Felice v. Westpark Capital, Inc.

Background

WestPark Capital, Inc. and Robert Ainbinder moved for reconsideration of the Court’s September 30, 2024 order, which had denied parts of their motions to dismiss the plaintiffs’ claims. NYIAX, joined by WestPark and Ainbinder, also asked the Court to dismiss the plaintiffs’ claims based on the limited federal issues remaining in the case.

Reconsideration

The Court denied the motions for reconsideration. It rejected the defendants’ argument that the Court had improperly distinguished Vincent Ruta from Dawn Felice, Linda Spivack, and Kathleen Spivack. The Court explained that the Felice and Spivack families had maintained joint investment accounts, had invested collaboratively, and allegedly relied on representations communicated through their husbands. Under New York law, indirect communications can support a fraud claim when the speaker intended the statements to reach and be relied on by the plaintiff. The Court found it plausible that Ainbinder intended to defraud Dawn Felice, Linda Spivack, and Kathleen Spivack.

The Court also rejected WestPark’s argument that it could not be responsible under ratification principles for Ainbinder’s alleged misconduct from 2019 through 2022, when he was not a registered WestPark agent. The Court found it plausible that WestPark later benefited from Ainbinder’s relationships with the Spivacks and therefore was aware of and approved closely related conduct during that earlier period.

The Court further declined to reconsider its decision not to dismiss claims based on the preclusive effect of an earlier Financial Industry Regulatory Authority panel ruling. The Court stated that the organization’s rules did not clearly support WestPark’s interpretation and that it lacked enough information to grant dismissal based on claim preclusion at that stage. The Court noted that WestPark could present additional evidence on that issue at summary judgment.

Jurisdictional objections

The Court denied the requests by NYIAX, WestPark, and Ainbinder to dismiss the plaintiffs’ claims because only a small portion of the original federal claims survived. It held that the claims arose from a common set of operative facts: the alleged multiyear solicitation of investments in NYIAX by Ainbinder and his brother, who were employed by WestPark for most of that period. The Court also stated that it could continue exercising supplemental jurisdiction—the authority to hear related state-law claims—even if all federal claims had been dismissed, in light of the time and resources already spent on the case and discovery.

NYIAX separately argued that claims against it should be dismissed to the same extent that claims against Ainbinder had been dismissed. The Court denied that request without prejudice to refiling because NYIAX had presented it through letters rather than a properly filed motion. The Court stated that deciding the claims based on two brief letters would not give the plaintiffs a full and fair opportunity to respond. NYIAX could raise the arguments through a properly filed motion for judgment on the pleadings or for summary judgment.

Disposition

Judge J. Paul Oetken denied the defendants’ motions for reconsideration and requests to dismiss various claims for lack of subject-matter jurisdiction. He also denied NYIAX’s letter-based request without prejudice to refiling through a proper procedural vehicle. The Clerk was directed to close the motions at Docket Numbers 83, 85, and 103.