The opinion of the court was delivered by: Judge Smith
Plaintiff initiated this action on January 3, 2003, asserting claims under Section 10 of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b-5, as well as state law. Plaintiff asserts, inter alia, that Defendant violated his fiduciary duty to Plaintiff and breached a Partnership Agreement when he applied the proceeds of a life insurance policy to fulfill the Agreement's buyout after death provision. Plaintiff also contends that Defendant violated his fiduciary duty to plaintiff when he purchased stock from her and later sold it for a higher price. The parties filed cross-motions for summary judgment and the Court granted Defendant's Motion in an Order dated September 16, 2004, dismissing Plaintiffs' federal claims with prejudice and the state law claims without prejudice. On October 13, 2004, Plaintiff filed a Notice of Appeal. On January 6, 2006, the Court of Appeals for the Sixth Circuit reversed this Court's grant of summary judgment to Defendant as to Plaintiff's claim under Section 10 of the Securities and Exchange Act of 1934. Plaintiff did not appeal the dismissal without prejudice of her state law claims, but instead filed those claims in the Franklin County Court of Common Pleas, case no. 04CVH-10-10919. The state court case is stayed by agreement of the parties pending the outcome of the case before this Court.
Pursuant to this Court's Order, the arguments were re-briefed in the context of Defendant's Motion for Summary Judgment and the response and reply. Defendant's Motion is now ripe for review. For the reasons that follow, the Court grants Defendant's Motion for Summary Judgment (Doc. 27).
Plaintiff Donna Saxe is both the widow of decedent CPA Ronald Saxe and the Executor of his estate. Plaintiff initiated this suit in both capacities. For the sake of clarity, the Court will refer to her dual capacities using the singular "Plaintiff."
Defendant Thomas P. Dlusky was a partner with Ronald Saxe in the Pritchett, Dlusky & Saxe accounting firm ("PDS Accounting"). Dlusky, along with Ronald Saxe, also owned a twenty-five percent interest in PDS Planning, Inc. ("PDS Planning"), a closely held financial planning firm. Robert Hamilton owned the remaining fifty percent of PDS Planning.
Ronald Saxe died on December 29, 1997. In June 1998, Defendant approached Plaintiff about purchasing the Saxe's twenty-five percent interest in PDS Planning. Defendant told Plaintiff that he believed the twenty-five percent interest was worth $30,000, based upon a "rule of thumb" valuation of four and one-half times the previous year's profits. Plaintiff's son, Douglas Saxe, assisted her in connection with the transaction. At the time, Douglas Saxe was an accountant and partner in PDS Accounting. Douglas Saxe was familiar with PDS Planning and prepared tax returns for PDS Planning after his father's death through 2001.
In June 1998, Plaintiff agreed to the $30,000 price and the agreement was later reduced to writing by Plaintiff's estate attorney. Plaintiff did not attempt to have the shares in PDS Planning appraised. In fact, Plaintiff filed papers in the Probate Court waiving her right to an appraisal. Defendant paid Plaintiff the $30,000 by November 1999.
Sometime in the late summer of 2000, Hamilton, the President and fifty percent shareholder in PDS Planning, approached Defendant and offered him $250,000 for his fifty percent interest in PDS Planning. For business reasons the documents consummating the sale to Hamilton were backdated to January 2000.
On January 3, 2003, Plaintiff initiated this case asserting claims for violation of Rule 10b-5 of the Securities and Exchange Act of 1934, breach of fiduciary duties and breach of contract. As mentioned above, Plaintiff's state law claims are now pending in state court and the only claim for this Court to decide in Defendant's Motion for Summary Judgment is the claim under the Securities and Exchange Act of 1934.
The standard governing summary judgment is set forth in Fed. R. Civ. P. 56(c), which provides:
The judgment sought shall be rendered forthwith 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.
Summary judgment will not lie if the dispute about a material fact is genuine; "that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is appropriate, however, if the opposing 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. ...