United States District Court, S.D. New York
OPINION AND ORDER
KATHERINE POLK FAILLA United States District Judge
Moon Joo Yu and Hee Rak Kim brought this action in September
2014 alleging that Premiere Power LLC and several of its
directors and officers, including Defendants Sandra Dyche
(“Dyche”) and John Jankovic
“Defendants”), had defrauded them out of $1.65
million. Defendants have filed two substantially identical
motions seeking summary judgment on the bases that (i)
Plaintiffs' securities fraud claims were not filed within
the two-year limitations period and (ii) Plaintiffs have
failed to demonstrate that they relied on Defendants'
statements when they decided to invest in Premiere.
Yu argues that she was only on notice of the fraudulent
scheme in late 2012 and that her claims, which she filed on
September 18, 2014, are not time-barred. She further claims
that, at a minimum, there is a genuine dispute of material
fact as to whether she relied on Defendants' statements.
The Court agrees, and denies Defendants' motions for
summary judgment as to Plaintiff Yu.
Hee Rak Kim does not oppose Defendants' motions for
summary judgment, choosing instead to withdraw his Securities
Act Section 10(b) and Rule 10b-5 claims. Accordingly, the
Court does not address further his federal claims. However,
the Court will retain pendent jurisdiction over Plaintiff
Kim's state-law claims, as those claims arise under the
same operative facts as other federal claims in this case.
A. Factual Background
Court discusses the underlying facts in this case only to the
extent necessary to resolve the instant motion, as the Court
previously engaged in more exhaustive factual recitations,
both in this case and in a related case. See SEC v.
Jankovic, No. 15 Civ. 1248 (KPF), 2017 WL 1067788, at
*2-6 (S.D.N.Y. Mar. 21, 2017); Yu v. Premiere Power
LLC, No. 14 Civ. 7588 (KPF), 2015 WL 4629495, at *1-4
(S.D.N.Y. Aug. 4, 2015).
Jankovic's Role at Premiere
Jankovic founded Premiere Power LLC (“Premiere”)
in 2009 with his father, Jerry Jankovic, and Thomas Gudgel
(“Gudgel”). (Pl. 56.1 ¶ 1). Between July and
December 2009, Jankovic worked as a consultant for Premiere.
Jankovic, 2017 WL 1067788, at *3. In December 2009,
Jankovic became Premiere's Chief Executive Officer
(“CEO”), a position he held until late 2011. (Pl.
56.1 ¶ 115).
stated mission was to develop and operate power plants and
on-site hydroponic tomato hot-houses on Native American land.
(Pl. 56.1 ¶ 2). But Premiere also had another mission,
one that it failed to disclose to investors: to raise money
to cover expenses arising from a 2006 lawsuit against Jerry
Jankovic, Sandra Dyche, and a company they had formed in
2001, 21st Century Morongo Energy, LLC
(“Morongo”). (Id.). The Morongo
litigation involved claims against, inter alia,
Jerry Jankovic and Dyche for fraud, negligent
misrepresentation, and conversion. Jankovic, 2017 WL
1067788, at *2.
December 22, 2009, Jankovic, Dyche, and others at Premiere
hosted a meeting for existing and prospective investors (the
“Investors Meeting”), during which Jankovic
distributed copies of a Preliminary Information Memorandum
(the “PIM”). Jankovic, 2017 WL 1067788,
at *2. The PIM was intended “to provide preliminary
information in order to assist the recipient in deciding
whether it wants to [invest].” (Dkt. #86-1). Its cover
page listed Jankovic as one of its two authors
(id.); indeed, according to Dyche, Jankovic was the
lead author (Pl. 56.1 ¶ 119). At the Investors Meeting,
Jankovic spent at least one hour addressing those in
attendance, with Dyche translating into Korean.
Jankovic, 2017 WL 1067788, at *2.
contained numerous misstatements, including the following:
i) The PIM listed a former Oklahoma Congressman as a member
of Premiere's Board of Directors and claimed that this
Congressman held a 1% equity interest in Premiere. That
Congressman never agreed to serve on Premiere's Board.
ii) The PIM identified the Managing Executive Director of an
energy company as a member of Premiere's Board of
Directors. Like the Congressman, the Managing Director was
purported to hold a 1% stake in Premiere. Though the Managing
Director had discussed the possibility of joining Premiere,
he never committed to serving as a member of Premiere's
iii) The PIM stated that an Oklahoma accounting firm would
handle Premiere's outsourced accounting and bookkeeping.
That firm, however, never agreed to work with Premiere.
iv) Finally, the PIM identified a nationally known accounting
firm as an “Affiliate” of Premiere's
“Corporate Holdings” division. But the National
Accounting Firm never had a relationship of any sort with
Jankovic, 2017 WL 1067788, at *5. At the Investors
Meeting, Jankovic delivered a PowerPoint presentation that
mirrored the PIM's content, repeating many, if not all,
of its misstatements. Id. Jankovic did not mention
the Morongo litigation, nor any intention to use investor
funds to cover legal fees arising from that litigation.
Id. at *4.
Premiere's CEO, Jankovic was aware that Dyche, Annie Kim
(“Kim”), and Anna Lee (“Lee”) were
working to find investors for Premiere. Jankovic also knew
that Dyche, Kim, and Lee would receive brokers' fees for
the sale of Premiere membership units to investors, including
Plaintiff Yu. (Pl. 56.1 ¶ 121).
Dyche's Role at Premiere
a native Korean speaker, was a member of the Board of
Directors of Premiere. (Pl. 56.1 ¶ 5). When she joined
the Board of Directors, she received a percentage ownership
of Premiere. (Dyche Dep. 112:2-6). Dyche actively solicited
funds on Premiere's behalf and, according to Jankovic,
worked as a “broker” for Premiere. (Jankovic Dep.
46:9-13). Dyche helped solicit Yu's $1.5 million
investment. Jankovic, 2017 WL 1067788, at *3.
exchange for obtaining investors, Dyche received membership
interests in Premiere. (Dyche Dep. 203:13-204:9). According
to Jankovic, Dyche hired Lee and Kim to work as brokers
“on behalf of Premiere.” (Jankovic Dep.
272:17-273:11). Jankovic's understanding was that Lee and
Kim, who first introduced Yu to Premiere, “were working
for Sandra [Dyche]” (id. at 272:24-25), and
their primary role was to “introduc[e] [investors] to
Sandra” (id. at 100:8-17). In exchange, they
received ownership interest in Premiere. (Id. at
226:4-7). Dyche, Lee, and Kim all attended the Investors
Meeting on December 22, 2009. (Id. at
128:14-129:23). Dyche spoke to investors in Korean before,
during, and after the meeting. (Pl. 56.1 ¶ 38).
Yu's Decision to Invest in Premiere
a. Dyche, Lee, and Kim Introduce Yu to
first learned about Premiere in the fall of 2009 from Lee and
Kim. (Dyche 56.1 ¶ 10). Lee “explained [to Yu]
about this investment repeatedly, ” “told [Yu] a
lot about this investment, ” and told Yu that
“[Lee and Kim] invested in that business too.”
(Yu Dep. 22:23-23:2, 24:15-21). Lee highlighted Dyche's
involvement to encourage Yu to invest; she also told Yu that
if Yu invested $1.5 million, Yu would enjoy strong returns on
her investment. (Id. at 24:15-21; 44:2-8, 13-15).
Based on Lee's initial descriptions, Yu thought that she
would ultimately decide to invest in the company.
(Id. at 23:18-21, 29:3-15, 28:3-7, 44:25-46:13).
with Dyche, Lee, and Kim in early December 2009 at a Seoul
coffee shop. At that point, Yu had not finalized her decision
to invest in Premiere. (Yu Dep. 22:15-22). Dyche, Lee, and
Kim promised Yu that if she invested in Premiere, she would
receive $300, 000 in profit in addition to her initial
investment of $1.5 million “within two to three years
after [her initial] investment, ” as well as an annual
dividend of more than $300, 000 for the next thirty years.
(Id. at 14:12-17, 15:9-11, 15:25-16:19, 80:8-11,
131:22-133:25). At the meeting, Dyche also provided Yu with
an English version of the PIM. (Id. at 18:14-20).
Though Yu could not read English, she noticed a chart in the
PIM that displayed potential returns over 30 years.
(Id. at ...