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HAGEDORN & COMPANY v. SOFINOR FINANCE

United States District Court, S.D. New York


February 1, 2005.

HAGEDORN & COMPANY, Plaintiff,
v.
SOFINOR FINANCE, LLC, et al., Defendants.

The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge

OPINION

Defendants Sofinor Finance, LLC, Salem Habel, and Sandra Habel have moved for an order striking portions of plaintiff's amended complaint pursuant to Fed.R.Civ.P. 12(f). Defendants argue that certain portions of the complaint refer to conduct and statements made during a settlement negotiation, and are therefore inadmissible under Fed.R. Evid. 408. Plaintiffs oppose the motion on the ground that no settlement negotiation took place.

Defendants' motion to strike portions of the amended complaint is denied.

  FACTS

  Sofinor invested $500,000 as the initial funding for a slate of motion pictures, and hired Hagedorn to assist in procuring the remainder of the necessary funds through a bond offering. The proposed movie transaction Page 2 was ultimately aborted when Sofinor demanded the return of its initial investment from Hagedorn, and these lawsuits were then filed.

  Defendants have moved to strike paragraphs 36 through 46 of plaintiff's amended complaint. Paragraphs 36 through 46 contain a lengthy description of a meeting that occurred on February 27, 2003. Defendant Salem Habal attended the meeting as a representative of Sofinor, along with his personal attorney, Michael McNerney. It is not clear whether McNerney represented Sofinor at that time. Plaintiff was represented at the meeting by Philip Lian and E. Alexander Gabel, and by Hagedorn's attorney, Michael Wolff. Also present at the meeting were four representatives of the Provident Group, including its Chairman and CEO, Steven Carlson; Mary Ann Halford, the principal of Global Media, a media advisory firm; David Kronemyer, a principal of KWHK, LLC; and Basem Zakaruya, a principal of Structure Capital Group, Inc.

  The meeting was divided into two parts. During the first part of the meeting, Halford, Kronemyer, Zakaruya, Lian, and the several representatives of the Provident Group made presentations as to their roles and their progress to date in furthering the proposed movie transaction. Following those presentations, McNerney asked numerous questions of the presenters.

  The second part of the meeting was attended only by Habal, Page 3 McNerney, and Hagedorn's three representatives. The parties apparently discussed Hagedorn's ongoing negotiations with the Provident Group as to the amount and timing of Provident's fees. The parties also discussed the possibility of an additional investment in the proposed movie transaction, either by Sofinor or by Habal personally.

  Defendants claim that the entire February 27 meeting was a settlement conference. Defendants submit a sworn declaration by McNerney, in which he states that

[p]rior to any substantive conversation at the meeting in New York, Richard Wolff, attorney for Hagedorn, specifically stated that he perceived the meeting to be a "settlement conference" and therefore all conversations would be construed as settlement negotiations and would be "off the record." Dr. Habal and I agreed.
Defendants claim that Habal and McNerney therefore believed that they were in fact participating in a settlement conference. Defendants provide no other evidence to support their position that the entire February 27 meeting was a settlement conference.

  Plaintiffs deny that the February 27 meeting was a settlement conference. Plaintiffs submit four affidavits in support of their position. First, Wolff, the attorney for Hagedorn, declares that he never stated that the meeting was a "settlement conference," nor that the meeting would be "off the record." Page 4 Wolff admits that, at one point during the second part of the meeting, he asked to go "off the record" in order to respond to a question relating to Hagedorn's expenditures. Wolff states that McNerney agreed, and that both parties agreed to go back "on the record" once that question had been answered.

  Plaintiffs also submit an affidavit by Lian, in which he denies that Wolff stated in terms or substance that the meeting was a "settlement conference" or a "settlement negotiation," or that the discussions would be "off the record" in any respect. Lian also confirms Wolff's account of the events in the second part of the meeting.

  Finally, plaintiffs submit affidavits by Kronemyer and Carlson. Their affidavits are substantially similar: both deny that Wolff stated that the meeting was a "settlement conference" or that it was "off the record," and both cite the fact that the meeting was "on the record" as a reason for their attendance.

  DISCUSSION

  The Court may order that "any redundant, immaterial, impertinent, or scandalous matter" be stricken from the complaint. Fed.R.Civ.P. 12(f). The Court may also grant a motion to strike a portion of a complaint if the evidence offered in support of that portion of the complaint Page 5 would be inadmissible at trial. Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976). A motion to strike based on inadmissibility of the evidence will fail if there is any possibility that the pleading could be supported by admissible evidence. See Eskofot A/S v. E.I. Du Pont De Nemours & Co., 872 F.Supp. 81, 94 (S.D.N.Y. 1995).

  The admissibility of evidence of settlement negotiations is governed by Fed.R. Evid. 408. Evidence of conduct or statements made in settlement negotiations is generally not admissible to prove liability for the claim or to show the validity of the claim or its amount.

  Defendant argues that the allegations in paragraphs 36 through 46 can only be supported by evidence of conduct or statements made in settlement negotiations. There is a sharp dispute about whether the February 27 meeting was a settlement negotiation. It appears likely that the meeting was a business conference. However, the issue cannot be resolved on the present record. The allegations in the complaint should stand, and the Court will make the actual determination about admissibility when the case is tried.

  CONCLUSION

  Defendants's motion to strike is denied. Page 6

  SO ORDERED. Page 1

20050201

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