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Johannes Baumgartner Wirtschafts-Und Vermo Gensberatung GmbH v. Salzman

United States District Court, E.D. New York

September 3, 2013

JOHANNES BAUMGARTNER WIRTSCHAFTS-UND VERMÖ GENSBERATUNG GMBH and HOLGER KNUT THEILER, Plaintiffs,
v.
STANLEY P. SALZMAN, ESQ.; STANLEY P. SALZMAN, P.C.; FRIESNER & SALZMAN P.C.; MARILYN J. SALZMAN; POSTBANK FINANZBERATUNG AG; BHW BAUSPARKASSE AG a/k/a DEUTSCHE POSTBANK AG; MICHAEL KAUBISCH; STEFAN Kröner; PETER SCHMIDT; AMBIENTE GMBH; BLACKSTONE CAPITAL TRADE AG; HARI RANA; MORITZ JOHANNES WAGNER d/b/a C.B.O.D. SERVICEBÜ RO GERMANY; CARTER, BAILEY, OPPENHEIM & DRYFUS, INC.; J. GREENBAUM; JOHN RALSTON; KAREN SLACUM a/k/a KAREN SLOCUMB; AGENTS FOR DELAWARE CORPORATIONS; FERNANDO FARIA SAMPAIO; SINO-IBERIAN HOLDINGS LIMITED; IT'S INVESTMENT TREUHAND & SERVICE GMBH; NORBERT SCHRAMM; MEHMED KOCABAS; ALI KARLI; LIDER INTERNATIONAL IMPORT & EXPERT GMBH; MESUT CETIN; HÜ SEYIN COBAN; AYKUT HASAN BÖ LÜ KBASI; MURAT Özkan; FIFO TRUST LIMITED; FIFO TRUSTEES LIMITED; MEYTEC CAPITAL HOLDINGS LTD; MARTIN BRIAN TOBIAS-GIBBINS; A. RASHID; JOHN M. PRESTON LIMITED; KAZAN INVESTMENTS LIMITED; UNIVERSAL METAL TRADING LTD.; HAKAN METIN; SERKET SAHIN; HILMI Ü RKMEZ; MUHSIN KARAKURT a/k/a VELI; PHILIP SINCLAIR; LES HARRISON; MARTIN HALLEY, RENFREW SECURITY BANK & TRUST (OFFSHORE) LTD.; LONDON FINANCIAL INVESTMENT GROUP LTD.; and DEFENDANT DOES 1-50; Defendants

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[Copyrighted Material Omitted]

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For Plaintiffs: Ivo G. Caytas, Esq., Caytas & Associates, New York, NY.

For Postbank Finanzberatung, BHW Bausparkasse, Kaubisch, and Kroner, Defendants: Howard Zelbo, Esq., Cleary Gottlieb Steen & Hamilton, New York, NY.

For FIFO Trust Limited, FIFO Trustees Limited, Tobias-Gibbins, and Meytec Capital Holdings, Defendants: Charles Hyman, Esq., Kissel Hirsch & Wilmer LLP, Tarrytown, NY.

For Salzman & Stanley P. Salzman, P.C., Defendants: Peter J. Biging, Esq., Lewis, Brisbois, Bisgaard & Smith, LLP, New York, NY.

For Remaining, Defendants: No appearances.

OPINION

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MEMORANDUM & ORDER

SEYBERT, District Judge

Pending before the Court are the following: (1) Magistrate Judge A. Kathleen Tomlinson's Report and Recommendation (" R& R" ) that the motion for partial default judgment filed by Plaintiffs Johannes Baumgartner Wirtschafts-Und Vermö gensberatung GmbH (" JBWV" ) and Holger Knut Theiler (" Theiler," and together with JBWV, " Plaintiffs" ) on their claims for fraud, conversion, unjust enrichment, conspiracy, and gross negligence against Defendants Aykut Hasan Bölükbasi (" Bölükbasi" ), Murat Özkan (" Özkan" ), and Hakan Metin (" Metin" ) be granted in part and denied in part (Docket Entries 247, 329) and Bölükbasi, Özkan, and Metin's objections thereto (Docket Entry 347); (2) Judge Tomlinson's R& R that Plaintiffs' motion for final partial default judgment on their claims for breach of contract, securities fraud, and violations of the Racketeer Influenced and Corrupt Organizations Act (" RICO" ) against Defendants Peter Schmidt (" Schmidt" ), Ambiente GmbH (" Ambiente" ), Moritz Johannes Wagner (" Wagner" ), Carter Bailey Oppenheim & Dryfus Inc. (" CBOD" ), J. Greenbaum (" Greenbaum" ), John Ralston (" Ralston" ), Karen Slacum a/k/a Karen

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Slocumb (" Slacum" ), Agents for Delaware Corporations (" ADC" ), Hüseyin Coban (" Coban" ), Bölükbasi, Özkan, and Metin be granted in part and denied in part (Docket Entries 306, 333) and Plaintiffs' and Bölükbasi, Özkan, and Metin's objections thereto (Docket Entries 343, 347); (3) Plaintiffs' unopposed motion to reinstate their claims against Defendants Stanley P. Salzman (" Salzman" ), Stanley P. Salzman P.C. (" Salzman P.C." ), and Friesner & Salzman P.C. (together, the " Salzman Defendants" ) (Docket Entry 315); (4) Plaintiffs' motion to reinstate their claims against Defendants Martin Brian Tobias-Gibbins (" Gibbins" ) and Meytec Capital Holdings Limited (" Meytec" ) (Docket Entry 311); and (5) Gibbins and Meytec's cross-motion to declare the settlement agreement between Plaintiffs and Gibbins and Meytec breached (Docket Entry 319).

For the following reasons, the Court SUSTAINS Bölükbasi, Özkan, and Metin's objections to Judge Tomlinson's R& Rs and OVERRULES Plaintiffs' objections; ADOPTS IN PART Judge Tomlinson's R& Rs; DENIES Plaintiffs' motions for default judgment; DENIES Plaintiffs' motions to reinstate their claims against the Salzman Defendants and Defendants Gibbins and Meytec; and DENIES Defendants Gibbins and Meytec's motion to enforce the settlement agreement.

BACKGROUND

The Court assumes familiarity with the underlying facts of this case, which are detailed in both of Judge Tomlinson's R& Rs. Thus, this section will be limited to this case's lengthy procedural history.

Plaintiffs commenced this action on June 27, 2008, asserting violations of RICO, federal securities laws, and New York state common law arising out of a purported advanced fee fraud.[1] On September 10, 2008, the Clerk of the Court noted the default of Defendants CBOD, Greenbaum, and Ralston (Docket Entries 11-13), and, on September 11, 2008, Plaintiffs filed a motion for a partial default judgment against those defendants on their state law fraud, conversion, unjust enrichment, conspiracy, and gross negligence claims (Docket Entry 14), which the undersigned referred to Judge Tomlinson for an R& R (Docket Entry 26). Judge Tomlinson issued her R& R on August 14, 2009, recommending that the Court enter a partial default judgment against these defendants on those claims but defer calculating damages until resolution of the entire case. (Docket Entry 57.) The Court adopted this R& R in its entirety on September 10, 2009. (Docket Entry 60.)

On September 11, 2009, Plaintiffs moved for leave to file a Second Amended Complaint[2] which set forth additional defendants.[3] (Docket Entry 62.) Judge

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Tomlinson granted that motion on September 17, 2009. (Docket Entry 63.) Thereafter, Plaintiffs voluntarily dismissed the claims against Marilyn Salzman with prejudice (Docket Entry 86), against the Salzman Defendants without prejudice (Docket Entry 128), against Universal Metal without prejudice (Docket Entry 171), against BHW, Postbank, Kaubisch, and Kröner without prejudice (Docket Entry 235), and against the FIFO Defendants with prejudice (Docket Entry 253). Plaintiffs also consented to the entry of judgment against Gibbins and Meytec in the amount of $7,536,345.00. (Docket Entry 234.)

In the interim, Plaintiffs requested that the default of Defendants Slacum and ADC be entered by the Clerk of the Court and moved for a partial default judgment against Slacum and ADC on their state law fraud, conversion, unjust enrichment, conspiracy, and gross negligence claims. (Docket Entries 73, 77.) The Clerk of the Court noted their defaults (Docket Entries 75-76), and the Court referred the motion for a partial default judgment to Judge Tomlinson for an R& R (Docket Entry 91). Judge Tomlinson issued an R& R on August 24, 2010, recommending that the Court enter a partial default judgment against these defendants on these claim but defer calculating damages until resolution of the entire case. (Docket Entry 217.) Plaintiffs filed objections to Judge Tomlinson's R& R to the extent that she recommended deferring the calcuation of damages and the entry of judgment. (Docket Entry 220.) The Court sustained Plaintiffs' objections, thus overruling the portion of Judge Tomlinson's R& R that recommended delaying an assessment of damages, and granted Plaintiffs' motion for a partial default judgment in its entirety. (Docket Entry 240.) A partial judgment was entered against Slacum and ADC jointly and severally in the amount of $3,600,000 in liquidated damages plus $821,982.42 in statutory interest in favor of JBWV and in the amount of $200,000.00 in liquidated damages plus $68,301.33 in statutory interest in favor of Theiler. (Docket Entry 240.)

Plaintiffs filed similar motions for partial default judgment against Defendants Ambiente, Schmidt, Veli, Kocabas, Coban, Karli, and Wagner (Docket Entries 145, 149, 157, 173, 184, 189) after receiving certifications of their respective defaults from the Clerk of the Court (Docket Entries 138-39, 141, 143, 153, 169, 180). These motions were all referred to Judge Tomlinson for R& Rs. (Docket Entries 154, 177, 187, 194.) Judge Tomlinson issued three separate R& Rs addressing these motions on February 24, 2011 (Docket Entries 262-64), which the Court adopted in their entirety (Docket Entry 269). That Order concluded, in relevant part, as follows:

1. A partial default judgment is entered in Plaintiffs' favor, and against Defendants Ambiente GMBH, Peter Schmidt, Muhsin Karakurt a/k/a Muhsin Veli, Mehmed Kocabas, Hüseyin Coban, Ali Karli, Moritz Johannes Wagner d/b/a C.B.O.D. Serviceburo Germany, on the state law claims of fraud, conversion, unjust enrichment, conspiracy and gross negligence.

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2. Defendants Ambiente GMBH, Peter Schmidt, Muhsin Karakurt a/k/a Muhsin Veli, Mehmed Kocabas, Hüseyin Coban, Ali Karli, Moritz Johannes Wagner d/b/a C.B.O.D. Serviceburo Germany; Carter Bailey Oppenheim & Dryfus, Inc., J. Greenbaum, and John Ralston are jointly and severally liable:
a. To Plaintiff Johannes Baumgartner Wirtschafts- und Vermö egensberatung [sic] GMBH for: (a) liquidated damages in the amount of $3,600,000; plus (b) prejudgment interest in the amount of $970,223.31;
b. To Plaintiff Holger Knut Theiler for: (a) liquidated damages in the amount of $200,000; plus (b) prejudgment interest in the amount of $81,079.32.
3. The Clerk of the Court is directed to issue a judgment in Plaintiffs' favor on those amounts, against those Defendants.
4. Additionally, the Clerk of the Court is directed to amend the judgment entered by Electronic Order on September 30, 2010 against Ms. Slacum and Agents for Delaware Corporations. The Amended Judgment should reflect that Ms. Slacum and Agents for Delaware Corporations are jointly and severally liable with Ambiente GMBH, Peter Schmidt, Muhsin Karakurt a/k/a Muhsin Veli, Mehmed Kocabas, Hüseyin Coban, Ali Karli, Moritz Johannes Wagner d/b/a C.B.O.D. Serviceburo Germany; Carter Bailey Oppenheim & Dryfus, Inc., J. Greenbaum, John Ralston, and not just each other.
. . .
8. Any assets that Plaintiffs recover from any Defendant shall be deposited in the Court's registry pending this case's resolution or further order of the Court. Plaintiffs are directed to consult with Judge Tomlinson ...

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