English v. Lattanzi

• Decision Date: 26 August 2015
• Docket Number: 12-CV-4179(JS)(AYS)
• Parties: ROBERT ENGLISH, Plaintiff, v. LARRY LATTANZI, as personal representative of the Estate of BARBARA A. LATTANZI, Defendant.
• Court: U.S. District Court — Eastern District of New York

ROBERT ENGLISH, Plaintiff, v. LARRY LATTANZI, as personal representative of the Estate ofBARBARA A. LATTANZI, Defendant.

12-CV-4179(JS)(AYS)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

August 26, 2015

MEMORANDUM & ORDER

APPEARANCES

For Plaintiff:

Thomas P. Mohen, Esq.

Jonathan Mark Cader, Esq.

Jonathan Temchin, Esq.

Mark E. Spund, Esq.

Davidoff Hutcher & Citron

200 Garden City Plaza, Suite 315

Garden City, NY 11530

For Defendant:

Kenneth J. DeMoura, Esq.

DeMoura Smith LLP

One International Place, 14th Floor

Boston, MA 02110

SEYBERT, District Judge:

On August 21, 2012, Plaintiff Robert English ("Plaintiff"), a retired investor, brought this action for fraud, conversion, and breach of fiduciary duty. Plaintiff claims his longtime employee, Barbara Lattanzi ("Lattanzi"), stole money from him for years. After Lattanzi's death on March 3, 2014,¹ Larry Lattanzi ("Defendant"), was substituted as the Defendant in his wife's place. Defendant maintains that Lattanzi received the moneyas compensation for her services. The parties have filed cross-motions for summary judgment. (Docket Entries 57, 58.) For the foregoing reasons, both motions are DENIED.

BACKGROUND²

Plaintiff was formerly a partner at the investment management firm of Neuberger Berman. (Def.'s 56.1 Stmt., Docket Entry 27-1, ¶ 1.) In 1993, he formed Jasper's Fund, Inc. ("Jaspers Inc." or "the Company") to manage certain investment funds he created ("the Jasper Funds"). (English Decl., Docket Entry 57-1, ¶ 2.) At all relevant times, Plaintiff was that sole shareholder and sole director of Jaspers Inc. (Def.'s 56.1 Stmt. ¶¶ 12, 13, 30.)

Lattanzi³ was introduced to Plaintiff by Larry Zicklin, the Managing Partner of Neuberger Berman. (Def.'s 56.1 Stmt. ¶ 3.) Plaintiff initially hired her as a consultant in 1993 to assist with the formation of the Jasper Funds--making introductions to auditors and law firms, and helping with "whatever else was necessary." (Def.'s 56.1 Stmt. ¶¶ 5, 7; English Dep., Docket Entry 58-4, at 31:10-13; English Decl. ¶ 4.) Six months to a year later,Plaintiff hired Lattanzi as a part-time employee of Jaspers Inc.⁴ (English Decl. ¶ 5.) Although no written agreement memorialized the terms of Lattanzi's employment, it was understood that "anything that was going to be done or needed to be done [at Jaspers Inc.], [Lattanzi] was going to handle." (Lattanzi Dep., Docket Entry 38-6 at 72:5-18.) During her employment, Lattanzi's responsibilities expanded to include placing orders for securities with traders, preparing quarterly performance letters for investors, and evaluating brokerage firms to handle the Company's accounts. (Def.'s 56.1 Stmt. ¶¶ 23-25.) Lattanzi estimated that the Jasper Funds were worth approximately ten million dollars during the early years of their operation, but they appreciated to a high point of almost $100 million. (Lattanzi Dep. 94:5-22, 95:16-24.)

On January 2, 1998, Plaintiff appointed Lattanzi as the Secretary and Treasurer of both Jaspers Inc. and the various Jasper Funds. (Def.'s 56.1 Stmt. ¶¶ 27-29.) "As Secretary and Treasurer, Lattanzi had access to all of Jaspers, Inc.'s accounts and authority to transfer funds" between them. (English Decl. ¶ 7.) On May 19, 2008 Plaintiff also consented to a banking resolution that allowed Lattanzi to endorse checks and make withdrawals ortransfers on behalf of Jasper Inc. (Def.'s 56.1 Stmt. ¶ 30.) Over the years, Plaintiff developed great trust in Lattanzi and her duties expanded to include personal administrative services for Plaintiff's family. (English Decl. ¶ 6.) Lattanzi testified that she began "working for [Plaintiff] on a personal basis" and that her work for Jaspers Inc. got "kind of mixed together" with her work directly for Plaintiff. (Lattanzi Dep. 105:3-9.) Lattanzi would make travel arrangements for Plaintiff's family, was authorized to wire funds from Plaintiff's personal investment account to his personal bank account to meet expenses, and worked with Plaintiff's accountant to prepare his tax returns. (English Decl. ¶ 6.) It is unclear, however, whether Lattanzi had authority to transfer monies between Plaintiff's personal account and Jaspers Inc.'s accounts. Plaintiff claims that Lattanzi was authorized to transfer funds from Plaintiff's personal brokerage account at Chase Bank in the amount of $50,000 per month, but was not authorized to transfer funds from Plaintiff's personal account to Jaspers Inc.'s account. (Pl.'s 56.1 Counterstmt. ¶ 52; English Dep. 111:7-10.) But Lattanzi testified during her deposition that she was authorized to "transfer money from [Plaintiff's] personal account into the Jaspers entities." (Lattanzi Dep. 249:3-6.)

Lattanzi and Plaintiff both agreed during discovery that when Lattanzi was hired, she was paid approximately $3000 a month,or $36,000 annually.⁵ (English Dep. 43:12-18, 34:1-16.) Plaintiff claims that, in addition to her annual $36,000 base salary, Lattanzi was paid a one-time bonus of $200,000 in the year 2000, "due to the extremely favorable performance returns by the Jaspers Funds in that year."⁶ (English Dep. 41:24-42:24; English Decl. ¶ 10.) Plaintiff claims that "[a]t no other time was Lattanzi paid any bonus, loaned any money, given any salary increase, or granted any advance on her salary from Jaspers, Inc." (English Decl. ¶ 11.) Lattanzi testified, however, that her annual salary increased dramatically during her time as an employee of Jaspers Inc. Although she did not "remember the exact numbers," or when her compensation changed, she testified that her compensation increased to over $200,000 annually, and later reached a peak of $300,000 to $350,000 annually. Lattanzi also testified that she was paid bonuses, given salary advances, and in "one year [Plaintiff] paid [her] half a million dollars" as a bonus. (Lattanzi Dep. 127:16-128:15, 129:1-4, 132:7-12.) According toLattanzi, her compensation varied based upon the "[p]erformance of the fund," among other factors.⁷ (Lattanzi Dep. 128:22-129:4.)

In September 2011, Plaintiff was contacted by agents from the U.S. Treasury Department. The agents advised Plaintiff that they were investigating Lattanzi because "their records showed she [ ] received substantial payments from Jaspers Inc., and [ ] did not pay taxes on those monies." (English Decl. ¶ 13.) After reviewing the records, Plaintiff concluded that, from 2003 to 2011, Lattanzi made unauthorized transfers totaling $4,077,288.21 from his personal investment account into Jaspers Inc.'s account. (English Decl. ¶ 16, Ex. C, D.) Plaintiff claims that Lattanzi paid herself $2,764,581.21 in "salary" and $1,171,645.92 in "salary advances." (English Decl. ¶ 16.) Before he was contacted by the U.S. Treasury agents, Plaintiff believed Lattanzi was a part-time assistant who was paid $36,000 a year. (English Decl. ¶ 17.)

From 2003 to 2011, Lattanzi retained bookkeepers and accountants on behalf of Jaspers Inc. to create financial statements and ledgers detailing income and expenses for the Company. (Def.'s 56.1 Stmt. ¶ 59.) The Company's financial statements, ledgers, and annual tax returns disclosed the paymentsat issue made by Jaspers Inc. to Lattanzi. (Def.'s 56.1 Stmt. ¶¶ 60, 68; Pl's 56.1 Countersmt. ¶ 68.) In addition, Plaintiff was sent notices whenever funds were transferred out of his personal account. (Def.'s 56.1 Stmt. ¶ 55.) However, Plaintiff never reviewed the ledgers or financial statements, and it is uncertain whether he ever reviewed the Company's tax returns. (Pl's 56.1 Countersmt. ¶ 67.)

In 2013, following discovery in this action, the parties both filed summary judgment motions. (Docket Entries 35, 38.) On March 3, 2014, Lattanzi passed away and Plaintiff filed a motion to substitute Larry Lattanzi as the defendant in the capacity as Lattanzi's personal representative. (See Mot. to Substitute, Docket Entry 49.) On February 12, 2015, the Court granted Plaintiff's motion and allowed the parties to re-file their summary judgment motions. English v. Murphy-Lattanzi, No. 12-CV-4179, 2015 WL 630248, at *6 (E.D.N.Y. Feb. 12, 2015). Both parties again moved for summary judgment and their motions are pending before the Court. (Docket Entry 57, 58.) Plaintiff argues that the evidence establishes, as a matter of law, that Lattanzi breached her fiduciary duty to Plaintiff and converted his assets. (Pl.'s Br., Docket Entry 57-22, at 1-3.) Defendant claims that factual disputes exist; that Plaintiff lacks standing to bring his claims; that all of Plaintiff's claims are barred by a Massachusettssurvival statute;⁸ and that English's allegations are barred by the applicable statutes of limitations. (Def.'s Opp. Br., Docket Entry 60, at 14.; Def.'s Br., Docket Entry 58-1, at 10-12.)

DISCUSSION

The Court will first address the applicable legal standard on a motion for summary judgment before turning to the parties' arguments.

I. Legal Standard

Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). "In assessing the record to determine whether there is a genuine issue to be tried as to any material fact, the court is required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summaryjudgment is sought." McLee v. Chrysler Corp., 109 F.3d 130, 134 (2d Cir. 1997).

"The burden of showing the absence of any genuine dispute as to a material fact rests on the party seeking summary judgment." Id.; see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970). A genuine factual issue exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. To...