639 F. App'x 670
2d Cir.2016Background
- Soley sued Wasserman for breach of fiduciary duty and sought equitable accountings concerning two joint ventures: Patriot Partners (a limited partnership) and four "Joint Stocks" private placements.
- The District Court tried the Patriot Partners breach claim to a jury, which found Wasserman breached fiduciary duties and awarded Soley damages; Soley then sought an equitable accounting for Patriot Partners, which the court denied.
- The Joint Stocks claims were tried to the bench; the court rejected Soley’s breach claim but granted an equitable accounting and restitution for the Joint Stocks and awarded prejudgment interest to Soley.
- Wasserman submitted an accounting for the Joint Stocks; Soley objected and requested a second, more complete accounting; the District Court accepted the submitted accounting, awarded restitution to Soley, and denied a second accounting.
- The District Court denied Soley’s request for attorney’s fees; it awarded costs to Soley under Rule 54(d)(1). Both parties appealed various rulings; the Second Circuit affirmed all District Court decisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a principal is entitled to an equitable accounting for Patriot Partners despite having an adequate legal remedy | Soley: fiduciary relationship gives an absolute right to accounting regardless of legal remedy availability | Wasserman: New York law requires showing no adequate remedy at law to obtain equitable accounting | Court: New York requires lack of an adequate remedy at law in addition to a fiduciary relationship; denial affirmed |
| Whether District Court erred by accepting Wasserman's Joint Stocks accounting and refusing a second accounting/hearing | Soley: accounting insufficient (redacted records, missing support); court should order a full accounting and hold a hearing | Wasserman: submitted sworn accounting and extensive bank records satisfying burden; no hearing required | Court: district court did not abuse discretion; sworn statements and records were sufficient; denial of second accounting and hearing affirmed |
| Whether Soley was entitled to attorney's fees as a fiduciary-duties prevailing party | Soley: American Rule inapplicable where fiduciary liability is found; fees should be awarded | Wasserman: fees not warranted; the cited precedents are narrower | Court: District Court correctly interpreted precedents as limited; denial of fees not an abuse of discretion |
| Whether prejudgment interest and taxation of costs were improper | Wasserman: interest improper because District Court relied on Soley affidavit barred by motion in limine; he also disputed that Soley was the prevailing party for costs | Soley: affidavit admissible for accounting/interest phase; she prevailed on significant issues | Court: affidavit admissible for interest determination (or was opened by Wasserman); awarding prejudgment interest was within discretion; Soley was the prevailing party for costs under controlling precedent; affirmed |
Key Cases Cited
- United Telecard Distrib. Corp. v. Nunez, 90 A.D.3d 568 (N.Y. App. Div. 2011) (to obtain an equitable accounting a claimant must show no adequate remedy at law)
- Kastle v. Steibel, 120 A.D.2d 868 (N.Y. App. Div. 1986) (supports requirement that legal remedy be inadequate for equitable accounting)
- Hermes v. Compton, 260 A.D. 507 (N.Y. App. Div. 1940) (historical support for accounting standards)
- Miltland Raleigh-Durham v. Myers, 807 F. Supp. 1025 (S.D.N.Y. 1992) (awarding attorneys' fees in limited fiduciary misconduct contexts involving estates/trusts)
- Birnbaum v. Birnbaum, 157 A.D.2d 177 (N.Y. App. Div. 1990) (discusses fees in fiduciary-breach proceedings in testamentary context)
- Dattner v. Conagra Foods, Inc., 458 F.3d 98 (2d Cir. 2006) (standard for determining a "prevailing party" under Rule 54(d) / fee-shifting analogies)
- LeBlanc-Sternberg v. Fletcher, 143 F.3d 748 (2d Cir. 1998) (distinguishes threshold prevailing-party determination from degree of success)
- Thoreson v. Penthouse Int’l, 80 N.Y.2d 490 (N.Y. 1992) (deferential review of factfinding where credibility is central)
- Texas State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782 (U.S. 1989) (defining "prevailing party" for fee-shifting contexts)