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TEPPER v. BENDELL

September 22, 2004.

DANIEL TEPPER, Plaintiff,
v.
BRUCE BENDELL, DORON COHEN, RICHARD L. FEINSTEIN, GEOFFREY ALEXANDER, MITCHELL C. LITTMAN, ESQ., LITTMAN KROOKS & ROTH P.C., ROBERT L. RIMBERG, ESQ., AND RIMBERG & ASSOCIATES, P.C. Defendants.



The opinion of the court was delivered by: SHIRLEY KRAM, Senior District Judge

OPINION AND ORDER

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 Nevada Action.

  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.

  I. BACKGROUND

  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 remaining claims.

  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.

  II. DISCUSSION

  A. Applicable Legal Standards

  1. Motion to Dismiss

  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 ...


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