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As permitted by the Court's order of June 1, 1998, plaintiff submits this objection to the tentative ruling set forth in that order on plaintiff's motion for partial summary judgment.

I. INTRODUCTION

It is plaintiff's understanding that the Court's tentative ruling is based on a determination by the Court that it would not be appropriate to issue a declaratory judgment with respect to the violations of the securities laws committed by the defendants in connection with the March 21 Letter and the June 9 Press Release. Plaintiff respectfully submits, however, that the propriety of whether a declaratory judgment should be issued is not relevant to whether plaintiff is entitled to prevail on his partial summary judgment motion.¹

A declaratory judgment and a partial summary judgment are far from the same thing. Plaintiff has not moved for a declaratory judgment. Plaintiff has only moved for partial summary judgment on the issues of whether the defendants violated SEC Rules 14a-3, 14a-6, and 14a-9 when they issued the March 21 Letter and the June 9 Press Release. The remedies plaintiff seeks for the defendants' violations are a permanent injunction, damages, and a declaratory judgment. The matter of which of these remedies should be granted (as well as what the proper amount of damages is) is not yet before the Court.

The only consideration relevant to whether plaintiff is entitled to partial summary judgment is whether plaintiff has established as a matter of law that defendants violated SEC Rules 14a-3, 14a-6, and/or 14a-9 by issuing the March 21 Letter and the June 9 Press Release. Since plaintiff has established this in his prior briefing, plaintiff is entitled to partial summary judgment.

II. A PARTIAL SUMMARY JUDGMENT IS NOT A DECLARATORY JUDGMENT

A partial summary judgment is not equivalent to a declaratory judgment. "A partial summary 'judgment' is not a final judgment," and "therefore . . . is not appealable" ("unless in the particular case some statute allows an appeal from the interlocutory order involved"). Advisory Committee Notes to Fed. R. Civ. P. 56, 1946 Amendment, Subdivision (d). "The partial summary judgment is merely a pretrial adjudication that certain issues shall be deemed established for the trial of the case." Id. By contrast, a declaratory judgment "declare[s] the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201. A declaratory judgment has "the force and effect of a final judgment or decree and shall be reviewable as such." Id.

Courts have accordingly treated summary judgments differently from declaratory judgments. For example, in Baca Land & Cattle Co. v. New Mexico Timber, Inc., 384 F.2d 701 (10th Cir. 1967), the district court granted summary judgment on a claim that requested a declaratory judgment, but denied summary judgment on another claim. The appeals court held that the district court's issuance of partial summary judgment was not "final" or "appealable." Id. at 702. And, in Carmichael v. Mills Music, Inc., 121 F. Supp. 43, 46 (S.D.N.Y. 1954), the court stated that "[w]hile the controversy [at issue] is ripe for declaratory judgment, it is not ripe for summary judgment."

Thus, whether or not plaintiff is entitled to a declaratory judgment is not relevant to whether plaintiff is entitled to partial summary judgment. "In determining a motion for summary judgment that is filed in the context of a declaratory judgment action, the same standard is applicable as in any other action." United States v. New York, __ F. Supp. __, 1998 WL 230183 at *10 (E.D.N.Y. May 7, 1998); see also Bingham, Ltd. v. United States, 724 F.2d 921, 924 (11th Cir. 1984). This action seeks damages, injunctive relief, and declaratory relief. Therefore, the only consideration relevant to whether plaintiff's partial summary judgment motion should be granted is whether plaintiff has established as a matter of law that defendants violated SEC Rules 14a-3, 14a-6, and/or 14a-9 when they issued the March 21 Letter and the June 9 Press Release. Plaintiff so established in plaintiff's prior briefing.

III. PLAINTIFF'S PARTIAL SUMMARY JUDGMENT MOTION IS RELEVANT TO BOTH PERMANENT INJUNCTIVE RELIEF AND DAMAGES

Plaintiff recognizes that, during the hearing on his partial summary judgment motion, the Court inquired as to why the Court should decide the motion at all. Plaintiff submits that, regardless of the propriety of a declaratory judgment, the Court should rule on the partial summary judgment motion for two reasons. First, this action seeks a permanent injunction against future securities violations by the defendants, and the number and nature of past violations is relevant to whether such an injunction should be issued. Second, plaintiff seeks damages for the expenses he incurred as a result of the March 21 Letter and the June 9 Press Release.

A. Whether Defendants Violated the Proxy Rules in Connection With the March 21 Letter and the Press Release is Relevant to Whether a Permanent Injunction Should be Issued

This action, among other remedies, seeks a permanent injunction against the defendants to prevent them from violating the securities laws in the future. It is proper for a court to grant such a permanent injunction where the number and nature of past securities violations suggest that there is a reasonable likelihood that more violations will occur. See S.E.C. v. Koracorp Industries, Inc., 575 F.2d 692, 697-99 (9th Cir.), cert. denied, 439 U.S. 953 (1978); S.E.C. v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1100 (2d Cir. 1972); S.E.C. v. Commercial Inv. & Dev. Corp. of Fla. ("CIDCF"), 373 F. Supp. 1153, 1165 (S.D. Fla. 1974).

In Koracorp, 575 F.2d at 697, the defendants committed violations of the securities laws for a period of time, but thereafter did not commit any violations for eighteen months. The district court granted summary judgment to the defendants on the matter of whether it was appropriate to issue an injunction against future violations. Id. at 695. The Ninth Circuit Court of Appeals reversed. Id. at 697. The Court stated, "The primary purpose of injunctive relief against violators of the federal securities laws is to deter future violations, not to punish the violators." Id. The Court added, "An inference arises from illegal past conduct that future violations may occur." Id. at 698. The Court further added, "The fact that illegal conduct has ceased does not foreclose injunctive relief." Id.

The Koracorp Court further stated, "'The ultimate test is whether the defendant's past conduct indicates under all of the circumstances and not merely in view of the time which has elapsed since the last violation that there is a reasonable likelihood of further violations in the future.'" Id. at 699 (quoting 3 Loss, Securities Regulation (2d ed. 1961) at 1976). And in CIDCF, 373 F. Supp. at 1165, the court stated, "A reasonable expectation of future violations may be inferred from the number and nature of past violations." Thus, the issue of whether the defendants violated the securities laws in issuing the March 21 Letter and the June 9 Press Release is relevant to whether a permanent injunction should be granted.

B. Plaintiff Seeks Damages for Expenses He Incurred As a Result of the March 21 Letter and the Press Release

The March 21 Letter and the June 9 Press Release were intended to predispose the Limited Partners into voting for the GP Plan before they received full disclosure. In order to combat this, plaintiff prepared and publicly filed with the SEC two proxy statements. Luchenitser Decl., Ex. A, B. These proxy statements were designed to counter the misrepresentations and nondisclosures in the March 21 Letter and the June 9 Press Release. Plaintiff is entitled to damages for the expenses he incurred in connection with the preparation and filing of these proxy statements.

Such damages are recoverable in securities cases. For example, in In re Crazy Eddie Securities Litigation, 948 F. Supp. 1154, 1173 (E.D.N.Y. 1996), the court awarded a plaintiff damages for the expenses the plaintiff incurred in waging a proxy battle for control of a corporation as a result of the defendant's fraudulent representations. Furthermore, many Ninth Circuit decisions have held that plaintiffs may recover consequential damages caused by violations of the securities laws. See DCD Programs, Ltd. v. Leighton, 90 F.3d 1442, 1447 (9th Cir. 1996); Garvin v. Greenbank, 856 F.2d 1392, 1401 (9th Cir. 1988); Volk v. D.A. Davidson & Co., 816 F.2d 1406, 1413 (9th Cir. 1987); Arrington v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 651 F.2d 615, 621 (9th Cir. 1981). Since plaintiff is entitled to recover damages for the securities violations at issue in his partial summary judgment motion, it is clearly proper for the Court to rule on the merits of the motion.

IV. CONCLUSION

For the foregoing reasons, plaintiff respectfully requests the Court not to enter its tentative ruling and to instead grant partial summary judgment to plaintiff that defendants violated SEC Rules 14a-3, 14a-6, and 14a-9 in connection with the March 21 Letter and the June 9 Press Release. The issue of what remedy or remedies plaintiff should be entitled to as a result of these violations is best left for another day.

¹ While plaintiff respectfully disagrees with the Court's conclusion that it is not appropriate to issue a declaratory judgment with respect to the March 21 Letter and the June 9 Press Release, plaintiff will not argue the matter here because plaintiff does not believe the matter to be relevant. Plaintiff does not waive his right to argue the matter in the future if it is appropriate to do so.