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BICKHARDT v. RATNER

November 23, 1994

FRITZI BICKHARDT, Individually, and THEODORE GINSBERG and STANLEY GINSBERG, as Trustees, Plaintiffs, against NATHANIEL RATNER, Defendant.

Peter K. Leisure, U.S.D.J.


The opinion of the court was delivered by: PETER K. LEISURE

LEISURE, District Judge:

 This action alleges a pattern of racketeering activity, securities fraud, common-law fraud, breach of fiduciary duty, conversion, and breach of partnership agreement. Plaintiffs are Fritzi Bickhardt ("Ms. Bickhardt"), individually, and Theodore Ginsberg and Stanley Ginsberg (the "Ginsberg Trustees"), as trustees for the trust created for the benefit of Ruth Ginsberg under the Last Will and Testament of Sol Mutterperl (collectively "plaintiffs"). Defendant is Nathaniel Ratner ("Ratner").

 Ratner has moved for summary judgment on all plaintiffs' securities fraud claims and on Ms. Bickhardt's common-law fraud claim. *fn1" Plaintiffs have cross-moved for summary judgment on the issue of whether plaintiffs and Ratner were partners. *fn2" For the reasons stated below, the Court grants Ratner's motion for summary judgment on plaintiffs' securities fraud claim. The Court denies Ratner's motion for summary judgment on plaintiffs' common-law fraud claim and denies plaintiffs' cross-motion for summary judgment on the issue of whether plaintiffs and Ratner were partners.

 BACKGROUND

 The real parties in interest in this action are, or at one time were, family or friends of one another. Ms. Bickhardt and her husband, Ludwig Bickhardt (collectively "the Bickhardts"), had been friends with Ratner since approximately the early 1960's. Ruth Ginsberg is Ms. Bickhardt's sister. Ruth Ginsberg met Ratner through the Bickhardts.

 In 1963, Ratner and others not involved in this action formed a limited partnership called L.G.R. Associates ("L.G.R."). L.G.R. was formed to own and operate certain real estate consisting of ten acres of land, upon which the Eatontown Shopping Center was eventually constructed. When L.G.R. was formed, Ratner held interests as both a general and limited partner.

 In 1971, the Bickhardts provided a total of $ 75,000 to Ratner, $ 50,000 in Ms. Bickhardt's name, and $ 25,000 in Ludwig Bickhardt's name. Also in 1971, the Ginsberg Trustees also provided several thousand dollars to Ratner, for the benefit of Ruth Ginsberg, but the precise amount of this provision is contested.

 The parties strenuously dispute the nature of these monetary transfers. Plaintiffs contend that the transfers represent payments for partnership interests in a general partnership, "Nathaniel Ratner -- Nominee," that Ratner allegedly formed with plaintiffs and others to own Ratner's collective interest as a general and limited partner in the pre-existing limited partnership, L.G.R. Ratner contends that the monies that plaintiffs provided to him in 1971 were loans, rather than payments for partnership interests.

 In support of their contention, plaintiffs rely (in addition to other evidence) on three letters dated May 24, 1972. In these letters, which are identical in relevant part, Ratner wrote to Ms. Bickhardt, Ludwig Bickhardt, and Ruth Ginsberg as follows:

 
This will confirm the fact that you are the beneficial owner of a [percentage] participating interest in that share of L.G.R. Associates, a limited partnership, now held in my name as a general and limited partner.
 
In the event that I shall be called upon, in accordance with the terms of the Articles of Partnership, to advance additional sums, your percentage of interest will be mathematically changed, and I will undertake to advise you of the amount of the investment and of the percentage of your interest at each such time.
 
Notwithstanding the provisions of this letter, I shall exercise all of the powers of a general and limited partner, acting in my own name.

 Complaint, Exhibit A. In support of his contention, Ratner relies (in addition to other evidence) on his averments that, from the inception of the parties' business relationship, he paid to plaintiffs, and plaintiffs accepted without objection, a constant return on their monies of 10 percent per annum.

 In March 1973, Ms. Bickhardt reduced the extent of her provision to Ratner from $ 50,000 to $ 25,000. But when Ludwig Bickhardt passed away, also in 1973, Ms. Bickhardt inherited whatever rights Ludwig Bickhardt had pursuant to the $ 25,000 provision that he had made to Ratner in 1971, raising the extent of Ms. Bickhardt's provision to Ratner to $ 50,000 again, where it stood through December 1988 (excluding any alleged appreciation).

 On or about January 2, 1989, after communications between Ratner and Ms. Bickhardt's attorney, and between Ratner and Ms. Bickhardt herself, Ratner returned $ 50,000 to Ms. Bickhardt, and Ms. Bickhardt executed a document by which she purported to relinquish to Ratner whatever interest she might then have had in the Eatontown Shopping Center. The parties strenuously dispute the circumstances and legal consequences of this transaction. Ms. Bickhardt contends that Ratner thereby defrauded her of the value of her partnership interest, to the extent that it exceeded $ 50,000. Ratner insists that he simply returned Ms. Bickhardt's loan principal to her and obtained from her a valid release from any further claim of entitlement.

 The Ginsberg Trustees have not, prior to this action, sought to withdraw from Ratner the provision that they made to him in 1971, or any further amounts to which they may be entitled. Ratner continues to pay them a constant return per annum on the provision, although the amount of the return, like the amount of the provision itself, is disputed.

 Plaintiffs filed this action on January 18, 1991. The thrust of their Complaint is that, although from 1971 onward the parties were actually partners in a general partnership called Nathaniel Ratner -- Nominee, Ratner has wrongfully conducted the parties' business ...


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