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Robert Nissen, et al v. Theodor Rozsa

June 23, 2011


The opinion of the court was delivered by: Linares, District Judge.



This matter comes before the Court by way of a motion for summary judgment filed by Plaintiffs on April 1, 2011 and a cross motion for partial summary judgment filed by Defendants on May 16, 2011. The Court has considered the submissions of the parties in support of and in opposition to the present motions and decides the matter without oral argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons that follow, both motions are denied.


The following facts are undisputed, except where noted. This matter arises from a dispute regarding a commission paid in connection with the sale of Sagmel, a pharmaceutical company, to Bayer Pharmaceutical ("Bayer"). In 2005, Sagmel entered into a representation agreement with Defendant TR Strategic Group, LLC ("TR Strategic") to assist it with finding financing or a buyer for its business. (Pls.' Stmt. of Uncontested Facts ("SOF") ¶ 22.) TR Strategic is a sole proprietorship owned by Defendant Theodor Rozsa ("Rozsa"). (SOF ¶ 19.)

The representation agreement between Sagmel and TR Strategic had a term of six months-spanning from July 18, 2005 to January 18, 2006-and provided for Sagmel to pay TR Strategic a commission if it obtained financing or located a buyer. (Id. at ¶ 22, 26.)

In July 2005, Rozsa sent Plaintiff Arthur Blumenthal ("Blumenthal") an email correspondence regarding an "exciting brokerage project for mutual profit." (Id. at ¶ 30.) Rozsa meant "for mutual profit" to be understood as a 50/50 split of the proceeds. (Id.) Thereafter, Rozsa and Blumenthal began working together to find a buyer for Sagmel. (Id. at ¶ 33.) During the fall of 2005, Blumenthal prepared a business plan for Sagmel and revised Sagmel's financial reports. (Id. at ¶ 50, 59.) Rozsa reviewed those reports, and the business plan was finalized in late October. (Id. at ¶ 59, 61.) Rozsa states that during this time he contacted various pharmaceutical companies as potential buyers for Sagmel. (Id. at ¶ 66--74.) In November 2005, Rozsa received a telephone call from Blumenthal stating that he wished to bring in Plaintiff Robert Nissen ("Nissen") to assist with the Sagmel project. (Id. at ¶ 75--76.) Rozsa never intended to compensate Nissen and believed that Nissen would be paid from any compensation paid to Blumenthal. (Id. at ¶ 111.)

In January 2006, TR Strategic's representation agreement with Sagmel expired without a buyer having been found. (Id. at ¶ 80.) At that time, Rozsa temporarily ceased his efforts to locate a buyer, (id.), but continued to contact Sagmel in the hopes of forming a new representation agreement, (id. at ¶ 81). During the first half of 2006, Blumenthal contacted several pharmaceutical companies concerning Sagmel. (Id. at ¶ 102.) In March 2006, Blumenthal contacted Soumitra Mukherjee at Bayer regarding Sagmel, but nothing came of the discussion. (Id. at ¶ 107.) Sometime in the summer of 2006, Nissen began working for Bayer as a business development consultant. (Id. at ¶ 134, 277.) On June 26, 2006, Nissen also communicated with Soumitra Mukherjee regarding Sagmel, but likewise failed to generate interest on the part of Bayer. (Id. at ¶ 106--7.)

In July 2006, Rozsa, Blumenthal, and Nissen met for dinner in Tarrytown, New York (the "Tarrytown meeting"). (Id. at ¶ 113.) Prior to this meeting, Rozsa had prepared a list of pharmaceutical companies that he thought might be interested in purchasing Sagmel. (Id. at ¶ 116.) Bayer was identified on the list as a top candidate, but Rozsa did not suggest that the parties contact Bayer, because no representation agreement with Sagmel was currently in place. (Id. at ¶ 117.) Plaintiffs allege that at the close of the Tarrytown meeting, the parties agreed to share evenly any income from the Sagmel project, with each receiving a 30% fee and with the additional 10% to be allocated later. (Id. at ¶ 118, 128.) Defendants dispute this assertion, contending that no such oral agreement was reached and that any discussion of sharing income was "merely a toast to potential future collaborations . . . something which never came to fruition." (Defs.' Resp. to Pls.' Stmt. of Uncontested Facts ["Defs.' Resp. Stmt."] ¶ 118.) The parties did not discuss the allocation of expenses, taxes, the governing law, or when any agreement among them might terminate. (SOF ¶ 123--26.) No agreement was ever reduced to writing. (Defs.' Stmt. of Undisputed Mat'l Facts ¶ 6.)

In the summer of 2007, Nissen spoke with his supervisor at Bayer about the potential acquisition of Sagmel. (SOF ¶ 137.) The supervisor referred Nissen to Peter Lauff, another Bayer employee. In August 2007, Nissen spoke with Lauff about Sagmel, and Lauff expressed interest in pursuing the matter further. (Id. at ¶ 136, 141.) Nissen then advised Rozsa that Bayer was interested in Sagmel, and in September 2007, TR Strategic and Sagmel entered into a new representation agreement, which provided for TR Strategic to receive as a commission 1% of the sale price. (Id. at ¶ 164, 165.) In October 2007, Nissen arranged a meeting between representatives of Bayer and representatives of Sagmel to discuss the potential deal. (Id. at ¶ 156, 159.) Rozsa and Nissen were in attendance. (Id. at ¶ 159.) In November 2007, a second meeting was held between Bayer and Sagmel representatives, with Rozsa, Blumenthal, and Nissen in attendance. (Id. at ¶ 208.) Later that month, Rozsa met with Bayer officials in Germany, after which Bayer made a verbal offer of $400 million to purchase Sagmel. (Id. at ¶ 219--20.) Rozsa participated in the negotiations that followed. (Id. at ¶ 243--45.) From November 2007 to June 2008, Rozsa kept Blumenthal apprised of the status of the transaction, but Blumenthal was not directly involved in the negotiations or the related due diligence. (Id. at ¶ 224--25.) Nissen also does not appear to have been involved in the transaction after the November meetings. (See generally id. at ¶ 214--66.)

On June 3, 2008, the Bayer-Sagmel deal closed. (Id. at ¶ 267.) As a result, TR Strategic was entitled to, and eventually received, a commission of $4,300,000*fn1 from Sagmel for its services. (Id.) Blumenthal subsequently asked Rozsa for 33% of that commission for himself and 10% for Nissen. (Id. at ¶ 271.) Rozsa responded by suggesting that the commissions be split so that Blumenthal would receive 20% and Rozsa would retain the remaining 80%. (Id. at ¶ 272.)

On November 12, 2008, the instant action was filed. On September 10, 2009, Blumenthal and Nissen filed an Amended Complaint seeking to recover 60% of the commissions received by TR Strategic, based on the agreement that was allegedly reached at the June 2006 meeting in Tarrytown. (First Am. Compl. ¶ 36.) The Amended Complaint alleges claims under theories of breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and fraud, and asks that a constructive trust be imposed on the commissions currently in Defendants' possession. On April 1, 2011, Plaintiffs moved for summary judgment on all counts except fraud, and on May 16, 2011, Defendants cross moved for partial summary judgment on the existence and enforceability of any contract among the parties.


A court shall grant summary judgment under Rule 56(c) of the Federal Rules of Civil Procedure "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant ...

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