May 7, 2013
MOHAMMED FEZZANI, CIRENACA FOUNDATION, DR. VICTORIA BLANK, LESTER BLANK, JAMES BAILEY, JANE BAILEY, BAYDEL LTD., MARGARET BURGESS, PATRICK BURGESS, BOOTLESVILLE TRUST, AND ADAM CUNG, PLAINTIFFS-APPELLANTS,
BEAR, STEARNS & CO. INC., BEAR STEARNS SECURITIES CORP., RICHARD HARRITON, MORRIS WOLFSON, ARIELLE WOLFSON, ABRAHAM WOLFSON, TOVIE WOLFSON, ANDERER ASSOCIATES, BOSTON PARTNERS, WOLFSON EQUITIES, TURNER SCHARER, CHAN SASHA FOUNDATION, UNITED CONGREGATION MESERAH, ISAAC DWECK, INDIVIDUALLY AND AS CUSTODIAN FOR NATHAN DWECK, BARBARA DWECK, MORRIS I. DWECK, RALPH I. DWECK, JACK DWECK, FAHNESTOCK & CO. INC., BARRY GESSER, MICHAEL REITER, AND APOLLO EQUITIES, DEFENDANTS-APPELLEES, ARTHUR BRESSMAN, ANDREW BRESSMAN, RICHARD ACOSTA, GLENN O'HARE, JOSEPH SCANNI, BRETT HIRSCH, GARVEY FOX, MATTHEW HIRSCH, RICHARD SIMONE, CHARLES PLAIA, JOHN MCANDRIS, JACK WOLYNEZ, ROBERT GILBERT, FIRST HANOVER SECURITIES, INC., BANQUE AUDI SUISSE GENEVE, FOZIE FARKASH, RAWAI RAES, BASIL SHIBLAQ, IYAD SHIBLAQ, KEN STOKES, MILLO DWECK, BEATRICE DWECK, RICHARD DWECK, ISAAC B. DWECK, HANK DWECK, AND DONALD & CO., DEFENDANTS.*FN1
Appeal from a September 22, 2008 order and a September 30, 2009 judgment entered in the United States District Court for the Southern District of New York (Paul A. Crotty, Judge).
Fezzani v. Bear, Stearns & Co.
Rulings by summary order do not have precedential effect. Citation to a summary order filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this Court's Local Rule 32.1.1. When citing a summary order in a document filed with this Court, a party must cite either the Federal Appendix or an electronic database (with the notation "summary order"). A party citing a summary order must serve a copy of it on any party not represented by counsel.
1 At a stated term of the United States Court of Appeals for the Second Circuit, held at the 2 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 7th 3 day of May, two thousand thirteen.
4 PRESENT: 5 RALPH K. WINTER, 6 JOSE A. CABRANES, 7 RAYMOND J. LOHIER, JR., 8 Circuit Judges.
9 UPON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, 10 ADJUDGED, AND DECREED that the judgment of the District Court be AFFIRMED IN 11 PART and VACATED IN PART AND REMANDED for further proceedings consistent with 12 this order.
13 The instant action began on February 2, 1999, when Mohammed Fezzani, Cirenaca 14 Foundation, Dr. Victoria Blank, Lester Blank, James Bailey, Jane Bailey, Baydel Ltd., Margaret 15 Burgess, Patrick Burgess, Bootlesville Trust, and Adam Cung (jointly "plaintiffs") filed suit against 16 more than fifty corporate and individual defendants. The complaint asserted claims for securities 17 fraud, market manipulation, RICO, aiding and abetting breach of fiduciary duty, and common law 18 fraud, all arising out of the criminal conduct of A.R. Baron & Co. ("Baron"), a now-defunct broker- 19 dealer. From 1992 to 1996, Baron manipulated the share prices of a few small, unknown companies 20 that it helped to take public.*fn1 The complaint accused the defendants--each in various ways through 21 different capacities--of assisting Baron in perpetuating its securities fraud. 22 Plaintiffs filed their First Amended Complaint on April 7, 2005. The Amended Complaint 23 included all of the previously named defendants, broken into six groups: (1) the Baron defendants;*fn2
1 (2) the Bear Stearns defendants;*fn3 (3) Fahnestock & Co. Inc. ("Fahnestock"); (4) the Dweck 2 defendants;*fn4 (5) the Wolfson defendants;*fn5 and (6) the Apollo defendants.*fn6 The causes of action also 3 remained unchanged, except that plaintiffs dropped one aspect of their market manipulation 4 claim--based on Section 9 of the Securities Exchange Act--and added a claim for civil conspiracy 5 to commit fraud. Once again, different causes of action were advanced against different groupings 6 of defendants.
7 On September 22, 2008, the District Court granted the motions to dismiss of all defendants, 8 save for the Apollo defendants. Fezzani v. Bear, Stearns & Co., 592 F. Supp. 2d 410 (S.D.N.Y. 2008). 9 A year later, the District Court dismissed the entire action sua sponte after the case had been dormant 10 for nearly a year. Plaintiffs now appeal these separate orders. We decide plaintiffs' appeal with 11 respect to the Dwecks in an opinion filed simultaneously with this summary order, and we address 12 the remainder of the appeal in this summary order. We assume the parties' familiarity with the facts, 13 procedural history, and legal issues currently before us.
15 We review de novo a district court's dismissal of a complaint for failure to state a claim under 16 Rule 12(b)(6). Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 88 (2d Cir. 2009). "In conducting this 17 review, we assume all 'well-pleaded factual allegations' to be true, and 'determine whether they 18 plausibly give rise to an entitlement to relief.'" Id. (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 1 (2009)). A complaint alleging securities fraud must satisfy Rule 9(b), which requires that "the 2 circumstances constituting fraud . . . shall be stated with particularity." Fed. R. Civ. P. 9(b).
3 Additionally, we have interpreted the pleading standards of the Private Securities Litigation Reform 4 Act, codified at 15 U.S.C. § 78u-4(b), to require that a defendant's intent be pleaded and based on 5 "facts [either] (1) showing that the defendants had both motive and opportunity to commit the fraud 6 or (2) constituting strong circumstantial evidence of conscious misbehavior or recklessness." ATSI 7 Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 99 (2d Cir. 2007).
8 Having conducted an independent and de novo review of the record in light of these 9 principles, we affirm the judgment of the District Court as it concerns the Bear Stearns defendants 10 and Fahnestock for substantially the reasons stated by the District Court it its thorough opinion. 11 Fezzani v. Bear, Stearns & Co., 592 F. Supp. 2d 410 (S.D.N.Y. 2008). This leaves only plaintiffs' ...
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