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Soley v. Wasserman

United States District Court, Second Circuit

December 6, 2013

JUDY W. SOLEY, Plaintiff,
v.
PETER J. WASSERMAN, Defendant.

OPINION & ORDER

KIMBA M. WOOD, District Judge.

On December 2, 2013, this Court held a bench trial to resolve Plaintiff's breach of fiduciary duty and accounting claims with respect to her investments with Defendant in the stocks of several companies: Tapistron, Nexmed (now called "Apricus BioSciences"), Neurobiological Technologies ("NTII"), and Cardima (collectively, the "Joint Stocks"). After considering the witness' testimony at the bench trial, as well as their affidavits of direct testimony, exhibits, pleadings, and Proposed Findings of Fact and Conclusions of Law, the Court makes the following Findings of Fact and Conclusions of Law, pursuant to Federal Rule of Civil Procedure 52(a).

I. Findings of Fact

Defendant offered Plaintiff and Arthur ("Casey") Stern opportunities to invest with him in private placement equities of certain companies. (Joint Pretrial Order - Stipulated Facts ¶ 38 [Dkt. No. 89] [hereinafter JPTO]). These investment opportunities were not available to the general public. ( Id. ). Plaintiff understood that she would own a proportionate interest in each private placement in which she chose to participate. (Soley Affidavit ¶ 3 [Dkt. No. 99]). She understood that she would give her money to Defendant, who would purchase and hold the shares. ( Id. ). Plaintiff further understood that once the shares of a stock purchased as a private placement were made publicly tradable, they would be sold and Defendant would pay Plaintiff her proportionate share of the proceeds. ( Id. ). Plaintiff, Defendant, and Stern agreed that the Defendant would have sole control over the Joint Stocks. (JPTO ¶ 40).

Defendant, Plaintiff, and Stern made the following initial investments in the Joint Stocks:

1. Tapistron: Plaintiff - $20, 000; Defendant - $15, 000; Stern - $10, 000. They jointly purchased 300, 000 shares in or about September 1997.
2. Nexmed: Plaintiff - $20, 000; Defendant - $25, 000; Stern - $15, 000. They jointly purchased 40, 000 shares in or about September 1999.
3. NTII: Plaintiff - $20, 000; Defendant - $25, 000; Stern - $15, 000. They jointly purchased 75, 000 shares in or about November 1999.
4. Cardima: Plaintiff - $10, 000; Defendant - $80, 000; Stern - $10, 000. They jointly purchased 172, 414 shares in or about May 3, 2001.

( Id. ¶ 41).

Some of the purchased Joint Stocks came with "warrants, " which entitle the stockholder to purchase additional shares at certain times or subject to certain conditions. (Wasserman Affidavit ¶ 10 [Dkt. No. 101]). Defendant has never given Plaintiff an accounting of the exercise of warrants in connection with the Joint Stocks. (Soley Affidavit ¶ 18).

After Plaintiff entrusted funds to Defendant for the purchase of the Joint Stocks, she contacted him numerous times for information about the status of those investments. ( Id. ¶ 5). Defendant was unwilling to discuss the investments with her and later told her to talk to Stern about them. ( Id. ). Plaintiff was unable to obtain even basic information about the Joint Stocks from either Defendant or Stern. ( Id. ¶ 6). By the end of 2005, Defendant had stopped returning Plaintiff's calls, so she began communicating with him in writing. ( Id ).

In a February 15, 2007 letter to Plaintiff, Defendant stated that he would gather the necessary information to answer her questions about the Joint Stocks and would provide it to her by May 2007. ( Id. ). Defendant, however, did not provide Plaintiff that information and did not contact Plaintiff in May 2007. ( Id. ). By letter dated December 24, 2007, Plaintiff complained to Defendant about Defendant's failure to respond to her inquiries, reminded Defendant that she had never been paid for the Joint Stocks, and demanded that Defendant account to her for her funds and pay Plaintiff her interest in the Joint Stocks. ( Id. ¶ 10; Exhibit P-49). Defendant did not respond to Plaintiff's December 2007 letter or provide her with an accounting or payment of her interest in the Joint Stock. (Soley Affidavit ¶ 11).

During 2001, Defendant sold 75, 000 shares of the NTII stock for a total of $302, 586. (JPTO ¶ 42). After selling the stock, Defendant did not pay Plaintiff her proportionate share of the proceeds. (Soley Affidavit ¶¶ 12, 17). Defendant currently holds the proceeds from the NTII stock in his personal bank account with Bank of America. (Transcript of Bench Trial, at 37-38 [Dkt. No. 133]). Plaintiff has a 1/3 ...


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