Opinion
No. 98 C 2924
November 13, 2000
MEMORANDUM OPINION AND ORDER
Plaintiff Bob Fewell claims that Defendant Bernard Siegel and others defrauded him and violated Securities laws in connection with Fewell's 1991 purchase of 300,000 shares in Gantry Corporation, an investment that proved worthless. The facts and procedural history are described in this court's earlier ruling denying Defendant Siegel's motion to dismiss, Fewell v. Kozak, No. 98 C 2924, Fed. Sec. L. Rep. ¶ 90,690, 1999 WL 966447 (N.D. Ill. Oct. 19, 1999), and will not be repeated here. In his earlier motion, Siegel asked the court to dismiss the claims against him on the basis that those claims rest on allegations concerning a telephone conversation that Fewell alleged to have occurred shortly before August 1, 1991, but never mentioned in his initial complaint in this action, filed in Arkansas in 1994. The court concluded that Fewell's failure to mention the alleged telephone call in his initial complaint did not preclude his raising it in his amended complaint. 1999 WL 966447 at *4 The court held, further, that while many of the statements allegedly made by Siegel in that telephone conversation are non-actionable, his alleged failure to disclose to Fewell the fact that Gantry Corporation had been dissolved by the Illinois Secretary of State was a material omission which might support a fraud claim against Fewell. Id. at * 6.
Defendant Siegel now seeks summary judgment in his favor. He contends that Fewell cannot meet his burden of proving that the critical telephone call came from Siegel. Summary judgment is appropriate where the "pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). In considering a summary judgment motion, the court construes the evidence in favor of the non-moving party, O'Connor v. DePaul University, 123 F2.d 665, 669 (7th Cir. 1997), but the non-moving party must produce affirmative evidence raising a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57 (1986). The court will grant summary judgment where the non-moving party fails to produce evidence sufficient to support a finding in its favor on an issue on which that party bears the burden of proof. McGrath v. Gillis, 44 F.3d 567, 569 (7th Cir. 1995).
The Hornibrook/Kozak Fraud Scheme
As more fully described in the court's earlier opinion, Fewell was approached about the Gantry investment by Jim Hornibrook, who had been Fewell's personal securities broker and advisor for more than 25 years. Hornibrook told Fewell that Bernard Siegel owed him a favor, and was prepared to return the favor by allowing Hornibrook to purchase shares in Gantry, a growing and prosperous company. Because Hornibrook himself could not afford the shares, Hornibrook reported, Siegel had agreed to sell the shares to Fewell on the condition that Fewell would share his profits from this investment with Hornibrook. Fewell claims he was reluctant to proceed with the Gantry purchase until he received a phone call from an individual who identified himself as Siegel and described Gantry's successful business to him. A few days later, Fewell issued a check payable to Siegel for $300,000 for 300 shares of Gantry stock at $1 per share. Fewell gave the check to Hornibrook, and Siegel cashed it soon afterwards. Fewell's complaint alleges that Hornibrook and an acquaintance of his, Bud Kozak, were aware that Gantry was a dissolved corporation and that Kozak had paid only $.06 per share for 416,250 Gantry shares earlier in 1991.
Fewell named Kozak and Hornibrook in his original complaint in this case. He withdrew his claims against Kozak when he filed his amended complaint in March 1999. His claims against Hornibrook proceed to arbitration. Fewell was awarded $401,000.00 against Hornibrook in the arbitration proceeding, but has been unable to collect that award.
Siegel denies making the telephone call to Fewell and claims he has never spoken to Fewell at all. Siegel testified that in 1991 he had loaned $160,000 to Bud Kozak, whom he had known for years. Kozak promised to pay him back from the proceeds of a stock sale he had already arranged, a sale that would net $300,000. Siegel claims that when he received Fewell's check, he assumed Fewell was Kozak's intended purchaser. He cashed the check and divided the proceeds with Kozak, as they had agreed.
Self-Authentication Insufficient
Siegel argues that Fewell cannot properly authenticate the caller as himself. Under the Federal Rules of Evidence, it is well-established that self-authentication of a caller alone is not sufficient to establish the authenticity of a telephone conversation. FED. R. EVID. 901(b)(6) Advisory Committee Notes; United States v. Roberts, 22 F.3d 744, 754 (7th Cir. 1994), citing United States v. Puerta Restrepo, 814 F.2d 1236, 1239 (7th Cir. 1987). In re Dodd, 82 B.R. 924 (N.D. Ill. 1987) is illustrative. In Dodd, a creditor claimed it had not received notice of the debtor's bankruptcy filing and sought leave to file a late proof of claim. The debtor objected; as evidence that the creditor was aware of the filing, the debtor's attorney testified that he had received a phone call from an unnamed representative of the creditor, asking when she could expect payments from the bankruptcy court. Reversing a bankruptcy judge's determination barring the late claim, the district court pointed out that "[t]he mere assertion by the caller [of her identity], without more, is not sufficient to establish the authenticity of the conversation." 82 B.R. at 929.
When there are additional circumstances confirming the identity of the caller, self-identification may be adequate. Roberts, 22 F.3d at 754. In United States v. Gironda, 758 F.2d 1201, 1218 (7th Cir. 1985), for example, the witness was permitted to testify about a conversation with someone he identified as the defendant because he was familiar with the defendant's voice from three prior conversations with him. In United States v. Sawyer, 607 F.2d 1190, 1193 (7th Cir. 1979), the witness called defendant Sawyer at his business phone number, and the person to whom he spoke provided personal information unique to Sawyer. The court found these circumstances sufficient to authenticate the telephone conversation.
Such circumstances are not present here, however. Fewell has offered no evidence, direct or circumstantial, to establish that the person who called him in 1991 and identified himself as Bernard Siegel was in fact Mr. Siegel. Fewell admits that he does not know and never had Mr. Siegel's phone number. (Fewell Dep. at 19-20.) He had no other conversations with Mr. Siegel, on the telephone or in person; and does not claim to be familiar with Siegel's voice. Nor is the information Fewell claims was exchanged in this conversation — that Hornibrook was unable to pay for the Gantry stock, that Siegel would sell the shares to Fewell himself, and that Gantry had large business contracts — of such a personal nature that the caller must have been Siegel. To the contrary, anyone associated with Hornibrook would have had an interest in conveying such information to Fewell.
Fewell argues that the "most compelling circumstantial evidence confirming the telephone conversation is the fact that within days of the call, Mr. Siegel received a check from Mr. Fewell in the amount of $300,000 which Siegel promptly cashed." (Plaintiff's Memorandum of Law in Support of his Response to Defendant's Motion for Summary Judgment at 3.) In fact, however, Fewell did not mail the check directly to Siegel. (Fewell Dep. at 18.) Instead, Fewell gave the check to Hornibrook, who presumably sent it on to Siegel. Id. Siegel acknowledges receiving and cashing the check, but he testified that Kozak had led him to expect it. Thus, Siegel's receipt of the money does not demonstrate that he knew or had reason to know that it was obtained from Fewell by fraud.
CONCLUSION
Fewell's claims against Siegel all relate to a single telephone call, in which Siegel allegedly made false representations (or failed to disclose information) concerning Gantry Corporation. Apart from his testimony that the caller identified himself as Bernard Siegel, Fewell has no evidence that the person he spoke to was in fact Siegel. Self-authentication, standing alone, is not sufficient basis for introduction of a telephone conversation under Federal Rule of Evidence 901. Fewell has not offered evidence that creates a dispute of fact on this issue, on which he bears the burden of proof. Summary judgment is therefore entered in favor of Defendant Bernard Siegel.