And v. Gruenbaum

775 F.Supp.2d 630

Donald A. LANGREICH and, C. Albert Burke, Plaintiffs,

v.Jerry GRUENBAUM, et al., Defendants.

No. 06 CV 4931(BSJ).

United States District Court, S.D. New York.

Feb. 12, 2011.

James Edward Pratt, Law Office of James Pratt, Garden City, NY, for Plaintiffs.Boris Sorin, Sylvor & Richman, LLP, New York, NY, for Defendants.

ORDER

BARBARA S. JONES, District Judge.

After having reviewed Magistrate Judge Dolinger's Report and Recommendation dated January 25, 2011, and having received no objections thereto, I hereby confirm and adopt the Report in its entirety, having been satisfied that there is no clear error on the face of the record. See King v. Greiner, No. 02 Civ. 5810(DLC), 2009 WL 2001439, at *4 (S.D.N.Y. July 8, 2009) (citation omitted); see also Wilds v. United Parcel Serv., 262 F.Supp.2d 163, 169 (S.D.N.Y.2003). Accordingly, defendants' motion to enforce a settlement (docket number 27) is denied.

The parties' failure to file written objections precludes appellate review of this decision. See Caidor v. Onondaga County, 517 F.3d 601, 604 (2d Cir.2008).

The Clerk of the Court is directed to close the case.

SO ORDERED.

REPORT & RECOMMENDATION

MICHAEL H. DOLINGER, United States Magistrate Judge.

Defendants have moved for an order enforcing what they claim was a final agreement between them and plaintiffs Donald A. Langreich and C. Albert Burke to settle this case. Plaintiffs oppose the motion, although they too seem to argue that a binding agreement was reached, only not the one for which the defendants are pressing. For the reasons that follow, we recommend that defendants' motion be denied, and that the parties be directed to proceed to complete the litigation of their case unless they all sign a document embodying the agreed-upon terms of a settlement.

Prior Events

Plaintiffs filed this lawsuit in 2006, asserting claims for fraud, securities fraud and breach of the New York Business Corporations Law in connection with corporate management decisions and the handling of shares of an entity now known as Concordis Group as part of a corporate merger. Defendants moved to dismiss the complaint, a motion granted in part on January 30, 2009. Langreich v. Gruenbaum, 2009 WL 321253 (S.D.N.Y. Jan. 30, 2009). Since the court's decision left standing a claim for fraud, id. at *6–7, we conducted a scheduling conference and ordered that discovery be completed by July 31, 2009 and that all pre-trial proceedings be ended by August 31, 2009. (Order, Apr. 9, 2009). We subsequently extended the discovery deadline to September 14, 2009 and scheduled a settlement conference. (Order, July 30, 2009; Order, Aug. 5, 2009).

On August 18, 2009 we conducted the settlement conference, at which time the parties appeared to agree on the basic terms of a resolution of the litigation, including issuance to the two plaintiffs of 150,000 shares of Concordis Group and registration of all shares held by the plaintiffs. They also represented that their counsel would proceed to draft a written agreement and stipulation of discontinuance. No such agreement was ever finalized, and we therefore scheduled a status conference for December 18, 2009.

At that conference, defendants' attorney advised that he had prepared and sent to plaintiffs' counsel in September a draft that embodied what he believed were the terms of the agreement reached in August. He reported that he had heard nothing back from plaintiffs' attorney until a few days before the December conference, when he received a demand from opposing counsel seeking the addition of new and unacceptable terms in the agreement. He further represented that, as a result, his clients were prepared to pursue needed discovery and litigate the matter. (Tr. at 2).

In response, plaintiffs' attorney noted that defendants' September draft was materially incomplete because the oral agreement in August included a commitment by defendants to register both the new shares and the shares that plaintiffs already held. He also adverted to a need to ensure against dilution of the shares, an issue that had been alluded to in discussions during the settlement conference. He also insisted that if the defendants would not agree to those conditions, plaintiffs were also prepared to litigate the case. (Tr. at 2–4).

Although not mentioned by plaintiffs' counsel, it appears as well that plaintiffs had made a number of additional demands before the conference, including a requirement for the issuance of an opinion letter and payment of some cash. (Tr. at 4–5). In any event, at the conference defendants made plain their rejection of these additional terms although they were apparently willing to register the shares. (Tr. at 4–5).

Having heard this account, we observed that at the August conference the parties had agreed to the transfer of 150,000 shares to each of the plaintiffs and registration of all shares. (Tr. at 6, 8–9). We further advised that “[i]f the Plaintiffs are prepared to repudiate their agreement, the defendant has two choices, either to move to enforce the agreement or to pursue discovery and let the chips fall where they may.” (Tr. at 6). We then gave both counsel the opportunity to state whether their clients were adhering to the agreement as we understood it, and after consultation they advised that they were now in disagreement about the scope of the registration requirement. (Tr. at 7–8). Although even at that point there appeared to be a joint understanding of the registration obligation, defendants' counsel announced that he wished to proceed with the litigation and obtain a discovery schedule “because obviously I guess from what I gather right now there wasn't a meeting of the minds.” (Tr. at 8). He went on to say that “if in the meantime we get to an agreement of exact language you want in the document—because I kind of wish you would have given it to me sooner and we probably wouldn't have to be here, but we're here but I still believe strongly we should set a discovery schedule.” (Tr. at 8).

In a last effort to have the parties confirm the obvious—that they had been in agreement on the most essential terms four months before—we invited them to state at that time on the record that they would comply with their prior agreement. (Tr. at 8–9). We further observed that memorializing the agreement would be a very simple task of drafting, taking “probably an hour or less” and offered to witness the signing of the agreement by the parties the following week. (Tr. at 9). We further ordered that all discovery was to be completed by the end of March but stayed that discovery for the following week “to permit the parties—if they wish—to sign on the dotted line a stipulation that is very simple and should not encompass more than one page embodying the provisions which I just mentioned were agreed to at the last conference.” ( Id.). Finally, we noted that a schedule was now in place and must be adhered to “if one side or the other doesn't want to sign.” ( Id.). Following the conference we issued an order confirming that discovery was to end by March 31 and that a joint pretrial order was due by April 18, 2010 unless either side moved by then for dispositive relief. (Order, Dec. 18, 2009).

The parties then proceeded with discovery. On March 22, 2010, however, defendants' counsel sent us a letter complaining about plaintiffs' alleged sloth in providing documents and asking for a hearing “to address the fact that the case has been settled” or, alternatively, for an order setting a new schedule for discovery. (Letter from Boris Sporin, Esq., to the Court (Mar. 22, 2010)). By endorsed order we denied the request, noting that we had already set a schedule, which we expected the parties to adhere to. (Endorsed Order, Mar. 22, 2010).

It appears that counsel on both sides as well as plaintiffs themselves then attended a settlement meeting on March 24, 2010, and seemingly came to an agreement, embodied in a document entitled “Agreement”, which both plaintiffs signed, apparently on that date. That agreement provided, among other things, for the issuance of 100,000 shares to each plaintiff and to James Pratt, Esq., their attorney, and it obliged the defendants to file a registration statement with the SEC within six months and to take “all steps necessary for the registration statement to become effective.” The agreement also provided that any amendments or modifications were to be in writing signed by both plaintiffs and defendants or their authorized representatives. (Letter from James E. Pratt, Esq., to Boris Sorin, Esq. (May 6, 2010) (“May 6 Letter”) (on file with the court); see also Mot. to Enforce Settlement Agreement, June 6, 2010, at Ex. D).

At the same time, the attorneys both signed a stipulation of discontinuance dated March 24, 2010, presumably indicating that plaintiffs (who were present) as well as defendant Gruenbaum (who was overseas and thus absent) agreed to the settlement terms reflected in the agreement. (May 6 Letter; Mot. to Enforce Settlement Agreement, at Ex. E). According to plaintiffs' counsel, it was also agreed that the stipulation would be held for filing until the defendants had executed the settlement document. (May 6 Letter).

Consistent with prior history in this case, defendants never signed the March 24 agreement, even though their attorney submitted the stipulation of discontinuance to the court, albeit in violation of the parties' understanding that it would be held until the defendants signed the “Agreement” document. Instead, it appears that on April 16 defendants' attorney called plaintiffs' counsel and asked to change the wording of the Agreement to dilute defendants' obligation to file a registration statement within six months, and to substitute instead a provision requiring only “best efforts.” ( Id.). By letter dated May 6, with a copy to the court, plaintiffs' attorney advised his opposite number that plaintiffs rejected the proposed change...