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In Re Alliance Equipment Lease Program Securities Litigation

February 23, 2007

IN RE ALLIANCE EQUIPMENT LEASE PROGRAM SECURITIES LITIGATION


The opinion of the court was delivered by: Hon. Napoleon A. Jones, Jr. United States District Judge

SECOND SUPPLEMENTAL ORDER

This Document Relates To: GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT All Actions AGAINST ADDITIONAL MEMBERS OF THE DEFENDANT CLASS [Doc. No. 1218]

Before the Court is Plaintiff's Second Supplemental Motion for Summary Judgment Against Additional Members of the Defendant Class. [Doc. No. 1218]. On July 1, 2004, this Court granted Lead Plaintiffs' Motion for Summary Judgment and awarded damages based on Plaintiff Class members' supplemental declarations. [Doc. No. 1038.] However, during the pendency of the Motion for Summary Judgment, Plaintiffs advised the Court that six members of the Defendant Class had not been served notice. [Doc. No. 973]. This Court excluded these brokers from the Order, and Magistrate Judge Stormes subsequently granted leave to serve these members of the Defendant class. [Doc. No. 1117.] To date, no oppositions have been filed. Lead Plaintiffs have indicated that this will be the final motion for summary judgment. The Court has determined that the issues presented herein are appropriate for decision without oral argument. See S.D. Cal. Civ. R. 7.1(d)(1). For the reasons discussed herein, the Court GRANTS Plaintiff's Motion for Summary Judgment against these additional members of the Defendant class.

Background

The facts of this case are recited in the Court's February 5, 2003, Order granting Plain-tiff's Motion for Partial Summary Adjudication. (See Order Granting Pls.' Mot. for Partial Summ. J. at 1-3.) In short, this case arises out of the sale of Alliance Equipment Lease Program contracts to Plaintiff Class members between the dates of November 1, 1997, and November 25, 1998. (See July 1, 2004, Order Granting Pls.' Mot. for Summ J. at 1.) According to Plaintiffs, the leases did not exist, and the invested money was allegedly misappropriated by Alliance principals and their cohorts. (See id.) The present case is a nationwide class action brought by investors against various persons and entities involved in selling and marketing the Alliance Lease Program allegedly in violation of Section 12 of the Securities Act of 1933, 15 U.S.C. § 771.

On February 5, 2003, this Court held that collateral estoppel prohibited Defendants from relitigating whether the investment constituted a "security" under federal law. (See Order Granting Pls.' Mot. for Partial Summ. J. at 6.) On July 1, 2004, this Court granted Lead Plaintiffs' Motion for Summary Judgment and awarded damages based on Plaintiff Class members' supplemental declarations. (See July 1, 2004, Order Granting Pls.' Mot. for Summ. J. at 1.) However, on August 4, 2004, Lead Plaintiff's filed an ex parte Application for Leave to File Additional Supplemental Declarations and Briefing on behalf of eight Plaintiff Class members who, due to late notice, had not timely submitted proof of their damages. [Doc. No. 961.] This Court issued a supplemental order granting summary judgment and awarding damages to the additional class members. (See Sept. 23, 2004, Supplemental Order Granting Pls.' Mot. for Summ. J. at 2.)

However, during the pendency of the Motion for Summary Judgment, Plaintiffs withdrew the Motion with respect to six members of the Defendant Class who were never served with notice of the establishment of a Defendant Class. In the July 1, 2001, Order, this Court indicated that these unserved Defendants were still parties to this case, but were no longer involved in the Motion. (See July 1, 2004, Order Granting Pls.' Mot. for Summ. J. at 3.) On January 19, 2005, Magistrate Judge Stormes granted Lead Plaintiffs leave to serve the unserved Defendant Class members with supplemental notice of Defendant Class certification. (See Order Granting Ex Parte Application for Leave to Serve Supplemental Notice at 6.)

Plaintiffs, thereafter, sent the supplemental notice to the unserved Defendant Class, identified as Edward Beauette, Robert Clark, Frank DeMaria, Greg Gregson, Ronald La Porta, Marcia Ratajczak, Steve Telesca, and Andrew P. Weis. (See Aug. 28, 2006, Decl. of Vincent Slavens ¶ 9.) Subsequently, Plaintiffs reached settlement agreements with Defendants Steve Telesca and Robert Clark. (See id.) Counsel for Lead Plaintiffs sent requests to Plaintiff Class members who were sold Alliance Leasing contracts in order to obtain additional claim forms. See id.) Counsel for Lead Plaintiffs received declarations from investors who claim to have purchased their contracts from Frank Demaria, Greg Gregson, and Andrew P. Weis. (See id.)

Legal Standard

Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure on "all or any part" of a claim where there is an absence of a genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). One of the principal purposes of Rule 56 is to dispose of factually unsupported claims or defenses. See Celetox, 477 U.S. at 323-24. A fact is material when, under the governing substantive law, the fact might affect the outcome of the

See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute about a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. When making its determination, the Court must view all inferences drawn from the underlying facts in the light most favorable to the party opposing the motion. See Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

The party seeking summary judgment bears the initial burden of establishing the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323. The moving party can satisfy this burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element of his or her claim on which that party will bear the burden of proof at trial. See id. at 322-23. If the moving party fails to discharge this initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S. H. Kress & Co., 398 U.S. 144, 159-60 (1970).

If the moving party meets the initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing there is a genuine issue for trial." Anderson, 477 U.S. at 256. "The mere existence of a scintilla of evidence in support of the nonmoving party's position is not sufficient." Triton Energy Corp. v. Square D. Co., 68 F.3d 1216, 1221 (9th Cir. 1995) (citing Anderson, 477 U.S. at 252); see also Matsushita, 475 U.S. at 586 (if the moving party meets this initial burden, the nonmoving party cannot defeat summary judgment by merely demonstrating "that there is some metaphysical doubt as to the material facts"). It is insufficient for the party opposing summary judgment to "rest upon the mere allegations or denials of [his or her] pleading." Fed. R. Civ. P. 56(e). Rather, the party opposing summary judgment must "by [his or her] own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.' " Celotex, 477 U.S. at 324 (quoting Fed. R. Civ. P 56(e)). "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." See T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors, 809 F.2d 626, 630 (9th Cir. 1987). In addition, the Court is not obligated "to scour the records in search of a genuine issue of triable fact." Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (citing Richards v. Combined Ins. Co., 55 F.3d 247, 251 (7th Cir. 1995)). "[T]he district court may limit its review to the documents submitted for purposes of summary judgment and those parts of the record specifically referenced therein." Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1030 (9th Cir. 2001).

"Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.' " Matsushita, 475 U.S. at 587 (citing First Nat'l Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289 (1968)). Moreover, "[a] district court must enter summary judgment against a party who fails to make a showing sufficient to establish an essential element of a claim, even if genuine factual disputes exist regarding other elements of ...


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