McEssy v. Gray, Jr. et al

Filing 261

MEMORANDUM-DECISION & ORDER: Plaintiff proceed to trial against Edwards to prove his liability, and, if liability is proven, damages for Counts I and V of the Second Amended Complaint; Plaintiff proceed to trial against Gray to prove damages for Coun ts I, V, and VII of the Second Amended Complaint; Plaintiff's proof of damages against Gray will be used by this Court to ascertainhis damages suffered by BIM and Archipel; All Pretrial submissions pursuant to paragraph 12(B) of the Uniform Pret rial Scheduling Order at Dkt. No. 118, including any motions in limine, shall be filed no later than Tuesday, March 10, 2020 at 5:00 p.m.; and Plaintiff, Edwards, and Gray appear at the Utica Federal Courthouse, 10 Broad Street, Utica, New York, 13501, at 9:30 a.m. on Monday, March 23, 2020, for jury selection and trial. Signed by Judge David N. Hurd on 12/13/2019. (Copy served upon Gregory W. Gray, Jr. via regular mail on 12/13/2019)(see)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
----------------------------------WILLIAM H. McESSY,
Plaintiff
-v-

1:15-CV-1462

GREGORY W. GRAY, JR.; GREGORY P.
EDWARDS; ARCHIPEL CAPITAL LLC; and BIM
MANAGEMENT, LP
.
Defendants.
----------------------------------APPEARANCES:

OF COUNSEL:

CHAPMAN, CUTLER LAW FIRM
Attorneys for plaintiff
111 West Monroe
Chicago, Illinois 60603

DAVID THOMAS AUDLEY, ESQ.
JOSEPH LOMBARDO, ESQ.
SARA TARANEH GHADIRI, ESQ.

GREGORY W. GRAY, JR.
Defendant pro se
60 School Street #1192
Orchard Park, New York 14127
TARTER KRINSKY & DROGIN LLP
Attorneys for defendant Edwards
1350 Broadway
New York, New York 10018

MICHAEL J. GRUDBERG, ESQ.

DAVID N. HURD
United States District Judge

MEMORANDUM–DECISION and ORDER
Plaintiff William H. McEssy ("McEssy" or "plaintiff") filed the present action on
December 9, 2015, alleging several and varied claims against defendants Gregory W. Gray,
Jr. ("Gray"), Gregory P. Edwards ("Edwards"), Archipel Capital, LLC, BIM Management, LP
("BIM"), and Bennington Investment Management, Inc. ("Bennington"). Those disparate

claims nevertheless followed a single operative nucleus: plaintiff alleged that the defendants
participated in an extended scheme to defraud him of his money by misrepresenting the
validity—and indeed the existence—of a number of investment opportunities.
On October 17, 2019, McEssy moved for summary judgment under Federal Rule of
Civil Procedure ("Rule") 56 against Gray, Edwards, and Bennington on the following Counts
of the Second Amended Complaint: (I) securities fraud under § 10(b) of the Exchange Act,
15 U.S.C. § 78j(b) ("§ 10(b)"); (V) common law fraud; and (VII) common law breach of
fiduciary duty. 1 On that same day, plaintiff also moved for partial default judgment under
Rule 55 on the same three counts against BIM and Bennington.
Pursuant to this Court's Memorandum-Decision and Order dated December 13, 2019,
those motions were assessed and resolved. Bennington's motion for summary judgment was
granted in its entirety, and it was dismissed from this action. Edwards' motion for summary
judgment was granted in part and denied in part. McEssy's Count VII claim for breach of
fiduciary duty was dismissed against him, but this Court determined that questions of fact
exist for his claims under Counts I and V for § 10(b) securities fraud and common law fraud,
respectively. Those questions of fact necessitate trial to ascertain liability and damages.
McEssy was granted summary judgment against Gray on the three Counts on which
plaintiff moved. Similarly, plaintiff was granted default judgment on the three Counts for
which he moved against BIM. Lastly, plaintiff attained default judgment on Counts I and V
against Archipel, but failed to plausibly allege a breach of fiduciary duty to merit default
judgment as to Count VII. For each of these defendants, however, the issue of damages
remains uncertain. This is especially true because plaintiff alleges that Gray misled him as to

1 Although several other claims remained viable as to defendants Gray, BIM, and Archipel, defendants Edwards
and Bennington had moved for and been granted dismissal of all Counts of the Second Amended Complaint
except for Counts I, V, and VII. McEssy v. Gray, 2016 WL 10518458 (N.D.N.Y. Aug. 11, 2016). Thus, those
counts alone remained against Edwards and Bennington.

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the nature and extent of his disciplinary history, but the record and the ready availability of
that disciplinary history raise questions as to whether that alleged deception truly harmed
him.
For Gray, as a defendant who has appeared before this Court, those damages must
be ascertained through a jury trial. For the defaulting defendants, however, this Court has
the capacity to order a hearing as to the propriety of damages under Rule 55(b)(B). Because
McEssy alleges that BIM and Archipel were merely the vehicles for Gray's scheme, however,
this Court is satisfied that the damages attributable to the architect of the fraud would be
appropriately attributed to his instruments as well.
In summary, there are triable issues of fact for Edwards' liability under Counts I and V
of McEssy's amended complaint. Should plaintiff prove liability, he must also prove
damages. Additionally, there is a triable issue of fact as to the damages suffered by plaintiff
at Gray's hands. That trial for damages will also serve as a hearing to establish the damages
against BIM and Archipel.
Therefore, it is
ORDERED that
1.

Plaintiff proceed to trial against Edwards to prove his liability, and, if liability is

proven, damages for Counts I and V of the Second Amended Complaint;
2.

Plaintiff proceed to trial against Gray to prove damages for Counts I, V, and VII

of the Second Amended Complaint;
3.

Plaintiff's proof of damages against Gray will be used by this Court to ascertain

his damages suffered by BIM and Archipel;

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4.

All Pretrial submissions pursuant to paragraph 12(B) of the Uniform Pretrial

Scheduling Order at Dkt. No. 118, including any motions in limine, shall be filed no later than
Tuesday, March 10, 2020 at 5:00 p.m.; and
5.

Plaintiff, Edwards, and Gray appear at the Utica Federal Courthouse, 10 Broad

Street, Utica, New York, 13501, at 9:30 a.m. on Monday, March 23, 2020, for jury selection
and trial.
It is SO ORDERED.

Dated: December 13, 2019
Utica, New York.

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