Abrams & Wofsy v. Renaissance Inv. Corp., Civ. No. 1:87-cv-1931-WCO

CourtUnited States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Northern District of Georgia
Citation820 F. Supp. 1519
Docket Number1:87-cv-1962-WCO,Civ. No. 1:87-cv-1931-WCO,1:87-cv-2074-WCO and 1:87-cv-2454-WCO.
PartiesABRAMS & WOFSY, et al. v. RENAISSANCE INVESTMENT CORPORATION, et al. Kathy J. PIGNATELLI, et al. v. RENAISSANCE INVESTMENT CORPORATION, et al. Fred A. ACHECAR, et al. v. RENAISSANCE INVESTMENT CORPORATION, et al. Edmund S. PENDLETON, et al. v. RENAISSANCE INVESTMENT CORPORATION, et al.
Decision Date12 March 1993

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Charles David Hailey, Mozley Finlayson & Loggins, Michael Hilliard Schroder, Swift Currie McGhee & Hiers, Marion Smith, II, White Smith Howard & Ajax, Joseph John Burton, Jr., Burton & Anderson, Atlanta, GA, for plaintiffs Abrams & Wofsy, A.H. Adams, Eric Ansel, Halbert Ashworth, Richard Barlow, Betty Black, Allen Brill, Thomas F. Carroll, John R. Clarke, Calvin Corvaia, Fred M. Councill, Douglas Cummins, R.A. David, Robert A. Ericsson, Marshall Feaster, Robert H. Fier, David French, Victor Glazer, William H. Graf, Ruth Graf, Alvin T. Greenspan, Earl Hadlow, Carl Herndon, Robert S. Howard, J. Michael Hughes, Thomas H. Jacobsen, Thomas Judge, Walter Kaminski, Mary Beth King, Mitchell Leibovitz, Mark Oden Heimer, Thomas Petway, Pat Price, Billy Jo Raber, Charles E. Rice, Ronald Richey, William Saye, Michael Shigezane, Yakov Skarinsky, Wad A. Smith, Warren Soffian, Richard Steinberg, Benjamin Strauss, Parvesh Swani, John W. Turner, David C. Vaughter, Ronald Walker, Rick Wilber, Robert G. Wilder, J. Roy Wynne and Stanley Ziman, Fred A. Achecar, William M. Allen, Michael B. Arnold, Carolyn M. Cox, Robert W. Cox, John D. Cullen, Michael R. Deluca, John H. Drake, Robert A. Ericsson, Goodman B. Epsy, III, Grant D. Esterling, Marshall Feaster, Jane K. Feaster, Kenneth D. Frazier, William H. Gower, Michael E. Gribble, Anne Love Hall, David E. Handley, John P. Kelsey, Ronald D. Kettlehake, Wyvonne Kettlehake, Abraham Koch, Kenneth R.L. Lassiter, R. Thomas Lentz, Wolfgane E. Loescher, Teri A. Ohliger, John H. Mantas, David D. Mooberry, Charles D. Muvdi, Diane T. Bonaccorsi, Harriet M. Pastor, Raymond Pastor, David L. Pollack, Roslyn G. Pollack, Walter F. Putnam, Charles F. Richards, Ronald J. Ritchie, Jean Roberts, Larry J. Roth, Diane Roth, John W. Salisbury, Henry S. Sawin, Jr., William B. Saye, James W. Scott, Meyer Silver, Cynthia J. Silver, Donald M. Skinner, Barbara A. Skinner, Mark A. Suwyn, Perry L. Swanson, Barbara L. Swanson, Thomas Sweeney, Margaret T. Sweeney, Raju M. Vanapalli, E. Norman Veasey, Robert G. Wilder, Rea Bros., Inc., Rea Inv. Partners, Barry Berger and Jane Berger.

Marion Smith, II, White, Smith, Howard & Ajax, Joseph John Burton, Jr., Burton & Anderson, Atlanta, GA, for plaintiffs Smith W. Robertson, Goodman B. Espy, III, M.D. and Billy J. Raber, trustee.

Oliver Reid Dobbs, III, pro se.

Stephanie J. Chisholm, pro se.

Frank J. Beltran, Beltran & Coffey, Atlanta, GA, for defendant John T. Breedlove, MAI.

David Elliot Spalten, Lex Allen Watson, II, Merritt & Tenney, Atlanta, GA, for defendants Skillman E. Siewert, Skillman Siewert, Inc., a GA Corp.

Skillman E. Siewert, pro se.

Marion Smith, II, White Smith Howard & Ajax, Joseph John Burton, Jr., Burton & Anderson, Atlanta, GA, for Billy J. Raber, trustee.

Richard Riley Hays, Jay D. Bennett, Alston & Bird, Atlanta, GA, for Ake-Atlanta Venture No. 5, objector.

John A. Chandler, John L. North, Sutherland Asbill & Brennan, Atlanta, GA, Anthony J. Constantini, phv, KPMG Peat Marwick, New York City, for defendant Peat Marwick Main & Co.

Kirby Glenn Atkinson, Boyce Ekonomou & Atkinson, Atlanta, GA, Jack Jeffrey Helms, Jr., Helms & Helms, Homerville, GA, for cross-defendant Stephanie J. Chisholm.

Richard Byron Attridge, Richard Anthony Schneider, King & Spalding, Atlanta, GA, for Reed Smith Shaw & McClay, objector.

John David Jones, Greene Buckley Jones & McQueen, Carla Anne Ford, Office of U.S. Atty., N.D. Ga., John Douglas Hartness, Jr., F.D.I.C., Legal Div., Atlanta, GA, for plaintiffs Kathy J. Pignatelli, James M. Barr, David E. Boone, Frances Briamonte, Joseph W. Brown, Vickie A. Brown, John P. Clifford, M.I. Curtis, James H. Day, Edward I. Dobin, Paul F. Engstrom, Leonard H. Finkelstein, Gerard R. Frey, John D. Gavin, Carl A. Goldenberg, Edgar R. Goldenberg, Dennis M. Gray, Mary Jo Gray, John L. Gray, Judy E. Gray, Jose G. Guzman, Lourdes L. Guzman, James P. Halstead, James M. Hamlett, III, Edmund F. Hecklau, Eleanor S. Hecklau, William F. Heefner, Fred Lane, Mayling Y. Lane, Norman Levine, Helen O. Lieberman, Allan J. Nadeau, Judith A. Nadeau, Dewaine L. Osman, Nancy Ann Osman, Paul A. Parris, Edward A. Patrone, William R. Peterson, Jr., Lee S. Potter, Willard Potter, Robert W. Prichard, Vijaykumar M. Rao, Robert Scherr, Ann Scherr, William G. Smith, A. Reginald Tarleton, John W. Tarleton, Robert Turrentine, Jan M. Weinberg, Charles S. Wiworski, John S. Zettick and Elaine P. Zettick.

Margaret L. Milroy, Greene Buckley Jones & McQueen, Atlanta, GA, for plaintiff Eileen Gavin.

Jonathan Roger Levine, Levine & D'Alessio, Atlanta, GA, for defendant Charles M. Shirley.

Charles M. Shirley, pro se.

John J. Almond, C.B. Rogers, Rogers & Hardin, Atlanta, GA, John T. Coyne, phv, Jordan Coyne Savits & Lopata, Washington, DC, Thomas J. Hughes, Jr., Office of Thomas J. Hughes, Jr., Marietta, GA, for defendant Finley, Kumble, Wagner, Heine, Underberg, Manley & Casey, a partnership.

John J. Almond, C.B. Rogers, Rogers & Hardin, Atlanta, GA, for Philip Schwartz.

Emmet J. Bondurant, II, Jeffrey O. Bramlett, George W. Fryhofer, III, Bondurant Mixson & Elmore, John L. North, Sutherland Asbill & Brennan, Atlanta, GA, for defendants Hurt, Richardson, Garner, Todd & Cadenhead, a GA Partnership, E. Lewis Hansen, Michael A. Hoover.

John A. Chandler, John L. North, Sutherland, Asbill & Brennan, Atlanta, GA, for defendant Jerry Humphries.

Brian Nathan Smiley, Page & Bacek, William L. Bost, Jr., Greenfield Bost & Kliros, Atlanta, GA, for defendant Robert Bretschneider.

Robert Bretschneider, pro se.

Dobbs Industries Const. Co., pro se.

Stephen J. Anderson, William E. Sumner, Sumner & Hewes, Atlanta, GA, for plaintiffs Edmund S. Pendleton and Diane M. Pendleton.

ORDER

O'KELLEY, Chief Judge.

From January 21, 1992 to May 7, 1992, this court conducted the nonjury trial of the consolidated Abrams & Wofsy, Pignatelli, Achecar, and Pendleton cases ("the Renaissance cases"). At trial, the plaintiffs and defendants KPMG Peat Marwick and Jerry F. Humphries (collectively "Peat Marwick") presented evidence relevant to the Abrams & Wofsy, Pignatelli, and Pendleton plaintiffs' claims of fraud and negligence brought pursuant to (1) section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5 (hereinafter "section 10(b)"); (2) the Georgia Securities Act; (3) common law fraud under Georgia law; and (4) the Georgia law of professional negligence. The court now sets forth its findings of fact and conclusions of law relating to these claims. Fed.R.Civ.P. 52(a). In doing so, the court makes the following conclusions: (1) assuming that plaintiffs' section 10(b) claims against Peat Marwick are not time-barred,1 these claims fail because the evidence does not show that Peat Marwick possessed the requisite scienter; (2) plaintiffs' claims under the Georgia Securities Act fail because Peat Marwick did not act as a seller under the applicable version of section 10-5-12(a)(2) and no private cause of action is available under the applicable version of section 10-5-12(d); (3) plaintiffs' common law fraud claims fail because the evidence does not show that Peat Marwick possessed the requisite scienter; (4) the Pignatelli and Pendleton plaintiffs' federal and Georgia RICO claims fail because the requirement of two or more predicate acts has not been met; and (5) plaintiffs' claims of professional negligence fail because the evidence does not show that Peat Marwick breached any duty owed to plaintiffs.

I. The Rise and Fall of Renaissance Investment Corporation

The evidence at trial showed that Renaissance Investment Corporation ("Renaissance") was a company masterminded and run by Oliver Reid Dobbs, III. With the help of his father's ample financial resources and his Renaissance staff, including such key figures as Stephanie Chisholm (vice-president of administration), Charles Shirley (vice-president of finance), and Tom Nelson (vice-president of construction), Dobbs acquired several residential properties in Atlanta, Georgia for the purpose of renovating them and selling them to investors. Judging from his educational background and his activities at Renaissance, as shown at trial, Dobbs appears to have been a relatively sophisticated businessman. He attended a well-regarded private high school in Atlanta, obtained bachelor's and master's degrees in business, and received the benefit of one year of law school. However, unfortunately for all those involved in the Renaissance litigation, he devoted his business acumen to pursuing any necessary means, including making fraudulent misrepresentations and involving other people in his scheme, to accomplish his burgeoning ambitions to develop and renovate these historic Atlanta properties.

As the evidence revealed, Dobbs was quite adept at dealing with bankers, accountants, and lawyers who assisted him in structuring the renovation projects to secure debt and equity financing through bank loans and, more significantly, through the "syndication" process. Each syndication involved (1) forming a limited partnership for a real estate project, (2) preparing an offering circular, known as a private placement memorandum ("PPM"), to induce investment in the project, (3) circulating the PPM to a limited number of prospective investors, who were generally quite wealthy and were interested in investments with significant tax benefits, and (4) admitting...

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    ...the little case law that does exist points to a conclusion that there is no such cause of action. See Abrams & Wofsy v. Renaissance Inv. Corp., 820 F. Supp. 1519, 1529 (N.D. Ga. 1993) (interpreting previous iteration of this statute and holding that it did not provide for a private cause of ...
  • Patel v. Patel
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    ...(B) does not require a showing of fraud under Georgia law. Additionally, the plaintiffs rely on Abrams & Wofsy v. Renaissance Investment Corp., 820 F.Supp. 1519 (N.D.Ga.1993) for the assertion that this court has recognized that O.C.G.A. § 10–5–12(a)(2)(B) tracks the language of the non-fra......
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1 books & journal articles
  • Appendix E Judicial Decisions Cited in the Text
    • United States
    • American Bankruptcy Institute Developing the Evidence
    • Invalid date
    ...Inc. v. Schultz, 535 N.E.2d 933 (Ill. App. Ct. 1989) FINANCIAL FORECASTS AND PROJECTIONS • Abrams & Wofsy v. Renaissance Inv. Corp., 820 F. Supp. 1519 (N.D. Ga. 1993) • Agranoff v. Miller, 791 A.2d 880 (Del. Ch. 2011) • Henke v. Trilithic Inc., 2005 Del. Ch. LEXIS 170 (Del. Ch. Oct. 28, 200......

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