Summary
denying motion for reconsideration, rejecting plaintiff's contention that under Castellano, he had sufficiently alleged loss causation because he alleged "'that defendant's misrepresentations induced a disparity between the transaction price and the true 'investment quality' of the securities at the time of the transaction'"
Summary of this case from In re Merrill Lynch Co., Inc. Res. Sec. Litig.Opinion
No. 00 Civ. 1939 (LTS)(HBP)
February 26, 2003
David A. P. Brower, Esq. and Demet Basar, Esq., WOLF HALDENSTEIN ADLER FREEMAN HERZ LLP, Attorneys for Plaintiff.
Mitchell R. Schrage, Esq., MITCHELL R. SCHRAGE ASSOCIATES, Attorneys for Defendants.
OPINION AND ORDER
Plaintiff Jonathan S. Greenwald ("Greenwald" or "Plaintiff") filed this action asserting securities fraud and state law claims in connection with a private placement. Defendants Orb Communications Marketing ("Orb Communications"), Andrew S. Pakula ("Pakula") and Laura Berland ("Berland") (together, the "Defendants") moved to dismiss the complaint ("Complaint") on the grounds that it fails to state a claim under the federal securities laws and that the state law claims in the Complaint should be dismissed because, absent a viable federal claim, there is no basis for the Court to retain jurisdiction.
The Complaint in this case alleges that Defendants violated section 10(b) of the Securities and Exchange Act of 1934 ("Exchange Act") ( 15 U.S.C.A. § 78j(b) (West 1997 Supp. 2000)) and Rule 10b-5 promulgated thereunder ( 17 C.F.R. § 240.10b-5 (2001)), and are liable under section 20(a) of the Exchange Act. The Complaint also asserts common law fraud, breach of contract, quantum meruit, and unjust enrichment claims against the Defendants.
The Court issued an Opinion and Order ("Opinion") dismissing the Complaint on the basis that the Complaint did not sufficiently allege loss causation with respect to Greenwald's Section 10(b) claim. Plaintiff has moved for reconsideration of the Court's Opinion. In addition, Plaintiff has moved for leave to amend the Complaint, and Defendants have cross-moved to dismiss the Complaint.
For the following reasons, Plaintiff's motion for reconsideration is denied, Plaintiff's motion to amend the Complaint is granted and Defendants' motion to dismiss the Complaint is denied.
DISCUSSION
Motion for Reconsideration
The standards governing motions to alter or amend judgments pursuant to Rule 59(e) and motions for reconsideration or reargument pursuant to Local Rule 6.3 are the same. See 4200 Avenue K LLC v. Fishman, No. 00 Civ. 8814, 2001 WL 498402, at *1 (S.D.N.Y. May 10, 2001) (citing Candelaria v. Coughlin, 155 F.R.D. 486, 491 (S.D.N.Y. 1994)). "Whether to grant or deny a motion for reconsideration or reargument is in the `sound discretion of a district court judge and will not be overturned on appeal absent an abuse of discretion.'" U.S. Titan, Inc. v. Guangzhou Men Hua Shipping Co., Ltd., 182 F.R.D. 97, 100 (S.D.N.Y. 1998) (quoting McCarthy v. Manson, 714 F.2d 234, 237 (2d Cir. 1983)).
A motion for reconsideration or reargument is appropriate when the court has overlooked "controlling decisions or factual matters that were put before it on the underlying motion . . . and which, had they been considered, might have reasonably altered the result before the court." Range Road Music, Inc. v. Music Sales Corp., 90 F. Supp.2d 390, 392 (S.D.N.Y. 2000) (internal quotation marks and citation omitted). Alternatively, a motion for reconsideration or reargument may be granted to "correct a clear error or prevent manifest injustice." Griffin Indus., Inc. v. Petrojam, Ltd., 72 F. Supp.2d 365, 368 (S.D.N.Y. 1999). A motion for reconsideration or reargument may not be used to advance new facts, issues or arguments not previously presented to the Court. See 4200 Avenue K, 2001 WL 498402, at *1. Nor may it be used as a vehicle for relitigating issues already decided by the Court. See Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995) ("[A] motion to reconsider should not be granted where the moving party seeks solely to relitigate an issue already decided."). Local Rule 6.3 "should be narrowly construed and strictly applied so as to avoid repetitive arguments on issues that have been considered fully by the Court." Dellefave v. Access Temps., Inc., No. 99 Civ. 6098, 2001 WL 286771, at *1 (S.D.N.Y. Mar. 22, 2001). See also In re Houbigant, Inc., 914 F. Supp. 997, 1001 (S.D.N.Y. 1996) (a Local Rule 6.3 motion "is not a motion to reargue those issues already considered when a party does not like the way the original motion was resolved"); Carolco Pictures, Inc. v. Sirota, 700 F. Supp. 169, 170 (S.D.N.Y. 1988) (purpose of Local Rule 6.3 is to "ensure the finality of decisions and to prevent the practice of a losing party examining a decision and then plugging the gaps of a lost motion with additional matters").
The Court, in granting Defendants' motion to dismiss, held that Plaintiff had not alleged sufficiently loss causation in the Complaint. Plaintiff argues that the Court misapplied the requirements for establishing loss causation as set forth in Castellano v. Young Rubicam, Inc., 257 F.3d 171 (2d Cir. 2001). The issue of whether the Complaint alleges loss causation was briefed by the parties and considered by the Court in reaching its decision to grant Defendant's motion to dismiss. The Court, as the Plaintiff acknowledges, discussed Castellano v. Young Rubicam, Inc. in reaching its decision. Plaintiff has not set forth any controlling decisions or factual matters which the Court has overlooked, nor has Plaintiff established that reconsideration of the Court's decision is warranted to correct a clear error or prevent manifest injustice.
Plaintiff contends that, under Castellano, loss causation is sufficiently pled in a complaint where a plaintiff alleges "that defendant's misrepresentations induced a disparity between the transaction price and the true `investment quality' of the securities at the time of the transaction." Castellano, at 188. Plaintiff contends that the Complaint, read as whole, adequately pleads loss causation.
The Court determined that "there is no allegation that Greenwald has suffered an economic loss on the security, much less that the alleged misrepresentations and omissions were the proximate cause of such a loss. The Complaint does not draw a connection between the Defendant's misrepresentations and any foreseeable loss suffered by Greenwald on the Debenture as a result of the purchase of the security." (Opinion at 27.) Plaintiff asserts that, because the Complaint generally alleges that Greenwald suffered damages as a result of having purchased the 9% convertible debenture in the principle sum of $350,000, loss causation was pled adequately. Although the Court has already determined this issue in its Opinion, to be clear, the Court reiterates that the Complaint makes many allegations of loss based upon breach of contract, services rendered, breach of warranty, quantum meruit, unjust enrichment and a third-party beneficiary claim, but fails to connect the damages allegedly suffered by Plaintiff to the purchase of the Debenture.
Because Plaintiff has not pointed to controlling authority or factual matters overlooked by the Court, the Court finds that there is no appropriate basis for reconsideration of its Opinion.
Plaintiff's Motion to Amend the Complaint
The Opinion gave Plaintiff an opportunity to interpose an amended complaint within 30 days. In light of the timely filing of an application to amend the complaint and there being no opposition interposed to the application, Plaintiff's motion is granted. The amended complaint shall be filed and served within 14 days from the date hereof.
Defendants' Motion to Dismiss
Defendants' have crossed moved to dismiss the Complaint. The Court dismissed the Complaint as per the Opinion. Accordingly, Defendants' motion is denied as moot, without prejudice to renewal in relation to the amended complaint.
SO ORDERED.