GOLDIN, HOFFMAN, JONAS & PERSON V. BARNEY, INC.

State: Florida

Court: Florida Third District Court

Docket No: 07-3318

Case Date: 11/19/2008

Preview:Third District Court of Appeal
State of Florida, July Term, A.D. 2008
Opinion filed November 19, 2008. Not final until disposition of timely filed motion for rehearing. ________________ No. 3D07-3318 Lower Tribunal No. 03-13264 ________________

David Goldin, Scott Hoffman, David Jonas, and Louis Person,
Appellants, vs.

Salomon Smith Barney, Inc.,
Appellee.

An Appeal from the Circuit Court for Miami-Dade County, Gill S. Freeman, Judge. Beggs & Lane (Pensacola) and David L. McGee and Steven R. Griffin, for appellants. Greenberg Traurig and Edward G. Guedes and Brigid F. Cech Samole, for appellee.

Before WELLS, SHEPHERD, and ROTHENBERG, JJ. ROTHENBERG, J.

The plaintiffs, David Goldin, Scott Hoffman, David Jonas, and Louis Person ("the plaintiffs"), appeal from an order dismissing their Second Amended Complaint against Salomon Smith Barney, Inc. ("SSB") with prejudice. On de novo review, Morin v. Fla. Power & Light Co., 963 So. 2d 258, 260 (Fla. 3d DCA 2007), we affirm because: (1) under applicable New York law, the plaintiffs failed to demonstrate justifiable reliance on SSB's alleged fraudulent misrepresentations; and (2) the plaintiffs failed to demonstrate that SSB had a duty to disclose any material facts which SSB allegedly omitted or concealed. The following factual allegations, which we accept as true, appear in the Second Amended Complaint. In 1998, the plaintiffs sold their website development company to Winstar Communications, Inc. ("Winstar"). The plaintiffs received eighty percent of the sale price in Winstar stock, and became Winstar vice presidents. In 1999, Winstar employed SSB to help with a number of financial transactions. Those transactions generated substantial fees for SSB. The

SSB/Winstar investment banking relationship created incentives for SSB and its analysts to encourage potential stockholders to buy Winstar stock, and to encourage those who owned Winstar stock to hold it. Accordingly, through a series of communications with the general public and with Winstar employees and shareholders, SSB analysts overstated the investment quality of Winstar stock.

2

Winstar management told its employees that the financial forecasts of SSB analyst Jack Grubman ("Grubman") could be trusted above all others. Beginning in January 2000, the plaintiffs participated in quarterly conference calls with Grubman, who consistently reiterated the positive outlook of Winstar stock. The plaintiffs relied on these communications in purchasing and holding Winstar stock. Despite SSB's public stance vis-

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