negotiations with her and that . . . she [did] induce them to continue in contract negotiations."
The court will grant summary judgment if "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits . . . show that there is not genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The burden is on Sheinbrot, the moving party, to show the absence of any genuine issue of material fact, and the court draws all factual inferences in favor of Pfeffer, the party against whom summary judgment is sought. Anderson v. Liberty Lobby, 477 U.S. 242, 247-48, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).
The elements of common law fraud as outlined above are a material, false representation by defendant, an intent to induce reliance or defraud, plaintiffs' reasonable reliance on that representation, and plaintiffs' resultant injury. Murray v. Xerox Corp., 811 F.2d at 121. Each element of fraud "must be established by clear and convincing evidence." Katara v. Jones Commodities, Inc., 835 F.2d 966, 971 (2d Cir. 1987); see also Simcuski v. Saeli, 44 N.Y.2d 442, 452, 406 N.Y.S.2d 259, 265, 377 N.E.2d 713 (1978).
Plaintiffs rely on the following statements in support of their motion. In her depositions relating to 92-CV-2490, Pfeffer said that by the summer of 1990, she was having "second doubts" about becoming a partner/shareholder in the Corporation. By October 31, 1990, she no longer felt she could, in good conscience, enter into "any business employment or other business relationship" with plaintiffs. She was no longer interested in their promise to make her a partner. Nevertheless, Pfeffer admitted she continued to engage in some partnership negotiations with plaintiffs. For instance, she discussed the purchase price or buy-in to the Corporation with them. She did this "because [she] was angry, because of the way [she was] treated."
The court agrees that Pfeffer's deposition statements demonstrate the requisite scienter for the tort of fraudulent misrepresentation with respect to her partnership negotiations with plaintiffs on or around October 31, 1990 and thereafter. Simply put, the depositions show that Pfeffer intended to give plaintiffs the impression that she desired to enter into a partnership agreement with them on or around October 31, 1990 when she was no longer interested.
Pfeffer's contention that her affidavits dated February 18, 1994, March 31, 1994, September 9, 1994, and December 29, 1994 better explain her actions and support a denial of summary judgment is unavailing. It is well settled that "a party's affidavit which contradicts [her] own prior deposition testimony should be disregarded on a motion for summary judgment." Mack v. United States, 814 F.2d 120, 124 (2d Cir. 1987); see also Perma Res. & Dev. Co., 410 F.2d at 578 (opposite result "would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact").
Nevertheless, not all misrepresentations of intention are actionable. Plaintiffs have not met their burden in demonstrating by clear and convincing evidence that there is no dispute as to material fact regarding the other elements of fraudulent misrepresentation.
Specifically, plaintiffs have not shown that they relied on Pfeffer's representation and that their reliance was reasonable. There remains a question of fact as to whether plaintiffs intended to make Pfeffer a partner at the time of her misrepresentation. A finding that plaintiffs were not interested in making Pfeffer a partner undermines their contention that they reasonably relied on Pfeffer's representation that she was still interested in becoming a partner. All plaintiffs have shown is that when Pfeffer represented, by inquiring about the purchase price into the Corporation, that she wanted to continue partnership negotiations with plaintiffs, she no longer wanted to become plaintiffs' partner. That showing is insufficient to establish fraud for the purpose of summary judgment.
Plaintiffs' motions to dismiss defendant's affirmative defenses, first and third counterclaims in both actions is hereby granted. Plaintiffs' motions to dismiss defendant's fourth counterclaims in both actions is denied. The Sheinbrot plaintiffs' motion to dismiss defendant's second counterclaim is denied in part and granted in part. The Singer plaintiffs' motion to dismiss all of defendant's counterclaims is denied to the extent described above. The Sheinbrot plaintiffs' motion for partial summary judgment on their fraudulent misrepresentation action is denied.
Defendant's second counterclaim in both suits, to the extent it alleges that plaintiffs' partnership offer and negotiations after the summer of 1990 were made with fraudulent intent not to make her a partner, remains unaffected by these motions. Defendant's fourth counterclaim, to the extent it alleges injuries resulting from plaintiffs' holding her out to the public as a partner or shareholder, also stands. All of the above rulings apply in both 93-CV-5343 and 94-CV-649.
Dated: Brooklyn, New York
January 16, 1997
Eugene H. Nickerson, U.S.D.J.
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