Rountree Motors, Inc. v. Commonwealth Dealers Life Ins. Co.
| Decision Date | 13 August 2013 |
| Docket Number | CIVIL NO. 3:13cv47 (DJN) |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | ROUNTREE MOTORS, INC. et al., Plaintiffs/Counterclaim Defendants, v. COMMONWEALTH DEALERS LIFE INSURANCE COMPANY a/k/a COMMONWEALTH DEALERS COMPANY, Defendant-Counterclaimant. |
This matter is now before the Court by consent of the parties pursuant to 28 U.S.C § 636(c)(1) on the parties' cross-motions for summary judgment (ECF Nos. 20, 22), in which Plaintiffs Rountree Motors, Inc., Rountree Motors of New Hampshire, Inc., Rountree Automotive, Inc., Kruziffer Automotive, Inc., and Kruziffer Motors, Inc. (collectively "Plaintiffs") move for a declaratory judgment that they are shareholders of Defendant's company and for summary judgment on their breach of contract and constructive fraud claima. Defendant Commonwealth Dealers Life Insurance Company ("CDLIC") also moves for a finding that Plaintiffs are not shareholders of CDLIC. Having reviewed the pleadings filed by the parties, the Court DENIES Plaintiffs' Motion for Summary Judgment and DENIES Defendant's Motion for Summary Judgment, because disputed material facts exist that render Summary Judgment inappropriate in this case.
The Court has reviewed each party's statement of undisputed facts, including theextensive supporting documentation filed in support of the respective positions. Withholding discussion of disputed material facts, as required where the parties have submitted cross-motions for summary judgment, see Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (citations omitted), the Court has concluded that the following narrative represents the facts for purposes of resolving the cross-motions for summary judgment.
Plaintiffs, a group of automobile dealerships owned by Robert Rountree that are no longer operational, allege ownership of stock in Defendant insurance company CDLIC. (Complaint "Compl." (ECF No. 1 at ¶¶ 5,27-31; Pis.' Mem. in Supp. of Mot. for Summ. Judg. ( ) (ECF No. 23) at ¶ 2; ( ) Plaintiffs seek a declaratory judgment that they are shareholders of Defendant's company and allege claims for breach of contract or, in the alternative, constructive fraud.
Mark Albert, past President of Defendant's company and former general manager of one of Rountree's businesses, was authorized by the Board of Directors of Defendant's company to offer shareholder interest in Defendant's company in return for selling policies on Defendant's behalf. (Albert Aff. (ECF No. 21-3) at ¶¶ 2, 4, 15; Albert Dep. (ECF No. 21-5) at 45:1-25.) Albert was also "authorized to accept subscriptions for shares and to convey ownership interests in [Defendant's company]," although there had to be a written agreement to issue stock. (Albert Aff. at ¶ 19; Albert Dep. at 45:15-25.) Albert offered Plaintiffs the opportunity to sell Defendant's insurance policies, which they sold and collected $508,385 in commissions. (Albert Aff. at ¶¶ 17, 24; Rountree Dep. (ECF No. 21-2) at 10:4-25; Defendant's Memorandum in Support of Motion for Summary Judgment ("Def.'s Mem.") Exh. 6 (ECF. 21-6) at PX 176.)
In the early 2000s, Albert told Rountree that for Rountree to continue to sell Defendant'sinsurance policies, Plaintiffs needed to become shareholders of Defendant CDLIC. (Rountree Dep. at 11:1-12; Albert Aff. at ¶ 3.) Albert provided Plaintiffs with "offering materials" about the shareholder program, which included a Private Placement Memorandum ("Memo"). The Memo explained that prospective stockholders were required to (1) "sign a stockholders' agreement and a stock-subscription agreement with [Defendant]"; and (2) "agree to purchase 1,000 shares of Voting Common Stock at a price of $2 per share and 250 shares of B Participating Common Stock at a price of $2 per share for a total investment of $2,500." (Def.'s Mem. Exh. 7 at PX 006-007.) The Memo also required that payment be submitted via check. (Def.'s Mem. Exh. 7 at PX 019.) Albert told Plaintiffs "not to worry about the money because [they would] handle it in one fashion or another" and that Albert would complete the necessary documents. (Rountree Dep. at 36:13-25.)
During their business relationship, Albert and Rountree met multiple times per year, Albert provided Plaintiffs with letters addressing Plaintiffs as "Shareholder" and delivered documents that referred to Plaintiffs as a "shareholder." Plaintiffs admittedly did not pay for Defendant's stock in the required form of a $2,500 check. .) Plaintiffs were assigned a shareholder number of No. 312, but were not issued stock certificates. Albert kept a handwritten log of clients, which did not reflect Plaintiffs as stockholders. (Def.'s Mem. Exh. 10 at CD00813; Albert Dep. at 69:9-71:13.)
Plaintiffs seek a declaratory judgment that they are, in fact, shareholders of Defendant's company, as well as judgment in their favor based on breach of contract and constructive fraud.Defendant seeks a declaratory judgment that Plaintiffs are not shareholders of CDLIC and dismissal of Plaintiffs' breach of contract and constructive fraud claims.
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The relevant inquiry in a summary judgment analysis is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). In reviewing a motion for summary judgment, the Court must view the facts in the light most favorable to the non-moving party. Id. at 255.
When considering a case for summary judgment, the Court cannot weigh the evidence to enter a judgment, but simply must determine if there is a genuine issue for trial. Greater Bait. Ctr.for Pregnancy Concerns v. Baltimore, _F.3d_, 2013 WL 3336884, at *12 (4th Cir. July 3, 2013) (quoting Anderson, 477 U.S. at 249). Even on cross-motions for Summary Judgment, this Court cannot resolve factual issues, it can only identify them. Greater Balt. Cir. for Pregnancy Concerns, _F.3d _, 2013 WL 3336884, at *12 (citing Redd v. N. Y. State Div. of Parole, 678 F.3d 166, 174 (2d Cir. 2012)). Of course, the Court cannot weigh the evidence or make credibility determinations in its summary judgment analysis. Williams v. Staples, Inc., 372 F.3d 662, 667 (4th Cir. 2004).
Once a motion for summary judgment is properly made and supported, the opposing party has the burden of showing that a genuine dispute exists. Matsushita Elec. Indus. Co. v.Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact. Anderson, 477 U.S. at 247-48. Indeed, summary judgment must be granted if the nonmoving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). To defeat an otherwise properly supported motion for summary judgment, the nonmoving party must rely on more than conclusory allegations, "mere speculation," the "building of one inference upon another," the "mere existence of a scintilla of evidence," or the appearance of some "metaphysical doubt" concerning a material fact. Lewis v. City of Va. Beach Sheriffs Office, 409 F. Supp. 2d 696, 704 (E.D. Va. 2006) (citations omitted).
A "material fact" is one that might affect the outcome of a party's case. Anderson, 477 U.S. at 247-48; JKC Holding Co. LLC v. Wash. Sports Ventures, Inc., 264 F.3d 459,465 (4th Cir. 2001). Whether a fact is considered to be "material" is determined by the substantive law, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248; see also Hooven-Lewis v. Caldera, 249 F.3d 259, 265 (4th Cir. 2001). A "genuine" issue concerning a "material" fact only arises when the evidence, viewed in the light most favorable to the non-moving party, is sufficient to allow a reasonable jury to return a verdict in that party's favor. Anderson, 477 U.S. at 248.
Both parties move for declaratory judgment in their favor on the issue of whether Plaintiffs are shareholders of CDLIC. The Court finds that genuine issues of material fact exist as to whether Plaintiffs are shareholders of CDLIC.
The Code of Virginia defines a shareholder as "the person in whose name shares are registered in the records of the corporation." Code of Virginia § 13.1-603. In determining shareholder status, the Court looks to (1) the reflection of the shareholder's name in the company books, (2) a stock certificate proving ownership of shares, (3) payment for the shares of stock, and (4) the company payments of dividends upon the stock to the shareholder. Turnbull...
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