23 F.3d 539 (D.C. Cir. 1994), 92-7036, Gandal v. Telemundo Group, Inc.

Docket Nº:92-7036, 92-7037, and 92-7039.
Citation:23 F.3d 539
Party Name:Alvin GANDAL, Appellee, v. TELEMUNDO GROUP, INC., Appellant, ADVO System, Inc., et al. Alvin GANDAL, Appellee, v. TELEMUNDO GROUP, INC., et al. Alvin GANDAL v. TELEMUNDO GROUP, INC., et al., Reliance Group Holdings, Inc., et al., Appellants.
Case Date:May 20, 1994
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

Page 539

23 F.3d 539 (D.C. Cir. 1994)

Alvin GANDAL, Appellee,



ADVO System, Inc., et al.

Alvin GANDAL, Appellee,





TELEMUNDO GROUP, INC., et al., Reliance Group Holdings,

Inc., et al., Appellants.

Nos. 92-7036, 92-7037, and 92-7039.

United States Court of Appeals, District of Columbia Circuit

May 20, 1994

Page 540

Appeals from the United States District Court for the District of Columbia (89cv2563).

Page 541

Kathleen L. Beggs, with whom Jeremiah C. Collins, John J. Buckley, Jr., and Kevin M. Downey, Washington, DC, were on the brief, for appellants/cross-appellees Telemundo Group, Inc., et al.

Glenn B. Manishin, with whom Jeffrey Blumenfeld, Washington, DC, was on the brief, for appellee/cross-appellant Gandal.

Before: EDWARDS, RUTH B. GINSBURG [*], and SILBERMAN, Circuit Judge.

Opinion for the Court filed by Circuit Judge SILBERMAN.


SILBERMAN, Circuit Judge:

On July 20, 1993, we dismissed Gandal's tort claims against three other defendants on the ground tat the district court lacked personal jurisdiction. See Gandal v. Telemundo Group, Inc., 997 F.2d 1561 (1993). Our opinion did not address the appeals and cross-appeals concerning Gandal's efforts to recover from Telemundo because they were automatically stayed by an involuntary bankruptcy petition filed against Telemundo on June 8, 1993. That stay has now been modified to permit this Court to decide the appeals. This opinion incorporates the statement of facts from the earlier opinion and addresses the claims against Telemundo.

Gandal appeals the district court's decision that, as a warrantholder, he was not entitled to receive the same consideration that the corporation paid to employee-holders of restricted shares. The corporation cross-appeals and argues that the district court erred when it determined that warrantholders had a right to receive a $1.50 cash dividend paid to shareholders. We affirm the district court's decision as to the restricted shares, but reverse its ruling on the cash dividend because a genuine issue of material fact as to whether Gandal was actually injured remains unresolved.


At the outset we encounter Telemundo's argument that both of Gandal's contract claims are untimely. Telemundo contends that the statute of limitations began to run on Gandal's claim to the same consideration as the holders of restricted shares--at the very latest--on the date that the corporation purchased those shares, September 4, 1986. And Telemundo believes that the claim to the cash dividend accrued on the date (August 19, 1986) that the dividend was declared. Therefore, Telemundo insists that both contract counts of Gandal's suit, filed on September 15, 1989, fell outside of the District of Columbia's three-year statute of limitations period, D.C.Code Ann. Sec. 12-301(7) (1989). See Steorts v. American Airlines, Inc., 647 F.2d 194 (D.C.Cir.1981). Gandal responds that the earliest date on which the limitations period could be thought to begin was December 24, 1986, the formal consummation of the merger. Gandal further contends that the period did not actually commence until the date of the suit, September 1989, when Telemundo rejected Gandal's request for the $1.50 cash dividend and the cash paid for the restricted shares.

The statute of limitations period for a breach of contract action, of course, begins to run upon the breach. See, e.g., Western Union Tel. Co. v. Massman Constr. Co., 402 A.2d 1275 (D.C.1979). This ostensibly simple legal rule provides little help to us, because the nature of Gandal's claim makes ascertaining the exact date of the alleged breach difficult. Gandal contends that he was harmed by not having been offered the full compensation to which he was entitled. In other words, the corporation's failure to offer Gandal his due allegedly prevented him from exercising (or attempting to exercise) his warrant. The provision that Gandal claims was breached, section 10.5, did not become operative, by its own terms, until after the formal consummation of the merger on December 24, 1986. Accordingly, a breach could have occurred before that date only if

Page 542

there was an anticipatory repudiation of the contract by Blair.

We are confident, however, that Blair could not have breached its obligation to pay the warrantholders the same compensation as it paid shareholders until the latter amount was firmly set. And we think that the warrantholders would have harbored legitimate uncertainty as to that amount until the shareholders were actually paid the cash dividend on September 15, 1986. Gandal's claim to the cash dividend itself therefore is timely. His claim to the same compensation as the restricted shareholders is also timely because he seeks not just the cash that the restricted shareholders were paid on September 4, 1986, but also the $1.50 cash dividend they received on September 15, 1986. We therefore must consider the merits of Gandal's contract claims.


Gandal claims that the warrant agreement entitles him to receive the same compensation as was paid to the holders of restricted Blair shares--i.e., $22.25 in cash and 2.57 ADVO shares. Although the restricted shares were Blair common stock of the same type and class as the publicly traded Blair shares, the employees were compensated more favorably than other shareholders (at least before taxes) because, while both groups were given the ADVO shares and the cash dividend, employees received $20.75 in cash instead of the less valuable junk bond. Gandal points out that, although the warrant agreement states that warrantholders will receive the same "kind and amount" of compensation as shareholders, it does not specify which group of shareholders provides the relevant baseline for comparison in the event that one group is treated better. He urges us to interpret this ambiguity against Telemundo and read the warrant agreement as incorporating a "most-favored shareholder" principle to the benefit of warrantholders.

Although acknowledging that the warrant agreement provides that New York law controls, Gandal, noting the absence of New York caselaw directly on point, suggests we rely upon the Delaware Supreme Court's recent decision in Continental Airlines Corp. v. American General Corp., 575 A.2d 1160 (Del.), cert. dismissed, 498 U.S. 953, 111 S.Ct. 376, 112 L.Ed.2d 390 (1990). In that case, the Delaware Court held that a holder of Continental warrants was entitled to receive the same compensation package as employees who held restricted shares. Rejected was the argument of the surviving corporation, Texas Air, that employee compensation was unrelated and incomparable to the merger consideration offered to other shareholders and that the agreement did not envision that warrantholders would be able "to pick and choose" among different forms of consideration legitimately offered to shareholders. Instead the court concluded that, "when Texas Air granted an option to some of the stockholders of Continental (the employee-stockholders), it was required [to] offer the same consideration to [the warrantholder]. Texas Air cannot escape the plain language of...

To continue reading