Boettcher v. IMC Mortg. Co., 2D03-3101.

• Decision Date: 12 May 2004
• Docket Number: No. 2D03-3101.,2D03-3101.
• Citation: 871 So.2d 1047
• Parties: Dwayne R. BOETTCHER; Larry E. Cheek; Karl T. and Phyllis J. Coles; Michael T. and Lara M. Coles; Gian A. and Susan S. Cossa; Gian A. Cossa; Susan S. Cossa; Linda and Joseph Costello; DNA Data Systems; Albert C. and Laura A. Damico; Paul and Diana Dexter; David Dunn; Robert Eckardt; Susan Eipert; Donald J. Farris; David Fenlon; Thomas Fountain; Judith J. Gaglani; Eugene Harley; Raghab Inkibar; Abdulkader M. Inkidar and Kathy J. Inkidar; Inkidar Enterprises, Inc.; Craig L. and Lisa J. Kaufman; Mark Stuart Keeler; Robert J. King, Jr.; Laura Irene Lizotte; Cherrie B. McKenzie; Dennis Noon; Dean W. Oswald; Jose Romeo Posada; Sydney B. Self, Jr.; Shi Jian; O. Phillip Smith; David Storf; Brian Troxell; James Varanelli; Mary A. and Gary W. Vinesett; Peter Williams; Daniel J. Ziegler, Appellants, v. IMC MORTGAGE COMPANY, Appellee.
• Court: Florida District Court of Appeals

871 So.2d 1047

Dwayne R. BOETTCHER; Larry E. Cheek; Karl T. and Phyllis J. Coles; Michael T. and Lara M. Coles; Gian A. and Susan S. Cossa; Gian A. Cossa; Susan S. Cossa; Linda and Joseph Costello; DNA Data Systems; Albert C. and Laura A. Damico; Paul and Diana Dexter; David Dunn; Robert Eckardt; Susan Eipert; Donald J. Farris; David Fenlon; Thomas Fountain; Judith J. Gaglani; Eugene Harley; Raghab Inkibar; Abdulkader M. Inkidar and Kathy J. Inkidar; Inkidar Enterprises, Inc.; Craig L. and Lisa J. Kaufman; Mark Stuart Keeler; Robert J. King, Jr.; Laura Irene Lizotte; Cherrie B. McKenzie; Dennis Noon; Dean W. Oswald; Jose Romeo Posada; Sydney B. Self, Jr.; Shi Jian; O. Phillip Smith; David Storf; Brian Troxell; James Varanelli; Mary A. and Gary W. Vinesett; Peter Williams; Daniel J. Ziegler, Appellants, v. IMC MORTGAGE COMPANY, Appellee.

No. 2D03-3101.

District Court of Appeal of Florida, Second District.

May 12, 2004.

Richard E. Brodsky of Brodsky & Mullin, P.A., Coconut Grove, for Appellants.

John R. Hamilton of Foley & Lardner, Orlando; and Scott D. Richburg and Jessie L. Harrell of Foley & Lardner, Jacksonville, for Appellee.

WALLACE, Judge.

In this case, we are called upon to determine whether the circuit court properly entered a final summary judgment in a dissenters' rights action filed pursuant to section 607.1320, Florida Statutes (1999). IMC Mortgage Company, a Florida corporation (IMC), filed the action against IMC shareholders (the dissenters) who had opposed the sale of a substantial amount of IMC's assets to a subsidiary of Citigroup, Inc., and then perfected their rights under the dissenters' rights statute. On motion filed by IMC, the circuit court entered a final summary judgment that determined the "fair value" of the dissenters' IMC shares on the relevant date to be $0,035 per share. We conclude that IMC failed to meet its burden on summary judgment of proving that the fair value of the dissenters' shares was $0.035 per share as it maintained. Therefore, we reverse the final summary judgment, and we remand this case to the trial court for further proceedings.

Facts and Procedural History

IMC is a publicly held corporation.¹ On November 15, 1999, IMC sold a substantial amount of its assets to Citifinancial Mortgage Company, a subsidiary of Citigroup, Inc. Pursuant to section 607.1202, a majority of the shareholders of IMC were required to approve the sale. At a vote taken on November 12, 1999, the requisite majority of shareholders voted to approve the proposed transaction.

IMC shareholders who elected to dissent from the sale had dissenters' rights pursuant to section 607.1320. A number of shareholders served notice of their intent to dissent from the sale and demanded payment of the fair value of their IMC shares. These shareholders also deposited or agreed to deposit all of their share certificates with IMC. The relevant date for the determination of the fair value of the dissenters' shares was November 11, 1999, the day prior to the vote for approval of the sale.

IMC filed an action in the circuit court pursuant to section 607.1320(7) to determine the fair value of the dissenters' shares. The dissenters answered and requested a determination of the fair value of their IMC shares as of the relevant date and judgment against IMC for the amount of the fair value of each of the dissenters' shares.

IMC subsequently moved for summary judgment, contending that the fair value of IMC stock on the relevant date was $0.035 per share. In support of its motion, IMC relied on the allegations of its complaint that had been verified by its president.² Pertinent to the issue of the fair value of its shares, the complaint alleged facts purporting to establish that $0.035 per share was the closing price for IMC stock on the relevant date:

4. IMC is a publicly owned corporation and its shares are traded on an interdealer quotation system.

....

13. On November 11, 1999, the relevant date for determination of "fair value" of dissenters' shares pursuant to § 607.1301(2), Fla. Stat. (1999), the stock closed at $00.035 on volume of 756,100.

....

15. During the approximate one month prior to November 11, 1999, IMC's shares traded in a closing price range from $00.0271 to $00.054, on daily volume ranging from 756,100 to 25,100 shares.

Opposing IMC's motion for summary judgment, the dissenters did not dispute the allegations of IMC's complaint concerning the closing price of IMC's stock on the relevant date or the closing price range during the one-month period prior to that date.³ The dissenters argued, instead, that the closing price of IMC stock on the relevant date was negatively affected by the impending transaction. In support of their position, the dissenters relied on the affidavit of Stephen K. Halpert, a law professor who was offered as an expert in the fields of corporate law, securities regulation, and financial markets. In his affidavit, Halpert opined:

5. It is my expert opinion that the closing market price of IMC common stock the day before the shareholder vote on the Citigroup Sale, which IMC asserts is 3.5 cents per share, is not indicative of and does not determine "fair value" under the Act for the purpose of compensating dissenting shareholders under the Act. To hold otherwise would be inconsistent with the text, purpose and history of the Act.

....

8. In particular, it is apparent to me that the closing price of IMC shares on the OTCBB on November 11, 1999 was primarily determined by the anticipated effect of the Citigroup Sale, rather than the intrinsic value of the IMC [sic]. According to the proxy statement dated September 29, 1999 that was circulated by the management of IMC to shareholders to solicit their votes to approve the Citigroup Sale (the "IMC Proxy"), if the transaction were not approved, IMC would file for bankruptcy, which, according to management, would result in IMC shareholders losing their entire interest. Given management's representation of the alleged alternative in the IMC Proxy, shareholder approval was likely to be regarded by the market as virtually certain.

9. Moreover, because dissenters' rights are only available to shareholders entitled to vote, and because voting on the Citigroup Sale transaction was limited to IMC shareholders of record on September 17, 1999, a purchaser of IMC shares in the OTCBB market on November 11, 1999 would not be entitled to dissent and be paid "fair value" for his shares. Fla. Statutes § 607.1302(b) [sic]. Thus, even a buyer who believed on November 11, 1999 that IMC was worth more than represented by management in the proxy would be unwilling to pay a price greater than the maximum possible residual value of IMC shares after the Citigroup Sale transaction. Since the relevant section of the Act defines "fair value" so as to exclude the anticipated effects of the challenged corporate action (unless exclusion would be inequitable), determining the "fair value" of IMC's common stock on the basis urged by IMC would clearly be violative of the Act, and it would be highly inequitable if the Court were to apply the valuation method urged by IMC.

....

11. For the foregoing reasons, granting Plaintiff summary judgment on the basis of the closing market price on November 11, 1999 would bind defendants to the consequences of the Citigroup Sale notwithstanding their dissent, and would deny them the remedy of a fair valuation as intended by the Florida Business Corporation Act. Instead, to fulfill the requirements of the Act, the Court must conduct a factual inquiry to ascertain the "fair value" of IMC common stock, exclusive of any depreciation that resulted from the transaction.

Relying upon Halpert's affidavit, the dissenters argued that IMC was not entitled to a summary judgment because it had failed to establish the fair value of its shares on the relevant date.

After a hearing, the circuit court granted IMC's motion. In its final summary judgment, the circuit court accepted IMC's evidence of value and found that "[t]he fair value of Defendants' [the dissenters'] shares of IMC common stock on November 11, 1999, was $0.035 per share." From the final summary judgment, the dissenters have taken this appeal.

Summary Judgment

A final order granting a summary judgment is subject to de novo review. Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126, 130 (Fla.2000). A party moving for a summary judgment must conclusively demonstrate that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Fla. R. Civ. P. 1.510; Holl v. Talcott, 191 So.2d 40, 43 (Fla.1966); First N. Am. Nat'l Bank v. Hummel, 825 So.2d 502, 503 (Fla. 2d DCA 2002). Once the moving party meets its burden, then the party opposing entry of a summary judgment must prove the existence of genuine triable issues. Holl, 191 So.2d at 43-44; First N. Am. Nat'l Bank, 825 So.2d at 503.

In this case, the allegations of IMC's verified complaint purported to establish the fair value of its shares on the relevant date. On the other hand, the dissenters did not submit any evidence concerning the fair value of IMC's shares. Instead, the dissenters offered an affidavit that challenged IMC's methodology as insufficient to establish the fair value of its shares within the meaning of the statute. Under this state of the record, the issue presented is whether IMC met its burden of demonstrating its entitlement to summary judgment.

IMC argues that the Halpert affidavit was insufficient to withstand summary judgment. As IMC correctly observes, Professor Halpert did not offer an opinion concerning what the preferable method of valuation would be or what value that method would produce. Citing Lufthansa German Airlines Corp. v. Mellon, 444 So.2d 1066 (Fla. 3d DCA 1984), IMC argues that the dissenters "cannot create a genuine issue of material fact sufficient to preclude summary judgment by attempting to create facts within IMC's...