Amusement Indus., Inc. v. Stern ( 2018 )

17-339-cv
Amusement Indus., Inc. v. Stern
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 5th day of January, two thousand eighteen.
PRESENT: REENA RAGGI,
DEBRA ANN LIVINGSTON,
RAYMOND J. LOHIER, JR.,
Circuit Judges.
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AMUSEMENT INDUSTRY, INC., a California
corporation, d/b/a Westland Industries, PRACTICAL
FINANCE CO., INC., a California corporation,
Plaintiffs-Appellees,
v. No. 17-339-cv
MOSES STERN, a/k/a Mark Stern,
Defendant-Appellant,
JOSHUA SAFRIN, an individual, FIRST REPUBLIC
GROUP REALTY, LLC, a Delaware limited liability
company, EPHRAIM FRENKEL, an individual, LAND
ASSOCIATES ESCROW, a New York limited liability
company, LAND TITLE ASSOCIATES ESCROW,
AVERY EGERT, FIRST REPUBLIC GROUP CORP.,
LAND TITLE ASSOCIATES AGENCY, LLC, a/k/a
Land Title Associates,
Defendants,
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STEPHEN FRIEDMAN, STEVEN ALEVY,
BUCHANAN INGERSOLL & ROONEY P.C.,
BANKERS CAPITAL REALTY ADVISORS LLC,
HERRICK, FEINSTEIN, LLP, ALLEN ALEVY, ALLEN
P. SRAGOW, ROBERT FRIEDMAN,
Third-Party Defendants.
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FOR APPELLANT: Brian K. Condon, Condon & Associates, PLLC,
Nanuet, New York.
FOR APPELLEES: John Hofsaess, Westland Real Estate Group,
Long Beach, California.
Appeal from a judgment of the United States District Court for the Southern
District of New York (Lewis A. Kaplan, Judge; Gabriel W. Gorenstein, Magistrate
Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the amended judgment entered on January 6, 2017, is AFFIRMED.
Defendant Moses Stern appeals from an award of summary judgment in favor of
plaintiffs Amusement Industry, Inc. d/b/a Westland Industries and Practical Finance Co.,
Inc. (collectively, “Amusement”) on their state-law claims of fraud, conversion, unjust
enrichment, and conspiracy arising from a real estate transaction in which Stern obtained
$13 million from Amusement in connection with the purchase of a portfolio of retail
shopping centers. We review an award of summary judgment de novo, construing the
evidence in the light most favorable to the non-moving party and drawing all reasonable
inferences and resolving all ambiguities in that party’s favor. See Townsend v. Benjamin
Enters., Inc., 679 F.3d 41, 47 (2d Cir. 2012). We “may affirm on any basis for which
there is sufficient support in the record.” Bruh v. Bessemer Venture Partners III L.P.,
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464 F.3d 202, 205 (2d Cir. 2006). In applying these principles here, we assume the
parties’ familiarity with the facts and procedural history of this case, which we reference
only as necessary to explain our decision to affirm.
Stern challenges the district court’s drawing of adverse inferences from deposition
invocations of the Fifth Amendment privilege by Stern and third-party defendant Stephen
Friedman. Stern failed to raise this argument as to his own invocation in objecting to
Magistrate Judge Gorenstein’s August 11, 2016 report and recommendation. See Cephas
v. Nash, 328 F.3d 98, 107 (2d Cir. 2003) (stating general rule that failure to object to
purported error in magistrate judge’s report waives further judicial review of point).
Even were we to excuse such waiver, see id., however, Stern’s invocation challenges do
not warrant vacatur.
While adverse inferences cannot be drawn against a non-moving party at summary
judgment based on an invocation of the Fifth Amendment privilege, see In re 650 Fifth
Ave. & Related Props., 830 F.3d 66, 93 n.25 (2d Cir. 2016), “invocation of the Fifth
Amendment is not a substitute for relevant evidence” and does not free a litigant “from
adducing proof in support of a burden which would otherwise have been his,” United
States v. Certain Real Prop. & Premises Known as 4003-4005 5th Ave., Brooklyn, N.Y.,
55 F.3d 78, 83 (2d Cir. 1995) (internal quotation marks omitted). Thus, this court has
affirmed an award of summary judgment despite the district court’s assumption that
adverse inferences could be drawn from deposition invocations of the Fifth Amendment
because “the lack of testimony from those witnesses meant that there was no record
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evidence to dispute the overwhelming evidence” proffered by the moving party. In re
650 Fifth Ave. & Related Props., 830 F.3d at 93 n.25. That is this case.
Our independent review of the record reveals that, for substantially the reasons
stated by the magistrate judge in his report and recommendation and adopted by the
district court, Amusement proffered sufficient evidence to establish the elements of its
claims, with Stern adducing no admissible evidence creating any triable issue of fact. See
Amusement Indus., Inc. v. Stern, No. 07 Civ. 11586 (LAK) (GWG), 2016 WL 4249965,
at *8–15 (S.D.N.Y. Aug. 11, 2016), adopted by 2016 WL 6820744 (S.D.N.Y. Nov. 10,
2016). We further note that the district court concluded that evidence showing
Amusement’s reliance on Stern’s misrepresentations “alone [was] sufficient” to support
its summary judgment award, that such evidence was merely “buttressed by Stern’s
invocation of the Fifth Amendment,” and that Friedman’s invocation of the Fifth
Amendment was no more than “icing on the cake.” Amusement Indus., Inc. v. Stern, No.
07 Civ. 11586 (LAK) (GWG), 2016 WL 6820744, at *2 (S.D.N.Y. Nov. 10, 2016).
Thus, to the extent Stern argues the district court granted summary judgment “solely
based upon” adverse inferences drawn from the Fifth Amendment invocations,
Appellant’s Br. at 17, he mischaracterizes the district court’s decision.
In urging otherwise, Stern points to a 2009 bankruptcy decision denying
Amusement a preliminary injunction preventing First Republic Group Realty, LLC from
utilizing disputed funds. See Amusement Indus., Inc. v. Citigroup Global Mkts. Realty
Corp. (In re First Republic Grp. Realty, LLC), 421 B.R. 659 (Bankr. S.D.N.Y. 2009). He
argues that the decision “paint[s] a much different picture” of the facts in this case,
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Appellant’s Br. at 4, and, in particular, sheds light on the relationships among the various
parties involved in the real estate transaction. The argument fails because Stern offers no
explanation as to how the bankruptcy court’s preliminary factual findings, made years
earlier and on a different record, here raise genuine issues of material fact. He does not
argue, nor could he, that the requirements of issue preclusion are met as to any disputed
issue. See Proctor v. LeClaire, 715 F.3d 402, 414 (2d Cir. 2013). Nor does Stern dispute
that he subsequently pleaded guilty to having committed perjury in the bankruptcy
proceedings. Insofar as Stern relies on the bankruptcy court decision to argue that
Amusement’s witnesses are generally not credible, such conclusory attacks are
insufficient to defeat summary judgment. See Island Software & Computer Serv., Inc. v.
Microsoft Corp., 413 F.3d 257, 261 (2d Cir. 2005) (recognizing that “[b]road, conclusory
attacks on the credibility of a witness will not, by themselves, present questions of
material fact”).1
Stern further argues that plaintiffs cannot prove his “intent to defraud
Amusement,” Appellant’s Br. at 18 (emphasis in original), by relying on statements
“made to third-parties” and “not directly to” plaintiffs, Reply Br. at 9 (citing Pasternack
v. Lab. Corp. of Am. Holdings, 27 N.Y.3d 817, 37 N.Y.S.3d 750 (2016)). While
Pasternack holds that the reliance element of a fraud claim cannot be proved by reference
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The same conclusion obtains with regard to Stern’s contention that the other opinion he
submitted to the district court—an unpublished 2007 California state court decision
affirming a judgment against Amusement arising out of an unrelated real estate
transaction, see Amusement Indus., Inc. v. Antin, No. B181465, 2007 WL 1241548 (Cal.
Ct. App. Apr. 30, 2007)—shows “[t]his is clearly not the first time” Amusement has
“engaged in such a scheme,” Appellant’s Br. at 12–13.
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to a defendant’s misrepresentation to a third party, see 27 N.Y.3d at 828–29, 37 N.Y.S.3d
at 750, the New York Court of Appeals there explicitly distinguished cases in which “the
third party acted as a conduit to relay the false statement to plaintiff, who then relied on
the misrepresentation to his detriment,” id. (stating that indirect communication can
establish fraud claim, so long as statement was made with intent that it be communicated
to plaintiff and that plaintiff rely on it). To the extent plaintiffs’ claim is premised on
indirect communications, they assert, with record support, that Stern made
misrepresentations with intent that they be conveyed to and relied on by Amusement.
Accordingly, Pasternack affords Stern no relief from the challenged judgment.
Stern nevertheless argues that Amusement cannot show reasonable reliance
because its principal, Allen Alevy, testified at his deposition that he understood Friedman
to be Amusement’s attorney, thereby precluding reasonable belief that Friedman was
making representations on behalf of Stern. But Alevy also testified that he understood
Friedman to be acting as Stern’s attorney. Indeed, record evidence establishes that
Friedman served as Stern’s “general coun[se]l in this transaction” and that Stern held him
out as such. App’x 500. Accordingly, the cited Alevy testimony raises no genuine issue
of material fact as to the reasonableness of Amusement’s reliance.
Finally, Stern’s assertion that plaintiffs have already recovered $26 million from
other parties for the injuries at issue is based only on a confidential settlement to which
Stern lacks access. Because Stern adduces no evidence to support this assertion, it cannot
raise a question of fact to defeat summary judgment. See Davis v. New York, 316 F.3d
93, 100 (2d Cir. 2002) (recognizing that “reliance upon conclusory statements or mere
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allegations is not sufficient to defeat a summary judgment motion”). Nor does Stern cite
any authority supporting his proposition that such a recovery creates a genuine dispute of
material fact as to causation.2
In sum, the record demonstrates that Amusement is entitled to summary judgment
on its fraud, unjust enrichment, conversion, and conspiracy claims. We have considered
Stern’s remaining arguments and conclude that they are without merit. Accordingly, the
award of summary judgment in favor of plaintiffs is AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
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Stern also summarily asserts that plaintiffs are not entitled to summary judgment on the
conversion claim because “[a]s [Bankruptcy] Judge Glenn found, Amusement ratified the
transaction, and proceeded as if it owned the malls” and, thus, “Amusement cannot now
claim that Stern is exercising unauthorized dominion or control over its property.”
Appellant’s Br. at 20. We have determined that findings of the bankruptcy court do not
here establish triable issues of fact, and Stern points to no record evidence in support of
this contention.
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