The opinion of the court was delivered by: FOLEY
MEMORANDUM-DECISION and ORDER
Plaintiff D. Frank Campito commenced this action on August 21, 1975, seeking money damages based upon alleged violations of certain antifraud and registration provisions of the federal securities laws as well as state law. By leave of court, an amended complaint was filed on February 4, 1977, substituting Virginia W. Anderson, as Executrix of the Estate of Stanley D. Anderson, for Stanley D. Anderson and adding Donald Hatt, Esquire, as Trustee in Bankruptcy of Systomation, Inc., as parties-defendant. In this amended complaint, plaintiff's first and second claims for relief contain allegations with respect to defendants McManus, Longe, Brockwehl, Inc., ("MLB") and John J. McManus ("McManus") founded on violations of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), Rule 10b-5, 17 C.F.R. § 240.10b-5 (1978), § 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a) (First Claim For Relief), and § 12(1) of the Securities Act of 1933, 15 U.S.C. § 77L (1) (Second Claim For Relief). Plaintiff's third and fourth claims for relief assert similar claims against defendants Systomation, Inc., Donald Hatt, Esquire, as Trustee in Bankruptcy of Systomation, Inc., and Virginia W. Anderson, as Executrix of the Estate of Stanley D. Anderson. The remaining seven claims for relief in plaintiff's amended complaint, five of which are brought against defendants MLB and McManus while two are brought only against defendant McManus, are pendent claims based on New York law.
Now before the Court is a motion by defendants MLB and McManus pursuant to Rule 56, Fed.R.Civ.P., for summary judgment dismissing the first and second claims for relief on the ground that they are barred by the applicable statutes of limitations and dismissing the fifth, sixth, seventh, eighth, ninth, tenth, and eleventh claims for relief on the ground of lack of jurisdiction over the subject matter.
Unfortunately, the recitation of facts underlying the instant motion are not as clearly presented as they could have been had the attorneys been aware of a recent amendment to the General Rules of this Court. See N.D.N.Y.R. 10(e) (statement of material facts as to which a party contends there is or is not genuine issue to be tried shall be annexed to moving or opposing papers on motion for summary judgment) (effective August 23, 1978). This amendment is not contained in previously issued pamphlets of the General Rules and is to be brought to the attention of the attorneys when summary judgment motions are filed. Furthermore, to aid in the future prosecution of this lawsuit, attention is directed to 15 U.S.C. §§ 77c(a)(11) and 77d(2) together with 17 C.F.R. §§ 230.144, 230.146, and 230.147 (1978). In any event, the facts appear as follows.
Preliminarily, it should be noted with respect to the individual defendants named in this action that Stanley D. Anderson was the president and a director of Systomation, Inc., at all times referred to in the amended complaint. Likewise, John J. McManus was a director of MLB as well as Systomation, Inc., at all time pertinent to this lawsuit.
The events leading to the commencement of this action began in September of 1969 when MLB entered into a construction contract with Systomation, Inc., whereby MLB assumed the responsibilities of general contractor for the construction of the corporate headquarters of Systomation, Inc., to be located in Clifton Park, Saratoga County, New York. At about the same time, MLB entered into a subcontract with Campito Plumbing and Heating, Inc., for all the plumbing, heating, and air conditioning work on this project. Plaintiff apparently is the founder and principal shareholder of Campito Plumbing and Heating, Inc., as well as its president.
Work commenced on the project and proceeded without incident until some time during the summer of 1970 when the construction lender, Schenectady Trust Company, advised MLB that it would make no further advances on its construction funding to Systomation, Inc. It is asserted that at that time, Systomation, Inc., owed MLB approximately $ 494,000.00 of which about $ 394,000.00 was owed by MLB to its subcontractors.
On or about August 1, 1970, construction on the project ceased, MLB filed a mechanics' lien against the property, and a receiver was appointed to protect the work in place. Thereafter, Systomation, Inc., made efforts to find additional sources of revenue so that the construction could resume and the contractors paid. The culmination of this effort occurred on December 4, 1970, when an Escrow Agreement was executed. Motion For Summary Judgment, Exhibit C, filed October 25, 1978. This agreement provides, among other things, that certain named investors, including MLB, would subscribe for shares of common stock in Systomation, Inc. In addition, MLB agreed to release its mechanics' lien and discharge the receiver. It is alleged that a registration statement was never filed with the Securities and Exchange Commission or in effect in connection with the issuance and distribution of these securities.
Plaintiff, who was not a party to the negotiations that led to the execution of the Escrow Agreement, did not sign this agreement. Then, on or about December 31, 1970, MLB executed an "Investment Letter" and delivered it to the Escrow Agent, the Schenectady Trust Company, under the terms of the Escrow Agreement. Motion For Summary Judgment, Exhibit D, filed October 25, 1978. This letter creates restrictions on the transferability of the stock of Systomation, Inc., issued to MLB under the Escrow Agreement. Pursuant to this agreement, Systomation, Inc., issued 10,000 shares of stock to MLB on or about January 29, 1971.
Thereafter, John J. McManus, on behalf of MLB, allegedly offered to sell 12,500 shares of Systomation, Inc., stock to the plaintiff. Plaintiff maintains that he initially thought that McManus was negotiating a purchase by plaintiff directly from Systomation, Inc., but only later learned that the stock to be sold to him was Systomation, Inc., stock that MLB had previously obtained pursuant to the Escrow Agreement. Subsequently, on or about May 5, 1971, MLB sent a letter to plaintiff confirming an agreement between plaintiff and MLB whereby plaintiff would accept stock in lieu of cash payment on the construction project. More specifically, plaintiff agreed to accept 10,000 shares of Systomation, Inc., stock in lieu of $ 50,000.00 due to Campito Plumbing and Heating, Inc., on its subcontract upon completion of the project, which by that time had been resumed.
On May 10, 1971, this agreement between plaintiff and MLB was amended as follows:
The undersigned do hereby ratify and confirm the Escrow Agreement dated December 4, 1970, and the addenda pertaining thereto, under which the rights to purchase, options to purchase, the issuance of stock warrants are set forth. A copy of said Escrow Agreement and addenda is annexed hereto.
The undersigned do agree to be bound by the conditions and limitations expressed herein concerning the purchase, the ownership, the holding of and the sale or disposition of said stock.
Motion For Summary Judgment, Exhibit F, filed October 25, 1978; Affidavit of D. Frank Campito, P 9, filed December 1, 1978. This amendment was signed by plaintiff individually and as president of Campito Plumbing and Heating, Inc. Plaintiff contends, however, that the Escrow Agreement and addenda pertaining thereto were not in fact annexed to this agreement. Therefore, plaintiff asserts that whereas the "Investment Letter" is the only document that contains any restrictions against the future transfer of Systomation, Inc., stock he only learned of the restrictions against transfer at a much later date.
On or about June 3, 1971, plaintiff exercised an option to purchase an additional 2,500 shares of Systomation, Inc., stock by tendering to MLB a check for $ 12,500.00. This was acknowledged by MLB on July 27, 1971. Then, on February 8, 1972, the construction project having been completed, Campito Plumbing and Heating, Inc., received final payment on its subcontract from MLB, approximately $ 60,000.00, and plaintiff tendered a check to MLB for $ 50,000.00 for the 10,000 shares of Systomation, Inc., stock that plaintiff had agreed to purchase. Plaintiff further alleges that on July 27, 1971, and on February 8, 1972, MLB mailed separate photocopies of stock certificates purportedly indicating that plaintiff had a 2,500 and a 10,000 share interest, respectively, in shares of Systomation, Inc., stock held by MLB. Amended Complaint, P 21; Affidavit of D. Frank Campito, PP 13, 15, filed December 1, 1978.
It appears that on or about June 15, 1971, Systomation, Inc., had issued 25,000 shares of its common stock to MLB, 10,000 shares of which were to be held by MLB for the benefit of the plaintiff. It further appears that on or about June 25, 1971, Systomation, Inc., had issued 8,750 shares of its common stock to MLB, 2,500 shares of which were to be held by MLB for the benefit of the plaintiff. The ...