The opinion of the court was delivered by: SHIRLEY KRAM, Senior District Judge
Daniel Tepper ("Plaintiff") filed suit in Nevada District Court
against Fidelity Holdings, Inc. ("Fidelity") based on a dispute
over securities transactions (the "Nevada Action"). See Tepper
v. Fidelity Holdings, Inc., No. 99-1119 (D. Nev. filed Jul. 27,
2001). Judge Quackenbush decided the matter through binding
mediation and found Fidelity liable for damages totaling
$522,000. Thereafter, Fidelity paid the sum in its entirety to
satisfy the judgment. (Rimberg Decl. Ex. B at 1-2).
Plaintiff now sues Bruce Bendell, Doron Cohen, Richard L.
Feinstein, Mitchell C. Littman, Esq., Littman Krooks & Roth P.C.,
Robert L. Rimberg, Esq., and Rimberg & Associates ("Defendants")
in their individual capacities as the officers and attorneys of Fidelity for the same losses at issue in the
Defendants move pursuant to Fed.R. Civ. P. 12(b) (6) to
dismiss Plaintiff's cause of action for failure to state a claim
upon which relief may be granted. In the alternative, Defendants
move for summary judgment pursuant to Fed.R. Civ. P. 56(c),
citing the preclusive effect of the binding mediation on
Plaintiff's current claims for damages. Defendants also move to
levy sanctions under Fed.R. Civ. P. 11(b), alleging that
Plaintiff and his attorney have pursued a frivolous lawsuit.
For the reasons set forth below, Defendant's motions are
granted in part and denied in part.
Both the facts and procedural history of the transactions at
issue have been described previously by this Court. See Tepper
v. Bendell, 2002 U.S. Dist. LEXIS 23303, at 2-7 (S.D.N.Y. Dec 5,
2002). Since 2002, however, there have been significant
developments affecting the viability of Plaintiff's three
On March 27, 2003, Plaintiff received a complete satisfaction
of the judgment in the Nevada Action. (Rimberg Decl. Ex B at
1-2). This is clearly evinced by a signed document labeled
"Satisfaction of Judgment," which states that the "judgment, with
interests and costs, has been fully paid." See id. Fidelity therefore fulfilled its obligations under
the stipulated mediation, paying Plaintiff $522,000 for his
losses on the securities transactions in question. Nonetheless,
Plaintiff continues to assert three causes of action against
Defendants in their individual capacities as the officers and
attorneys of Fidelity. In return, Defendants move to dismiss
these claims and move for summary judgment in the alternative.
A. Applicable Legal Standards
To prevail on a Rule 12(b) (6) motion to dismiss, the Court
accepts as true the factual allegations in the complaint and
draws all reasonable inferences in favor of the plaintiff. See
Harris v. City of New York, 186 F.3d 243, 247 (2d Cir. 1999).
However, the Rules require that when "matters outside the
pleadings are presented to and not excluded by the court, the
motion shall be treated as one for summary judgment and disposed
of as provided in Rule 56." Fed.R. Civ. P. 12(b) (6). Such
actions are mandatory when a party wishes to introduce an
extraneous document with information not set forth in the
complaint. See Carter v. Stanton, 405 U.S. 669, 671 (1972).
Defendant relies on a document labeled "Satisfaction of
Judgment" that was signed by Plaintiff as the primary piece of
evidentiary support for his 12(b) (6) motion. (See Rimberg Decl. Ex. B at 1-2). Because the document was not included in
Plaintiff's amended complaint, the Court will ...