Sea Carriers Corp. v. Empire Programs, Inc., 04 CIV. 7395(RWS).

• Decision Date: 15 May 2007
• Docket Number: No. 04 CIV. 7395(RWS).,04 CIV. 7395(RWS).
• Parties: SEA CARRIERS CORPORATION, Plaintiff, v. EMPIRE PROGRAMS INC. and Robert A. Martin, Defendants.
• Court: U.S. District Court — Southern District of New York

488 F.Supp.2d 375

SEA CARRIERS CORPORATION, Plaintiff, v. EMPIRE PROGRAMS INC. and Robert A. Martin, Defendants.

No. 04 CIV. 7395(RWS).

United States District Court, S.D. New York.

May 15, 2007.

Becker Meisel LLC, Eisenhower Plaza II, Livingston, NJ, By Joseph G. Harraka, Jr., for Plaintiff.

Law Offices of Allan H. Carlin, New York City, By Allan H. Carlin, for Defendants.

OPINION

SWEET, District Judge.

Defendants Empire Programs, Inc. ("Empire") and Robert A. Martin ("Martin") (referred to collectively as the "Defendants") have moved pursuant to Rule 56, Fed.R.Civ.P., for summary judgment dismissing the Amended Complaint filed by Plaintiff Sea Carriers Corporation ("Sea Carriers" or "Plaintiff') in its entirety. For the reasons set forth below, the motion for summary judgment is granted in part and denied in part.

The Parties

Sea Carriers, a Delaware corporation, was founded by Per G. Barre ("Barre"). Sea Carriers has its principal place of business in Connecticut.

Empire was incorporated in New Jersey in 2002. Empire's principal place of business is located in New Jersey.

Martin, a citizen of the state of New. Jersey, is owner and president of Empire. Martin has also conducted business as Empire Programs, Inc. ("Empire DE"), an entity incorporated in Delaware in 1976 but dissolved prior to commencement of this action or of the relationship among Sea Carriers, Barre, Martin, and Empire and/or Empire DE.

Prior Proceedings

On September 16, 2004, Sea Carriers filed a complaint against Empire, alleging six causes of action: (1) breach of contract under an alleged joint venture agreement; (2) breach of an implied covenant of good faith and fair dealing; (3) breach of fiduciary duty; (4) declaratory relief entitling Sea Carriers to participate in any recoveries by Empire NJ; (5) imposition of a constructive trust; and (6) an accounting. The gravamen of the complaint is Sea Carriers' effort to establish an entitlement to share in any recoveries by Empire arising out of enforcement actions against New York Stock Exchange specialist firms that were found to have engaged in trading abuses from at least 1999 through 2003 — specifically, the firm of Spear, Leeds & Kellogg Specialists LLC.

On January 19, 2005, Sea Carriers filed a motion for expedited discovery and trial pursuant to Rule 26(d), Fed.R.Civ.P., and 28 U.S.C. § 1657. Sea Carriers simultaneously moved for a preliminary injunction pursuant to Rule 57, Fed.R.Civ.P., to enjoin the Administrator of a "Fair Fund" established under Section 308(a) of the Sarbanes-Oxley Act of 2002, 15 U.S.C. § 7246, from distributing any funds to Empire and to enjoin Empire from accepting any such funds until Sea Carriers' right to share in such funds had been adjudicated. While the motion for expedited discovery for all parties was approved by an order of the Court on February 18, 2005, Sea Carriers' motion for a preliminary injunction was denied based on the absence of an immediate need for relief, but with leave to renew.

On November 4, 2005, Sea Carriers filed a motion for an order pursuant to Rule 11, Fed.R.Civ.P., for imposition of sanctions against Empire. The motion was denied by an order of the Court filed on September 27, 2006, with leave granted to renew the motion. In addition, on November 17, 2005, Sea Carriers filed a motion for partial summary judgment pursuant to Rule 56, Fed.R.Civ.P., which was denied on April 28, 2006. Sea Carriers Corp. v. Empire Programs, Inc., No. 04 Civ. 7395(RWS), 2006 WL 1148684 (S.D.N.Y. Apr.28, 2006) (the "April 2006 Opinion").

By an order to show cause filed on March 23, 2006, Sea Carriers again moved for a preliminary injunction order to enjoin the Fair Fund Administrator from distributing any funds to the Defendants and to enjoin Empire and Martin from accepting any such funds until Sea Carriers' right to share in such funds had been adjudicated. The hearing was adjourned to April 26, 2006, on which date the motion was marked fully submitted. The motion was denied in an opinion filed on November 20, 2006. Sea Carriers Corp. v. Empire Programs, Inc., No. 04 Civ. 7395(RWS), 2006 WL 3354139 (S.D.N.Y. Nov.20, 2006).

The Amended Complaint was filed on May 16, 2006, which, inter alia, added Martin as a defendant in the pending action. Permission for filing the Amended Complaint was granted in an order dated April 11, 2006.

The instant motion for summary judgment was filed by the Defendants on November 17, 2006, and marked fully submitted on January 25, 2007.

The Facts

The facts have been set forth in the parties' Local Rule 56.1 Statements and are in significant conflict.

The relationship between the parties began in 1998, when discussions were held between Martin, holding himself out as president of Empire Programs, Inc., and Barre, the principal of Sea Carriers. An agreement was reached which governed the relationship between Sea Carriers and Empire Programs, Inc. from the fall of 1998 through December 2002 when the relationship is alleged to have been terminated' by the consent of the parties. (Am. Compl. ¶ 14).

In 1998, Martin opened an account at Spear, Leeds & Kellogg ("the SLK Account") under the name Empire Programs, Inc. Trading of the account was conducted using Sea Carriers' proprietary investment trading strategies. (Am.Compl. ¶ 11.)

According to Sea Carriers, the arrangement was a joint venture entitling Sea Carriers to fifty percent of any moneys received by Empire Programs, Inc. as a consequence of the activity in the SLK Account. (Am.Compl. ¶ 12.) According to Empire, under the arrangement, Barre was a trading advisor to Empire Programs, Inc. and was to receive fifty percent of the profits, arising out of the SLK Account.

The contribution of each party to the enterprise, the intent of the parties in entering into the arrangement, control over the arrangement, and the allocation of losses, are all matters in dispute.

Discussion

1. The Summary Judgment Standard

Summary judgment is granted only if there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); SCS Commc'ns, Inc. v. Herrick Co., Inc., 360 F.3d 329, 338 (2d Cir.2004); see generally 11 James Wm. Moore, et al., Moore's Federal Practice ¶ 56.11 (3d ed. 1997 & Supp.2004). The court will not try issues of fact on a motion for summary judgment, but, rather, will determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate where the moving party has shown that "little or no evidence may be found in support of the nonmoving party's case. When no rational jury could find in favor of the nonmoving party because the evidence to support its case is so slight, there is no genuine issue of material fact and a grant of summary judgment is proper." Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223-24 (2d Cir.1994) (internal citations omitted). "The party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists and that the undisputed facts establish her right to judgment as a matter of law." Rodriguez v. City of New York, 72 F.3d 1051, 1060-61 (2d Cir.1995).

A material fact is one that would "affect the outcome of the suit under the governing law," and a dispute about a genuine issue of material fact occurs if the evidence is such that "a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505; see also R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 57 (2d Cir.1997). Thus, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. 2505; see also Quarles v. Gen. Motors Corp., 758 F.2d 839, 840 (2d Cir.1985) ("[T]he mere existence of factual issues — where those issues are not material to the claims before the court — will not suffice to defeat a motion for summary judgment.").

In determining whether a genuine issue of material fact exists, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Gibbs-Alfano v. Burton, 281 F.3d 12, 18 (2d Cir.2002). Thus, "[s]ummary judgment may be granted if, upon reviewing the evidence in the light most favorable to the nonmovant, the court determines that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law." Richardson v. Selsky, 5 F.3d 616, 621 (2d Cir.1993). The nonmovant cannot escape summary judgment, however, "merely by vaguely asserting the existence of some unspecified disputed material facts, or defeat the motion through mere speculation or conjecture," W. World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir.1990) (internal quotations and citations omitted); accord Giordano v. City of New York, 274 F.3d 740, 749-50 (2d Cir.2001), particularly where such speculation is unsubstantiated. See Byrnie v. Town of Cromwell, Bd. of Edam, 243 F.3d 93, 101 (2d Cir.2001); Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir.1998). In other words, the non-movant must invoke more than just "metaphysical doubt as to the material facts." Matsushita Elec. Indus., 475 U.S. at 586, 106 S.Ct. 1348. In order to defeat a motion for summary judgment, the non-moving party must offer sufficient evidence to enable a reasonable jury to return a verdict in its favor. See Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Byrnie, 243 F.3d at 101; Scotto, 143 F.3d at 114.

2. Summary Judgment Is Inappropriate as to...