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Glazer v. Abercrombie & Kent

March 24, 2009

DONALD W. GLAZER, KEVIN R. MCCLELLAN, DANIEL L. MOSLEY, AND EVAN A. STEIN PLAINTIFFS,
v.
ABERCROMBIE & KENT, INC., GEOFFREY KENT, ANDREW W. HARPER, ANDREW HARPER TRAVEL, INC, AND JOHN DOE, A/K/A ANDREW HARPER, DEFENDANTS.



The opinion of the court was delivered by: Hon. George W. Lindberg

MEMORANDUM OPINION AND ORDER

Before the Court are defendants' motions for summary judgment. Defendants Abercrombie & Kent, Inc. ("A&K") and Geoffrey Kent ("Kent") (collectively the "Kent defendants") filed a joint motion for summary judgment as to all claims pending against them in the Fourth Amended Complaint ("complaint") - Count I (violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 as to A&K and Kent); Count II (common law fraud as to A&K); Count III (common law fraud as to Kent); Count V (negligent misrepresentation as to A&K and Kent); Count VII (violation of the Consumer Protection Acts of the plaintiffs' respective states as to A&K and Kent); and Count VIII (breach of guaranty as to A&K). Defendants Andrew Harper and Andrew Harper Travel, Inc. (collectively the "Harper defendants") also filed a motion for summary judgment as to all claims pending against them in the complaint - Count I (violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5); Count IV (common law fraud); Count V (negligent misrepresentation); and Count VII (violation of the Consumer Protection Acts of the plaintiffs' respective states). All four defendants filed a consolidated Local Rule ("Rule") 56.1 statement of undisputed material facts. The plaintiffs Donald Glazer ("Glazer"), Kevin McClellan ("McClellan"), Daniel Mosley ("Mosley") and Evan Stein ("Stein") (collectively "plaintiffs") filed consolidated responses to defendants' motions for summary judgment.

For the reasons set forth more fully below, the Harper defendants' motion for summary judgment is granted in part. Judgment is entered in favor of the Harper defendants as to the Securities Law claim (Count I) and all of Mosley and McClellan's state law claims. Glazer and Stein's other remaining state law claims are dismissed as to the Harper defendants. All briefing related to the Kent defendants' motion for summary judgment is stricken.

I. Relevant Undisputed Facts

The following facts are undisputed unless specifically noted below. Glazer is a Massachusetts lawyer who serves as advisory counsel on business law at a Boston law firm. McClellan is an ophthalmologist who lives in Northbrook, Illinois. Stein is a physician and businessman in Ft. Thomas, Kentucky. Stein formed two (and sold one) large medical research laboratories. Mosley is the head of the trust and estates practice group at a large New York City law firm. Kent is the chairman of A&K, which focuses its business on selling high-end international travel tours. Andrew Harper, Inc. publishes a travel newsletter entitled Hideaway Report. Andrew Harper is a pseudonym for two brothers who operate Andrew Harper, Inc.

This case stems from plaintiffs' memberships in a destination club known as "Andrew Harper's Distinctive Retreats, a Destination Club by Abercrombie & Kent" ("club"). McClellan joined the club on February 23, 2004 and Mosley joined the club three days later, on February 26, 2004. At that time, the Harper defendants did not have any involvement in the club and the club was named "Distinctive Retreats by Abercrombie & Kent." On March 23, 2004, after McClellan and Mosley had already joined the club, the Harper defendants - via their predecessor company, Harper Associates, Inc. - executed a trademark licensing agreement granting Distinctive Retreats, LLC the right to call their club "Andrew Harper's Distinctive Retreats by Abercrombie & Kent." Glazer and Stein joined the club after the Harper defendants executed the trademark licensing agreement with Distinctive Retreats, LLC. Glazer joined the club on February 25, 2005 and Stein joined the club on April 15, 2005.

McClellan and Mosley each paid $392,000 for their memberships to the club. Glazer paid $425,000 and Stein paid $450,000, respectively, for their club memberships. In exchange for their membership payments, each plaintiff received a document entitled a "member bond" and the guaranty to refund the amount plaintiffs paid for their memberships, with certain restrictions and modifications, if plaintiffs chose to redeem their member bonds and discontinue their memberships in the club. The club filed for bankruptcy in early July 2006. Plaintiffs claim that they joined the club in reliance upon a combination of non-disclosures and materially false and misleading statements by defendants, which resulted in the loss of their membership payments.

II. Legal Analysis

A. Summary Judgment Standard of Review

To succeed on a motion for summary judgment, the moving party must show that the pleadings, depositions, answers to interrogatories, and admissions on file, together with any admissible affidavits do not create a genuine issue of material fact and that it is entitled to judgment as a matter of law. FED.R.CIV.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The Court must construe all facts in the light most favorable to the non-moving parties, plaintiffs, and must view all reasonable inferences in their favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

B. Harper Defendants' Motion for Summary Judgment

1. Claims by Mosley and McClellan

The Harper defendants seek the entry of summary judgment as to all of Mosley and McClellan's claims - Counts I, IV, V, and VII - because those two men purchased their contested club memberships before the Harper defendants were involved with the club. Mosley and McClellan do not dispute this fact and failed to provide any basis for denying the Harper defendants' motion for summary judgment as to their claims.*fn1 McClellan joined the club on February 23, 2004 and Mosley joined the club three days later, on February 26, 2004. The Harper defendants - via their predecessor company, Harper Associates, Inc. - did not execute a trademark licensing agreement granting Distinctive Retreats, LLC the right to call their club "Andrew Harper's Distinctive Retreats by Abercrombie & Kent" until March 23, 2004. McClellan admits that he did not receive any communications from the Harper defendants, or any documents mentioning the Harper defendants prior to joining the club. Mosley stated that he did not ...


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