Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

BABAEV v. GROSSMAN

April 6, 2004.

MEIR BABAEV and MICHAEL ARBIV, Plaintiffs, -against- RICHARD GROSSMAN, RICHARD STUART CATERERS, LTD. and RICHARD STUART KOSHER CATERERS, LTD., Defendants


The opinion of the court was delivered by: THOMAS PLATT, JR., Senior District Judge

MEMORANDUM AND ORDER

Defendants Richard Grossman, Richard Stuart Caterers, and Richard Stuart Kosher Caterers move under the Federal Rules of Civil Procedure, the Private Securities Litigation Reform Act of 1998 ["PSLRA"] and the Sarbanes-Oxley Act of 2002 to dismiss the Amended Complaint of Plaintiffs Meir Babaev and Michael Arbiv. Plaintiffs sued Defendants for fraud under the Securities Exchange Act of 1934, and for State claims of breach of contract, common law fraud and negligent misrepresentation. Oral argument was heard April 2, 2004. For the following reasons, Defendants' motion is DENIED.

Background

 A. Factual background

  This case involves the proprietors of a catering service who are alleged to have fraudulently induced the proprietors of a waiter service to purchase a 10% interest in the catering business. Both businesses served religious celebrations at Jewish temples. Defendants allegedly promised Plaintiffs more frequent use of the waiter service by the catering service in exchange for Plaintiffs' investment in Defendants' business, as well as returns upon the investment itself. See Defendants' Memorandum of Law in Support of their Motion to Dismiss at 2-4.

  Defendants allegedly told Plaintiffs that the business of the catering service was about to expand and to become "a cash cow." However, the catering service's business was in fact about to contract. Known to Defendants, but unbeknownst to Plaintiffs, was the fact that a large temple was severing its relationship with Defendants because the caterers allegedly served non-kosher food to the temple's congregants. Plaintiffs now seek a return of their investment of $133,609, plus interest, as well as their costs. See id.; see also Plaintiffs' Brief in Opposition to Defendant's Motion to Dismiss at 2-8.

 B. Procedural background

  The events at issue took place in 2001. Plaintiffs filed their original Complaint in October 2003, and an Amended Complaint in December 2003. The Complaint states that an employee of Defendants informed Plaintiffs that Defendants "had defrauded them, in or about August/September 2001." Complaint at ¶ 23. The Amended Complaint states that "about the first week or so of November 2001," the same employee indicated "that he believed that all of Grossman's representations were intentionally false and made to induce Plaintiffs to make the required capital investment." Amended Complaint at ¶¶ 48, 51.

  Discussion

 A. Regulations, rules and statutes

  Federal Rule of Civil Procedure 12(b)(6) provides that a complaint may be dismissed for failure to state a claim upon which relief may be granted.

  Section 10(b) of the Securities Exchange Act provides that it shall be unlawful for a defendant, acting with scienter, to use in connection with the sale of a security a deceptive device in contravention of the rules of the Securities and Exchange Commission, such as a false statement or the omission of a material fact. See 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5. The PSLRA provides that in alleging falsehoods or omissions, a complaint shall specify the falsehood or omission, why its is misleading, and state facts strongly inferring fraudulent intent. See 15 U.S.C. § 78u-4(b). And Sarbanes-Oxley provides that no securities fraud claim may be brought later than two years after the discovery of the violation. See 28 U.S.C. § 1658(b)(2).

  Sections 1332 and 1367 of Title 28 of the United States Code provide that district courts have original jurisdiction of civil actions where the matter in controversy exceeds $75,000 and is between citizens of different States, and also have supplemental jurisdiction over related claims forming part of the same controversy. District courts may decline to exercise supplemental jurisdiction over such related claims ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.