Fengler v. Numismatic Americana, Inc.

In December 1986, Iris Fengler (plaintiff) contracted to sell 60 percent of the stock in her office-supply company, Stationers Supply Company, Inc. (Stationers), to Numismatic Americana, Inc. (Numismatic) (defendant). John Cameron (defendant) was the president of Numismatic. Negotiations were conducted by Jerry Simon (defendant). The contract, which was signed on December 24, 1986, provided for an investment of $50,000 into Stationers, a satisfaction of the claims of Stationers’ creditors, and a weekly salary of $1,100 to Fengler. Simon and Cameron were represented by Stuart Bochner (defendant) and his law firm, Bochner and Berg (defendant). Fengler was unrepresented. Fengler alleged that Simon had told her Bochner would adequately represent her interests and that Bochner had told her obtaining her own counsel on Christmas Eve would be difficult. Fengler brought suit in February 1987, alleging that two weeks after the contract, the defendants removed all inventory, furnishings, and business records from Stationers, converted the assets of Stationers to their personal use, refused to satisfy the claims of Stationers’ creditors, and stopped paying Fengler’s salary after the first week. Simon and Cameron disappeared before they could be served, but Bochner and his firm were served. Fengler alleged that Bochner had (1) breached his duty of care to her by failing to advise her to obtain her own counsel and (2) schemed to defraud her. Fengler sought relief, including a preliminary injunction restraining the defendants from engaging in any business on behalf of Stationers. In opposing the preliminary injunction, Bochner claimed that (1) he and his firm no longer represented Simon and Cameron and could not engage in business for Stationers, (2) his relationship with the other defendants consisted solely of drafting the contract and attending the closing, and (3) he had no knowledge of the other defendants’ intentions. Bochner further requested an evidentiary hearing before any preliminary injunction was granted. The United States District Court for the Southern District of New York granted the injunction without holding a hearing or making findings of fact. Bochner and his firm appealed.