H.T.E., Inc. v. Tyler Technologies, Inc.
| Decision Date | 19 September 2002 |
| Docket Number | Case No. 6:01-cv-1366-Orl-31DAB. |
| Parties | H.T.E., INC., a Florida corporation, Plaintiff, v. TYLER TECHNOLOGIES, INC., a Delaware corporation, Defendant. |
| Court | U.S. District Court — Middle District of Florida |
John W. Foster, Sr., Jerry Ray Linscott, Baker & Hostetler, LLP, Tucker H. Byrd, Greenberg Traurig, P.A., Orlando, FL, for Plaintiff.
William B. Wilson, Michael D. Starks, Holland & Knight, LLP, Orlando, FL, for Defendant.
This matter comes before the Court on Plaintiff's Motion for Partial Summary Judgment (Doc. 48), together with Plaintiff's Memorandum in support thereof (Doc. 49), Plaintiff's Supplement (Doc. 85), and Defendant's opposition memorandum (Docs. 53 & 83). On June 20, 2002, the Court conducted a hearing at which argument of counsel was presented. Pursuant to this Court's August 12, 2002 Order, both Plaintiff and Defendant filed supplemental briefs and authority (Docs. 93-96). Both parties concede that the issues here to be decided do not involve disputed issues of material fact. Accordingly, the matter is ripe for determination as a matter of law.
Plaintiff, H.T.E., Inc. ("HTE") is a publically held Florida corporation, headquartered in Seminole County, Florida. HTE is in the business of computer software development and its stock is traded on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"). Defendant, Tyler Technologies, Inc. ("Tyler") is a Delaware corporation with its principal office located in Dallas, Texas. Tyler is a holding company with operating subsidiaries also engaged in the computer software business. Its stock is traded on the New York Stock Exchange ("NYSE").
HTE was founded by Jack and Dennis Harward (the "Harwards"). On August 3, 1999, the Harwards entered into a severance agreement and resigned as officers and employees of HTE. Two weeks later, on August 17, 1999, Tyler and the Harwards entered into a stock purchase agreement whereby Tyler acquired from the Harwards 5,618,952 shares of HTE stock, representing approximately 32% of HTE's outstanding stock, at an average price of $2.81 per share.
On August 20, 1999, Tyler notified HTE of its purchase of the HTE shares. On August 23, 1999, Tyler provided an "Acquiring Person Statement" ("APS") to HTE pursuant to Florida Statutes section 607.0902(6). However, Tyler did not exercise its right to request a special meeting of the HTE shareholders as provided by section 607.0901(7), Florida Statutes. Consequently, Tyler's voting rights to the HTE shares acquired from the Harwards was not determined until the next regular meeting of the HTE shareholders on November 16, 2000. At that meeting, a proposal to confer voting rights on the HTE stock held by Tyler was defeated.
On October 12, 2001, over two years after Tyler had acquired the HTE stock, HTE's board of directors adopted resolutions authorizing the redemption of all of the HTE shares owned by Tyler at $1.30 per share. On October 29, 2001, HTE gave Tyler notice of the redemption. Tyler disputes HTE's right to redeem the shares.
On October 30, 2001, HTE filed suit in state court seeking declaratory relief. Tyler removed the case to federal court on November 20, 2001. On December 21, 2001, HTE amended its Complaint to state a claim against Tyler for tortious interference. Tyler answered the first Amended Complaint and filed a counterclaim seeking declaratory relief with respect to HTE's redemption of Tyler's HTE stock.
The instant Motion concerns the effectiveness and scope of HTE's redemption of Tyler's shares. The issue of the appropriate redemption price and HTE's claim for tortious interference remain for another day.
This dispute is governed by Florida's Control-Share Acquisition Law, section 607.0902, Florida Statutes, enacted in 1987.1 The act focuses on the acquisition of "control shares"2 in an issuing public corporation. When control shares are acquired in a "control share acquisition,"3 the shares do not have voting rights unless a majority of the target company's disinterested shareholders approves a resolution granting voting rights to the control shares. Fla. Stat. § 607.0902(9). Thus, the purpose of the act is to protect Florida shareholders by affording them an opportunity to decide whether a change in corporate control is desirable, as well as creating a disincentive for Florida corporations to reincorporate in other states. See generally, Robert C. Rasmussen and Jeffrey M. Fuller, Florida Takeover Law: Control-Share Acquisitions, 16 F.S.U. L.Rev. 103, 104-05, 149 (1988); see also Staff Analysis and Economic Impact Statement for Bill No. CS/SB 404, Fla. Sen. Comm. on Commerce, at 2 (Apr. 14, 1987) ( ); Staff Analysis for Bill No. HB 358, Fla. H.R. Comm. on Commerce, at 3 (Apr. 24, 1987); Final Staff Analysis for Bill No. HB 358, Fla. H.R. Comm. on Commerce, at 2-3 (June 22, 1987); Staff Analysis and Economic Impact Statement for Bill No. HB 358, Fla. Sen. Comm. on Commerce, at 3 (revised May 26, 1987).
Since the statute focuses on a vote of the disinterested shareholders, the act provides a framework for calling the shareholders meeting at which control share voting rights are determined. Generally, the voting rights issue is to be presented at the next special or annual meeting of the shareholders. Fla. Stat. § 607.0902(7)(d). However, the acquiring company can compel a special meeting to be held within 50 days, if it files an APS and undertakes to pay the expenses thereof. Id. at 607.0902(7)(a)-(b).
The statute also provides the target company with certain redemption rights with respect to control shares. Id. at 607.0902(10). Section 607.0902(10)(a) applies to a control share acquisition where no APS has been filed. In that circumstance, the target company may, at any time within sixty (60) days following the acquisition, redeem the control shares at the "fair value" thereof. Id. at 607.0902(10)(a). Thus, if the acquiring company wishes to preempt the target company's right to effect an early redemption (presumably prior to a vote of the shareholders), it can simply file an APS. And, by filing an APS, the acquiring company can force an early vote of the target company's shareholders pursuant to section 607.0902(7)(a).4
Section 607.0902(10)(b) is curiously worded. At first blush, it would appear to relate to the converse of subsection (10)(a); i.e., redemption rights where the acquiring company has filed an APS. However, subsection (10)(b) does not provide an express right of redemption, nor does it indicate any time limit. Rather, it reads: "Control shares in a control-share acquisition are not subject to redemption after an acquiring person statement has been filed unless the shares are not accorded full voting rights by the shareholders as provided in subsection (9)." Id. at 607.0902(10)(b). It is this section which is at the root of this controversy.
Tyler contends that HTE's purported redemption of the shares acquired by Tyler is ineffective because its attempt came too late. HTE claims that because Tyler filed an APS, section 607.0902(10)(b) applies, giving HTE an unlimited amount of time to redeem the stock.
Tyler's reasoning is that subsections 607.0902(10)(a) and (b) must be read together, and the 60-day provision of (10)(a) must be read into (10)(b). It argues that subsection (10)(b) standing alone does not work because it does not contain the essential redemption terms (e.g., redemption "at fair value"). Thus, if provisions of (10)(a) regarding fair value, etc., must be assumed to apply to a(10)(b) redemption, Tyler contends that the 60-day limitation must likewise apply. According to Tyler, this fits nicely with the shareholder notice scheme whereby the acquiring company can compel a shareholder meeting within 50 days, leaving management another ten days to effect redemption if it so chooses. HTE, on the other hand, argues that because subsection (10)(b) is silent, the Court cannot read the 60-day time limit from subsection (10)(a) into (10)(b) and thus, HTE had an indefinite right of redemption.5
A court's interpretation of a statute Caro-Galvan v. Curtis Richardson, Inc., 993 F.2d 1500, 1505 (11th Cir.1993) (citations omitted). "When the language of the statute is clear and unambiguous and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation and construction; the statute must be given its plain and obvious meaning." Campus Communications, Inc. v. Earnhardt, 821 So.2d 388, 395 (Fla. 5th DCA 2002) (quoting Holly v. Auld, 450 So.2d 217, 219 (Fla.1984) (quoting A.R. Douglass, Inc. v. McRainey, 102 Fla. 1141, 137 So. 157 (1931)); see also United States v. Weaver, 275 F.3d 1320, 1331 (11th Cir. 2001); Rollins v. Pizzarelli, 761 So.2d 294, 297 (Fla.2000)). However, if a statute is ambiguous, courts should apply the rules of statutory construction. "Ambiguity suggests that reasonable persons can find different meanings in the same language." Pizzarelli, 761 So.2d at 297-98 (citing Forsythe v. Longboat Key Beach Erosion Control Dist., 604 So.2d 452, 455 (Fla.1992)).
Here, Tyler and HTE have argued for different interpretations of section 607.0902(10)(b). Accordingly, the Court finds the statute ambiguous. When the statutory language is...
To continue reading
Request your trial
-
Griffin v. Bruffett
...been silent as to a period of time, courts have read in a ‘reasonable time’ into the statutes." H.T.E., Inc. v. Tyler Technologies., Inc. , 217 F.Supp.2d 1255, 1261, n.9 (M.D. Fla. 2002). Accordingly, it would certainly be reasonable to conclude that in the absence of a clear court order in......