Opinion
SUCV2012-4630 BLS1
09-19-2016
Corinna von Schonau-Riedweg et al. v. Rothschild Bank AG et al No. 135208
Filed September 21, 2016
MEMORANDUM AND ORDER ON DEFENDANT JOHN J. PRESTON'S SUPPLEMENTAL MOTION FOR SUMMARY JUDGMENT
Edward P. Leibensperger, Justice
In a thorough and detailed memorandum dated June 17, 2016 (the " Decision"), this court (Kaplan, J.) granted summary judgment dismissing many of plaintiff's claims. The court left for trial plaintiff's claim that she was defrauded in connection with her purchase in December 2007, of shares in a company called Texas Syngas, now named NC 12, Inc. As a result of the court's decision only two defendants remain--Michael Sydow and John Preston. Preston, only, now moves again for summary judgment dismissing plaintiff's claims.
Preston correctly points out that the court directed him, in February 2016, to confine his first summary judgment motion to the issue of whether plaintiff's claims were barred by the applicable statute of limitations. The court then indicated that " [i]f some or all of the claims survive the statute of limitations, we will then see whether yet another round of summary judgment is useful or [whether] we're at the point where we should simply schedule a date for trial." In the Decision the court went beyond the statute of limitations issue and held that plaintiff's claims against Sydow and Preston survive summary judgment because " there are triable issues of material fact relating to those claims and whether the plaintiff should have been on inquiry notice of any claims related to Collins' wrongdoing prior to September 2010 (when Collins was fired from the company)." Decision, p. 51. Notwithstanding that conclusion by the court after wading though stacks of memoranda and documents, Preston sought to move again for summary judgment. By Order dated July 19, 2016, I allowed Preston to proceed while cautioning that, given the court's review in the Decision of the facts, it was unlikely that there could be a meritorious motion for summary judgment. A trial date of November 1, 2016 was set.
Preston proceeded to serve and file the present motion for summary judgment. Another set of memoranda, statements of allegedly undisputed material facts and boxes of documents were submitted. Oral argument on the motion was held on September 14, 2016.
In reality, many of the statements of fact are disputed.
I have reviewed the materials and find that the court's previous conclusion that there are triable issues of fact regarding plaintiff's claims against Preston (and Sydow) is certainly correct. It is undisputed that Preston was intimately involved in persuading plaintiff and her advisor to purchase the shares. It is also true that Preston was aware, at the time of plaintiff's purchase, that the individual touted as the " founder" of Texas Syngas, its chief operating officer, and a person experienced and qualified to lead Texas Syngas to prosperity (Collins), had been sued for his conduct at Texas Syngas. In fact, the lawsuit alleged that Collins and Sydow, in connection with previously selling shares of Texas Syngas, " engaged in fraudulent conduct, deceptive conduct, and intentional conduct, and have misappropriated property from the unsuspecting members and shareholders of Texas Syngas . . ." Exhibit 39, ¶ 15. Plaintiff's claims of misrepresentation rest, at least in part, on triable issues of fact regarding the circumstances of Preston's knowledge regarding the lawsuit, the materiality of the fact that the lawsuit existed and whether plaintiff was made aware of the lawsuit. This claim alone defeats Preston's motion for summary judgment.
Plaintiff raises other fact issues concerning Preston's conduct in connection with her purchase of shares in Texas Syngas. There is no reason to address those issues at this time.
Preston's motion for summary judgment succeeds in slightly narrowing plaintiff's claims. Plaintiff concedes that she has no claim for breach of fiduciary duty (Count 20) and no claim based upon a theory of alter ego (Count 17). Thus, the claims that will proceed to trial are Counts 1, 9, 10, 13, 15, and 18. Plaintiff is directed to prepare a form of special verdict to present at the final trial conference on October 26, 2016.
Count 10 is a claim under G.L.c. 93A. In the Decision the court held that a c. 93A claim is available for fraud in connection with the sale of securities. I agree. Preston's citation to Schwenk v. Auburn Sportsplex, LLC, 483 F.Supp.2d 81 (D.Mass. 2007), is inapposite.
CONCLUSION
Defendant, John T. Preston's Supplemental Motion for Summary Judgment is ALLOWED as to Counts 17 and 20. The motion is otherwise DENIED.