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KLEIN v. SPEAR

July 23, 1969

Klein, Plaintiff
v.
Spear, Leeds & Kellogg, et al., Defendant


Cooper, District Judge.


The opinion of the court was delivered by: COOPER

COOPER, District Judge:

On December 27, 1968 plaintiff, pro se, brought this suit against a total of twelve defendants charging in four separate claims that they violated the Securities Act of 1933 and the Securities Exchange Act of 1934 by manipulating the price at which certain stock owned by plaintiff was purchased and sold.

 All defendants herein, moving separately, seek summary judgment *fn1" dismissing this action, or, alternatively, severance of the first cause of action and an order requiring plaintiff to furnish an undertaking for the payment of the costs of this suit, including reasonable attorneys' fees.

 Plaintiff is an habitual litigant specializing in suits against brokerage firms and their attorneys. He has commenced eight successive actions against defendants Spear, Leeds & Kellogg, James C. Kellogg, III, and Raymond E. Grabowski (Kellogg defendants) since 1965, three in federal court and five in state court, none of which has concluded in plaintiff's favor. At least four of these suits still appear to be outstanding, including the instant action and Klein v. Kenney, et al, 68 Civ. 4970 (in which companion motions by the Kellogg defendants have been decided by this Court today) filed in this District. The other four, including Klein v. O'Donnell & Co., et al, 65 Civ. 3684, filed in this District in 1965, have all terminated sooner or later for lack of prosecution. See Sullivan affidavit, January 15, 1969; Sullivan letter, June 25, 1969.

 We are further informed that plaintiff has commenced some four lawsuits, including the instant action, against Mabon, Nugent & Co., Weingarten & Co., Herman Lass and Lew Sonn (Nugent defendants). After Sidney S. Bobbe, attorney for the Nugent defendants, successfully defended the Nugent defendants in the first suit by obtaining summary judgment against plaintiff, he was himself named as a defendant in plaintiff's last three actions. As a result of this litigation, Bobbe additionally has been twice sued by plaintiff for several million dollars for alleged slander and libel. Both complaints were dismissed.

 The pattern plaintiff follows is clear and by no means restricted to these defendants. From the moving and supplementary papers submitted to us by all parties herein it is evident that in the past five or six years plaintiff has initiated well over thirty lawsuits against an extremely large number of defendants. He is rarely, if ever, content to lose an action. Such defeats merely serve as springboards for libel actions against the attorney for the prevailing party, for repetitious suits against the successful side, for criminal complaints, etc. See, e.g., Bobbe affidavit of May 16, 1967 attached to motion papers of Nugent defendants herein; Bobbe affidavit of April 7, 1969; Sullivan affidavit of January 15, 1969; Sullivan supplementary affidavit of January 20, 1969; Sullivan letter of April 7, 1969 and transcript of testimony of H. L. Klein attached thereto. Most of these suits were in state courts, but several have been in federal courts. Out of this volume of litigious enterprise, plaintiff asserts that he obtained verdicts in his favor in three actions. Additionally, he claims to have received settlements ranging from $150 to $5000 in some seven of his lawsuits. See plaintiff's reply affidavit, May 7, 1969.

 An example of how plaintiff uses one claim as a base from which to generate a seemingly endless current of litigation is provided in capsule form by Judge Tyler in Klein v. Bower et al, CCH Fed. Sec. L. Rep. para. 92,362 n. 7 (S.D.N.Y. 1967):

 
"So vigorous and so persistent has the plaintiff been in seeking redress for his alleged grievances that there appears to be an injunction outstanding in the Supreme Court of New York forbidding continuance of that course of conduct. In addition to the previous civil litigation in the state courts, it seems that plaintiff has, inter alia, (1) filed at least one complaint each with the District Attorneys of New York and Queens counties, (2) summoned certain of the defendants before the New York County Criminal Court, (3) filed charges against certain of the defendants who are notaries before the Secretary of State of New York, *fn2" (4) filed a tort action in Kings County Supreme Court, and (5) filed an additional complaint with the New York County District Attorney charging perjury in connection with certain exhibits used in the state court litigation. All of these activities pertained to the transactions which underlie the instant litigation. Each seems to have been terminated by a finding in favor of the defendants."

 The injunction order referred to by Judge Tyler forbids further annoyance and harassment by plaintiff of a law firm that had represented a defendant in a prior action instituted by plaintiff. See Bower v. Klein et al, Sup. Ct., N.Y. County, index no. 5810/1968, July 10, 1968 (Murphy, J.). That order has been affirmed and a writ of prohibition brought by Klein against Justice Murphy, who ordered the injunction, has been unanimously denied by the Appellate Division, First Department. In the short time since Judge Tyler's decision plaintiff has been held in civil and criminal contempt and fined $250 (or ten days in jail) for deliberately violating provisions of that injunction order. See Bower v. Klein et al, index no. 5810/1968, order of Justice Samuel Gold, Supreme Court, New York County, May 21, 1969.

 We could continue with this sorry recital almost indefinitely. The point is, although it hardly needs stating, that plaintiff has taken great liberty with the liberty of judicial process - apparently a violent abuse of it. Nevertheless, as is our duty, we are constrained to and do measure the legal effectiveness of his papers with that preciseness which the law commands in respect of claims asserted by the most deserving of litigants. We point out that we have not before us a limping inarticulate plaintiff. We learn that he has been assisted in the drawing of his papers by a practicing attorney (or attorneys); his oral argument before us (on the return day of these motions) was clear in expression, vigorously bitter in its denunciation and inexhaustible (after a full hour of screeching, he appeared as refreshed as at the start).

 Taking up the question of summary judgment first, we consider each cause of action separately in passing upon defendants' motions.

 First Cause of Action

 This claim is alleged against the Kellogg defendants, the Nugent defendants (including Sidney S. Bobbe), and Vanden, Broeck, Lieber & Co. (Vanden).

 At the outset, we find plaintiff barred by collateral estoppel from asserting what appears to be at least the major portion of his first cause of action.

 The heart of this action (certainly with respect to injuries claimed) is plaintiff's allegation that the liquidation of his account by Weingarten & Co. was in breach of his agreement with them, and that as a result plaintiff was damaged to the extent that he never received the stock he had purchased.

 From the affidavits and exhibits submitted by the Nugent defendants and not disputed by plaintiff, it appears that plaintiff raised an identical allegation of breach of this same agreement as the basis for an action brought by him against Weingarten & Co. and Mabon, Nugent & Co. in the Supreme Court, Kings County, New York.

 On July 17, 1967, Justice Feiden of that court granted defendants' motion for summary judgment and directed entry of judgment for defendant and dismissal of plaintiff's complaint. Upon reargument on September 18, 1967, he adhered to his original decision granting summary judgment of dismissal. Justice Feiden filed an undated and unpublished memorandum setting forth his reasons for granting summary judgment. In that memorandum he made clear that dismissal was based on the absence of any merit to the cause of action, and not on the statute of limitations or any other ground.

 On February 28, 1968, plaintiff's appeal from Justice Feiden's order granting summary judgment was dismissed for failure to prosecute by the Appellate Division, Second Department. On July 16, 1968, Justice Feiden, finding no substance to plaintiff's claim of newly discovered evidence (an alleged endorsement on the back of the $1000 deposit check given Weingarten & Co.), denied plaintiff's motion for a rehearing as untimely. *fn3"

 There has thus been a valid final adjudication in the State courts which conclusively establishes defendants breached no agreement with plaintiff by liquidating his account and that plaintiff suffered no compensable injury as a result thereof. Plaintiff is bound by that determination and cannot relitigate that issue here. See 1B Moore, Federal Practice para. 0.405 at 637, para. 0.409 at 1007-1008, and para. 0.441 at 3778-3779 (2d ed. 1965). See also, Abramson v. Pennwood Investment Corp., 392 F.2d 759 (2d Cir. 1968); Klein v. Spear, Leeds & Kellogg, N.Y.L.J. May 23, 1969, p. 18 (Justice Rinaldi granted summary judgment for defendants in an action based on substantially the same facts as those alleged herein, but sounding in state law). Despite an absence of mutuality with regard to certain of the defendants herein, plaintiff is collaterally estopped from relitigating that portion of his first cause of action, even against these new defendants. See Zdanok v. Glidden Co., Durkee Famous Foods Div., 327 F.2d 944, ...


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