The opinion of the court was delivered by: Sweet, District Judge.
Defendant Thomas A. Martin and various defendants aligned in
interest with him ("the Kinderhill Defendants") have moved
pursuant to Fed.R.Civ.P. 12(c) for judgment on the pleadings in
this and two related cases, Bruce v. Martin, 87 Civ. 7737
(RWS) ("Bruce I")*fn1 and Malone v. Martin, 90 Civ. 4651
(RWS), and for an injunction preventing plaintiffs' counsel
from several related actions. For the following reasons, the
motion is denied.
The parties, underlying facts, and prior proceedings are set
forth in the prior opinions in this case and related cases,
familiarity with which is assumed. E.g., Bruce v. Martin,
712 F. Supp. 442 (S.D.N.Y. 1989); Thornock v. Kinderhill Corp.,
712 F. Supp. 1123 (S.D.N.Y. 1989).
Nearly two years after filing the original complaint in Bruce
I, the plaintiffs entered into a settlement agreement ("the
Agreement") with the Kinderhill Defendants, intended to dispose
of all of the claims against those defendants in both Bruce I
and the closely-related Thornock action, 88 Civ. 3978 (RWS).
Pursuant to the Agreement, the Kinderhill Defendants were to
pay the plaintiffs a total of $275,000, $50,000 upon the
signing of the Agreement and the balance in payments of
$175,000 and $50,000. In return, the plaintiffs agreed to
dismiss the Kinderhill Defendants from both Bruce I and
Thornock and to refrain from instituting any further actions
against them. Paragraph 8(b) of the Agreement specifically
If the $175,000 payment to plaintiffs . . . is not timely
made, plaintiff [sic] may either (i) rescind this Agreement
by notice in writing to Kinderhill Corporation and Thomas A.
Martin, or (ii) sue for breach.
In addition, the plaintiffs' counsel agreed not to assist in
any other actions against any of the Kinderhill Defendants
arising out of the transactions at issue in Bruce I.
The Kinderhill Defendants concede that after paying the initial
$50,000, they have defaulted on their remaining obligations
under the Agreement. When the $175,000 payment was not made,
the plaintiffs decided to reassert the underlying claims
against the Kinderhill Defendants, and accordingly sought to
reopen the settlements in Bruce I and Thornock. At the same
time, the plaintiffs instituted this action, repeating most of
the claims in Bruce I ("the Securities Claims") and adding a
new claim for breach of the Agreement.*fn2 On this new
claim, they seek both rescission of the Agreement and monetary
damages for the breach.
The present motion seeks judgment in the defendants' favor in
both Bruce actions, and seeks to enforce the provision of the
Agreement regarding the plaintiffs' counsel by obtaining an
injunction against their prosecution of the Malone action and
a similar state court action, Christensen v. Martin
(Sup.Ct.N.Y.Co.). The motion was filed on May 30, 1991, and
oral argument was heard on June 13.
1. Restoration of the $50,000 is not required.
In making this argument, the defendants rely primarily on Cox
v. Stokes, 156 N.Y. 491, 51 N.E. 316 (1898) and Lee v. Vacuum
Oil Co., 126 N.Y. 579, 27 N.E. 1018 (1891) for the principle
that prior to seeking recission of a contract a plaintiff must
restore to the defendant any benefits received under the
contract. However, ...