United States District Court, S.D. New York
SHLD, LLC, DAVID MONTEAU, HARVEY NEWMAN, STUART SALLES, and LAURENCE WILNEFF, Plaintiffs,
NICHOLAS HALL, AMAR SHAH, TIER HALL, LTD., TIER HALL CONSULTING, LTD., INDEPENDENT SERVICES GROUP, LTD., INDEPENDENT BROKING SOLUTIONS, LTD., THE IVY GROUP, LLC, MINORIES LAW LIMITED, JEREMY BLOOMER, and NIGEL FRUDD, Defendants.
REPORT AND RECOMMENDATION
C. FRANCIS IV UNITED STATES MAGISTRATE JUDGE
action centers on a scheme to deliver "investor-funded
life insurance to employee associations and union groups in
New York." (Second Amended Complaint ("SAC"),
¶ 181). Alleging that the defendants breached an
agreement to "create and structure a bond that would
provide the needed capital" for the program (SAC, ¶
3), the plaintiffs - SHLD, LLC ("SHLD"), David
Monteau, Harvey Newman, Stuart Salles, and Laurence Wilneff -
filed this action for breach of contract, as well as
conversion and other torts. When defendants Nicholas Hall,
Amar Shah, and Tier Hall Consulting, Ltd. (collectively, the
"Defaulting Defendants") failed to answer,
certificates of default were entered and the case was
referred to me for a hearing on damages. The Defaulting
Defendants failed to appear at the inquest held on February
14, 2017. The following findings are therefore based on
evidence provided by the plaintiffs. I recommend that the
plaintiffs be awarded $265, 000 in damages plus prejudgment
interest measured at 9% from March 11, 2015, until the date
judgment is entered, and $710.00 in costs.
individual plaintiffs in this action are the members of SHLD;
each is a citizen of the United States and resides in either
Illinois or New York. (SAC, ¶¶ 10-13, 194;
Plaintiffs' Proposed Findings of Fact and Conclusions of
Law (“Proposed Findings”), ¶ 2). The
Defaulting Defendants are (or were, in the case of Tier Hall
Consulting, Ltd. (“Tier Hall Consulting”))
citizens of the United Kingdom; Nicholas Hall and Amar Shah
were the principals and owners of Tier Hall Consulting. (SAC,
¶¶ 15, 20-21; Proposed Findings, ¶¶ 3,
5). Most of the other defendants -- Tier Hall, Ltd.
(“Tier Hall”), Independent Broking Solutions,
Ltd., Independent Services Group, Ltd., Minories Law Ltd.,
and Nigel Frudd -- are citizens of the United Kingdom. (SAC,
¶¶ 14, 16-17, 19, 22; Proposed Findings,
¶¶ 4, 6-8). The Ivy Group, LLC, has its principal
place of business in Connecticut, and its members are
domiciled in Connecticut or Massachusetts; its principal,
Jeremy Bloomer, is a citizen of the United States and is
domiciled in Massachusetts. (SAC, ¶¶ 18, 23;
Proposed Findings, ¶ 9).
individual plaintiffs “conceived of The Amalgamated
Life Insurance and Annuity Network Trust of New York
(“ALIANT”) as a project to deliver
investor-funded life insurance to employee associations and
union groups in New York State.” (Proposed Findings,
¶ 10; SAC, ¶ 180). Between January and September
2013, the individual defendants met with Mr. Hall and Mr.
Shah in New York and elsewhere to discuss the project. (SAC,
¶¶ 183-184, 192; Proposed Findings, ¶¶
11-18). More specifically, a meeting in New York between the
individual plaintiffs and Mr. Hall on July 22, 2013,
culminated in a draft proposal by which Tier Hall, Ltd.,
would manage the creation and structuring of an investment
vehicle. (SAC, ¶¶ 187-188; Draft Proposal, attached
as Exh. 1 to SAC; Proposed Findings, ¶¶ 13-14). For
an initial investment from the plaintiffs of $300, 000, Tier
Hall would engage advisors with an eye to recruiting
investors and developing a business plan within two to three
months. (SAC, ¶¶ 190-191; Draft Proposal; Proposed
Findings, ¶¶ 14-16). After a September 30, 2013
meeting in New York among the individual plaintiffs and Mr.
Shah, a non-disclosure agreement was entered into, with Mr.
Shah signing on behalf of Tier Hall. (SAC, ¶¶
192-193; Proposed Findings, ¶¶ 18-19).
individual plaintiffs formed SHLD in October 2013 as “a
vehicle to develop and fund the administrative structure and
reserves required for ALIANT through the bond” that Mr.
Hall, Mr. Shah, and Tier Hall Consulting were to create.
(SAC, ¶ 194, Proposed Findings, ¶ 20). Immediately
afterward, Mr. Shah informed the plaintiffs that an
additional $30, 000 would be needed to form an Irish bond
company to hold the portfolio of “life
settlements” that would back the bond. (SAC,
¶¶ 194-195; Proposed Findings, ¶¶ 20-21).
This additional amount was incorporated into a “Heads
of Terms” agreement between SHLD and Tier Hall
Consulting,  which Mr. Hall Dated: behalf of Tier Hall
Consulting. (SAC, ¶¶ 198-199; Heads of Terms
Agreement; Proposed Findings, ¶¶ 22-23). That
agreement required Tier Hall Consulting to form the
aforementioned Irish bond company within three to six months
of the payment of the plaintiffs' $330, 000. (SAC, ¶
207; Head of Terms Agreement at 1; Proposed Findings, ¶
29). It further required, among other things, that within
three to six months of the execution of a binding agreement,
Tier Hall Consulting would (1) hire the company's board
and legal, actuarial, and accountancy teams; (2) work with
the bond distribution platform, (3) execute a service
agreement with the charitable trust that would own the bond
company, (4) “project manage the whole transaction
including the professional advisors, ” and (5) recruit
potential investors and develop a business plan. (SAC,
¶¶ 207-211; Heads of Terms Agreement at 1; Proposed
Findings, ¶¶ 29-33).
Heads of Terms Agreement was later incorporated into the
parties' final contract, which Mr. Hall signed as
“partner” and Mr. Shah signed as
“director” of Tier Hall Consulting. (SAC, ¶
202; Letter of David G. Monteau dated Oct. 31, 2013
(“Monteau Letter”), attached as part of Exh. 3 to
SAC; Proposed Findings, ¶ 24). The final contract was to
be governed by the laws of the United States, and required
Tier Hall Consultants to perform the services outlined in the
Heads of Terms Agreement “in accordance with [its]
performance milestones, ” supply periodic progress
reports, and provide a list of subcontractors, among other
things (SAC, ¶¶ 203-204, 212; Terms and Conditions
of Engagement (“Final Contract”), attached as
part of Exh. 3 to SAC, ¶¶ 3.1, 3.2, 3.6, 12.5.1
& Schedule 1; Proposed Findings, ¶¶ 25-26, 34).
If Tier Hall Consulting failed to complete the services it
was contracted to perform, failed to complete them to
SHLD's satisfaction, or failed to complete them on time,
SHLD could demand a refund, terminate the agreement, or both.
(SAC, ¶¶ 205-206; Final Contract, ¶¶ 9,
10.1-10.3; Proposed Findings, ¶¶ 27-28).
November 15, 2013, the plaintiffs had made the entire $330,
000 payment. (SAC, ¶ 213; Proposed Findings, ¶ 35).
Three months later, Mr. Shah provided a draft
“teaser” for prospective investors and informed
the plaintiffs that he was “a month behind.”
(SAC, ¶ 218; Proposed Findings, ¶ 37). The
plaintiffs expressed their dissatisfaction with the teaser,
as well as with the absence of monthly reports and lack of
overall progress. (SAC, ¶ 219; Proposed Findings, ¶
38). Over the next months, Tier Hall Consulting continued to
miss deadlines and failed to show progress on funding. (SAC,
¶ 221-39; Proposed Findings, ¶ 40). When no
investors had been found by December 2014, the plaintiffs
requested a list of itemized expenditures from Mr. Hall.
(SAC, ¶ 239, 242; Proposed Findings, ¶¶
40-41). Mr. Hall detailed the following expenditures:
1. $40, 000 to legal advisors Minories Law Limited;
2. $85, 000 to The Ivy Group;
3. $65, 000 to Independent Services Group;
4. $120, 000 to Tier Hall Consulting; and
5. $20, 000 in general expenses.
(SAC, ¶ 243; Proposed Findings, ¶ 42). These
expenses were either unauthorized and therefore in violation
of the parties' agreement, or unearned in light of the
lack of “reasonably competent or timely
work-product.” (SAC, ¶ 248, Proposed Findings,
¶¶ 44-48). In addition, as the bond company was
never formed, the “defendants  put to other uses the
$30, 000 that had been added to the start-up fee allegedly to
address additional expenses relating to the formation of the
bond company.” (Proposed Findings, ¶ 43; SAC,
¶ 247). The plaintiffs terminated the contract on March
11, 2015, and demanded a refund of ...