Miami Partner Joseph A. Sacher and Senior Counsel Andrew R. Schindler obtained a Federal Court Order granting summary judgment and dismissing one of their clients, a prominent South Florida attorney and managing partner and securities practitioner, from a malpractice action involving complex securities transactions.
The plaintiff alleged the firm’s client committed malpractice, breached fiduciary duties, and breached a contract in connection with four different securities transactions and sought $8 million in damages. In the first transaction, the complaint alleged that the defendant failed to incorporate provisions in a securities purchase agreement accounting for any reverse stock splits, despite the issuer publicly announcing a possible reverse split in the future. In the second transaction, the plaintiff alleged that the defendant drafted ambiguous stock warrant agreements that resulted in the plaintiff receiving less than the amount of desired shares upon exercise of stock warrants once the issuer’s share price reached a certain level. In the third transaction, the plaintiff alleged that the defendant wrote the incorrect maturity date for a debenture. And in the fourth transaction, the complaint alleged that the defendant breached her fiduciary duty because the defendant represented a company that the plaintiff sought to invest in, and the defendant purportedly advised the company not to do business with plaintiff.
The firm's team moved for summary judgment on all asserted claims based on a laser-focused deposition of plaintiff’s principal and corporate representative that demonstrated that defendant did not represent plaintiff in any of the four transactions, did not have a contract with the defendant, and that the defendant did not represent the plaintiff at the time of the fourth transaction and had properly advised the company that it could not move forward with the transaction due to unrelated restrictions borne by governing securities laws.
The U.S. District Court referred the motion to the U.S. Magistrate Judge, who issued a report and recommendation recommending that the District Court deny the motion for summary judgment due to issues of fact. However, after objecting to and appealing the report and recommendation to the District Judge, the District Court agreed with the defendant, sustained the objections, and found that there was no issue of material fact that the defendant’s conduct breached any duty or caused plaintiff any harm. The remaining parties subsequently settled the case.