Press v. Primavera

685 F.Supp.3d 216

Robert D. PRESS, Plaintiff, v. Patrick J. PRIMAVERA, Defendant.

Case No. 1:21-cv-10971 (JLR)

United States District Court, S.D. New York

Signed August 3, 2023

Albert Shemtov Mishaan, Sondra Denise Grigsby, Marc E. Kasowitz, Kasowitz, Benson, Torres LLP, New York, NY, Jeffrey Ephraim Glatt, McGrail & Bensinger LLP, New York, NY, for Plaintiff.

John Edward Lawlor, Mineola, NY, for Defendant.

OPINION AND ORDER

JENNIFER L. ROCHON, United States District Judge:

Plaintiff Robert D. Press ("Plaintiff") brings this diversity action against Defendant Patrick J. Primavera ("Defendant") alleging defamation for statements made to the U.S. Securities and Exchange Commission ("SEC"). See ECF No. 1 ("Compl."). Now before the Court is Defendant's motion to dismiss the Complaint on the grounds that his statements made to the SEC are absolutely privileged because they were made in the course of a quasi-judicial proceeding. See ECF No. 28 ("Br."); ECF No. 35 ("Reply"). Plaintiff opposes the motion. See ECF No. 33 ("Opp."). For the reasons set forth below, the Court DENIES Defendant's motion to dismiss.

BACKGROUND¹

Defendant Primavera is a former Managing Director of the New York office of TCA Fund Management Group Corp. (the "TCA Group" or "TCA Investment Manager"), an investment firm founded by Plaintiff. Compl. ¶ 1. Defendant was hired by Plaintiff in approximately July 2016 as "Managing Director of TCA Investment Manager's New York office," and began in his role in September 2016. Id. ¶ 19. In that role, he oversaw employees who were responsible for a vast array of tasks associated with investment banking, including locating clients, crafting and executing investment bank services agreements ("IBSAs"), preparing written scopes of work ("SOW"), performing the investment banking services for clients, recording fees earned and other reports for Plaintiff and other management, issuing invoices to clients for services rendered, "conducting collectability assessments on the ability of an investment banking client to pay investment banking fees," and reporting to internal accountants statistics about IBSAs, fees, and results of the collectability assessments. Id. ¶¶ 4, 19. In 2017, Defendant "assumed ultimate responsibility for all aspects of the investment banking services and fees . . . ." Id. ¶ 22. Those fees included an "investment banking fee to the TCA Master fund" for the services the company provided, id. ¶ 20, which encompassed identifying potential transactions, and reviewing organizational charts, employee documents, financial models, and budgets of clients' companies, id. ¶ 21. While he was Managing Director, Defendant hired a staff of ten and was responsible for reporting to internal accountants. Id. ¶¶ 22-23. Plaintiff gave Defendant "autonomy" over the New York office. Id. ¶ 26. According to Plaintiff, during Defendant's employment, Defendant secretly entrusted his responsibilities to a former employee, who was then acting as an outside advisor. Id. ¶ 25. Defendant ultimately left the company in 2019. Id. ¶ 27.

In January 2020, Plaintiff learned that a whistleblower complaint was filed with the SEC about his company. Id. ¶ 28. Plaintiff does not allege that Defendant filed that complaint. At Plaintiff's request, lawyers for the TCA Group initiated an internal investigation to look into the allegations in the whistleblower complaint, an investigation Plaintiff characterizes as being conducted "side-by-side" with the SEC investigation. Id. Plaintiff alleges that the internal investigation revealed that Defendant had engaged in a "fraudulent pattern of activity" in which, assisted by the outside advisor and internal accountants, Defendant and his employees did not provide any "material investment banking services" to their clients. Id. ¶ 29. This was contrary to reports given to management and to what was reflected in the TCA Group's books. See id. According to Plaintiff, Defendant had made a series of false or misleading statements to Plaintiff and upper management, including but not limited to, statements about his role, the outside advisor's role, what his office was doing, and the fees collected by his office. Id. ¶ 30; see also id. ¶¶ 32, 45-51 (alleging misrepresentations by Defendant about banking and consulting services); ¶¶ 33, 41-44 (alleging misrepresentations by Defendant and staff about agreements with clients); ¶¶ 34-36 (alleging misrepresentations made by Defendant to outside auditors); ¶¶ 37-38 (alleging misrepresentations by internal accounting to Plaintiff and upper management); ¶ 52 (alleging misrepresentations by Defendant to Plaintiff about collectability of investment fees).

On December 22, 2020, Defendant submitted a declaration (the "statement" or "Declaration") to the SEC that allegedly falsely blamed Plaintiff for Defendant's aforementioned misconduct. Id. ¶ 57. Although Plaintiff does not attach the Declaration to his Complaint, he alleges that it contains defamatory statements, including statements that the TCA Group did not have an investment banking department, no one on staff could provide the services outlined in the IBSAs, and that Plaintiff was aware of all of it. Id. ¶ 57. Plaintiff contends that these statements were false because Plaintiff relied in good faith on Defendant to hire staff and run the investment banking side of the business. Id. ¶¶ 58-60. Plaintiff further alleges that, in the Declaration, Defendant "falsely claimed . . . that [Plaintiff] was aware of the financial condition of the companies that signed IBSAs and knew most of the investment banking fees recorded were uncollectible." Id. ¶ 61. Plaintiff says that Defendant lied and hid information in order to conceal his own fraudulent conduct. See id. ¶ 62. Plaintiff further contends, without any details, that Defendant "caused these false statements to be repeated to third parties including the SEC," but does not identify any third parties other than the SEC. Id. ¶ 68.

Plaintiff alleges he was damaged by the Declaration submitted to the SEC. He contends that, not only did it harm his reputation in his trade and expose Plaintiff to public ridicule, but as a result of Defendant's statements, Plaintiff "was compelled to reach a settlement with the SEC, without admitting or denying any of the substantive allegations, in order to put this matter behind him." Id. ¶ 63; see id. ¶ 69. The Complaint does not indicate on what date, or in what context, this settlement was reached.

On December 21, 2021, Plaintiff filed the instant defamation action. See generally Compl. Defendant filed a motion to dismiss on September 6, 2022. ECF No. 27. On September 22, 2022, the case was reassigned to the undersigned. ECF No. 31. On September 30, 2022, Plaintiff filed his opposition to the motion to dismiss. See generally Opp. On October 7, 2022, Defendant filed his reply brief. See generally Reply.

LEGAL STANDARD

To survive a motion to dismiss under Federal Rule of Civil Procedure ("Rule") 12(b)(6), a complaint must contain "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Francis v. Kings Park Manor, Inc., 992 F.3d 67, 72 (2d Cir. 2021) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 680, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). The Court draws all reasonable inferences in the plaintiff's favor, and accepts as true all non-conclusory allegations of fact. Id. However, a complaint must allege "more than a sheer possibility that a defendant has acted unlawfully" and more than "facts that are 'merely consistent with' a defendant's liability." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Determining whether a complaint states a claim is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. In making this determination, a court is generally limited to the "facts stated on the face of the complaint," as well as "documents appended to the complaint or incorporated in the complaint by reference," "matters of which judicial notice may be taken," and documents "integral" to the complaint. Goel v. Bunge, Ltd., 820 F.3d 554, 559 (2d Cir. 2016) (internal citations omitted); see also Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) ("[A] court may consider documents attached to the complaint as an exhibit or incorporated in it by reference, matters of which judicial notice may be taken, or . . . documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit." (internal citation and quotation marks omitted)). Finally, "[w]hile the Court must accept the facts as alleged in the complaint, 'when any allegations contradict the evidence contained in the documents relied upon by a plaintiff, the documents control, and the Court need not accept the allegations contained within the complaint as true.' " Zoulas v. N.Y. City Dep't of Educ., 400 F. Supp. 3d 25, 48 (S.D.N.Y. 2019) (quoting Rozsa v. May Davis Group, Inc., 187 F. Supp. 2d 123, 128 (S.D.N.Y. 2002)).

DISCUSSION

I. Judicial Notice

As an initial matter, the parties dispute the information the Court may consider in evaluating the motion to dismiss. Defendant argues that the Court should take judicial notice of two documents: (1) a complaint for injunctive and other relief, filed in the Southern District of Florida by the SEC against TCA Group, TCA Global Credit Fund GP, LTD., and related entities, on May 11, 2020 (see ECF No. 19-1 or "Injunction Complaint"); and (2) an Order Instituting Administrative and Cease-and-Desist Proceedings, which was filed on September 30, 2021 in an administrative proceeding before the SEC, captioned In the Matter of Robert D. Press (see ECF No. 19-2 or "SEC...