SHLD, LLC et al v. Hall et al

Filing 111

ORDER ADOPTING REPORT AND RECOMMENDATIONS for 110 Report and Recommendations: The Clerk will enter judgment in favor of plaintiffs and defendants Nicholas Hall and Amar Shah and against defendant Tier Hall Consulting, Ltd., in the amount of $265,000.00 plus prejudgment interest measured at 9% per annum from March 11,2015, to the date of entry of judgment, and $710.00 in costs. (Signed by Judge Louis L. Stanton on 4/20/17) (ml)

ORIGINAL
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - -X
SHLD, LLC, DAVID MONTEAU,
HARVEY NEWMAN, STUART
SALLES, and LAURENCE WILNEFF,

USDCSDNY'
DOCUMENT
ELECTRONICALLY FILED
DOC #:--...,...-.,..---~...,....-

DATE FILED:, '/JU/1?

.

Plaintiffs,
15 Civ. 6225 (LLS)
- against ORDER
NICHOLAS HALL, AMAR SHAH, TIER
HALL LTD., TIER HALL CONSULTING,
LTD., INDEPENDENT SERVICES GROUP,
LTD., INDEPENDENT BROKING
SOLUTIONS, LTD., THE IVY GROUP,
LTD., MINORIES LAW LIMITED, JEREMY
BLOOMER, and NIGEL FRUDD,
Defendants.
- - - - - - - - - - - - - - - - - - -X

Having independently reviewed the March 30, 2017 Report and
Recommendation of the Honorable James C. Francis, United States
Magistrate Judge, and there having been no objections, I approve
and adopt his conclusions and recommendations.
The Clerk will enter judgment in favor of plaintiffs and
defendants Nicholas Hall and Amar Shah and against defendant
Tier Hall Consulting, Ltd., in the amount of $265,000.00 plus
prejudgment interest measured at 9% per annum from March 11,
2015, to the date of entry of judgment, and $710.00 in costs.
So ordered.
Dated: New York, New York
April 20, 2017
Louis L. Stanton
U.S.D.J.
- 1 -

Copies transmitted this date to:
Matthew J. Maiorana, Esq.
Queller, Fisher, Washor, Fuchs & Kool LLP
233 Broadway, 18th Floor
New York, NY 10279
(via ECF)
Nicholas Hall
9 St. Clair St.
London
EC3N lLQ
United Kingdom
(via U.S. Mail)
Amar Shah
9 St. Clair St.
London
EC3N lLQ
United Kingdom
(via U.S. Mail)
Tier Hall Consulting, Ltd.
9 St. Clair St.
London
EC3N lLQ
United Kingdom
(via U.S. Mail)

- 2 -

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 1 of 22

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

- - - - - - - - - - -

-:

SHLD, LLC, DAVID MONTEAU, HARVEY
NEWMAN, STUART SALLES, and
LAURENCE WILNEFF,

15 Civ. 6225 (LLS)

(JCF)

REPORT AND
RECOMMENDATION

Plaintiffs,
- against NICHOLAS HALL, AMAR SHAH, TIER
HALL, LTD., TIER HALL CONSULTING,
LTD., INDEPENDENT SERVICES GROUP,
LTD., INDEPENDENT BROKING
SOLUTIONS, LTD., THE IVY GROUP,
LLC, MINORIES LAW LIMITED,
JEREMY BLOOMER, and NIGEL FRUDD,

USDSSDNY
DOCUMENT
ELECTRONICALLY FILED

DOC#:----~---~
_DATE FILED:

-3.../3.a/{kj

Defendants.
TO THE HONORABLE LOUIS L. STANTON, U.S.D.J.:
This action centers on a scheme to deliver "investor-funded
life insurance to employee associations and union groups in New
York."

(Second Amended Complaint ("SAC"),

CJl

181).

Alleging that

the defendants breached an agreement to "create and structure a
bond that would provide the needed capital" for the program (SAC,
cn 3), the plaintiffs-- SHLD, LLC ("SHLD"),

Newman,

David Monteau, Harvey

Stuart Salles, and Laurence Wilneff -- filed this action

for breach of contract,

as well as conversion and other torts.

When defendants Nicholas Hall, Amar Shah, and Tier Hall Consulting,
Ltd.

(collectively, the "Defaulting Defendants") failed to answer,

certificates of default were entered and the case was referred to
1

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 2 of 22

me for a hearing on damages.

The Defaulting Defendants failed to

appear at the inquest held on February 14,
findings

are

plaintiffs.

therefore

based

on

2017.

evidence

The following

provided

by

the

I recommend that the plaintiffs be awarded $265,000

in damages plus prejudgment interest measured at 9% from March 11,
2015, until the date judgment is entered, and $710.00 in costs.
Background
The individual plaintiffs in this action are the members of
SHLD; each is a citizen of the United States and resides in either
Illinois or New York.

(SAC,

10-13, 194; Plaintiffs'

<j[<j[

Proposed

Findings of Fact and Conclusions of Law ("Proposed Findings"),
2).

The Defaulting Defendants are

Hall Consulting,
United Kingdom;

Ltd.

(or were,

Ltd.

<j[<j[

3,

("Tier

Nicholas Hall and Amar Shah were the principals

5).
Hall"),

(SAC, <n<n 15, 20-21; Proposed

Most of the other defendants -- Tier Hall,
Independent

Independent Services Group,

Ltd.,

Braking
Minories

Frudd -- are citizens of the United Kingdom.
19,

22;

in the case of Tier

("Tier Hall Consulting") ) citizens of the

and owners of Tier Hall Consulting.
Findings,

Proposed Findings,

<j[<j[

4,

6-8).

Solutions,
Law Ltd.,
(SAC,

domiciled

in

Connecticut

or

<j[<j[

Massachusetts;

Ltd.

I

and Nigel
14, 16-17 I

The Ivy Group,

its principal place of business in Connecticut,
are

<j[

LLC,

has

and its members
its

principal,

Jeremy Bloomer, is a citizen of the United States and is domiciled
2

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 3 of 22

in Massachusetts.

1

(SAC,

~~

18, 23; Proposed Findings,

~

9).

The individual plaintiffs "conceived of The Amalgamated Life
Insurance and Annuity Network Trust of New York
project

to

deliver

associations
Findings,

~

and

investor-funded

union

groups

~

10; SAC,

180).

in

life
New

("ALIANT")

insurance

York

to

State."

York and elsewhere to discuss the project.
~~

employee
(Proposed

Between January and September 2013,

the individual defendants met with Mr. Hall and Mr.

Proposed Findings,

as a

11-18).

(SAC,

~~

Shah in New
183-184, 192;

More specifically, a meeting in New

York between the individual plaintiffs and Mr. Hall on July 22,
2013,

culminated in a draft proposal by which Tier Hall,

Ltd.,

would manage the creation and structuring of an investment vehicle.
(SAC,

~~

187-188;

Proposed Findings,

Draft
~~

Proposal,

13-14).

plaintiffs of $300,000,

attached as

Exh.

1

to

SAC;

For an initial investment from the

Tier Hall would engage advisors with an

eye to recruiting investors and developing a business plan within
two to three months.

(SAC,

Findings,

After a September 30,

~~

14-16) .

~~

190-191; Draft Proposal; Proposed
2013 meeting in New

York among the individual plaintiffs and Mr. Shah, a non-disclosure
agreement was entered into,
Tier Hall.

(SAC,

~~

with Mr.

Shah signing on behalf of

192-193; Proposed Findings,

~~

18-19).

Each of the non-defaulting defendants has been dismissed
from the action or has settled.
(Proposed Findings, ~~ 64-68).
1

3

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 4 of 22

The individual plaintiffs formed SHLD in October 2013 as "a
vehicle

to

develop

and

fund

the

administrative

structure

and

reserves required for ALIANT through the bond" that Mr. Hall, Mr.
Shah,

and Tier

Proposed

Hall

Findings,

Consulting were
20) .

<JI

to

create.

Immediately

(SAC,

afterward,

<.II

Mr.

194,
Shah

informed the plaintiffs that an additional $30,000 would be needed
to

form an

Irish bond company to hold the

settlements" that would back the bond.2
Findings,
a

<JI<JI

"Heads

20-21).

of

Consulting,

3

194-195; Proposed

<JI<JI

This additional amount was incorporated into

Terms"
which

(SAC,

portfolio of "life

agreement

Mr.

Hall

between

signed

on

SHLD

and

Tier

Hall

of

Tier

Hall

behalf

Consulting.

(SAC,

Findings,

22-23) . That agreement required Tier Hall Consulting

<JI<JI

<JI<JI

198-199; Heads of Terms Agreement; Proposed

to form the aforementioned Irish bond company within three to six
months of the payment of the plaintiffs'

$330,000.

Head of Terms Agreement at 1; Proposed Findings,

<JI

29)

(SAC,

<JI

207;

It further

2 A "life settlement" describes the situation where "a life
insurance policy owner sells his or her policy to an investor in
exchange for a lump sum payment. The amount of the payment .
to the policy owner is generally less than the death benefit on
the policy, but more than its cash surrender value."
Investor
Bulletin on Life Settlements, https://www.sec.gov/investor/alerts
/lifesettlements-bulletin.htm (last visited March 28, 2017).
3 The agreement misidentifies Tier Hall
Consulting as Tier
Hall Consultancy, LLC.
(SAC, <JI 200; Heads of Terms Tier Hall
Consultancy Limited and SHLD LLC dated Oct. 18, 2013 ("Heads of
Terms Agreement"), attached as Exh. 2 to SAC).

4

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 5 of 22

required,

among other things,

that within three to six months of

the execution of a binding agreement,

Tier Hall Consulting would

(1) hire the company's board and legal, actuarial, and accountancy
teams;

(2) work with the bond distribution platform,

(3)

execute

a service agreement with the charitable trust that would own the
bond company,

(4) "project manage the whole transaction including

the professional advisors," and
and develop a business plan.

( 5)

recruit potential investors

(SAC,

Agreement at 1; Proposed Findings,

CJ!CJ!

CJ!CJ!

207-211;

Heads of Terms

29-33).

The Heads of Terms Agreement was later incorporated into the
parties'
Mr.

final contract,

which Mr.

Hall signed as "partner" and

Shah signed as "director" of Tier Hall Consulting.

202;

Letter of David G.

Manteau dated Oct.

31,

2013

(SAC,

("Manteau

Letter"), attached as part of Exh. 3 to SAC; Proposed Findings,
24).

CJ!

CJ!

The final contract was to be governed by the laws of the

United States, and required Tier Hall Consultants to perform the
services outlined in the Heads of Terms Agreement "in accordance
with

[its]

performance

milestones,"

supply

periodic

progress

reports, and provide a list of subcontractors, among other things
(SAC,

C][CJ!

203-204, 212; Terms and Conditions of Engagement ("Final

Contract"), attached as part of Exh. 3 to SAC, ! ! 3.1, 3.2, 3.6,
12. 5. 1

&

Schedule 1; Proposed Findings, ! ! 25-2 6,

34) .

If Tier

Hall Consulting failed to complete the services it was contracted
5

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 6 of 22

to perform,
failed

to

terminate
Contract,

failed to complete them to SHLD' s
complete

the
~~

them on

agreement,

time,

or

SHLD

both.

could demand a
(SAC,

~~

15,

$330,000 payment.

2013,

(SAC,

~

the plaintiffs

or

refund,

205-206;

~~

9, 10.1-10.3; Proposed Findings,

By November

satisfaction,

Final

27-28).

had made

213; Proposed Findings,

entire

35).

~

the

Three

months later, Mr. Shah provided a draft "teaser" for prospective
investors and informed the plaintiffs that he was "a month behind."
(SAC,

~

218; Proposed Findings,

~

37).

The plaintiffs expressed

their dissatisfaction with the teaser, as well as with the absence
of monthly reports and lack of overall progress.
Proposed

Findings,

~

38).

Over

the

next

(SAC,

months,

~

Tier

219;
Hall

Consulting continued to miss deadlines and failed to show progress
on funding.

(SAC,

~

221-39;

Proposed Findings,

~

40).

When no

investors had been found by December 2014, the plaintiffs requested
a list of itemized expenditures from Mr. Hall.
Proposed Findings,

~~

4 0-41) .

Mr.

(SAC,

':II 239,

Hall detailed the following

expenditures:
1.

$40,000 to legal advisors Minories Law Limited;

2.

$85,000 to The Ivy Group;

3.

$65,000 to Independent Services Group;

4.

$120,000 to Tier Hall Consulting; and

5.

$20,000 in general expenses.
6

242;

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 7 of 22

~

(SAC,

~

243; Proposed Findings,

42).

These expenses were either

unauthorized and therefore in violation of the parties' agreement,
or unearned in light of the lack of "reasonably competent or timely
work-product."

(SAC,

~

248,

Proposed Findings,

~~

44-48).

In

addition, as the bond company was never formed, the "defendants []
put to other uses the $30,000 that had been added to the start-up
fee

allegedly

to

address

additional

formation of the bond company."
24 7) .

expenses

relating

(Proposed Findings,

~

to

the

43; SAC,

~

The plaintiffs terminated the contract on March 11, 2015,

and demanded a refund of their $330,000.
~

Findings,
money.

49) .

(SAC,

~

(SAC,

~

249;

Proposed

The Defaulting Defendants refused to return the
251; Proposed Findings,

~

49).

Discussion
A.

Legal Standards

Where a defendant has defaulted, all of the facts alleged in
the complaint,

except those relating to the amount of damages,

must be accepted as true.
Inc.

v.

See Transatlantic Marine Claims Agency,

Ace Shipping Corp.,

109 F.3d 105,

Keystone Global LLC v. Auto Essentials,
WL 224359,

at *3

(S.D.N.Y.

Jan.

16,

108

Inc.,

2015).

(2d Cir.

12 Civ.

1997);

9077, 2015

The court may also

rely on factual allegations pertaining to liability contained in
affidavits and declarations
e.g.,

Tamarin v.

submitted by the plaintiffs.

Adam Caterers,

Inc.,
7

13 F.3d 51,

54

(2d Cir.

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 8 of 22

1993).

Nonetheless, a court "must still satisfy itself that the

plaintiff has established a sound legal basis upon which liability
may be

imposed."

(E.D.N.Y.

Jemine v.

2012).

Once

Dennis,

liability

901
has

F.

Supp.

been

2d 365,

established,

373
the

plaintiff must provide evidence establishing the amount of damages
with reasonable certainty.

Transatlantic Marine Claims Agency,

109 F.3d at 111.
B.

Liabili ty 4
1.

"[A]

Breach of Contract

federal

court

exercising diversity

jurisdiction must

apply the choice-of-law rules of the state in which that court
sits to determine the rules of decision that would apply if the
suit were brought in state court."
Microflo Ltd.,

718 F.3d 138,

151

Liberty Synergistics Inc. v.
(2d Cir.

2013).

In a contract

case, New York choice of law principles require a court to apply
the "law of the jurisdiction with the most significant interest
in,

or

spectrum

relationship
of

to,

significant

the

dispute,"

contacts,

taking

including

into
the

account

"a

place

of

Jurisdiction is predicated on diversity.
28 U.S.C. § 1332.
The plaintiffs plead sufficient facts to establish personal
jurisdiction over the Defaulting Defendants.
(SAC, ~~ 25, 30-31,
35, 40-41, 45, 50-51, 55, 60-61).
Moreover, a prior opinion by
the Honorable Louis S. Stanton, U.S.D.J., suggests that the
plaintiffs have adequately alleged personal jurisdiction over the
Defaulting Defendants.
See SHLD, LLC v. Hall, No. 15 Civ. 6225,
2 016 WL 6 5 91 0 9, at * 5 ( S . D. N. Y. Feb. 17, 2 016) .
4

8

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 9 of 22

contracting,

the

places

of

negotiation

location of the subject matter,
contracting parties."

and

and the domicile

Bank of New York v.

5 99, 609 ( 2d Cir. 2014)

performance,

of the

Yugoimport,

(alteration in original)

the

745 F.3d

(quoting Brink's

Ltd. v. South African Airways, 93 F.3d 1022, 1031 (2d Cir. 1996)).
"New York choice-of-law rules also 'require[] the court to honor
the

parties'

choice

[of

substance are concerned,
York

law

original)
(2d

are

not

law provision]

thereby

1987)) .

violated.'"

the

813 F.2d 543,

Final

Contract

Wilneff live

of

in
551

requires

The only two states with a relationship

to the agreements at issue here are Illinois,
and Mr.

matters

(alterations

Id.

Garrett Corp.,

noted,

As

application of U.S. law.

as

so long as fundamental policies of New

(quoting Woodling v.

Cir.

insofar

(SAC,

<_[<_[

10,

13) ,

where Mr. Monteau

and New York,

where Mr.

Newman and Mr. Salles live and where the agreements were largely
negotiated (SAC,

<_[<_[

11-12, 187, 192-193; Proposed Findings,

~~

13-

14, 18-19).
The elements of a breach of contract claim under New York law
are (1) the existence of an agreement;
the

contract by

the plaintiff;

defendant; and (4) damages.

( 3)

(2) adequate performance of
breach

of contract ·by the

See Eternity Global Master Fund Ltd.

v. Morgan Guaranty Trust Co.,

375 F.3d 168,

The elements are the same under Illinois law.
9

177

(2d Cir.

2004).

See Gonzalzles v.

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 10 of 22

American Express Credit Corp.,

315

Ill.

N.E.2d 345, 351 (Ill. App. Ct. 2000).
conflict,
state.

App.

3d 199,

206,

733

There is therefore no actual

and I will apply New York law as the law of the forum

As should be obvious from the factual background discussed

above, each of these elements is met here:
an enforceable agreement;

The Final Contract is

the plaintiffs performed by remitting

their $330,000; the defendants breached by failing to perform and
failing to return the $330, 000;

and this caused the plaintiffs

damages in the amount of the unreturned funds.
2.

Conversion

To determine what law applies to tort causes of action, courts
(1) what are the

must engage in "[t)wo separate inquiries .

significant contacts and in which jurisdiction are they located;
and[)

(2) whether the purpose of the law is to regulate conduct or

allocate loss."
521,

Padula v. Lilarn Properties Corp., 84 N.Y.2d 519,

620 N.Y.S.2d 310, 311

significant
Kingdom.

contacts

are

(1994).
New

Here, the jurisdictions with

York,

Illinois,

and

the

United

As to the second inquiry, where "conduct-regulating laws

are at issue, the law of the jurisdiction where the tort occurred
will generally apply because that jurisdiction has the greatest
interest in regulating behavior within its borders."
620 N.Y.S.

at 311

(quoting Cooney v.

Osgood Machinery,

N.Y.2d 66, 72, 595 N.Y.S.2d 919, 922 (1993)).
10

Id. at 522,
Inc.,

81

Here, the tortious

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 11 of 22

conduct alleged

conversion of the $330,000 that the plaintiffs

provided to the defendants -- took place in the United Kingdom.
See,

e.g.,

Pentagen

International
(S.D.N.Y.

Aug.

Technologies

Inc.,

No.

93

2,

1996)

Civ.

("The

International,
8512,

locus

1996 WL
of

a

Ltd.

v.

CACI

435157,

at

*12

conversion

is

the

[jurisdiction] where the defendant's acts respecting the allegedly
converted

property

are

committed."),

adhered

to

on

reconsideration, 1996 WL 434551 (S.D.N.Y. Aug. 2, 1996).
The plaintiffs cite only New York law in support of this
claim.

They have not provided guidance on the law of conversion

in the United Kingdom.

Rule 44.1 of the Federal Rules of Civil

Procedure allows a court to determine the content of foreign law
based on "any relevant material or source
submitted by a party."

whether or not

However, it does not require a court "to

undertake its own analysis to determine" the content of foreign
law.

In re Nigeria Charter Flights Contract Litigation,

520 F.

Supp. 2d 447, 458 (E.D.N.Y.2007); see also Aristocrat Leisure Ltd.
v.

Deutsche Bank Trust Co. Americas,

3306876,

at *4

(S.D.N. Y.

Aug.

20,

No.

2010)

04 Civ.

10014,

2010 WL

(collecting cases).

decline to do so here and therefore apply New York law.
~'

In re Nigeria Contract

Flights,

520

F.

Supp.

2d

I
See,

at

458

(collecting cases holding that under New York choice of law rules,
forum law applies where litigant fails
11

to establish content of

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 12 of 22

foreign law) .
Under New York law, the plaintiffs' claim fails.

Conversion

requires the "unauthorized assumption and exercise of the right of
ownership over goods belonging to another to the exclusion of the
owner's rights."

Polanco v.

NCO Portfilio Management,

F. Supp. 3d 363, 370 (S.D.N.Y. 2014)

Inc.,

23

(quoting Thyroff v. Nationwide

Mutual Insurance Co., 460 F.3d 400, 403-04

(2d Cir. 2006)).

[T] o state a claim for conversion, [a] plaintiff must
allege that ' ( 1) the party charged has acted without
authorization, and (2) exercised dominion or a right of
ownership over property belonging to another[,] (3) the
rightful owner makes a demand for the property, and (4)
the demand for the return is refused.
Id.

(second and third alterations in original)

(quoting Sabilia v.

Richmond, No. 11 Civ. 739, 2011 WL 7091353, at *19 (S.D.N.Y. Oct.
26,

2011)).

"Where

the

original

possession

is

lawful,

a

conversion does not occur until the defendant refuses to return
the

property after

property."

Usov v.

demand

or

Lazar,

No.

*7 (S.D.N.Y. June 25, 2013)

until

he

13 Civ.

sooner disposes
818,

of

2013 WL 3199652,

the
at

(quoting Thryoff v. Nationwide Mutual

Insurance Co., 360 F. App'x 179, 180 (2d Cir. 2010)).
"[A]n action will lie for the conversion of money where there
is a specific,
otherwise
question."

treat

identifiable fund and an obligation to return or
in

a

particular

manner

the

specific

fund

in

Manufacturers Hanover Trust Co. v. Chemical Bank, 160
12

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 13 of 22

A. D. 2 d

113,

plaintiffs
however.

12 4 ,
have

55 9 N. Y. S . 2 d
not

7 0 4,

712

(1st Dep' t

sufficiently identified the

19 9 0) .

fund

The

involved,

When the alleged converted property is money, the money

must be "described or identified in the same manner as a specific
chattel."

Interior by Mussa,

Ltd.

v.

Misc. 2d 308, 310, 664 N.Y.S.2d 970, 972

Town of Huntington,
(2d Dep't 1997)

174

(quoting

9310 Third Ave. Associates, Inc. v. Schaffer Food Service Co., 210
A.D.2d

207,

208,

620

N.Y.S.2d

255,

256

(2d

Dep't

1994)).

Generally, identification of a specific sum and a "specific, named
bank account" into which it was transferred is sufficient to state
a claim for conversion.
WL 7271219,

at *14

Eldesouky v. Aziz, No. 11 Civ. 6986, 2014

(S.D.N.Y. Dec. 19, 2014)

(quoting Republic of

Haiti v. Duvalier, 211 A.D.2d 379, 384, 626 N.Y.S.2d 472, 475 (1st
Dep't 1995)); see also DeAngelis v. Corzine,
283

(S.D.N.Y. 2014)

where

they

were

Hanover Trust,

17 F. Supp. 3d 270,

(holding funds properly identified as chattel

"segregated

and

160 A.D.2d at 114,

identifiable");
125,

Manufacturers

559 N.Y.S.2d at 706,

712

(finding conversion claim sufficient where plaintiff identified
Here,

amount and account number) .

the Second Amended Complaint

and Proposed Findings of Fact allege merely that "[o]n November 6,
2013,

$33,000 was wired to defendant Tier Hall Consulting.

The

remaining $297,000 was wired to defendant Tier Hall Consulting on
November 14,

2013."

(SAC,

~

213;
13

Proposed Findings,

~

35).

No

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 14 of 22

account is identified; indeed, the plaintiffs do not even specify
that the entire amount was transferred to a single account.
taking the plaintiffs'
established a
Warner,

Inc.,

allegations as true,

conversion
No.

Feb. 25, 2014)

11 Civ.

claim.
2870,

5

See,

then,

e.g.,

they have not

Sang Lan v.

2014 WL 764250,

Even

at *6

Time

(S.D.N.Y.

(dismissing conversion claim where complaint failed

to name account into which allegedly converted funds deposited).
C.

Damages
1.

Amount

The plaintiffs paid $330,000 under the parties' agreements.
When they terminated the Final Contract,

they were entitled to a

refund of the proportion of that amount "commensurate with that
part (if any) of the [s]ervices undertaken to [SHLD's] satisfaction
(acting reasonably)."
have

alleged

unsatisfactory.

that

(Final Contract,
Tier

Hall

(Proposed

~

10.3).

Consulting's

Findings,

~~

The plaintiffs

work

44-48;

product
SAC,

~

was
248).

Therefore,

they are entitled to a refund of the entire amount.

See,

House of Diamonds v.

e.g.,

Borgioni,

LLC,

737 F.

Supp.

2d

I express no opinion as to whether the other requirements
of the plaintiffs' conversion claim, such as the breach of a legal
duty independent of the contract, see, e.g., Carvel Corp. v.
Noonan, 350 F.3d 6, 16-17 (2d Cir. 2003), are met.
Cf. SHLD, 2016
WL 659109, at *9 (indicating that conversion claim was duplicative
of breach of contract claim, but that plaintiffs could plead it in
the alternative to breach of contract claim because liability under
contract was disputed) .
14
5

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 15 of 22

162, 172 (S.D.N.Y. 2010)

(noting that contract damages should put

plaintiff in same economic position as if defendant had performed).
However, they have already collected $65,000 from a settlement of
claims against Independent Services Group,
(Proposed Findings,

Sf 67) .

Ltd.,

and Tier Hall.

The amount of damages is therefore

$265,000.
2.

Prejudgment Interest

"In

a

diversity

prejudgment interest."

case,

state

law

governs

the

award

of

Schipani v. McLeod, 541 F.3d 158, 165 (2d

Cir. 2008).

Under New York law, prejudgment interest for breach

of

is

contract

measured

at

9%

per

year

from

the

ascertainable date that the cause of action existed."

§§ 500l(b),
March 11,

5004.
2015,

"earliest
N.Y. CPLR

The plaintiffs seek prejudgment interest from
the date the Final Contract was terminated and

they demanded return of the money.

(Proposed Finding, Sf 85).

As

interest accrues at a rate of $65.34 per day (i.e. 9% of $265,000
divided by 365), as of the date of this Report and Recommendation,
the plaintiffs are entitled to interest in the amount of [$49,005
as of March 30, 2017].
3.

Joint and Several Liability

The plaintiffs contend that each of the Defaulting Defendants
is jointly and severally liable for the damages award.
Findings,

Sf 72).

(Proposed

A preliminary question is whether Mr. Hall and
15

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 16 of 22

Mr. Shah can be held personally liable for the breach of the Final
Contract.

The

plaintiffs

assert

that

personal

liability

is

appropriate here because Mr. Hall and Mr. Shah (1) both signed the
contract,

( 2)

negotiated the contract,

( 3)

were to perform the

services for which the plaintiffs contracted,

( 4)

were the sole

points of contact during the period the contract was in force,
"interchangeably used different

companies

(5)

which they owned and

controlled to interact with [the] plaintiffs," and (6) controlled
both Tier Hall Consulting,

the contracting party,

the entity used during negotiations.

and Tier Hall,

(Proposed Findings,

~

73).

Pursuant to New York law, "an agent who signs an agreement on
behalf of a disclosed principal will not be individually bound to
the terms of the agreement

'unless there is clear and explicit

evidence of the agent's intention to substitute or superadd his
personal liability for,

or to,

that of his principal.'"

Cement

and Concrete Workers District Council Welfare Fund, Pension Fund,
Legal Services Fund and Annuity Fund v. Lollo, 35 F.3d 29, 35 (2d
Cir.

1994)

(quoting Lerner v.

Wokers Union,

938 F.2d 2,

5

Amalgamated Clothing and Textile

(2d Cir.

1991)).

In analyzing this

issue, courts consider
various iterations of the following factors: ( 1) the
length [in pages] of the contract; (2) the placement of
the liability clause [personally binding the signatory
to the terms of the contract]; (3) the appearance of the
signatory's name in the agreement itself; (4) the nature
16

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 17 of 22

of the negotiation that surrounded the contract; and (5)
the signatory's role in the company.
Raymond Weil, S.A. v. Theron, 585 F. Supp. 2d 473,

482

(S.D.N.Y.

2008) .
As the second factor indicates, and as the cases confirm, a
contract

generally must include a provision assigning personal

liability to the individual signatory for a court to impute such
liability to that individual.

See,

e.g.,

(citing "provision unequivocally fix[ing]
the signatory"); USHA Holdings, LLC v.
Ltd.,

No.

(E.D.N.Y.

12

CV

Sept.

3492,
11,

clearly identifies

2015

Lollo,

35 F.3d at 35

personal liability on

Franchise India Holdings,

Dist.

LEXIS

("[T]he

2015)

U.S.

133644,

at

*33

first

page of the Agreement

[the individual defendant and signatory] as a

party to the Agreement."); Raymond Weil,

585 F. Supp.

2d at 483

(citing provision stating that agreement "shall bind and inure to
the benefit of [the individual defendant and signatory]"); Porter
v.

Property Damage Control Group,

Inc.,

2907403, at *3 (E.D.N.Y. Sept. 28, 2007)
sentence identifies

No.

03 CV 5972,

2007 WL

("[T]he contract's first

[the individual defendant and signatory]

as

among the parties it binds .

."); Paribas Properties, Inc. v.

Benson,

536 N.Y.S.2d 1007,

146 A.D.2d 522,

Dep' t 1989)
joint

and

524-26,

1008-10

(1st

(identifying provision making contractual obligations
several

among

individual
17

signatories

and

corporate

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 18 of 22

entity) .

Indeed,

the

first

factor

--

the

page-length of the

contract -- matters only insofar as the length makes it more or
less

probable

that

the

individual

signatory was

provision imposing personal liability.

aware

of

the

See, e.g., Lollo, 35 F.3d

at 35

(finding personal liability for one individual signatory

where

provision

signature

line,

fixing
and

liability

rejecting

appeared

personal

immediately

liability

individuals where provision allegedly fixing

above

for

other

liability on them

appeared on "page 34 of a 55-page contract"); USHA Holdings, 2015
U.S.

Dist.

LEXIS

appeared on

133644,

first

page

at

*32-33

of agreement

(noting provision at

issue

of "only fifteen pages") ;

Raymond Weil, 585 F. Supp. 2d at 483 (provision at issue appeared
immediately above signature block); Porter, 2007 WL 2907403, at *3
("[T]he contract is only eleven pages long, and few pages separate
the page identifying
the

page

on

which

[the individual signatory]
his

signature

appears

as a party from
. ") ;

Paribas

Properties, 146 A.D.2d at 525-26, 536 N.Y.S.2d at 1009 ("The letter
agreement . . . is only three pages long and the critical paragraph
appears distinctly above the signature.").

Likewise, the nature

of the negotiation is relevant because it sheds light on whether
the "liability clause" was bargained for.

See, e.g.,

Lollo,

35

F.3d at 35 (noting that "the provision was expressly bargained for
and reached after much negotiation"); Porter, 2007 WL 2907403, at
18

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 19 of 22

*3

("[The individual signatory]

participated in negotiating the

contract, and presumably had an opportunity to insist that he not
be identified as a party.");
525,

536

N.Y.S.2d

at

1009

Paribas Properties,
(noting

that

146 A.D.2d at

individual

signatory

negotiated contract and "had [he]

not wished to undertake [a

personal] obligation, [his] name[]

could have been deleted") .

Here,

the plaintiffs do not claim that the Final Contract

includes a provision making Mr. Hall or Mr. Shah personally liable.
Indeed,

the

agreement

throughout

denominates

the

"Consultant,"

identified as "Tier Hall Consultancy, Limited," as the party to be
bound.
6.1-6.3,

(Final Contract,
7.1-7.3,

Furthermore,

<[<[

8.1-8.2,

2,

3.1-3.6,

10.1,

3.8-3.9,

12.1-12.2

&

4.1-4.2,
Schedule

5.2,
1).

SHLD expressly disavows that it has any obligations

to the "Consultant's Staff," identified as Mr. Hall and Mr. Shah
(and referred to only three times in the agreement) .
Letter at 1; Final Contract,

<JI<JI

(Manteau

3.7, 12.1 & Schedule 1).

The plaintiffs make much of the fact that the Final Contract
is the only agreement that both Mr. Hall and Mr. Shah signed, and
that Mr. Hall's signature identifies him only as "partner" with no
corporate

title,

while

Mr.

Shah's

signature

identifies

him as

"director" but includes no reference to Tier Hall Consulting in
the signature block itself.

(Proposed Findings,

<[

73).

This,

they argue, establishes that Mr. Hall and Mr. Shah intended to be
19

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 20 of 22

"personally

committed

to

perform under

the

contract,"

because

otherwise "there would be no purpose in both of them signing the
contract and in [Mr.] Hall self-identifying as a 'partner' rather
than with a corporate title."

(Proposed Findings,

~

73).

While

this could be interpreted as some evidence that each intended to
be personally bound, it does not constitute the "clear and explicit
evidence," Lollo,
Lerner,

35 F.3d at 35,

938 F. 2d at 5

that is required.

See,

e.g. ,

(noting that "New York courts have found

individual liability in rare cases" and citing the "overwhelming
evidence" presented in Paribas Properties)
D.

Costs

The plaintiffs claim costs in the amount of $710 -- $400 for
the filing fee and $310 for service.
and reasonable.
LLC,

No.

2010),

09 CIV.
report

These amounts are recoverable

See, e.g., Conceria Vignola SRL v. AXA Holdings,
6684,
and

2010 WL 3377476,

recommendation

at *5

adopted,

(S.D.N.Y. Aug.
2010

WL

3,

3385260

(S.D.N.Y. Aug. 23, 2010).
Conclusion
For the foregoing reasons, I recommend that the plaintiffs be
awarded $265,000 on their breach of contract claim only, as well
as interest in the amount of $65.34 per day from March 11, 2015,
until judgment is entered.

I recommend that neither Mr. Hall nor

Mr. Shah be held personally liable for these amounts.
20

I further

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 21 of 22

recommend an award of costs in the amount of $710.00.
Pursuant to 28 U.S.C.
6(d)

§

636(b)(1)

and Rules 72,

of the Federal Rules of Civil Procedure,

6(a),

and

the parties shall

have fourteen (14) days to file written objections to this Report
and Recommendation.

Such objection shall be filed with the Clerk

of the Court, with extra copies delivered to the Chambers of the
Honorable Louis L. Stanton, Room 2250, and to the Chambers of the
undersigned, Room 1960, 500 Pearl Street, New York, New York 10007.
Failure to file timely objections will preclude appellate review.

Respectfully submitted,

JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE
Dated:

New York, New York
March 30, 2017

Copies transmitted this date to:
Matthew J. Maiorana, Esq.
Queller, Fisher, Washor, Fuchs & Kool LLP
233 Broadway, 18th Floor
New York, NY 10279
(via ECF)
Nicholas Hall
9 St. Clair St.
London
EC3N lLQ
United Kingdom
(via U.S. Mail)

21

Case 1:15-cv-06225-LLS-JCF Document 110 Filed 03/30/17 Page 22 of 22

Amar Shah
9 St. Clair St.
London
EC3N lLQ
United Kingdom
(via U.S. Mail)
Tier Hall Consulting, Ltd.
9 St. Clair St.
London
EC3N lLQ
United Kingdom
(via U.S. Mail)

22