JOHN RAPILLO et al., Plaintiffs, - v - BARRY FINGERHUT et al., Defendants.
09-CV-10429 (VSB)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
9/14/2016
VERNON S. BRODERICK, United States District Judge
Appearances:
Robert J. Conway
Jeffrey Alan Marshall
Marshall, Conway & Bradley, P.C.
New York, NY
Counsel for Plaintiffs
Max Folkenflik
Folkenflik & McGerity
New York, NY
Counsel for Defendants Barry Fingerhut, Fingerhut-Holzer Partners LLC, Fingerhut-Holzer Equities, Inc., Fingerhut-Holzer, Inc., Fingerhut-Holzer Fund, L.P., Geo-Capital Partners, Inc., Fingerhut-Holzer the Waverly I, LLC, and Fingerhut-Holzer the Waverly II, LLC
David Holzer
Defendant Pro Se
VERNON S. BRODERICK, United States District Judge:
Before me is the motion for summary judgment of Defendants Barry Fingerhut, Fingerhut-Holzer Partners LLC, Fingerhut-Holzer Equities, Inc., Fingerhut-Holzer, Inc., Fingerhut-Holzer Fund, L.P., Geo-Capital Partners, Inc., Fingerhut-Holzer the Waverly I, LLC,
I. Preliminary Legal Framework – Rule 56.1
The factual summary that follows is based on my assessment of the facts that are not in dispute, because I found the conclusory or unsupported allegations or statements in the parties’ respective Rule 56.1 Statements to be unreliable. Rule 56.1 statements and counterstatements are supposed to be “short and concise statement[s], in numbered paragraphs, of the material facts” about which the parties contend there is or is not a “genuine issue to be tried.”
The majority of Plaintiffs’ Rule 56.1 Statement is inconsistent with the Federal Rules in that it disputes every one of Defendants’ factual assertions and makes various factual assertions purportedly in rebuttal however many of those assertions are merely conclusory statements or
A fact is not disputed simply because a litigant conclusorily proclaims it to be so if the underlying record evidence clearly contradicts that assertion. See BellSouth Telecomms., Inc. v. W.R. Grace & Co., 77 F.3d 603, 615 (2d Cir. 1996) (opposing party cannot defeat summary judgment by “merely . . . assert[ing] a conclusion without supplying supporting arguments or facts“). Further, I do not blindly accept the parties’ 56.1 statements at face value, as “allegations are not ‘deemed true simply by virtue of their assertion in [the] Local Rule 56.1 statement.‘” F.T.C. v. Med. Billers Network, Inc., 543 F. Supp. 2d 283, 302 (S.D.N.Y. 2008) (quoting Holtz, 258 F.3d at 73). To ensure that Plaintiffs’ “Local Rule 56.1 statement [did not] substitute for the admissibility requirement set forth in Fed. R. Civ. P. 56(e),” Holtz, 258 F.3d at 74, I have disregarded allegations that were “not accompanied by citation to admissible evidence” as well as allegations where “the cited evidence [did] not support the allegation.” F.T.C. v. Med. Billers Network, Inc., 543 F. Supp. 2d at 302. Accordingly, I have disregarded Plaintiffs’ Rule 56.1 statements which are unsupported by citations to admissible evidence contained in the record.3
The following facts are undisputed unless otherwise noted.
A. The Parties
Plaintiff John Rapillo had a career as a furniture salesman and interior designer. (Pls.’ 56.1 Stmt. ¶ 1;4 Conway Decl. Ex. 6, ¶ 4.)5 Plaintiff Heidi Rapillo, the wife of John Rapillo, is a hospital admissions officer. (Conway Decl. Ex. 6, ¶ 2.) During the relevant period, the Rapillos6 lived in Westchester County, New York. (AC ¶¶ 5, 6;7 Conway Decl. Ex. 7, ¶ 1.)8 The Rapillos met Defendant David Holzer in 1983 when Holzer hired Mr. Rapillo to perform certain decorating and interior design projects at Holzer‘s home. (Pls.’ 56.1 Stmt. ¶ 1; JR Tr. 22:5-23:5.)9 Thereafter, Holzer hired Mr. Rapillo for certain other interior design services. (JR Tr. 27-28.) The Rapillos “became friends” with Holzer, (Pls.’ 56.1 Stmt. ¶ 1), were invited to Holzer‘s home “for dinner many times,” (JR Tr. 32:8-9), and celebrated holidays with Holzer and his family, (id.).
The Defendants in this action are two individuals, six corporations, and one limited partnership. Fingerhut-Holzer Partners LLC, Fingerhut-Holzer the Waverly I, LLC, and Fingerhut-Holzer the Waverly II, LLC are limited liability corporations organized under the laws of New York. (Ans. ¶¶ 19, 24, 25.)10 Fingerhut-Holzer Equities, Inc., Fingerhut-Holzer, Inc.,
and GEO Capital Partners, Inc. are corporations organized under the laws of New York. (Id. ¶¶ 20, 21, 23.) Fingerhut-Holzer Fund, L.P. is a limited partnership organized under the laws of New York. (Id. ¶ 22.)
The individual Defendants are Barry Fingerhut and David Holzer. (Id. ¶¶ 7, 8.) During the relevant period, Fingerhut and Holzer each resided and worked in New York. (Id.) Fingerhut and Holzer were each managing members of Fingerhut-Holzer Partners LLC, Fingerhut-Holzer the Waverly I, LLC, and Fingerhut-Holzer the Waverly II, LLC. (Id. ¶¶ 12, 16, 17.) Additionally, Fingerhut and Holzer were each shareholders in Fingerhut-Holzer Equities, Inc. and Fingerhut-Holzer, Inc., (id. ¶¶ 13, 14), and general partners in Fingerhut-Holzer Fund, L.P, (id. ¶ 15).
B. The Rapillos Seek to Invest Certain of Their Money
In 2001, Mr. Rapillo sustained permanent injuries to his “cervical spine” when he fell 18 feet off a balcony while working at a client‘s home. (JR Tr. 43:14-24; Conway Decl. Ex. 6, ¶ 2.) As a result of his injuries, Mr. Rapillo was unable to work for over nine months. (JR Tr. 44:12-13.) Between 2004 and 2011, Mr. Rapillo resumed his work as a decorator and performed substantially the same work he had done prior to his accident. (Id. 47:4-9.)11 Mr. Rapillo filed a lawsuit in connection with that accident, (JR Tr. 5:19-6:3), and obtained a jury verdict in August 2004, (id. 47:19-48:5), for more than $8 million, (id. 53:24-54:11). While an appeal was pending, the parties agreed to settle the matter for approximately $3 million in total damages, (id.
After the Rapillos received the $2.4 million settlement payment, (id.), Mr. Rapillo asked Holzer how he should invest the settlement proceeds. (Pls.’ 56.1 Stmt. ¶ 12; HR Tr. 9:3-19).12 Based on Mr. Rapillo‘s conversation with Holzer, the Rapillos both understood that Defendants did not accept investments from individual investors such as themselves, (HR Tr. 9:17-10:15), because Defendants “only [got] involved with” investments from “large companies, [or] large corporations,” (JR Tr. 19:4-5). Although the Rapillos could not invest directly with Defendants, Holzer said that he would let the Rapillos know when “a good deal came up.” (Id. 8:16-21.)
Between October 2005 and March 2006, the Rapillos made four separate wire transfers totaling $1,900,000.00. With the exception of the first wire transfer for $300,000.00 related to their investment in Waverly I that was wired to a law firm, the remainder of the funds—$1,600,000.00—was wired to Holzer‘s personal bank account. The Rapillos believed that the funds relating to each wire transfer would be channeled into an investment in which one or more of Defendants were participating. The Rapillos believed that the four wire transfers related to the investments described below.
1. Waverly I
Waverly I was a residential real estate development project in or around Jacksonville, Florida that involved construction of approximately 200 condominium units. (Pls.’ 56.1 Stmt. ¶ 15; Conway Decl. Ex. 14; id. Ex. 6 ¶ 4b.) In mid-October 2005, the Rapillos signed subscription agreements for the Waverly I development project. (Pls.’ 56.1 Stmt. ¶ 16.) On or
The Rapillos’ wire transfer to Foley and Lardner LLP relating to their $300,000.00 investment in Waverly I was the only investment that the Rapillos actually made with Defendants. (Pls.’ 56.1 Stmt. ¶¶ 17, 18; HR Tr. 104:20-106:4.) Plaintiffs do not dispute that Waverly I was a legitimate investment. (See Pls.’ 56.1 Stmt. ¶ 17.) Additionally, it is undisputed that Waverly I failed for a variety of reasons, including the collapse of the Florida real estate market in 2008. (Id.)13
2. “Dinner Theater Concept” in Boca Raton, Florida
On or about December 15, 2005, the Rapillos wired $600,000.00 to Holzer‘s personal bank account, (Conway Decl. Ex. 9), for the purpose of investing in a “dinner theater concept” in Boca Raton, Florida, (JR Tr. 94:3-11). Holzer represented to Mr. Rapillo that the dinner theater investment project entailed “building many” additional theater locations, (id. 92:19), which would showcase “this new concept in theater where you lounge and order food,” (id. 91:19). Mr. Rapillo testified that he did not know the name or address of the existing dinner theater that the project sought to replicate at the new locations, (id. 90:13-25), was not aware which entity or entities were investing in the project, (id. 60:2-15), and did not sign any agreement or receive
3. Waverly II
On or about January 31 2006, the Rapillos wired $200,000.00 to Holzer‘s personal bank account, (Conway Decl. Ex. 10), with the intention of investing in “Waverly II,” (JR Tr. 96:7-13). Mr. Rapillo testified that he understood Waverly II to be “phase 2” of construction for the Waverly development which entailed building additional condominium units in Jacksonville, Florida. (JR Tr. 127:23-128:3; see Pls.’ 56.1 Statement ¶ 23.) The Rapillos believed that their $200,000.00 investment would be used to purchase certain of these additional units. (JR Tr. 96:12-13.) The Rapillos received “a sheet on the Waverly II and what those units were going to be sold for,” (id.), but did not sign any agreements relating to Waverly II, (id. 131:3-9), or receive any documentation evidencing their investment in Waverly II, (id.). (See also Pls.’ 56.1 Statement ¶ 23.)
4. Stock Purchase in V-Campus
On or about March 23, 2006, the Rapillos wired $800,000.00 to Holzer‘s personal bank account, (Conway Decl. Ex. 11), with the understanding that Holzer would purchase stock in V-Campus on the Rapillos’ behalf, (JR Tr. 102:21-103:5). (See Pls.’ 56.1 Stmt. ¶ 24.) The Rapillos did not sign any agreement or receive any documentation regarding their investment in
C. Holzer Admits Taking The Rapillos’ Money For Himself
Contrary to Holzer‘s representations to the Rapillos, the $1,600,000.00 that the Rapillos transferred to Holzer‘s personal bank account was not “pooled” with Holzer‘s money or invested by Holzer on behalf of the Rapillos. Instead of investing any of Rapillos’ money in Waverly II, the “dinner theatre concept,” or V-Campus stock, Holzer admitted that he took that money for himself. (Pls.’ 56.1 Stmt. ¶ 18; HR Tr. 106:2-4; DH Tr. 102:6-15, 113:7-115:11).
The Rapillos each testified that they never received any documentation from any of the Movants evidencing the fact that they had made the three wire transfers to Holzer‘s personal bank account. (JR Tr. 94:15-19, 96:10-19, 103:22-24; HR Tr. 71:15-17, 72:7-13.) Through their discussions with the New York District Attorney‘s office, the Rapillos were informed that their investment in Waverly I was legitimate, (Pls.’ 56.1 Stmt. ¶ 17; HR Tr. 104:20-105:6), and each of the other three so-called investments was illegitimate, (HR Tr. 105:14-25). Holzer pleaded guilty on April 30, 2009. During his guilty plea allocution, Holzer admitted that he used the Rapillos’ money for his own purposes and did not invest any of the $1,600,000.00 on behalf of the Rapillos. Specifically, Holzer said that
Between December 2005 and March 2006, I took $1.6 million dollars from Heidi and John Rapillo, people I have known for more than 20 years. I represented to them I would invest their money in
a movie theater and penthouse project. In fact, I did not invest any money on their behalf. I used Rapillo‘s money for my own personal use and invested some of it on my [own] behalf.
(Folkenflik Decl. Ex. C, 11:16-24.) During his deposition, Holzer testified that he treated all $1.6 million of the Rapillos’ money as his own money. (DH Tr. 114:12-25.) He also testified that he did not transfer any of the Rapillos’ money to Fingerhut. (Id. 113:7-114:11, 115:7-11.)
D. The Rapillos’ Relationship with Fingerhut and the Corporate Defendants
The Rapillos first became aware of Fingerhut and the Corporate Defendants through their discussions with Holzer. (Pls.’ 56.1 Stmt. ¶ 7.) In Spring 2004, Mr. Rapillo visited Holzer at Holzer‘s office located at 399 Park Avenue, New York, New York. (JR Tr. 10:14-18.) While Mr. Rapillo was visiting Holzer, Fingerhut walked past them and Holzer identified Fingerhut to Mr. Rapillo as his partner Barry Fingerhut, but Mr. Rapillo did not meet Fingerhut or see his face at that time. (Pls.’ 56.1 Stmt. ¶ 10; JR Tr. 7:14-9:13 (Mr. Rapillo states that he had “seen [Fingerhut] once before at the office,” but the first time Mr. Rapillo met Fingerhut was long after the Rapillos made the wire transfers to Holzer).) This brief glimpse of Fingerhut in Movants’ office was the only in-person contact either of the Rapillos had with Fingerhut until 2009 when they met him in connection with the criminal proceedings against Holzer. (Id.)
It is undisputed that the Rapillos had only three direct communications with Fingerhut. First, at some point in 2007, (HR Tr. 63:15-22, 112:25), Ms. Rapillo telephoned Fingerhut “in regard to the Waverly I investment” and expressed her desire “to cash out,” (“2007 Telephone Call“). (Conway Decl. Ex. 7, ¶ 3.) Second, subsequent to the 2007 Telephone Call, Fingerhut sent the Rapillos the November 7 Letter14 regarding Waverly I and explaining that the “recent
It is also undisputed that the Rapillos did not communicate or correspond with Fingerhut until some point in 2007, approximately one year after the Rapillos’ last wire transfer to Holzer‘s personal bank account in March 2006. (Pls.’ 56.1 Stmt. ¶ 10; JR Tr. 7:14-9:13.) Mr. Rapillo testified that he never spoke to Fingerhut “about anything” until after Holzer was arrested, (JR Tr. 106:8-11), on May 22, 2008, (DH Tr. 115:15). Additionally, it is undisputed that the substance of the 2007 Telephone Call, the November 7 Letter, and the 2008 Telephone Call solely concerned issues related to the Waverly I investment. (Pls.’ 56.1 Stmt. ¶¶ 14, 28.) Likewise, the communications Ms. Rapillo had with Jackie Cohen, an administrative assistant who worked for Fingerhut, also related solely to Waverly I and were ministerial in nature. (HR Tr. 26:6-16.)16 Except with respect to these limited communications related to Waverly I, there
E. Fingerhut and the Corporate Defendants’ Knowledge of Holzer‘s Alleged Frauds
It is undisputed that, on three separate occasions, (see supra Sections II.B.2-4), the Rapillos wired money into Holzer‘s personal bank account with the understanding that Holzer would “pool,” (HR Tr. 51:4), his own money with the Rapillos’ money and, in turn, invest the comingled funds in investments that Holzer represented the Movants were undertaking. (Pls.’ 56.1 Stmt. ¶ 33; HR Tr. 51:14-19.) Movants state that they had no knowledge of Holzer‘s agreement with the Rapillos to pool their money with his to make investments; except for the Rapillos’ investment in Waverly I, “neither Fingerhut nor the [Corporate Defendants] had anything to do with the Rapillos, or any ‘investment’ they supposedly made with Holzer,” (Pls.’ 56.1 Stmt. ¶ 14).
In response, Plaintiffs purport to dispute this fact and cite (1) an irrelevant section of Fingerhut‘s deposition transcript, (see Conway Decl. Ex. 4 at 32-37), (2) conclusory accusations contained in Mr. Rapillo‘s affidavit, (see Conway Decl. Ex. 6 ¶ 18 (“David Holzer operated his fraud out of the Fingerhut Holzer partners offices. He made use of Fingerhut Holzer staff. He was vested in perpetuating his fraud. He was vested with authority under such circumstances.“)), and (3) the annual K-1 statements relating solely to the Rapillos’ investment in Waverly I, (see Conway Decl. Exs. 17, 18). Plaintiffs’ response—although purporting to dispute Defendants’ assertion—does not dispute that Movants had no knowledge of (1) the three wire transfers into Holzer‘s personal bank accounts or (2) the three investments the Rapillos believed they were making with Holzer. (See Pls.’ 56.1 Stmt. ¶ 14.)
Specifically with respect to Fingerhut‘s knowledge, “[t]here is no evidence that Fingerhut ever had any awareness of any investment by the Rapillos other than the legitimate investment in
Not only do Plaintiffs fail to cite any evidence to support their conclusory assertion that Fingerhut knew of their “pooling” arrangement with Holzer, there is ample evidence in the record, including the Rapillos’ deposition testimony, that belies their assertion. First, Mr. Rapillo testified that he did not know whether Fingerhut or any of the Movants knew, prior to Holzer‘s arrest, that the Rapillos were “pooling” their money with Holzer‘s money so that he could invest on their behalf. (JR Tr. 92:17-93:10.) Second, Mr. Rapillo testified that he did not know whether Fingerhut or any of the Movants knew, prior to Holzer‘s arrest, that the Rapillos had transferred money to Holzer for the purpose of investing on their behalf. (Id. 135:9-136:2.) Third, Ms. Rapillo testified that she “assumed [Fingerhut] knew” they were pooling their money
Additionally, the Rapillos understood that Movants did not accept investments from individual investors such as themselves, (Pls.’ 56.1 Statement ¶ 12;20 HR Tr. 9:17-10:15), because Defendants “only [got] involved with” investments from “large companies, [or] large corporations,” (JR Tr. 19:4-5). Thus, the Rapillos endeavored to invest with Fingerhut and the Corporate Defendants by channeling their money through Holzer. (Pls.’ 56.1 Stmt. ¶ 18.) Ms. Rapillo testified that she and her husband channeled their money through Mr. Holzer because they “weren‘t big enough fish” for Fingerhut and the Corporate Defendants to deal with directly. (HR Tr. 50:24-51:19.) Similarly, Mr. Rapillo testified that their “money was not substantial enough” for Fingerhut and the Corporate Defendants to transact business with them directly. (JR Tr. 92:17-21.)
III. Procedural History
Plaintiffs commenced this action by filing their complaint on December 23, 2009.21 (Doc. 1.) Holzer, proceeding pro se, submitted his Answer on February 4, 2010. (Doc. 39.)22 On April 1, 2010, Fingerhut and the Corporate Defendants filed their motion to dismiss the complaint, (Doc. 7), together with a memorandum of law, (Doc. 9), and supporting declaration,
On February 5, 2014, the case was reassigned to me. Discovery was completed by January 16, 2015. (See Doc. 57.) On February 20, 2015, I approved the briefing schedule for Defendants’ motion for summary judgment. (Doc. 60.) After numerous extensions of the schedule, on August 3, 2015, Fingerhut and the Corporate Defendants filed their Motion for Summary Judgment as to each of Plaintiffs’ causes of action, (Doc. 69), together with the Rule 56.1 Statement of Undisputed Material Facts, (Doc. 70), a memorandum of law, (Doc. 71), and supporting declarations with exhibits, (Docs. 72, 73).24 On September 30, Plaintiffs filed their memorandum of law in opposition, (Doc. 78),25 the Rule 56.1 Counterstatement of Undisputed Material Facts, (Doc. 79), and supporting declaration with exhibits, (Doc. 80). On October 14, Movants filed their reply, (Doc. 82), and supporting declaration with an exhibit, (Doc. 81).
IV. Legal Standard
Summary judgment is appropriate when “the parties’ submissions show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” Fay v. Oxford Health Plan, 287 F.3d 96, 103 (2d Cir. 2002); see
On a motion for summary judgment, the moving party bears the initial burden of establishing that no genuine factual dispute exists, and, if satisfied, the burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial,” id. at 256, and to present such evidence that would allow a jury to find in her favor, see Graham v. Long Island R.R., 230 F.3d 34, 38 (2d Cir. 2000). To defeat a summary judgment motion, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). “A party asserting that a fact cannot be or is genuinely disputed must support the assertion by . . . citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials . . . .”
In considering a summary judgment motion, a court must “view the evidence in the light
V. Discussion
A. Advisers Act Claims
In Counts I and II of the Amended Complaint, Plaintiffs allege that Defendants committed fraud and breached the fiduciary duty they owed to Plaintiffs in violation of § 80b-6 of the Investment Advisers Act of 1940,
1. Applicable Law
“[T]here exists a limited private remedy under the Investment Advisers Act of 1940 to void an investment advisers contract, but . . . the Act confers no other private causes of action, legal or equitable.” Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 24 (1979). With respect to this limited private remedy, Section 206 of the Advisers Act provides:
It shall be unlawful for any investment adviser, by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly . . . to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client . . . .
To bring a claim under section 215 of the Advisers Act, a plaintiff must have entered into a contract for investment advisory services with an investment adviser.26 See de Kwiatkowski v. Bear, Stearns & Co., 306 F.3d 1293, 1309-10 (2d Cir. 2002) (holding that the brokerage firm “did not in this case contract to serve in an advisory capacity” and thus “was not an ‘investment adviser‘” as defined by the Advisers Act); Kassover, 619 F. Supp. 2d at 32-33 (dismissing Advisers Act claim where plaintiff had brokerage agreements, not investment advisory agreements as required by the Advisers Act); Clark v. Nevis Capital Mgmt., LLC, No. 04-CV-2702, 2005 WL 488641, at *13 (S.D.N.Y. Mar. 2, 2005) (“Only parties to an investment advisory contract may sue for rescission under section 215.“); Neely v. Bar Harbor Bankshares, 270 F. Supp. 2d 44, 49 (D. Me. 2003) (“[T]here is no right of action under the [Advisers Act] unless there is an investment adviser contract between the parties.“).
Plaintiffs’ first Advisers Act claim alleges that, under the Advisers Act, Defendants “owed plaintiffs a duty to act with reasonable care,” and “Defendants affirmatively breached this fiduciary duty.” (AC ¶ 53.) Plaintiffs’ second Advisers Act claim alleges that Defendants “misrepresent[ed] their rendering of personalized advise [sic] and omit[ted] material facts concerning the nature and type of investments.” (AC ¶ 58.)
In their motion for summary judgment, Movants first argue that Plaintiffs’ Advisers Act claims must be dismissed because no Movant ever executed an investment advisory contract with Plaintiffs. (Defs.’ Mem. 13.) Second, Movants argue that, even if Plaintiffs entered into an investment advisory agreement with one or more Movants, dismissal of Counts I and II is required because the Advisers Act does not provide for damages other than the recoupment of fees. (Id.) Movants are correct.
The parties do not dispute that Plaintiffs never entered into an agreement with any Defendant to provide investment advice.27 Instead, Plaintiffs claim that, while an investment advisory agreement is sufficient to establish an investment advisory relationship, an agreement is not necessary for relief under the Advisers Act. (Pls.’ Mem. 20.) Plaintiffs are wrong; in order for the Advisers Act to apply, the parties must have entered into an investment advisory agreement. See de Kwiatkowski, 306 F.3d at 1309-10 (holding that the brokerage firm “did not in this case contract to serve in an advisory capacity” and thus was not an “investment adviser” as defined by the Advisers Act); Norman, 350 F. Supp. 2d at 388 (holding that “the remedies under the [Advisers Act] are only available where an investor brings suit on the investment adviser‘s allegedly improper conduct (or vice versa) pursuant to a contract for services“);
After incorrectly asserting that an actual agreement is not necessary for relief under the Advisers Act, Plaintiffs claim that “both Fingerhut and Holzer held themselves out to be investment advisers,” (Pls.’ Mem. 20),28 which gave rise to “an implied right of action under the [Advisers] Act,” (id.) (emphasis in original). In support of this assertion, Plaintiffs state that “New York Courts have routinely held that there is an implied right of action under the [Advisers] Act,” (Pls.’ Mem. 20); however, the cases cited by Plaintiffs to support this proposition are not from any New York court and do not even involve the Advisers Act. See Moses v. Burgin, 445 F.2d 369, (1st Cir. 1971) (reversing a Massachusetts district court decision involving the Investment Company Act); Herpich v. Wallace, 430 F.2d 792, 796 (5th Cir. 1970) (affirming, in part, a Louisiana district court decision involving the Investment Company Act). Moreover, after the Supreme Court‘s decision in Transamerica courts in this district have long recognized that the Investment Company Act and the Advisers Act are distinguishable on the basis that the latter does not provide for a private right of action. See Krinsk v. Fund Asset Management, Inc., 654 F. Supp. 1227, 1232 (S.D.N.Y. 1987) (emphasizing that the Supreme Court decision in Transamerica foreclosed the possibility that the Advisers Act provides for a private right of action and noting that the Supreme Court had not yet “negated an implied right of action under the Investment Company Act“). In addition, to the extent it could be argued that the
Even if the absence of an investment advisory agreement did not preclude Plaintiffs’ Advisers Act claims, there is no evidence in the record to support Plaintiffs’ assertion that Movants held themselves out as investment advisers to the Rapillos. (See Defs.’ Mem. 13). To the contrary, Plaintiffs’ assertion contradicts the undisputed facts that the Rapillos (1) knew the Movants did not accept retail customers like them, (HR Tr. 10:10-12), and (2) pooled their money with Holzer‘s money without Movants’ knowledge, (id. 50:24-51:5; JR Tr. 92:17-21; see supra Section II.E). These undisputed facts also support the finding that there was no investment advisory relationship between the Rapillos and Movants.
In any event, assuming for the sake of argument that Plaintiffs could demonstrate the existence of an investment advisory relationship with Movants, Plaintiffs’ sole remedy would be recession of the agreement and recovery of fees paid in consideration of such an agreement. Transamerica, 444 U.S. at 24 n.14. Here, Plaintiffs have failed to demonstrate that they paid any fees to Movants in consideration of the investment advice Plaintiffs claim to have received.29 Moreover, Plaintiffs do not seek to recover any such investment advisory fees; instead, Plaintiffs seek to recover their entire $300,000.00 investment in Waverly I and the entire $1,600,000.00 they transferred to Holzer‘s personal bank account. (Pls.’ Mem. 21; AC ¶ 60.) The Advisers Act
Accordingly, Movants’ motion for summary judgment is GRANTED with respect to Plaintiffs’ Advisers Act claims in Counts I and II of the Amended Complaint.
B. Fraud Claim in Violation of Section 10(b) of the Securities Exchange Act of 1934
In Count III, Plaintiffs allege that “in furtherance of their scheme to defraud, defendants, directly and indirectly, in connection with purchases and sales of securities, misrepresented material facts and omitted to state material facts,” (AC ¶ 67), in violation of
1. Primary liability under Section 10(b)
i. Applicable Law
unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange . . . [t]o use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the
Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
ii. Analysis
Movants argue that the
In response, Plaintiffs claim that “Fingerhut/Holzer lied about the nature of the investments.” (Pls.’ Mem. 16-17.) Additionally, Plaintiffs reference communications and correspondence between Movants and the Rapillos as evidence that Movants made material misrepresentations. (Id.) However, each communication or correspondence that Plaintiffs identify relates solely to the Rapillos investment in Waverly I, (see Pls.’ Mem. 16; supra Section II.D), and, as explained above, it is undisputed that Waverly I was a legitimate investment, (see supra Section II.B.1). It is also undisputed that the Rapillos did not meet Fingerhut until after Holzer‘s frauds were exposed, (JR Tr. 7:14-8:9; id. Ex. G, 22:12-17), and had no contact with
Plaintiffs note that recklessness can, under certain circumstances, fulfill the element of scienter, (Pls.’ Mem. at 15); however, the element of scienter is independent from the requirement that a defendant make a material misrepresentation. See Rolf v. Blyth, Eastman Dillon & Co., Inc., 570 F.2d 38, 44 (2d Cir. 1978) (holding that, where “the alleged aider and abettor owes a fiduciary duty to the defrauded party, recklessness satisfies the scienter requirement“) (internal footnote omitted). In Rolf, the material misrepresentation element was established by defendant‘s “constant” assurances to plaintiff in light of the fact that they were intended to assuage plaintiff‘s doubt in the investment strategy put forward by defendant‘s subordinate. Id. at 47-48. With respect to the scienter element, the district court held that the defendant was reckless in failing to ascertain the validity of his subordinate‘s statements and such recklessness satisfied the scienter requirement for a
In light of the fact that Plaintiffs have offered no evidence that any Movant made any material misrepresentation, there is no basis upon which a reasonable juror could find any Movant primarily liable for a
i. Applicable Law
“Controlling-person liability” under
ii. Analysis
Movants argue that liability cannot be premised on
Even if Plaintiffs could demonstrate some culpable participation, Plaintiffs’ controlling person theory still fails because there is no basis to conclude that any Movant knew of Holzer‘s primary violation. First, Plaintiffs have offered no evidence that Fingerhut or any Movant knew of the frauds Holzer perpetrated on the Rapillos until after their completion. (See supra Sections II.D-E.) Second, the Rapillos transferred their funds into Holzer‘s personal bank account to “pool” their money with Holzer‘s money because they understood that Movants would not accept their money if the Rapillos attempted to invest directly with the Movants. (JR Tr. 19:4-5; HR Tr. 9:17-10:15; see also supra Section II.E.) Indeed the only reasonable conclusion to draw from these facts is that the Rapillos transferred their money to Holzer with the understanding that Fingerhut would not know of their pooling of money with Holzer so that they could make investments alongside Movants. (Pls.’ 56.1 Stmt. ¶ 18.) In other words, their investments were a secret between them and Holzer, and it was understood between the Rapillos and Holzer that these investments would be hidden and/or not disclosed to Fingerhut or the Corporate Defendants. Plaintiffs’
Accordingly, Movants’ motion for summary judgment is GRANTED with respect to Count III of the Amended Complaint.
In Counts IV and V, Plaintiffs allege that Defendants committed fraud with respect to “each and every investment.” (AC ¶ 72.) Plaintiffs further allege that Defendants “represented to the plaintiffs that their investments were to be placed in sound real estate, equity, debentures, credits and bonds,” (id.), but the “representations made by defendants were, in fact false,” (id. ¶ 73), and “defendants knew their misrepresentations [to be] false,” (id. ¶ 74). In addition to arguing that Defendants are primarily liable for fraud, Plaintiffs raise three alternative theories of liability. These theories—aiding and abetting, respondeat superior, and veil piercing—are not contained in the Amended Complaint or elsewhere other than in their opposition papers. (Pls.’ Mem. 10-12, 17-19.)31
For the reasons set forth below, I find that Plaintiffs have failed to offer any evidence demonstrating liability as to any Movant pursuant to these three theories of liability—aiding and abetting, respondeat superior, and veil piercing. Accordingly, Movants’ motion for summary judgment is GRANTED as to Counts IV and V.
1. Fraud—Primary Liability
i. Applicable Law
The elements of common law fraud under New York law are “(1) a material misrepresentation or omission of fact, (2) made with knowledge of its falsity, (3) with an intent to defraud, and (4) reasonable reliance on the part of the plaintiff, (5) that causes damage to the plaintiff.” Schlaifer Nance & Co. v. Estate of Warhol, 119 F.3d 91, 98 (2d Cir. 1997). “Because the elements of common-law fraud are substantially identical to those governing [Section] 10(b), the identical analysis applies.” In re Optimal U.S. Litig., 837 F. Supp. 2d 244, 252 (S.D.N.Y. 2011) (internal quotation marks omitted).
ii. Analysis
As set forth in detail above, (see supra Sections II.C-E), Holzer, not Movants, made the alleged material misrepresentations regarding the three fraudulent transactions, and the three communications between Fingerhut and Plaintiffs all occurred after Plaintiffs made their final transfer of funds to Holzer‘s personal bank account and related solely to the Waverly I investment, (see supra Section II.D), a legitimate investment. In light of the fact that Plaintiffs have failed to identify any material misrepresentation made by any Movant, Movants cannot be found liable for fraud. Schlaifer Nance & Co., 119 F.3d at 98.
2. Fraud—Aider and Abettor Liability
i. Applicable Law
To establish liability for aiding and abetting fraud under New York law,32 a plaintiff must show (1) the existence of a fraud; (2) the defendant‘s knowledge of the fraud; and (3) that the defendant provided substantial assistance to advance the fraud‘s commission. See Lerner v. Fleet Bank, N.A., 459 F.3d 273, 292 (2d Cir. 2006); Wight v. BankAmerica Corp., 219 F.3d 79, 91 (2d Cir. 2000). A defendant must be shown to possess “actual knowledge” of the underlying fraud “to impose liability [as] an aider and abettor under New York law.” Lerner v. Fleet Bank, N.A., 459 F.3d at 292; JP Morgan Chase Bank v. Winnick, 406 F. Supp. 2d 247, 252 (S.D.N.Y. 2005) (“The knowledge requirement of an aiding and abetting fraud claim is satisfied by alleging actual knowledge of the underlying fraud.“). “A defendant provides substantial assistance only
ii. Analysis
As already stated, Plaintiffs have failed to identify any evidence that demonstrates Movants possessed actual knowledge of Holzer‘s alleged fraud, (see supra Section II.E), or any evidence to support the claim that Movants provided substantial assistance to Holzer in committing his fraud, (id.). To the contrary, the evidence contained in the record supports the proposition that Movants played no part in Holzer‘s fraud. (Id.) Accordingly, Plaintiffs’ aiding and abetting fraud claims fail. See Lerner v. Fleet Bank, N.A., 459 F.3d at 292 (holding that “actual knowledge is required to impose liability on an aider and abettor under New York law“).
3. Fraud—Respondeat Superior
i. Applicable Law
Without citing any authority, Plaintiffs claim that Movants are liable for Holzer‘s fraud under the theory of respondeat superior. (See Pls.’ Mem. 11-12.) Under New York law, “an employer may be vicariously liable for the tortious acts of its employees only if those acts were committed in furtherance of the employer‘s business and within the scope of employment.” N.X. v. Cabrini Med. Ctr., 97 N.Y.2d 247, 251 (2002) (citing Riviello v. Waldron, 47 N.Y.2d 297, 302 (1979)). Additionally, New York law “precludes suits against an employer for a theft committed by employees so long as the employer did not induce the employee to commit the theft.” Goldstein v. U.S., 14 F. App‘x 115, 116 (2d Cir. 2001) (summary order) (dismissing suit against the U.S. Department of Veterans’ Affairs where plaintiff alleged employee stole certain of plaintiff‘s documents and medical records). In Goldstein, the Second Circuit held that “[t]here is no evidence in the record to suggest that the defendants induced or otherwise approved of its employees committing the purported theft of Goldstein‘s medical records and, as such, the
ii. Analysis
Here, Plaintiffs claim that Movants are liable for Holzer‘s fraud under the theory of respondeat superior because Holzer‘s fraud was committed “under the guise of the Fingerhut/Holzer LLC, and Fingerhut was a controlling member of the LLC who provided most (if not all) of the capital contribution to the LLC.” (Pls.’ Mem. 12.)33 This theory of liability fails for multiple reasons. First, Holzer‘s scheme, inclusive of his fraud and conversion of Plaintiffs’ money, was outside the scope of any purported employment relationship with Movants. Plaintiffs concede that as retail customers they would not be accepted as investors by Fingerhut and the Corporate Defendants, and that Holzer offered them a means to circumvent this restriction. (See supra Section II.E.) Second, Holzer‘s scheme was not in furtherance of Movants’ business since Holzer admits that he “used Rapillo‘s money for [his] own personal use and invested some of it on [his own] behalf.” (Folkenflik Decl. Ex. C, 11:16-24.) Third, Plaintiffs do not claim that Fingerhut induced Holzer to take Plaintiffs’ money, and the evidence in the record supports the proposition that Movants had no knowledge of Holzer‘s scheme. (See supra Section II.E.)
Accordingly, Plaintiffs’ respondeat superior argument is not supported by the record and is without merit.
i. Applicable Law
Plaintiffs invoke the equitable doctrine of veil piercing, (Pls.’ Mem. 10), but fail to articulate how the doctrine applies in this case. Under New York law, a court may pierce the corporate veil where (1) “the owner exercised complete domination over the corporation with respect to the transaction at issue,” and (2) “such domination was used to commit a fraud or wrong that injured the party seeking to pierce the veil.” Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 (2d Cir. 1997). Veil piercing is “typically employed by a third party seeking to go behind the corporate existence in order to circumvent the limited liability of the owners and to hold them liable for some underlying corporate obligation.” Matter of Morris v. New York State Dep‘t of Taxation & Fin., 82 N.Y.2d 135, 140-41 (1993).
ii. Analysis
Here, Plaintiffs assert that Fingerhut should be held liable using veil piercing because “Fingerhut was personally intertwined with Fingerhut/Hozer LLC and it impossible [sic] to trace what happened with the Rapillos’ money after it was given to Holzer. It is likely that Holzer put these funds toward the partnership‘s investment vehicles, or even gave the money directly to Fingerhut.” (Pls.’ Mem. 10-11.)34
The undisputed evidence in the record refutes Plaintiffs’ assertions that Fingerhut was involved in Holzer‘s fraud. (See Folkenflik Decl. Ex. C, 11:16-24 (Holzer states that he “used Rapillo‘s money for [his] own personal use and invested some of it on [his own] behalf.“).) In addition, Plaintiffs failed to articulate how piercing the veil of any Corporate Defendant would
In light of the fact that Plaintiffs have failed to demonstrate the elements of fraud concerning any Movant, whether as a primary actor, or through aider and abettor liability, respondeat superior, or veil piercing, Movants’ motion for summary judgment is GRANTED with respect to Counts IV and V of the Amended Complaint.
D. Conversion Claim
In Count VI Plaintiffs allege that instead of investing their money, Defendants “took plaintiffs’ money and converted it for their own personal use.” (AC ¶ 87.) Plaintiffs also allege that Defendants used Plaintiffs’ money to purchase various luxury items including jewelry, art, clothes, equities, and stocks. (Id. ¶ 88.)
1. Applicable Law
Under New York law, “[a] conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person‘s right of possession.” Okyere v. Palisades Collection, LLC, 961 F. Supp. 2d 522, 534 (S.D.N.Y. 2013) (quoting Colavito v. N.Y. Organ Donor Network, Inc., 8 N.Y.3d 43, 49-50 (2006)); Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 403-04 (2d Cir. 2006) (“[C]onversion is the unauthorized assumption and exercise of the right of ownership over
New York law also permits a claim for aiding and abetting conversion where the plaintiff can prove “(1) the existence of a violation by the primary wrongdoer; (2) knowledge of the violation by the aider and abettor; and (3) proof that the aider and abettor substantially assisted the primary wrongdoer.” Chemtex, LLC v. St. Anthony Enters., Inc., 490 F. Supp. 2d 536, 545-46 (S.D.N.Y. 2007); Lesavoy v. Lane, 304 F. Supp. 2d 520, 526 (S.D.N.Y. 2004) (citing Briarpatch Ltd. L.P. v. Geisler Roberdeau, Inc., No. 99-CV-9623, 2002 WL 31426207, at *7 (S.D.N.Y. Oct. 30, 2002), vacated in part on other grounds, Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296 (2d Cir. 2004), cert. denied, 544 U.S. 949 (2005)). While “wrongful intent is not an essential element of the conversion,” Leve v. Itoh & Co. (Am.), Inc., 136 A.D.2d 477, 478 (1st Dep‘t 1988), appeal denied, 71 N.Y.2d 806 (1988), a plaintiff must show that the defendant “aided and assisted” the converter “with culpable knowledge that such funds did not belong to [the converter].” Weisman, Celler, Spett & Modlin v. Chadbourne & Parke, 271 A.D. 2d 329, 330 (1st Dep‘t 2000), appeal denied, 95 N.Y.2d 760 (2000). New York “has not adopted a constructive knowledge standard for imposing aiding and abetting liability.” Lesavoy, 304 F. Supp. 2d at 526 (quoting Kolbeck v. LIT Am., Inc., 939 F. Supp. 240, 246 (S.D.N.Y. 1996)). Thus, “New York law requires actual knowledge of the wrongful conduct.” Diamond State Ins. Co. v. Worldwide Weather Trading LLC, No. 02-CV-2900, 2002 WL 31819217, at *6 (S.D.N.Y. Dec. 16, 2002) (citations omitted).
2. Analysis
The Rapillos claim that the $1,900,000.00 that they transferred in the four separate wire transfers was converted by Defendants, (AC ¶ 89); however, in light of the undisputed fact that the Waverly I investment was legitimate, (see supra Section II.B.1), the Rapillos’ $300,000.00 investment in Waverly I cannot give rise to a conversion claim. It is also undisputed that the Rapillos transferred the funds relating to their investment in Waverly I to an escrow account controlled by Foley and Lardner LLP. (Pls.’ Mem. 4; Conway Decl. Ex. 6, ¶ 6; id. Ex. 8.) After they invested in Waverly I, the Rapillos received K-1 statements for at least two years updating them on the status of their investment in Waverly I. (Conway Decl. Exs. 17, 18.) Mr. Rapillo acknowledges that the $300,000.00 he and his wife transferred to Foley and Lardner LLP was to be invested in Waverly I, although the Waverly I development project ultimately failed. (JR Tr. 142:17-25.) In light of the fact that the Rapillos intended to, and did, transfer the $300,000.00 to Foley and Lardner LLP for the purpose of investing in Waverly I, and that money was in fact invested in Waverly I, the Rapillos investment in Waverly I cannot give rise to a conversion claim against Movants. See Thyroff, 460 F.3d at 403-04 (noting that conversion requires the “unauthorized assumption and exercise of the right of ownership“) (emphasis added). In other words, the $300,000.00 was invested as Plaintiffs expected. Thus, Plaintiffs’ conversion claim
After carefully reviewing the evidence contained in the record before me, I find that Plaintiffs have failed to put forward any evidence upon which a reasonable juror could find any Movant liable for conversion as a primary actor. The undisputed evidence demonstrates that, on three separate occasions, the Rapillos transferred their money to Holzer‘s personal bank account, (id.), and Holzer admits that, upon receiving their money, he treated the Rapillos’ money as his own, (Folkenflik Decl. Ex. C, 11:16-24 (“I used Rapillo‘s money for my own personal use and invested some of it on my [own] behalf.“)). In light of the fact that Holzer, and not any Movant, “assume[d] or exercise[d] control over [the Rapillos‘] personal property,” Okyere, 961 F. Supp. 2d at 534, only Holzer could be liable to the Rapillos for conversion as a primary actor.
Plaintiffs’ argument that Movants aided and abetted Holzer in the conversion is also unsupported by the evidence in the record. As set forth above, (see supra Section II.E), Plaintiffs failed to proffer any evidence to support their conclusory assertion that Movants had the requisite “actual knowledge” of Holzer‘s conversion, Diamond State Ins. Co., 2002 WL 31819217, at *6, or that any Movant provided substantial assistance to Holzer in committing the alleged conversion, Chemtex, LLC, 490 F. Supp. 2d at 547. In light of the fact that Plaintiffs have failed to any facts demonstrating that any Movant (1) had actual knowledge of Holzer‘s alleged conversion or (2) substantially assisted Holzer in the conversion, Plaintiffs’ claim for aiding and abetting conversion fails.
E. Breach of Fiduciary Duty Claims
In Counts VII, VIII, and IX Plaintiffs assert claims for breach of fiduciary duty. In Count VII Plaintiffs allege that Defendants breached “their fiduciary duty to perform their professional services by investing monies and all funds in sound investments with utmost good faith and with the highest standards of care, foreclosure and fidelity.” (AC ¶ 92.) In Count VIII Plaintiffs allege that Fingerhut, “in exercise of his duty as a principal, agent, associate or fiduciary of [the Corporate Defendants] knew that his partner DAVID HOLZER was involved in fraud, deceit, dishonesty, in the theft, stealing, asportation, and purloinment of the assets, chattels, goods and monies of [the Rapillos] and that [Fingerhut] took the benefit of the monies, goods and assets for his own use.” (Id. ¶ 96.) In Count IX, styled as a claim for “breach of fiduciary duty,” Plaintiffs allege that they “are entitled to treble damages and punitive damages against each of the defendants for the theft, dishonesty, breach of fiduciary duty, conversion, fraud and violation of all of the statutes enumerated above.” (Id. ¶ 98.)
1. Applicable Law
To sustain a claim for breach of fiduciary duty, a plaintiff must demonstrate (1) the existence of a fiduciary duty between the parties, (2) the knowing breach of that duty by defendant, and (3) damages suffered by plaintiff as a result of the breach. Johnson v. Nextel Commc‘ns, Inc., 660 F.3d 131, 138 (2d Cir. 2011) (citing Barrett v. Freifeld, 64 A.D.3d 736, 739 (2d Dep‘t 2009)). To state a claim for aiding and abetting a breach of fiduciary duty, a plaintiff must show “(1) breach of fiduciary obligations to another of which the aider and abettor had actual knowledge; (2) the defendant knowingly induced or participated in the breach; and (3) plaintiff suffered actual damages as a result of the breach.” Anwar v. Fairfield Greenwich Ltd., 728 F. Supp. 2d 372, 442 (S.D.N.Y. 2010); see Kaufman v. Cohen, 307 A.D.2d 113, 124 (1st Dep‘t 2003).36
Under New York law, a fiduciary relationship may be found “when one [person] is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation.” Flickinger v. Harold C. Brown & Co., 947 F.2d 595, 599 (2d Cir. 1991) (quoting Mandelblatt v. Devon Stores, Inc., 132 A.D.2d 162, 168 (1st Dep‘t 1987)). In determining whether a fiduciary relationship exists, “New York courts conduct a fact-specific inquiry into whether a party reposed confidence in another and reasonably relied on the other‘s superior expertise or knowledge.” Facella v. Fed‘n of Jewish Philanthropies of N.Y., Inc., No. 98-CV-3146, 2004 WL 1700616, at *6 (S.D.N.Y. July 30, 2004) (citation omitted).
2. Analysis
Assuming, without deciding, that Plaintiffs’ investment in Waverly I gave rise to a fiduciary relationship between Plaintiffs and Movants, the scope of such a relationship would relate solely to the Waverly I investment and would not extend to the three wire transfers Plaintiffs made with Holzer believing he would invest their money after pooling it with his own money. (See supra Sections II.B.2-4.) See Thermal Imaging, Inc. v. Sandgrain Sec., Inc., 158 F. Supp. 2d 335, 344 (S.D.N.Y. 2001) (the scope of the “fiduciary duty extends only to those matters with which [the fiduciary] is entrusted“). For the reasons already stated, Waverly I was a legitimate investment that was administered properly despite ultimately failing, (see supra Section II.B.1); thus, Plaintiffs have no claim for breach of fiduciary duty premised on Movants’ involvement with Waverly I.
Plaintiffs’ aiding and abetting a breach of fiduciary duty claims fail for the same reasons that Plaintiffs’ aiding and abetting conversion and aiding and abetting fraud claims fail: Plaintiffs have not identified any evidence in the record to support their conclusory allegations that any Movant had actual knowledge of Holzer‘s fraud scheme. (See supra Section II.E.) Since Plaintiffs have failed to demonstrate the element of actual knowledge, Anwar, 728 F. Supp. 2d at 442, Plaintiffs’ aiding and abetting breach of fiduciary duty claims must be dismissed.
Accordingly, Movants’ motion for summary judgment dismissing Plaintiffs’ breach of fiduciary duties claims contained in Counts VII, VIII and IX is GRANTED.
For the foregoing reasons, Movants’ motion for summary judgment is GRANTED as to each cause of action contained in the Amended Complaint. The Clerk‘s Office is respectfully directed to terminate the pending motion at Doc. 69. Plaintiffs and Defendant Holzer are directed to appear for a conference on October 14, 2016 at 10:30 a.m. in Courtroom 518 of the Thurgood Marshall United States Courthouse, 40 Foley Square, New York, New York to discuss the next steps in the case.
SO ORDERED.
Dated: September 14, 2016
New York, New York
Vernon S. Broderick
United States District Judge