Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

BECKER v. SILVERMAN

June 24, 1986

BARRY BECKER, Plaintiff,
v.
ROBERT SILVERMAN, Defendant



The opinion of the court was delivered by: TENNEY

TENNEY, J.,

 The plaintiff in this action, Barry Becker ("Becker"), contends that the defendant, Robert Silverman ("Silverman"), violated Section 10(b) ("§ 10(b)") of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. 78j, by making certain misrepresentations in connection with the purchase of stock. In addition, the amended complaint sets forth pendent state law claims for common law fraud and breach of fiduciary duty. *fn1" The defendant has filed a motion pursuant to Fed. R. Civ. P. ("Rule") 12(b)(6) and 9(b) for an order dismissing the plaintiff's amended complaint for failure to state a claim, and pursuant to Rule 56 for summary judgment. The defendant also argues that the entire matter should be sent to arbitration.

 For the reasons set forth below, the defendant's motion to dismiss the action and for summary judgment is denied. Those claims asserted by the plaintiff, which do not arise under the Exchange Act, however, are to be arbitrated, and this action is stayed pending arbitration.

 BACKGROUND

 In 1981, Becker and Silverman established a retail micro computer business, Computer Center, Inc. ("CCI"), which sold and serviced micro computer hardware and software. *fn2" Silverman and Becker entered into a written Shareholders' Agreement ("Agreement") on December 1, 1981, which provided that they would each own 100 shares of common stock. They were the sole shareholders.

 The Agreement stated that they would both "vote their stock in the Corporation so that each [of them would] be a Director . . . [and] an Officer of the Corporation." The Agreement also included an arbitration clause which provided that any dispute relating to or arising out of the Agreement would be resolved by arbitration.

 On January 1, 1983, Becker and Silverman entered into another agreement ("1983 Agreement"), whereby Silverman purchased 25 shares from Becker for $25,000. As a result of that transaction, Silverman owned 125 shares, which was 62.5 per cent of the corporation's shares, and Becker owned 75 shares -- 37.5 per cent. The 1983 Agreement specified that despite the sale and transfer of shares, all of the terms and provisions of the original Agreement were to remain in full force and effect.

 It is undisputed that on April 4, 1984, Silverman took certain actions which were intended to prevent Becker from continuing as an employee, officer, or director of the corporation. Silverman ceased paying Becker any salary, barred Becker from CCI's corporate headquarters, and changed the computer "password" for sales records of the CCI stores.

 The Litigation Saga

 Two weeks after Becker was "fired," he instituted an action in New York State Supreme Court, seeking a preliminary injunction against Silverman. Becker v. Silverman, No. 09346/83, slip op. (N.Y. Sup. Ct. Apr. 26, 1984). *fn3" The court denied Becker's application, stating that arbitration was the appropriate forum for resolving the parties' dispute.

 Becker subsequently instituted a dissolution proceeding in New York State Supreme Court, in which he sought to have CCI dissolved as a corporation. Becker v. Silverman, No. 21573-84, slip op. (N.Y. Sup. Ct. Mar. 12, 1985). In March 1985, the court concluded that the dispute should be arbitrated rather than litigated. The court dismissed the dissolution proceedings and directed the parties to proceed to arbitration. Despite the court's order, however, arbitration proceedings have not been initiated.

 Becker made the next move by demanding the right to examine the books and records of CCI, pursuant to N.Y. B.C.L. § 624 (McKinney 1963). Shortly after Becker made his demand, Silverman instituted an action against Becker in New York State Supreme Court asking the court to cancel Becker's shares. Silverman contended that Becker had never actually paid for his shares in CCI because he had not made any capital contribution for the pertinent shares. That case is still pending. Becker responded by instituting this action.

 DISCUSSION

 1. Dismissing the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.