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Fezzani v. Bear, Stearns & Co. Inc.

United States District Court, S.D. New York

January 5, 2018

MOHAMMED FEZZANI, et al., Plaintiffs,
v.
BEAR, STEARNS & COMPANY INC., et al. Defendants.

          OPINION & ORDER

          PAUL A. CROTTY UNITED STATES DISTRICT JUDGE.

         Almost two decades ago, Plaintiffs, customers of a now defunct broker dealer, A.R. Baron & Co. ("Baron"), brought an action, seeking money damages from defendants for their alleged participation in a coordinated fraud on Plaintiffs. Plaintiffs' claims were dismissed. See Fezzani v. Bear, Stearns & Co., 2005 WL 500377 (S.D.N.Y. Mar. 2, 2005); Fezzani, 592 F.Supp.2d 410 (S.D.N.Y. Sept. 23, 2008). On appeal, the Second Circuit affirmed the dismissal of the federal claims, but remanded the state law claims for (1) aiding and abetting fraud and (2) civil conspiracy to defraud against Isaac R. Dweck, individually and as custodian for Nathan Dweck, Barbara Dweck, Morris I. Dweck, Ralph I. Dweck, and Jack Dweck ("Dweck Defendants"), and Abraham Wolfson, Morris Wolf son, and Aaron Wolf son ("Wolfson Defendants, " and together with Dweck Defendants, "Defendants"). See Fezzani, 716 F.3d 18 (2d Cir. 2013); Fezzani, 527 Fed.Appx. 89 (2dCir. 2013).

         After four years of repeated, but unfulfilled, promises, Plaintiffs have failed to produce evidence sufficient to show their damages. Defendants now move for summary judgment. In the alternative, Defendants move for dismissal as sanctions.

         For the reasons set forth below, the Court GRANTS the motion for summary judgment and DENIES the motion for sanctions, as moot.

         FACTS

         This action arises out of a massive fraud committed by Baron, its officers and employees, and its co-conspirators. Baron was a New York broker-dealer that operated from approximately May 1992 until its bankruptcy in July 1996. Horowitz Decl. Ex. A, ECF 186-1, ¶ 1. Baron and its officers were convicted of securities fraud. Id. at ¶¶ 2, 4.

         In February 1999, Plaintiffs filed a complaint, asserting claims against eleven individuals and organizations which allegedly propped up Baron's fraudulent activities. See ECF 1. Plaintiffs claim damages of $7.25 million, out of more than $80 million in trading losses attributed to Baron's frauds. Horowitz Decl. Ex. A at ¶¶ 7, 37. When some of the asserted claims were dismissed, Plaintiffs filed an Amended Complaint in April 2005, alleging six claims: (1) federal securities fraud based on the Defendants' misrepresentations and omissions; (2) federal securities fraud based on market manipulation; (3) violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"); (4) common law fraud; (5) civil conspiracy to defraud; and (6) aiding and abetting fraud. See Amended Complaint, ECF 62; Horowitz Decl. Ex. A. This Court dismissed all claims with respect to substantially all defendants. Fezzani, 592 F.Supp.2d 410. On appeal, the Second Circuit affirmed the dismissal of the federal securities claims, but reinstated two state law claims against Defendants and remanded. Fezzani, 716 F.3d 18; Fezzani, 527 Fed.Appx. 89.

         On remand to the District Court, more than a decade after the filing of the original complaint, Plaintiffs and Defendants agreed to truncate discovery in an effort to expedite the resolution of the lawsuit. Accordingly, the parties agreed to first determine Plaintiffs' damages, if any. Horowitz Decl., ECF 186, ¶ 3; Folkenflik Deck, ECF 204, ¶¶ 7, 9. In April 2014, the parties agreed to retain experts-Charles Myers, Paul Moulden, and Adam Kalt from the firm Economic Analysis Group, Ltd. ("EAG")-to analyze the Plaintiffs' trading records and determine any trading losses and gains in their accounts. Def. Stmt. 56.1, ¶¶ 2, 3; Pl. Stmt. 56.1, ¶¶ 2, 3.

         In September 2014, EAG informed Defendants that, without a complete set of the individual Plaintiffs' account statements, EAG was unable to perform the requested analysis. Def. Stmt. 56.1, ¶ 4; Pl. Stmt. 56.1, ¶ 4. Defendants subsequently requested Plaintiffs to provide the missing statements, but to date, Plaintiffs have not produced them. Def. Stmt. 56.1, ¶ 5; Pl. Stmt. 56.1, ¶ 5.

         LEGAL STANDARDS

         Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. § 56(a). The Court "resolve[s] all ambiguities and draw[s] all reasonable inferences in the light most favorable to the nonmoving party." Summa v. Hofstra Univ., 708 F.3d 115, 123 (2d Cir. 2013). Where the non-moving party has the burden of proof, however, the moving party need only show that there is no evidence to support a necessary element of the non-moving party's claim. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Summary judgment is warranted where "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Smith v. Cnty. of Suffolk, 776 F.3d 114, 121 (2d Cir. 2015).

         DISCUSSIONS

         I. Motion for Summary Judgment

         Defendants now move for summary judgment, contending that Plaintiffs cannot adduce any evidence to establish their ...


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