Launay v. Launay, Inc.
| Decision Date | 23 August 1985 |
| Docket Number | No. 83-1345.,83-1345. |
| Citation | 497 A.2d 443 |
| Parties | Raymond LAUNAY, et al., Appellants, v. LAUNAY, INC., et al., Appellees. |
| Court | D.C. Court of Appeals |
Eugene Mittelman, Washington, D.C., with whom Stanley R. Jacobs, Bethesda, Md., was on briefs, for appellants.
Harvey A. Levin, Washington, D.C., for appellees.
Before BELSON and TERRY, Associate Judges, and PAIR, Associate Judge, Retired.
This litigation arose out of the breakdown of the efforts of certain members of two families, the Launays and the Arpads, to collaborate in the business of repairing and selling antiques. The principal dispute was over the ownership of corporate shares formerly owned by a deceased founder, Michael Arpad. The already complicated dispute became more entangled because of lapses in pleading and practice. Unsuccessful as plaintiffs, the Launays now appeal (1) the dismissal of Count I of their original complaint, the count in which they sought enforcement of a buy-sell agreement, (2) the award of counsel fees to the Arpads imposed upon the dismissal of all counts of the original complaint except Count V, seeking accounting and partition of real property, (3) the dismissal with prejudice of their amended complaint, including a shareholders' derivative count, a count in defamation, and also the count in accounting and partition that had survived the first motion to dismiss, and (4) the refusal of the trial court to vacate the dismissal of the amended complaint. We reverse both the dismissal of original Count I (enforcement of the buy-sell agreement) and the award of attorneys' fees. We affirm the dismissal of the derivative and defamation counts of the amended complaint, but reverse the dismissal of the count seeking accounting and partition.
A brief recitation of the tangled procedural history of the case is necessary. The plaintiffs in this civil action were Raymond Launay and Daniele Launay, husband and wife (the Launays). The defendants were the estate of Michael Arpad, Vivian Arpad (the widow of Michael Arpad), and Sheldon Arpad (the son of Michael and Vivian) (the Arpads) and also Launay, Inc., a District of Columbia corporation.
The Launays sought in their original complaint: specific enforcement of a buy-sell agreement concerning shares of Launay, Inc. (Count I); damages for breach of an agreement to operate jointly Launay, Inc. (Count II); liquidation of Launay, Inc. (Count III); damages for defamation (Count IV); and an accounting and partition of real property (Count V). The Arpads moved to dismiss the original complaint, asserting that none of its five counts stated a cause upon which relief could be granted. They stated the following additional grounds for dismissal of certain counts: Count I was barred by the statute of limitations; Counts II and III were miscast since they sought damages for the Launays rather than for the corporation and Count IV failed to set forth with the required specificity the claim that Sheldon Arpad impugned the business reputation of Mr. Launay.
The Arpads also contended that all claims against the estate of Michael Arpad were barred by noncompliance with probate presentation requirements. D.C.Code §§ 20-102, -901 to -905 (1981).
After a hearing, Judge Norman dismissed with prejudice the demand for specific performance of the buy-sell agreement, Count I; dismissed, with plaintiffs' consent, Counts II, III, and IV, with leave to amend; and denied the motion to dismiss Count V. Attorneys' fees and costs were awarded to the Arpads in the amount of $1,153.
The Launays thereafter filed an amended complaint consisting of three counts: Count I, a derivative action (a restatement of Counts II and III of the original complaint); Count II, a defamation action; and Count III, the accounting and partition claim which had been Count V of the original complaint and had survived the first motion to dismiss. The Arpads moved to dismiss the amended complaint. They argued that Count I did not meet the pleading requirements for shareholder derivative actions, Super.Ct.Civ.R. 23.1, in that the complaint failed to state that the action was not collusive, and the complaint was not verified. They asserted that the defamation charge still lacked the requisite specificity. Finally, they argued, there was no basis in fact for the accounting and partition sought in Count III of the amended complaint.
Along with their amended complaint, the Launays filed a motion to reconsider and vacate the order dismissing the specific performance count and awarding attorneys' fees, and requested a hearing on the motion. The Arpads opposed this motion also. Because Judge Norman had retired, the Launays' motion to reconsider was referred to another judge. The motion for reconsideration was initially set for hearing on September 15, 1983, but was continued by consent to September 30, 1983.
On October 12, 1983, Judge Goodrich dismissed with prejudice the Launays' amended complaint. The order noted the Launays' lack of opposition to the motion to dismiss. The Launays moved for relief from the dismissal under Super.Ct.Civ.R. 60(b), on October 24, 1983. The Arpads opposed. On November 4, 1983, Judge Wolf refused to vacate the dismissal. At the hearing on the motion, the Launays were permitted to place in the record a proposed second amended complaint correcting the pleading defects of the derivative action. They also proffered, but did not make a part of the record, an opposition to the Arpads' motion to dismiss the first amended complaint. This timely appeal is taken from Judge Wolf's denial of relief from the order of dismissal, Judge Goodrich's dismissal of the amended complaint and Judge Norman's dismissal of Count I of the original complaint and award of attorneys' fees.
We turn first to appellant's challenge to Judge Norman's dismissal of the original complaint's first count, which called for specific performance of the buy-sell agreement. We summarize here the allegations of that count. Raymond Launay and Michael Arpad formed Launay, Inc., in 1962 to carry on the business of repairing and selling antiques. One hundred shares of capital stock of Launay, Inc. were authorized. The corporation issued 54 shares to Michael and Vivian Arpad as tenants by the entirety, and 46 shares to Raymond and Daniele Launay. On the day the stock was issued, Raymond Launay and Michael Arpad agreed that the stock would be issued to each of them individually so that the survivor could purchase the stock of the other upon his death. The corporate bylaws and minutes described the buy-sell agreement, but the stock certificates and ledger did not refer to the restriction. Raymond Launay and Michael Arpad operated Launay, Inc. for 20 years with the understanding that the stock had been issued solely to each and, upon the death of the other, would be subject to purchase by the survivor. When Michael Arpad died, Raymond Launay notified Vivian Arpad of his election to purchase Michael Arpad's stock at book value, but Vivian Arpad asserted that she had owned the stock jointly with her husband. Based on these allegations, the Launays asked the court to direct the sale of the contested 54 shares to Raymond Launay.
The Arpads moved to dismiss Count I contending that it failed to state a claim upon which relief could be granted because, by operation of law, Vivian Arpad, a tenant by the entirety, had succeeded to the full and complete ownership of the 54 shares. Michael Arpad, they argued, could not have unilaterally defeated Vivian Arpad's right of survivorship even if, as the Launays asserted, he had agreed to the buy-sell agreement.
The Arpads' motion to dismiss Count I was to be treated as a motion for summary judgment because it referred to an affidavit and certain documents.1 The court will grant a motion for summary judgment if the pleadings and affidavits show that there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Super.Ct.Civ.R. 56(c).2
Raymond Launay's affidavit set forth that it had been his understanding that Vivian Arpad was bound by the buy-sell agreement, irrespective of the manner in which the stock was issued. He averred that Michael Arpad agreed to the buy-sell agreement, and that Vivian Arpad signed the agreement as a temporary acceptance on behalf of Michael Arpad, promising to obtain Michael Arpad's signature later.
The facts presented to the court permit different conclusions. On the one hand, the stock certificate issued to the Arpads and the stock ledger page show that the stock was issued in tenancy by the entirety to Michael and Vivian Arpad. If that were so, Vivian Arpad, rather than Raymond Launay, would become the sole owner of those shares of stock if she survived her husband. On the other hand, the minutes of the first stockholders' meeting of Launay, Inc. (attended by Michael and Vivian Arpad and Raymond Launay) describe the buy-sell agreement as an amendment to the bylaws.3 In pertinent part, the agreement provides that "the surviving stockholder has the option to purchase the stock of the deceased." The minutes stated that a signed certificate would represent the buy-sell agreement. That certificate incorporated the buy-sell agreement described in the minutes and, according to its terms, was to be signed by "all the stockholders of Launay, Inc." This stock restriction agreement contained two lines for signatures. The initials "MA" appear in the margin next to the first line, and the initials "RL" appear in the margin next to the second line. Vivian Arpad signed above the first line, and Raymond Launay signed on the second line. The minutes of the first stockholders' meeting also listed the names of the stockholders and the corresponding number of shares as "Michael Arpad—54" and "Raymond Launay—46."
We hold that two material factual issues are posed...
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