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Negri v. Friedman

United States District Court, S.D. New York

May 31, 2017

RYAN J. NEGRI, Plaintiff,
v.
MICHAEL J. FRIEDMAN, Defendant.

          MEMORANDUM OPINION AND ORDER

          GREGORY H. WOODS, United States District Judge

         I. INTRODUCTION

         This case between two pro se litigants arises out of a transaction in which Plaintiff Ryan Negri (“Negri”) sold his company, Negri Electronics, to First Ascent, LLC (“First Ascent”), a company owned by Defendant Michael Friedman (“Friedman”). Negri originally filed his complaint, along with his brother Philip Negri, against Friedman, Defendant's father Arthur Friedman, Defendant's business partner P.J. Louis, and First Ascent. Plaintiff alleged that these Defendants fraudulently misled Plaintiff into entering into the transaction, fraudulently transferred money out of Negri Electronics, were unjustly enriched by those transfers, and breached the agreement underlying the transaction. As this case progressed, most of the Defendants were dismissed from the case, and Plaintiff Philip Negri withdrew his remaining claims. While Ryan Negri's claims against Friedman remained, they can no longer do so, as they each fail as a matter of law. Plaintiff has presented no facts that support his allegations, and therefore Defendant's motion for summary judgment is GRANTED.

         II. BACKGROUND[1]

         Plaintiff founded his company, Negri Electronics, in 2006. Declaration of Michael J. Friedman in Support of Motion for Summary Judgment (“Friedman Decl.”) Ex. S (“Negri Dep. Tr.”) 8:24-25. The company was initially based in California, but later moved to Nevada. Id. 11:16-17; Friedman Decl. Ex. E at 7. Negri Electronics sold electronics such as cellular phones, tablets, and cameras. Negri Dep. Tr. 9:21-24. In early 2013, Friedman formed First Ascent, LLC, a New York-based private equity firm that “focused on acquiring and growing companies in the areas of telecommunications, information technology, data management, and media.” Defendant's Local Rule 56.1 Statement (“Def.'s 56.1”) at ¶ 1; Friedman Decl. Ex. T. In what would seem to be fortuitous circumstances, around the same time, Negri began speaking to an investment banker named Todd Sherman about “a potential investment or sale for [Negri Electronics].” Negri Dep. Tr. 14:4-7. Negri's company was therefore-in theory-exactly the kind of company that Friedman's company was seeking to acquire at the exact same time that Negri was pursuing a potential sale.

         Sherman introduced Friedman and Negri in late 2013 to discuss such a potential acquisition. Def.'s 56.1 ¶¶ 6-7, Negri Dep. Tr. 15:20-16:4. After entering into a non-disclosure agreement, the parties conducted initial due diligence. Def.'s 56.1 ¶ 9; Friedman Decl. Ex. C. On December 17, 2013, Friedman and P.J. Louis, on behalf of First Ascent, visited Negri Electronics in Las Vegas. Def.'s 56.1 ¶ 13. On December 24, 2013, a Stock Purchase Agreement was entered between Ryan Negri and Philip Negri (as shareholders), Negri Electronics, and First Ascent, LLC. Friedman Decl. Ex. G (the “Agreement”). The Agreement provided that First Ascent would acquire the outstanding stock of Negri Electronics for $7, 212, 819.34, payable over four years. Id. at 1 & Appendix A. At closing, the Negri brothers were to be given a total of $252, 837.24, which Plaintiff admits he received. Id. Appendix A; Am. Compl. ¶ 40. Friedman was not a party to this agreement in his individual capacity, although he did sign the agreement on behalf of First Ascent. Id. In addition to the Agreement concerning the sale of the company, Negri and First Ascent also entered into a consulting agreement pursuant to which Negri would remain with the company as a consultant to help with the transition. Negri Dep. Tr. 25:9-12. On December 31, 2013, Negri published a press release announcing the acquisition, noting the “exciting growth opportunity” the transaction presented. Friedman Decl. Ex. H. at 3.

         Soon after this agreement was signed, First Ascent took control of the operations of Negri Electronics, and things quickly took a turn for the worse. The parties disagree about who caused this unraveling. In the Amended Complaint, Negri claims that Defendant began looting the company through large cash withdrawals. Am. Compl. ¶¶ 41-45. Friedman claims, to the contrary, that upon taking over Negri Electronics he realized that the company had failed to pay various bills to vendors and suppliers. See Def.'s 56.1 ¶¶ 21-24; Friedman Decl. Ex. F (emails containing requests for outstanding payments). Friedman states that the acquired electronics company appeared to be “a sinking ship and a ponzi [sic] scheme in disguise.” Def.'s 56.1 ¶ 70. An additional obstacle presented itself, on February 11, 2014 when Plaintiff submitted a letter to Defendant resigning from the company, stating “I sincerely wanted to stay on and help the company grow, but as you know things changed as soon as PJ [Louis] took the reins.” Friedman Decl. Ex. K.

         Friedman asserts that the circumstances surrounding the poor financial state of Negri Electronics led him to seek out funding sources “in order to keep the Company afloat.” Def.'s 56.1 ¶ 54. On March 31, 2014, Defendant secured a $3 million line of credit for Negri Electronics by entering into a credit agreement with TCA Global Credit Master Fund, LP (“TCA”). Friedman Decl. Ex. L. As part of the credit agreement, Negri agreed to subordinate his rights and claims to TCA. Friedman Decl. Ex. U; Negri Dep. Tr. 35:5-12. The Amended Complaint alleges that on July 1, 2014, Friedman defaulted and failed to pay Negri payment due under the Agreement. Am. Compl. ¶ 58. By the end of that year, Plaintiff brought this case seeking payment under the Agreement and alleging that Defendant had misused company assets in a “shameless course of conduct.” Am. Compl. ¶ 66. While this transaction clearly failed, there are no facts in the record that indicate the ultimate fate of the companies that entered into this doomed purchase agreement.

         III. PROCEDURAL BACKGROUND

         Plaintiff brought his initial complaint, along with his brother Philip Negri, against Defendants Michael Friedman, Arthur Friedman, First Ascent, LLC, and P.J. Louis, on December 31, 2014. Dkt. No. 1. Plaintiffs amended their complaint on April 8, 2015. Dkt. No. 29. On April 30, 2015, Plaintiffs voluntarily dismissed Defendant P.J. Louis, and on May 4, 2015, voluntarily dismissed Defendants Arthur Friedman and First Ascent LLC. Dkt. Nos. 48 & 51. On September 4, 2015, Plaintiff Philip Negri dismissed his claims against remaining Defendant Michael Friedman, leaving only Plaintiff Ryan Negri's claims against Defendant Michael Friedman.

         Discovery between the two remaining parties took place from September 2015 to October 2016. Defendant moved for summary judgment on all claims on December 20, 2016. Dkt. No. 123. Plaintiff's opposition was due on February 2, 2017 pursuant to the Court's briefing schedule. Dkt. No. 119. The Court sua sponte extended the deadline for Plaintiff's opposition to February 24, 2017. Dkt. No. 127. Plaintiff did not file an opposition by that date. The Court informed Plaintiff that Defendant's motion for summary judgment would be decided in due course. Dkt. No. 129.

         IV. LEGAL STANDARD

         Defendant is entitled to summary judgment on a claim if he can “show[ ] that there is no genuine dispute as to any material fact and [he is] entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (“[S]ummary judgment is proper ‘if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'” (quoting former Fed.R.Civ.P. 56(c))). A genuine dispute exists where “the evidence is such that a reasonable jury could return a verdict for the nonmoving party, ” while a fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “Factual disputes that are irrelevant or unnecessary will not be counted.” Id.

         To defeat a motion for summary judgment, Plaintiff “must come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting former Fed.R.Civ.P. 56(e)). “[M]ere speculation or conjecture as to the true nature of the facts” will not suffice. Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (internal quotation marks and citations omitted). Plaintiff “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586.

         Here, despite a sua sponte extension of time for Plaintiff to oppose Defendant's motion for summary judgment, Plaintiff failed to file any response to the motion. The Second Circuit has explained how district courts should review unopposed motions for summary judgment. See Jackson v. Fed. Express, 766 F.3d 189 (2d Cir. 2014). As an initial matter, a non-movant is not required to respond to the motion, but “non-response runs the risk of unresponded-to statements of undisputed facts proffered by the movant being deemed admitted.” Id. at 194 (citing Fed.R.Civ.P. 56(e)(2)). Further, when deciding an unopposed motion for summary judgment, the district court need not “robotically replicate the defendant-movant's statement of undisputed facts and references to the record.” Id. at 197. In such ...


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