Lopardo v. Lehman Bros., Inc.

Decision Date06 March 2008
Docket NumberNo. 1:02 CV 764.,1:02 CV 764.
Citation548 F.Supp.2d 450
PartiesRichard LOPARDO, et ah, Plaintiffs, v. LEHMAN BROTHERS, INC., et al., Defendants.
CourtU.S. District Court — Northern District of Ohio

Barbara Quinn Smith, Maddox Hargett & Caruso, Mentor, OH, John T. Murray, James S. Timmerberg, Murray & Murray, Sandusky, OH, Anthony J. Hartman, Hugh D. Berkson, Jay H. Salamon, Hermann, Cahn & Schneider, Cleveland, OH, for Plaintiffs.

Frank Gruttadauria, Cleveland, OH, pro se.

D. Grayson Yeargin, Daniel L. Stein, Jeremy D. Kernodle, Laurence A. Silverman, Lorie E. Lupkin, Michael C. Boteler, P. Benjamin Duke, Philip A. Irwin, Preethi Krishnamurthy, Covington & Burling, New York, NY, Stephanie E. Niehaus, Charna E. Sherman, David C. Weiner, Steven A. Friedman, Squire, Sanders & Dempsey, Mark P. O'Neill, Weston Hurd Mark E. Staib, Cleveland, OH, for Defendants.

MEMORANDUM OPINION AND ORDER

DONALD C. NUGENT, District Judge.

This matter is before the Court on several motions: (1) Motion to Dismiss of Defendant SG Cowen Securities Corporation (ECF # 219); (2) Defendant Cowen & Company's Motion to Dismiss Time-Barred Claims (ECF # 221); (3) Defendant Cowen & Company's Joinder in Co-Defendant SG Cowen Securities Corporation's Motion to Dismiss (ECF # 222); (4) Motion for Judgment on the Pleadings of Defendants Hambrecht & Quist, Inc. and J.P. Morgan Chase & Co. (ECF # 232); and, (5) Motion of Plaintiff, Melissa Lopardo For Leave to File Second Amended Complaint (ECF # 273).

Plaintiffs Charles Lopardo, as trustee for the Lopardo Family Trust ("Charles Lopardo"), and Melissa Lopardo' filed a joint Memorandum in Opposition collectively addressing the arguments raised in all of the Defendants' Motions to Dismiss. (ECF # 235). Defendants SG Cowen Securities Corporation ("SG Cowen") and Cowen & Company each filed a Reply brief in support of their respective Motions to Dismiss. (ECF # 246, 248). Melissa Lopardo then filed a combined Sur-reply in Opposition to the Motions to Dismiss. (ECF # 272). Charles Lopardo did not join in Melissa Lopardo's Sur-reply, nor did he join in her Motion for Leave to File a Second Amended Complaint. Plaintiffs Richard and Catherine Lopardo have not responded to any of the Motions to Dismiss nor have they joined in or otherwise commented on Plaintiff Melissa Lopardo's Motion for Leave to File a Second Amended Complaint.1

Defendants SG Cowen and Cowen & Company each filed Memorandum in Opposition to Melissa Lopardo's Motion for Leave to File a Second Amended Complaint. (ECF # 278, 279). Melissa Lopardo filed a Reply to each. (ECF # 281, 282). The Court has carefully considered all of the pleadings, motions, briefing, and relevant law, and these issues are now ready for disposition.

STANDARD OF REVIEW

A motion to dismiss under Federal Rule of Civil Procedure ("Rule") 12(b)(6) allows a defendant to test the legal sufficiency of a complaint without being subject to discovery. See Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 566 (6th Cir.2003). In evaluating a motion to dismiss, the court must construe the complaint in the light most favorable to the plaintiff, accept its factual allegations as true, and draw reasonable inferences in favor of the plaintiff. See Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir.2007). The court will not, however, accept conclusions of law or unwarranted inferences cast in the form of factual allegations. See Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir.2000).

In order to survive a motion to dismiss, a complaint must provide the grounds of the entitlement to relief, which requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action. See Bell Atl. Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007). That is,"[f]actual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (internal citation omitted); see also Association of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir.2007) (recognizing that the Supreme Court "disavowed the oft-quoted Rule 12(b)(6) standard of Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)"). Accordingly, the claims set forth in a complaint must be plausible, rather than conceivable. See Twombly, 127 S.Ct. at 1974.

On a motion brought under Rule 12(b)(6), the court's inquiry is limited to the content of the complaint, although matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint may also be taken into account. See Amini v. Oberlin College, 259 F.3d 493, 502 (6th Cir.2001). It is with this standard in mind that the instant Motion must be decided. In evaluating a motion for dismissal under Rule 12(b)(6), the district court must "consider the pleadings and affidavits in a light most favorable to the [non-moving party]." Jones v. City of Carlisle, Ky., 3 F.3d 945, 947 (6th Cir.1993) (quoting Welsh v. Gibbs, 631 F.2d 436, 439 (6th Cir.1980)). However, though construing the complaint in favor of the non-moving party, a trial court will not accept conclusions of law or unwarranted inferences cast in the form of factual allegations. See City of Heath, Ohio v. Ashland Oil, Inc., 834 F.Supp. 971, 975 (S.D.Ohio 1993).

This Court will not dismiss a complaint for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). In deciding a Rule 12(b)(6) motion, this Court must determine not whether the complaining party will prevail in the matter but whether it is entitled to offer evidence to support the claims made in its complaint. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974).

PROCEDURAL HISTORY

The Plaintiffs filed this action in April of 2002 alleging various claims against an array of defendants. (ECF # 1). The remaining claims are all based on allegations of malfeasance which took place from 1982 through January of 2002, in connection with securities accounts the Plaintiffs purchased from Defendant Frank Gruttadauria. The case was originally assigned to the Honorable Judge John Manos, who eventually stayed the action pending arbitration of the claims against Cowen & Company, S.G. Cowen, and Lehman Brothers. (ECF # 163).

Over the course of the litigation, several parties were dismissed or withdrew from the case. DeGrandis & DeGrandis was voluntarily dismissed (ECF # 176); Plaintiff James Lopardo passed away (ECF # 170); the Estate of Emily Lopardo released all claims against all defendants (ECF # 182, 183, 184); and Lehman Brothers was dismissed (ECF # 204). The case was reassigned to the current Judge, and the stay was lifted upon the completion of the arbitration. (ECF # 200).

In July of 2007, Plaintiffs Richard Lopardo, Catherine Lopardo, Melissa Lopardo, and Charles Lopardo (as Trustee for the Lopardo Family Trust)("Charles Lopardo") joined in filing the First Amended Complaint against Defendants Frank Gruttadauria, Cowen & Company, S.G. Cowen, Hambrecht & Quest, Inc. ("Hambrecht & Quest"), and J.P. Morgan Chase & Co. ("J.P.Morgan"). (ECF # 206). Melissa Lopardo and Charles Lopardo subsequently dismissed their claims against Hambrecht & Quist and J.P. Morgan. (ECF # 215).

Defendants S.G. Cowen and Cowen & Company filed motions to dismiss all claims against them by Richard and Catherine Lopardo based on res judicata because they allege these claims have already been fully and finally adjudicated during the previous arbitration. They also moved to dismiss all claims by Melissa Lopardo on the grounds that she does not have legal standing to pursue them. S.G. Cowen and Cowen & Company also seek to dismiss the claims for violations of the Ohio Pattern of Corrupt Activities Statute, and Plaintiffs' promissory estoppel claims for failure to state a claim upon which relief can be granted. (ECF # 219, 222). Hambrecht & Quist and J.P. Morgan join in the Motions to Dismiss those two claims based on Fed.R.Civ.P. 12(b)(6). (ECF # 219, 222, 232). Cowen & Company, Hambrecht & Quist, and J.P. Morgan filed motions to dismiss all claims against them based on the applicable statutes of limitations and/or statutes of repose. (ECF # 221, 232).

Melissa Lopardo, after hiring new counsel, filed a Motion for Leave to File a Second Amended Complaint. (ECF # 273). None of the other remaining Plaintiffs have joined in this request. The Court, hereby grants Melissa Lopardo's Motion for Leave to File a Second Amended Complaint. In the interest of fairness and judicial economy, however, the pending Motions to Dismiss shall be considered as they apply to the claims made by Richard, Catherine, and Charles Lopardo in the First Amended Complaint, and in so far as they may still be applicable to the claims set forth by Melissa Lopardo in her Second Amended Complaint. Further, the Defendants' Memorandum in Opposition to Melissa Lopardo's Motion for leave to file the Second Amended Complaint shall be treated as Motions to Dismiss in so far as a request for dismissal is fairly implied.

The outstanding claims are as follows:

• Richard and Catherine Lopardo have claims against Hambrecht & Quist and J.P. Morgan for (1) breach of fiduciary duty; (2) fraud; (3) federal securities violations under 10(b)(5); (4) violations of 15 U.S.C. § 771; (5) violations of O.R.C. § 1707.44; (6) negligent misrepresentation; (7) promissory estoppel; (8) negligent hiring, retention and supervision; and (9) breach of implied contract and bailment.

• Richard, Catherine, Charles and Melissa Lopardo have claims against Frank Gruttadauria, Cowen & Company, and S.G. Cowen for (1) breach of fiduciary duty; (2) fraud; (3) negligent...

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