Gurary v. Winehouse, 235 F. 3d 792 - Court of Appeals, 2nd Circuit 2000

Defendant-appellant Nu-Tech Bio-Med, Inc. ( Nu-Tech ) appeals from an order entered in the United States District Court for the Southern District Court of New York (Stanton, J.) denying its motion for sanctions pursuant to the Private Securities Litigation Reform Act of 1995 ( PSLRA ) and Federal Rule of Civil Procedure 11 ( Rule 11 ) against plaintiff-appellee Mordechai Gurary ( Gurary ). Gurary brought suit against Nu-Tech and defendant Isaac Winehouse ( Winehouse ) to recover damages for securities fraud pursuant to section 10(b) of the Securities Exchange Act of 1934 (the Exchange Act ), 15 U.S.C. § 78j, and 17 C.F.R. § 240.10b-5 ( Rule 10b-5 ) thereunder. The district court granted summary judgment in favor of both defendants and denied their motions for sanctions under Rule 11. We affirmed the summary judgment but remanded for further findings regarding compliance with Rule 11 as mandated by the PSLRA. See Gurary v. Winehouse, 190 F.3d 37, 47 (2d Cir.1999). On remand, the district court concluded that sanctions were not warranted because [a] conceivable extension of existing law might render Gurary\u27s claims of securities fraud properly pleaded. Gurary v. Winehouse, No. 97CIV3803, 2000 WL 20706, at *1 (S.D.N.Y. Jan. 12, 2000). For the reasons that follow, we affirm in part, and vacate in part the order of the district court and remand for further proceedings consistent with this opinion