United States District Court, W.D. New York
ALAN H. FOX, PlaintiffS,
LIFEMARK SECURITIES CORP. AND JEFFREY MORRISON, Defendants,
For Alan H. Fox, Plaintiff: Rita W. Gordon, Gordon Associates, New York, NY.
For Lifemark Securities Corporation, Jeffrey Morrison, Defendants: Luigi Spadafora, Matthew Tracy, LEAD ATTORNEYS, Winget, Spadafora & Schwartzberg, LLP, New York, NY.
DECISION AND ORDER
MICHAEL A. TELESCA, United States District Judge.
Plaintiff Alan H. Fox (" plaintiff" or " Fox" ) brings this action against LifeMark Securities Corporation (" LifeMark" ) and his investment advisor Jeffrey Morrison (" Morrison" ) (collectively " defendants" ) pursuant to section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. § § 78j[b]), Rule 10b-5 (17 C.F.R. § 240.10b-5), Section 20(a) of the Securities Exchange Act of 1934 (15 U.S.C. § 78t[a]), Section 17(a) of the Securities Act of 1933 (15 U.S.C. § 77q[a]) and Section 15(c)(1) of the Securities Exchange Act of 1934 (15 U.S.C. § 78o[c]). Plaintiff contends that Morrison recommended the purchase of four investments, a Prudential variable annuity (" Prudential" ), a Grubb-Ellis REIT (" Grubb-Ellis" ), the ATEL Growth Capital 5 leasing program (" ATEL 5" ), and the ATEL 14 leasing program (" ATEL 14" ) (collectively the " investments" ), that were legally unsuitable for his investment needs.
Defendants have moved for summary judgment under Rule 56 of the Federal Rules of Civil Procedure contending that plaintiff has failed to raise a triable issue of fact on his Rule 10b-5 securities fraud (" unsuitability" ) claim, and related claims of personal liability, respondeat superior /failure to supervise, breach of fiduciary duty, negligence, common-law fraud, breach of contract, and gross negligence. For the reasons stated below, I grant defendants' motion for summary judgment and dismiss the complaint, in its entirety, with prejudice.
Unless otherwise noted, the following facts are taken from plaintiff's complaint, including the documents incorporated therein by reference, the documents upon which parties relied in their motions, and deposition testimony.
I. The Parties
LifeMark is a securities broker-dealer based in Rochester, New York. Morrison is an individual broker who became licensed to sell securities in 1999. In 2005, Morrison became a registered representative and independent contractor of LifeMark, through which he placed all of his security business. Plaintiff is an individual in his mid 70s and a long-time business man. His business career consisted of: managing his family's printing business from 1961 to 1979; being owner and CEO of Contour Packing Corp. from the early 1980s to 1994; owning and operating The Packaging People, Inc., a manufacturing business, with his wife from 1994 to 2011; starting Supply Managers in 1990 and overseeing its financial and technical aspects; operating Business Acquisitions and Transitions, LLC from 1998 to 2006; and purchasing the Blue Sky Classic Cars (" Blue Sky" ) restoration business in 2006. He has actively invested in the stock market since 2001 and passively through a 401K plan with The Packaging People.
II. Plaintiff's financial situation and goals
On July 23, 2009, plaintiff met with Morrison and Ellen Douglas, also a registered representative of LifeMark and Morrison's business partner, to discuss plaintiff's financial situation and his desire to move his investments from Morgan Stanely. Five days later, plaintiff sent a 12-page Full Financial Planning Questionnaire/Fact Find document(" FFPQ" ) to Morrison in which he listed his assets, liabilities, net worth, and financial goals. Plaintiff stated that his assets totaled $4,820,000.00 and that his liabilities totaled $1,337,000.00. See also Plaintiff's counter statement of facts, p. 10. He also listed his total yearly income as $222,000.00 and stated that he wished to retire " 3 years after death." Plaintiff's FFPQ, p. 6. The FFPQ included a client declaration wherein plaintiff confirmed that he " provided this information with the understanding that it [would be] used to form the basis of any advice and recommendations made to [him] and that [he was] not under any obligation to take up any recommendations made." Plaintiff's FFPQ, p. 11.
Plaintiff now disputes the values listed for some of his business assets, asserting that the numbers were either based on his post-recession projections or did not accurately reflect his ownership share, circumstances of which Morrison was aware based on his many conversations and meetings with plaintiff. Plaintiff further contends that his statement about retiring three years after his death was " ironic" and not meant to be taken literally. He testified, however, that he could not retire until he sold Blue Sky, and that, in 2009, he was unsure when that would occur. In essence, plaintiff's allegations are predicated primarily on his ...