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Emergent Capital Inv. Mgmt. LLC v. Stonepath Group, Inc.

United States District Court for the Southern District of New York

October 2, 2001, Decided ; October 3, 2001, Filed

00 Civ. 7723 (RWS)

Opinion

 [*617] Sweet, D.J.,

Defendants Stonepath Group, Inc. ("Stonepath"), previously known as Net Value  [*618]  Holdings, Inc. ("NETV"), Andrew Panzo ("Panzo") and Lee Hansen ("Hansen"), have moved pursuant to Rule 56, Fed. R. Civ. P., for summary judgment to dismiss the complaint of plaintiff Emergent Capital Investment Management, LLC ("Emergent") in action 00 Civ. 7723 (the "Initial Action"). The defendants have also moved under Rule 12(b)6 to dismiss the first amended complaint filed by Emergent in a related action, 01 Civ. 3936 (the "Second Action") and Emergent has moved pursuant to Rule 42(a),  [**2]  Fed. R. Civ. P., to consolidate the initial action and the Second Action. For the reasons set forth below, the motions to dismiss and the motion to consolidate are granted.

This is a hard case because the E-commerce bubble blew up in the face of these investors, as it did with many others 1 and the defendants assisted in creating the bubble. However, the theories advanced by Emergent do not successfully overcome the market forces which caused the loss of their investment.

Prior Proceedings

On October 12, 2000, Emergent filed its complaint alleging a violation of Section 12 of the Securities Act of 1933 (First Claim for Relief), Rule 10(b)5 (Second Claim for Relief), section 20 of the Securities & Exchange Act of 1934 (Third Claim for Relief), common law fraud (Fourth Claim for Relief), negligent misrepresentation (Fifth Claim for Relief) and rescission (Sixth Claim for Relief) arising out [**3]  of the purchase of NETV Series C convertible Preferred Stock (the "Stock") in March 2000 in a private placement of 166,667 shares undertaken by Emergent on the representation (alleged by Emergent) that the amount to be raised by the private placement of the stock was $ 20 million. Answers to the complaint were filed and discovery undertaken.

The defendants' motion was heard and marked fully submitted on June 13, 2001.

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165 F. Supp. 2d 615 *; 2001 U.S. Dist. LEXIS 15649 **; Fed. Sec. L. Rep. (CCH) P91,623

EMERGENT CAPITAL INVESTMENT MANAGEMENT, LLC, Plaintiff, - against - STONEPATH GROUP, INC. (previously known as NET VALUE HOLDINGS, INC.), ANDREW PANZO, and LESS HANSEN, Defendants.

Disposition:  [**1]  Stonepath motion for summary judgment in initial action granted. Motion to dismiss first amended complaint in Second Action for failure to state claim granted with leave granted to replead. Emergent's motion for consolidation granted.

CORE TERMS

misrepresentation, offering, causation, stock, allegations, first amended complaint, parties, investor, amended complaint, private placement, stock purchase agreement, consolidate, Brochure, summary judgment, shares, representations, sophisticated, summary judgment motion, proximate cause, fraud claim, rescission, documents, omission, merger

Civil Procedure, Summary Judgment, Motions for Summary Judgment, General Overview, Judgments, Opposing Materials, Entitlement as Matter of Law, Appropriateness, Genuine Disputes, Legal Entitlement, Materiality of Facts, Burdens of Proof, Evidentiary Considerations, Scintilla Rule, Securities Law, Securities Act Actions, Civil Liability, Civil Liability Considerations, Secondary Liability, Primary & Secondary Liability, Business & Corporate Compliance, Contracts Law, Contract Conditions & Provisions, Integration Clauses, Contracts Law, Affirmative Defenses, Fraud & Misrepresentation, Governments, Courts, Common Law, Securities Exchange Act of 1934 Actions, Implied Private Rights of Action, Deceptive & Manipulative Devices, Torts, Actual Fraud, Negligent Misrepresentation, Elements, Business Torts, Damages, Measurement of Damages, Reliance Damages, Contract Formation, Mistake, Mutual Mistake, Defenses, Ambiguities & Mistakes, Blue Sky Laws, Offers & Sales, Unilateral Mistake, Responses, Defenses, Demurrers & Objections, Motions to Dismiss