United States District Court, S.D. New York
February 1, 2005.
HAGEDORN & COMPANY, Plaintiff,
SOFINOR FINANCE, LLC, et al., Defendants.
The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge
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
Defendants' motion to strike portions of the amended complaint
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
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,
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."
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
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.
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
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.
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.
Defendants's motion to strike is denied.
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