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April 17, 1997


The opinion of the court was delivered by: MOTLEY

 Defendants have moved for summary judgment on plaintiffs' only federal claim in this action *fn1" , that defendants have violated § 10(b) of the Securities and Exchange Act and Rule 10b-5 promulgated thereunder. For the reasons provided below, this motion is granted.


 Plaintiffs and individual defendants together formed a closely held corporation, defendant A-Train Video, Inc. ("A-Train"), in which each of the five shareholders was also a director who held 20% of the corporation's stock. The dispute began when plaintiffs first expressed an intent to withdraw from the corporation in February of 1994. The parties disagreed about the proper method of valuing the corporation's shares, with defendants maintaining that the value was to be determined from the corporate tax returns, and plaintiffs insisting that the proper measure was fair market value. *fn2" On December 22, 1994, the shareholders met and agreed to establish December 31, 1994 as the date by which the valuation of the shares would be fixed. However, though the parties had reached agreement on the date of the valuation, they continued to disagree about the actual value of the shares. This dispute continued throughout most of 1995, until defendants in December of that year sent each plaintiff a check in the amount of $ 10,014.27, the amount which defendants believed was the value of the shares of the corporation as of December 31, 1994, plus accrued interest. Plaintiffs cashed the checks with a restrictive endorsement reserving their rights to receive another $ 20,000 which they felt was owed them.

 Plaintiffs also allege that during this entire period, defendants met secretly, withheld funds from the corporation, and put corporate receivables into a new bank account to which plaintiffs had no access in order to misrepresent to plaintiffs the value of the shares. They seek relief under § 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and raise a number of state law claims as well.


 I. Summary Judgment Standard

 "Uncertainty as to the true state of any material fact defeats [a summary judgment] motion." Gibson v. American Broadcasting Coms., 892 F.2d 1128, 1132 (2d Cir. 1989). It is not the role of the trial court to weigh the evidence presented or to resolve any factual issue, but rather it is the court's job to determine whether, after the parties have conducted adequate discovery, any such issues remain to be tried. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2510-11, 91 L. Ed. 2d 202 (1986); Fed. R. Civ. P. 56(c). A factual issue is unresolved if a reasonable factfinder could determine it in favor of either party. Anderson, 477 U.S. at 249, 106 S. Ct. at 2511; Gibson, 892 F.2d at 1132. Moreover, the court must view the inferences to be drawn from the facts in the light most favorable to the non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986); Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir. 1985), cert. denied, 484 U.S. 918, 108 S. Ct. 269, 98 L. Ed. 2d 226 (1987). The non-moving party may defeat the motion for summary judgment by producing sufficient facts to establish a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24, 106 S. Ct. 2548, 2552-53, 91 L. Ed. 2d 265 (1986). "The non-moving party may not rest on the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided [in F.R.C.P. 56], must set forth sufficient facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e); accord Anderson, 477 U.S. at 256-57, 106 S. Ct. at 2514; Adickes v. H.K. Kress & Co., 398 U.S. 144, 159 n. 20, 90 S. Ct. 1598, 1609, 26 L. Ed. 2d 142 (1970)(indicating that the last two sentences of Rule 56(e) were added to prevent a party from relying solely upon its pleading in resisting a motion for summary judgment).

 II. Securities Fraud

 A. Elements Needed to Establish a Violation of § 10(b) and Rule 10b-5

 The Supreme Court and the Second Circuit have made clear that allegations of a mere breach of contract or breach of fiduciary duty, without more, do not create a claim under Section 10(b) or Rule 10b-5. Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 476, 97 S. Ct. 1292, 1302, 51 L. Ed. 2d 480 (1977); Shemtob v. Shearson, Hammill & Co., 448 F.2d 442, 445 (2d Cir. 1971). "Remedies for such violations are generally sought under state laws. . . ." Bischoff v. G.K. Scott & Co., Inc., 687 F. Supp. 746, 748 (E.D.N.Y. 1986)

 In order for a plaintiff to state a claim of securities fraud under § 10(b) of the Securities and Exchange Act of 1934, the following four elements must be established: (1) defendant's misrepresentation or omission of a material fact in connection with the purchase or sale of a security, (2) plaintiffs detrimental reliance, (3) scienter, and (4) employment of the mails, an instrumentality of interstate commerce, or a national security exchange in furtherance of the fraud. Keenan v. Blair & Co., 838 F. Supp. 82, 85-86; Bischoff, 687 F. Supp. at 749; Savino v. E.F. Hutton & Co., Inc., 507 F. Supp. 1225, 1231 (S.D.N.Y. 1981). Defendants argue that plaintiffs have failed to raise a genuine issue of material fact as to the first, second and fourth elements. Because it is the easiest to deal with, the court addresses the final element first.

 B. Interstate Commerce

 Defendants maintain that the court does not have subject matter jurisdiction because Rule 10b-5 requires that "an instrumentality of interstate commerce, or of the mails" be used, and no such instrumentality was used in this case because the corporation is a closely-held New York ...

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