128 F.3d 94 (2nd Cir. 1997), 1265, Maharaj v. Bankamerica Corp.

Docket Nº:1265, Docket 96-7021.
Citation:128 F.3d 94
Party Name:Vikramchandra MAHARAJ, derivatively on behalf of InterQuant Capital Advisors, Ltd., and individually, Plaintiff-Appellant, v. BANKAMERICA CORP.; Bank of America National Trust and Savings Association; Security Pacific National Bank; Security Pacific Investment Group, Inc.; Bofa Capital Management Inc.; Robert H. Smith; Edward G. Hartman; J. Michael
Case Date:October 17, 1997
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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128 F.3d 94 (2nd Cir. 1997)

Vikramchandra MAHARAJ, derivatively on behalf of InterQuant

Capital Advisors, Ltd., and individually,

Plaintiff-Appellant,

v.

BANKAMERICA CORP.; Bank of America National Trust and

Savings Association; Security Pacific National Bank;

Security Pacific Investment Group, Inc.; Bofa Capital

Management Inc.; Robert H. Smith; Edward G. Hartman; J.

Michael Gaffney; Arthur A. Fritz; Ann Y. Lau; Richard G.

Wimbish; Christopher R. Helton; Katherine Wolking;

Defendants-Appellees.

Interquant Capital Advisors, Ltd., Nominal Defendant.

No. 1265, Docket 96-7021.

United States Court of Appeals, Second Circuit

October 17, 1997

Argued May 8, 1997.

Page 95

Bernard Persky, New York City (Jonathan Gardner, Goodkind Labaton Rudoff & Sucharow LLP, New York City, of counsel), for Plaintiff-Appellant.

David B. Chenkin, New York City (John M. Wilson, Zeichner Ellman & Krause, New York City, of counsel), for Defendants-Appellees.

Before: FEINBERG, CARDAMONE, and LEVAL, Circuit Judges.

CARDAMONE, Circuit Judge:

Full of high expectations for success, plaintiff and defendants together formed a new business venture in which defendants took a majority stake and plaintiffs assumed managerial responsibility. Later, defendants determined to end the relationship and wind up the business. The reason advanced for terminating plaintiff was not, as one might expect, because of disappointed business expectations; but, rather because of plaintiff's alleged violation of defendants' personal code of conduct. The consequences of defendants' strong reaction to what they perceived to be plaintiff's personal misconduct reinforces the notion that passion conquers reason. That such proved to be the case here is reflected in plaintiff's favorable jury verdict in the breach of employment contract suit he brought against defendants.

Plaintiff Vikramchandra Maharaj appeals from a December 1, 1995 judgment of the United States District Court for the Southern District of New York (Cote, J.), dismissing his complaint. The district court ruled plaintiff's individual claims were barred by res judicata and that he was precluded from asserting derivative claims on behalf of InterQuant Capital Advisors, Ltd. under the doctrine of judicial estoppel. Plaintiff challenges both rulings on appeal.

BACKGROUND

Maharaj's complaint tells the following tale. In December 1987 he and defendant Security Pacific National Bank (Security Pacific or the Bank), founded a Delaware corporation named InterQuant Capital Advisors, Ltd. (InterQuant). InterQuant was formed for the purpose of providing investment advice using quantitative methods and proprietary software Maharaj had developed. The Bank provided 80 percent of the initial equity, and Maharaj contributed 20 percent. Maharaj was elected as a director and named President and Chief Executive Officer of the newly formed company pursuant to a five-year employment agreement. Maharaj and Security Pacific also signed a stockholders' agreement, which stated that in the event Maharaj's employment by InterQuant was terminated for any reason, InterQuant, the Bank, or certain of InterQuant's employees would have the option to buy Maharaj's shares.

In October 1989 defendant Security Pacific Investment Group, to which the Bank had transferred its interest in InterQuant, informed Maharaj that his employment was terminated as of October 4, 1989, purportedly for failing to abide by Security Pacific's code of conduct. On October 18 the InterQuant board, from which Maharaj had been removed following his firing, adopted a resolution stating that plaintiff's shares of InterQuant stock were worth $0. Notwithstanding

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the repurchase option contained in the stockholders' agreement, at no time did InterQuant, Security Pacific, or any of InterQuant's employees offer to redeem or purchase plaintiff's shares.

Shortly after dismissing Maharaj, the defendants caused InterQuant to transfer all its assets to another corporation they owned named InterCash Capital Advisors, Inc. (InterCash). InterCash, using assets obtained from InterQuant...

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