dismissal of all claims asserted herein based on the res judicata effect of a previously litigated state action (hereafter the "State Action"). Alternatively, defendants have moved for dismissal of the Second, Third, Fourth and Fifth claims asserted in this Federal Action for failure to state a claim upon which relief may be granted.
The res judicata asserted is grounded in the resolution in favor of the defendants in the previous State Action with whom the decedent was in privity. The State Action was initiated by the same plaintiff as in this matter, on essentially the same subject matter and the same grievances as are found in the claims asserted herein.
For the reasons set forth below, the result of the State Action has precluded, by the doctrine of res judicata, the assertion of plaintiff's claims against the decedent.
Hoenig & Co., Inc. (hereafter "the Company") is a registered broker-dealer and New York Stock Exchange member providing brokerage, marketing and other services to institutional clients. Ronald H. Hoenig was its founder and President, Chief Executive Officer, and Chairman of the Board of Directors until his death on October 12, 1995.
Hellman, the plaintiff herein and in the State Action, joined the Company as a senior officer in 1974 and became a director in or about July, 1986, at which time the Company was a wholly owned subsidiary of the Security Pacific National Bank (hereafter "Security Pacific"). By written agreement dated as of November 24, 1987, Security Pacific, the Company, and fifteen individuals, one of whom was the plaintiff and one of whom was Ronald H. Hoenig, entered into a Stock Purchase Agreement whereby the fifteen individuals purchased the stock of the Company from Security Pacific. Also by written agreement dated as of November 24, 1987, the fifteen shareholders of the Company entered into a Stockholders' Agreement setting forth the rights of the purchasers inter sese.
Hellman continued as an officer and director of the Company until the Spring of 1989 when he resigned from both positions. On October 26, 1989, the Company and certain individuals who had been part of the original group of purchasers from Security Pacific, including Ronald H. Hoenig, redeemed and purchased Hellman's stock interest.
In November, 1991, a new company was organized under the name of Hoenig Group, Inc. (hereafter "Group") whose shares are publicly traded. Group purchased all of the outstanding stock of the Company, continuing the Company as a wholly owned subsidiary of Group. Ronald H. Hoenig functioned in both corporations as the President, Chief Executive Officer, and Chairman of the Board of Directors until his death.
On September 21, 1995, Hellman instituted the State Action referred to above in the New York State Supreme Court, Westchester County, naming as defendants the Company, Group and seven directors and officers of both corporations, including Ronald H. Hoenig. Having passed away, neither Ronald H. Hoenig nor his estate thereafter were served with process in the State Action.
The complaint stated that in 1987, defendant Ronald H. Hoenig entered into a written contract with plaintiff providing for a leveraged buy out of the Company from Security Pacific, the funds to come from a bank loan and cash investments from several investors including plaintiff and that the plaintiff had never been provided with the shares of the Company to which he was entitled. The relief sought from all defendants was specific performance of the contract, that defendants be required to transfer to plaintiff the shares of the Company and their dividends.
The individual and corporate defendants in the State Action except Ronald H. Hoenig moved for dismissal of the suit. The motion was granted with respect to Ronald H. Hoenig's individual co-defendants--the other officers and directors of the Company and Group--and the case was dismissed as to them pursuant to New York's CPLR § 3211(a)(7) for failure to state a cause of action. No appeal by the plaintiff was ever taken from that Order of dismissal.
The corporate defendants, viz., the Company and Group, answered the original complaint and moved for summary judgment on various grounds, including, but not limited to the affirmative defenses that the cause of action asserted was time-barred by a six year statute of limitations pursuant to New York's CPLR § 213.
Hellman responded with an amended complaint on March 6, 1996 against only the two corporations, alleging that: (1) the Company and Group had failed to deliver to him the shares of the Company he had purchased from Security Pacific; (2) that the corporate defendants had failed to provide him with certain information before his purchase from Security Pacific; (3) that he was insufficiently compensated for his shares sold by him on October 26, 1989; (4) that Group had converted his shares when it had acquired the Company's stock in November, 1991; (5) that the Company had converted his shares when it redeemed his shares; and (6) that false statements made to plaintiff on or about November 24, 1987 in connection with the Stock Purchase Agreement with Security Pacific had constituted fraud.
After filing an answer to the amended complaint, the corporate defendants again moved for summary judgment in their favor which was granted and the State Action was dismissed. The state court found that the "First" cause of action was asserted against the wrong defendants since the written purchase agreement dated as of November 24, 1987, required Security Pacific, and not the Company, to deliver the shares of stock purchased by the fifteen individuals and that all of the alleged causes of action, including the "First," were time-barred by the applicable periods of limitation.
Plaintiff appealed from the Order and Judgment dismissing the causes of action asserted in their amended complaint except as to the "First" and "Second" causes of action which he did not challenge on appeal.
The Complaint Herein
On April 14, 1997, during the pendency of the appeal from the State Action, the plaintiff filed the instant complaint (hereafter the "Federal Complaint") naming as defendants herein, only the executors of the Estate of Ronald H. Hoenig. The Federal Complaint asserts five claims:
1. Failure of the decedent to properly calculate and pay plaintiff the correct value of his stock interest in the Company when the Company redeemed plaintiff's stock interest on October 26, 1989;
2. Breach of an oral agreement made in 1987 to properly calculate and pay plaintiff the correct value of his stock interest in the Company;