to retain Cole’s executive compensation (but not, for example, Horowitz’s, despite
Horowitz’s extant securities fraud conviction) following his acquittal and dismissal of the criminal
case.
Finally, Iconix moves to dismiss the Complaint’s claims for punitive and consequential
damages. Its arguments, however, significantly downplay the egregious and foreseeable
2
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consequences of Iconix’s betrayal of Cole, while ignoring swaths of allegations in the Complaint
that make clear that Iconix committed an independent tort and harmed the public generally.
FACTUAL BACKGROUND 1
Neil Cole founded Iconix in 2005 and built it into a multi-billion-dollar branding empire
over nearly 25 years. Complaint (“Compl.”) ¶¶ 2, 10. While serving as Iconix CEO, Cole was
falsely accused of securities fraud and other crimes in connection with two joint venture
transactions—known as SEA-2 and SEA-3—that had been negotiated by Seth Horowitz, Cole’s
one-time protégé and former COO of Iconix. Id. ¶¶ 11, 26-27. In an effort to protect himself and
harm Cole, Horowitz falsely claimed that Cole had conspired with Iconix’s overseas counterparties
to create so-called secret side deals—which Cole had supposedly done to artificially inflate
Iconix’s revenue—and then tried to cover up the deals by destroying documents and ordering
Horowitz to do the same. Id. ¶¶ 30-34. Horowitz repeatedly told investigators, law enforcement,
and prosecutors this false story, and principally based on these false reports, Cole was indicted by
a federal grand jury and subjected to a criminal trial for charges related to conspiracy to commit
securities fraud, securities fraud, and obstruction of justice (the “Proceedings”). Id. ¶¶ 37-38.
Cole was tried twice. At his first trial, the jury acquitted Cole of the top conspiracy charge
and the obstruction count, and was hung on the remaining counts, an outcome the Second Circuit
later recognized as reflecting the jury’s outright rejection of the government's core theory. Id. ¶¶
1
Iconix’s skewed statement of “facts” urges the Court to take judicial notice of certain “public records,” “even if the
corresponding documents are not attached to or incorporated by reference in the complaint.” MTD n.1. Although
Iconix fails to identify with specificity the entirety of the public records to which it refers, Iconix incorporates into its
motion certain records, such as filings from the SEC and FTC. Iconix also selectively quotes from Cole’s sentencing
proceeding in United States v. Cole, No. 19-cr-869 (S.D.N.Y.), following Cole’s unconstitutional conviction. While
the Court can take judicial notice of the existence of these public records or proceedings, the Court may not consider
these documents “for the truth of the facts asserted therein,” Coggins v. Cnty. of Nassau, 988 F. Supp. 2d 231, 242
(E.D.N.Y. 2013).
3
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47-52. The Government unconstitutionally retried Cole on the hung counts in violation of the
Double Jeopardy Clause, and the Government secured convictions against Cole. Id. ¶ 53.
Although Iconix was contractually obligated to defend Cole against Horowitz’s false
allegations in the Proceedings, Iconix quickly turned on Cole, and abandoned its obligations for
its own self-interest and enrichment. Id. ¶¶ 58-59. On January 28, 2008, Iconix and Cole entered
into an Employment Agreement. Id. ¶ 110. Paragraph 8 of the Employment Agreement provides
in relevant part that, “[d]uring the Term and thereafter, the Company shall indemnify and hold
harmless the Executive and his heirs and representatives as, and to the extent, provided in the
Company’s by-laws.” Id. ¶ 114. When Cole departed Iconix, Iconix and Cole entered into a
Separation Agreement dated December 29, 2016. Id. ¶ 111. Paragraph 10 of the Separation
Agreement provides in relevant part that, “notwithstanding the termination of the Employment
Agreement, the Company continues to be bound by Section 8 of the Employment Agreement
(including, without limitation, any rights to indemnification and advancement to the extent set
forth in the Company’s by-laws as in effect as of the Resignation Date”). Id. ¶ 114. The “by-laws”
referred to in both the Employment Agreement and the Separation Agreement required Iconix
indemnify Cole and advance his legal fees. Id. ¶ 115.
Iconix’s indemnification and advancement obligations applied to the expenses Cole
incurred defending himself in the Proceedings, the purpose of which was to ensure that Cole, a
high-level executive, could meaningfully defend himself in any proceeding arising from his role
at Iconix. Id. ¶¶ 60-61. At the outset, Iconix acknowledged its obligations and advanced Cole the
millions of dollars in legal expenses he incurred, principally consisting of fees charged by his
chosen counsel, Paul, Weiss, Rifkind, Wharton & Garrison (“Paul Weiss”). Id. ¶ 63.
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Despite Cole’s full performance under the contracts, Iconix’s compliance came to an abrupt
halt on the eve of Cole’s first criminal trial. Id. ¶ 64. Iconix embarked on a calculated course of
conduct designed to obstruct Cole’s ability to defend himself—conduct driven by Iconix’s self-
interest in securing Cole’s conviction so that it could, among other things, recover the millions of
dollars it had already advanced. Id. ¶¶ 65, 96. Iconix unilaterally and without justification ceased
advancing Cole’s legal fees and expenses in violation of its contractual obligations, forcing Cole
to file suit and seek emergency injunctive relief, in which he successfully obtained an order from
a New York State court, holding that Cole had a “clear, contractual right to advancement” (the “PI
Order”). Id. ¶¶ 69-70. Iconix also refused to provide Cole’s defense team with exculpatory
evidence gathered by its own Special Committee during an internal investigation of the SEA-2 and
SEA-3 transactions and furnish Cole with any documents before his SEC interview. Id. ¶¶ 66-67.
In violation of the PI Order, prior to Cole’s second trial, Iconix told Cole it would refuse to
advance fees if he re-retained his counsel of choice at Paul Weiss—a condition Iconix had no
contractual right to impose and which forced Cole to retain new lawyer. Id. ¶¶ 71-74. Iconix
further conditioned advancement for the second trial on Cole’s agreement to a $5,000,000 cap on
legal fees—again, a condition for which Iconix had no contractual basis. Id. ¶ 75. Cole, facing
imminent trial with preparations already severely disrupted, had no practical choice but to agree.
Id. ¶ 76. The parties memorialized this arrangement in the Advancement Agreement dated June 7,
2022, which included a required payment schedule. Id. ¶¶ 77, 120. Despite Cole’s full
performance, Iconix failed to comply with the payment schedule and failed to pay $1,760,000 in
required installments under the Advancement Agreement, without justification. Id. ¶¶ 80, 81, 123.
To date, Cole continues to incur legal expenses for which Iconix is responsible, including legal
expenses to cover the instant action. Id. ¶ 84.
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Iconix’s efforts to obstruct and harm Cole’s ability to defend himself in the Proceedings
stem from Iconix’s self-interested efforts to immediately turn on Cole in the wake of Horowitz’s
false accusations. Without any basis, Iconix immediately assumed that Cole had done something
improper in connection with SEA-2 and SEA-3. Id. ¶ 87. To account for that incorrect
assumption, Iconix chose to restate its financial disclosures and elected to recoup over $7,000,000
in incentive-based compensation from Cole—$2,175,000 in cash and 575,127 shares of Iconix
stock then worth approximately $5,100,000—representing compensation Cole had legitimately
earned based on Iconix’s performance between 2012 and 2014. Id. ¶¶ 88-89. Iconix took no
similar action against Horowitz or others involved in the same transactions, despite their
compensation being calculated by the same or similar formula. Id. ¶ 90. Iconix arbitrarily
undertook its efforts to recoup Cole’s incentive-based compensation as part of its efforts to protect
its reputation and protect itself financially.
Despite Iconix’s efforts to obstruct Cole’s defense and secure a conviction against him, in
October 2025, the U.S. Court of Appeals for the Second Circuit unanimously vacated those
convictions and ordered dismissal of the indictment in full. Id. ¶¶ 53-54. On January 12, 2026,
the district court entered the vacatur and dismissal. Id. ¶¶ 55–56.
ARGUMENT 2
I. The Complaint States a Claim for Breach of the Advancement Agreement
(Count III).
Iconix argues the Complaint “failed to allege facts that . . . would demonstrate he is owed
the amount he claims is due under the Advancement Agreement.” MTD. 14. That argument is
meritless.
2
Iconix notably does not move to dismiss Cole’s Count II of Cole’s complaint for breach of the employment
agreement, separation agreement, and by-laws.
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Under New York law, a party has pled a breach of contract claim when it alleges the
following: “(1) the existence of an agreement, (2) adequate performance of the contract by the
plaintiff, (3) breach of contract by the defendant, and (4) damages.” Harsco Corp. v. Segui, 91
F.3d 337, 348 (2d Cir. 1996). While difficult to parse, Iconix appears to argue that Cole has failed
to sufficiently allege damages. Specifically, Iconix appears to argue that Cole failed to allege facts
that he is owed $1.76 million under the Advancement Agreement. But no faithful reading of the
Complaint can lead to that conclusion. In fact, the Complaint supports this claim with several
detailed and specific allegations concerning the sum owed to Cole under the Advancement
Agreement, including:
• Cole and Iconix entered into the Advancement Agreement, which included a
required payment schedule for $5,000,000 in fees; Compl. ¶ 77.
• Although Iconix made certain of the required payments under the agreed-upon
payment schedule, Iconix failed to make a single payment to Cole after it paid an
installment on October 1, 2022; id. ¶ 79.
• Iconix did not offer any justification for its refusal to advance any legal expenses
after October 1, 2022, and that no such justification existed, id. ¶ 81; and
• “Iconix failed to make payments for legal fees contained in the Advancement
Agreement in the amount of $1,760,000, and Cole instead had to make those
payments himself.” Id. ¶ 123.
To be clear, Cole plainly delineates the fees covered by the Advancement Agreement’s $5 million
cap, and those not covered by the $5 million cap. See, e.g., id. ¶ 78 (“The Advancement Agreement
made clear that it did not impact Iconix’s obligation (i) to pay legal expenses other than legal fees
or (ii) to pay legal expenses (including fees) that Cole might incur after the second trial (e.g.,
expenses incurred for sentencing and appeal)”) (emphasis added). And Iconix’s efforts to inject
any doubt into Cole’s unambiguous allegations that he is owed $1.76 million under the
Advancement Agreement fails.
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Iconix next argues that Cole was required to plead his breach of contract claim with
additional specificity. That argument, however, is untethered from the law. Iconix first analogizes
Cole’s so-called “pleading deficiencies” to those in Gallo v. Inter-Con Security Systems Inc., 2021
WL 3913539 (S.D.N.Y. Sept. 1, 2021), but Iconix’s reliance on Gallo is odd. In Gallo, a pro se
plaintiff asserted that the defendant insurance company was required pursuant to a settlement
agreement to reimburse him for $1,250 in medical expenses. The problem he ran into, however,
was that nothing in the settlement agreement remotely called for that reimbursement. As the Court
concluded: “Plaintiff has not identified any provision of the Settlement Agreement obligating
Defendant to make a payment of $1,250. And the Court has carefully reviewed the Settlement
Agreement, and has been unable to identify any such provision.” Id. at *9. Despite the lack of
any contractual provision entitling plaintiff to relief, however, the Court noted that the defendant
appeared to concede in its legal briefing “that it was obligated to make this payment to Plaintiff”
pursuant to some obligation (not in the contract or alleged in the complaint) but only if plaintiff
had provided “the necessary documentation and receipts to trigger the reimbursement process.”
Id. The Court noted, however, that there was no indication (in the complaint or otherwise) that the
plaintiff had complied with this “trigger,” and thus the court dismissed the breach claim on this
theory. Gallo is thus nothing like this case. For one, Cole’s right to reimbursement of legal fees
is obviously (and carefully) contained within an agreement: as relevant here, the Advancement
Agreement. And, unlike in Gallo, there is no “trigger” requiring that payment (other than Iconix’s
signature on the agreement). 3 Indeed, the Advancement Agreement is quite simple: Iconix was to
3
Noticeably, Iconix has (wisely) abandoned arguments it made in its pre-motion letter that there were any “triggers”
to reimbursement. For example, Iconix argued that Cole was required to allege certain required “prerequisites” to
advancement, including “prompt notice, an executed undertaking, and cooperation with Iconix’s participation rights.”
ECF No. 12. But (as Iconix has undoubtedly come to understand) none of the agreements at issue—and certainly not
the Advancement Agreement—contain any of those so-called “prerequisites.”
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pay $5,000,000 on dates certain. And the Complaint’s claim for breach of the Advancement
Agreement is equally simple: Iconix did not make certain of those payments on those dates certain
(or ever) in an amount totaling $1,760,000. Iconix’s reliance on Jia Chen v. Antel
Communications, LLC, 2015 WL 5793404 (E.D.N.Y. Sept. 30, 2015) fares no better. In Jia Chen
(like in Gallo but unlike here), the plaintiff failed to allege any entitlement under the relevant
employment contract for the vast majority of damages alleged in the complaint. Id. at *5. Here,
however, Cole has unequivocally alleged entitlement to $1.76 million under the Advancement
Agreement, which Iconix unjustifiably withheld from Cole.
II. The Complaint States a Claim for a Breach of the Implied Covenant of Good
Faith and Fair Dealing (Count IV).
The Complaint alleges that contained within the Employment Agreement and the
Separation Agreement was an implied understanding that: (i) Iconix would not obstruct Cole’s
ability to defend himself in any proceeding for which he was indemnified, and (ii) Iconix would
return incentive-based compensation it elected to recoup from Cole following a restatement if
Iconix later learned that Cole bore no responsibility for the restatement (as confirmed by a decision
of the Second Circuit). Iconix argues that this claim should be dismissed for two reasons: (i) the
Complaint’s obstruction-based claim is duplicative of its breach of contract claim; and (ii) the
Complaint’s recoupment-based claim relies on a repayment obligation that does not appear in and
cannot reasonably inferred from the governing agreements. Both arguments are meritless.
A. The Complaint States an Obstruction-Based Implied Covenant Claim.
Iconix first argues that the Complaint’s obstruction-based implied covenant claim is
duplicative of the Complaint’s breach of contract claims. But Iconix is incorrect because the
Complaint’s implied covenant claim alleges vastly distinct conduct and damages from the breach
of contract claims. Specifically, while an implied covenant claim cannot lie when “a breach of
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contract claim, based on the same facts, is also pleaded,” an implied covenant claim survives a
motion to dismiss “if it is based on allegations different from those underlying the accompanying
breach of contract claim.” See. e.g., Kaplan Grp. Investments LLC v. A.S.A.P. Logistics Ltd., 694
F. Supp. 3d 374, 388 (S.D.N.Y. 2023) (citation omitted). That is the case here.
Independent from its breach of contract claims, the Complaint alleges that the very purpose
of the indemnification obligations under the Employment and Separation Agreements was to
ensure that Cole had the ability to meaningfully defend himself in any proceeding relating to his
executive position at Iconix. Compl. ¶¶ 60-63. Given this purpose, a reasonable person in Cole’s
position would be justified in understanding that Iconix would not purposefully obstruct Cole’s
ability to defend himself in any proceeding for which Cole is indemnified. Id. ¶¶ 60-63. Yet, as
the Complaint alleges, Iconix undertook deliberate efforts to obstruct Cole’s ability to defend
himself including by: (i) refusing to cooperate with Cole’s legal defense, id. ¶ 66; (ii) refusing to
provide the defense with exculpatory evidence in its possession, id.; and (iii) subjecting Cole to an
SEC interview, while refusing to provide him with any documents in advance of the interview, id.
¶ 67. These efforts significantly hindered Cole’s ability to benefit under the Agreements.
Courts routinely sustain implied covenant claims in this context. For example, in URP
Maiden Lane LLC v. Valley National Bank, 244 A.D.3d 509 (1st Dep’t 2025), the First Department
rejected an argument that an implied covenant claim was duplicative of a breach of contract claim
where the plaintiff alleged “that defendants’ conduct undermined plaintiff’s reasonable expectation
that defendants would apprise it of information necessary to allow it to assess whether [the
agreement] had been breached and that defendants would not take steps to hinder plaintiff’s ability
to receive the fruits of the agreement.” 244 A.D.3d at 510. UPR Maiden Lane LLC is not an
outlier. In Demetre v. HMS Holdings Corp., 127 A.D.3d 493, 494 (1st Dep’t 2015), for example,
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the First Department likewise held that an implied covenant and breach of contract claim were not
duplicative where the plaintiff alleged that the defendant “in bad faith, engaged in acts that had the
effect of destroying or injuring plaintiffs’ right to receive “the fruits of the contract.” (quoting
Dalton v. Educational Testing Serv., 87 N.Y.2d 384, 389 (1995)); see also AEA Middle Mkt. Debt
Funding LLC v. Marblegate Asset Mgt., LLC, 214 A.D.3d 111, 113 (1st Dep’t 2023) (finding
implied covenant claim not duplicative where plaintiff alleged bad faith conduct on behalf of
defendants in conspiring to manufacture a restructuring process that deprived plaintiffs of the
benefit of their bargain under an agreement).
Iconix next argues that the Complaint’s implied covenant claim should be dismissed
because the Complaint seeks to recover damages that are “intrinsically tied to the damages
allegedly resulting from the breach of contract.” MTD 16. But that is simply incorrect. To support
this argument, Iconix does nothing more than cite to Liu Jo S.P.A. v. Jenner, 630 F. Supp. 3d 501,
520 (S.D.N.Y. 2022), but that case is unavailing. There, the court held that the alleged implied
covenant and breach of contract damages were “intrinsically tied” because “both amounts
derive[d] from the contract price.” Id. But that is not at all the case here. Cole’s damages that
flow from Iconix’s obstruction-based breach of the implied covenant claim—e.g., Cole being
forced to change counsel on the eve of his second trial, the disruption to his trial preparation, and
the resulting (subsequently overturned) conviction—are not damages that flow from the
Employment or Separation Agreements. That difference in damages sought is made plain in the
allegations relating to each claim. The Complaint’s breach of contract claims seeks reimbursement
for legal fees that Cole was forced to pay himself in light of Iconix’s breaches; by contrast, the
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Complaint’s obstruction-based implied covenant claim seeks damages relating to the harms Iconix
purposefully caused by obstructing Cole’s defense throughout the Proceedings. 4
B. The Complaint States a Recoupment-Based Implied Covenant Claim.
Iconix argues that the Complaint’s recoupment-based implied covenant claim should be
dismissed because: (i) it relies on a duty that does not exist in the contract, and (ii) the Separation
Agreement forecloses that implied covenant claim by “expressly resolving the recoupment and
leaving no contractual basis for the repayment Cole seeks.” MTD 16. Iconix, however,
fundamentally misunderstands both the Complaint’s well-pled allegations and relevant law.
First, Iconix appears to argue that the language of the Employment Agreement does not
mention the “return of compensation once recouped,” and thus, it argues, the implied covenant
claim fails. MTD 17-18. But, of course, an implied covenant claim need not (and never does) rely
on the express terms of a contract. Indeed, Iconix’s contention runs counter to the animating
purpose of an implied covenant claim, which encompasses obligations that, while not expressly
stated in a contract, are necessary to give effect to the parties’ reasonable expectations at the time
of contracting. Dalton, 87 N.Y.2d at 389; Dorset Indus., Inc. v. Unified Grocers, Inc., 893 F. Supp.
2d 395, 407 (E.D.N.Y. 2012) (“The fact that the Agreements are silent on these issues is not
necessarily fatal to the Plaintiff’s claim because New York does not require that a breach of the
duty of good faith and fair dealing be tied to a specific contractual provision.”); Havel v. Kelsey-
Hayes Co., 83 A.D.2d 380, 382 (4th Dep’t 1981) (“That a specific promise has not been expressly
stated does not always mean that it was not intended.”); Manhattan Motorcars, Inc. v. Automobili
Lamborghini, S.p.A., 244 F.R.D. 204, 218 (S.D.N.Y. 2007) (“As the implied covenant of good faith
4
Cole’s implied covenant claim is not duplicative of the breach of contract claim, but in any event, it can be pleaded
in the alternative. Botbol v. Frosch Intl. Travel Inc., 222 A.D.3d 471, 472 (1st Dep’t 2023).
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and fair dealing could be interpreted to incorporate these duties without contradicting the express
terms of the contract, the proper question is whether such implied terms are appropriate under the
circumstances.”). 5
Second, Iconix argues that the Separation Agreement reflects the parties’ agreement “to
settle and resolve, fully and finally, all claims related to the Resignation and the recoupment of
Cole’s performance-based cash bonus and equity awards as a result of the Restatements.” MTD
18. It is difficult to discern the precise bounds of Iconix’s argument here, but to the extent Iconix
argues that Cole has released or settled claims against Iconix related to the recoupment, the
argument fails. Indeed, Iconix’s disingenuous reading of the Separation Agreement collapses
under scrutiny. The full text of the provision Iconix relies on contains the following language:
WHEREAS, the Company and Cole desire to settle and resolve, fully and finally, all
claims related to the Resignation and the recoupment of Cole's performance-based
cash bonus and equity awards as a result of the Restatements, without any admission
of liability, incapacity, undue influence, fault or wrongdoing.
Dkt. 26-5 at 2.
Despite referencing this provision no less than five times in its brief, Iconix never
acknowledges that the relevant contractual language is contained in a prefatory “WHEREAS
clause.” Courts routinely recognize that “statements in a whereas clause . . . do not create rights
beyond those arising from the contract’s operative terms.” See Matter of Legion of Christ, Inc. v.
Town of Mount Pleasant, 151 A.D.3d 858, 860 (2d Dep’t 2017). And the contract’s operative terms
do not release the Complaint’s implied covenant claim. Indeed, Iconix makes a concerted effort
to put before the Court the Separation Agreement, yet Iconix misleadingly conveys its contents.
5
Iconix generally cites two cases in support of its argument that the failure of its agreements with Cole to mention a
duty for Iconix to return recoup funds dooms the Complaint’s recoupment-based implied covenant claim: Quintanilla
v. WW Int’l, Inc., 541 F. Supp. 3d 331 (S.D.N.Y. 2021), and Singh v. City of New York, 139 N.Y.S.3d 307 (2020). But
neither case supports Iconix’s contentions because in both, the express terms of the contract at issue directly
contradicted the plaintiff’s implied covenant claim. As noted in text, that is simply not the case here.
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For one, the Separation Agreement references a “General Release and Wavier (the ‘Release’)”
which is referenced as attached to the Separation Agreement as “Exhibit A.” Iconix, however,
failed to include the Release in its submission of the Separation Agreement. And the language of
the Release makes plain that the Separation Agreement has no bearing on the claims that Cole now
brings against Iconix. Specifically, the Release states that Cole releases Iconix:
[F]rom any and all claims, demands, causes of action, obligations, damages or
liabilities, known or unknown, however denominated, which the Releasors have or
may have against any Releasee arising on or prior to the Effective Date[.] 6
(emphasis added). Because the effective date of the Separation Agreement is December 28, 2016,
the Separation Agreement cannot release Cole’s implied covenant claim, or any other claim—such
as Cole’s unjust enrichment claim—that accrued following the affirmance of his acquittal of all
charges by the Second Circuit.
Relatedly, Iconix does not identify any provisions of the Separation Agreement that
foreclose the Complaint’s implied covenant claim. Nor has Iconix pointed to any provision in the
Separation Agreement that would prevent the Court from inferring any obligation not expressly
stated in the Separation Agreement. See Dorset Industries, Inc., 893 F. Supp. 2d at 407 (finding
that even a merger clause in an agreement that “recites that all of the parties’ agreements are
merged into the written document,” “does not prevent a court from inferring a covenant of good
faith and fair dealing.”) (citations omitted). And even if such a provision did exist in the Separation
6
The Release defines the Releasors as “[Cole] for himself and for his heirs, executors, administrators, trustees, legal
representatives and assigns.” The Agreement defines the Releasees as “[Iconix] and its affiliates and subsidiaries, and
all of their respective past, present and future parent entities, subsidiaries, divisions, affiliates, and related business
entities any of their successors and assigns, assets, employee benefit plan or funds, and all their respective past and/or
present directors, officers, fiduciaries, trustees, administrators, managers, supervisors, shareholders, investors,
employees, legal representatives, counsel and assigns, whether acting on behalf of the Company or its affiliates or, in
their individual capacities.”
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Agreement (which it does not), that still would not foreclose the Complaint’s recoupment-based
implied covenant claim here. Id.
Finally, Iconix argues that the Complaint does not allege facts from which Cole’s right to
recover the recouped funds could be inferred from the agreements. But the Complaint plainly
alleges as much: Iconix immediately assumed (incorrectly) that Cole had done something wrong
(and criminal) in connection with SEA-2 and SEA-3, and based on that incorrect assumption,
restated its financials, and then elected—entirely in its discretion—to force Cole to pay back
incentive-based compensation that he had otherwise earned (and not elect to have others do so).
The Complaint alleges that, under those circumstances, Cole was justified in understanding that
Iconix would not retain funds that it elected to recoup following a restatement once learning that
Cole had been fully and finally exonerated by the Second Circuit. Compl. ¶¶ 88-89.
At bottom, Iconix simply disagrees with the Complaint’s well-pled factual allegations and
urges the Court to rule as a matter of law on a fact-intensive question not suited for the pleadings
stage. In assessing the existence of an implied covenant, “the boundaries set by the duty of good
faith are generally defined by the parties’ intent and reasonable expectations in entering the
contract.” Dorset Indus., Inc. v. Unified Grocers, Inc., 893 F. Supp. 2d 395, 406 (E.D.N.Y. 2012)
(citation omitted). “In discerning what is ‘reasonable,’ the Court looks to what the parties would
have expected under the contract: the Court will infer that contracts ‘include any promises which
a reasonable person in the position of the promisee would be justified in understanding were
included’ at the time the contract was made.” Cordero v. Transamerica Annuity Serv. Corp., 39
N.Y.3d 399, 409 (2023). But it is black letter law that questions of intent and reasonableness are
for the trier of fact, not questions of law for the court. Brown v. Cara, 420 F.3d 148, 152-53 (2d
Cir. 2005) (“[The intentions of the parties are] frequently a source of persistent disputes of fact.”).
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III. The Complaint States a Claim for Unjust Enrichment (Count V).
The Complaint’s claim for unjust enrichment asserts that Iconix unjustly enriched itself at
Cole’s expense after it elected to recoup from Cole compensation valued at more than $7 million
in the wake of the false allegations against Cole, and it has retained those funds following the
affirmance of Cole’s acquittal. Iconix posits three arguments for dismissal of the Complaint’s
unjust enrichment claim: (i) it is precluded because recoupment is governed by the 2016 Separation
Agreement, (ii) it is contradicted by language in the Separation Agreement, and (iii) it is time-
barred because the alleged wrongful conduct occurred in 2016. Each argument fails.
First, Iconix argues that the Complaint’s unjust enrichment claim should be dismissed
because the claim is precluded by the 2016 Separation Agreement, “a valid and enforceable
contract.” While it is true that a party cannot “seek damages in an action sounding in quasi contract
where the suing party has fully performed on a valid written agreement, the existence of which is
undisputed, and the scope of which clearly covers the dispute between the parties,” an unjust
enrichment claim is only precluded when the contract “clearly covers the dispute between the
parties.” Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., Inc., 448 F.3d 573,
586-87 (2d Cir. 2006). But the Separation Agreement does not “clearly cover” this dispute.
The Complaint’s unjust enrichment claim against Iconix is premised on Iconix’s
enrichment at Cole’s expense when it recouped compensation from Cole valued at more than $7
million after it chose to restate its financial statements, Compl. ¶ 135. But that is not all. The
Complaint further alleges that Iconix recouped such funds from Cole and not from others,
including Horowitz, who was integral to the SEA-2 and SEA-3 transactions, id. ¶ 137, and that
Iconix has retained the recouped funds even though the Second Circuit has confirmed Cole’s
unanimous acquittal of charges related to the underlying conduct. The Complaint’s unjust
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enrichment theory proceeds on these facts: no one would think it’s fair after reading the Second
Circuit’s decision for Iconix to retain Cole’s executive compensation but not Horowitz’s.
For its part, Iconix has not identified a single provision of the Separation Agreement that
covers the conduct alleged in the Complaint’s unjust enrichment claim. Frio Energy Partners,
LLC v. Fin. Tech. Leverage, LLC, 680 F. Supp. 3d 322, 336 (S.D.N.Y. 2023) (denying motion to
dismiss unjust enrichment claim where contract is silent as to whether plaintiff was entitled to
compensation for certain costs if a deal did go through); see also Union Bank, N.A. v. CBS Corp,
2009 WL 1675087, at *6-7 (S.D.N.Y. June 10, 2009) (sustaining an unjust enrichment claim where
disputes existed about whether the contracts covered the “subject matter” of the dispute and
emphasizing that “[d]ecisions interpreting Clark–Fitzpatrick have made clear that the predicate
for dismissing quasi-contract claims is that the contract at issue ‘clearly covers the dispute between
the parties.’” (citation omitted)); Joseph Sternberg, Inc. v. Walber 36th St. Assocs., 187 A.D.2d 225
(1st Dep’t 1993). Moreover, Iconix makes much of the Complaint’s allegation that the Separation
Agreement is a “legally binding and valid contract,” MTD 20, but the mere existence of a valid
contract alone does not, and cannot, foreclose Cole’s unjust enrichment claim, see cases cited
supra. Sternberg, 187 A.D.2d at 228-29. Iconix then again reverts back to its argument that the
Separation Agreement contains the parties’ “express agreement ‘to settle and resolve, fully and
finally, all claims related to the Resignation and the recoupment of Cole’s performance-based cash
bonus and equity awards as a result of the Restatements.’” MTD 20. But for the same reasons
stated above, including that the Separation Agreement does not foreclose claims like this one—
that accrued after the Separation Agreement was signed—this argument should be rejected.
Second, Iconix argues that the Complaint’s unjust enrichment claim should be dismissed
because the language of the Separation Agreement “contradicts” the allegations in the Complaint.
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Specifically, Iconix seems to argue that the Complaint’s allegation that Iconix elected to recoup
Cole’s compensation based on a “false understanding” of Cole’s misconduct contradicts language
in the Separation Agreement that the recoupment was “a result of the restatements.” MTD 20.
This is a tortured reading of Cole’s complaint and entirely misunderstands the basis for the
Complaint’s unjust enrichment claim.
For one, there is no contradiction. Iconix conflates two things: (i) the right of Iconix to
seek recoupment as a general matter (which was a “result of the restatements”); and (ii) the exercise
of that right in Iconix’s discretion as against Cole (and not others involved in SEA-2 and SEA-3,
including admitted wrongdoers like Horowitz). To be clear, nothing in the by-laws (or otherwise)
mandated recoupment after a restatement (as made clear, again, by Iconix’s election not to recoup
from others). And the Complaint makes clear that Iconix’s exercise of its discretion to do so as
against Cole was part of its self-interested effort to frame Cole as a wrongdoer and fraudster with
whom they were cutting ties. Compl. ¶¶ 87-90. That Iconix has elected to retain the arbitrarily
recouped money, even after the Second Circuit confirmed that a jury necessarily decided that Cole
never engaged in the alleged fraud, forms the basis of the Complaint’s unjust enrichment claim.
In response, Iconix argues that the outcome of Cole’s criminal proceedings is irrelevant to
the recoupment because Iconix was “obligated to restate its financial[s].” MTD 21. But this
argument fails. For one, the Complaint alleges otherwise. Compl. ¶¶ 86-89, 137 (“Iconix chose
to restate its financial statements [. . .]”) (emphasis added). Further, even if Iconix was obligated
to restate its financials, it was not obligated to concomitantly seek recoupment from Cole. In any
event, Iconix’s decision to retain the recouped funds now—irrespective of whatever initially
triggered the recoupment—is undoubtedly against “equity and good conscience.” See, e.g.,
Agerbrink v. Model Serv. LLC, 155 F. Supp. 3d 448 (S.D.N.Y. 2016) (finding that plaintiff
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sufficiently pled an unjust enrichment claim where enrichment premised on unenforceable
liquidated damages clause). 7
Finally, Iconix argues that the Complaint’s unjust enrichment claim is time-barred because
the recoupment was tied to the restatements and not to the criminal proceedings, and therefore, the
claim began to accrue in 2016. This argument is fundamentally flawed. A tort claim accrues
“when all elements of the tort can be truthfully alleged in a complaint.” IDT Corp. v. Morgan
Stanley Dean Witter & Co., 12 N.Y.3d 132, 140 (2009) (emphasis added). The third element of an
unjust enrichment claim is that the enrichment is “against equity and good conscience,” and the
Complaint alleges that it became against equity and good conscience for Iconix to retain the funds
it recouped from Cole after his conviction was overturned in October 2025. See, e.g., Campione
v. Campione, 942 F. Supp. 2d 279, 283-84 (E.D.N.Y. 2013) (holding that even though defendant
originally received stock in 1973, the retention of the stock did not become wrongful until 2012,
and therefore claim accrued in 2012); Kermanshah v. Kermanshah, 580 F. Supp. 2d 247, 264
(S.D.N.Y. 2008) (noting that unjust enrichment claim began to accrue when defendants “possessed
any of [plaintiff’s] ‘money or property’ that ‘equity and good conscience require it to return.’”)
(citation omitted); Cohen v. S.A.C. Trading Corp., 711 F.3d 353, 364 (2d Cir. 2013) (finding that
unjust enrichment claim began to accrue from “the latest-in-time wrongful act pleaded in the
complaint”). For that reason (and others), the cases cited by Iconix are unavailing. See Martin
7
In support of its argument that the Complaint’s unjust enrichment claim is “contradicted” by Cole’s agreements with
Iconix, Iconix cites two cases: Matusovsky v. Merrill Lynch, 186 F. Supp. 2d 397, 400 (S.D.N.Y. 2002) and 900 Unltd.,
Inc. v. MCI Telecom. Corp., 626 N.Y.S.2d 188 (1st Dep’t 1995). But both are inapposite. Matusovsky did not even
involve an unjust enrichment claim, and, in any event, the plaintiff’s claims there were “contradicted” by an agreement
which contained a general release that unambiguously barred “all claims” against the defendant, which is not present
here. Then, citing a single line devoid of any context or explanation in the First Department’s decision 900 Unltd.,
Inc., Iconix also argues that Cole’s claim should be dismissed because Iconix retained funds pursuant to rights defined
by contract. But, as addressed in text, nothing in the Separation Agreement addresses Iconix’s right to retain the
recouped funds under present circumstances. Nor does the Separation Agreement bar Cole’s claim in equity for that
unjust retention.
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Hilti Fam. Tr. v. Knoedler Gallery, LLC, 137 F. Supp. 3d 430, 466 (S.D.N.Y. 2015) (generally
reiterating equitable tolling limitations period and granting motion to dismiss unjust enrichment
claim based on insufficient allegations to support equitable tolling); Cohen v. Dunne, 2017 WL
4516820, at *3-4 (S.D.N.Y. Sept. 27, 2017) (finding unjust enrichment claim began to accrue when
defendant received wrongful payment).
IV. The Complaint States Claims for Punitive and Consequential Damages.
Iconix argues that the Complaint’s claims for punitive and consequential damages are
unavailable as a matter of law and should be dismissed. The Court should reject these arguments.
A. The Complaint States a Claim for Punitive Damages.
Iconix argues that the Complaint’s claim for punitive damages should be dismissed because
the Complaint failed to allege: (i) an independent tort, or (ii) a pattern of Iconix’s misbehavior that
was directed at the public generally. (Iconix notably does not argue that the Complaint sufficiently
alleges conduct egregious enough to warrant punitive damages.) Both arguments are meritless.
First, the Complaint does plead independent torts sufficient for punitive damages. To start,
Iconix simply ignores the fact that New York courts recognize that, where, as here, a plaintiff has
sufficiently pled a breach of the implied covenant of good faith and fair dealing, a plaintiff has
satisfied the independent tort requirement and stated a claim at the motion to dismiss stage for
punitive damages on that basis alone. See 25 Bay Terrace Assocs., L.P. v. Pub. Serv. Mut. Ins. Co.,
144 A.D.3d 665 (2d Dep’t 2016); Zicherman v. State Farm Fire & Cas. Co., 698 F. Supp. 3d 564,
571 (E.D.N.Y. 2023) (“New York courts have repeatedly allowed claims for punitive damages to
go forward based on a breach of the covenant of good faith and fair dealing.”); Perlbinder v.
Vigilant Ins. Co., 190 A.D.3d 985 (2d Dep’t 2021). In Perlbinder, for example, the Second
Department affirmed the lower court’s denial of the defendant’s motion for summary judgment to
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dismiss the plaintiff’s demand for punitive damages. 190 A.D.3d at 986. In that case, the plaintiff
asserted, among other things, a claim against the defendant (an insurance company), for breach of
the implied covenant. At the end of settlement negotiations, the defendant had agreed to pay $1.6
million, but eventually only tendered approximately $400,000 to the plaintiff. Id. The Second
Department rejected the defendants’ efforts to dismiss the plaintiff’s demand for punitive damages,
in part because “an alleged breach of the implied covenant of good faith and fair dealing may
support an award of punitive damages.” Id. at 989. The Complaint’s punitive damages claim
therefore survives based on its implied covenant claim alone.
In any event, Iconix simply ignores the fact that the Complaint also alleges the independent
tort of fraudulent inducement. Specifically, the Complaint alleges that Iconix’s failure to advance
Cole his legal expenses pursuant to the Advancement Agreement was fraudulent, in that Iconix
defrauded Cole to believe that Iconix would comply with the Advancement Agreement without
having any intention of actually complying with it. Compl. ¶ 101; Deerfield Commc’ns Corp. v.
Chesebrough-Ponds, Inc., 68 N.Y.2d 954, 956 (1986) (fraud in the inducement is a recognized
independent tort even where it relates to a contractual obligation).
Third, relying on Rocanova v. Equitable Life Assur. Socy. of U.S., 83 N.Y.2d 603, 613
(1994), Iconix argues that the Complaint’s claim for punitive damages must be dismissed because
it does not plead a pattern of misconduct affecting the public at large. MTD 23. The argument
fails. To start, the Complaint need not show a pattern of similar conduct “directed at the public
generally.” See Hobish v. AXA Equitable Life Ins. Co., 43 N.Y. 3d 442, 453 (2025) (punitives
available on contract claim “where ‘the fraud, aimed at the public generally, is gross and involves
high moral culpability,’ or when it ‘envice[s] a high degree of moral turpitude and demonstrate[s]
such wanton dishonesty as to imply a criminal indifference to civil obligations’”) (emphasis added)
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(citation omitted). In any event, the Complaint does allege conduct that amounted to a pattern of
conduct directed at the public generally, including that Iconix: (i) violated (and is still violating) a
court order, (ii) intentionally interfered with Cole’s ability to vindicate his constitutional rights,
thereby interfering with a criminal case, and (iii) took actions aimed at manipulating the public in
an effort to restore Iconix’s reputation. These allegations are sufficient to state a claim for punitive
damages on a breach of contract claim. See Suffolk Sports Ctr., Inc. v. Belli Constr. Corp., 212
A.D.2d 241, 247 (2d Dep’t 1995); In re Alexander, 2026 WL 74280, at *2 (S.D.N.Y. Jan. 9, 2026)
(finding punitive damages warranted in case where party failed to comply with court orders).
Suffolk Sports—decided after Rocanova—is an illustrative example. Suffolk Sports
involved a dispute between two parties in a landlord-tenant relationship, where the Second
Department found that the plaintiff had sufficiently alleged entitlement to punitive damages. 212
A.D.2d at 247-48. There, the defendant “embarked upon a calculated effort to vitiate the landlord-
tenant relationship between it” and the plaintiff, including by taking steps to force the plaintiff out
of business. The Court held that the defendant’s actions “involve[d] that degree of bad faith
evincing a ‘disingenuous or dishonest failure to carry out [the parties’] contract’ so as to justify the
imposition of punitive damages.” Id. (citation omitted). Although the Court recognized that the
parties’ conduct involved a purely private dispute, the Court held that punitive damages “serve[d]
the public good by acting as a deterrent to similar actions in the future,” in part because “allow[ing]
any landlord to vitiate a landlord-tenant contract by resort to extralegal means would generally do
a disservice to all tenants.” Id. (emphasis added). The same is true here. Permitting Iconix to
intentionally and wantonly frustrate the purposes of its employment-based agreements with Cole,
would—like in Suffolk Sports—“do a disservice” to all employees and “could be interpreted as
tacit permission” for an employer to engage in wrongful and unlawful conduct. And, Suffolk Sports
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does not stand alone in allowing punitive damages claims to proceed in private disputes. In Smart
Coffee, Inc. v. Sprauer, 140 N.Y.S.3d 376, 387 (Civ. Ct. N.Y. 2021), for example, a court granted
a plaintiff punitive damages in a case premised on a breach of a commercial lease agreement where
the defendant’s conduct “was both intentional and malicious” and in violation of the N.Y.
Governor’s Executive Order during the COVID-19 pandemic. Other examples abound. See, e.g.,
Premium Prods., Inc. v. O’Malley, 246 A.D.3d 948, 955 (2d Dep’t 2026) (sustaining claim for
punitive damages where plaintiff alleged that defendant “acted so recklessly [and] wantonly as to
warrant awards…for punitive damages” in an employment and trade secrets claim); Mid-Hudson
Anesthesiologists, P.C. v. St. Luke’s Cornwall, 2026 WL 734947, at *11 (S.D.N.Y. March 16, 2026)
(sustaining claim for punitive damages where plaintiff alleged that defendants “knowingly misused
confidential financial, billing, and operational information obtained during the parties’ business
relationship in order to develop a strategy to replace Plaintiff as the hospital’s anesthesia
provider”); Marky’s Martial Arts, Inc. v. FC Online Marketing, Inc., 2022 WL 18276016, at *8
(S.D.N.Y. Sept. 16, 2022) (holding punitive damages appropriate where defendant disclosed
plaintiff’s client list to competitors in violation of contractual confidentiality obligations). In any
event, unlike in Rocanova, where the plaintiff failed to plead “that he was personally aggrieved by
tortious conduct arising out of his contractual relationship with” the defendant, 83 N.Y.2d at 604,
Cole’s complaint suffers from no such defects. See, e.g., Compl. ¶¶ 85-101.
In any event, this early stage is not the proper place to address Iconix’s argument. At the
motion to dismiss stage, “it is premature to conclude that the allegations in the complaint are
insufficient to support a finding that the defendant[] acted so recklessly or wantonly as to warrant
awards of damages and punitive damages” for certain causes of action. Premium Prods., Inc., 246
A.D.3d at 955 (finding premature dismissal of entitlement to punitive damages awards at the
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motion to dismiss stage); Gipe v. DBT Xpress, LLC, 150 A.D.3d 1208, 1210 (2d Dep’t 2017)
(noting that at the motion to dismiss stage, “it is premature to conclude that the allegations in the
complaint are insufficient to support a claim that DBT Xpress acted so recklessly or wantonly in
connection with the hiring, retention, and supervision of the defendant driver as to warrant an
award of punitive damages.”).
B. The Complaint States a Claim for Consequential Damages.
Iconix argues that Cole is not entitled to consequential damages because Cole has not
alleged that his damages were foreseeable. This argument should be rejected.
A party who breaches a contract “is liable for those risks foreseen or which should have
been foreseen at the time the contract was made.” Ashland Mgt. v Janien, 82 N.Y.2d 395, 403
(1993). It is not necessary for the breaching party to have foreseen the breach itself or the
particular way the loss occurred, rather, “[i]t is only necessary that loss from a breach is foreseeable
and probable.” See e.g., Bi-Economy Mkt., Inc., v. Harleysville Ins. Co. of N.Y., 856 N.Y.S.2d 505,
508 (2008). Courts must look to “the nature, purpose and particular circumstances of the contract
known by the parties . . . as well as ‘what liability the defendant fairly may be supposed to have
assumed consciously, or to have warranted the plaintiff reasonably to suppose that it assumed,
when the contract was made.’” Id. (citation omitted). Moreover, foreseeability of consequential
damages is a question of fact unsuitable for resolution at the pleading stage. Cargo Logistics Int’l,
LLC v. Overseas Moving Specialists, Inc., 723 F. Supp. 3d 212, 234 (E.D.N.Y. 2024).
Contrary to Iconix’s claim, the Complaint sufficiently alleges that Cole’s damages were
foreseeable and probable. Of course, the very purpose of Iconix’s indemnification and
advancement obligations were to protect Cole against the consequences of being unable to mount
an adequate legal defense for claims against him arising out of his position as CEO of Iconix. See
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Case 1:25-cv-09357-MKV Document 32 Filed 04/27/26 Page 30 of 31
e.g., Bi-Economy, 856 N.Y.S.2d at 508. Courts routinely sustain claims for consequential damages
in this context. Bi-Economy is directly analogous here. Just as in Bi-Economy, where the court
held that an insurance company that withheld coverage in bad faith could foresee that the insured
would suffer harm beyond merely the cost of the unpaid claim, Iconix—which contractually agreed
to fund Cole’s defense against criminal charges—could plainly foresee that withholding that
funding at critical junctures would harm Cole’s ability to defend himself and expose him to the
risk of conviction. Indeed, the Complaint alleges that Iconix not only actually foresaw these
consequences, but that it deliberately brought them about. To be clear, the Complaint alleges that
Iconix deliberately withheld the advancement of legal fees precisely because it wanted Cole to be
convicted so it could recover the fees it had advanced. A party cannot argue it did not foresee harm
that it allegedly engineered for its own selfish ends.
Finally, Iconix argues that the Complaint’s claim for consequential damages should be
dismissed because it is speculative. It is not. As noted above, the Complaint sufficiently alleges
Cole’s entitlement to consequential damages, and the complaint does not “plead facts that establish
that any consequential damages would not be susceptible to calculation.” DNF Assocs., LLC v.
HSBC Bank USA, N.A., 2024 WL 3426777, at *6 (S.D.N.Y. July 16, 2024). In any event,
entitlement “to consequential damages is best tested in the context of a motion for summary
judgement, after the parties have had the opportunity to develop the factual record.” Id.
CONCLUSION
Based on the foregoing, the Court should deny Iconix’s motion to dismiss.
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Case 1:25-cv-09357-MKV Document 32 Filed 04/27/26 Page 31 of 31
Dated: April 27, 2026
New York, New York
By:
Benjamin D. White
BLOCH & WHITE LLP
Benjamin D. White, Esq.
Cristina Alvarez, Esq.
Kyle W. Bigley, Esq.
90 Broad Street, Suite 703
New York, NY 10004
(212) 901-3825
bwhite@blochwhite.com
calvarez@blochwhite.com
kbigley@blochwhite.com
Attorneys for Plaintiff Neil Cole
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