Levine v. F.D.I.C.
| Decision Date | 18 August 1993 |
| Docket Number | D,No. 1628,1628 |
| Parties | Gabriel LEVINE, Plaintiff, Leon J. Greenspan, Appellant. v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for the New Connecticut Bank and Trust Company, N.A.; the Connecticut Bank and Trust Company, N.A.; Advest, Incorporated; and Charles Badain, Defendants, Samuel Messina, Defendant-Appellee. ocket 93-6053. |
| Court | U.S. Court of Appeals — Second Circuit |
Michael E. Greenspan, White Plains, NY (Leon J. Greenspan, Greenspan & Greenspan, White Plains, NY, of counsel), for appellant.
Eric Watt Wiechmann, Hartford, CT (William H. Narwold, David D. Legere, Cummings & Lockwood, Hartford, CT, of counsel), for defendant-appellee.
Before: NEWMAN, Chief Judge, VAN GRAAFEILAND and ALTIMARI, Circuit Judges.
Leon J. Greenspan, attorney for plaintiff Gabriel Levine, appeals from an order of the United States District Court for the District of Connecticut (Daly, J.) approving a magistrate judge's imposition of sanctions totalling $31,652.50 for Greenspan's violation of Fed.R.Civ.P. 11. For the reasons that follow, we affirm.
The instant case involves the alleged wrongful transfer and conversion of 33,000 shares of IBM common stock owned by Levine. The stock, which was held by Advest, Inc., with whom Levine's broker, Charles Badain, was associated, was pledged by Levine to secure a line of credit from Connecticut Bank & Trust Co. ("CBT"). At Levine's written request, allegedly procured by fraud, possession of the securities was transferred to PaineWebber, Inc. when Badain left the employ of Advest. After the 1987 stock market decline, PaineWebber sold the stock, apparently to cover a margin call on Levine's account.
In July 1990, two years after Levine had commenced litigation by suing CBT, Greenspan deposed Badain and also Samuel Messina, who had been one of Badain's supervisors at Advest's Rochester, New York office. In his capacity as a branch manager at the Rochester office, Messina had signed a form agreeing to hold the securities on behalf of CBT. Messina's deposition revealed that he was a native and life-long resident of Rochester, and that he had never conducted business in Connecticut.
Nevertheless, on October 1, 1990, Greenspan filed an amended complaint, which added Messina as a party defendant and alleged in pertinent part that:
5. At all times hereinafter mentioned or material, defendant SAMUEL MESSINA ("MESSINA")') was an employee of ADVEST in Rochester, New York, and as such, in his capacity of branch manager, regularly did and solicited business in Hartford, Connecticut.
6. BADAIN and MESSINA entered into and authorized the agreement between CBT and ADVEST for ADVEST to hold the IBM stock as collateral for the benefit of CBT and LEVINE in Connecticut as hereinafter alleged and wrongfully permitted the stock to be transferred to [PaineWebber]; and thus committed tortious acts outside the State of Connecticut causing injury to a person or property within the state while regularly doing and soliciting business in the state, and deriving substantial revenue from within the state, and are thus subject to the jurisdiction of this Court....
Messina moved to dismiss the complaint against him for lack of personal jurisdiction, Fed.R.Civ.P. 12(b)(2). In opposition to Messina's motion, Greenspan filed his own affidavit containing allegations, the substance of which was that Messina had conspired with Badain to both secure possession of the collateral and wrongfully transfer it to PaineWebber. Although the affidavit stated that Greenspan was "familiar with all of the facts and circumstances pertaining thereto," it contained no factual support for these allegations.
When Messina then subpoenaed Greenspan for deposition, Greenspan withdrew his affidavit and substituted a virtually identical affidavit from Levine, the contents of which were stated to be "upon information and belief based upon the discovery and investigation conducted on my behalf." This affidavit substantially contradicted in many material respects Levine's sworn testimony given at a prior deposition. For example, Levine testified that he didn't know whether Messina was involved in the transfer of his accounts to PaineWebber and he had no facts to indicate that Messina was involved. Levine also said that he had no facts indicating the existence of a conspiracy between Messina and Badain, that he personally had no contact with Messina relative to his account, and that Messina had never visited him in Connecticut.
On May 28, 1991, Magistrate Judge F. Owen Eagan made recommended rulings on three motions pending before him. 136 F.R.D. 544. The first was Messina's motion to dismiss for lack of personal jurisdiction; the second was CBT's motion for partial relief from a stay; the third was Levine's motion to sever his claim against the FDIC from his claims against the other defendants. The Magistrate Judge recommended that the first two motions be granted and that the third be denied. On July 12, 1991, the district court issued a six page "Ruling on Plaintiff's Objections" in which all of plaintiff's objections were overruled and the Magistrate Judge's recommended rulings were "AFFIRMED, ADOPTEDTED and RATIFIED."' This document was listed on the Clerk's docket as follows:
RULING on Pltf's Objections: Accordingly, these objections are overruled as well and the magistrate judge's recommended rulings on these motions are also affirmed adopted and ratified. DALY J., cc counsel. fdp M 7/12/91
No other pertinent document was filed. Specifically, no partial judgment was entered pursuant to Fed.R.Civ.P. 54(b) and 58.
On February 28, 1992, Messina moved for sanctions and attorney's fees under Fed.R.Civ.P. 11, Fed.R.Civ.P. 26(g), Fed.R.Civ.P. 31, 28 U.S.C. Sec. 1927 and the district court's inherent power. On August 19, 1992, Magistrate Judge Eagan recommended that the motion be granted and sanctions imposed, finding:
(1) that the plaintiff's claim that this court could properly assert personal jurisdiction over Messina was not well grounded in fact; (2) that plaintiff's counsel ignored facts revealed through reasonable inquiry, particularly the deposition of Messina and admissions of his own client; and (3) that counsel perpetuated his misconduct through the filing of numerous memoranda well after his errors were revealed to him. In addition, the court finds that plaintiff's counsel caused the plaintiff himself, through his affidavit, to execute a document...
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