Schoninger v. Green ( 2019 )


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  • 18-382-cv
    Schoninger v. Green
    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 25th day of February, two thousand nineteen.
    PRESENT: GUIDO CALABRESI,
    CHRISTOPHER F. DRONEY,
    Circuit Judges,
    STEFAN R. UNDERHILL,
    Chief District Judge.
    ----------------------------------------------------------------------
    RICHARD SCHONINGER,
    Plaintiff-Appellant,
    v.                                                              No. 18-382-cv
    JAMES GREEN, WILLIAM WILKISON,
    Defendants-Appellees.**
    ----------------------------------------------------------------------
    
    Chief Judge Stefan R. Underhill, United States District Court for the District of Connecticut, sitting by
    designation.
    **
    The Clerk of Court is respectfully requested to amend the official caption as set forth above.
    1
    FOR PLAINTIFF-APPELLANT:                            PHILIP M. SMITH, Kravit Smith LLP,
    New York, New York, and John P.
    Napoli, Seyferth Shaw LLP, New York
    New York.
    FOR DEFENDANTS-APPELLEES:                           MICHAEL D. MARGULIES (Robert
    Novack, on the brief), Carlton Fields
    Jorden Burt, P.A., New York, New
    York.
    Appeal from a February 6, 2018 judgment of the United States District Court for the
    Southern District of New York (Crotty, J.).
    UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
    AND DECREED that the judgment of the district court is AFFIRMED.
    Plaintiff-Appellant Richard Schoninger appeals from the judgment of the United
    States District Court for the Southern District of New York, granting summary judgment
    in favor of Defendants-Appellees James Green and William Wilkison. We assume the
    parties’ familiarity with the underlying facts, the record of the prior proceedings, and the
    issues on appeal.
    This action arises out of Schoninger’s1 $1 million investment in March 2014 in Islet
    Sciences, Inc. (“Islet”), a public biotechnological company in which he had previously
    invested $350,000. Schoninger alleges that Green and Wilkison, who were executive
    officers at Islet, orally agreed that, in exchange for Schoninger’s additional investment,
    they would cause Islet to merge with Brighthaven Ventures, LLC (“BHV”), a company
    separately held by Green and Wilkison that owned rights to the development of “Remo,” a
    pharmaceutical product to treat type 2 diabetes. The merger did not occur. Schoninger
    then filed this action, asserting claims for common law fraud, unjust enrichment, and
    breach of contract.
    On February 24, 2016, the district court dismissed Schoninger’s common law fraud
    and unjust enrichment claims. On February 5, 2018, the district court granted summary
    1
    Portions of Schoninger’s investment were transferred to his children, Plaintiffs Scott and Jacqueline
    Schoninger. Plaintiff Gerald Allen also invested on the advice of Schoninger. These three Plaintiffs are
    not parties to this appeal.
    2
    judgment to Green and Wilkison on Schoninger’s breach of contract claim. This appeal
    followed.2
    We review a district court’s grant of summary judgment de novo. Munoz-
    Gonzalez v. D.L.C. Limousine Serv., Inc., 
    904 F.3d 208
    , 212 (2d Cir. 2018). Summary
    judgment is appropriate if “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). “A genuine
    issue exists for summary judgment purposes where the evidence, viewed in the light most
    favorable to the nonmoving party, is such that a reasonable jury could decide in that party’s
    favor.” Guilbert v. Gardner, 
    480 F.3d 140
    , 145 (2d Cir. 2007) (internal quotation marks
    and citation omitted). “The mere existence of a scintilla of evidence in support of the
    [non-movant’s] position will be insufficient” to establish a genuine dispute, Anderson v.
    Liberty Lobby, Inc., 
    477 U.S. 242
    , 252 (1986), and the non-movant “must do more than
    simply show that there is some metaphysical doubt as to the material facts.” Matsushita
    Elec. Indus. Co. v. Zenith Radio Corp., 
    475 U.S. 574
    , 586 (1986); see also 
    Guilbert, 480 F.3d at 145
    (“[M]ere speculation and conjecture is insufficient to preclude the granting of
    the motion.”) (internal quotation marks and citations omitted).
    Having reviewed the record de novo, we agree with the district court’s conclusion
    that there are no genuine disputes of material fact that could support Schoninger’s breach
    of contract claim.
    I.       Background
    According to Schoninger’s deposition testimony and sworn declaration, the parties
    first met on February 11, 2014 to discuss a private offering of stock that Islet was planning.
    During that meeting, Green and Wilkison stated that the terms of a merger between Islet
    and BHV had been negotiated and that they were ready to announce the merger in “a couple
    weeks.” App’x at 227. Schoninger claims that Green represented that there would be
    no impediment to the merger because he and Wilkison were both managers of Islet and
    owners of BHV. Schoninger then offered at the end of the meeting to invest $1 million
    in Islet, but Green and Wilkison did not accept the offer at that time.
    On February 25, 2014, also according to Schoninger, he asked Islet’s investment
    banker, Edward Gibstein of COVA Capital Partners, LLC, to arrange another meeting with
    Green and Wilkison, but Gibstein did not do so, explaining that Green and Wilkison were
    too busy. Three days later, on February 28, 2014, Schoninger told Gibstein that he would
    2
    Schoninger does not appeal the dismissal of his claims for common law fraud and unjust enrichment.
    3
    invest only $250,000 in an attempt to encourage Green and Wilkison to meet with him
    again to obtain the $1 million he had initially offered. Schoninger also told Gibstein at
    that time that he was concerned that Green would change his mind about the merger, and
    Gibstein told Schoninger that Green would not change his mind.
    On March 3, 2014, Gibstein left Green a voicemail stating that Schoninger was
    going to invest either $250,000 or $300,000 that week. Schoninger claims that, that same
    day, Schoninger had a telephone conference with Green and Wilkison, during which Green
    stated that the merger “was going to happen ‘100%’” and that the merger would be
    announced late that week or early the next week. App’x at 230. According to
    Schoninger, the terms of the merger had not changed from what the parties discussed on
    February 11, 2014.
    Three days later, on March 6, 2014, Gibstein left Green a voicemail stating that
    Schoninger was going to invest $500,000 and that Schoninger was coming to Gibstein’s
    office that day to sign “the paperwork.” App’x at 40. Schoninger did not make an
    investment that day, however.
    Schoninger informed Gibstein sometime before March 10, 2014 that he had decided
    to invest $1 million, and he met with Gibstein at Gibstein’s office that day to document the
    investment. According to Schoninger, the parties’ only communications on March 10
    consisted of the following: Schoninger told Green and Wilkison on a conference call that
    he intended to invest $1 million in Islet, and Green and Wilkison responded by “thank[ing]
    [him] for [his] investment and counsel.” App’x at 231. The parties “then discussed
    [Schoninger’s] recommendation that they hold an investor conference call following the
    announcement of the merger,” 
    id., as well
    as the contents of a draft press release that
    described the basic terms of the merger. According to Schoninger’s declaration, during
    the course of that conversation, “[n]either Green nor Wilkison indicated that any of the
    terms of the merger had changed.” 
    Id. After the
    conference call ended, Schoninger purchased 3.2 million Islet shares and
    1.6 million Islet warrants, in exchange for $800,000, and he signed a subscription
    agreement with Islet the same day.3 Schoninger also purchased $200,000 in Islet stock
    from Sand Dollar Partners, LLC, which relieved, in part, a litigation settlement obligation
    owed by Islet to Sand Dollar Partners. Green, acting on behalf of Islet, approved both
    investments. It is undisputed that there is no written agreement between the parties
    3
    The subscription agreement between Schoninger and Islet contains an integration clause providing that
    the subscription agreement “supersede[s] all prior agreements and understandings” between Schoninger
    and Islet. App’x at 57.
    4
    memorializing that Schoninger’s investments were based on a promise by the Defendants
    to effect a merger of Islet and BHV.
    In September 2014, Islet and BHV entered into a merger agreement on terms
    approved by the Islet Board, but the merger was terminated in early 2015. On March 3,
    2015, Islet and BHV instead entered into a license agreement for the rights to Remo.
    Schoninger brought this action on March 24, 2015, on the basis of diversity jurisdiction.
    II.       Discussion
    Under New York law, 4 the elements of a breach of contract claim are: (1) an
    agreement; (2) performance by the plaintiff; (3) breach by the other party; and (4) damages
    suffered as a result of the breach. Fischer & Mandell, LLP v. Citibank, N.A., 
    632 F.3d 793
    , 799 (2d Cir. 2011) (citations omitted). “[W]hether a binding agreement exists is a
    legal issue, not a factual one.” Vacold LLC v. Cerami, 
    545 F.3d 114
    , 123 (2d Cir. 2008)
    (citations omitted). Accordingly, summary judgment is appropriate where, as here, “the
    evidentiary foundation for determining the formation of the parties’ contract is []
    undisputed,” and the only dispute concerns “the legal significance of [the] facts.”5 
    Id. (internal quotation
    marks and citations omitted).
    Schoninger’s theory of contract formation is that (1) on February 11, 2014, the
    parties agreed to all of the material terms of an agreement to merge Islet and BHV in
    exchange for Schoninger’s investment, except for one term: the amount of Schoninger’s
    investment; and (2) by March 10, 2014, the parties had entered into an oral agreement
    incorporating those terms. We hold that no such agreement was ever formed.
    For a contract to exist, there must be mutual assent to be bound, and “a party cannot
    be held to have contracted if there was no assent or acceptance.” Register.com, Inc. v.
    Verio, Inc., 
    356 F.3d 393
    , 427 (2d Cir. 2004) (internal quotation marks and citations
    omitted). Assent need not be written and “may be by word, act, or conduct which evinces
    the intention of the parties to contract.” 
    Id. (internal quotation
    marks and citations
    omitted) (emphasis removed). Assent must, however, be “sufficiently definite to assure
    that the parties are truly in agreement with respect to all material terms,” so that “the
    judiciary can give teeth to the parties’ mutually agreed terms[.]” Express Indus. &
    Terminal Corp. v. New York State Dep’t of Transp., 
    715 N.E.2d 1050
    , 1053 (N.Y. 1999).
    4
    The parties agree that New York law applies.
    5
    For the purposes of this appeal, Green and Wilkison do not dispute Schoninger’s account of their
    communications.
    5
    Moreover, under well-settled New York law, “the existence of a binding contract is not
    dependent on the subjective intent of either [party].” Brown Bros. Elec. Contractors v.
    Beam Const. Corp., 
    361 N.E.2d 999
    , 1001 (N.Y. 1977). Rather, it depends upon “the
    objective manifestations of the intent of the parties as gathered by their expressed words
    and deeds.” 
    Id. Here, nothing
    in the parties’ March 10 communications (or before then) objectively
    manifests Green and Wilkison’s assent to bind themselves to causing the merger in
    exchange for Schoninger’s investment. When Schoninger told Green and Wilkison that
    he intended to invest $1 million, they only “thanked [Schoninger] for his investment and
    counsel.” App’x at 231. And although Green and Wilkison went on to discuss the
    contents of a draft press release that described the merger, they did not represent their intent
    to bind themselves to effectuating the merger. Nor does Green’s March 3 statement that
    the merger was “going to happen ‘100%,’” App’x at 230, constitute objective evidence of
    Green and Wilkison’s assent to bind themselves to merging the companies in exchange for
    Schoninger’s investment. That statement, as the district court observed, is in the character
    of a business projection rather than a binding promise. See Schoninger v. Green, No. 15
    CIV. 2233 (PAC), 
    2018 WL 722838
    , at *4 (S.D.N.Y. Feb. 5, 2018). Likewise, Green’s
    approval of Schoninger’s investment does not demonstrate Green or Wilkison’s intent to
    be so bound, as Green was acting on behalf of Islet, and none of Schoninger’s funds were
    sent directly to Green or Wilkison. In sum, Green and Wilkison’s “words and deeds” on
    or before March 10 are insufficient to establish a binding contract.
    Schoninger has posited an alternative theory of contract formation, arguing that “he
    accepted [an] offer to him to participate in the merged companies by transferring his funds
    as [Green and Wilkison] desired.” Appellant’s Br. at 48. But that claim is also
    untenable given Schoninger’s repeated, unequivocal testimony that it was he who made the
    offer on February 11, 2014. See, e.g., App’x at 155 (“I made an offer. Mr. Green
    acknowledged it. He did not say yes.”).
    * * *
    For the foregoing reasons, and finding no merit in Schoninger’s other arguments,
    we hereby AFFIRM the judgment of the district court.
    FOR THE COURT:
    Catherine O’Hagan Wolfe, Clerk of Court
    6