The opinion of the court was delivered by: Michael A. Telesca United States District Judge
Eric J. Wischmeyer ("plaintiff") brings this lawsuit against K. Barthelmes Manufacturing Company, Inc. ("Barthelmes"), Arthur J. Wischmeyer, Richard M. Wischmeyer, John A. Wischmeyer, Anne C. Wischmeyer, Janet M. Wischmeyer, Thomas C. Wischmeyer, Phillip B. Dattilo, Linda Dattilo, Lori E. Neumann and Daniel Neumann (collectively "defendants"), pursuant to Section 10(b) of the Securities Exchange Act of 1934, (codified at 15 U.S.C. § 78j(b)), and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, (codified at 17 C.F.R. § 240.10b-5). Plaintiff claims that the defendants misrepresented the financial affairs of Barthelmes solely for the purpose of deceiving plaintiff and inducing him to sell his stock to Barthelmes.
By motion dated December 15, 2005, defendants move to dismiss plaintiff's Complaint pursuant to Rule 56 of the Federal Rules of Civil Procedure, and the Securities Exchange Act of 1934. Defendants contend that granting summary judgment is appropriate on the basis that there is no disputed material issue of fact and defendants are entitled to judgment as a matter of law. For the reasons set forth below, I hereby grant defendants' motion for summary judgment and dismiss plaintiff's Complaint with prejudice.
Plaintiff was employed by Barthelmes until approximately 1996. He also owned 711.667 shares of capital stock of Barthelmes, which is engaged in the design, manufacture and sale of fabricated metal products with its principal place of business located at 15 Cairn Street, Rochester, New York, 14611 (the "Barthelmes Property").
The plaintiff sued Barthelmes and its individual directors including Arthur J. Wischmeyer, CEO, Richard M. Wischmeyer, President, Anne C. Wischmeyer, Secretary, Linda Dattilo, Treasurer, John A. Wischmeyer, Janet M. Wischmeyer, Thomas C. Wischmeyer, Phillip B. Dattilo, Lori E. Neumann, and Daniel Neumann.
II. The State Court Proceeding
Plaintiff originally commenced an action against the defendants in New York State Supreme Court on April 6, 2000. On August 20, 2001 plaintiff served a Restated Verified Petition seeking dissolution of Barthelmes pursuant to New York BCL § 1104-a (the "State court action") alleging waste, mismanagement and oppression. Thereafter, Barthelmes elected "to purchase the shares owned by the [plaintiff] at their fair market value and upon such terms and conditions as may be approved by the court in accordance with New York BCL § 1118." See Defendants' Statement of Material Facts at ¶6. Pursuant to BCL § 1118, Barthelmes' election was irrevocable. See McKinney's Business Corporation Law § 1118(a). In addition, the parties to the State court action stipulated in November 2001 that plaintiff's shares will be valued as of December 31, 2000 ("Effective Date of Valuation").
The presiding Supreme Court judge, Justice Stander appointed an independent appraiser to advise the court as to the fair value of plaintiff's interest in Barthelmes as of the Effective Date of Valuation in accordance with BCL § 1118. The appraiser did in fact perform an appraisal of plaintiff's shares and under the supervision of Justice Stander, the parties reached an agreement on the fair value of plaintiff's interest in Barthelmes. Plaintiff's opposition papers indicate that the settlement reached by the parties and orally verbalized to Justice Stander on July 15, 2003 (the "July 15, 2003 settlement"), merely states an amount that defendants indicated they would be willing to pay plaintiff, but makes no mention of the fair value of plaintiff's shares or of any Effective Date of Valuation.
While the July 15, 2003 settlement transcript does not specifically mention the fair value or Effective Date of Valuation, the judge questioned all the parties, including plaintiff, if each understood, agreed with and consented to the terms of the settlement. Plaintiff clearly responded that he did.*fn1 Plaintiff was represented by counsel as indicated in the same transcript of proceedings and was satisfied with the representation given to him by both his counsel and his firm in negotiating the settlement. The November 2001 stipulation provided that plaintiff's shares would be valued as of December 31, 2000 and the stipulation was incorporated into the Order of Justice Stander dated January 11, 2002. On August 18, 2003 ("Stock Sale Date"), plaintiff executed a General Release and Stock Power whereby plaintiff formally transferred 711.667 shares of Barthelmes stock to defendants and released defendants from any liability with reference to the sale and transfer of the stocks.
III. New York State Energy and Research Development Authority Grant
Prior to the Stock Sale Date, Barthelmes received a cost sharing grant from the New York State Energy and Research Development Authority (the "NYSERDA Grant") to purchase a Strippit LVD Axel Laser and Press Brake ("Strippit Laser"). The Cost Sharing Agreement was signed by NYSERDA and returned to defendants on February 26, 2003. The purchase ...