Comprehensive Care Corp. v. RehabCare Corp., No. 95-3328

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtBefore RICHARD S. ARNOLD, Chief Judge, MORRIS SHEPPARD ARNOLD; ROSENBAUM
Citation98 F.3d 1063
Decision Date21 November 1996
Docket NumberNo. 95-3328
PartiesFed. Sec. L. Rep. P 99,339 COMPREHENSIVE CARE CORPORATION, Appellee, v. REHABCARE CORPORATION, Appellant.

Page 1063

98 F.3d 1063
Fed. Sec. L. Rep. P 99,339
COMPREHENSIVE CARE CORPORATION, Appellee,
v.
REHABCARE CORPORATION, Appellant.
No. 95-3328.
United States Court of Appeals,
Eighth Circuit.
Submitted June 10, 1996.
Decided Oct. 22, 1996.
Rehearing Denied Nov. 21, 1996.

Page 1064

Daniel Conlisk, St. Louis, MO, argued (Gerald Greiman, St. Louis, MO, argued in rebuttal; Thomas W. Jerry, St. Louis, MO, on the brief), for Appellant.

Mark G. Arnold, St. Louis, MO, argued (Alan Popkin and Michael Wetmore, St. Louis, MO, on the brief), for Appellee.

Before RICHARD S. ARNOLD, Chief Judge, MORRIS SHEPPARD ARNOLD, Circuit Judge, and ROSENBAUM, * District Judge.

ROSENBAUM, District Judge.

Comprehensive Care Corporation ("CompCare") was the parent of its wholly-owned subsidiary, RehabCare Corporation ("RehabCare") until mid-1991. Subsequent to this time, however, CompCare required additional funding. To secure these funds, CompCare contractually allowed RehabCare to purchase a number of RehabCare shares. RehabCare purchased the shares from CompCare in October, 1992. Thereafter, CompCare claimed RehabCare breached the share-purchase contract. CompCare brought claims of securities fraud, breach of contract, and common law fraud. A jury returned a $2,681,250.00 verdict in CompCare's favor. In April, 1995, the district court entered judgment in the amount of the jury award. RehabCare appeals the district court's entry of judgment. We reverse.

Page 1065

I.

Since mid-1991, CompCare has twice sold major portions of its RehabCare stock. CompCare sold the first portion of its RehabCare shares in a public offering, retaining 48 percent of RehabCare's stock, in mid-1991. As part of this transaction, CompCare obtained two seats on RehabCare's board of directors. During the summer of 1992, CompCare decided to sell its remaining RehabCare stock. CompCare approached RehabCare, and RehabCare indicated it was willing to purchase the stock.

In early August, 1992, the parties agreed in principle that RehabCare would buy 1,875,000 shares of its stock for $8 per share. Thereafter, at CompCare's August 26, 1992, board meeting, CompCare's president reported that another buyer was willing to purchase the stock at $10 per share or more. No such offer was tendered, however, and CompCare needed to conclude the sale. At the August 26 meeting, the CompCare board authorized the stock sale to RehabCare.

On August 27, 1992, CompCare and RehabCare representatives met to discuss the pending transaction. During that meeting, RehabCare received a letter from Continental Medical Systems, Inc. ("CMS"), offering to acquire RehabCare for $10 per share. Knowing of this offer, CompCare agreed to sell the 1,875,000 shares to RehabCare for $8 per share on the condition that, if RehabCare were acquired within 12 months of the redemption, RehabCare would pay CompCare the amount by which the sale price exceeded $8 per share. The parties referred to these "stock appreciation rights" as "SARs". The parties signed a letter of intent embodying these terms, and on September 1, 1992, the redemption agreement was executed.

Meanwhile, during early August, 1992, RehabCare prepared a shareholder rights plan (a "poison pill") for consideration by its board of directors. Under the plan, if a purchaser acquired a certain percentage of RehabCare stock, the acquisition would confer preferred share rights on existing shareholders. On August 19, 1992--13 days before the execution of the CompCare/RehabCare stock redemption agreement--written materials, including a summary of the proposed plan, were sent to RehabCare's directors. At that time, CompCare's two RehabCare board representatives were James Carmany and Harvey Felsen, each of whom received a copy of the August 19, 1992, materials. Carmany was CompCare's president and chief executive officer until August 26, 1992. Felsen was a CompCare director and one of three members of CompCare's executive committee. RehabCare's board adopted the poison pill on September 21, 1992.

Also in August, 1992, when CMS first offered to acquire RehabCare, RehabCare's board decided the $10 per share offer was too low. As a result, on August 28, 1992, Rehabcare told CMS it was not interested in being acquired. On October 8, 1992, CMS raised its RehabCare bid to $11.25 per share. On October 15, 1992, RehabCare's board...

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48 practice notes
  • Dick v. Koski Prof'l Grp., P.C., No. S-19-132.
    • United States
    • Supreme Court of Nebraska
    • 30 d5 Outubro d5 2020
    ...Ltd. , supra note 53.57 See id.58 Coffey v. Planet Group , 287 Neb. 834, 845 N.W.2d 255 (2014).59 Comprehensive Care Corp. v. RehabCare , 98 F.3d 1063, 1066 (8th Cir. 1996).60 Coffey v. Planet Group , supra note 58.61 Eager v. Berke , 11 Ill. 2d 50, 142 N.E.2d 36 (1957).62 2 Restatement (Se......
  • Cranpark Inc. v. Rogers Group Inc., Case No. 4:04CV1817.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • 2 d3 Junho d3 2010
    ...was a condition precedent. A condition precedent is generally not a promise. See Comprehensive Care Corp. v. RehabCare Corp., 98 F.3d 1063 (8th Cir.,1996); see also Williston § 38:15; Merritt Hill Vineyards Inc. v. Windy Heights Vineyard, Inc., 61 N.Y.2d 106, 472 N.Y.S.2d 592, 460 N.E.2d 10......
  • Park Irmat Drug Corp. v. Express Scripts Holding Co., Case No. 4:17–CV–0979 RLW
    • United States
    • United States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
    • 21 d3 Fevereiro d3 2018
    ...rise to new obligations not otherwise contained in a contract's express terms." Comprehensive Care Corp. v. RehabCare Corp., 98 F.3d 1063, 1066 (8th Cir. 1996). See also Stone Motor Co. v. General Motors Corp., 293 F.3d 456. 466 (8th Cir. 2002) ("general implied duty of good faith......
  • Varela v. AE Liquidation, Inc. (In re AE Liquidation, Inc.), No. 16-2203
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • 4 d5 Agosto d5 2017
    ...the WARN Act in close cases, such notice is not mandatory, and Eclipse cannot be held liable for its failure to provide it. See Loehrer, 98 F.3d at 1063...
  • Request a trial to view additional results
48 cases
  • Dick v. Koski Prof'l Grp., P.C., No. S-19-132.
    • United States
    • Supreme Court of Nebraska
    • 30 d5 Outubro d5 2020
    ...Ltd. , supra note 53.57 See id.58 Coffey v. Planet Group , 287 Neb. 834, 845 N.W.2d 255 (2014).59 Comprehensive Care Corp. v. RehabCare , 98 F.3d 1063, 1066 (8th Cir. 1996).60 Coffey v. Planet Group , supra note 58.61 Eager v. Berke , 11 Ill. 2d 50, 142 N.E.2d 36 (1957).62 2 Restatement (Se......
  • Cranpark Inc. v. Rogers Group Inc., Case No. 4:04CV1817.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • 2 d3 Junho d3 2010
    ...was a condition precedent. A condition precedent is generally not a promise. See Comprehensive Care Corp. v. RehabCare Corp., 98 F.3d 1063 (8th Cir.,1996); see also Williston § 38:15; Merritt Hill Vineyards Inc. v. Windy Heights Vineyard, Inc., 61 N.Y.2d 106, 472 N.Y.S.2d 592, 460 N.E.2d 10......
  • Park Irmat Drug Corp. v. Express Scripts Holding Co., Case No. 4:17–CV–0979 RLW
    • United States
    • United States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
    • 21 d3 Fevereiro d3 2018
    ...rise to new obligations not otherwise contained in a contract's express terms." Comprehensive Care Corp. v. RehabCare Corp., 98 F.3d 1063, 1066 (8th Cir. 1996). See also Stone Motor Co. v. General Motors Corp., 293 F.3d 456. 466 (8th Cir. 2002) ("general implied duty of good faith......
  • Varela v. AE Liquidation, Inc. (In re AE Liquidation, Inc.), No. 16-2203
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • 4 d5 Agosto d5 2017
    ...the WARN Act in close cases, such notice is not mandatory, and Eclipse cannot be held liable for its failure to provide it. See Loehrer, 98 F.3d at 1063...
  • Request a trial to view additional results

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