Boone v. Carlsbad Bancorporation, Inc.
| Decision Date | 28 August 1992 |
| Docket Number | No. 89-2066,89-2066 |
| Citation | 972 F.2d 1545 |
| Parties | Alma BOONE; Estate of James R. Coleman; T. Dudley Cramer; James L. Dow and Betty Jo Dow, his wife; Zora Ann Evans; Nancy Flanagan; Natalie Buck; Marshall Elmore; Marjorie Mansfield, Trustee of the H.H. Thomas Testamentary Trust; J.R. Mansfield, M.D.; and Cody Monte, Plaintiffs-Appellants, Glen R. Pollard, Plaintiff-Intervenor-Appellant, v. CARLSBAD BANCORPORATION, INC., a New Mexico corporation; the Carlsbad National Bank, a national banking association; Cecil Arnold; Gerry Berg; Don Brewer; Mike Capps; Elizabeth Capps; George Crump; A.R. Donaldson; George Thomas Dunagan; Ronnie Firestone; Richard J. Forrest; Robert H. Forrest; Joe Gant, III; T.E. Hauser; A. Ron Hoffman; Barrie Hood; Ross Hyden; Ross Manganaro; Ann Manganaro; Earl Miller; Robert C. Murray; Prentiss O'Neal; Pam Pai; Vin Pai; James D. Renfrow; Resource Management, Inc.; Keith Sparks; Laurence Walterscheid; Sylvia Walterscheid; James F. Zimmerman; United States of America; Comptroller of the Currency; Myer Rosenberg; Sidney J. Bernard; and Federal Deposit Insurance Corporation, in its capacity as Receiver for MBank Dallas, N.A., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
William C. Schaab of Rodey, Dickason, Sloan, Akin & Robb, P.A., Albuquerque, N.M., for plaintiffs-appellants.
Charles A. Gall of Jenkens & Gilchrist, P.C., Dallas, Tex. (Robert A. Johnson and James L. Rasmussen of Kemp, Smith, Duncan & Hammond, Albuquerque, N.M., with him on the brief), for defendants-appellees.
Lester N. Scall, Office of the Comptroller of the Currency, Washington, D.C. (L. Robert Griffin, Office of the Comptroller of the Currency, Washington, D.C., and Raymond Hamilton, Asst. U.S. Atty., Albuquerque, N.M., with him on the brief), for defendant-appellee Comptroller of the Currency.
David L. Swanson (Allen W. Kimbrough, with him on the brief) of Winstead, McGuire, Sechrest & Minick, Dallas, Tex., for defendant-appellee F.D.I.C.
Before HOLLOWAY and McWILLIAMS, Senior Circuit Judges, and BABCOCK, * District Judge.
Plaintiffs, former minority shareholders of Carlsbad National Bank (CNB), appeal from various orders in the United States District Court for the District of New Mexico whereby the court granted summary judgment on certain of plaintiffs' claims and dismissed others for failing to state a claim. The court dismissed plaintiffs' remaining state law claims by declining to exercise pendent jurisdiction. We affirm.
The following facts, asserted in plaintiffs' second and third amended complaints, are taken as true for purposes of this appeal. 1
This action arises from events culminating in the April 21, 1986, consolidation of CNB with the state-chartered, New Carlsbad Bank (New Bank) in a reverse triangular merger. 2 New Bank is a wholly owned subsidiary of a one-bank holding company, defendant Carlsbad Bancorporation ( Company).
In 1983, defendants Ronald L. Bouchier and R. Lew Bouchier began purchasing CNB common stock. Defendant MBank, Dallas (MBank), provided loans to finance these acquisitions, requiring that the stock serve as security for the loans. By March 1985, the Bouchiers had acquired approximately 61% of CNB's 250,000 outstanding shares. In April 1985, the Bouchiers defaulted on the notes secured by the stock, and MBank announced a private sale of the shares. Before the sale, however, the Bouchiers entered negotiations with the individual defendants, ten of the nineteen CNB officers who owned approximately 10% of CNB's stock. The individual defendants agreed to assume the Bouchier notes in exchange for the Bouchiers' agreement to sell their CNB stock. MBank subsequently renewed the notes.
In preparation for the stock transfer, the individual defendants organized the Holding Company on June 7, 1985, and sought approval from federal authorities to operate it as a one-bank holding company. In June and July of 1985, MBank agreed to lend $8,303,382 to the Holding Company to enable it to assume the renewed notes from the individual defendants (the acquisition indebtedness). On August 15, 1985, the Bouchiers and the individual defendants entered into a Stock Purchase Agreement whereby the Bouchiers sold their stock for $63.12 per share to the individual defendants. The individual defendants, (hereafter the Controlling Shareholders), thus gained control of over 71% of CNB's stock. Under this agreement, MBank also loaned $500,000 to the Controlling Shareholders who used this money to form New Bank, a wholly owned subsidiary of the Holding Company.
The directors of CNB, including the Controlling Shareholders, unanimously voted to approve a merger agreement between CNB and New Bank. The merger proposal was mailed to all the CNB shareholders, including plaintiffs, via a prospectus and proxy statement dated February 14, 1986. Subject to the approval of federal agencies, the merger agreement provided for consolidation of CNB and New Bank whereby CNB would be the surviving entity and would be wholly owned by the Holding Company. The merger was approved by 82% of the voting shares, well in excess of the two-thirds majority required by New Mexico law. See N.M.Stat.Ann. §§ 58-4-2, 58-4-5 (1984).
Pursuant to the merger, the 250,000 common shares of outstanding CNB stock were exchanged for 250,000 shares of the common stock of the Holding Company. Additionally, the Controlling Shareholders received a cash equivalent of $48.05 per share for their surrendered CNB stock through the assumption of the acquisition indebtedness by the Holding Company. Some Controlling Shareholders also received preferred stock in the Holding Company. Minority shareholders of CNB who did not dissent from the merger received either unsecured debentures equal to $48.05 per share, or Holding Company preferred stock. Under the terms of the merger, the Controlling Shareholders would elect all of the directors of the Holding Company. Moreover, the Holding Company pledged all of the shares of CNB acquired in the merger as security for the $8,303,382 loan from MBank.
The Holding Company offered $35 per share to the dissenting minority shareholders, including the plaintiffs. Plaintiffs refused and surrendered their stock pursuant to 12 U.S.C. § 215 in order to invoke their statutory appraisal rights. Under the statute, each side could appoint one appraiser to a three-person appraisal committee; the third appraiser would be selected by the two appointed ones. See § 215(c). Although the plaintiffs appointed W. Wood to the appraisal committee within the statutory time period, the committee was never formed due to either CNB's failure to appoint an appraiser or the failure of the two appointed appraisers to agree upon a third. Thus, there was no committee appraisal of the CNB stock under § 215(c). On September 2, 1986, CNB asked the Comptroller of the Currency (Comptroller) to conduct an appraisal pursuant to § 215(d). All interested parties were allowed to submit material to the Comptroller. On December 9, 1987, the Comptroller issued its appraisal, valuing the dissenting shares at $40.44 per share. The rejected Holding Company stock was auctioned and the proceeds in excess of the appraised value of the dissenting shares were paid to the plaintiffs.
Plaintiffs filed suit against CNB, the Holding Company, MBank, and the Controlling Shareholders, alleging various violations of federal securities laws, civil RICO, and pendent state claims based on fraud and breach of fiduciary duty. Plaintiffs sought the fair market value of their CNB stock, allegedly over $60 per share, which they claim was improperly depressed by the events leading up to and culminating in the merger. Plaintiffs also requested injunctive relief.
In a companion case, plaintiffs sued the Comptroller, the Holding Company, and CNB, alleging that the Comptroller's valuation of the minority shareholders' stock was unreasonable, arbitrary, and capricious. Plaintiffs allege that the Comptroller lacked authority to conduct the appraisal. Plaintiffs there sought only injunctive relief. The district court consolidated both of these cases.
The applicable standards of review are well settled: Our review of the district court's grant of summary judgment is de novo. Eaton v. Jarvis Prods. Corp., 965 F.2d 922, 925 (10th Cir.1992). Summary judgment is proper if the record shows that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The record must be viewed in the light most favorable to the nonmovants Our standard of review for an order granting a motion to dismiss for failure to state a claim is also de novo. See Morgan v. City of Rawlins, 792 F.2d 975, 978 (10th Cir.1986). Under Rule 12(b)(6), dismissal is inappropriate unless the plaintiffs can prove no set of facts in support of their claims to entitle them to relief. Id.
and the moving parties have the burden of showing that they are entitled to summary judgment as a matter of law. Ewing v. Amoco Oil Co., 823 F.2d 1432, 1437 (10th Cir.1987). Once this burden is carried, however, the nonmovants must designate specific facts demonstrating the existence of a genuine, dispositive issue on which they will bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986)
By order of July 8, 1987, the district court held that 12 U.S.C. § 215 applied to the reverse triangular merger in this case. 3 The court also determined that the Controlling Shareholders' recourse to the Comptroller for an appraisal under § 215(d) was appropriate because the appraisal remedies provided in subsections (c) and (d) were independent alternative remedies. In a subsequent ruling on November 29, 1988, the court rejected plaintiffs' claim...
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