Soley v. Wasserman
OPINION & ORDER: The Court GRANTS in part and DENIES in part Defendant's motion for summary judgment and in limine relief, and DENIES Plaintiffs motion for summary judgment. The parties shall, by February 25, 2013, submit to the Court a joint le tter outlining any steps that need to be taken before the case is Ready for Trial. The parties must file a joint pretrial order by March 22, 2013. The parties shall advise the Court by March 22, 2013 whether they consent to trial of this case before a Magistrate Judge. The case will be deemed Ready for Trial April 4, 2013. (Signed by Judge Kimba M. Wood on 2/11/2013) (ft)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
JUDY W. SOLEY,
PETER J. WASSERMAN,
KIMBA M. WOOD, U.S.D.J.:
OPINION & ORDER
08 Civ. 9262 (KMW) (FM)
Plaintiff Judith W. Soley brings this diversity action against her younger brother,
Defendant Peter J. Wasserman, asserting a variety of claims arising out Wasserman’s conduct as
Soley’s financial advisor over approximately the past thirty years. On May 14, 2010, after
multiple claims in her original complaint were dismissed, Soley filed an Amended Complaint.
[Dkt. No. 20]. On July 6, 2010, Wasserman moved to dismiss the Amended Complaint pursuant
to Federal Rules of Civil Procedure 8(a)(1), 12(b)(1), and 12(b)(6). [Dkt. No. 24]. The Court
granted in part and denied in part Wasserman’s motion to dismiss on September 29, 2011. See
Soley v. Wasserman, 823 F. Supp. 2d 221, 225 (S.D.N.Y. 2011) (Wood, J.) [Dkt. No. 36]. In
relevant part, the Court denied the motion to dismiss Soley’s claims for breach of fiduciary duty
and equitable accounting.
Following discovery, both parties now move for summary judgment. (See Def.’s Mot.
for S.J. & In Limine Relief [Dkt. No. 62]; Pl.’s Mot. for Partial S.J. [Dkt. No. 66]). In the
alternative, Wasserman seeks in limine relief. For the reasons that follow, the Court grants
Wasserman’s motion in part and denies the motion in part. The Court also denies Soley’s
STANDARD OF REVIEW
A. Summary Judgment
Summary judgment is appropriate only if the record before the court establishes that there
is no “genuine issue as to any material fact and that the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(c). The moving party has the burden of demonstrating that no
dispute of a material fact exists. Jeffreys v. City of New York, 426 F.3d 549, 554 (2d Cir. 2005).
In evaluating whether the moving party has met its burden, a court must “construe the evidence
in the light most favorable to the non-moving party and . . . draw all reasonable inferences in the
non-moving party’s favor.” Stonewell Corp. v. Conestoga Title Ins. Co., 678 F. Supp. 2d 203,
208 (S.D.N.Y. 2010) (Wood, J.) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986)); see also In re “Agent Orange” Prod. Liab. Litig., 517 F.3d 76, 87 (2d Cir. 2008).
A motion for summary judgment should be denied “if the evidence is such that a
reasonable jury could return a verdict” in favor of the non-moving party. NetJets Aviation, Inc.
v. LHC Commc’ns, LLC, 537 F.3d 168, 178-79 (2d Cir. 2008); see also Fed. R. Civ. P. 56(e).
Accordingly, where adjudication of a claim requires assessing credibility or deciding between
conflicting versions of events, summary judgment is not appropriate. See Jeffreys, 426 F.3d at
553-54; Hayes v. N.Y.C. Dep’t of Corr., 84 F.3d 614, 619 (2d Cir. 1996). The non-moving party
“must do more than simply show that there is some metaphysical doubt as to the material facts,”
Matsushita Elec. Indus. Co., Ltd., v. Zenith Radio Corp., 475 U.S. 574, 586 (1986), but must
show that there is “significant, probative evidence” on which a reasonable factfinder could
decide in its favor. Anderson, 477 U.S. at 247.
B. In Limine Relief
The Federal Rules of Evidence favor the admission of all relevant evidence. See Fed. R.
Evid. 402. Evidence is relevant if it “tend[s] to make the existence of any fact that is of
consequence to the determination of the action more probable or less probable than it would be
without the evidence.” Fed. R. Evid. 401. Similarly, Rule 702, which governs the admissibility
of expert testimony, “embodies a liberal standard of admissibility.” Nimely v. City of New York,
414 F.3d 381, 396 (2d Cir. 2005). Expert testimony shall be excluded, however, when it is
“unhelpful and therefore superfluous and a waste of time.” In re Methyl Tertiary Butyl Ether
(MTBE) Prods. Liab. Litig., 643 F. Supp. 2d 482, 493-94 (S.D.N.Y. 2009) (Scheindlin, J.).
“A district court’s inherent authority to manage the course of its trials encompasses the
right to rule on motions in limine.” Carofino v. Forester, 450 F. Supp. 2d 257, 270 (S.D.N.Y.
2006) (Leisure, J.) (citing Luce v. United States, 469 U.S. 38, 41 n.4 (1984)). A district court
will “exclude evidence . . . in limine only when the evidence is clearly inadmissible on all
potential grounds.” United States v. Ozsusamlar, 428 F. Supp. 2d 161, 164 (S.D.N.Y. 2006)
This Court’s September 29, 2011 Opinion, familiarity with which is assumed, details the
factual allegations set forth in the Amended Complaint. See Soley, 823 F. Supp. 2d at 225-28.
That Opinion permitted only Soley’s breach of fiduciary duty and equitable accounting claims to
proceed. Id. at 225. The Court further limited those claims to the allegations relating “to Patriot
Partners and those investment accounts over which Wasserman had discretionary authority.” Id.1
After reviewing the Parties’ summary judgment submissions, the Court recounts only the
Having limited the remaining scope of this case, the Court does not consider allegations, Rule
56.1 statements, or legal arguments relating to any already dismissed claims.
undisputed facts relevant to Soley’s remaining claims. These facts are drawn from the Parties’
Rule 56.1 Statements of Fact. (“Def.’s 56.1;” “Pl.’s 56.1”).2
Since 1974, Wasserman “has traded equities and options for his own account and through
various entities.” (Def.’s 56.1 ¶ 3). In 1991, Wasserman formed and served as the General
Partner of Patriot Partners, L.P., a partnership used “to invest for its own account in securities
and other investment instruments.” (Id. ¶¶ 4-5). Soon after, Patriot Partners distributed a
“Private Offering Memorandum . . . to potential investors, including Soley.” (Id. ¶ 6). Soley
entered into a Partnership Agreement and purchased a partnership interest by transferring
$500,000 from her personal brokerage account to Patriot Partner’s account. (Id. ¶¶ 7-8). The
Partnership Agreement imposed various obligations, including requiring Wasserman to
“maintain books and records at the principal office of the Partnership.” (Pl.’s 56.1 ¶¶ 59-61). In
2004 and 2005, Soley and Wasserman were the sole partners of Patriot Partners. (Id. ¶ 112).
From its inception until 2003, Patriot Partners utilized the accounting services of Grant
Thorton, LLP to perform independent, certified audits and tax preparation services. (Def.’s 56.1
¶ 11). Discovery has yielded auditing records for 1991, 1996-2001, and 2003. (Id. ¶ 13).
“Throughout the period of [Patriot] Partners’ existence, from 1991 through 2005, Soley’s
accountant, Barry Kamras, received . . . financial and tax reporting of Soley’s interest in Partners
and used that information in preparing Soley’s personal tax returns.” (Id. ¶ 19 (citing Barry
Kamras Dep. 6-10, 17-19, 22-24, 59, 144-45)).
In October 1998, Soley directed the transfer of $150,000 from her personal account to
Patriot Partners’ account (“the October 1998 transfer”). (Def.’s 56.1 ¶¶ 21-22; Pl.’s 56.1 ¶ 66).
Each party has submitted a response to the opposing party’s Rule 56.1 Statement. Plaintiff’s
counsel, through a letter to the Court, objects to the timeliness, form, and substance of Defendant’s
response. The Court finds Plaintiff’s objections to be without merit, but nonetheless relies on the
responses only to determine whether certain facts are disputed. Thereafter, the Court draws only upon the
documentary and testimonial evidence to determine whether genuine issues of material fact actually exist.
The October 1998 transfer was accounted for in Patriot Partner’s books as “Wasserman Recap:
Loan to Partnership (10/98).” (Pl.’s 56.1 ¶ 67). In January 1999, $50,000 was transferred from
Patriot Partners’ account to Soley’s account. (Def.’s 56.1 ¶ 23; Pl.’s 56.1 ¶ 68). In August 1999,
Soley wrote to Wasserman to request repayment of “the remainder of the $150,000 ‘loan.’”
(Def.’s 56.1 ¶ 31; Pl.’s 56.1 ¶ 96). As discussed in detail below, the Parties dispute the nature of
the October 1998 transfer, whether Patriot Partners properly accounted for the transfer on its
books, and whether the October 1998 transfer was properly repaid. (See infra Parts III, IV).
Beginning around 1997, based on Wasserman’s suggestions, “Wasserman, Soley[,] and a
mutual family friend, Arthur (Casey) Stern, made investments together in certain stocks,”
including investments in “TAPI,” “NEXM,” “NTII,” and “CRDM” (collectively, the “Joint
Stock Investments”). (Def.’s 56.1 ¶¶ 40-42; Pl.’s 56.1 ¶¶ 120, 122). These investments were
purchased at private offerings, and each “became publically tradeable before October, 2002.”
(Def.’s 56.1 ¶¶ 44-45). Since the time of the investments, Wasserman has sold some shares
(Pl.’s 56.1 ¶ 127) and still owns others (id. ¶ 129). Wasserman admits he “has not paid Soley for
her interest in any of the Joint Stock Investments” (id. ¶ 132), but the Parties dispute whether
Wasserman has provided an accounting of these investments.
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
A. Breach of Fiduciary Duty Claim
As noted above, this Court previously held that the Amended Complaint stated a claim
for breach of a fiduciary duty “with respect to (1) Patriot Partners, and (2) investment accounts
over which Wasserman had full trading authority.” Soley, 823 F. Supp. 2d at 233. “To establish
a claim for breach of fiduciary duty, a plaintiff must prove (1) the existence of a fiduciary
relationship; (2) misconduct by defendant constituting a breach of its fiduciary duty to plaintiff;
and (3) damages to plaintiff directly caused by defendant's misconduct.” Sokol Holdings, Inc. v.
BMB Munai, Inc., 726 F. Supp. 2d 291, 305-06 (S.D.N.Y. 2010) (Wood, J.) (citing Berman v.
Sugo LLC, 580 F. Supp. 2d 191, 204 (S.D.N.Y. 2008) (Patterson, J.)). Although Wasserman
does not dispute the existence of a fiduciary relationship, the Parties disagree regarding whether
Wasserman breached his duties and whether Soley can prove damages resulting from any breach.
Plaintiff’s expert, Stuart L. Fleischer, calculates damages based on several asserted
breaches of Wasserman’s fiduciary duties, including:
(1) Damages resulting from Wasserman’s “failure to fully and timely repay
money [Soley] loaned [Patriot Partners]” in the October 1998 transfer.
(2) Damages resulting from Wasserman’s “failure to distribute [Soley’s]
remaining partnership interest (her capital) at the time that Patriot Partners
effectively ceased business [on December 31, 2003].”
(3) Damages resulting from Wasserman’s failure “to adhere to the investment
strategy [Wasserman] communicated to and was understood by . . . Soley at
the time these investments were made.”
(See Tofel Aff. Ex. A, Fleischer 5/31/12 Corrected Expert Report 1-2.). In the instant
motion, Wasserman seeks summary judgment as to each of these contentions.
(1) Characterizing the October 1998 Transfer
Wasserman contends that any claim based on the October 1998 transfer is untimely.
Characterizing the transfer as a loan with no specified repayment date, Wasserman argues that
any resulting claim accrued on the date of the loan. (See Def.’s Mem. in Supp. of S.J. 11
(“Def.’s Mem.”) (citing In re Kharisma Jewelry, Inc., 165 B.R. 371 (Bankr. E.D.N.Y. 1994))).
Applying the six year statute of limitations,3 Wasserman argues that this claim is untimely
because the original complaint was filed nearly ten years after the transfer. [Dkt. No. 1].
The Parties agree that a six year statute of limitations applies but disagree as to whether to
characterize this claim as a breach of a contractual obligation or a breach of fiduciary duty.
Although Wasserman characterizes the transfer as a loan from Soley to Wasserman,
Soley contends that the transfer was actually an investment or loan to Patriot Partners, not
Wasserman individually. Based on its review of the Parties’ submissions, the Court finds that
the nature of the October 1998 transfer remains in dispute. (Compare Luttinger Aff., Ex.
G02302 (characterizing transfer as a loan from Wasserman to Patriot Partners), with Soley Aff. ¶
15 (describing transfer as a “short-term investment” in Patriot Partners), and Soley Aff., Ex. J
(characterizing the transfer as a “short-term” “loan” to Patriot Partners)). This dispute is material
to the resolution of this claim because although Wasserman argues that a claim for non-payment
of a personal loan will accrue on the date of the loan (in 1998), Soley points out that an action for
non-payment of liabilities invested by a Partriot Partners partner would accrue upon the
partnership’s dissolution (in 2006). (See Soley Aff. Ex. B., at 35-36 (Partnership Agreement
noting that debts or liabilities of the Partnership are “due and payable” “immediately prior to the
termination of the Partnership”)). Accordingly, because the nature of the October 1998 transfer
remains a disputed material fact, summary judgment is denied.
(2) Whether Soley Requested Return of Her Partnership Interest, and, If So, When
Based on a review of Patriot Partners’ activities, Soley’s expert concluded that the
Partnership “effectively ceased conducting business at December 31, 2003.” (Tofel Aff. Ex A,
Fleischer 5/31/21 Corrected Report 1). The report calculates damages for Wasserman’s “failure
to distribute [Soley’s] remaining partnership interest (her capital)” from this date. Wasserman
argues that this claim was not pled in the Amended Complaint and contends that Soley “cannot
show . . . any basis on which [Wasserman] would have been obligated to distribute her interest at
any particular point in time.” (See Def.’s Mem. 14-15; Def.’s Reply Mem. in Supp. 7 (arguing
that Soley cannot demonstrate “that she made the required written request to redeem her interest
as of year-end 2003, and that she did not withdraw or alter such request”)).
As an initial matter, the Court finds that the allegations of the Amended Complaint gave
Wasserman fair notice of this claim. See Swierkiewicz v. Sorema N. A., 534 U.S. 506, 512
(2002). The Complaint alleges that Wasserman “[d]ominated and controlled [Soley’s] financial
affairs without regard to her interests,” and specifically notes that Soley “repeatedly” requested
that her partnership affairs be “wound up and her share of its assets returned.” (See Am. Compl.
¶¶ 63, 22). Moreover, the Complaint includes measurements of Soley’s capital investments in
Patriot Partners as of the end of 2003, followed by indications that no actions appeared to have
been taken between 2004 and 2006. (See id. ¶¶ 20-21 & accompanying tbl.). These allegations
clearly put Wasserman on adequate notice.
Furthermore, in a sworn affidavit to this Court, Soley directly states that “[b]eginning in
or about 1999, [she] repeatedly asked Wasserman to redeem [her] interest in Patriot Partners.”
(See Soley Aff. ¶ 22). Although Soley’s testimony is the most direct evidentiary support for a
demand date this early, Soley provides additional documentary evidence indicating that she did
in fact make a demand well prior to the close of the partnership in 2006. (See Wybrial Aff., Ex
EE (Dec. 29, 2004 email from Wasserman to Soley)). Accordingly, because there remains a
dispute of fact as to when (and whether) Soley requested the return of her partnership share and
also as to Wasserman’s response, summary judgment is inappropriate.
(3) Alleged Failure to Adhere to Stated Investment Strategy
Soley’s expert report considers a third basis for damages: that Wasserman allegedly
failed “to adhere to the investment strategy [that he] communicated to and was understood by . . .
Soley at the time these investments were made.” (See Fleischer Report 2). In particular, the
For the reasons stated above, the Court GRANTS in part and DENIES in part
Defendant's motion for summary judgment and in limine relief, and DENIES Plaintiffs motion
for summary judgment. 7
The parties shall, by February 25, 2013, submit to the Court a joint letter outlining any
steps that need to be taken before the case is Ready for Trial. The parties must file a joint
pretrial order by March 22,2013. The parties shall advise the Court by March 22, 2013 whether
they consent to trial of this case before a Magistrate Judge. The case will be deemed Ready for
Trial April 4, 2013.
Dated: New York, New York
February _1_(_, 2013
Kimba M. Wood
United States District Judge
7 Given that the Court has denied the majority of each motion for summary judgment, the Court
does not award either side fees or costs.
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