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Monteleone v. Leverage Group

August 22, 2009

FRANCES MONTELEONE ET AL. PLAINTIFFS,
v.
THE LEVERAGE GROUP, LEVERAGE OPTION MANAGEMENT CO., INC., LEVERAGE MANAGEMENT LLC, NORTH AMERICAN FINANCIAL, PHILIP BARRY LLC, PHILIP BARRY, HK HOLDINGS, LLC, AND JOSEPH'S DEVELOPMENT CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Charles P. Sifton (electronically signed) United States District Judge

SIFTON, Senior Judge.

MEMORANDUM OPINION AND ORDER

Various groups of plaintiffs,*fn1 including the Del Monaco plaintiffs, commenced several actions against defendant Philip Barry ("Barry") and companies controlled by him, including the Leverage Group, Leverage Option Management Co., Inc., Leverage Management, LLC, North American Financial, and Philip Barry, LLC. These cases were consolidated for pretrial purposes on November 17, 2008. On December 24, 2008, all plaintiffs together filed an Amended Consolidated Complaint, which included the following additional defendants: Saint Joseph's Development Corporation and HK Holdings, LLC.*fn2 The Amended Consolidated Complaint asserted RICO, fraud, conversion, misrepresentation, and breach of contract claims. Now before the court are separate motions for partial summary judgment on damages against Philip Barry filed by plaintiffs German Valdivia, Stephen Doyle, Mark Kowalski, Nunzio Fontana, Marco Fontana, and David Breiner.*fn3 Defendant Barry has filed no response to the motions. The aforementioned plaintiffs are all part of the Del Monaco plaintiffs' group. For the reasons stated below, the motions are granted in part and denied in part.

BACKGROUND

Familiarity with the procedural history, parties, investment scheme, and prior summary judgment motions made in this case is assumed.*fn4

On January 29, 2009, I granted the Monteleone, Barglow, Gambello, Greenberger, Bianco, and Bray plaintiffs' motions for summary judgment. Pursuant to my consolidation order, these six motions for summary judgment were treated as having been filed on behalf of all plaintiffs. German Valdivia, Stephen Doyle, Mark Kowalski, Nunzio Fontana, Marco Fontana, and David Breiner, along with other Del Monaco plaintiffs, submitted affidavits indicating that their exposure to defendants' investment scheme mirrored that of the Monteleone, Barglow, Bianco, Gambello, Greenberger, and Bray plaintiffs. On February 6, 2009, I granted summary judgment as to liability to the Del Monaco plaintiffs. However, I denied summary judgment as to damages to all Del Monaco plaintiffs on the ground that they had submitted insufficient proofs to permit the calculation of damages.

At the same time as these proceedings were occurring in the District Court, a bankruptcy proceeding filed by Philip Barry on October 31, 2008 was taking place in the Eastern District of New York Bankruptcy Court. On January 23, 2009, several plaintiffs from the various plaintiff groups, including German Valdivia, Stephen Doyle, Mark Kowalski, Nunzio Fonatana, Marco Fontana, and David Breiner, obtained relief from the automatic stay put in place by the bankruptcy court in favor of Barry,*fn5 which enabled them to proceed against Barry in the District Court. However, Bankruptcy Judge Milton ordered that any collection efforts of the creditors for whose benefit the stay was lifted against Barry and his assets must occur in the Bankruptcy Court.

Plaintiffs German Valdivia, Stephen Doyle, Mark Kowalski, Nunzio Fontana, Marco Fontana, and David Breiner have submitted affidavits containing additional evidence in support of their application for summary judgment on damages.

DISCUSSION

A plaintiff must substantiate a claim with evidence to prove the extent of damages. Although an evidentiary hearing may be held, "it is not necessary for the district court to hold a hearing, as long as... there was a basis for the damages specified." Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997); Tamarin v, Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993) (district judges are given much discretion to determine the necessity of an inquest).

Stephen Doyle

Stephen Doyle states that he invested $172,400 with defendants in several accounts bearing interest of 3% per month. Affidavit of Stephen Doyle at ¶ 5. The 3% monthly interest accounts did not generate quarterly statements. Id. Instead, Mr. Doyle invested with Barry "based on his verbal representations." Id.*fn6 Doyle states that he never made any withdrawal of his principal. Id. ¶ 7.

Mr. Doyle has submitted documentation in support of his claim that he made the above named deposits with defendants between March 19, 1994 and March 21, 1998. Id. ¶ 7. The documents submitted are as follows: (1) deposit slip dated March 19, 1994, indicating that Doreen DelMonaco deposited $5,300 into account number 3-192-94c; (2) deposit slip dated January 30, 1995, indicating that Stephen Doyle deposited $5,000 into account number 1-302-95c; (3) teller's check dated August 27, 1997, made out to Leverage Option Management in the amount of $10,000; (4) deposit slip dated March 4, 1998, indicating that Doreen Doyle deposited $60,000 into account number 4-041-98c; (5) teller's check dated March 11, 1998, made out to MBNA America in the amount of $20,000, stamped on the back as "received" by North American Financial, indicating an account number of 3-211-98c; (6) deposit slip dated March 21, 1998, indicating that Doreen Doyle deposited $72,100 into account number 3-211-98c. Id.

In addition, Doyle submits an affidavit by Doreen Doyle, who states that she is the wife of Stephen Doyle, and that while many of the receipts are in her name, the money came from joint marital funds and she has assigned all right, title, and interest in the funds to Mr. Doyle. Affidavit of Doreen Doyle at ΒΆ 3. Mrs. Doyle further states that the March 11, 1998 teller's check in the sum of $20,000 was made payable to MBNA America at the request of ...


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