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GREENBERG v. CHRUST

September 10, 2003

STEVEN A. GREENBERG, PLAINTIFF AGAINST STEVEN CHRUST, DEFENDANT


The opinion of the court was delivered by: Robert Sweet, Senior District Judge Page 2

OPINION

Defendant Steven Chrust ("Chrust") renews a motion for summary judgment against plaintiff Steven A. Greenberg ("Greenberg") pursuant to Federal Rule of Civil Procedure 56(b).

For the reasons set forth below, defendant's motion for summary judgment is granted.

Prior Proceedings

This action was commenced on November 14, 2001, by the filing of a complaint alleging causes of action for (1) common law fraud; (2) securities fraud; (3) negligent misrepresentations; and (4) breach of fiduciary duty.

Discovery has been completed, and various motions have been disposed of. See Greenberg v. Chrust, 198 F. Supp.2d 578 (S.D.N.Y. 2002) ("Greenberg I"); Greenberg v. Chrust, No. 01 Civ. 10080, 2002 U.S. Dist. LEXIS 21103 (Oct. 31, 2002) ("Greenberg II"); Greenberg v. Chrust, No. 01 Civ. 10080, 2003 U.S. Dist. LEXIS 2209 (S.D.N.Y. Feb. 10, 2003) ("Greenberg III").

In December 2001, Chrust moved to dismiss Greenberg's complaint, and in Greenberg I, his motion to dismiss was granted in part and denied in part, stating: Page 3

The allegations in the complaint regarding Chrust's misrepresentation of his employment background and business acumen (i.e. that he resigned his position at Winstar, that he successfully aided small companies, and that he managed a successful hedge fund) satisfy the requirements for a fraud claim. Greenberg has alleged that such representations were false and known to be false when made; that they were made to induce Greenberg to contribute his shares back to the company; and that Greenberg relied on these representations and was injured as a result.
***
Greenberg has with sufficient particularity, specified the statements made by defendant which were fraudulent, identified who made the statements, when they were made (to plaintiff and others on various occasions prior to defendant's retention as chairman of the board) and why they were fraudulent.
Greenberg I at 582, 583.

In Greenberg II, Chrust's motion for summary judgment was denied "with leave granted to renew at the close of discovery." Greenberg II at 8. Disputed issues of material fact included:

the circumstances of Chrust's departure from Winstar, the representations Chrust made regarding his employment status prior to his retention by Worlds, his work with various small companies, and involvement with a hedge fund prior to his retention by Worlds, the provision and availability of certain materials regarding Chrust's background, and the cause for movement in Worlds' stock price between March 23, 1999 and April 13, 1999.
Id. at 6-7. This was the case since "[w]hether or not Chrust was under a duty to disclose his employment depends upon [his] prior statements," and it was also unclear "whether the statements Page 4 regarding Chrust's successes are merely statements of opinion and non-actionable." Id. at 7-8.*fn1

Since then, the following additional material was collected through discovery:

(1) Greenberg's deposition;

(2) Chrust's deposition;

(3) the deposition of non-party witness William Rouhana, Jr. ("Rouhana"), Winstar's former Chairman and Chief Executive Officer; and
(4) the minutes of Winstar's Board of Directors, produced by Winstar's bankruptcy trustee.
Chrust's current fraud claim is based on three different categories of misrepresentations, which he alleges induced Greenberg to contribute his personal securities to Worlds in connection with Chrust's retention. These misrepresentations involved:

(1) Chrust's departure from Winstar;

(2) Chrust's continued affiliation with Winstar after his departure; and Page 5
(3) Chrust's business and employment background.

The instant motion was heard and marked fully submitted ...


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