Conkling v. TurnerConkling v. Turner
- Reporters:
- Before:
- Reynaldo G. Garza, King, DeMoss
Plaintiff Richard L. Conkling (“Conkling“) appeals a take-nothing judgment rendered against him based upon his claims for violations of the
I. Background
This case has its origins in 1961, when defendant Bert S. Turner (“Turner“) recruited Conkling to work for a corporation that Turner was forming with L.W. “Puna” Eaton, Jr. (“Eaton“). The corporation, Nichols Construction Corporation (“Nichols“), was formed on December 28, 1961. Conkling went to work for Nichols in January 1962. Conkling alleges that Turner represented at the time that he would give Conkling stock in Nichols and all later-formed entities if Conkling would make a long-term commitment to Nichols and that such stock would be redeemed at a fair price when Conkling‘s employment ended. Conkling claims he accepted this offer.
A. The Nichols Agreements
In November 1962, Turner had a document prepared (the “1962 agreement“) which provided for the issuance of 10 shares, or 5%, of Nichols’ stock to Conkling, and 10 shares each to two other minority shareholders, Carmen St. Clair (“St. Clair“) and J.B. Millican (“Millican“). The 1962 agreement also provided that Turner and Eaton would each receive 85 shares, or 42.5%, of the Nichols stock. The price set forth in the document for the stock was $1,000 per share. Conkling, St. Clair, and Millican were each to give a $10,000 one-year note for his shares, and the document provided that Nichols would hold his shares until the notes were paid. Each of the parties executed the 1962 agreement.
Both Conkling and Turner testified that all parties agreed not to follow this agreement after it was executed. In fact, Turner and Eaton were apparently successful in obtaining financing after the 1962 agreement was executed, and purportedly paid only $500, rather than $85,000, for their shares. Conkling also claims that, several days after Turner presented this document, Turner gave Conkling his stock certificate for 10 shares, telling him that he was receiving the stock for services Conkling had previously performed for Nichols and that he would not have to pay the $10,000 note unless Nichols failed. Defendants stipulated that, according to Nichols’ records, Conkling was issued 10 shares of Nichols’ stock on November 15, 1962.
Six months later, in May 1963, Nichols redeemed Eaton‘s 85 shares at Turner‘s direction. According to Conkling, Turner engaged in questionable practices related to his negotiations with Eaton, including ordering the reporting of profits on certain Nichols jobs to be delayed and instructing Conkling to withhold a number of profitable jobs from Nichols’ financial statement. Turner also allegedly misrepresented to Eaton the value of Nichols’ equipment in order to avoid paying him a greater amount for redemption of his stock. Conkling alleged that the redemption of Eaton‘s stock increased his proportionate ownership of Nichols from 5% to 8.69565%.
In June 1963, Turner directed his lawyer to prepare another document (the “1963 agreement“) which recited that Turner owned 100% of Nichols. This agreement set forth the terms for Conkling and the other minority shareholders to purchase an 8% interest in Nichols. The document also contained a right of first refusal and specific formula for redemption of any Nichols’ stock; however, that provision was subsequently deleted by agreement in August of 1966. Without
B. The Nichols Affiliates
Over the years, Nichols prospered and new companies were formed by Turner. The original Nichols shareholders had an oral agreement to share proportionate ownership in any direct affiliates or spin-off companies of Nichols. The relative ownership relationship for the affiliate companies was to be based upon the original ownership ratio of Nichols. The following companies, formed as affiliates, spin-offs, or alleged affiliates of Nichols, form the basis of Conkling‘s complaint.
1. National Maintenance, International Maintenance, TSMC, BTL, TL, and Crest
In 1970, Nichols spun off a corporation to conduct maintenance work previously done in Nichols’ name and transferred almost $1,000,000 worth of assets to the newly formed company, named National Maintenance Corporation (“National Maintenance“). Conkling purchased an 8% interest in National Maintenance in accordance with the relative ownership agreement between the original Nichols founders. Similarly, International Maintenance Corporation (“International Maintenance“) was formed in 1971, and, although no stock was issued until 1977, Conkling was able to purchase an 8% interest in that company as well.
In 1971, TSMC Company (“TSMC“) was formed as a partnership designed to be supported exclusively by income from rental of construction equipment to Nichols’ affiliates on a cost-plus basis. Conkling received an 8% interest in this partnership. T.L. Company (“TL“) and BTL Company (“BTL“) were also partnerships whose revenues came from the rental of construction equipment to Nichols and affiliates on a cost-plus basis. Conkling purchased 8% interests in each in 1978 and 1980, respectively. Crest, Inc. (“Crest“) was formed as a Texas corporation to pursue construction opportunities in that state. Conkling acquired an 8% interest in Crest in August of 1974.
2. TIL
In October of 1981, Turner formed Turner Investments, Ltd. (“TIL“), wholly owned by Turner and his family, to hold his interests in Nichols and another related company. It subsequently became the chief operating company over Nichols and its affiliates, consolidating executive management, data processing, and accounting personnel for these companies. TIL billed Nichols and its affiliates for its services, and Conkling asserted that the billings were excessive.
3. Blast, Trebco, and IPS
In August of 1975, Turner formed Blast Corporation (“Blast“), which subsequently entered the residential construction market under the name S & S Homes, Inc. (“S & S“). Turner supposedly told Conkling that Blast was a mere shell, and Conkling did not purchase an interest in the company. After sustaining losses, S & S was changed back to Blast, and the company was purchased by Nichols in August of 1977.
Trebco Corporation (“Trebco“) was formed in September of 1983 to perform non-union industrial construction and maintenance work in Texas. Conkling claims that Turner concealed Trebco so that he would not be able to purchase an interest in the company. Turner directed Nichols to lend up to $600,000 to Trebco for working capital, but the company was relatively unsuccessful, reporting heavy operating losses. Trebco was subsequently sold to Nichols on October 9, 1984, although the stock certificate effecting the transfer was backdated to November 1, 1983.
Nichols also spun off its entire pipe fabrication division and formed International Piping Systems, Ltd. (“IPS“) in July of 1982. In the process, Nichols also transferred approximately $200,000 worth of assets to the newly-formed company. The stock in IPS was originally issued to TIL, Turner‘s family-owned company, although Conkling claims he
4. Harmony
On the same day Blast was formed, in August of 1979, Turner also formed Harmony Corporation (“Harmony“). Turner has apparently admitted that he concealed the creation of Harmony from Conkling. The stock in Harmony was issued originally to unrelated parties, but was subsequently acquired by Nichols and then Turner. Conkling learned of Turner‘s ownership of Harmony and made repeated requests to purchase an interest in the company. Although Turner takes the position that Conkling was never entitled to purchase his relative ownership interest in Harmony, he allowed Conkling to purchase 5,161 shares on March 14, 1980, for $1.00 per share. Conkling understood that this quantity of shares would make him an 8.69565% owner of the company. However, later that day, an additional 33,450 shares of Harmony were issued to Harmony‘s president, C.N. “Bones” McLellan, Jr. (“McLellan“), thus diluting Conkling‘s interest. McLellan testified that he was told he was to hold the new shares as a nominee for Turner and that they were to be subject to Turner‘s secret option to purchase. In fact, although McLellan gave a note to Harmony for the purchase price of these shares, the obligation was later cancelled when Turner purchased the shares by executing a note to Harmony in the same amount.
5. Merit, Merit Environmental, and Gymco
Merit Industrial Constructors, Inc. (“Merit“) and its wholly-owned subsidiary, Merit Environmental Services, Inc. (“Merit Environmental“) were Louisiana corporations created in early 1982 to perform non-union industrial and environmental construction and maintenance work. Merit was a competitor of Harmony‘s. Although Turner has never been a named owner of Merit, Conkling claims that there is sufficient evidence to show that he secretly owns the company. The undisputed evidence reveals that Turner has supplied Merit with significant cash infusions and has guaranteed loans for the company with Louisiana National Bank (“LNB“), a bank on whose board of directors Turner sits. Turner has also guaranteed lines of credit and performance bonds on behalf of Merit. Although the owners of record have executed a promissory note in favor of Turner, it appears that no interest has been paid on this note since 1983 and that the principal has only been reduced by payments.
After Conkling heard rumors that Turner owned Merit, he requested that he be allowed to purchase his relative ownership interest in the company. Turner denied ownership in Merit, and Conkling never acquired an interest in the company. Conkling also asserts that Turner has used Merit to compete with Harmony, sometimes using Harmony‘s confidential information to its detriment.
Gymco was a Louisiana partnership formed by the owners of Merit to purchase equipment exclusively for rental to Merit. Conkling claims that Turner also secretly owns Gymco, as evidenced by the fact that Turner guaranteed indebtedness of Gymco and reported certain tax effects on his income tax returns with respect to Gymco such as would signify ownership.
C. Discussions About Redemption of Conkling‘s Stock
As noted above, Conkling was fired from Nichols in December of 1983, and, not surprisingly, the parties dispute the reason for his termination. After termination, the parties attempted negotiations for the purchase of Conkling‘s stock in Nichols and its affiliates, but were unable to agree to a price. One year later, Conkling sent a letter to Turner offering to sell these interests for $7,000,000. Although Conkling now claims
D. The Instant Litigation
In November 1985, Conkling filed suit against Turner and numerous corporations and partnerships controlled by Turner. He also sued David R. Carpenter (“Carpenter“), who served as Chief Financial Officer of Nichols and in various other capacities to the Nichols spin-off companies. Conkling alleged civil RICO violations under
After a protracted discovery, the defendants filed motions to dismiss and for summary judgment. A lengthy joint pre-trial order defining the issues for trial was signed by the judge on October 17, 1991, and filed on October 21, 1991 (the “pre-trial order“). Prior to trial, by order entered January 21, 1992 (the “pre-trial summary judgment“), the district court granted the defendants’ summary judgment motions in part, dismissing (i) Conkling‘s RICO predicate act based upon Turner‘s alleged refusal to redeem his stock in Nichols and affiliates, (ii) certain derivative claims, (iii) Conkling‘s claims for wrongful discharge, denial of access to corporate records, and damages due to the corporations’ use of an unfavorable depreciation method, (iv) all claims against Carpenter, and (v) certain miscellaneous claims not discussed in this appeal. In response to requests from both parties, the district court clarified the pre-trial summary judgment by order of February 5, 1992 (the “clarification order“), to confirm that it had “dismissed all claims which are shareholder derivative claims in nature, including any claim involving Harmony to the extent that such claim is derivative.”
The weekend before trial, the district court announced that it would sever the issues to be tried and would try only a single alleged predicate act—fraud in the 1963 agreement—with respect to Conkling‘s civil RICO claims in the first phase of trial. The court also stated that the breach of contract claim would be tried in this initial phase. After Conkling presented his case, both parties moved for judgment as a matter of law; the district court granted the defendants’ motion with respect to Conkling‘s breach of contract claims. The 1963 agreement issue was submitted to the jury, which found that Turner did not commit fraud in the 1963 agreement. As a result of the jury‘s verdict on this issue, the district court, on April 9, 1992, entered summary judgment in favor of the defendants on the remainder of Conkling‘s complaint, both under civil RICO and breach of fiduciary duty (the “post-trial summary judgment“). The instant appeal ensued.
II. Analysis
A. The Severance Order
Conkling first contends that the trial court abused its discretion in severing from his RICO case all predicate acts except for his claim that Turner defrauded him into executing the 1963 agreement. Essentially, the trial court determined that Conkling would not be able to show any pattern of racketeering activity unless he could show that the agreement he and Turner entered into in June 1963 was fraudulently induced. Thus, the trial judge deemed it appropriate to try this issue alone before proceeding to any other acts that could be predicate acts for the RICO claims. In fact, after the jury determined that Turner had not defrauded Conkling with respect to the 1963 agreement, the
Severance is proper when a trial court determines that severance is “in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition or economy.”
To determine whether the severance order was proper in this case, we must first evaluate the basis of the RICO claims. Section 1962(b) of Title 18 makes it unlawful “for any person through a pattern of racketeering activity ... to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.”
We note at the outset that RICO cases appear to be specially suited for trial limitation. In fact, numerous trial courts have ordered separate trials on RICO claims to facilitate their resolution and simplify jury presentation. See, e.g., Agency Holding Corp. v. Malley-Duff & Assoc., Inc., 483 U.S. 143, 145, 107 S.Ct. 2759, 2761, 97 L.Ed.2d 121 (1987) (reciting that RICO case had been severed from antitrust and tortious interference claims); United States v. Quintanilla, 2 F.3d 1469, 1479-80 & n. 13 (7th Cir.1993) (recognizing that trial court had ordered separate trial on RICO count and other fraud counts pertaining to an identifiable fraudulent scheme); First Nat‘l Bank and Trust Co. v. Hollingsworth, 931 F.2d 1295, 1301 (8th Cir.1991) (noting that RICO case had been tried separately from fraudulent conveyance issues); cf. Laitram Corp. v. Hewlett-Packard Co., 791 F.Supp. 113, 117-118 (E.D.La.1992) (trifurcating complex patent trial into phases to diminish potential of jury confusion). Other courts have bifurcated distinct classes of predicate acts supporting the substantive RICO claim for separate disposition. E.g., United States v. Jenkins, 902 F.2d 459, 461 (6th Cir.1990) (observing that district court had severed mail fraud predicate acts from substantive RICO claim and bribery and extortion predicate acts); cf. United States v. Coonan, 839 F.2d 886, 889-90 (2d Cir.1988) (suggesting a bifurcation procedure to be used at the charge/deliberation stage in which jury is first asked to determine which, if any, of the charged predicate acts were committed and, only if two or
Conkling‘s RICO case is similarly complex. In all, Conkling has alleged during the course of this litigation at least 25 predicate acts, including the derivative claims for diminution in value of Nichols and its affiliates. Ten of these were adjudicated in the pre-trial summary judgment. The trial court apparently considered the predicate acts relating to Merit, Merit Environmental, and Gymco not to be predicate acts as a matter of law. See below infra at section II.B.3.b. The Harmony dilution claim was conceded by the parties to involve fact issues, but, as discussed above, its viability under RICO depended upon the existence of at least one other predicate act. The remaining predicate acts were dependent upon a finding of fraud in the 1963 agreement4, an issue which was tried to the jury and found against Conkling. It is clear to us that the court below had a specific purpose in paring down the issues for jury resolution to the lowest common denominator. If the 1963 agreement issue were to be resolved in the defendants’ favor, the RICO case could be decided as a matter of law, thus simplifying the number of issues ultimately submitted to the jury. See, e.g., Rossano v. Blue Plate Foods, Inc., 314 F.2d 174, 176 (5th Cir.) (Issue severed need not conclusively decide entire case on given claim; “[i]t is enough that there be on the record at the time a substantial issue of fact which, if determined in favor of defendant, will eliminate expense for all concerned without prejudice to the rights of the parties.“), cert. denied, 375 U.S. 866, 84 S.Ct. 139, 11 L.Ed.2d 93 (1963); see also In re Bendectin Litig., 857 F.2d at 308, 320 (recognizing the “numerous cases that have tried an individual
issue separately under circumstances that, had the issue been decided in favor of the plaintiff, the trial would have had more than two phases to it,” and affirming district court‘s trifurcation order).
Under these circumstances, we cannot find that the trial court acted arbitrarily in severing the 1963 agreement predicate act. Rather, the trial transcript reflects that the court was concerned with preventing the jury from being needlessly confused by the complexity of the case, and the court‘s actions were in line with this interest. The court‘s concern about jury confusion was justified, considering that the case involved over twenty years of historical facts, a substantial number of witnesses, and countless theories of recovery. In fact, trial on the single issue (and the contract claim) took almost three and one-half weeks and involved numerous Federal Rule of Evidence 104 hearings outside the presence of the jury to determine the admissibility of evidence as to the numerous contested factual issues. Moreover, this court‘s long-standing rule that a district court is accorded great deference on review with respect to its severance decision reflects our perception that the trial court is in the best position to determine whether bifurcation is appropriate.
The only possible prejudice Conkling could have suffered in proceeding in this manner was his inability to aggregate the allegations of fraud with respect to his multiple claims. However, as seen above, the RICO predicate acts remaining for trial were “dormantly dependent” upon a finding of initial fraud in the 1963 agreement, and Conkling “would have been not one whit more entitled to a verdict
Finally, and although Conkling complains that he was not given any notice of the dramatic severance until the weekend before trial, we note that he would have been in no different a position if the trial court had granted summary judgment on the RICO predicate acts severed.5 The dependence of the spin-off predicate acts upon the 1963 agreement was fully briefed by the defendants in their motion for summary judgment, and, had the trial court found no fact issue with respect to that agreement, it would have necessarily dismissed these claims as well. Indeed, Conkling‘s own “Statement of Plaintiffs’ Claims” in the pre-trial order acknowledged the dependence:
[The ownership relationship agreement between Conkling and Turner] was established on the basis of Turner owning 85 shares of Nichols and Conkling owning 10 shares.... This ownership relationship was what Turner and Conkling agreed would always determine their relative ownership in all
subsequently formed entities.... Each time Turner formed a new entity, ... Mr. Conkling was entitled to acquire his proportionate ownership relative to Turner‘s. Turner later formed National Maintenance, International Maintenance, Harmony, TSMC, BTL, and TL. Each time one of these entities was formed, Turner tacitly reaffirmed ... the ownership relationship agreement with Conkling.... Because Turner had reduced Mr. Conkling‘s ownership interest in Nichols through the 1963 fraud, Conkling received less of an interest in those entities than that to which he was entitled.
(emphasis added). Accordingly, once the jury decided that there was no fraud in the 1963 agreement, the vitality of these pendent claims then became a matter of law, thereby eliminating a large portion of the litigation. We hold that the district court did not abuse its discretion in staging the trial in this way.
B. The RICO Summary Judgments
Conkling next challenges the district court‘s grant of summary judgment on his “agreement to repurchase” predicate act prior to trial and on his entire RICO case after the jury‘s verdict concluded the first phase of the bifurcated trial. With respect to the pre-trial summary judgment, the trial court did not elaborate upon the grounds for its decision. The trial court recited in its post-trial summary judgment that the jury‘s finding “that the defendants were not guilty of any fraud” decided the remainder of the RICO case as a matter of law. We note the standard of review and address each contention in turn.
1. Standard of review
Summary judgment is proper if “the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law.”
2. The agreement to redeem
As one of the predicate acts in support of his RICO counts, Conkling asserts that Turner entered into an agreement with him over twenty years ago to purchase Conkling‘s stock at a “fair price” in the event of termination while harboring a secret intention never to perform that agreement. He argues that the district court erroneously granted a pre-trial summary judgment on this claim when fact issues abounded.
A contract to purchase and sell securities in the future can constitute a “purchase or sale” of the securities actionable under the federal securities laws. See Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 750-51, 95 S.Ct. 1917, 1932, 44 L.Ed.2d 539 (1975). However, Conkling did not assert an independent securities fraud claim. Rather, he has used the alleged violations as predicate acts under RICO. The defendants argue that Conkling has not claimed damages as a result of this fraud claim, but instead has requested specific performance of the agreement6, a remedy which is not available to private litigants under RICO. The district court apparently adopted this argument in deciding the issue since it originally denied summary judgment with respect to Conkling‘s breach of contract claim based upon the same allegations as was this fraud claim and against which the defendants raised virtually the same defenses save this one.
This court has not yet decided whether RICO affords private litigants the option of equitable remedies,7 and our sister
circuits appear to disagree on the issue.8 However, we need not resolve this dispute today since the district court‘s subsequent grant of judgment as a matter of law on Conkling‘s corollary breach of contract claim, see infra section II.D—finding that Conkling failed to adduce sufficient evidence that there was a contract—confirmed that summary disposition of this securities fraud claim was proper.9 The premise of this fraud claim is that Turner entered into an “oral agreement to purchase Conkling‘s stock at the end of
Stamps, 421 U.S. at 751, 95 S.Ct. at 1932 (observing that “[u]nlike respondent, which had no contractual right or duty to purchase Blue Chip‘s securities, the holders of puts, calls, options, and other contractual rights or duties to purchase or sell securities have been recognized as ‘purchasers’ or ‘sellers’ for purposes of Rule 10b-5.“) (emphasis added). His failure to do so was fatal to this predicate act as a matter of law.
3. The case tried and resulting post-trial RICO summary judgment
The district court specifically held that Conkling‘s “claim under RICO should be dismissed since the jury found no fraud on the part of the defendants in this case.” Implicit in this finding is a conclusion that all but one10 of the remaining predicate acts were dependent upon fraud in the 1963 agreement. The trial court had already dismissed before trial many of the predicate acts enumerated in Conkling‘s brief as either (i) derivative claims, which Conkling did not have standing to bring, or (ii) actions that could not be RICO predicate acts as a matter of law. The court then apparently determined that the predicate acts remaining for jury resolution stemmed from the 1963 agreement11 and adjudicated all of them as a matter of law when the jury failed to find fraud in the execution of that agreement. Conkling argues that not all of his predicate acts can be neatly pigeonholed into one of the three enumerated categories. Specifically, he challenges the district court‘s resolution of the Harmony, Merit, TIL, IPS, Blast, and Trebco transactions. In his reply brief, Conkling belatedly asserts that the use of an improper depreciation measure unfairly deflated the book values of the companies in which he retained an interest. We discuss each of these claims below.
a. Harmony
Although, as noted previously, the defendants concede a fact issue with respect to the Harmony dilution claim, that transaction standing alone could not support a RICO “pattern“—necessitating at least two acts of racketeering activity—under
b. Merit, Merit Environmental and Gymco
The Merit Environmental and Gymco claims appear to be integrally related to the Merit transaction. However, neither of these transactions suffices to defeat summary judgment on the RICO case. Since Merit Environmental was a corporation wholly owned by Merit, Conkling could have no claim that he was defrauded out of any proportionate ownership in Merit Environmental unless he could prove fraud with respect to Merit. Further, although Conkling argues in a conclusory manner that he “was defrauded out of his relative ownership in Merit [ ], Merit Environmental, and Gymco pursuant to his ownership relationship agreement with Turner,” he does not articulate in his brief any basis for asserting the predicate act of mail fraud with respect to Gymco. In fact, the only evidence proffered by Conkling to defeat summary judgment on the Gymco “predicate act” is evidence showing a fact issue with respect to Turner‘s ownership of the partnership. Conspicuously absent from Conkling‘s argument is any analysis of, or
The claims relating to Merit are more difficult. Conkling asserts in this court as below that he was “fraudulently deprived by Turner of his rightful proportionate interest in Merit.” This transaction was clearly not derivative, nor was it a direct result of the 1963 agreement. However, we do not believe it was a viable predicate act by the time of trial. The defendants pointed out that Conkling waived any claim for damages from Merit, concluding that he could introduce the evidence under
MR. BECKER [Conkling‘s counsel]: .... Do you remember, we talked about it. I agreed to give up the damage claim on Merit because you said it was admissible under 404(b) at the status conference.
THE COURT: I didn‘t say that it was totally admissible.... [Merit] could not even be a damage claim because it wasn‘t prayed for, number one. Number two, what I said was—what I said was the fact that it is not a damage claim doesn‘t mean that it can[not] be used for another purpose including 404(b), but I never made a ruling that it was absolutely admissible under 404(b) at that time.
It is entirely inconsistent for Conkling to claim that the Merit evidence is admissible under
Important in this regard is the fact that several documents of record reflect that the status conference referred to by Conkling‘s counsel in the above-cited dialogue took place prior to the district court‘s severance of the RICO claim. Accordingly, Conkling‘s voluntary waiver of the Merit transaction as a claim under the belief that the evidence would be admitted under
c. TIL
Conkling also claims that the TIL predicate acts should not have been decided on summary judgment. Conkling admits that TIL is, and always has been owned by Turner and his family. In fact, based upon Turner‘s representations that “TIL would solely be an estate planning tool to enable Turner to hold all of his and his family‘s stock in Nichols and Harmony, ... Conkling agreed that he would not be entitled to acquire his relative ownership in TIL.” Although it is undisputed that the ownership of TIL remains exclusively in Turner and his family, Conkling claims that the placement of TIL as chief operating company over Nichols and its affiliates somehow changed its nature and entitled him to ownership. A closer look at the allegations and evidence, however, shows that Conkling‘s damages are based upon TIL‘s profits from the management of the Nichols-related companies, which is a derivative claim. Since Conkling does not have standing to raise derivative claims on behalf of the companies in which he holds stock, see Adams-Lundy v. Association of Professional Flight Attendants, 844 F.2d 245, 250 (5th Cir.1988), the district court properly granted judgment on this claim in favor of the defendants.
d. IPS, Blast, and Trebco
IPS, Blast, and Trebco were each acquired by Nichols as a wholly-owned subsidiary, and the jury‘s confirmation of Conkling‘s 8% interest in Nichols demonstrated that he retained relative ownership in each of these companies. Therefore, these claims were properly resolved in the post-trial summary judgment as “dormantly dependent” upon a determination of fraud in the 1963 agreement.
e. Depreciation
Although Conkling‘s reply brief makes reference to the improper depreciation claim numbered as predicate act 17, we do not “consider arguments belatedly raised after appellees have filed their brief” in the absence of manifest injustice. Najarro v. First Fed. Sav. & Loan Ass‘n, 918 F.2d 513, 516 (5th Cir.1990); see also Smith v. Lucas, 9 F.3d 359, 367 n. 16 (5th Cir.1993). It appears to us that Conkling waited to raise this argument until his reply brief in order to evade the fifty-page limit set forth in
f. In conclusion, ...
The trial court correctly perceived that the predicate acts remaining for jury resolution—with the exception of Harmony—were contingent as a matter of law upon a finding of fraud in the 1963 agreement. Accordingly, we hold that the trial court did not err in granting summary judgment to the defendants on the RICO case.
C. Breach of Fiduciary Duty
The district court determined “that there is no factual or legal basis to support [Conkling‘s] breach of fiduciary claim.” Accordingly, it granted summary judgment on Conkling‘s breach of fiduciary duty claim. Although Conkling‘s brief on this issue is almost entirely conclusory, inappropriately incorporating briefing filed below,14 he has
Turner contends that the fiduciary duty claims are based upon the same facts already found to be fatally deficient as causes of action as discussed both supra and infra. However, after careful review of the record on appeal, we have not found that Turner moved for summary judgment on all of the breach of fiduciary duty issues.15 Specifically, Turner did not move for summary judgment in the court below on the basis that the Harmony dilution claims pled as a breach of fiduciary duty could be summarily adjudicated; rather, he argued only that Conkling did not have standing to assert Harmony claims derivatively.16 In fact, Turner has conceded on appeal that a fact issue exists with respect to the Harmony dilution transaction. Although that claim, as noted above, was properly adjudicated in the RICO context on the basis that it was the only predicate act available to Conkling, we conclude that the conceded fact issue preserves it in the fiduciary duty context.
Similarly, Turner did not request summary disposition of the fiduciary duty claims relating to the 1963 agreement and its progeny. The summary judgment arguments and the jury issue went to whether any of the actions or omissions stemming from that agreement were fraudulent—not whether they constituted a breach of any fiduciary duty. With respect to these claims, therefore, Turner could not have met his initial summary judgment burden of pointing out an absence of any fact issues by identifying portions of the pleadings, discovery, and affidavits which support its position. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Thus, the trial court‘s grant of summary judgment on these fiduciary duty issues was in error.
D. Rule 50(a) Adjudication of Conkling‘s Breach of Contract Claim
The district court granted judgment as a matter of law on this claim after the close of Conkling‘s case, and we review its decision de novo, applying the same legal standard as it used. Omnitech Int‘l, Inc. v. The Clorox Co., 11 F.3d 1316, 1322-23 (5th Cir.1994). Judgment as a matter of law is proper after a party has been fully heard by the jury on a given issue, and “there is no legally sufficient evidentiary basis for a reasonable jury to have found for that party with respect to that issue.”
The court below further found that, even if it construed Conkling‘s “understanding” as a binding agreement, there was no evidence to corroborate the oral agreement. Conkling responded, as he does before this court, that Louisiana law does not require that a plaintiff provide “independent proof of every detail of [his] testimony.” Samuels, 342 So.2d at 662; see also Taylor v. Dowden, 563 So.2d 1294, 1297 (La.Ct.App.) (“[O]nly general corroboration must be shown.“), writ denied, 568 So.2d 1057 (La.1990). He argued that (i) Turner‘s admission that he “told Mr. Conkling that when Conkling left the company his stock would be redeemed at a ‘fair price,’ ” (ii) Turner‘s handwritten notes referencing a potential purchase of Conkling‘s “equity” in the event of termination, and (iii) inferences he drew from certain patterns of events, were sufficient to corroborate generally his testimony that an agreement was reached.
The trial court nonetheless determined that any oral contract failed for lack of a definite price, a term which must be fixed and determined in order to create a binding contract of sale under Louisiana law.
Conkling cites to the Louisiana Supreme Court‘s opinion in Benglis Sash & Door Co. v. Leonards, 387 So.2d 1171, 1172-73 (La.1980), for the proposition that “the parties can consent to buy and sell a certain thing for a reasonable price, and when they do, the contract for sale has been perfected. The essential thing is that there is a meeting of the minds (as opposed to a disagreement) as to price.” In our view, the trial court properly confined the holding in Benglis to its specific fact-setting. The parties in Benglis had a prior course of dealings and a sufficiently mutual understanding of price terms based upon this relationship, as evidenced by the fact that the defendant did not object to the price ultimately charged. Id. at 1173. Benglis did not eliminate—but rather reemphasized—the necessity of showing that the parties reached a meeting of the minds as to that term. In fact, the cases decided after Benglis have not read it, as would Conkling in this case, as a wholesale revision of the definite price requirement of
Wegman v. Central Transmission, Inc., 499 So.2d 436 (La.Ct.App.1986), writ denied, 503 So.2d 478 (La.1987), does not alter our analysis. Conkling reads Wegman to uphold as definite the use of the price term “equitable price,” as amounting to a “fair price” to
Moreover, in fact-settings more akin to that presented, the Louisiana courts have found such terms as “book value,” “market rise,” and “prevailing price” not to be sufficiently ascertainable and thus fatal to the confection of a contract. See, e.g., Directional Wireline, 552 So.2d at 1214 (holding that parties’ failure to agree as to the method used to calculate “book value” of stock to be purchased precluded meeting of the minds as to essential element of price); Princeville Canning Co. v. Hamilton, 159 So.2d 14, 17, 18-19 (La.Ct.App.1963) (Contract providing that sale prices will increase according to “market rise” does not provide an objective method by which the price of the sale can be established with certainty when there is no agreement as to a method by which “market rise” can be determined.); Shell Oil, 210 So.2d at 558 (rejecting “prevailing price” as being too indefinite without reference to a specific market from which it can be readily discerned).
Similarly, no “agreed” price for Turner to redeem Conkling‘s stock can be determined with any certainty because there is no discernible agreement as to any method by which “fair value” could be computed. Conkling suggests that the Nichols’ board minutes reflecting Turner‘s request for permission to negotiate a redemption price based upon the underlying assets of the corporation and his statement that he “might have to redeem” the stock of the minority shareholders is conclusive proof that the parties had previously agreed to a definite method to calculate fair value. Conkling understands these portions of the minutes as “mean[ing] that Turner was authorized to negotiate a price based upon the value of the underlying assets of the companies, and if they could not agree on a value for the underlying assets, then an independent appraisal would be used.” He offers the original agreements between Nichols and its shareholders (including Turner and Conkling) in 1962 and 1963—which included independent appraisal clauses and certain guidelines for calculating redemption values—as providing the method by which he and Turner would compute the “fair value” of the stock. There are several problems inherent in looking to the 1962 and 1963 agreements for guidance. First, the two agreements have conflicting provisions regarding valuation.20 Moreover, the 1962
E. Subsequent Oral Modification Evidence
Conkling next takes issue with the trial court‘s instruction to the jury to disregard evidence of an alleged subsequent oral agreement modifying the 1962 agreement. Conkling testified at trial that, after the written agreement was executed in 1962, Turner modified the agreement by giving him a stock certificate and informing him that the stock was in exchange for previous services. However, the district court interrupted his testimony in this regard and instructed the jury to disregard any agreements “except for the 1962 agreement and the 1963 agreement.... The witness can testify what happened post [19]63 but not pre [19]63 regarding other agreements between the parties.” Conkling argues that the subsequent oral modification of the 1962 agreement should have been admitted and directs our attention to
Testimonial or other evidence may not be admitted to negate or vary the contents of an authentic act or an act under private signature. Nevertheless, in the interest of justice, that evidence may be admitted to prove such circumstances as a vice of consent, or a simulation, or to prove that the written act was modified by a subsequent and valid oral agreement.
Conkling‘s argument that the oral agreement modified the earlier, 1962 agreement misses the mark. The focus of this case is upon the written, 1963 agreement. Under Conkling‘s own version of the facts, this alleged oral agreement was entered into before the 1963 agreement. The pertinent provision of
Moreover, the 1963 agreement—voluntarily executed by Conkling—provided that it was “the sole agreement by and between the parties in connection with the purchase or sale of any and all interests in and to Nichols Construction Corporation, being substituted for any previous agreement or understanding, oral or otherwise” (emphasis added). The agreement was signed by both Turner and Conkling as “parties.” The entire purpose of the 1963 agreement was to provide a mechanism whereby Conkling could acquire stock in Nichols. The plain terms of the 1963 agreement allocated 8% of the stock outstanding to Conkling.21 Pursuant to the 1963 agreement, the minority
F. Claims Against Carpenter
The defendants defend the summary judgment on Conkling‘s causes of action relating to Carpenter in an abundance of caution, though Conkling did not address these claims in his appellant‘s brief. Conkling did respond to the defendants’ contentions about Carpenter in his reply brief; however, as noted above, this court does not, in the absence of manifest injustice, consider claims raised for the first time after the opening briefs are filed by the appellant and appellee(s). Najarro, 918 F.2d at 516; see also Smith v. Lucas, 9 F.3d 359, 367 n. 16. Conkling offers, and we can discern, no reason why he failed to bring up this alleged error in his initial brief. Accordingly, we see no manifest injustice in refusing to address the issue.
III. Conclusion
For the foregoing reasons, we reverse and remand the district court‘s summary adjudication of Conkling‘s breach of fiduciary duty claims as described above. In all other respects, we affirm the judgment of the district court. Each party is to bear his own costs of this appeal.
AFFIRMED in part, REVERSED and REMANDED in part.
Notes
| Bert S. Turner | 76 per cent |
| Carmen L. St. Clair | 8 per cent |
| Richard L. Conkling | 8 per cent |
| J.B. Millican | 8 per cent |