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BRUCE v. MARTIN

June 19, 1991

NORMAN M. BRUCE, ET AL. PLAINTIFFS,
v.
THOMAS A. MARTIN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Sweet, District Judge.

OPINION

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.

Background

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).

The Facts

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 provided

    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.

Discussion

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, ...


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