Connecticut Nat. Bank v. Fluor Corp.
| Decision Date | 05 January 1987 |
| Docket Number | D,No. 41,41 |
| Citation | 808 F.2d 957 |
| Parties | Fed. Sec. L. Rep. P 93,060 The CONNECTICUT NATIONAL BANK, Plaintiff-Appellant, v. FLUOR CORPORATION and Fluor Acquisition Corporation, Defendants-Appellees. ocket 86-7394. |
| Court | U.S. Court of Appeals — Second Circuit |
Thomas J. Groark, Jr., Hartford, Conn. (James Sicilian, and Day, Berry & Howard, Hartford, Conn., on the brief), for plaintiff-appellant.
Edmund H. Kerr, New York City (Jonathan I. Blackman, and Cleary, Gottlieb, Steen & Hamilton, New York City, on the brief), for defendants-appellees.
Before TIMBERS, PRATT and ALTIMARI, Circuit Judges.
Appellant, The Connecticut National Bank ("CNB"), appeals from a judgment entered May 7, 1986 in the District of Connecticut, T. Emmet Clarie, District Judge, granting a motion of appellees Fluor Corporation and Fluor Acquisition Corporation ("Fluor") to dismiss CNB's amended complaint for failure to state a claim upon which relief can be granted and, with respect to Count I of the amended complaint, for failure to plead fraud with particularity. CNB's complaint alleged a claim under Secs. 14(d) and (e) of the Securities Exchange Act of 1934, 15 U.S.C. Secs. 78n(d) and (e) (1982) (the Williams Act), and three state law claims. The order dismissing the amended complaint granted leave to plaintiff to "amend its complaint within twenty days, provided it wishes to correct the legal inadequacies of said complaint."
The district court dismissed the Williams Act claim on the ground that CNB's allegations regarding scienter failed to satisfy the particularity requirement of Fed.R.Civ.P 9(b). The court dismissed the state law claims on the ground that, in view of the dismissal of the Williams Act claim, the court lacked pendent jurisdiction over the state law claims.
On appeal, CNB argues that the district court erred in dismissing the Williams Act claim since its allegations of scienter satisfied the particularity requirement of Rule 9(b). CNB also argues that the court erred in dismissing two of the state law claims since its complaint predicated jurisdiction over those claims on diversity of citizenship as well as on pendent jurisdiction.
We hold that the district court correctly dismissed the Williams Act claim since CNB's allegations of scienter failed to comply with the requirements of Rule 9(b). But we hold that the district court erred in dismissing the state law claims CNB pressed on appeal.
We affirm in part; and reverse and remand in part.
CNB, plaintiff below, is a national bank and a Connecticut corporation. Its principal place of business is Hartford. During the period of time when the events leading to the instant dispute occurred, CNB was known as the Hartford Bank and Trust Company. CNB is the Hartford Bank's successor in interest.
Fluor Corporation, one of the defendants below, is a Delaware corporation. Its principal place of business is in Irvine, California. Fluor Acquisition Corporation, the other defendant below, is a New York corporation. Its principal place of business is in New York City.
The complaint alleged that the amount in controversy, exclusive of interest and costs, exceeded $10,000.
Accordingly, in addition to federal question jurisdiction with respect to the Williams Act claim, the complaint alleged diversity jurisdiction which becomes relevant to the state law claims which we discuss below.
On April 6, 1981, Fluor made a tender offer for 20,410,000, or approximately 45%, of the common shares of St. Joe Minerals Corporation ("St. Joe"). We previously have stated the facts relating to that tender offer on an appeal from the dismissal of a class action brought by St. Joe stockholders. Schlesinger Investment Partnership v. Fluor Corporation, 671 F.2d 739 (2 Cir.1982). We assume familiarity with that opinion. We summarize only those additional facts believed necessary to an understanding of the issues raised on the instant appeal.
Fluor's offer to purchase for cash ("the offer") the St. Joe stock stated conspicuously on its cover page that "The Offer Will Expire at 12:00 Midnight, New York City Time, on Friday, May 1, 1981, Unless Extended." Page 2 of the offer, however, stated in smaller print the following oversubscription restriction:
On April 14, 1981, the Hartford Steam Boiler Company ("Steam Boiler") requested CNB, the custodian of its securities, to tender 50,000 of its St. Joe shares to Fluor. CNB did not comply with this request until some date after April 15 but before May 1, 1981. The exact date is not identified in the record. Fluor refused CNB's tender of Steam Boiler's St. Joe shares since more than 20,410,000 shares had been tendered by 12:00 midnight on April 15, 1981.
On May 4, 1981, CNB purchased from Steam Boiler 39,000 of its St. Joe shares. That number of shares represented the number that Fluor, by virtue of the proration requirements of the Williams Act, would have purchased had CNB tendered the 50,000 shares before midnight on April 15. On May 12, 1981, CNB resold, at a net loss of more than $550,000, the St. Joe shares it had purchased from Steam Boiler.
CNB commenced the instant action on April 25, 1985. On July 10, 1985, Fluor filed a motion to dismiss the complaint for failure to state a claim upon which relief could be granted pursuant to Fed.R.Civ.P. 12(b)(6). Before the district court could decide this motion, CNB filed an amended complaint on August 5, 1985. The amended complaint alleged that Fluor's failure to print the oversubscription restriction in the same paragraph with, and in the same size print as, the May 1, 1981 expiration date, and its failure in other ways to emphasize that restriction, constituted misstatements and omissions of material facts in the description of the tender offer in violation of the Williams Act. The only allegations regarding scienter were as follows:
"Fluor intended to mislead the shareholders or their agents, commercial banks or custodians by the aforesaid misstatements and omissions, or knew or should have known that the misstatements and omissions would mislead and confuse the shareholders or their agents, commercial banks, or custodians and acted recklessly and wantonly in communicating the terms of the offer."
The amended complaint also alleged state law claims under the Connecticut Unfair Trade Practices Act, ("CUTPA"), Conn.Gen.Stat.Ann. Sec. 42-110a, et seq. (1960 & West Supp.1986), and for common law misrepresentation and breach of contract. The amended complaint predicated jurisdiction over the state law claims on both diversity of citizenship and pendent jurisdiction.
On September 10, 1985, Fluor filed a motion to dismiss the amended complaint under Rules 9(b) and 12(b)(6). The district court granted this motion in an opinion dated April 29, 1986, i.e., it dismissed the Williams Act claim for failure to plead with particularity and the state law claims for lack of pendent jurisdiction. On May 7, 1986, judgment was entered on the court's opinion dismissing the amended complaint. This appeal followed.
For the reasons stated below, we affirm the judgment of the district court insofar as it dismissed CNB's Williams Act claim and the CUTPA claim, but we reverse and remand insofar as it dismissed the state law claims.
We turn first to the threshold question whether we have appellate jurisdiction in this case in which the judgment appealed from was entered upon an order of the district court which dismissed the complaint, with leave to plaintiff to "amend its complaint within twenty days, provided it wishes to correct the legal inadequacies of said complaint."
It is well settled in this Court that such dismissals with leave to amend are not "final decisions" within the meaning of 28 U.S.C. Sec. 1291 (1982) and therefore are not appealable absent a certificate under Fed.R.Civ.P. 54(b) or 28 U.S.C. Sec. 1292(b) (1982). Blanco v. United States, 775 F.2d 53, 56 (2 Cir.1985) (Friendly, J.); Elfenbein v. Gulf & Western Indus., Inc., 590 F.2d 445, 448 (2 Cir.1978); Kozemchak v. Ukrainian Orthodox Church of America, 443 F.2d 401, 401 (2 Cir.1971); Epton v. Hogan, 355 F.2d 203, 203 (2 Cir.1966); ABC v. Wahl Co., 121 F.2d 412, 413 (2 Cir.1941); Atwater v. North American Coal Corp., 111 F.2d 125, 125 (2 Cir.1940); see 9 Moore's Federal Practice p 110.08, at 114-15 (2d ed. 1986).
At oral argument before us, however, the presiding judge resolved the dilemma presented by the purported appeal from an interlocutory judgment in what strikes us as a sensible way. In response to Judge Pratt's inquiry of appellant's counsel as to whether he intended, after our decision, to file a further amended complaint, appellant's counsel responded unequivocally in the negative. We are satisfied that such disclaimer of intent to amend effectively cures the nonfinal character of the judgment from which the appeal has been taken. We do note, however, that the better practice would have been for counsel to have included in the record on appeal a written disclaimer of intent to amend, thus obviating a possible summary dismissal of the appeal with costs.
We turn next to CNB's argument that the district court erred in dismissing the Williams Act claim since its allegations of scienter satisfied the particularity requirement of Rule 9(b).
At the outset, we assume it is common ground that there...
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