Dennis v. General Imaging, Inc.
| Decision Date | 03 December 1990 |
| Docket Number | No. 90-3052,90-3052 |
| Citation | 918 F.2d 496 |
| Parties | Fed. Sec. L. Rep. P 95,655, RICO Bus.Disp.Guide 7637 Dr. Windsor DENNIS, Plaintiff-Appellant, v. GENERAL IMAGING, INC., Defendant, New South Distributors, Inc., et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Bruce A. North, Celeste Brustowicz, K. Margaret Le, Malony, North & Hanewinekel, Metiaire, La., for plaintiff-appellant.
Leroy A. Hartley and Robert C. Wallace, New Orleans, La., for Copelin, Villavso, New South Distributors.
M. Arnaud Pilie, Pilie, Pilie and Landry, New Orleans, La., for Thomas.
James L. Wheeler, Wheeler & Assoc., Metairie, La., for Campo.
Norbert A. Simmons and Ivy J. Prout, New Orleans, for Carl D. Robinson.
Appeals from the United States District Court for the Eastern District of Louisiana.
Before POLITZ, WILLIAMS, SMITH, Circuit Judges.
Dr. Windsor Dennis sued Sherman Copelin, Lloyd Villavaso, Dr. Carl Robinson, and Dr. Ignatius Thomas for alleged violations of sections 12(1), 12(2), and 15 of the Securities Act of 1933 and sections 10(b) and 20 of the Securities Exchange Act of 1934. In addition, he alleged that Copelin and Villavaso violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sec. 1961 et seq. 1 The district court granted summary judgments to Villavaso, Copelin, Thomas, and Robinson. Dennis appeals. We conclude that the district court properly awarded summary judgments. We affirm the decision of the district court based upon Judge Arceneaux's lucid and thorough opinion. Summary judgments were granted only upon the federal claims. Three pendent state claims were properly dismissed without prejudice. Finally, we have no need to consider the validity of the district court's holding that intrastate telephone calls satisfy the jurisdictional requirement of a claim under Section 12(1) of the Securities Act of 1933. The opinion of the district court is appended.
We cannot affirm the summary judgments unless "we are convinced, after an independent review of the record, that 'there is no genuine issue as to any material fact' and that the movant is 'entitled to a judgment as a matter of law.' " Brooks, Tarlton, Gilbert, Douglas & Kressler v. United States Fire Ins. Co., 832 F.2d 1358, 1364 (5th Cir.) (quoting Fed.R.Civ.P. 56(c)), clarified on rehearing, 832 F.2d 1378 (5th Cir.1987). After a careful review of the entire record, we conclude that no issue of material fact exists and that the four appellees are entitled to summary judgments under the law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The district court's opinion presents a complete analysis of why summary judgment is proper. We address here only three minor issues that the parties raised on appeal that are not fully answered in the district court's opinion: plaintiff's need for particularized allegations, waiver of affirmative defenses, and the interstate commerce requirement of Section 12(1) of the Securities Act of 1933.
Dennis complains that the district court placed an improper burden of production and proof on him in two aspects because it often noted his failure to make "particularized allegations." The complaint is unfounded. In the first aspect, the district court was simply noting Dennis's failure to support his allegations so that an issue of material fact remained after the defendants presented evidence countering his allegations. Unsupported assertions are insufficient, when challenged by appropriate evidence submitted on summary judgment, to create an issue of material fact. Celotex Corp., 477 U.S. at 324, 106 S.Ct. at 2553; Matter of Lewisville Properties, Inc., 849 F.2d 946, 950 (5th Cir.1988). In the second aspect, the court acted correctly in noting Dennis's failure to comply with Fed.R.Civ.P. 9(b)'s requirement that fraud and mistake be alleged with particularity. The district court did not place upon Dennis an improper burden of production or proof.
Second, Dennis argues that the district court should not have applied the intrastate transaction exemption to thwart his claims under Sec. 12(1) of the 1933 Act. Because the defendants did not raise this defense in their answers, Dennis contends that the defendants waived the defense under Fed.R.Civ.P. 8(c). Dennis reads Rule 8(c) too restrictively. In the absence of unfair surprise, defendants did not waive the defense by their failure to plead it in their answers. Allied Chem. Corp. v. Mackay, 695 F.2d 854, 855-56 (5th Cir.1983). 2 Dennis was not victimized by a surprise. The intrastate exemption was at issue throughout discovery and summary judgment proceedings. The defendants' failure to raise the exemption in their answers, therefore, did not constitute waiver of the defense. The district court properly considered the defense.
Third, the defendants in response to the appeal contend that the district court should not have reached the intrastate exemption issue because they had not made telephone calls in commerce so there was no jurisdiction over them. A jurisdictional requirement for Sec. 12(1) of the 1933 Act is proof that there had been transportation, communication, or mails "in commerce" in the offer or sale of the securities. The defendants urge that Dennis could not use intrastate telephone calls to satisfy this jurisdictional requirement of Sec. 12(1). The district court held to the contrary. In finding that the jurisdictional requirement had been met the court said: "It has long been held that intrastate telephone calls in which securities are promoted or offered satisfies the jurisdictional provisions of the securities laws." While the district court correctly decided the issue for the Securities Exchange Act of 1934, the issue is still open under Sec. 12(1) of the 1933 Act.
The two cases the district court cited as authority address the jurisdictional requirements of the 1934 Act. Loveridge v. Dreagoux, 678 F.2d 870, 874 (10th Cir.1982); Dupuy v. Dupuy, 511 F.2d 641, 642-42 (5th Cir.1975), cert. denied, 434 U.S. 911, 98 S.Ct. 312, 54 L.Ed.2d 197 (1977). 3 Decisions on the jurisdictional requirements of the 1934 Act do not necessarily control the meaning of the jurisdictional requirements of Sec. 12(1) of the 1933 Act. In holding that intrastate telephone calls are sufficient under the 1934 Act in Dupuy, we noted the differences in the jurisdictional requirements of the two acts. Dupuy, 511 F.2d at 642. There appears to have been no authoritative holding that intrastate telephone calls meet the "in commerce" requirement of Sec. 12(1) of the 1933 Act as opposed to the "instrumentality of commerce" provision of the 1934 Act. In any event, since it is clear that the defendants are not liable under Sec. 12(1), that question is not at issue in this case.
Accordingly, we AFFIRM the district court's granting of the summary judgments.
Carl Robinson and
Ignatius Thomas
Before the Court are Motions for Summary Judgment by defendants Dr. Ignatius Thomas (Doc. 74) and Dr. Carl Robinson (Doc. 75) and a Motion to Dismiss And/Or Motion For Summary Judgment On Behalf of defendants Sherman Copelin and Lloyd Villavaso (Doc. 72). These motions arise out of a suit asserting violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1961 et seq., Sections 12(1), 12(2) and 15 of the Securities Act of 1933 and Sections 10(b) and 20 of the Securities Exchange Act of 1934 and various pendent state law claims. 1 These defendants seek dismissal of all the claims asserted against them by the plaintiff, Dr. Windsor Dennis, arising out of a series of soured investments he made from February to April 1986 in two Louisiana corporations, defendants General Imaging, Inc. ("General Imaging") and New South Distributors, Inc. ("New South").
The following uncontroverted material facts are gleaned from the materials and filed in this matter.
In February, 1986, Dr. Nicholas Campo and other doctors not named in this action who were officers and directors of a Louisiana corporation named Family Medical Care Centers of America ("FMCCA") solicited limited partnership participation in a series of partnerships in which FMCCA would be the general partner. The partnerships would own and establish medical clinics on the premises of Schwegmann grocery stores in the metropolitan New Orleans, Louisiana area and FMCCA was to have an exclusive contract managing each facility.
Learning of this opportunity plaintiff contacted Lloyd Villavaso, New South's accountant 2, to discuss investing in the FMCCA projects. At a meeting attended by Campo, Villavaso and defendant Sherman Copelin, plaintiff was informed that no partnership interests in the medical clinics were then available. At that time, plaintiff alleges that Campo, Villavaso and Copelin offered him an investment opportunity in New South. New South was a Louisiana corporation incorporated on August 12, 1985 to distribute liquor in Louisiana. Campo, Copelin and Robinson were its directors and defendant Dr. Ignatius Thomas was an investor in the firm.
Plaintiff's unrebutted allegation is that at this meeting Dennis was told by Campo, Copelin and Villavaso that New South had entered into a letter agreement with John Schwegmann to provide his grocery store chain with private label liquor products and was, in fact, doing so. New South planned to obtain the rights to distribute national liquor brands throughout the state. Dennis alleges, and defendants do not rebut this allegation, that Campo, Copelin and Villavaso were very optimistic about New South's prospects and touted its profit-making potential based on the Schwegmann contract and the...
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