The opinion of the court was delivered by: LOWE
MEMORANDUM OPINION and ORDER
This is a civil action for money damages whereby plaintiffs allege violations of Section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b), and rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder.
The defendants Hamilton International Corporation ("HIC"), MEI Corporation ("MEI") and Household Finance Corporation ("HFC") have moved for summary judgment. Plaintiffs have cross-moved for summary judgment against defendants HIC and MEI, and have cross-moved for partial summary judgment against HFC.
For the following reasons, defendants' motions and plaintiffs' cross-motions are denied in all respects.
Plaintiffs S. William Green, Justin Colin and Roger J. Hochstin owned convertible debentures of defendant HIC having a redemption value of $ 300,000. The right to redeem expired on Sunday, October 31, 1976, at 3:00 p. m., E.S.T. The conversion rate was $ 2.25 per share.
Two weeks prior to October 31, 1976, HIC common stock was publicly trading at a price well below the conversion rate.
At 11:00 a. m., E.S.T., on Monday, November 1, 1976, defendant HFC delivered a written merger offer to HIC proposing to acquire the latter corporation by purchasing all outstanding shares at $ 4.00 per share. Plaintiffs redeemed their debentures at 4:15 p. m., E.S.T., Monday, November 1, 1976 without knowledge of the outstanding offer. News of the proposed merger was released to the public on November 4, 1976. Plaintiffs demanded recission of the redemption; defendants rejected this demand.
Plaintiffs commenced this action contending that defendants conspired to violate Section 10(b) and Rule 10b-5 of the Securities and Exchange Act of 1934: (1) by concealing, through their silence, alleged pre-November 1st merger negotiations, and (2) by failing to inform defendants on November 1st, when they redeemed, that HFC had made a merger offer to HIC that morning.
II. Plaintiffs' Cross-Motions for Summary Judgment
Plaintiffs' cross-motions for summary judgment and cross-motion for partial summary judgment are premised on the argument that an expiration date ending on a Sunday, as a matter of law, is extended to Monday. Defendants argue that the expiration date in the debentures is not extended by statute or the case law of the jurisdiction. This Court finds, upon the authorities cited by defendants, that October 31, 1976, even though a Sunday, was, under Michigan Law, the expiration date of plaintiffs' debentures.
Although plaintiffs' debentures expired as a matter of law on Sunday, October 31, 1976, an arrangement was made between the parties on October 18 and 19, 1976 for redemption to actually occur on Monday, November 1, 1976. Based on the affidavits, exhibits and depositions, there is a question of fact whether or not this accommodation extended plaintiffs the right to redeem and also convert their debentures. Accordingly, defendants' motion and plaintiffs' cross-motion for summary judgment on this issue are denied. American Mfrs. Mut. Ins. Co. v. American Broadcasting-Paramount Theatres, Inc., 388 F.2d 272 (2d Cir. 1967); Rains v. Cascade Industries, Inc., 402 F.2d 241 (3d Cir. 1968).
III. HIC's Motion for Summary Judgment and Plaintiffs' Cross-Motion Against HIC
Plaintiffs cross-move that summary judgment should be granted to them against HIC for HIC's failure to disclose on November 1, 1976 the delivery of the merger offer to HIC earlier that day. This motion must be denied.
Defendant HIC moves for summary judgment arguing that it did not fail to disclose material information to plaintiffs, either as part of a conspiracy or otherwise, and did not possess the requisite intent to ...