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August 28, 2001


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


This case involves a complex dispute between Plaintiff Rohit Phansalkar and Defendants Andersen Weinroth & Co., L.P., AW & Co., Inc., G. Chris Andersen and Stephen D. Weinroth (collectively "AW"). The parties have alleged several claims against each other based on transactions that took place during Phansalkar's employment at AW. This motion involves just one of Phansalkar's many claims against AW. In Count Fifteen of his Amended Complaint, Phansalkar alleges that AW illegally converted his shares in a company called Millenium Cell Inc. ("MCEL"). AW moves pursuant to Rule 56(c) of the Federal Rules of Civil Procedure for partial summary judgment dismissing this count. For the reasons stated below, AW's motion is denied.


Rule 56 provides for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no 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). "An issue of fact is `material' for these purposes if it `might affect the outcome of the suit under the governing law[,]' [while] [a]n issue of fact is `genuine' if `the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Konikoff v. Prudential Ins. Co. of Am., 234 F.3d 92, 97 (2d Cir. 2000) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

In assessing the record to determine whether genuine issues of material fact are in dispute, a court must resolve all ambiguities and draw all reasonable factual inferences in favor of the non-moving party. See Parkinson v. Cozzolino, 238 F.3d 145, 150 (2d Cir. 2001). "Although the moving party bears the initial burden of establishing that there are no genuine issues of material fact, once such a showing is made, the non-movant must `set forth specific facts showing that there is a genuine issue for trial.'" Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000) (quoting Anderson, 477 U.S. at 256, 106 S.Ct. 2505). However, the non-moving party may not "rest upon . . . mere allegations or denials." St. Pierre v. Dyer, 208 F.3d 394, 404 (2d Cir. 2000). "Statements that are devoid of any specifics, but replete with conclusions, are insufficient to defeat a properly supported motion for summary judgment." Bickerstaff v. Vassar Coll., 196 F.3d 435, 452 (2d Cir. 1999), cert. denied, 530 U.S. 1242, 120 S.Ct. 2688, 147 L.Ed.2d 960 (2000); see also Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998) ("If the evidence presented by the non-moving party is merely colorable, or is not significantly probative, summary judgment may be granted.") (quotation marks, citations, and alterations omitted).


Anderson Weinroth & Co., L.P., is an investment banking firm. G. Chris Anderson and Stephen D. Weinroth are partners at this firm. Rohit Phansalkar was an investment banker at the firm from February 1998 until July 2000.*fn1

Phansalkar alleges that AW wrongfully withheld compensation, certain securities and certain investment opportunities that were promised to him in exchange for the services he provided during his tenure with AW. Phansalkar also alleges that Anderson and Weinroth breached their agreement to sell him certain shares of stock in MCEL which are now worth several million dollars. Phansalkar's complaint includes claims for breach of contract, conversion, breach of fiduciary duty, quantum meruit, unjust enrichment and an accounting. See Phansalkar's Amended Complaint ¶¶ 54-137.

AW alleges that, during his tenure at AW, Phansalkar intentionally concealed from his partners at AW that he had appropriated for himself property and opportunities that rightfully belonged to the partnership. According to AW, these actions violated the utmost duties of care, loyalty, and good faith owed by one partner to his other partners and constituted the unauthorized assumption and exercise of ownership over assets that belonged to AW. AW's complaint includes claims for breach of fiduciary duties, conversion and breach of contract. See AW's Second Amended Complaint ¶¶ 28-74.


Assuming plaintiffs allegations to be true, the facts relevant to this motion are as follows. In December, 1998, AW and certain other investors formed a limited liability company called Millenium Cell LLC ("MCEL LLC"). See 8/1/01 Affidavit of Russell J. Steward, AW employee ("Steward Aff.") ¶ 2. No certificates evidencing the interests of investors in MCEL LLC were ever issued. See id. In or around February 2000, Anderson and Weinroth offered to sell Phansalkar up to $100,000 worth of their interests in MCEL LLC, representing a percentage ownership of the company. See Defendants' Statement of Material Facts Pursuant to Local Civil Rule 56.1(a) ("Def.56.1") ¶ 3 (citing 3/27/01 Deposition of Stephen D. Weinroth ("Weinroth Dep."), Ex. B to 8/1/01 Affidavit of Defendants' Attorney Jaculin Aaron ("Aaron Aff."), 46-47). In or around February 2000, Phansalkar purchased 637,902 shares of MCEL LLC from Anderson and Weinroth for $60,000 (the "MCEL Shares"). See Plaintiffs Statement of Material Facts Pursuant to Local Civil Rule 56.1(a) ("Pl.56.1") ¶ 1. Phansalkar delivered to both Anderson and Weinroth a check for $30,000 as payment for those shares, which each deposited in his respective personal bank account. See Phansalkar checks, Ex. B to 8/13/01 Affidavit of Plaintiffs Attorney Sapna Mirchandani ("Mirchandani Aff.").

In April 2000, MCEL was converted into a corporation which was called Millenium Cell Inc. ("MCEL"). See Steward Aff. ¶ 4. No common stock certificates for MCEL were issued at this time. See id. ¶ 5.

In or about May 2000, AW prepared and maintained ownership schedules reflecting the names, shares and percentage ownership of MCEL investors, including Phansalkar (the "MCEL Ownership Schedules"). See P1. 56.1 ¶ 2. The schedules identified Phansalkar as the owner of 637,902 shares of MCEL. See id.; MCEL Ownership Schedules, Ex. C to Mirchandani Aff. In or about May 2000, at the instruction of Weinroth, AW employee Russell J. Steward requested that Phansalkar identify any designees to whom he wished to grant his shares of MCEL stock. See P1. 56.1 ¶ 4. Phansalkar complied with this request and designated certain of his shares to various individuals. See id. These designations were reflected on the MCEL Ownership Schedules. See MCEL Ownership Schedules.

On May 25, 2000, MCEL submitted an S-1 filing with the Securities Exchange Commission. See P1. 56.1 15. The S-1 Filing listed the amount of shares held by each of Andersen and Weinroth as well as other principal shareholders, but did not include the 637,902 MCEL Shares owned by Phansalkar. See id. One of the items submitted to the underwriters, accountants and attorneys involved in the proposed public offering was the MCEL Ownership ...

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