MEMORANDUM OPINION
Plaintiff Frances H. Connelly, as executrix of her deceased husband’s estate, has sued General Medical Corporation and its chief executive officer, Steven Nielsen, for defrauding and misleading her in connection the sale of certain securities. Set for a one day jury trial on April 6, 1995, this case is currently before the Court upon the plaintiffs Motion for Leave to Amend and the defendants’ Motion for Summary Judgment.
For the reasons stated herein, the Court will GRANT the plaintiffs Motion For Leave to Amend and GRANT the defendants’ Motion for Summary Judgment.
FACTS
A Virginia corporation, defendant General Medical Corporation (“General Medical”) is one of the nation’s largest distributors of medical and surgical products to hospitals. Compl. ¶ 5. General Medical is the successor-in-interest to Rabeo Health Services, Inc. (“Rabeo”), a Delaware corporation. Id.
Thomas M. “Tom” Connelly (“the decedent”), joined General Medical in 1976. Id. ¶ 7. In 1987, Rabeo, a privately-held corporation, acquired General Medical as a subsidiary. Id. ¶8. Like many General Medical managers, or “partners” as they were known in Rabeo parlance, the decedent purchased Rabeo common stock after the acquisition, subscribing to 12,000 shares at $.01 per share. Id.; Dep. of Steven B. Nielsen at 24.
The decedent’s ownership rights were governed by a March 31, 1987, stock subscription agreement (“the Agreement”). Compl. ¶ 10, Ex. 1. 1 Among other provisions, the Agreement entitled Rabeo to purchase at a set price the entirety, but only the entirety, of the decedent’s shares upon his death. Compl. ¶ 11, Ex. 1, at ¶ 2.2. To exercise this option, Rabeo was required to provide written notice to the decedent’s personal representative within six months of his death. Compl. ¶11. 2
Finally, the Agreement granted Rabeo a five-year purchase option. Compl., Ex. 1., at ¶ 2.5. This provision was similar to the six-month option in that it limited Rabeo to purchasing not less than all of the estate’s stock, and gauged the price for such a sale by reference to the adjusted shareholders equity. Id. This option could be exercised “[a]t any time after the fifth anniversary of the date of termination” of employment. Id.
The decedent occasionally discussed his Rabeo stock with the plaintiff. Dep. of Frances H. Connelly at 67. She understood from these talks that “if the company was sold or if the stock went public ... we would realize an amount of ... money.” Id. at 68. However, the plaintiff never pushed him to elabo-' rate: “he never went into, and I didn’t ask, I mean, that was business, and I just left it up to him.” Id. Still, she was aware that efforts had been made to sell the company. Id. at 67.
The decedent died of an abdominal aneurysm on August 29, 1992. Compl. ¶ 8; Aff. of Frances H. Connelly ¶ 2. He had risen to the rank of Vice President at General Medical and, by virtue of additional subscriptions and stock splits, he owned 86,400 shares of Rabeo common stock at the time of his death. Compl. ¶ 8-9. Named the executrix of the estate, the plaintiff hired an accountant to settle its affairs. F. Connelly Dep. at 19-22, 23-24. She had never personally made any investment decisions or participated in stock transactions. F. Connelly Aff. ¶ 5. Thus, her 25 year-old - son Brian, an insurance salesperson, coordinated the life insurance proceeds to ensure an income for his mother. Dep. of Brian Connelly at 4-5, 9-10.
On September 3, 1992, defendant Steven B. Nielsen, President and CEO of General Medical and Vice President and Member of the Board of Directors of Rabeo, 3 wrote a letter of condolence to the plaintiff, assuring her that “you are very special and we want you to know that the Nielsen’s [sic] and General Medical are here for you. Our love is a constant that you will always be able to count on.” Pl.’s Brief in Opp. to Defs.’ Mot. for Summ.J., Ex. 4, at 2. That same day, Nielsen wrote to Rabeo Chairman Richard Bernstein and suggested that Rabeo transfer the decedent’s stock to the estate. See Mem. in Supp. of Defs.’ Mot. for Summ.J., Ex. 4, at 1. Nielsen claims he wrote the letter to ensure that the “estate and [the Connelly] family were treated fairly by all concerned.” Nielsen Dep. at 39-40. However, in the letter he told Bernstein that transfer would be both “an appropriate and proper gesture” of thanks for the decedent’s contributions to General Medical, and “a profound statement of loyalty and trust to the remaining [General Medical] partners.” Mem. in Supp. of Defs.’ Mot. for Summ.J., Ex. 4, at 1.
Apparently, Bernstein initially dismissed the idea. Nielsen Dep. at 42. Eventually, however, Rabco’s management elected to make a proposal to the estate. In February 1993, Nielsen was informed, either by Rab-co’s Executive Vice President, Treasurer, and Chief Financial Officer, Stuart Turner, or by its Vice President for Legal Affairs, James A. Cohen, that Rabeo was willing to purchase only one-half of the estate’s shares, provided that the estate waive its rights to merger or sale consideration as to those shares.
Id.
at 47. As Nielsen understood it, the estate would be entitled to keep the remaining one-half with all other rights under the Agreement.
Id.
He was asked to
Thus, on Thursday, February 25, Nielsen telephoned the plaintiff. Compl. ¶¶ 6,14. In a five minute conversation, he told her to expect a letter from Rabeo asking for her permission to purchase one-half of the decedent’s shares. Id. ¶ 14; F. Connelly Dep. at 37; Nielsen Dep. at 54. Nielsen told the plaintiff that the proposal affected certain portions of the Agreement, and directed her to the specific paragraphs for her own perusal. Compl. ¶ 14; Nielsen Dep. at 55.
Nielsen told the plaintiff that, in his opinion, the estate should get all the stock. F. Connelly Dep. at 35; F. Connelly Aff. at ¶ 9. However, when the plaintiff asked Nielsen what he thought of the proposal, he responded that it was “a reasonable — reasonably good thing to do.” Nielsen Dep. at 55. Nielsen asked that the plaintiff read the Agreement, and call Turner or Cohen if she had any questions. F. Connelly Dep. at 33; Nielsen Dep. at 56. He concluded by suggesting that she consult an attorney or financial ad-visor for input. F. Connelly Dep. at 36-37; Nielsen Dep. at 55.
Nielsen’s telephone call was the first time anyone had mentioned the Rabeo stock to the plaintiff since her husband’s death. F. Con-nelly Dep. at 33. After talking to Nielsen, she located the Agreement and attempted to read it, highlighting the provisions that Nielsen had mentioned. Id. at 39; F. Connelly Aff. at 10. She had never seen the document before and apparently understood neither its terms nor what Nielsen was asking of her. Compl. ¶ 14; F. Connelly Dep. at 26, 35, 38, 41-44, 46. 4 She called her son Brian for advice, but since the Agreement was not in front of him, he could not help her. F. Connelly Dep. at 47-48.
The anticipated letter arrived by Federal Express on Friday, February 26. F. Connelly Dep. at 55-56. Dated the day before, it bore Cohen’s signature and indicated that Nielsen had been sent a copy. Compl., Ex. 2.In rather spartan fashion, the letter requested that the plaintiff consent to the following modifications:
1. That Section 2.2(a) of the Shareholders Agreements is hereby amended to provide Rabeo with the option to purchase up to one-half of the shares owned by the shareholder (the “Purchased Shares”).
2. Section 2.2(a) of the Shareholders Agreements is further amended so that the purchase price paid for the Purchased Shares shall not be subject to any adjustments pursuant to Section 2.7 of the Shareholders Agreements or otherwise. Rаbeo shall be relieved of any obligation it may have pursuant to Section 2.7 of the Shareholders Agreements.
3. Section 2.2(a) of the Shareholders Agreements is further amended to allow Rabeo to extend its’ [sic] option to purchase the shares from 6 months to 225 days.
4. Except as modified hereby, the Shareholders Agreements shall remain in full force and effect.
Id., at 1-2. The letter offered no explanation or interpretation of the proposal.
The plaintiff read the letter but did not understand its import. Compl. ¶ 16; F. Con-nelly Dep. at 49; F. Connelly Aff. ¶ 11. Accordingly, she followed Nielsen’s suggestion and contacted Stuart Turner’s office, leaving a message for him to call.
Id.
Turner returned her call later that day.
Id.
The plaintiff remembers little of the ensuing twelve-minute conversation, except that Turner explained that the letter would allow Rabeo to take back half of the estate’s stock to give to more recent employees joining the firm. Compl. ¶ 16; F. Connelly Dep. at 49-
I spoke to Mrs. Connelly and told her that in the usual situation the company almost always opts to buy back all the shares. But considering the feelings everybody had had for Tom, that we would like to allow her the opportunity to keep part of the stock in perpetuity.
I further explained to her that in consideration of that — we would allow her to keep half in perpetuity, and in cоnsideration of that we would buy back the other half with her giving up the rights to the 550 day protection plan. Price protection plan.
I explained to her that while there were no current transactions that were active, that clearly we had tried to go public twice before, which she knew about. And it was possible and maybe even probable that we would try it again in the future. Where it would be in the 550 day period or not, I couldn’t say. But it could well be.
I said to her that while the company was not currently for sale, that certainly if somebody came along with the right price something like that could always happen and that she needed to carefully consider the offer that was being made, because she was giving up her 550 day protection on half the stock in order to keep the other half in perpetuity.
Turner Dep. at 39-37.
Turner also claims that he asked the plaintiff to consult a financial advisor or attorney. Id. at 37. While the plaintiff does not remember this portion of the conversation, F. Connelly Dep. at 63, she does recall telling Turner that because she was having difficulty understanding the proposal, she would talk it over with her family. F. Connelly Aff. ¶ 14. She never sought any professional advice on the matter, preferring instead “to discuss it over the weekend with [her sons].” F. Con-nelly Dep. at 48-49, 62-63. In particular, she wished to talk to Brian, the insurance salesperson. Id. at 46, 63. However, because she never gave him thе Agreement or Rabco’s February 25 letter to her, and never read those documents to him, id. at 47, Brian had no idea it was even “a proposal.” B. Connelly Dep. at 12. As he remembers it:
I didn’t know what was sent down to her [from Rabeo]. In our conversations, I usually found out how the weather is and is there anything I can do for her. There wasn’t anything of a technical nature that we talked about.
Id. Hence, although Brian had invested the proceeds of his father’s life insurance policy, he gave the plaintiff no help digesting the Rabeo proposal.
Under the terms of the written Agreement, Rabco’s option to purchase the estate’s shares was to expire on Sunday, February 28,1993. According to Turner, however, the plaintiff orally agreed to waive this deadline:
I suggested that unfortunately, due to my schedule, I had let this come too close to the point in time when our option to buy back the shares would expire. But that I didn’t want to pressure her. So that if she wanted, we could agree between us to extend our period of time to exercise that option so that she would have more time to consider the proposal I was making and-not be rushed.
She agreed to that and that ended the phone call. Turner Dep. at 37-38.
On the morning of Monday, March 1, the plaintiff received a telephone call from James C. Robison, General Medical’s Senior Vice President for Sales. Compl. ¶ 17; F. Connelly Dеp. at 73. Robison told the plaintiff that Rabeo needed her to sign the February 25 letter, and asked her to come to General Medical’s Richmond office at 11:00 a.m. to sign the document.
Id.;
F. Connelly Aff. ¶ 16. Although she was upset, B. Connelly Dep. at 13, the plaintiff complied, and met with Robison and Keith Nedrow, General Medical’s in-house counsel. Compl. ¶ 17; F. Connelly Dep. at 75.
6
She was accompanied
During her deposition, the plaintiff described the meeting:
Q. Do you recall what was said in the meeting?
A. Okay. We did some small talk, what not. The letter that I was to sign, [Robison] went over briefly. I left it in their hands. He asked me to sign, I signed. We signed a couple of times. And that I was only going to get half; okay. Because my understanding was, again, other people were going to get it.
The one thing I do remember is that after everything was signed, and it just stuck in the back of my mind, was that the papers that were newly signed, they wanted them faxed to New York. And I didn’t give it a second thought.
* * * * * *
Q. Do you recall saying that while you would have, like to have kept all the shares, half was better than nothing?
A. Yeah.
F. Connelly Dep. at 76-77, 78. None of the attendees recall any other substantive discussions at this meeting. F. Connelly Dep. at 75-78; B. Connelly Dep. at 16; Dep. of James C. Robison at 12-13; 7 Dep. of Keith Nedrow at 35-44. Thus, the plaintiff left General Medical’s office with the following understanding of the situation:
As far as we all understood was that I had [X]-amount of shares of privately owned stock that, at the moment, was negligible for, you know, the amount — monetary amount, and that some day down the road, if the company does something, you know, wе would — we would have some money. And that’s all we knew. That’s all — we left it at that.
F. Connelly Dep. at 80.
On March 17, 1993, Cohen sent the plaintiff a letter purporting to exercise Rabeo’s option to purchase 43,200 shares. Compl., Ex. 3; F. Connelly Dep. at 81. Rabeo considered the shares to be worthless at current value; nonetheless, it was willing to remit half of Tom’s initial investment of one penny per share:
Pursuant to Section 2.2(a) and 2.6 of the Stock Agreement, the purchase price is specified to be equal to the Adjusted 'Shareholder’s Equity applicable to these shares. As of the last date of the fiscal year immediately following the end of the employment, there was a common shareholder’s deficit and, therefore, no equity attributable to the Estate’s shares of the Company’s Common stock. A schedule of the Adjusted Shareholder’s Equity is attached hereto. However, the Company is returning to you the initial investment for such shares of $675.00 as the purchase price for the shares.
Compl., Ex. 3. Cohen informed the plaintiff that by tendering its check, Rabeo had completed its purchase of the 43,200 shares, and that the shares had been canceled. Id. He concluded by asking the plaintiff to execute a Stock Power form he had enclosed with the letter. Id. On March 25, the plaintiff complied, transferring the shares to Rabeo. Compl. ¶ 21; F. Connelly Dep. at 81.
During this period, Rabeo Chairman Bernstein and the General Mеdical senior management
8
were embroiled in a long-simmering feud. General Medical had been the topic of frequent buyout rumors in the late 1980s, but such speculation had ceased in 1991, when Rabeo twice unsuccessfully attempted to take General Medical public. Nedrow Dep. at 66-68, 72-73. Reading the market from Richmond, the senior manage
Like the decedent, the senior managers had entered into subscription agreements with Rabeo in 1987. Id. Between them, they held less than ten percent of the Rabeo stock. Nedrow Aff. ¶ 4. However, because Rabeo was privately held, their shares were “essentially worthless unless we went public or the company was sold.” Fatzinger Dep. at 28. It was not unusual for the senior management to rue privately that their agreements were valueless as long as Rabeo wаs heading in the wrong direction. Id. at 28-29; Nielsen Dep. at 21.
By March 1993, it was obvious that Bernstein and Nielsen had differing visions for General Medical’s future, and that corporate growth was impossible as long as this schism impeded high-level decision making. Ned-row Dep. at 78. Consequently, the senior managers still “had no real expectation of ever being able to realize any value from the shareholder agreements” they held. Id. In mid-March, and without Bernstein’s knowledge, they sought legal advice regarding their rights under the agreements. 9 Finally, after a March 25,1993, meeting with counsel, they first began to consider staging a takeover of General Medical. Id. at 73-75, 80-81.
This nascent thought came to fiuition on August 31,1993, when a consortium of senior managers and financial investors completed a $300 million leveraged buyout of General Medical, merging the company into a subsidiary of GM Holdings, Inc. Compl. ¶ 23; Nedrow Dep. at 62; Nielsen Dep. at 76-77. 10 Any person holding a shareholder agreement received $20 per share for their Rabeo common stock. Compl. ¶ 23. As a result, Nielsen and the other senior managers finally realized the value of their stock. Nielsen Dep. at 76-77. And, because the estate still owned 43,200 shares of Rabeo common stock, the plaintiff received a check for $875,829.30 on September 3, 1993. Compl. ¶25. Of course, but for the plaintiff’s decision to modify the Agreement, the estate would have received twice that sum: the merger occurred less than 550 days аfter Rabeo exercised its option on the decedent’s stock, and the “claw-back” provision otherwise would have applied. Compl. ¶23.
Citing this chain of events, the plaintiff has sued General Medical and Nielsen, asserting claims for (1) securities fraud under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.A. § 78j(b) (West 1981), and Rule 10b-5 of the Securities and Exchange Commission, 17 C.F.R. 240.10b-5 (1994); (2) fraud, under the common law of Virginia; and (3) breach of fiduciary duty. She also contends that this Court should declare void the March 1, 1993, amendment to the Agreement and rescind her tender of shares to Rabeo. All told, she seeks $875,829.30 in compensatory damages, exclusive of interest and costs.
Jurisdiction is appropriate pursuant to 28 U.S.C.A. §§ 1331 and 1367 (West 1993).
THE PLAINTIFF’S MOTION FOR LEAVE TO AMEND
The Court must first decide whether the plaintiff should be granted leave to amend her complaint to allege additional facts, and “clarify her allegations based on information that came to light during discovery.” Pl.’s
In the main, the plaintiffs clarifications take the form of additional facts, all designed to underscore the allegedly fraudulent nature of the Agreement modification. However, the plaintiff does wish to withdraw both her claim for punitive damages and her allegation that the defendants failed to tell her to consult a lawyer or a financial advisor. Finally, she wishes to charge General Medical with actual fraud and Nielsen with constructive fraud.
I. Standard of Review
Discretion to deny leave to amend is limited by the dictate of Federal Rule of Civil Procedure 15(a) that “leave shall be freely given when justice so requires,” and by the general policy, embraced by the Federal Rules, favoring resolution of cases on their merits.
See Davis v. Piper Aircraft Corp.,
[i]f the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. — the leave sought should, as the rules require, be “freely given.”
Foman v. Davis,
II. Discussion
The plaintiff claims that her new allegations were unearthed during discovery, which she maintains was an inordinately sluggish process. She stresses that her underlying theories of liability having remained essentially unchanged. Accordingly, she reasons, the proposed amendment is proper because no prejudice can befall either defendant.
In the defendants’ eyes, however, the proposed amendment would be highly prejudicial. The plaintiff filed her motion three days before the end of discovery, just as the defendants were polishing their summary judgment motion for submission to the Court. Because they relied upon the original complaint to prepare their motion, the defendants apparently fear that this relatively late amendment will forestall any consideration of the merits of this case. They also contend that an amendment would require additional discovery.
In
Island Creek Coal Co.,
the trial court had denied the plaintiffs leave to amend their complaint, relying, in part, upon the belief that the allegation of a totally new claim calling for additional discovery would unfairly prejudice the defendant.
[The defendant’s] experts had extensively investigated and discovered those facts. Thesе experts had testified about such facts in their depositions ... [T]he motion did not, therefore, take the defendant by surprise or require it to investigate a claim of which it was not already cognizant. In fact, the defendant’s .experts testified in their depositions why they thought any claim such as the plaintiffs proposed to assert could not be sustained. On the face of this record, the defendant is hardly in a position to argue that the granting of the amendment would be prejudicial to it inforcing it to investigate and prepare to defend [such a] claim. This contention of the defendant is farther- undermined by the fact that the defendant argued that the allowance of the amendment would have been futile.
Id.
The instant matter is quite similar. In fact, the case for granting the plaintiffs motion is even more compelling here, where she proposes additional facts, not a fresh theory of liability. Because these facts came to light during the depositions of probable defense witnesses, the defendants cannot claim to be unfairly surprised. 11 Nor is there reason to extend discovery. 12
A court may deny a motion for leave to amend when the plaintiff unduly delays raising new allegations. For instance, in
The Equity Group, Ltd. v. Painewebber, Inc.,
The most thаt could be considered prejudicial about the proposed amendment is that the defendants premised their motion for summary judgment upon the original Complaint. But that means little. . Granted, it is not an abuse of discretion to deny a party leave to amend and add a new claim where the motion to amend was interposed “at the eleventh hour, after discovery was virtually complete and the [defendant’s] motion for summary judgment was pending before the court.”
Roberts v. Arizona Bd. of Regents,
The defendants have been unable to produce evidence of undue prejudice and bad faith. Hence, all that remains as a bar to the amendment is the defendants’ last contention — that the amendment is futile. Since the Court is already presented with a motion for summary judgment that requires examination of the merits of this case, it exacts little additional energy to accord the same scrutiny to all the plaintiffs allegations, both old and new. In any event, a plaintiff confronted with a charge of futility need not prove each and every element of the count involved.
Island Creek Coal Co.,
Accordingly, the Court will GRANT the Motion for Leave to Amend and decide this case based on all the evidence.
THE DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
I. Standard of Review
Under Rule 56(c), a motion for summary judgment may be granted “only if the pleadings, depositions, interrogatory answers, admissions, and affidavits show ‘that there is no
The party moving for summary judgment always bears the initial burden of informing the Court of the absence of a genuine issue of material fact.
Celotex,
II. Securities Fraud
In Count I, the plaintiff charges that the defendants committed securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The statute makes it unlawful for any person
to use or employ, in connection with the purchase or sale of any security ..., any manipulative or deceptive device or contrivance in contravention of such rule and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
15 U.S.C.A. 78j(b). Invoking this rule-making authority, the Commission promulgated Rule 10b-5, which forbids the making of
any untrue statement of a material fact or [the omission of] a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading ... in connection with the purchase or sale of any security.
17 C.F.R. § 240.10b-5(b). Consequently, to survive a motion for summary judgment on a claim of securities fraud, the plaintiff must show a genuine issue of material fact as to four elements: (1) that the defendants made a false or misleading statement of material fact; (2) with scienter; (3) upon which the plaintiff reasonably relied; (4) that proximately caused the plaintiff’s damages.
Hillson Partners Ltd. Partnership v. Adage, Inc.,
While she initially identified eight misleading statements or omissions in her Complaint, that total ballooned to seventeen in the Amended Complaint. For the purposes of the defendants’ summary judgment motion, hоwever, she raises sixteen, categorized into eight groups. They are:
A) Failing to disclose that the senior managers had unanimously advised Richard Bernstein to sell General Medical in December, 1992 (Amended Compl. 138(n)); '
B) Failing to disclose that the senior managers were concerned about securing the value of their own Rabeo stock and were exploring ways to do so prior to asking the plaintiff to enter into the modification of the Shareholder Agreement (Amended Compl. ¶ 33(b), (k)(m), • (p));
C) Failing to disclose that the senior management of General Medical in Richmond was at “loggerheads” with the Rabeo management in New York and desired to separate from Rabeo (Amended Compl. ¶ 33(o)-(p));
D) Misstating that, under the Amended Shareholders Agreement, the plaintiff would own half' of the stock into perpetuity, when the February 25 letter did not waive Rabco’s five year purchase option;
E) Misstating that the amendment to the Agreement was in the plaintiffs best interest (Amended Compl. ¶ 33(h));
F) Failing to disclose that Nielsen did not clearly understand the terms of the Shareholder Agreement when he advised her to agree to the proposed modification or that Robison was unfamiliar with the modification (Amended Compl. ¶ 33(i)-(j));
G) Failing to disclose fully the risks and implications of entering or not entering into the amendment to the Agreement (Amended Compl. ¶ 33(c) — (d), (f)-(g));
H) Failing to disclose, on March 1, 1993, that the Rabeo shares had vested and Rabeo was giving no consideration for thе modification (Amended Compl. ¶ 33(e)).
Claims E and F merit swift disposition, for the plaintiff has failed to demonstrate a genuine issue of material fact as to either of these contentions. To begin with, Claim E falls flat on its face. The Court finds no evidence suggesting that the- plaintiff was told the proposed amendment was in her best interest. Indeed, she torpedoed this allegation during her own deposition:
Q.' Other than the conversations we’ve already discussed, can you recall any specific conversation where somebody said it would be in yóur best interest to sign this document?
A. In those specific words, I don’t recall. I — they asked me to sign, and I willingly signed.
F. Connelly Dep. at 82. The record is devoid of evidence- that she was ever told that the amendment was in her best interest. To the contrary, the plaintiffs only basis for this allegation is her own faith that “these people knew Tom, and they would know in my best interests or our best interests as family. So whatever they said, I figured they knew more than I did.” Id. at 71. But the plaintiff offers no rationale for resting Section 10(b) liability upon her subjective and unexpressed belief. 13 As a result, summary judgment is appropriate on Claim E.
Claim F likewise fails, as to both Robison and Nielsen. The plaintiff contends that she should have been told about Robison’s unfamiliarity with the Agreement. This is entirely unpersuasive. There is no evidence that Robison and the plaintiff engaged in a substantive discussion about the Agreement, and no evidence that the plaintiff relied upon his judgment. Thus, summary judgment is appropriate.
The plaintiffs allegations about Nielsen meet the same fate. True, Nielsen did not understand every clause in the Agreement, and sought legal advice to confirm his suspicions that it held no value absent a sale or merger. Yet he undoubtedly understood the issues of which he and the plaintiff spoke. Nielsen knew that Rabeo was willing to purchase only one-half of the estate’s shares, provided that the estate waive its rights to future consideration. He also was aware that the estate would keep the remaining one-half with all other rights intact. In addition, his comment to the plaintiff that he would have preferred to see the estate receive all the stock makes clear that he comprehended the limits of the proposed amendment. Moreover, Nielsen communicated at least the bones of the proposal to the plain- • tiff; her highlighted copy of the Agreement proves that Nielsen correctly indicated the clauses to be altered. Since Nielsen’s understanding of these matters was complete,
The Court will address the plaintiffs remaining claims seriatim.
A. The Defendants’ Nondisclosures
1. Failure to Disclose the Possibility of a Sale or Merger
The plaintiffs first three groups of allegations, claims A-C, challenge the defendants’ alleged failure to disclose the possibility of a sale or merger occurring within the next 550 days. The defendаnts, however, claim that any such omissions were not material.
The plaintiff must establish the materiality of any omitted information, for an incomplete statement is not actionable if it is otherwise insignificant.
Basic Inc. v. Levinson,
Materiality must be judged in the context of the statement.
Rubinstein v. Collins,
The plaintiff argues that a reasonable investor would want to know both of the disputes brewing between the senior managers and Rabeo, and that the idea of separating the businesses had begun to germinate. Certainly this position has some merit. The estate’s “claw-back” rights, which the plaintiff ceded to Rabeo in the amendment, had no value unless a sale or merger occurred within the next 550 days. Since any assessment of the plaintiffs options had to rest heavily on speculation about the future, a reasonable investor in her position would want to know as much as possible.
That bеing said, it defies logic and contravenes the facts of this case to suggest that the defendants concealed plans to sell General Medical from the plaintiff. No reasonable juror could find that the defendants were contemplating or actively seeking to sell the Company at the time the plaintiff signed the amendment to the Agreement. Granted, Rabeo twice attempted tó take General Medical public in 1991, and the senior management did tell Bernstein that they favored selling the company in December 1992. Yet nothing in the record suggests that Bernstein heeded this advice at the time, or that he took it as anything but a vote of no-confidence. In fact, the advice of the senior managers meant little when Bernstein “couldn’t find a way to take the company public or find a buyer that was of interest to him.” Fatzinger Dep. at 10. In late February and early March 1993, the future . of General Medical was anybody’s guess. As a result, to assail the defendants for failing to disclose their feelings about the future is to demand mere supposition.
In assessing the materiality of such speculative judgments about future events, the Court must balance “both the indicated probability that the event will occur and the anticipated magnitude of the event in light of the totality of the company activity.”
Milton v. Van Dorn Co.,
In
Taylor v. First Union Corp.,
The materiality of information concerning a proposed merger is directly related to the likelihood the merger will be accomplished; the more tentative the discussions the less useful such information will be to a reasonable investor in reaching a decision. Information of speculative and tentative discussions is of dubious and marginal significance to that decision. To hold otherwise would result in endless and bewildering guesses as to the need for disclosure, operate as a deterrent to the legitimate conduct of corporate operations, and threaten to “bury the shareholders in an avalanche of trivial information”; ■ the very perils of the limit on disclosure imposed by the materiality requirements serves to avoid.
Id. at 244-45.
Taylor makes clear that the plaintiffs allegations do not articulate materiаl omissions. The senior managers had, at most, only begun to form embryonic ideas about the sale of General Medical. They certainly had no formal agreements; indeed, no talk of a leveraged buyout surfaced until March 25, 1993, after the plaintiff had tendered her stock to Rabeo. Moreover, neither the factual nor the legal predicate for such an event was in place. There is no evidence suggesting that the senior managers could bring about a sale simply by recommending it to Bernstein. Instead, the event became possible only after the senior managers sought legal advice about their subscription agreements. This first happened in mid-March 1993, over two weeks after the plaintiff signed the amendment to the Agreement.
Attempting to avoid summary judgment, the plaintiff points to a purported factual dispute over the date the senior managers first conceived of a buyout. She rests this argument upon Fatzinger’s recollection that he and Nielsen had a conversation “sometime between [late January] and the first part of March,” during which Nielsen admitted seeing a lawyer “to potentially find a white knight for General Medical, that would replace Richard Bernstein.” Fatzinger Dep, at 12-14. However, Fatzinger’s dim memory was conclusively rebutted by other affiants and deponents, who indicated that the first meeting with counsel did not occur until March 17 at the earliest, and that the idea of a buyout was not raised until March 25. See Aff. of John O’Grady, ¶¶2-3; Aff. of Well-ford L. Sanders, Jr., ¶¶ 2-3; Nedrow Dep. at 73-75; Nielsen Dep. at 73, 75. This evidence establishes that Nielsen’s téte-á-téte with Fatzinger could not have occurred as early as Fatzinger thought. More importantly, the buyout plans did not become material developments until after the plaintiff had agreed to the modification she now challenges.
In the alternative, the plaintiff attempts to cabin
Taylor
to cases involving publicly-traded entities, arguing that closely-held corporations, such as Rabeo, “have a duty to disclose preliminary merger intentions and other forward-looking information.” Pl.’s Mem. in Opp. to Defs.’ Mot. for Summ.J. at 24. This argument rises from the Seventh Circuit’s decision that the so-called “price and structure rule”
14
does not apply to closely-held corporations.
Michaels v. Michaels,
The plaintiffs reliance upon Michaels and Jordan is misplaced. While these cases may-have expanded the duty to disclose, they did not eviscerate the requirement of materiality. More pointedly, they do not mandate the disclosure of every pre-merger occurrence. Instead, the Court still must balance the likelihood of the event and its probable magnitude. In this case, however, there was no “event” that could be predicted, let alone measured. Unlike Jordan, in which the board of directors resolved itself in favor of a mergеr, here the plaintiff can point only to internal dissension between the General Medical senior management and its superiors in New York. This is not evidence of a material fact, even in the Seventh Circuit.
Because it is only through hindsight that the plaintiff can spot the evolution of a merger, that prospect was, as a matter of law, “too incipient 'for a jury to find [it] material.”
Hartford Fire Ins. Co. v. Federated Dept. Stores, Inc.,
2. Failure to Disclose the Risks and Implications of the Proposed Amendment
In claim G, the plaintiff argues.that the defendants failed to inform her (1) that whether Rabeo exercised its option or not, the Agreement gave the estate rights to future consideration if Rabeo was sold or purchased within 550 days; (2) that Rabeo’s option would expire on February 28, after which she could not be forced to sell the estate’s stock; (3) that she was waiving her rights to future consideration on the 43,200 shares she sold back to Rabeo; and (4) that the estate’s rights under the existing Agreement “were more valuable” than the rights retained under the modification.
The materiality of this information is apparent; it is axiomatic that a reasonable investor would assign importance to the terms and consequences of the modification proposal. However, the defendants cannot be held liable for omitting evеn a material fact unless they owed the plaintiff a duty of disclosure. “Silence, absent a duty to disclose, is not misleading under Rule 10b-5.”
Basic Inc.,
[t]he limitless scope of nondisclosure invites those with hindsight to allege fraud based on nondisclosure of nearly anything that later comes to the surface, or is thought to he beneath it.
3 Alan R. Bromberg & Lewis D. Lowenfels,
Bromberg and Lowenfels on Securities Fraud and Commodities Fraud
§ 12.3, at 271 (2d ed. 1994). Thus, the duty to disclose must arise from “a fiduciary or other similar relation of trust and confidence” existing between the parties outside securities laws.
Schatz,
The plaintiff advances several theories why she was owed such a duty. For the present, however, those arguments can be set to one side, for the defendants owed no obligation to disclose information that was already in the plaintiffs possession.
The plaintiff essentially contends that the defendants should have interpreted the Agreement and modification proposal for her. In other words, she is attempting to shift the burden of understanding the document onto the defendants. But the Court knows of no such obligation under the federal securities law.
15
That the plaintiff may have been too
When the means of knowledge are open and at hand or furnished to the purchaser or his agent and no effort is made to prevent the purchaser from using them ... he will not be heard to say that he has been deceived to his injury by the misrepresentations of the vendor.
Id.
at 614 n. 3 (quoting
Shappirio v. Goldberg,
There is no indication in the case at bar that the defendants possessed greater access to the terms of the proposal than the plaintiff. She had the Agreement in hand, and was thrice guided to the relevant provisions, by Nielsen on Thursday, by Cohen’s letter on Friday, and again by Turner later that day. Moreover, she was advised at least once to consult an attorney or financial advisor. The defendants cannot be accused of fraud simply because the plaintiff disregarded that recommendation. This is especially so when the plaintiff failed to pursue the option she ostensibly did select, failing to discuss the matter with her son, and never providing him with copies of the Agreement and. the proposed amendment.
The plaintiff responds that the defendants somehow obstructed her access to advice by “forcing” a decision on the Monday, having presented her with the written proposal on the Friday. These cries of foul are unconvincing. The plaintiff was fully capable of seeking independent advice when the defendants recommended it, and could have refused to attend the Monday signing session at the General Medical headquarters. It is quite significant that she did not. Absent any suggestion of duress, or signs that the defendants dissuaded the plaintiff from seeking competent counsel, the Court will not let their liability rise or fall on their eagerness to close the deal. 16
The’ plaintiff also charges that the defendants failed to advise her that the estate’s rights under the existing Agreement “were more valuable” than the rights retained under the modification. This contention cannot stand. First, as a matter of law, the plaintiff is not entitled to demand an opinion from the defendants; whatever the defendants’ relationship with the plaintiff, they owed no such duty to lend counsel.
Moreover, there was no basis for the opinion she desired. The wisdom of. her choice was- dependent upon the occurrence of a sale, merger or successful public offering within 550 days. But as the Court has already held, these events were entirely speculative. No one, no matter how sophisticated, could divine the ultimate value of the alternatives the plaintiff faced.' Because “an inability to see into the future does not constitute securities fraud,”
see Eckstein v. Balcor Film Investors,
3. Failure,to Disclose on March 1, 199S, that Rabeo’s Option had Lapsed and that Rabeo was Giving No Consideration for the Modification
In claim H, the plaintiff charges the defendants with withholding the news that their option to purchase the estate’s shares had expired on February 28. Once again, the plaintiff attempts to hold the defendants
The plaintiff cites the complexity of the agreement as an excuse for failing to understand this provision. However, the Agreement’s option period, referenced in the February 25 letter, was quite clear:
If the Shareholder’s employment terminates as a result of his ... death ..., the Company shall have the option (exercisable by notice to the Shareholder or his personal representative at any given time within six months after the date of termination of employment) to purchase ...
Compl., Ex. at ¶ 2.2. Because she highlighted this provision on her copy of the Agreement after speaking with Nielsen, it is indisputable that she had notice of its terms. Hence, the defendants had no duty to disclose a matter so readily ascertainable to the plaintiff. “A fortiori, if the party has the information in question, he can not complain of its nondisclosure to him.” 1 Bromberg & Lowenfels, swpra, § 4.4, at 175-76.
Further, the plaintiff can point to no prior misleading statements about the option period that would trigger a duty to speak.
See Taylor,
As with her previous claims, the plaintiff has failed to establish a basis for liability. Accordingly, summary judgment is appropriate.
B. The Defendants’ Affirmative Misrepresentations
1. “We would allow her to keep half [the stock] in perpetuity”
In Claim D, 17 the plaintiff charges that Stuart Turner falsely told her that the estate would own half of the stock “into perpetuity.” In fact, says the plaintiff, Rab-eo retained its five year purchase option in the amended agreement.
The defendants contend that this allegation “is both an afterthought and a red herring.” Defs.’ Repl.Br. in Supp. of Defs.’ Mot. for Summ. J. at 6. Frankly, it is hard to miss the irony of the plaintiffs claim. She has limited recollection of the conversation in which this statement was allegedly made, and urges the Court to ignore this dialogue whenever it tends to damage her claim. For example, the Court is admonished to block its ears when Turner remembers explaining the proposal in detail and advising the plaintiff to talk to an attorney. However, the plaintiff is quick to draw attention to the one moment in which she claims Turner misspoke.
Putting that aside, the claim fails nonetheless. A statement is not a lie simply becаuse the plaintiff believes it to be so. In order for Turner’s words to be a false and misleading statement of material fact, there must be some cloud on the plaintiffs right of' ownership “in perpetuity.” For Rabco’s five year option to pose such an obstacle, however, there had to be a demonstrated possibility that the company would exercise it. The record does not support such a proposition. Indeed, there is no evidence that Rabeo intended to exercise the option, or even understood that it could. The option could only be used to purchase “all but not less than all” of the estate’s stock. Under the defendants’ reading of that clause, the option became inoperative when the plaintiff permitted Rab-eo to purchase only half of the stock. 18
Further, this claim undermines the plaintiffs theory of the case. In every other allegation, she suggests that the General Medical senior managers deliberately misled her about the possibility of a buyout and the value of waiting for such an event, ostensibly to minimize their buyout costs by limiting the
Why? Turner was obviously not part of the senior management cabal, and had no indication that their buyout attempt was in the cards. Moreover, the amendment was really not in Rabco’s interest. It already had the right to redeem all of the stock from the estate, subject only to the chance that Bernstein might eventually find a buyer. Granted, by “inducing” the plaintiff to enter into the agreement, Rabeo minimized that exposure, but at the cost of diluting corporate ownership. Rabeo lost control of over 40,000 shares, of its stock, shares that ordinarily could have been offered to another employee to anchor his loyalty to the company.
In short, there can be only two plausible explanations for Turner’s actions, only one of which can be true. First, perhaps Turner honestly believed that Bernstein could sell or merge Rabeo at some point within the next 550 days. However, no one thought this likely. As Turner himself put it:' “Clearly there was no mind set to sell the company.” Turner Dep. at 45. No, the only permissible conclusion is that Turner acted in good faith. He presented the idea to the plaintiff because “Tom Connelly had been- perhaps the single most beloved employee at General Medical [and cjertainly that was a feeling shared at Rabeo in New York.” Turner Dep. at 27-28. Consequently, the claim that Turner fraudulently indtíced the amendment is incoherent and insupportable. It will be dismissed.
2. The Amendment was a “reasonably good thing to do”
Finally, the Court is left with Nielsen’s comment to the plaintiff when she asked for his advice. While the plaintiff has not per se identified this as a false and misleading statement of material faсt, - it bears the most resemblance to her otherwise baseless claim that she was told the Rabeo proposal was in her best interest. As such, it merits as a cursory review. And nothing more.
Nielsen’s statement was an opinion, not a statement of fact. Applying Section 14(a) of the Securities and Exchange Act, the Supreme Court has held that such a statement of belief can be actionable only “as a misstatement of psychological fact of the speaker’s belief in what he says,”
Virginia Bankshares, Inc. v. Sandberg,
For the reasons stated, the Court will enter summary judgment in favor of the defendants on Count I of the plaintiff’s Amended Complaint.
III. State Law Claims
The Court must now decide whether to resolve the plaintiffs remaining claims. When a court has dismissed all claims over which it has original jurisdiction, it may decline to exercise supplemental jurisdiction over the remainder. 28 U.S.C. § 1367(c)(3). While the Court has dismissed thq federal securities fraud claims from this case, a balance of relevant factors, including judicial economy, convenience, fairness, and comity, favors a consolidated judgment.
See McCullough v. Branch Banking & Trust Co.,
A. Common Law Fraud
The plaintiffs charges of common law fraud will meet the same fate as her federal claims. To hold General Medical liable for actual fraud, the plaintiff must show that Rabeo (1) made a false representation, (2) of a material fact, (3) intentionally and knowingly, (4) with intent to mislead, and that (5) the misrepresentation induced the plaintiffs reasonable reliance, (6) causing a resulting injury.
Diaz Vicente v. Obenauer,
In support of Count III, the plaintiff argues that a reasonable finder of fact could conclude that Nielsen committed constructive fraud by stating that the Rabeo proposal was a “reasonably good thing to do.” The Court is unconvinced. Constructive fraud ordinarily “cannot be predicated upon what amounts to a mere expression of an opinion.”
Piedmont Trust Bank v. Aetna Cas. & Sur. Co.,
Moreover, the Court has already held that the plaintiff was capable of securing competent advice about the proposal. That she did not is not Nielsen’s cross to bear.
See First Nat’l Exch. Bank v. Johnson,
B. Breach of Fiduciary Duty
In Count IV, the plaintiff maintains that Nielsen owed her a fiduciary duty, and breached it by making the representations discussed above. While the Court’s disposition of Counts I and III indicates that there has been no breach, Nielsen also questions the basis for such a duty.
The existence of a fiduciary duty is ordinarily a question of fact.
Allen Realty Corp. v. Holbert,
the plaintiffs were social friends of [the defendant] and other partners of [the defendant’s] firm and ... members of the firm spent considerable amount of time working closely with the [plaintiffs] on business matters ... [The firm] rendered accounting services to [the plaintiffs] for four years prior to the initiation of the investment transactions and served as their accountants for a total of at least ten years.
Here, however, no reasonable juror could conclude that Nielsen owed the plaintiff such a duty. An older Virginia case is particularly instructive. In
Hancock v. Anderson,
Trust alone ... is not sufficient. We trust most men with whom we deal. There must be something reciprocal in the relationship before the rule can be invoked. Before liability can be fastened upon one there must have been something in the course of dealings for which he was in part responsible that induced another to lean upon him, and from which it can be inferred that the ordinary right to contract had been surrendered.
Id.,
Against this background, plaintiffs claim must fail. Her sole evidence that Nielsen owed her a fiduciary duty comes from the condolence letter he sent her in September 1992. The plaintiff avers that this letter induced her trust and confidence, with the result that later she accepted his opinion about the proposed amendment to the Agreement. But Nielsen simply told the plaintiff that “the Nielsen’s [sic] and General Medical are here for you. Our love is a constant that you will always be able to count on.” This is a statement of compassion, not an invitation to follow Nielsen’s investment advice. It is a far cry from the inducement required to create a fiduciary bond between the speaker and audience on matters such as the Rabeo proposal.
The plaintiff attempts to distinguish Hancock by noting that the defendant there expressly disavowed a confidential relationship by disclosing that he worked for a conflicting interest. However, this evidence factored less in the сourt’s calculus than the cashier’s exhortation that the plaintiff should seek the advice of another professional. Said the court, “[t]hat he should have advised her to consult with one of the most alert business men of Richmond is out of keeping with any purpose to defraud.” Id.
In this case, of course, Nielsen acted in precisely the same manner, informing the plaintiff that she should consult an attorney or financial advisor. F. Connelly Dep. at 36-37; Nielsen Dep. at 55. In any event, Nielsen was under no obligation to disclose the obvious; the plaintiff was abundantly familiar with his ties to Rabeo. Thus, she was on notice that Nielsen was not her representative in the Rabeo deal; for her to believe otherwise was irrational. One letter and one brief telephone conversation are not the breeding ground of a fiduciary duty.
On another front, the plaintiff contends that Nielsen is her fiduciary as a matter of Delaware law. As the director of Rabeo, a Delaware corporation, Nielsen would have created a fiduciary duty if he took advantage of inside information and deliberately misleading an ignorant shareholder to her detriment.
See Caballero v. Anselmo,
C. Rescission
Finally, the plaintiff seeks to set aside the amendment to the Shareholder Agreement and gain future consideration for the stock she sold to Rabeo. She claims, inter alia, that the amendment is the product of fraud and misrepresentation, and is therefore unconscionable, unfair, and lacking in consideration. She also argues that she did not give her knowing assent to the modification. After a thorough review of the record, and in light of the Court’s resolution of those issues already discussed, the Court finds no merit to the plaintiffs contentions, and will therefore enter summary judgment for the defendants.
In this case, a relatively unsophisticated shareholder, trying to recover from the recent loss of her husband, took the inadvisable step of entering into a major securities transaction without fully understanding the deal. The resulting misfortune, the estate’s inability to double its take on the ensuing buyout, makes for an outwardly harsh result. But these facts do not change the law applicable to this case, under which the plaintiff must shoulder the blame.
The proposal Rabeo made to the plaintiff was not one-sided or unfair. Although Rab-eo regularly redeemed stock held by the estates of former employees, the company offered the plaintiff an alternative: the estate could keep one half of the stock, provided the plaintiff agreed to waive all rights to future consideration on the other. ' As a result, the estate had the hope of one day selling those 43,200 shares for market value, instead of ceding them back to Rabeo for a pittance.
Of course, viewing the transaction through the distorting haze of the subsequent buyout, the proposal appears to be less favorable. The estate would have profited handsomely had the plaintiff rejected the modification, whether Rabeo purchased the estate’s stock or not. But “hindsight reaction to an improvident sale ..., based upon nondiselosed facts equally known or available to both parties, ordinarily [will] not be considered within the protective basis of Rule 10b-5.”
Myzel v. Fields,
From that viewpoint, it is clear that the plaintiff was in a better position to avoid any misconception. Had the Court authored the February 25 -letter, perhaps it might have explained the proposal in greater detail. On the other hand, the plaintiff was told to contact Rabeo officials for further explanation, and professional advice was suggested. But not once did the plaintiff seek to delay the process or manifest her reluctance to sign. For all the defendants knew, the woman who walked into the General Medical building оn March 1 was fully informed and quite capable of entering into the modification agreement. As the plaintiff herself said, “they asked me to sign, and I willingly signed.” F. Connelly Dep. at 82. These are not circumstances indicative of fraud or sharp practices.
Accordingly, and for the reasons stated, the Court will GRANT the defendants’ motion for summary judgment.
An appropriate Final Order shall issue.
FINAL ORDER
THIS MATTER is before the Court upon the plaintiffs Motion for Leave to File an Amended Complaint and the defendants’ Motion for Summary Judgment. Upon due consideration, and for the reasons set forth in the accompanying Memorandum Opinion, the Court hereby GRANTS both motions. The Clerk is DIRECTED to file the plaintiffs Amended Complaint. The Court hereby enters judgment on that complaint in favor of the defendants.
And it is SO ORDERED.
Notes
. The Agreement was a standard form contract used by Rabeo to delineate the terms of stock ownership. Dep. of Stuart Turner at 12.
. The Agreement set the price for such a transaction at the value of "the adjusted shareholders equity allocable to those shares as of the last day of the fiscal year immediately preceding” the decedent's death. Compl. ¶ 11, Ex. 1, at V 2.2(a). The price for any given date was to be determined "on the basis of [Rabco’s] consolidated balance sheet as of that date,” subject to adjust
. Nielsen is currently Chief Executive Officer and Chairman of the Board of General Medical. Compl. ¶ 6.
. However, the plaintiff also stated during her deposition: "I don’t know what I was thinking then. I probably understood it then. I can't honestly say right now. It’s been almost two years.” F. Connelly Dep. at 42. Given the procedural posture of this case, however, the Court will presume that she did not understand the Agreement or the proposed amendment.
. It was the company's standard practice to take the stock of former managers and retain them as treasury shares, reissuing them as needed "for replacement or for additional office[r]s.” Turner Dep. at 32.
. Nielsen had asked Nedrow to attend the meeting on his behalf. Nielsen Dep. at 61-62; Ned-
. Robison has no memory of the encounter whatsoever. Robison Dep. at 12-13.
. This term refers to Nielsen, Nedrow, Robison, Bruce Glickstein, and James Warren. In addition, two others figures named Fatzinger and Garber, no longer with General Medical, occupied peripheral roles. Aff. of G. Keith Nedrow ¶ 4.
. According to Nedrow, neither he nor Nielsen adequately understood their rights under the Agreements. Nedrow Dep. at 77. Nielsen, however, contends that he "had a prеtty good understanding" of the Agreements, Nielsen Dep. at 25, and states that they merely sought out a lawyer to confirm their suspicion that the Agreements gave them "no real rights.” Id. at 73.
. Thus, General Medical is Rabco’s successor-in-interest and a real party in interest for this litigation.
. The plaintiff's lawyers sent a copy of the proposed Amended Complaint to the defendants' counsel on February 16, 1995. Defense counsel offered their suggestions regarding the proposed complaint, some of which were incorporated into the final document submitted on February 21. Pl.'s Reply. Br. in Supp. of Mot. for Leave to Am. at 2.
. The defendants' curiosity has been piqued in one area: the plaintiff’s personal knowledge of her new found facts. However, since the allegations clearly arise from deposition testimony, the answer ought to be readily apparent. There is no evidence that the plaintiff had previously knowledge of these allegations but suppressed them for production at a later date. If she had an independent basis for her allegations, she logically would have included them in her original Complaint. That she did not indicates that the defendants already know all they could possibly discover on this issue.
. The evidence most closely related to this claim is Nielsen’s statement that the amendment was "a reasonably good thing to. do." However, as shown below, infra at 1118, this statement was an inactionable opinion.
. Under that rule, noted in
Taylor,
. The plaintiff argues that this alleged duty arose from their “affirmative representations ... concerning the attractiveness of the modification offer.” To create a duty to disclose, however, those representations must have been inaccurate, incomplete, or misleading.
Roeder v. Alpha Indus., Inc.,
. Particularly when the deal, ex ante, was favorable to the estate. This is not a case in which the defendants preyed upon a suspecting victim. To the contrary, all the evidencé indicates that they attempted to enrich the plaintiff by giving the estate something to which it would ordinarily not be entitled — the right to retain one-half of the decedent's stock.
. This claim is raised in the plaintiffs opposition brief but not in either of her complaints. In the interests of finality, however, the Court will address the claim.
. Of course, the contract could also be read, and perhaps more logically ought to be read, to allow Rabeo to purchase "all but not less than all of the stock held by the estate at the time the company exercises its five year option." The question is of no consequence, however, since the plaintiffs claim fails for other reasons.