Rademeyer v. Farris
| Decision Date | 14 May 2001 |
| Docket Number | No. 4:99CV1770SNL.,4:99CV1770SNL. |
| Citation | 145 F.Supp.2d 1096 |
| Parties | Daniel RADEMEYER, Plaintiff, v. Michael R. FARRIS, Defendant. |
| Court | U.S. District Court — Eastern District of Missouri |
Robert J. Selsor, Lisa S. Leary, Suelthaus and Walsh, Clayton, MO, for Daniel Rademeyer, plaintiff.
Timothy A. Hausman, Attorney General of Missouri, Assistant Attorney General, Jefferson City, MO, for State of Missouri, intervenor.
Mark J. Bremer, John Gianoulakis, Robert F. Murray, Kohn and Shands, St. Louis, MO, Stephen H. Rovak, Sonnenschein and Nath, St. Louis, MO, for Michael R. Farris, defendant.
This matter is before the Court on defendant's motion for summary judgment (# 18) filed December 5, 2001.1 Plaintiff alleges fraud and breach of fiduciary duty against defendant in connection with defendant's buy-out of the minority shareholders of MRF, Inc. Defendant argues plaintiff's claims are time barred, because the statute of limitations for both fraud and breach of fiduciary duty is five years and both causes of action accrued in early to mid-1994. Plaintiff argues that the causes of action did not accrue until 1997. In addition, plaintiff argues that the statute of limitations is tolled because 1) defendant actively concealed his fraudulent activity; and 2) because defendant moved to Florida in 1998. Defendant, in turn challenges the constitutionality of Mo.Rev. Stat. § 516.200 which tolls the statute of limitations when a defendant departs from and resides outside of Missouri. The Attorney General of Missouri has chosen to intervene pursuant to 28 U.S.C. § 2403(b), because a Missouri statute has been constitutionally challenged.
As an initial matter, the State of Missouri requests that the Court allow it to conduct discovery prior to adjudication of the constitutional issue. However, the Court fails to see what relevant information the State could discover that has not already been presented under the uncontroverted facts. Defendant attacks the constitutionality of § 516.200 on its face, and therefore, a fact-specific inquiry is not necessary.
Courts have repeatedly recognized that summary judgment is a harsh remedy that should be granted only when the moving party has established his right to judgment with such clarity as not to give rise to controversy. New England Mut. Life Ins. Co. v. Null, 554 F.2d 896, 901 (8th Cir.1977). However, summary judgment motions "can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts' trial time for those that really do raise genuine issues of material fact." Mt. Pleasant v. Associated Elec. Coop., Inc., 838 F.2d 268, 273 (8th Cir.1988).
Pursuant to Federal Rule of Civil Procedure 56(c), a district court may grant a motion for summary judgment if all the information before the court demonstrates that "there is no genuine issue as to a material fact and the moving party is entitled to judgment as a matter of law." Poller v. Columbia Broad. Sys., Inc., 368 U.S. 464, 467, 82 S.Ct. 486, 488, 7 L.Ed.2d 458 (1962). The burden is on the moving party. Mt. Pleasant, 838 F.2d at 273. After the moving party discharges this burden, the nonmoving party must do more than show that there is some doubt as to the facts. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Instead, the nonmoving party bears the burden of setting forth specific facts showing that there is sufficient evidence in its favor to allow a jury to return a verdict for it. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
In passing on a motion for summary judgment, the court must review the facts in a light most favorable to the party opposing the motion and give that party the benefit of any inferences that logically can be drawn from those facts. Buller v. Buechler, 706 F.2d 844, 846 (8th Cir.1983). The court is required to resolve all conflicts of evidence in favor of the nonmoving party. Robert Johnson Grain Co. v. Chem. Interchange Co., 541 F.2d 207, 210 (8th Cir.1976).
Pursuant to local rule 4.01(E), a memorandum in support of a motion for summary judgment shall have attached a statement of uncontroverted material facts. All matters set forth in the statement of the movant shall be deemed admitted for purposes of summary judgment unless specifically controverted by the opposing party. Most of defendant's statements were not controverted, and those that were, were not directly controverted, but rather plaintiff offered explanations. Therefore, the Court will consider all of the facts presented in defendant's statement. It will also consider plaintiff's explanations since defendant, in its reply memorandum, did not object.
In 1990, defendant Farris, along with a group of investors including Rademeyer, formed a company named MRF, Inc., which is also known as the Farris Group. Defendant owned 51% of the common stock of MRF, while plaintiff owned 6.95% or 695 of the 10,000 outstanding shares of common stock in the company. In early 1993, there were discussions between Farris and MRF's minority shareholders regarding the possibility of Farris purchasing the shares of the minority shareholders. Farris and the minority shareholders agreed on a sale price and on June 25, 1993, the parties closed on their Stock Redemption Agreement whereby plaintiff's and the other minority shareholder's shares were redeemed by MRF.
Plaintiff alleges in his cause of action that Farris concealed the true value of MRF at the time of the minority shareholder stock sale in June 1993. He also alleges that Farris failed to disclose that he was engaged in negotiations with LaserSight, Inc. and Healthsource, Inc. to sell the company for a higher per share price than Rademeyer and the other minority shareholders ultimately received for their shares.
In February 1994, defendant sold all of the outstanding capital stock of MRF to LaserSight, Inc. "In early 1994," Tim Shapiro, a former minority shareholder in MRF, told Rademeyer that "The Farris Group [had] been sold to LaserSight" and that "Mike [Farris] came out pretty good on it." Plaintiff also learned that the company had been sold in early 1994 because he was paid in full on the Promissory Note for his MRF stock around that time. He knew that the cash "came to Mike Farris as part of the closing in early 1994 on the sale of MRF, Inc. stock to LaserSight." Plaintiff knew in early 1994 that LaserSight was a publicly held company, and plaintiff believes that he checked the price of the stock of LaserSight in early 1994. Plaintiff did not attempt to access any Securities Exchange Commission filings or the Missouri Secretary of State or Florida Secretary of State filings to determine the precise terms of the sale of MRF to LaserSight, even though he "probably" knew that he could have at the time. Plaintiff is an experienced accountant and identifies himself as an "expert on the value of closely held corporations."
At some point between June 1994 and September 1994, John Brandvein, another former minority shareholder of the Farris Group, informed plaintiff that he was considering a claim against Farris. Brandvein told plaintiff that "he knew that MRF had sold its stock to LaserSight." He also told him that "he didn't think he had been treated fairly" in his sale of his MRF stock which closed on June 25, 1993; and that he thought he had "a very good case." However, Brandvein did not give any details or explain why he felt that way, and Rademeyer did not ask Brandvein why he thought he had a "very good case." Brandvein offered no specifics as to why he thought he had a valid claim against Farris other than that Farris had sold the company a number of months after buying out the minority shareholders for a higher price. Brandvein "tried to enlist [Rademeyer] into joining into the suit with him at that stage." In his deposition, plaintiff said that he told Brandvein that he decided not to pursue a lawsuit against Farris because he was "more interested in getting [his] career back on track." In Rademeyer's affidavit he states that the main reason he was not interested in joining into a proposed lawsuit was that Mr. Brandvein offered him no concrete explanation as to why the minority shareholders had been wronged.
Plaintiff claims that it was not until he was deposed as a witness in the Brandvein litigation in 1997, that he learned there had been discussions between LaserSight and the Farris Group prior to the purchase of his shares in June 1993. It was at this time that he saw the Letter of Intent dated June 14, 1993. Defendant moved from the State of Missouri and changed his residence to Florida in February of 1998, to continue as CEO of LaserSight. LaserSight had sold a subsidiary company and the only operating division left was in Orange County, Florida.
On November 12, 1999, plaintiff filed the instant cause of action. The fact that LaserSight's stock price was up to $16.50 per share in the late fall of 1999 was "a factor in [Rademeyer's] decision to file suit" when he did.
Under Missouri law, the applicable statute of limitations for common law fraud and breach of fiduciary duty is five years. Mo.Rev.Stat. § 516.120(5); § 516.120(4); see also Klemme v. Best, 941 S.W.2d 493, 497 (Mo.1997). However, if a defendant prevents the commencement of an action by any improper act, the limitation is tolled. Mo.Rev.Stat. § 516.280. In addition, if a defendant departs from and resides outside of the state of Missouri, the time of his absence from the state shall not be deemed or taken as any part of the time limited for the commencement of such action. Mo.Rev.Stat. § 516.200. Therefore, the first issue...
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Rademeyer v. Farris
...duty is five years, held the claims time barred and granted Mr. Farris's motion for summary judgment. See Rademeyer v. Farris, 145 F.Supp.2d 1096, 1102, 1106-07 (E.D.Mo.2001). We reverse in part and affirm in We review grants of summary judgment de novo, applying the same standards as the d......