Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Stephen W. Leibholz v. Robert H. Hariri

April 15, 2011

STEPHEN W. LEIBHOLZ, PLAINTIFF,
v.
ROBERT H. HARIRI, DEFENDANT.



The opinion of the court was delivered by: Debevoise, Senior District Judge

NOT FOR PUBLICATION

OPINION

This matter arises out of an alleged contract between Defendant Robert Hariri and Plaintiff Stephen Leibholz, whereby Dr. Hariri would give equity in his company, Lifebank, Inc. ("Lifebank"), to Mr. Leibholz in exchange for Mr. Leibholz's consulting services. According to Mr. Leibholz, this contract is enshrined in a letter written by Dr. Hariri, dated September 29, 2000. Mr. Leibholz contends that he performed consulting services for Dr. Hariri in accordance with the contract, but Dr. Hariri refused to transfer any equity to him. Thus, on October 27, 2005, Mr. Leibholz filed a Complaint against Mr. Hariri alleging securities fraud, common law fraud, and breach of contract. On November 10, 2005, Mr. Leibholz filed an Amended Complaint alleging two claims of securities fraud, two common law fraud claims, promissory and equitable estoppel, and breach of contract. The Amended Complaint sought damages, a constructive trust, and specific performance. On January 31, 2006, Dr. Hariri counterclaimed against Mr. Leibholz for misappropriation, false light, and fraudulent advertising in violation of the New Jersey Consumer Fraud Act ("NJCFA"), N.J.S.A. 56:8-2.

On March 2, 2006, Mr. Leibholz moved to dismiss Dr. Hariri's counterclaims. In response, on April 10, 2006, Dr. Hariri moved for summary judgment on all of Mr. Leibholz's claims. In an Opinion, dated July 13, 2006, the Court dismissed Dr. Hariri's claim for fraudulent advertising, but found that he had adequately stated as claims for misappropriation and false light. The Court also dismissed Mr. Leibholz's claims for securities fraud and promissory estoppel, but found material disputes regarding his claims for common law fraud, equitable estoppel, and breach of contract.

On July 31, 2007, Mr. Leibholz filed a Second Amended Complaint in order to set forth a claim against Dr. Hariri under the New Jersey Racketeering Influenced and Corrupt Organizations ("RICO") Act, N.J.S.A. 2C:41-1, et seq. That claim alleges a scheme where Hariri fraudulently promised Lifebank employees and consultants equity in the company in exchange for their services. It further alleges that Dr. Hariri received Lifebank stock through a fraudulent valuation of laboratory equipment that he contributed to the company.

Dr. Hariri now moves for summary judgment against all of Mr. Leibholz's claims. Mr. Leibholz moves for summary judgment against Dr. Hariri's counterclaims. Mr. Leibholz also moves for summary judgment in favor of his breach of contract claims. For the reasons set forth below, Dr. Hariri's motion will be granted, and Mr. Leibholz's motion will be granted with respect to Dr. Hariri's counterclaims, but denied with respect his breach of contract claims.*fn1

Mr. Leibholz's claims for breach of contract are dismissed because the terms of the September 29, 2000 letter are too indefinite to constitute an enforceable contract. Mr. Leibholz's common law fraud claims are dismissed because the language of the September 29, 2000 letter does not amount to a material misrepresentation of fact. Similarly, his equitable estoppel claim is dismissed because no reasonable juror could find that the language of the September 29, 2000 letter induced Mr. Leibholz to perform services for Dr. Hariri. In addition, Mr. Leibholz's claim under the New Jersey RICO Act is dismissed because the record provides no evidence that Dr. Hariri was engaged in racketeering activity.

Finally, Dr. Hariri's claim for misappropriation is dismissed because he failed to demonstrate damages, as is his claim for false light because it falls outside the one-year statute of limitations.

I. BACKGROUND

Robert J. Hariri is a medical doctor and researcher specializing in neurosurgery, neurotrauma/critical care, cell biology, and vascular pathology. In 1996, Mr. Hariri formedLifeBank, Inc.,*fn2 ("Lifebank") a biotech company that harvests, stores, and researches potential uses for stem cells from umbilical cords and placentas.*fn3

Stephen W. Leibholz is a businessman and physicist who has experience as a defense-contractor with the United States government. Mr. Leibholz operates Chesapeake TechLabs, Inc. ("Techlabs"), a defense-contracting company, and serves as a consultant to several other defense-related and technology companies.

A. Facts Regarding Mr. Leibholz's Initial Claims

In 2000, Lifebank was in dire straits financially, and Dr. Hariri was looking for ways to raise money and generate revenue for the company. Early that year, Mr. Leibholz was introduced to Dr. Hariri as an advisor to Richard Farkas, a prospective investor in Lifebank. Over the months that followed, Mr. Leibholz periodically visited Lifebank to discuss Techlabs' work in government funded defense-related technologies. Dr. Hariri was interested in working with Mr. Leibholz because he believed that Mr. Leibholz was well-connected and could help generate revenue for Lifebank. Thus, they engaged in discussions regarding three potential means of collaboration: (1) an exchange of equity between Lifebank and Techlabs; (2) the creation of a non-profit entity to attract federal funding; and (3) Mr. Liebholz playing a future role as a consultant to Lifebank.

Mr. Hariri and Mr. Leibholz orally discussed the possibility of Mr. Leibholz becoming a consultant for Lifebank in May 2000. However, they did not reach an agreement regarding the term, scope, or specific projects for which Mr. Leibholz would provide consulting services. In the summer of 2000, Mr. Liebholz and Leon J. Sokol, counsel for Lifebank, prepared andexecuted documents in order to incorporate and begin running a non-profit entity called the Biomedical Research Institute ("BRI") whose purpose was to attract government research funding. Mr. Leibholz continued to work with Mr. Sokol and various Lifebank personnel through 2002 in an effort to attract such funding.

Mr. Liebholz maintains that during one or more meetings in September of 2000, Dr. Hariri formally offered him LifeBank stock and stock options from his personal holdings in exchange for Mr. Leibholz's consulting services. Mr. Leibholz further maintains that he accepted Dr. Hariri's offer and requested that he confirm in writing the number of shares and share options that would be transferred. However, he admits that the parties again did not agree to the specific nature, duration, and scope of consulting services. Nonetheless, he contends that he performed such services for Dr. Hariri and BRI through 2002 in reliance on this oral agreement.

In a letter, dated September 29, 2000, Mr. Hariri wrote the following to Mr. Leibholz: *fn4

Dear Steve:

As we have previously discussed, I have wanted to find a means for you to participate in LIFEBANK on an equity basis. In my mind the relationship we have developed is unique and should continue to be mutually rewarding for years to come. I see providing you with a stake in LIFEBANK as an incentive for further collaboration.

Toward that end, I have come up with a package comprised of 20,000 shares of my personal stock which I pledge to distribute to you at the next annual meeting combined with 20,000 warrants to purchase common stock at $5.00/share, exercisable through December 31, 2005. The most recent private placement was transacted in September of this year at $8.50/share.

Obviously, there can be additional future incentives through stock options and warrants to reflect ongoing contributions. (Amend. Compl., Ex. A.)*fn5

In 2004, Lifebank merged with Celgene, Inc. ("Celgene"), a major pharmaceutical and biotech company. On December 31, 2004, after reading about the merger on the internet, Mr. Leibholz, who, after 2002, had largely been out of touch with Dr. Hariri, sent him a letter of congratulations and requested that he "take[] appropriate action" on the September 29, 2000 letter. (Amend. Compl., Ex. B.) On September 29, 2005, Mr. Leibholz sent a second letter to Dr. Hariri asking for 40,000 shares of Celgene stock as compensation for services rendered under the terms of the September 29, 2000 letter. (Amend. Compl., Ex. C.) Dr. Hariri refused to remit the shares.

On October 27, 2005, Mr. Leibholz filed a Complaint asserting causes of action for securities fraud, common law fraud, and breach of contract. On November 10, 2005, Mr. Leibholz filed an Amended Complaint alleging securities fraud, common law fraud, promissory and equitable estoppel, and breach of contract. The Amended Complaint sought damages, a constructive trust, and specific performance.

B. Facts Regarding Dr. Hariri's Counterclaims

From 2000-2005, Dr. Hariri was listed on the website of Gensor, Inc. ("Gensor"), abiochemical and nanotechnology company owned by Mr. Leibholz, as its Vice President and Chief Scientist. Specifically, the Gensor website described Dr. Hariri in the following manner: "The VP Chief Scientist, Robert Hariri, MD, PhD is a biologist, neurosurgeon, and inventor with extensive scientific and entrepreneurial experience." *fn6 (Certification of Robert Solomon in

Opposition to Plaintiff's Motions for Summary Judgment with Regard to the Contract Claims and the Counterclaim, dated October 22, 2010 ("Solomon Opp'n Cert."), Ex. F.) The Gensor website also displayed a picture of Lifebank's laboratory, labeled as "Bio Laboratory." See (Id.)

Dr. Hariri first discovered his name associated with Mr. Leibholz on a website in 2000, however, he cannot recall whether the website was Gensor's or Techlabs'.*fn7 In October 2005, after the commencement of this litigation, Dr. Hariri accessed the Gensor website and noticed his listing there. As a result, On January 31, 2006, Dr. Hariri asserted counterclaims against Mr. Leibholz for misappropriation, false ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.