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Bluefeld v. Cohen

United States District Court, D. Maryland

April 27, 2017

BARRY S. COHEN, et ah, Defendants.


          Paula Xinis United States District Judge.

         Pending before the Court is Defendants' Motion to Dismiss. ECF No. 100. The issues are fully briefed and the Court now rules pursuant to Local Rule 105.6 because no hearing is necessary. For the reasons stated below, the motion is granted.

         I. BACKGROUND

         On September 22, 2015, Plaintiff Barry J. Bluefeld ("Bluefeld" or "Plaintiff), filed this action on his own behalf and derivatively as a shareholder of Annuity Associates, Inc. ("Annuity") against Defendants Barry S. Cohen, Joel S. Meisel, and David H. Cohen (collectively "Defendants"). Plaintiff was granted leave to file an Amended Complaint, ECF No. 30, and did so on April 13, 2016. ECF No. 31.

         According to Plaintiff, since Annuity's incorporation in 1984, Defendant Barry Cohen has served as a director and Secretary/Treasurer and Defendant Joel Meisel has served as a director and President. As of September 19, 2012, Barry Cohen and Joel Meisel owned 23.5% and 18.5% of Annuity's Class A voting shares, respectively. Defendant David Cohen is the property manager for the Benson Business Center, which a commercial real estate building and Annuity's sole asset. ECF No. 31 at 3. David Cohen acquired a small Class A interest in July 2008.

         Cumulatively, Plaintiff's Amended Complaint asserts claims of racketeering and conspiracy in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962-1964, and state law claims of fraudulent misrepresentation, conversion, unjust enrichment, breach of fiduciary duty, and fraud. ECF No. 31 at 10-48. First, Plaintiff contends that the Benson Business Center was intentionally left unoccupied which "artificially" reduced the value of the corporate assert and thus minority shareholders stake in the corporation. ECF No. 31 at 7. Plaintiff alleges that Defendants fraudulently hid the vacancy status of the Benson building when communicating to investors and on Annuity's profit and loss statements. ECF No. 31 at 8.

         Additionally, Plaintiff alleges that Defendants defrauded Plaintiff and ten other Class B minority non-voting shareholders by diverting money "to pay personal expenses and expenses of other companies in which the Defendants control and own" without disclosing the transactions to minority shareholders. ECF No. 31 at 2. These alleged fraudulent transactions include the distribution monies to Defendants, the over-payment of management fees, payments to outside companies working on unrelated properties from the assets of Annuity, and the excessive payment of distributions to persons associated with Defendants. ECF No. 31 at 10.

         On September 21, 2016, Plaintiff's third and final counsel withdrew his appearance. ECF No. 54. On October 4, 2016, Plaintiff then informed the Court that he would not be retaining new counsel and instead would proceed pro se. ECF No. 59 at 1. On November 23, 2016, Defendants filed a pre-motion letter seeking leave of the Court to file a motion to dismiss. ECF No. 82. On, December 16, 2016, the Court granted Plaintiff one month to obtain new counsel, after which time Defendants could file their motion to dismiss. ECF No. 91. Plaintiff appealed this Court's order on January 11, 2017, which is currently pending before the United States Court of Appeals for the Fourth Circuit.[1]

         Since the Court's December 16, 2016 order, no counsel for Plaintiff has entered an appearance. Thus, as permitted by the Court's Order, Defendants filed the instant motion on February 1, 2017. ECF No. 100.

         II. ANALYSIS

         A. Jurisdiction

         As a threshold matter, the Court must determine whether it has jurisdiction to adjudicate Defendants' motion to dismiss in light of Plaintiff's most recent appeal of this Court's December 16, 2016 Order. "[W]hile the filing of a notice of appeal 'confers jurisdiction on the court of appeals and divests the district court of control over those aspects of the case involved in the appeal[, ]'" the district court does not lose jurisdiction when the litigant takes an appeal from an unappealable order. United States v. Jones, 367 F.App'x 482, 484 (4th Cir. 2010) (quoting Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982) (citing Ruby v. Sec y of United States Navy, 365 F.2d 385, 389 (9th Cir. 1966) (en banc))); accord Wright & Miller, 16A Fed. Prac. & Proc. Juris. § 3949.1 (4th ed.) ("The weight of authority holds that an appeal from a clearly non-appealable order fails to oust district court authority; older cases holding to the contrary have been rejected.") (footnotes omitted); McKesson HBOC, Inc. v. Islamic Republic of Iran, 315 F.Supp.2d 63, 66 (D.D.C. 2004) ("[A] notice of appeal from an unappealable order does not divest the district court of jurisdiction."); U.S. v. Brooks, 145 F.3d 446, 456 (1st Cir. 1998) ("[A] district court can proceed, notwithstanding the filing of an appeal, if the notice of appeal is defective in some substantial and easily discernible way (if, for example, it is based on an unappealable order) or if it otherwise constitutes a transparently frivolous attempt to impede the progress of the case."); see also Hammon v. Barry, 752 F.Supp. 1087, 1092 (D.D.C. 1990) ("Instead of allowing [a party] to willy-nilly deprive [a] Court of jurisdiction, thus bringing . . . proceedings to a standstill while a non-appealable ruling wends its way through the appellate process, the Court [may] disregard the notice of appeal from a non-appealable order and proceed with the case.") (internal citations and quotation marks omitted).

         Here, Plaintiff appealed a non-final order for which no right to appeal has been triggered. Nor did Plaintiff obtain a certificate of appealability from this Court to pursue an appeal from an interlocutory or collateral order. See United States v. Hinton, 420 F.App'x 270, 270 (4th Cir. 2011) (dismissing appeal where denial of motion for recusal was "neither a final order nor an appealable interlocutory or collateral order"); Poux v. FCIBennettsville SC, 418 F.App'x 157, 157 (4th Cir. 2011) (dismissing appeal of order staying discovery); Stephens v. Muncy,918 F.2d 174 ...

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