Manzo v. Wohlstadter

── Manzo v. Wohlstadter ── Case No.: 25-1304 Court: Court of Appeals for the First Circuit Date: March 24, 2026 Category: General United States Court of Appeals For the First Circuit No. 25-1304 MICHAEL A. MANZO; MICHAEL K. MANZO; LOUIS V. MANZO; PAUL A. AUWAERTER, M.D., Plaintiffs, Appellants, v. SAMUEL WOHLSTADTER; NADINE WOHLSTADTER, Defendants, Appellees. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Richard G. Stearns, U.S. District Judge] Before Montecalvo, Lipez, and Kayatta, Circuit Judges. Philip M. Giordano, with whom Julian A. Frare, Taylor M. Gould, and Reed & Giordano, P.A. were on brief, for appellants. Koushik Bhattacharya, with whom Jeremy Wyeth Schulman and Schulman Bhattacharya, LLC were on brief, for appellees. March 24, 2026  KAYATTA, Circuit Judge. In this lawsuit alleging securities fraud and unfair business practices, the district court enforced a forum selection clause contained in several promissory notes issued to plaintiffs in exchange for their investments in a business controlled by defendants. Finding no fault with the district court's decision, we affirm the dismissal of this lawsuit without prejudice. Our reasoning follows. I. A. Defendants sought dismissal of the complaint under Federal Rule of Civil Procedure 12(b)(6) based on the forum selection clause at issue. "[I]t is permissible to 'treat a motion to dismiss based on a forum selection clause as a motion alleging the failure to state a claim for which relief can be granted under Rule 12(b)(6).'" Rivera v. Kress Stores of P.R., Inc., 30 F.4th 98, 102 (1st Cir. 2022) (quoting Claudio-de León v. Sistema Universitario Ana G. Méndez, 775 F.3d 41, 46 & n.3 (1st Cir. 2014)). When reviewing the grant of such a motion, we employ our usual standard of review for failure to state a claim. Id. That is to say, we take as given the well-pleaded facts alleged in the complaint and "draw all reasonable inferences therefrom" in plaintiffs' favor. Alston v. Spiegel, 988 F.3d 564, 571 (1st Cir. 2021) (quoting Santiago v. Puerto Rico, 655 F.3d 61, 72 (1st Cir. 2011)). - 2 -  B. Trading on their friendship of many years, defendants Samuel Wohlstadter and Nadine Wohlstadter enticed plaintiffs Michael A. Manzo, Michael K. Manzo, Louis Manzo, and Dr. Paul Auwaerter to invest a large sum of money in Wellstat, a biopharmaceutical company run by defendants. In pitching the investment, defendants failed to disclose that Wellstat was in dire financial shape, was subject to an $82.6 million obligation to a lender, and was actually barred from incurring any further debt. And while defendants claimed plaintiffs' investment would fund a new company -- Wellmond -- that was soon to spin off from Wellstat, that new company was never actually formed, and defendants instead used plaintiffs' funds to pay off some of Wellstat's existing debt. Plaintiffs' investment took the form of cash paid in return for several promissory notes. The notes doubled down on the deception, affirmatively (and falsely) warranting that: [Wellstat] is not in violation or default of any term of [its] certificate of incorporation or bylaws, as applicable, or of any provision of any mortgage, indenture or contract to which it is a party an