Mosaic Financial, Ltd. et al. v. Mutual Shareholder Services, LLC et al.

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IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
MOSAIC FINANCIAL, LTD., et al,
Plaintiffs,
v.
MUTUAL SHAREHOLDER
SERVICES, LLC, et al.,
Defendants.
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CASE NO. 1:23-CV-02064-JPC
JUDGE J. PHILIP CALABRESE
UNITED STATES DISTRICT JUDGE
MAGISTRATE JUDGE
JENNIFER DOWDELL
ARMSTRONG
REPORT AND RECOMMENDATION
I. 	INTRODUCTION
Plaintiffs Mosaic Financial, Ltd. and Accuvest Global Advisors, Inc. (“Plaintiffs”)
allege that Defendants Mutual Shareholder Services, LLC (“MSS”), Steven Milcinovic, and
Bob Anastasi (“Defendants”) provided Plaintiffs with false and misleading information
regarding the value of the assets in an investment fund run by a third party who subsequently
pled guilty to investment advisor fraud.
This matter is currently before me pursuant to a referral from the Court to: (1) prepare
a report and recommendation regarding whether partial summary judgment on liability issues
would advance the case at this stage; and (2) set a briefing schedule and/or oversee discovery
necessary to move the case toward resolution. (ECF No. 37). For the reasons set forth below,
I conclude that partial summary judgment would not advance the case until the parties
complete fact discovery. Accordingly, I recommend that the Court decline to set a briefing
schedule on Plaintiffs’ contemplated motion for partial summary judgment at this time. If the
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Court agrees with my recommendation, I also propose a case management schedule for the
completion of fact and expert discovery and for dispositive motions once discovery is
completed.
II. 	FACTUAL AND PROCEDURAL HISTORY
On October 20, 2023, Plaintiffs filed their complaint, which alleges that Defendants
and then-Defendant Gregory Getts aided non-party Ofer Abarbanel in perpetrating a
fraudulent investment scheme. (ECF No. 1). In particular, Plaintiffs allege that Defendants
served as the administrators of the Income Collecting 1-3 Months T-Bills Mutual Fund (the
“Fund), a fund that Abarbanel ran. Plaintiffs further allege that Defendants repeatedly
provided false net asset value statements and other information to Defendants and disregarded
red flags regarding the Fund’s holdings. Plaintiffs claim that, as a result of Defendants’
alleged wrongdoing, Mosaic lost approximately $30 million in principal, gains and accrued
interest, advisory fees, and legal fees. Plaintiffs further allege that Accuvest lost $570,000 in
advisory fees and over $40,000 in legal fees. In their complaint, Plaintiffs asserted claims for
federal securities law violations, fraudulent misrepresentation, negligent misrepresentation,
breach of fiduciary duty, and violations of Ohio and Utah securities laws.1
Defendants moved to dismiss Plaintiffs’ complaint for failure to state a claim pursuant
to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 18). On February 18, 2025, the Court
granted in part and denied in part Defendants’ motion. (ECF No. 25). The Court dismissed
Plaintiffs’ Utah securities law claim and their claims against Mr. Getts. The Court also
dismissed Accuvest’s federal securities law claim, holding that Accuvest did not fall within
the class of plaintiffs whom Congress authorized to sue. The Court otherwise denied
1 The Court set forth a full description of Plaintiffs’ claims and factual allegations in its Opinion and Order
granting in part and denying in part Defendants’ motion to dismiss Plaintiffs’ complaint. (ECF No. 25).
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Defendants’ motion to dismiss.
Following the Court’s ruling, the parties engaged in written discovery, and have
generally reported that such discovery is proceeding on schedule. The parties have not yet
completed depositions.
On September 24, 2025, the parties filed a joint status report. (ECF No. 36). In the
report, Plaintiffs asked the Court to set a briefing schedule on their contemplated motion for
summary judgment regarding whether Defendants had a duty to confirm the accuracy of the
net asset value reports that they provided to Plaintiffs. Defendants, by contrast, argued that it
was premature to set a briefing schedule on a motion for partial summary judgment because
the question of whether Defendants had a duty to confirm the accuracy of the reports was
merely one issue in the case and because additional factual development was needed with
respect to several other issues.
On October 1, 2025, the Court held a status conference, during which the parties
discussed the possibility of Plaintiffs filing an early motion for partial summary judgment.
(See ECF non-document entry dated October 1, 2025). On October 9, 2025, the Court referred
the matter to me to determine “whether the record is sufficiently developed to support briefing
on a motion for partial summary judgment or whether limited discovery is needed in
connection with the same.” (ECF No. 37). The Court further stated that, “based on her view
of the record and discussion with counsel, the Court requests that the Magistrate Judge either
set a briefing schedule or identify the discovery necessary to develop the record for full or
partial summary judgment motions and oversee that discovery.” Id. Finally, “[i]n addition or
instead, the Magistrate Judge may conduct such other pretrial proceedings as necessary and
appropriate to move this case toward resolution, except that the Magistrate Judge need not
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prepare a report and recommendation on any dispositive motions.” Id.
Following the referral, the parties appeared before me on November 3, 2025 for a
status conference, at which the parties outlined their respective positions on whether it made
sense to set a briefing schedule on Plaintiffs’ contemplated motion for summary judgment,
the parties’ interest in participating in mediation, and the parties’ position regarding what
discovery would need to be completed prior to a potential mediation. Following the status
conference, I ordered the parties to submit a joint status report by November 13, 2025
“addressing the following issues: (1) whether they are willing to mediate this case; (2) what
limited discovery is necessary prior to a mediation taking place; and (3) identify three
potential mediation dates that are mutually convenient for the parties.” (See ECF non-
document entry dated November 3, 2025).
Ob November 13, 2025, the parties submitted what they labeled a “joint status report.”
(ECF No. 38). But the report was not, in fact, a joint report. Rather, the parties stated that they
had “agreed to submit separate sections . . . outlining their respective positions” and that
“[n]either side has had the opportunity to review and address the others’ position prior to the
filing of this Report.” Id. at PageID # 404. In their portion of the report, Plaintiffs argue that
the case is ripe for summary judgment on all issues but damages. In particular, Plaintiffs assert
that the Court should decide now the “key issue” of whether Defendants had a duty to verify
the Fund’s information before providing information to Plaintiffs. Id. at PageID # 408.
Defendants, by contrast, argues that discovery, including depositions, should be completed
before any mediation takes place.
On November 14, 2025, Plaintiffs filed a letter in response to Defendants’ portion of
the joint status report, in which Plaintiffs disputed Defendants’ assertion that additional
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discovery was needed on certain issues. (ECF No. 39). On November 18, 2025, Defendants
filed a motion for leave to respond to Plaintiffs’ portion of the joint status report and Plaintiffs’
response letter, along with a proposed response. (ECF No. 40). I granted that motion on the
same day. (See ECF non-document entry dated November 18, 2025). In their letter,
Defendants argued that additional factual development, including depositions of Plaintiff’s
employees, was necessary before the parties could brief summary judgment.
III. 	ANALYSIS
A. Whether Partial Summary Judgment Would Advance the Case at this Stage
After careful review of Plaintiff’s Complaint, the Court’s ruling on Defendants’
motion to dismiss, and the parties’ respective position statements, I conclude that proceeding
with Plaintiffs’ contemplated motion for partial summary judgment prior to the close of fact
discovery is not likely to materially advance the progress of the case.
Plaintiffs argue that the case is ripe for partial summary judgment because the facts
are essentially undisputed and the only issues before the Court are the legal questions of: (1)
whether Defendants were entitled to rely on information Abarbanel provided; and (2) whether
Defendants had any duty to provide Plaintiffs with accurate information. Plaintiffs further
argue that depositions of their own employees can shed no light on those questions. Plaintiffs
appear to acknowledge that it is relevant to their misrepresentation claims whether Plaintiffs
actually relied on Defendants’ alleged representations or MSS’ status as an independent fund
administrator, but they argue that the answer to that question is obvious and does not require
discovery.
Plaintiffs’ position is based on their assumption that the Court will ultimately agree
with their view of what is relevant to the case. And Defendants notably flag other issues that
may have some bearing on the Court’s summary judgment analysis. For example, Defendants
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note that, in denying their motion to dismiss the breach of fiduciary claims, the Court held
that Ohio law “requires a fact specific inquiry to determine whether a purported business
relationship has evolved into a fiduciary relationship,” and stated that “additional factual
development is necessary to allow the Court to decide whether Defendants owed Plaintiffs a
fiduciary duty.” (ECF No. 25, PageID # 308-09) (citations omitted). Defendants also assert
that additional discovery could shed light on whether they acted with scienter or whether
Plaintiffs actually or justifiably relied on Defendants’ representations.
It is ultimately for the Court, not me, to determine what facts are relevant to Plaintiffs’
claims. Given the current state of discovery and the Court’s ruling on Defendants’ motion to
dismiss, however, there is a material risk that permitting summary judgment at this stage
would inhibit, rather than further, the progress of this case and the interests of judicial
economy. In particular, I note that Federal Rule of Civil Procedure 56(d) provides that, where
the non-moving party requires additional discovery to respond to a motion for summary
judgment, the court may defer or deny the motion, permit additional discovery, or enter any
other appropriate order. See Fed. R. Civ. P. 56(d). “The purpose behind Rule 56(d) is to ensure
that [a party] receive[’s] ‘a full opportunity to conduct discovery to be able to successfully
defeat a motion for summary judgment.’” Doe v. City of Memphis, 928 F.3d 481, 490 (6th
Cir. 2019) (quoting Ball v. Union Carbide Corp., 385 F.3d 713, 719 (6th Cir. 2004)) (cleaned
up).
Defendants cite to Rule 56(d) and several Sixth Circuit cases interpreting it in their
response letter. Without prejudging the merits of any such motion, there is a meaningful
possibility that Defendants would respond to a motion for partial summary judgment by filing
a Rule 56(d) motion requesting the exact same categories of discovery that Defendants
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currently seek to obtain before the parties engage in summary judgment briefing. If the Court
grants such a motion, the parties will end up taking the same discovery anyway, only on a
delayed schedule and after unnecessary summary judgment briefing has occurred.
I therefore recommend that the Court permit Defendants to complete fact discovery,
including depositions, before the parties brief summary judgment. I recommend that such
discovery include any remaining written discovery and depositions regarding: (1) whether
there was a fiduciary relationship between the parties; (2) whether Plaintiffs relied on MSS’
status an independent fund administrator; and (3) whether Plaintiffs justifiably relied on
Defendants’ representations (whether contained in the net asset value statements or
otherwise) regarding the Fund’s assets.
B. Case Management Schedule
The Court’s referral order also directs me to set a briefing schedule or to oversee the
discovery necessary to move this case toward resolution. If the Court agrees with my
recommendation that the case is not appropriate for partial summary judgment at this time, I
intend to establish the following case deadlines:
Fact Discovery Cut-Off: April 1, 2026
Initial Expert Reports Due: May 1, 2026
Rebuttal Expert Reports Due: June 1, 2026
Expert Discovery Cut-Off: July 1, 2026
Dispositive Motion Deadline: August 3, 2026
Should the parties have any discovery disputes that they are unable to resolve without
court intervention, they may bring the dispute to my attention in accordance with the Federal
Rules of Civil Procedure and the Local Rules of this Court. In addition, both parties have
expressed a willingness to mediate the case at some point. Accordingly, if the above schedule
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is entered, I intend to hold an in-person mediation in my chambers on April 15, 2026
following the close of fact discovery.
IV. 	RECOMMENDATION
For the foregoing reasons, I RECOMMEND that this case is not ripe for partial
summary judgment on the issue of liability until the close of fact discovery.
Dated: December 5, 2025 	/s Jennifer Dowdell Armstrong
Jennifer Dowdell Armstrong
U.S. Magistrate Judge
V. 	NOTICE TO PARTIES REGARDING OBJECTIONS
Local Rule 72.3(b) of this Court provides:
Any party may object to a Magistrate Judge’s proposed findings,
recommendations or report made pursuant to Fed. R. Civ. P. 72(b)
within fourteen (14) days after being served with a copy thereof, and
failure to file timely objections within the fourteen (14) day period
shall constitute a waiver of subsequent review, absent a showing of
good cause for such failure. Such party shall file with the Clerk of Court,
and serve on the Magistrate Judge and all parties, written objections
which shall specifically identify the portions of the proposed findings,
recommendations, or report to which objection is made and the basis for
such objections. Any party may respond to another party’s objections
within fourteen (14) days after being served with a copy thereof. The
District Judge to whom the case was assigned shall make a de novo
determination of those portions of the report or specified proposed
findings or recommendations to which objection is made and may accept,
reject, or modify, in whole or in part, the findings or recommendations
made by the Magistrate Judge. The District Judge need conduct a new
hearing only in such District Judge’s discretion or where required by law,
and may consider the record developed before the Magistrate Judge,
making a determination on the basis of the record. The District Judge may
also receive further evidence, recall witnesses or recommit the matter to
the Magistrate Judge with instructions
Id. (emphasis added).
Failure to file objections within the specified time may result in the forfeiture or
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waiver of the right to raise the issue on appeal either to the district judge or in a subsequent
appeal to the United States Court of Appeals, depending on how or whether the party responds
to the report and recommendation. Berkshire v. Dahl, 928 F.3d 520, 530 (6th Cir. 2019).
Objections must be specific and not merely indicate a general objection to the entirety of the
report and recommendation; a general objection has the same effect as would a failure to
object. Howard v. Sec’y of Health and Hum. Servs., 932 F.2d 505, 509 (6th Cir. 1991).
Stated differently, objections should focus on specific concerns and not merely restate
the arguments in briefs submitted to the magistrate judge. “A reexamination of the exact same
argument that was presented to the Magistrate Judge without specific objections ‘wastes
judicial resources rather than saving them, and runs contrary to the purpose of the Magistrates
Act.’” Overholt v. Green, No. 1:17-CV-00186, 2018 WL 3018175, *2 (W.D. Ky. June 15,
2018) (quoting Howard). The failure to assert specific objections may in rare cases be
excused in the interest of justice. See United States v. Wandahsega, 924 F.3d 868, 878-79
(6th Cir. 2019).
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