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Acme American Repairs, Inc v. Harvey Katzenberg and Pearl Katzenberg

August 31, 2011

ACME AMERICAN REPAIRS, INC.;
ACME AMERICAN ENVIRONMENTAL CO., INC.; ACME COMMERCIAL KITCHEN DESIGN, INC.;
ACME AMERICAN REFRIGERATION, INC.;
ACME PACIFIC REPAIRS, INC.;
BANA PARTS, INC.; AND
BANA COMMERCIAL KITCHEN, INC., PLAINTIFFS,
v.
HARVEY KATZENBERG AND PEARL KATZENBERG, F/K/A PEARL FEUER, DEFENDANTS.



The opinion of the court was delivered by: Mauskopf, United States District Judge.

MEMORANDUM & ORDER

Currently before the Court are motions relating to the Court's September 24, 2010 Order granting defendants' motion for summary judgment. Defendants motion to amend this Court's September 24, 2010 Order pursuant to Federal Rule of Civil Procedure 60(a) or Local Civil Rule 6.3, based on an oversight or omission in the order, is GRANTED, and, as previously Ordered by this Court, summary judgment dismissing all causes of action brought by Acme Pacific Repairs, Inc., Bana Parts, Inc. and Bana Commercial Kitchen Parts, Inc. remains GRANTED. (Defs.' Mot. to Modify Order (Doc. No. 132) at 1.) Plaintiffs' motion for reconsideration under Federal Rule of Civil Procedure 60(a), regarding the dismissal of the breach of contract claim and denial of summary judgment on the fraud, breach of fiduciary duty, breach of duty of loyalty, conversion, and employee disloyalty claims is DENIED. (Pls.' Aff. in Opp'n to Mot. (Doc. No. 135) at 2.) Plaintiffs Rule 60(a) motion requesting that the Court reconsider its discussion of in pari delicto is likewise DENIED. (Id. at 4-5, 8.) Finally, the Court DENIES plaintiffs' request that the Court alter its judgment based on the preclusive effect of two previous court judgments involving some of the same parties and events as the present action. (Mot. Alter J. (Doc. No. 137) at 1.)

BACKGROUND

The Court adopts the factual recitation previously set forth in the September 24, 2010 Memorandum & Order. (Mem. & Order (Doc. No. 130) at 2-4.)

DISCUSSION

I. DEFENDANTS' 60(a) MOTION TO AMEND

On October 4, 2010, defendants filed a motion pursuant to Rule 60 of the Federal Rules of Civil Procedure and/or Local Civil Rule 6.3. (Defs.' Mot. to Modify Order at 1.) The Court did not address defendants' motion for summary judgment dismissing all causes of action asserted by plaintiffs Acme Pacific and the Bana Companies in its September 24, 2010 Order (Doc. No. 130). (Id.) Federal Rule of Civil Procedure 60(a) allows a court to "correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record." Fed. R. Civ. P. 60(a); Libaire v. Kaplan, No. 06-CV-1500, 2010 WL 317893, at *8 (E.D.N.Y. Jan. 21, 2010) (amending an order pursuant to Federal Rule of Civil Procedure 60). Accordingly, the Court now supplements its previous Order with a ruling on the motion to amend, and grants defendants' motion for summary judgment as to all causes of action asserted by plaintiffs Acme Pacific Repairs, Inc. ("Acme Pacific"), Bana Parts, Inc., and Bana Commercial Kitchen Parts, Inc. ("the Bana Companies"). (Defs.' Mem. Supp. Summ. J. at 2.)

Defendants maintain that Acme Pacific cannot properly bring this action because the Acme Pacific shareholder agreement states that "[n]o stockholder shall act in any manner other than in the ordinary course of business without the consent of the Directors acting at a meeting of the Directors," and "Acme Pacific has not called a meeting for purposes of voting on initiating this action." (Defs.' Mem. Supp. Summ. J. at 6.) Defendants argue that "this lawsuit is not in the ordinary course of business," and that, since there was never a meeting of directors at which this lawsuit was discussed, any action by Acme Pacific must be dismissed. (Defs.' Mem. Supp. Mot. (Doc. No. 121-6) at 24-25.) Likewise, defendants maintain that the Bana companies cannot properly bring this action because "the Bana companies [did not] conduct a duly noticed meeting of the directors to address initiation of a lawsuit." (Id. at 30.)

Summary judgment is appropriate when the pleadings, depositions, interrogatories, admissions, and affidavits demonstrate that there are no issues of material fact in dispute and that one party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

In a sworn declaration, defendants maintain that Acme Pacific and the Bana Companies never held a meeting of the directors to authorize this suit. (Def. Harvey Katzenberg's Decl. Supp. Mot. Partial Summ. J. (Doc. No. 121) at 19.) There is no evidence in the record that any meeting did occur; plaintiffs offer only an unsworn flat denial of defendants' sworn assertion. (Pls.' Resp. Defs.' Rule 56.1 Statement Uncontested Material Facts (Doc. No. 121-11) at 8.) Plaintiffs' flat denial, unsupported by any evidence that an authorization meeting occurred, is insufficient to create a genuine issue of material fact as to that issue. See Fed. R. Civ. P. 56(e)(2); Tycoons Worldwide Grp. (Thai.) Pub. Co. v. JBL Supply, Inc., 721 F. Supp. 2d 194, 202 (S.D.N.Y. 2010) ("Mere assertions, unsupported by any affirmative and specific evidence, are insufficient to raise a genuine issue of material fact for trial."). Accordingly, defendants' request for summary judgment dismissing all causes of action asserted by Acme Pacific and the Bana Companies is GRANTED.

III. PLAINTIFFS' 60(a) MOTION TO AMEND: IN PARI DELICTO

A. Waiver

Plaintiffs request that the Court "review its decision under Fed. R. Civ. Pro. 60(a) in light of the defenses extant in the defendants' Answer." (Pls.' Aff. in Opp'n to Mot. at 1.) In its September 24, 2010 Order, the Court declined to grant summary judgment for plaintiffs on their claims of breach of fiduciary duty and fraud because "the possible participation in the fraudulent activity by Acme's current ownership[] implicates the doctrine of in pari delicto, giv[ing] rise to triable questions of fact[] and preclud[ing] the grant of summary judgment." (Mem. & Order (Doc. No. 130) at 19.) The Court notes that, as an initial matter, this argument does not fall under the purview of Rule 60(a); nonetheless, the Court finds that it is without merit.

Plaintiffs first contend that defendants waived in pari delicto as a defense because defendants did not assert it in their answer to the amended complaint. (Pls.' Aff. Opp'n Mot. at 4.) While it is true that defendants did not raise in pari delicto in their answer to the amended complaint (see Doc. No. 8), in pari delicto is an equitable defense; thus "courts have discretion whether to apply the defense in any particular case." Buckley v. Deloitte & Touche USA LLP, No. 06-CV-3291 (SHS), 2007 WL 1491403, at *1 (S.D.N.Y. May 22, 2007). Since this is the summary judgment stage, and there remain unresolved issues of fact, the Court's previous order stands. Summary judgment will not be granted when the ...


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