R-G Denver, Ltd. v. First City Holdings of Colorado, Inc., R-G

• Decision Date: 02 May 1986
• Docket Number: No. 84-1430,R-G,84-1430
• Parties: DENVER, LTD., Plaintiff-Appellant, v. FIRST CITY HOLDINGS OF COLORADO, INC., Robert H. Goodman, Mortab, Ltd., and First City Financial Corporation, Ltd., Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1469

789 F.2d 1469

R-G DENVER, LTD., Plaintiff-Appellant, v. FIRST CITY HOLDINGS OF COLORADO, INC., Robert H. Goodman,

Mortab, Ltd., and First City Financial

Corporation, Ltd., Defendants-Appellees.

No. 84-1430.

United States Court of Appeals, Tenth Circuit.

May 2, 1986.

Miles C. Cortez, Jr., and Dean G. Panos, of Miles C. Cortez & Associates, P.C., Englewood, Colo., for plaintiff-appellant.

Tucker K. Trautman and Margaret L. Toal-Rossi, of Ireland, Stapleton, Pryor & Pascoe, P.C., Denver, Colo., for defendants-appellees.

Before BARRETT and ANDERSON, Circuit Judges, and COOK, District Judge. ^*

H. DALE COOK, District Judge.

This matter comes before this Court on appeal from a final order and judgment entered by the United States District Court for the District of Colorado, granting summary judgment in favor of the defendants below. ¹ The effect of this ruling was to dismiss the claims of R-G Denver, Ltd. (R-G) as against First City Holdings of Colorado, Inc., Robert N. Goodman, Mortab, Ltd., and First City Financial Corporation, Ltd. (collectively referred to as "Holdings" for purposes of this appeal) for tortious interference with contractual and business relationships, tortious interference with prospective business and economic advantage, tortious interference with contractual rights with a third person, and for exemplary damages.

In reviewing the district court's grant of summary judgment, we must view the case in the same manner as did that court. Gomez v. American Electric Power Service Corp., 726 F.2d 649, 651 (10th Cir.1984). Thus, we must determine whether any genuine issue of material fact exists and, if not, whether the substantive law was correctly applied. See Fed.R.Civ.P. 56(c); Western Casualty & Surety Co. v. Nat'l Union Fire Ins. Co., 677 F.2d 789 (10th Cir.1982). In doing so, we must view the record in the light most favorable to the party opposing the motion. Lindley v. Amoco Production Co., 639 F.2d 671, 672 (10th Cir.1981). Conclusory allegations, however, do not establish an issue of fact under Rule 56. Bruce v. Martin-Marietta Corp., 544 F.2d 442 (10th Cir.1976).

Based on our review of the record before us, as well as the briefs, written and oral arguments of counsel for the parties, and the applicable law, we find trial court's granting of summary judgment to have been proper. We affirm.

The basic facts are not disputed. R-G's claims arise out of a series of transactions and communications between it, Holdings, and the Denver Real Estate Investment Association (DREIA). These transactions and communications comprised competing efforts to purchase the assets or stock of DREIA.

Appellant R-G is an Illinois limited partnership formed to acquire the assets of DREIA, a business trust organized under Colorado law. Its noncash assets included interests in real and personal property located in several Colorado metropolitan areas. DREIA's business affairs were conducted by its Board of Trustees. The appellees, Holdings, are corporations and an individual who, together, own almost six percent of DREIA's stock.

R-G and DREIA entered into a contract on July 17, 1980, providing for R-G's purchase of all DREIA's assets for a purchase price of $42,540,000.00 and the unpaid principal balance on the closing date of certain outstanding promissory notes. The contract provided that two million dollars of the purchase price would be held in escrow for post-closing distribution to shareholders, contingent upon the satisfaction of certain conditions. This transaction represented a value of $32.00 per share, with a possible additional $2.00 per share to be distributed when the conditions were satisfied.

The R-G/DREIA agreement expressly provides, in pertinent part, as follows:

7. Condition.

(a) This Agreement and the Closing are expressly subject to and conditioned upon approval not later than October 15, 1980 of the transactions contemplated herein by the affirmative vote of the holders of a majority of the outstanding Shares of DREIA at a meeting of the Shareholders called for such purpose. In connection with obtaining said Shareholder approval, DREIA:

(i) shall seek and pursue with diligence favorable tax rulings from the Internal Revenue Service ...;

(ii) shall take all requisite action to expeditiously call a meeting of the Shareholders following the issuance of favorable Rulings and submit to the Shareholders resolutions approving and authorizing the execution, delivery and performance of the Agreement and all documents and instruments to be executed pursuant thereto (the "Resolutions");

(iii) shall consult with Purchaser and its counsel in preparing all necessary proxies, proxy statements and other materials, including but not limited to, all amendments and supplements thereto as may be necessary to make any statement in such proxies, proxy statements or other materials, at the time and in light of the circumstances under which it is made, not false or misleading with respect to any material fact, or to state any material fact necessary or necessary to correct any statement therein which has become false or misleading, with respect to the Resolutions;

(iv) shall distribute to the Shareholders all necessary proxies, proxy statements and other materials with respect to the Resolutions and solicit all such proxies from the Shareholders;

....

(b) In the event that such requisite shareholder approval is not obtained by October 15, 1980, either Seller or Purchaser may terminate this Agreement by delivery of written notice thereof to the other party and in the absence of such notice this Agreement shall automatically terminate on December 31, 1980. In the event of any such termination not resulting from any breach by Purchaser of its obligations hereunder, the Earnest Money shall be immediately returned to Purchaser, Seller shall pay to Purchaser an amount equal to $200,000.00 plus the amount of any loan fees or commissions (not in excess of $100,000.00) paid by Purchaser to Continental Illinois National Bank and Trust Company of Chicago ("Continental Bank") and not refunded to Purchaser, as liquidated damages for Purchaser's costs and expenses incurred in connection with this transaction and as Purchaser's sole and exclusive remedy therefor (Seller and Purchaser hereby confirming that as of the date hereof they are unable to ascertain the amount of actual damages which Purchaser will incur if this Agreement is terminated as aforesaid), and neither Seller nor Purchaser shall have any further rights or obligations under this Agreement. In addition to the foregoing, in the event said shareholder approval is not obtained, Seller shall not, at any time prior to January 1, 1981, enter into any letter of intent, agreement in principle or other contract or agreement with any third party to sell all or substantially all of the assets of DREIA, unless Seller first notifies Purchaser thereof and grants to Purchaser the right to purchase such assets on the same financial terms and conditions as are contained in such proposed third-party agreement and Purchaser fails to exercise such right by delivery of written notice thereof to Seller within fifteen (15) days following Purchaser's receipt of Seller's notice....

On or about August 12, 1980, Holdings filed a Form Schedule 13D with the Securities Exchange Commission, which stated that Holdings had recently acquired over five percent of DREIA's common stock, making Holdings the single largest DREIA shareholder. In this filing, Holdings indicated that it might wish to obtain control of DREIA or its assets.

Holdings, with knowledge of the R-G/DREIA contract and of a contract R-G had with Prudential ², informed DREIA on or about September 15, 1980, that it intended to make a tender offer for DREIA's stock for $35.00 per share. The next day DREIA issued a press release reporting Holding's intended tender offer and issued a Notice of Special Meeting of Shareholders to its shareholders, referencing the scheduled October 15, 1980 meeting, recommending the R-G/DREIA contract, and including an agenda on which the R-G/DREIA proposal would be voted upon. ³

On September 18, 1980, Holdings told DREIA it would not make a tender offer, but was continuing to consider available courses of action. A press release was issued, reflecting this changed circumstance.

On October 3, 1980, Holdings offered to buy DREIA's assets for $36.00 per share, with no escrow hold-back and with all other terms essentially identical to those proffered by R-G. The offer's expiration date was October 9, 1980. An October 6th press release informed DREIA shareholders of this new proposal, which DREIA rejected because it did not accommodate the right of first refusal granted R-G under the July 17, 1980 agreement with DREIA.

On or about October 8, 1980, Holdings extended a new offer for the DREIA assets at the same price of $36.00 per share. This offer, accommodating R-G's right of first refusal, was to expire on October 13, 1980. Holdings submitted for DREIA's approval a $5,000,000.00 letter of credit payable to DREIA, to be deposited in escrow upon DREIA's acceptance of Holdings' offer.

The offer was extended by Holdings beyond the October 13 deadline when DREIA's trustees did not accept it by that date. The extended offer contained a provision for revocability at any time prior to acceptance.

DREIA had been soliciting proxies in favor of the R-G acquisition to be voted at the October 15, 1980 shareholders' meeting since September 16. The trustees concluded, however, in view of the material developments regarding Holdings, that the proxies solicited were no longer complete. The October 15 meeting therefore resulted in adjournment to a later date without a vote on the R-G/DREIA contract so that proper, updated proxies might be solicited.

Holdings revoked its asset offer on November 13, 1980, and made a tender offer to DREIA at $36.00 per share, which was amended to $37.15 per...