Opinion
No. 95 Civ. 7051 (RWS).
May 21, 2001
MEMORANDUM OPINION
Defendant Morton Cohn ("Cohn") has moved under Local Rule 6.3 for reargument and reconsideration of his motion for summary judgment to dismiss the complaint against him which was denied by an opinion of January 8, 2001 (the "January 2001 Opinion"). Dietrich v. Bauer, 126 F. Supp.2d 759. For the reasons set forth below, the motion for reconsideration is granted and upon reconsideration the motion for summary judgment is denied.
Parties and Prior Proceedings
As set forth in the January 2001 Opinion, prior proceedings and the parties are described in the opinion of March 4, 1999, familiarity with which is presumed. See Dietrich v. Bauer, 76 F. Supp.2d 312 (S.D.N.Y. 1999) ("Dietrich I").
The surviving claims in this action include primary liability claims under Section 10(b) of the 1934 Act, SEC Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder, and common law fraud against defendant Green-Cohn Group, Inc., and a controlling person liability claim under Section 20(a) of the 1934 Act, 15 U.S.C. § 78t(a), and pendent state law claims, against Cohn.
The instant motion was timely made and marked submitted on March 28, 2001.
Reconsideration is Granted
At issue is whether material facts exist which, when viewed most favorably to Dietrich, who resists the summary judgment, are sufficient to create a factual issue concerning the knowledge and participation of Cohn in the alleged fraud by his controlled entity.
Cohn has focused upon a factual finding in the Opinion at page 6: "Cohn objected to this request and has failed to produce any accounting statements." The basis for reargument is the failure of the Court to note that Cohn did not fail to produce because of the objection but because he had no such statements. Since what is at issue is an inference which could be drawn from the lack of evidence, it could be argued, and has been, that the quoted language fails to support the inference and overlooks the reason for the non-production.
It is also argued that because it was not mentioned in the Opinion that the Court overlooked the deposition by Greenfield, the manager of the controlled entity, to the effect that the accounting statements contained no reference to Scorpion and that therefore no material facts were in dispute as to Cohn's knowledge.
Because the effect of an inference is at issue and because the Opinion did not deal with Greenfield's statement, reconsideration will be granted.
Upon Reconsideration the Motion for Summary Judgment is Denied
In fact, whatever the inference from the finding in the Opinion quoted above, the accounting statements have not been produced and Cohn testified, uncertainly, that he believed the investments were listed. It remains appropriate in the summary judgment context to conclude that the absence of the accounting may support the conclusion that they contained a reference to Scorpion.
Greenfield's denial and Cohn's statement that he never heard of Scorpion is credible and would support a finding that Cohn had no knowledge of the fraud and did not participate in it.
However, a material factual dispute arises from Cohn's testimony, from the circumstances of the accounting statements, and their absence. To hold otherwise would be to credit the testimony of the defendants over the inference which may be drawn by the fact-finder from the absence of the statements which Cohn believed listed the investments.
Upon reconsideration the conclusions reached in the Opinion are unchanged, and the motion by Cohn to dismiss is denied.
It is so ordered.