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BENINATI v. F.D.I.C.

July 13, 1999

STEPHEN BENINATI, PLAINTIFF,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER FOR COMMUNITY NATIONAL BANK AND TRUST COMPANY OF NEW YORK, AND FEDERAL DEPOSIT INSURANCE CORPORATION IN ITS INDIVIDUAL CORPORATE CAPACITY, DEFENDANTS.



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

  MEMORANDUM & ORDER

Defendant Federal Deposit Insurance Corporation moves to dismiss the complaint pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiff Stephen Beninati cross moves to amend his complaint to add the United States as a defendant.

Defendant's motion to dismiss is granted. Plaintiff's motion to amend the complaint is denied.

BACKGROUND

Plaintiff brings this action pursuant to 12 U.S.C. § 1821(d)(5) seeking damages in the amount of $5,000,000. The complaint alleges that the FDIC breached its "fiduciary duty and its duty to act in good faith" and that it tortiously interfered with plaintiff's rights under a shareholders' agreement.

In 1976, plaintiff Stephen Beninati ("Beninati") and Richard Nicotra ("Nicotra") co-founded Everything Yogurt, Inc. ("EYI"). Beninati and Nicotra each owned 47.5% of the outstanding common shares of EYI, and Kenneth Kaplan ("Kaplan") owned the remaining 5%. Stat. of Undisputed Facts ¶¶ 1-2. On October 3, 1991, EYI entered into a Loan Consolidation and Modification Agreement (the "Loan Agreement") with Community National Bank and Trust Co. of New York ("CNB"). Id. at ¶ 3; Def.'s Aff. in Supp. of Summ.J.Ex. 3. The face amount of the loan was $1,000,000. When CNB initially loaned the funds to EYI, Beninati and Nicotra pledged their shares in EYI pursuant to a Stock Pledge and Security Agreement (the "Pledge Agreement").*fn1 Stat. of Undisputed Facts ¶ 4; Stock Pledge and Security Agreement at Def.'s Aff. in Supp. of Summ.J.Ex. 4.

Under the Pledge Agreement, upon a default, CNB had the right to "sell, assign, give an option or options to purchase, contract to sell or otherwise dispose of and deliver . . . [the] pledged stock." Pledge Agreement ¶ 2(e). CNB was obligated to send each of the stockholders notice ten days prior to the time of any sale or disposition of the pledged stock. Id. ¶ 2(f). The stockholders retained the right to vote the pledged stock until the occurrence of a default. Id. at ¶ 2(c). Upon a default, CNB had the right to exercise voting and all other corporate rights. Id. In the event that CNB could not dispose of the pledged stock in a public sale, the Agreement expressly permitted CNB to dispose of the shares through private sales. Id. at ¶ 5. The Agreement also explains that "[t]he Stockholders acknowledge that any such private sales may be at places and on terms less favorable to CNB than if sold in public sales and agree that such private sales shall be deemed to have been made in a commercially reasonable manner." Id. Finally, the parties agreed that CNB's rights under the Pledge Agreement were "superior to any rights that any signatory [to the pledge agreement] may have under" agreements between or among EYI and its stockholders and the stockholders themselves. Id.

On November 8, 1991, CNB was declared insolvent and the Federal Deposit Insurance Corporation ("FDIC") was appointed as Receiver. Stat. of Undisputed Facts at ¶ 5. As Receiver, the FDIC took possession of the EYI note. Beninati alleges that around the time CNB was declared insolvent, he and Nicotra became increasingly at odds over management issues of EYI. Pl.'s Aff. in Opp'n to Summ.J. ¶ 2. Sometime in late 1991, EYI stopped making full monthly payments on the loan and in May 1992 stopped making any payments. Stat. Of Undisputed Facts ¶¶ 7-8.

According to plaintiff, in August of 1992, Nicotra and Kaplan, the 5% shareholder, held a Special Meeting of the EYI Board of Directors and terminated plaintiff as President. Pl.'s Aff. in Opp'n to Summ.J. ¶ 2. Shortly thereafter, they terminated him as Director, thereby precluding his involvement with EYI's affairs. Id. Beninati filed a summons and complaint in New York Supreme Court, Richmond County, based upon Nicotra's and Kaplan's actions. Beninati's Aff. in Opp'n to Summ.J. ¶ 2. Beninati alleged that their actions were contrary to a Shareholders Agreement that guaranteed Beninati employment and barred any significant decisions affecting EYI without consent of both Beninati and Nicotra. Id.; see also EYI Shareholders' Buy Sell Agreement, Def.'s Aff. in Supp. of Summ.J.Ex. 9.

Around the time that Beninati commenced the state action against Nicotra and Kaplan, the FDIC declared EYI's note to be in default and notified Beninati and Nicotra accordingly. Stat. Of Undisputed Facts ¶¶ 8, 9. The FDIC proceeded to engage in negotiations with Nicotra and other unnamed representatives of EYI regarding the liquidation of the loan obligation. Beninati Aff. in Opp'n to Summ. J.Ex. A. Plaintiff alleges that he tried to participate in these negotiations, but that the FDIC did not allow him to do so. Id. at ¶ 4.

Instead, Beninati alleges, the FDIC conducted separate negotiations with him. In a letter dated June 28, 1993, the FDIC notified Beninati's attorney that it would be "accepting bids from parties interested in purchasing the Everything Yogurt stock pledged by . . . Beninati." Def.'s Aff. in Opp'n to Summ.J.Ex. 12. Beninati alleges that in subsequent negotiations with the FDIC, the FDIC misled him by suggesting that it would only consider offers sufficient to liquidate the entire EYI obligation, not portions of it. Pl.'s Aff. in Opp'n to Summ.J. ¶ 3. Plaintiff also alleges that the FDIC never indicated that it would consider offers for his shares alone. Id. Plaintiff concedes he was financially unable to purchase either the entire note or his shares. Id. Beninati alleges, however, "with the assistance of others" he would have be able to make an offer for his shares "in excess of that which was accepted by the FDIC from . . . Nicotra." Id. at ¶ 5. Beninati contends that he did not make such an offer because he relied on the FDIC's representation that it would only consider offers for the full amount of the debt.

On August 23, 1993, the FDIC sold Beninati's shares in EYI to Nicotra for $210,000.00, on a deferred payment basis. Stat. of Undisputed Facts ¶¶ 10-11; Beninati Aff. in Opp'n to Summ.J ¶ 3. At the same time, the FDIC sold the EYI note and remaining collateral*fn2 to Colombo, Inc. ("Colombo") for $735,000.

On November 25, 1994, Beninati commenced an action in the New York Supreme Court, Richmond County, against Nicotra, Colombo, and the FDIC, claiming that the transfer of stock to Nicotra and the sale of the EYI note to Colombo was fraudulent and, therefore, should be voided. The FDIC was dismissed from the action due to Beninati's failure to exhaust his administrative remedies as mandated by 12 U.S.C. § 1821(d). Stat. of Undisputed Facts ¶ 14. On September 8, 1995, after the FDIC was dismissed from the state court action, Beninati filed a claim with the FDIC. Id. at ¶ 15. However, the claim did not specify an amount. A supplemental claim was filed on November 29, 1995. After receiving a final notice of denial, Beninati commenced the instant action against the FDIC in this Court. In its answer, the FDIC admits that plaintiff served the Notice of Claim in a timely manner. Answer ¶ 3.

In sum, the complaint sets forth two claims. The first claim alleges that the FDIC tortiously interfered with plaintiff's right under the Shareholder's Agreement entered into by plaintiff, Nicotra, and Kaplan. The second claim alleges that the FDIC, by its actions of selling plaintiff's stock to Nicotra and the EYI note to Colombo, breached its "fiduciary" duty to act in good faith and its duty to dispose of plaintiff's collateral in a commercially reasonable manner.

DISCUSSION

Pursuant to Rule 56 of the Federal Rules of Civil Procedure summary judgment is appropriate when "there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c); Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986). The burden is especially heavy as "the inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)). For the reasons stated below, the Court concludes that plaintiff's claims are contract claims and, therefore, the FDIC is a proper defendant and subject to suit in this Court. However, this Court also concludes ...


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