The opinion of the court was delivered by: Sprizzo, District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiff Marianne Quinn commenced the instant action against
defendants Thomas H. Lee Company and Thomas H. Lee ("Lee
Defendants"), Diet Center Worldwide, Inc. ("DCWI"), United States
Fidelity and Guaranty Company ("USF & G"), and Francis Teti
("Teti") (collectively "defendants"). This action arises from the
termination of two of plaintiff's Diet Center, Inc. ("DCI")
franchises. She alleges claims of conspiracy, breach of contract,
negligence, and breach of fiduciary duty. Pursuant to Rule 56 of
the Federal Rules of Civil Procedure, defendants individually
move for summary judgment. For the reasons set forth below,
defendants' motions for summary judgment are granted.
On May 10, 1977, plaintiff entered into a written agreement
with Diet Center, Inc. ("DCI") of Rexville, Idaho, a franchisor
of weight loss clinics across the United
States, to establish a DCI franchise in Montgomery County,
Maryland. See Plaintiff's Local Rule 3(g) Statement, dated July
29, 1996 ("Quinn's 3(g) Stmt.") ¶ 1; First Amended Complaint,
dated December 1, 1995 ("First Am. Compl.") ¶ 8; Lee Defendants'
Local Rule 3(g) Statement, dated March 27, 1996 ("Lee's 3(g)
Stmt."), ¶¶ 6, 7. Approximately two years later, plaintiff and
DCI entered into a second agreement giving plaintiff the
exclusive franchise rights in certain areas of Westchester
County, New York. See Quinn's 3(g) Stmt. ¶ 1; First Am. Compl.
¶ 9; Lee's 3(g) Stmt. ¶ 7. Plaintiff incorporated Diet Centers of
Montgomery County, Inc. ("DCMC") and Diet Centers of Westchester
County, Inc. ("DCWC"). See First Am. Compl. ¶¶ 8-9. She
contends that she successfully operated DCMC and DCWC through
June 1990, generating an income which allowed her to live
comfortably in Virginia. See Quinn's 3(g) Stmt. ¶ 2; First Am.
Compl. ¶¶ 11-12.
In 1990, plaintiff became estranged from her husband, who also
had been employed at DCMC's corporate offices. See Quinn's 3(g)
Stmt. ¶ 3; First Am. Compl. ¶ 13. Plaintiff's husband filed for
divorce in the Circuit Court of Fairfax County, Virginia, and
sought a ninety-day temporary restraining order to conserve their
assets pending the outcome of the divorce proceeding. See First
Am. Compl. ¶¶ 15, 18. On March 28, 1991, the Virginia Court
appointed Francis Teti, a certified public accountant, as
conservator and trustee of the assets of plaintiff and her
husband, including DCMC and DCWC. See Teti's Local Rule 3(g)
Statement, dated April 10, 1996 (Teti's 3(g) Stmt.) ¶ 2; Quinn's
3(g) Stmt. ¶ 6; First Am. Compl. ¶ 21. USF & G issued a
receiver's bond in the amount of $250,000 to Teti. See USF &
G's Local Rule 3(g) Statement, dated April 12, 1996 ("USF & G's
3(g) Stmt.") ¶ 3. Teti served as conservator until October 17,
1991. See Teti's 3(g) Stmt. ¶ 8; USF & G's 3(g) Stmt. ¶ 5.
On October 17, 1991, plaintiff and her husband entered into a
Property Settlement Agreement, giving 49% interest and
operational control of DCMC to plaintiff's husband, and giving
the remaining 51% of DCMC and 100% of DCWC to plaintiff. See
Quinn's 3(g) Stmt. ¶ 10; First Am. Compl. ¶¶ 24-25. Pursuant to
the settlement, the order appointing Teti was rescinded. See
USF & G's 3(g) Stmt. ¶ 4. He performed no services for plaintiff
or her franchises after October 31, 1991, when he turned over
copies of all related documents to plaintiff's attorney. See
Teti's Reply Memorandum of Law, dated April 10, 1996 at 7.
In the interim, plaintiff's lawyer in her divorce proceedings,
Herbert Callihan, Esq., and plaintiff's office manager at DCMC,
Ingrid Bennett, incorporated Diet Centers of Potomac, Ltd.
("DCP") in February 1989. See Quinn's 3(g) Stmt. ¶ 14; First
Am. Compl. ¶¶ 26-27. Plaintiff alleges that Callihan and Bennett
conspired with her former husband, DCI, Teti, and the Lee
Defendants, majority shareholders in DCI's parent company, to use
the DCP franchise to launder money by causing DCI to accept large
overpayments from DCP and issue credits to DCMC for non-existent
orders for merchandise. See First Am. Compl. ¶¶ 33-34, 37, 40.
Although plaintiff alleges that DCP was operated without her
knowledge or consent, plaintiff also alleges that DCI fined her
for operating DCP as an unauthorized subfranchise under the
franchise agreement. See id. ¶ 32.
At the time that DCI terminated plaintiff's franchises, DCI was
the wholly owned subsidiary of American Health Companies
("American Health"), of which the Lee Defendants were majority
shareholders. Several months after DCI terminated the DCMC and
DCWC franchises, Wellness Group Acquisition Company, Inc.
("Wellness Group") purchased certain assets of DCI from a
consortium of banks in a foreclosure sale held pursuant to
Article 9 of New York's Uniform Commercial Code. See DCWI's
Rule 3(g) Statement, dated April 12, 1996 (DCWI's 3(g) Stmt.) ¶
2. Wellness Group subsequently changed its name to Diet Center
Worldwide, Inc. ("DCWI"). See id. ¶ 2. With the exception of
DCI's general counsel and one other employee, no employees,
officers or directors of DCI were hired by DCWI. See id. ¶¶
Plaintiff filed the instant action on April 21, 1995. Plaintiff
alleges that DCI, the Lee Defendants, and Teti conspired with DCP
to deprive plaintiff of her franchises by causing DCP to make
overpayments to DCI and that the defendants further conspired to
terminate her franchise when she threatened to "go public" with
her suspicions. In the alternative, she claims that the Lee
Defendants acted negligently in permitting the overpayments, that
DCI acted negligently in accepting the overpayments from DCP, and
that Teti breached his fiduciary duty to plaintiff as
conservator. She alleges that USF & G acted negligently in
issuing a receiver's bond to Teti instead of a conservator's
bond. Plaintiff further alleges that DCI breached the franchise
agreements, and she seeks to hold DCWI liable for her claims
against DCI as DCI's successor. Finally, she attempts to pierce
DCI's corporate veil to impose liability on the Lee Defendants as
majority shareholders in DCI's parent company.
USF & G has filed an indemnification cross-claim against Teti,
who in turn has filed an indemnification cross-claim against the
Lee Defendants and DCWI. All defendants individually filed
motions to dismiss the plaintiff's action pursuant to Federal
Rule of Civil Procedure 12(b)(6), which were subsequently
converted to motions for summary judgment. See Order, dated
April 9, 1996.
In support of their motion for summary judgment, the Lee
Defendants contend that plaintiff's claim of conspiracy must fail
because she has neither alleged nor offered any evidence of an
independent tort committed by the conspirators. The Lee
Defendants further argue that neither plaintiff's negligence nor
her breach of contract claim can survive summary judgment because
plaintiff has offered no basis for piercing DCI's corporate veil.
Finally, the Lee Defendants argue that they are not liable under
a breach of contract theory because they are not signatories to
any contract between plaintiff and DCI.
In support of its motion for summary judgment, DCWI argues that
because it purchased DCI's assets at a foreclosure sale, it did
not agree to assume liability for DCI's obligations. DCWI further
argues that plaintiff has no evidence to support her claim that
DCWI's acquisition of DCI's assets constituted a de facto merger.
Teti argues that summary judgment should be granted in his
favor because plaintiff's claims against him are barred by the
Virginia and Maryland statutes of limitations for accountant's
malpractice and for breach of fiduciary duty.
In support of its motion for summary judgment, USF & G argues
that no cause of action exists for negligently writing the wrong
type of bond. USF & G further argues that because plaintiff
stipulated that the Virginia court rescind the order pursuant to
which the bond was issued to Teti, USF & G cannot be liable to
In opposition to defendant's motions for summary judgment,
plaintiff argues that the cancellation of her franchises by DCI
gives rise to an inference of conspiracy by the defendants.
Plaintiff further argues that, in light of her inability to
conduct full discovery, plaintiff's negligence and breach of
contract claims are not ripe for summary judgment. Plaintiff
counters Teti's argument that her breach of fiduciary duty claim
is time barred by arguing that the Court ...