Garner v. Pearson, No. 72-416 Civ. T-K.

CourtUnited States District Courts. 11th Circuit. United States District Court of Middle District of Florida
Writing for the CourtJohn L. Riley, St. Petersburg, Fla., for Frank J. Valdes
Citation545 F. Supp. 549
PartiesGraham C. GARNER and Sydney Morris, as Official Liquidators of the British-American Bank, Ltd. (in Compulsory Liquidation), Plaintiffs, v. Tazwell W. PEARSON, Donald R. Baker, Robert N. Bussey, and Exchange Bancorporation, Inc., Defendants.
Decision Date23 July 1982
Docket NumberNo. 72-416 Civ. T-K.

545 F. Supp. 549

Graham C. GARNER and Sydney Morris, as Official Liquidators of the British-American Bank, Ltd. (in Compulsory Liquidation), Plaintiffs,
v.
Tazwell W. PEARSON, Donald R. Baker, Robert N. Bussey, and Exchange Bancorporation, Inc., Defendants.

No. 72-416 Civ. T-K.

United States District Court, M. D. Florida, Tampa Division.

March 15, 1982.

On Proposed Judgment June 30, 1982.

On Reconsideration July 23, 1982.


545 F. Supp. 550
COPYRIGHT MATERIAL OMITTED
545 F. Supp. 551
Preston Moore, Holland & Knight, Tampa, Fla., for Exchange Bancorporation

Michael L. Kinney, Tampa, Fla., for Taxwell W. Pearson and Donald R. Baker.

Albert I. Gordon, Tampa, Fla., for Robert N. Bussey.

John L. Riley, St. Petersburg, Fla., for Frank J. Valdes.

James A. Dixon, Jr., Miami, Fla., Brian J. Gallagher, Kronish, Lieb, Shainswit, Weiner & Hellman, New York City, for plaintiffs.

ORDER CONTAINING MEMORANDUM OPINION

KRENTZMAN, Chief Judge.

After hearing on plaintiffs' motion for partial summary judgment in the above cause the Court, by order entered September 15, 1981, granted the motion, directed counsel for plaintiffs to furnish and serve proposed findings or memorandum of opinion consistent with Rule 52(a), Federal Rules of Civil Procedure, and granted defendants time to file objections to the same.

After requests for extension of time were granted from time to time to the respective parties, the following were filed on the

545 F. Supp. 552
dates indicated and are before the Court for consideration
October 30, 1981 — Plaintiffs' Proposed Memorandum of Opinion;
November 30, 1981 — Defendant Exchange Bancorporation Inc.'s Objections to the Proposed Opinion;
November 30, 1981 — Defendant Exchange's Suggestion of Lack of Subject Matter Jurisdiction;
December 1, 1981 — Defendant Exchange's Motion for Rehearing on Summary Judgment Motion;
December 1, 1981 — Defendants Pearson and Baker's Adoption of Exchange's Objections;
December 4, 1981 — Defendant Bussey's Adoption of Exchange's Objections and Motion for Rehearing;
February 10, 1982 — Plaintiffs' Memorandum Opposing Defendants' Suggestion of Lack of Subject Matter Jurisdiction;
February 17, 1982 — Exchange's Reply to Plaintiffs' Opposition to Exchange's Motion for Rehearing;
February 18, 1982 — Exchange's Reply to Plaintiffs' Memorandum Opposing Exchange's Suggestion to a Lack of Subject Matter Jurisdiction;
March 3, 1982 — Plaintiffs' Response to Defendants' Request; and
March 12, 1982 — Plaintiffs' Supplemental Memorandum Opposing Defendants' Suggestion of a Lack of Subject Matter Jurisdiction.

The Court has considered all of the above, finds that the respective objections to the proposed memorandum of opinion should be denied and overruled, that the respective motions for rehearing and lack of subject matter jurisdiction should be denied and it is so ordered. The Court further finds that the proposed memorandum of opinion as hereinafter set out is consistent with the Court's order of September 15, 1981, and it should be and is adopted and confirmed in all respects.

MEMORANDUM OF OPINION

Introduction

The British-American Bank, Limited (the "B-A Bank"), was a Bahamian bank until 1972 when it was placed in compulsory liquidation by the Supreme Court of the Bahamas.1 Plaintiffs are its court-appointed liquidators.

Plaintiffs brought this action to recover B-A Bank assets which they allege were misappropriated or otherwise unlawfully taken in violation of both statutory and common law by those who controlled the B-A Bank prior to its liquidation.2 Plaintiffs claim that defendants Robert N. Bussey ("Bussey"), Tazwell W. Pearson ("Pearson") and Donald R. Baker ("Baker") controlled the B-A Bank and its subsidiary corporations, owed fiduciary duties to the B-A Bank and its depositors, but breached those duties by converting, otherwise misappropriating, or wasting various assets of the B-A Bank under circumstances which also violated the Securities Exchange Act of 1934 (15 U.S.C. § 78j(b)).

Defendant Exchange Bancorporation Inc. ("Exchange") is charged with being the transferee of one of these converted B-A Bank assets — 35,079.34 shares (or 88%) of the common stock of the Citizens Bank of Clermont (the "Citizens Bank Stock"). Plaintiffs charge that Exchange purchased the Citizens Bank Stock from Bussey, Pearson and Baker with prior actual notice of an

545 F. Supp. 553
adverse claim by the B-A Bank to that stock. On this footing, plaintiffs contend that Exchange's title to the Citizens Bank Stock is no better than that of Bussey, Pearson and Baker — a converter's title

The pending motion for partial summary judgment.

Following the close of discovery, plaintiffs moved for partial summary judgment against Bussey, Pearson and Baker and Exchange with respect to the Citizens Bank Stock.

The parties provided complete briefs, and submitted affidavits, exhibits and admissions. All parties were fully heard at a lengthy hearing held on June 22, 1981. Following a review of the parties' detailed submissions and the arguments presented at the June 22, 1981 hearing, this Court issued its September 15, 1981 Order granting plaintiffs' motion for partial summary judgment against defendants Bussey, Pearson, Baker and Exchange.

The record supports summary disposition.

Summary judgment is required when the uncontradicted facts presented by the movant and his opponent establish a prima facie case which would support a directed verdict if uncontroverted at trial. S.E.C. v. Spence & Green Chemical Co., 612 F.2d 896, 901-902 (5th Cir. 1980), cert. denied, 449 U.S. 1082, 101 S.Ct. 866, 66 L.Ed.2d 806 (1981); Walter E. Heller and Co. v. O/S. Sonny V, 595 F.2d 968, 975 (5th Cir. 1979); Munoz v. Int'l Alliance, etc., 563 F.2d 205, 212-214 (5th Cir. 1977); Curl v. IBM Corp., 517 F.2d 212, 214 (5th Cir. 1975), cert. denied, 425 U.S. 943, 96 S.Ct. 1683, 48 L.Ed.2d 187 (1976); Golden Oil Co., Inc. v. Exxon Co., U.S.A., 543 F.2d 548, 551 (5th Cir. 1976); Lovable Co. v. Honeywell, Inc., 431 F.2d 668, 670-671 (5th Cir. 1970); Gould v. Control Laser Corp., 462 F.Supp. 685, 693 (M.D.Fla.1978), modified, 650 F.2d 617 (5th Cir. 1981).

A properly founded summary judgment motion requires proof which is "positive, direct and factual in nature ... not mere charges or assertions or conclusions." Bros, Inc. v. W. E. Grace Mfg. Co., 261 F.2d 428, 432 (5th Cir. 1958).

Such a motion can be successfully resisted only by a showing that a trial is necessary to resolve a genuine issue (i.e., one "that requires a judge or jury to resolve the parties' differing versions of truth at trial") which exists with respect to a material fact (i.e., one "which is determinative of the parties' duties or rights"). Valadez v. Graham, 474 F.Supp. 149, 154 (M.D.Fla. 1979). "The adversary must adequately demonstrate by receivable facts that a real, not formal, controversy exists, and, of course, he does not do that by mere denial or holding back evidence." Bruce Construction Corp. v. United States, 242 F.2d 873, 875 (5th Cir. 1957). See Southern Rambler Sales Inc. v. American Motors Corp., 375 F.2d 932, 937 (5th Cir. 1967); Wright & Miller, Federal Practice & Procedure: Civil § 2727, pp. 536-537 (1973), quoted with approval in Walter E. Heller & Co. v. O/S. Sonny V, supra, 595 F.2d at 975. In order to create a "genuine" issue of fact, "more than mere allegations or conclusory statements must be offered." United Steelworkers, etc. v. University of Alabama, 599 F.2d 56, 61 (5th Cir. 1979). See also Echaide v. Confederation of Canada Life Ins., 459 F.2d 1377, 1381 (5th Cir. 1972). And, it is not sufficient to suggest the possibility that inferences might be drawn at trial in the opponent's favor. A properly supported summary judgment can be defeated only by a showing that reasonable inferences from established facts could be drawn which would warrant a finding against the movant on a material issue. Aladdin Oil Co. v. Texaco, Inc., 603 F.2d 1107, 1117 (5th Cir. 1979); Tyler v. Vickery, 517 F.2d 1089, 1094 (5th Cir. 1975), cert. denied, 426 U.S. 940, 96 S.Ct. 2660, 49 L.Ed.2d 393 (1976).

In this case plaintiffs put forward admissions, and documents which, taken together with the defense submissions of fact, establish the following facts:

(1) At all material times, Bussey, Pearson and Baker were control persons of the B-A Bank and the entire British-American corporate complex, including British-American

545 F. Supp. 554
Holdings S.A. (the "B-A Fund"), British American Bancorporation Inc. ("B-A Bancorp"), the American National Bank and Trust Company of South Pasadena, Florida (the "American Bank"), and, after its purchase, the Citizens Bank of Clermont (the "Citizens Bank")

(2) The B-A Bank always owned a majority, and in October, 1971 it owned all but six, of the 405,608 issued and outstanding shares of the B-A Fund.

(3) The B-A Fund owned B-A Bancorp which had acquired 73% of the issued and outstanding stock of the American Bank with money supplied by the B-A Bank.

(4) Bussey, Pearson and Baker caused the B-A Bank to provide the funds used by Bussey and Pearson to purchase the Citizens Bank Stock in 1970.

(5) On January 9, 1970, Bussey and Pearson appear to have entered into a written agreement with B-A Bancorp3 (the "B-A Bancorp Agreement"). That agreement permitted Bussey and Pearson to purchase the Citizens Bank Stock and register title in their personal names only until the Federal Reserve Board should approve B-A Bancorp's ownership of that stock, and required them to turn the stock over to B-A Bancorp upon such approval or dispose of the stock if approval were to be denied. The Bancorp Agreement placed the entire financial burden, and all benefits, of this transaction on B-A Bancorp.

(6) Bussey and Pearson registered the Citizens Bank Stock in their personal names, presumably pending regulatory approval of the ownership of that stock by B-A Bancorp.

(7) The Federal Reserve Board refused to approve the...

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8 practice notes
  • Banco De Desarrollo Agropecuario, SA v. Gibbs, No. 86 CIV. 8547(PKL).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • April 6, 1989
    ...duties to the controlled corporation. See, e.g., Pepper v. Litton, supra, 308 U.S. at 305-07, 60 S.Ct. at 244-46; Garner v. Pearson, 545 F.Supp. 549 at 557-62. Control persons are not limited to officers and directors of the corporation but, rather, are those persons who exercise de facto c......
  • Estate of Ayers ex rel. Strugnell v. Beaver, No. 98-2240-CIV-T-17C.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Middle District of Florida
    • May 19, 1999
    ...Corp., 812 F.Supp. 1218, 1222-23 (M.D.Fla.1993); see also Browning v. Peyton, 918 F.2d 1516, 1522 (11th Cir.1990); Garner v. Pearson, 545 F.Supp. 549, 557 (M.D.Fla.1982) (quoting Quinn v. Phipps, 93 Fla. 805, 113 So. 419 (1927)). "Whether fiduciary duties were created between two parties is......
  • Fogade v. ENB Revocable Trust, No. 99-12527
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • August 28, 2001
    ...its claims were derivative claims brought on behalf of First Bancorporation and Eastern Overseas. 16. Relying on Garner v. Pearson, 545 F.Supp. 549 (M.D. Fla. 1982), the district court also determined that "[a] control person who causes a corporation to transfer property rights for overvalu......
  • Swerhun v. General Motors Corp., No. 90-932-CIV-T-17B.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Middle District of Florida
    • February 11, 1993
    ...whenever one person trusts in and relies upon another. The only question is, Does such a relation in fact exist? Garner v. Pearson, 545 F.Supp. 549, 557 (M.D.Fla.1982) (Krentzman, C.J.), quoting Quinn v. Phipps, 93 Fla. 805, 113 So. 419 (1927); see Browning v. Peyton, 918 F.2d 1516, 1522 (1......
  • Request a trial to view additional results
8 cases
  • Banco De Desarrollo Agropecuario, SA v. Gibbs, No. 86 CIV. 8547(PKL).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • April 6, 1989
    ...duties to the controlled corporation. See, e.g., Pepper v. Litton, supra, 308 U.S. at 305-07, 60 S.Ct. at 244-46; Garner v. Pearson, 545 F.Supp. 549 at 557-62. Control persons are not limited to officers and directors of the corporation but, rather, are those persons who exercise de facto c......
  • Estate of Ayers ex rel. Strugnell v. Beaver, No. 98-2240-CIV-T-17C.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Middle District of Florida
    • May 19, 1999
    ...Corp., 812 F.Supp. 1218, 1222-23 (M.D.Fla.1993); see also Browning v. Peyton, 918 F.2d 1516, 1522 (11th Cir.1990); Garner v. Pearson, 545 F.Supp. 549, 557 (M.D.Fla.1982) (quoting Quinn v. Phipps, 93 Fla. 805, 113 So. 419 (1927)). "Whether fiduciary duties were created between two parties is......
  • Fogade v. ENB Revocable Trust, No. 99-12527
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • August 28, 2001
    ...its claims were derivative claims brought on behalf of First Bancorporation and Eastern Overseas. 16. Relying on Garner v. Pearson, 545 F.Supp. 549 (M.D. Fla. 1982), the district court also determined that "[a] control person who causes a corporation to transfer property rights for overvalu......
  • Swerhun v. General Motors Corp., No. 90-932-CIV-T-17B.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Middle District of Florida
    • February 11, 1993
    ...whenever one person trusts in and relies upon another. The only question is, Does such a relation in fact exist? Garner v. Pearson, 545 F.Supp. 549, 557 (M.D.Fla.1982) (Krentzman, C.J.), quoting Quinn v. Phipps, 93 Fla. 805, 113 So. 419 (1927); see Browning v. Peyton, 918 F.2d 1516, 1522 (1......
  • Request a trial to view additional results

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