Greenberg v. Ameriprise Fin. Servs., Inc.
| Decision Date | 31 March 2016 |
| Docket Number | 15-cv-3589 (ADS) (AYS) |
| Parties | ERIC HOWARD GREENBERG, Plaintiff, v. AMERIPRISE FINANCIAL SERVICES, INC., RICHARD EVAN LEVINE, and LEVINE & ASSOCIATES, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
APPEARANCES:
Baruch S. Gottesman, Esq.
Attorney for the Plaintiff
Fresh Meadows, NY 11366
Horowitz and Rubenstein, LLC
200 South Service Road, Suite 104
Roslyn Heights, NY 11577
By: E. Alan Rubenstein, Esq., Of Counsel
Carlet, Garrison, Klein & Zaretsky, L.L.P.
1135 Clifton Avenue
Clifton, NJ 07013
By: Virginia T. Shea, Esq., Of Counsel
Chorpenning, Good, Carlet & Garrison, Esqs.
623 Fifth Avenue, 24th Floor
New York, NY 10022
By: Michael J. Zaretsky, Esq., Of Counsel
This case arises from a March 30, 2007 letter written by the Defendant Richard E. Levine ("Levine") to the Florida Department of Insurance regarding the purported attempt by the Plaintiff Eric H. Greenberg (the "Plaintiff") to setup a fraudulent life insurance scheme and solicit Florida residents to participate in this fraudulent scheme. The Plaintiff alleges that the letter was false and defamatory and caused him to lose his job as a financial advisor and suffer reputational and economic damages.
On May 20, 2015, the Plaintiff filed a complaint in the Supreme Court of the State of New York, Nassau County, against the Defendants Ameriprise Financial Services, Inc. ("Ameriprise"), Levine, and Levine & Associates (collectively, the "Defendants"), alleging state tort law claims for defamation, tortious interference with contract, and tortious interference with prospective economic relations.
On June 19, 2015, the Defendants timely removed the action to this Court pursuant to 28 U.S.C. §§ 1441(b) and 1446 on the basis of diversity of citizenship.
Presently before the Court is a motion by the Defendants pursuant to the Federal Arbitration Act, 9 U.S.C. 1, et seq. (the "FAA"), to compel arbitration and stay this action.
For the reasons set forth below, the Defendants' motion is granted.
The Plaintiff is a New York citizen and maintains his principal place of business in Nassau County. (Compl. at ¶ 1.)
The Defendant Ameriprise is a Delaware corporation with its principal place of business in Minneapolis, Minnesota. (Notice of Removal at ¶ 5.) It is a "broker-dealer" and member of the Financial Industry Regulatory Authority ("FINRA"). (Rustad Decl. at ¶ 4.) FINRA is a"self-regulatory organization authorized by federal law to perform certain regulatory functions as to the securities industry." (Id. at ¶ 3.)
The Defendant Levine is a Georgia citizen. (Notice of Removal at ¶ 6.) He is a financial advisor affiliated with Ameriprise. (Rustad Decl at ¶ 4.)
The Defendant Levine & Associates is a marketing designation under which Levine conducts his financial advisory practice with Ameriprise. (Id. at ¶ 6.) It is not a separate legal entity. (Id.)
Beginning about 1990, the Plaintiff began practicing as a "finance industry professional." (Compl. at ¶ 9.) To that end, the Plaintiff obtained a Series 3 license permitting him to trade in commodities; a Series 55 license permitting him to trade in equities; and a license from the New York State Insurance Department to sell life insurance. (Id. at ¶¶ 9-13.) The Plaintiff also alleges that as a financial services professional he was "subject to self-regulation through FINRA." (Id. at ¶ 17.)
Allegedly from 1990 to 2007, the Plaintiff had an "excellent reputation in the financial services industry" and was never investigated by FINRA or any other relevant regulatory agency "for fraud, illegality, or non-compliant behavior." (Id. at ¶ 15.)
In 2007, the Plaintiff had contracts to provide services for Woodbury Financial Services, Inc. ("Woodbury"), U.S. Planning Group, "various life insurance companies, and Errors and Omissions insurance companies." (Id. at ¶ 18.) The complaint does not state the terms of these contracts or make clear what services the Plaintiff agreed to provide for these companies.
On March 30, 2007, the Defendant Levine wrote a letter to the Florida Department of Insurance to report an apparent illegal insurance scam undertaken by the Plaintiff. (Compl., Ex. A.) According to the letter, in about February 2007, the Plaintiff approached Levine's parentsand a number of other couples in their mid-70s living in Boynton Beach, Florida, and asked them to attend a meeting regarding life insurance. (Id. at 1.) In late February 2007, the Plaintiff held a meeting in the Cascades subdivision in Boynton Beach, which Levine's parents attended, and allegedly offered them, as well as the other attendees, an opportunity to take part in a "money for nothing" life insurance plan whereby (i) each couple would take out one or multiple life insurance policies based on estimates far in excess of their net worth; (ii) the couple would then transfer title to that policy or policies to a trust run by the Plaintiff and his associates, which would cover the premium payments on the policy; and (iii) the Plaintiff would then sell the policy in the secondary market to a life insurance settlement company for a fraction of what the policy was worth to turn a quick profit. (See id.) Using this method, the Plaintiff purportedly promised that "each couple would receive somewhere in the neighborhood of $250,000 if they would agree to take out a $2 million policy on the older person in each couple." (Id.)
According to Levine, one couple at the meeting "asked how they would get approved for a $2 - $5 million policy when they are worth less than $1 million, [the Plaintiff] said that [they] could simply put his name down on the application as their 'financial advisor' and he would verify they had sufficient assets and income to warrant such a policy." (Id.) Another couple allegedly asked how a life insurance policy could change hands so quickly, and the Plaintiff apparently responded, "[T]he insurance company would never know the policy changed hands since it would still be owned by the same trust and only the beneficiary of the trust would change." (Id.)
In his letter to the Florida Department of Insurance, Levine wrote that he had a "number of concerns" with the Plaintiff's proposition. First, he stated that "[a]ccording to the Florida Department of Financial Services website, it would not appear that [the Plaintiff] is licensed tosolicit insurance business in the state of Florida." (Id. at 2.) Second, he noted that the Plaintiff's proposed strategy "appears to be Stranger Initiated Life Insurance" and that there "doesn't appear to be any insurable interest or legitimate intent in taking out these policies other than for the purpose of immediate resale to investors and to 'make money for nothing,' as the Plaintiff explained." (Id.) Third, Levine stated that the Plaintiff offered no business card, brochure, or stationary bearing his name. (Id.) Instead, he gave the attendees a generic letter bearing the name of Marc Cohen, his alleged superior at the U.S. Planning Group. (Id.) According to Levine, the Plaintiff was then listed on the National Association of Securities Dealers ("NASD"), the predecessor organization to FINRA, as being employed by the U.S. Planning Group. (Id.)
Finally, Levine purportedly attached information regarding the Plaintiff in his letter and asked that the recipient at the Florida Department of Insurance "maintain the confidence of []his claim." (Id. at 3.)
In the complaint, the Plaintiff denies the substance of the allegations set forth in the March 30, 2007 letter, alleging that he never held an insurance seminar; did not "entice seniors to attend a seminar at his parents' home"; and "did not solicit insurance applications in Florida." (Compl. at ¶¶ 52-56.)
In the Summer of 2007, allegedly as a "direct and proximate cause of the false allegations published by [the] Defendants, [the] Plaintiff was discharged by Woodbury [] for cause.' (Id. at ¶ 70.)
Also, the Plaintiff alleges that as a result of his termination, FINRA disclosed the incident on its public database. To that end, the Plaintiff attaches to the complaint, a "brokercheck report" run on the FINRA database, which is dated May 20, 2015. (See Compl., Ex. B.) According to the report, the Plaintiff is "not currently registered" with FINRA but had beenpreviously registered as associated with Legend Securities, Inc., World Equity Group, Inc., and Woodbury. (See id. at 1.) Relevant here, the Report discloses that the Plaintiff was discharged by Woodbury on July 19, 2007 for "unlicensed activity" based on allegations that the Plaintiff "conducted an insurance seminar in Florida without being licensed in the State." (Id. at 7.). Also included in this disclosure is the following statement authored by the Plaintiff:
I have never been notified in writing or contacted by Florida in relation to this. I was in Florida during the beginning of 2007 for a party celebrating my parents['] fity [sic] year wedding anniversary. I had the opportunity to see many people who have known me since childhood . . . . They inquired about my wife, four children, etc . . . . In general terms I explained to them about my enterance [sic] into the insurance business. To this day I have never been paid by a brokerage firm nor an insurance company for any business. I have never even submitted an application for either. This accusation has prevented me from attempting to begin my new career.
(Id. at 8.)
According to the complaint, the March 30, 2007 letter also interfered with the performance of the Plaintiff's contract with the U.S. Planning Group. (Compl. at ¶ 75.) He also alleges that the letter disrupted other contracts that the Plaintiff had with unspecified third parties. (Id. at ¶ 77.)
On May 27, 2014, the Plaintiff's colleague obtained a copy of the March 30, 2007 letter in discovery in an unrelated...
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