Snider v. Lugli
| Decision Date | 07 March 2013 |
| Docket Number | 10-CV-4026 (SJF)(AKT) |
| Parties | LARRY SNIDER, Plaintiff, v. RUSSEL V. LUGLI, and NORTHWESTERN CONSULTANTS, INC., Defendants. |
| Court | U.S. District Court — Eastern District of New York |
On September 2, 2010, plaintiff Larry Snider ("plaintiff or "Snider") commenced this action against Russel V. Lugli ("Lugli") and Northwestern Consultants, Inc. ("Northwestern," and together with Lugli, "defendants") asserting claims for (1) breach of contract, (2) fraud, (3) breach of fiduciary duty, and (4) "breach of accounting duty" arising out of plaintiff's entry into a joint venture with defendants for "the purpose of the purchase, construction and sale of Twenty Four (24) or more entry level housing style housing units" on a parcel of land owned by Northwestern in Bay Shore, New York (the "Bay Shore joint venture"). [Docket Entry Nos. 1, 81-5] ("Compl."). Now before the Court is defendants' motion for summary judgment dismissing plaintiff's complaint. [Docket Entry No. 79]. For the reasons that follow, the motion is GRANTED IN PART and DENIED IN PART.
Lugli, who resides in California, is the president and Chief Executive Officer of Northwestern, a Nevada corporation. Affidavit of Russel v. Lugli in Support of Defendants' Motion for Summary Judgment [Docket Entry No. 81] ("Lugli Aff") at ¶ 1. On August 15, 2006, Northwestern entered into a joint venture agreement with Northwestern's former attorney,Eliot Bloom, for the purpose of developing the property in Bay Shore. Lugli Aff. Ex. B (the "Joint Venture Agreement"). Under the Joint Venture Agreement, Bloom held a forty-five percent (45%) interest in the venture and Northwestern held a fifty-five percent (55%) interest. Lugli Aff. at ¶ 3.
On October 5, 2007, Bloom, Northwestern and Lugli executed an agreement under which Northwestern and Lugli agreed to pay Bloom four hundred fifty thousand dollars ($450,000.00) in three (3) installments in exchange for Bloom's forty-five percent (45.00%) interest in the Bay Shore joint venture and his promise "to provide all legal representation necessary to complete the [Bay Shore joint venture] with no fees to be charged." Lugli Aff. Ex. C. The first installment of one hundred thousand dollars ($100,000.00) was due to be paid on the date the buyout agreement was executed. Lugli Aff. Ex. E.
Bloom arranged for Harry Feingold, Bloom's friend, to introduce Lugli to plaintiff in order to recruit plaintiff as an investor and facilitate Bloom's exit from the venture. Lugli Aff. at ¶ 4; Defendants' Memorandum of Law in Support of Motion for Summary Judgment [Docket Entry No. 82] ("Def. Memo.") at 3. On October 5, 2007 (the same date on which Lugli and Northwestern were required to pay one hundred thousand dollars ($100,000.00) to Bloom under the buyout agreement), plaintiff, at the direction of Feingold, signed a check for one hundred two thousand five hundred dollars ($102,500.00) payable to "Savannah Development," a corporation alleged by defendants to have been owned and controlled by Feingold. Lugli Aff. at ¶ 6, Ex. F. Lugli testified that he "had no part in giving these instructions to [plaintiff], neither saw nor received any portion of [plaintiff's] money at any time," Lugli Aff. at ¶¶ 6-7, and that approximately seventy-five thousand dollars ($75,000.00) of plaintiff's money was transferred by Feingold to the personal bank account of Elizabeth Bloom, Bloom's wife. Lugli Aff. at ¶ 7.
Under an amended joint venture agreement executed on November 1, 2007 by Northwestern and plaintiff, plaintiff was granted a ten percent (10.00%) interest in the Bay Shore joint venture, Northwestern was granted a sixty-two and one-half percent (62.50%) interest, and Frank Johnston was granted a twenty-seven and one-half percent (27.50%) interest. Lugli Aff. at Ex. E (the "Amended Joint Venture Agreement").
On August 11, 2009, Bloom commenced an action against Lugli and Northwestern in the Supreme Court of the State of New York, County of Nassau (the "Supreme Court"), by filing a motion for summary judgment in lieu of a complaint seeking to recover the last two (2) installments due under the buyout agreement, totaling three hundred fifty thousand dollars ($350,000.00). On November 19, 2009, the Supreme Court granted Bloom's motion for summary judgment, but the Appellate Division of the Supreme Court of the State of New York, Second Department (the "Appellate Division"), reversed the order, finding that Bloom failed to establish that the buyout agreement was an instrument for the payment of money only since Bloom had not shown that he satisfied his ongoing obligation to provide legal services in connection with the Bay Shore joint venture. Bloom v. Lugli, 81 A.D.3d 579, 916 N.Y.S.2d 139 (App. Div. 2011).
On remand, the Supreme Court denied Lugli's and Northwestern's motion for leave to amend their answer and again granted summary judgment to Bloom. However, by order dated January 16, 2013, the Appellate Division reversed, holding that Lugli and Northwestern had "raised triable issues of fact as to whether [Bloom] intentionally or negligently omitted the material fact that the Town's approval of the development of the [Bay Shore] project included certain conditions and restrictions that either could not be met or would be significantly difficultto meet, and as to whether this information was kept from [Lugli and Northwestern] at the time that the buy-out agreement was executed." Bloom v. Lugli, No, 13207/09, Slip Op. at 5 (N.Y. App. Div.Jan. 16, 2013). Snider is not a party to the New York state action.
On November 3, 2010, Lugli and Northwestern commenced an action in this district against, inter alia, Eliot Bloom, Elizabeth Bloom, Eliot F. Bloom, P.C. (collectively, the "Bloom defendants"), Feingold,1 Fire Island Seashell Company, Inc. (d/b/a Savannah Development Co.), and Snider, 2 asserting various claims related to the Bay Shore joint venture (arising both before and after Snider's involvement), including "unlawful sale of securities," conspiracy, breach of contract, fraud, negligent misrepresentation, rescission, unjust enrichment, breach of fiduciary duty and "financial elder abuse." Northwestern Consultants. Inc. v. Bloom, No. 10-CV-5087 (E.D.N.Y. Nov. 3, 2010) (the "Northwestern matter").
On May 19, 2011, the Bloom defendants moved to dismiss the complaint for lack of subject matter jurisdiction or, alternatively failure to join an indispensable party. [Docket Entry No. 30]. The case was reassigned to the Court on January 9, 2012, after Judge Bianco recused himself. On May 22, 2012, the Court denied the Bloom defendants' motion to dismiss the complaint. [Docket Entry No. 42]. At a conference held on July 11, 2012, the Court ordered this case consolidated with the Northwestern matter for purposes of trial.
"Summary judgment must be granted where the pleadings, the discovery and disclosure materials on file, and any affidavits show 'that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'" Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir. 2011) (quoting Fed. R. Civ. P. 56(a)). "In ruling on a summary judgment motion, the district court must resolve all ambiguities, and credit all factual inferences that could rationally be drawn, in favor of the party opposing summary judgment and determine whether there is a genuine dispute as to a material fact, raising an issue for trial." McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 202 (2d Cir. 2007) (internal quotation marks omitted). "A fact is material if it might affect the outcome of the suit under the governing law, and an issue of fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Ramos v. Baldor Specialty Foods. Inc., 687 F.3d 554, 558 (2d Cir. 2012) (internal quotation marks omitted).
"The moving party bears the burden of establishing the absence of any genuine issue of material fact." Zalaski v. City of Bridgeport Police Dep't, 613 F.3d 336, 340 (2d Cir. 2010). If this burden is met, "the opposing party must come forward with specific evidence demonstrating the existence of a genuine dispute of material fact." Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir. 2011). The non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts and may not rely on conclusory allegations or unsubstantiated speculation." Id. (internal quotation marks and citations omitted). "[P]roceeding pro se does not otherwise relieve a litigant from the usual requirements of summary judgment." Viscusi v. Proctor & Gamble, No. 05-CV-1528, 2007 WL 2071546, at *9 (E.D.N.Y. July 16,2007). However, "the submissions of a pro se litigant must be construed liberally and interpreted to raise the strongest arguments that they suggest." Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir. 2006) (internal quotation marks omitted); Thompson v. Tom Vazquez Janitorial, No. 05-CV-808, 2006 WL 3422664, at *2 (E.D.N.Y. Nov. 28, 2006) ().
Defendants assert that plaintiff's claim for an accounting must be dismissed because: (1) plaintiff and defendants "did not have a relationship of a mutual and confidential nature [and] . . . it is well settled that an equitable action for an accounting will not lie in the absence of a fiduciary relationship between the parties"; and (2) defendants "never saw nor received [p]laintiff's money at any time." Def. Memo, at 7-9 (internal quotation marks omitted). According to defendants, they shared with plaintiff "nothing more than a conventional business relationship . . . and there were no 'special circumstances' that transformed the business...
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