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Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 

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UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

MICHAEL A. FARLEY, 

 Plaintiff - Appellant, 

v. 

ANTHONY R. STACY, 

 Defendant - Appellee, 

and 

PAUL A. ROSS, 

 Defendant. 

No. 15-5056 

(D.C. No. 4:14-CV-00008-JHP-PJC) 

(N.D. Okla.) 

_________________________________ 

ORDER AND JUDGMENT*

_________________________________ 

Before GORSUCH, McKAY, and BACHARACH, Circuit Judges. 

_________________________________ 

Michael Farley filed this lawsuit after he invested in his friends’ business and 

suffered significant monetary losses. The operators of that business, Paul Ross and 

Anthony Stacy, successfully moved for summary judgment on Farley’s claims for 

violations of federal and state securities laws, breach of contract, breach of fiduciary 

 *

 After examining the briefs and appellate record, this panel has determined 

unanimously to honor the parties’ request for a decision on the briefs without oral 

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore 

submitted without oral argument. This order and judgment is not binding precedent, 

except under the doctrines of law of the case, res judicata, and collateral estoppel. It 

may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 

and 10th Cir. R. 32.1. 

FILED 

United States Court of Appeals

Tenth Circuit 

April 14, 2016

Elisabeth A. Shumaker 

Clerk of Court

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duty, and actual and constructive fraud. Exercising our jurisdiction under 28 U.S.C. 

§ 1291, we affirm. 

I. FACTS 

Michael Farley is a successful car salesman who invested over $1.25 million 

with the Palo Verde Fund, LP (“the Fund”), which was operated by his friends, Paul 

Ross and Anthony Stacy. Ross and Stacy co-founded the Fund’s general partner, 

Paragon Capital Advisors, LLC. In addition, Ross served as the vice president of the 

Fund’s alternative investments and Stacy as the Fund’s investment manager. 

In 2010, Farley invested $751,215.74 in the Fund. Farley contends that he 

made this investment because Ross promised him a 14% rate of return and told him 

his investment would remain liquid. Before the investment, however, Farley received 

a Subscription Booklet and a Confidential Private Placement Memorandum, which 

contradicted Ross’s alleged promises. These investment materials disavowed any 

representations that were not contained within them, explained the investment terms 

in detail, identified numerous risk factors, warned of the risk of substantial or total 

losses, and highlighted the investment’s lack of liquidity.1

 Farley concedes that he 

initialed terms throughout the Subscription Booklet and signed a Subscription 

Agreement to accept its terms on March 1, 2010. Even so, he contends he never read 

the investment materials and instead relied on his friends’ advice and knowledge. 

 1

 Farley could have kept his investment liquid by checking the box on the first 

page of the Subscription Agreement to opt out of the Fund’s alternative investment 

program, but he did not do so. 

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The rate of return for the first year of the initial investment was close to the 

14% that was purportedly promised. So in 2011, Farley invested another $504,000. 

He signed two Additional Subscription Requests on March 24, 2011, which 

reaffirmed all of the representations, warranties, and acknowledgments made in the 

original Subscription Agreement. 

Farley lost his entire investment after the Fund closed in 2013. In an attempt 

to recoup his losses, he filed this lawsuit against Ross and Stacy, alleging violations 

of federal and state securities laws, breach of contract, breach of fiduciary duty, and 

actual and constructive fraud. Ross and Stacy moved for summary judgment on all 

claims. The district court granted summary judgment after finding that (1) Farley 

could not prove his federal securities fraud, contract, and actual fraud claims; and 

(2) Farley’s state securities fraud, constructive fraud, and breach of fiduciary duty 

claims were barred by the statute of limitations for each. 

Farley now appeals. After the parties completed briefing, Ross was 

voluntarily dismissed from this appeal, leaving Stacy as the sole appellee. 

II. ANALYSIS 

We review the district court’s grant of summary judgment de novo, applying 

the same standard that the district court applied. Cillo v. City of Greenwood Vill., 

739 F.3d 451, 461 (10th Cir. 2013). Summary judgment must be granted if “there is 

no genuine dispute as to any material fact and the movant is entitled to judgment as a 

matter of law.” Fed. R. Civ. P. 56(a). Stated otherwise, “[t]he moving party is entitled 

to summary judgment where the record taken as a whole could not lead a rational trier 

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of fact to find for the non-moving party.” 19 Solid Waste Dep’t Mechs. v. City of 

Albuquerque, 156 F.3d 1068, 1071 (10th Cir. 1998) (alteration and internal quotation 

marks omitted). “When applying this standard, we examine the record and reasonable 

inferences drawn therefrom in the light most favorable to the non-moving party.” Id.

A. Lack of Evidence to Support Claims Against Stacy 

Farley’s claim for breach of fiduciary duty requires him to present evidence 

establishing that he and Stacy shared a fiduciary relationship. For all remaining 

claims, Farley must prove that Stacy made a misrepresentation in connection with the 

failed investment. Because the record is devoid of such evidence, we affirm the 

district court’s grant of summary judgment in favor of Stacy on all claims.2

 

See Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1130 (10th Cir. 2011) (confirming 

that we “may affirm on any basis supported by the record, even if it requires ruling 

on arguments not reached by the district court or even presented to us on appeal”). 

A moving party who will not bear the burden of persuasion at trial can meet its 

burden at the summary judgment stage “by pointing out to the court a lack of 

evidence for the nonmovant on an essential element of the nonmovant’s claim.” 

Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 671 (10th Cir. 1998). We thus examine 

whether there is any evidence of a misrepresentation by Stacy or of a fiduciary 

 2

 The district court took a different path to reach this outcome, but Ross’s 

intervening dismissal has changed the landscape of this case. In particular, Ross’s 

dismissal has exposed the glaring absence of evidence regarding Stacy. Without such 

evidence, Farley cannot satisfy the initial elements of his fraud-based claims against 

Stacy, so justifiable reliance is no longer the central issue. 

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relationship with Stacy, based on the requirements for each claim and/or Farley’s 

theory of the case: 

 For his federal securities law and actual fraud claims, Farley must prove 

that Stacy made a misleading statement or misrepresentation in connection 

with the failed investment. See, e.g., Grossman v. Novell, Inc., 120 F.3d 

1112, 1118 (10th Cir. 1997) (“a misleading statement or omission of a 

material fact” is an element of a claim under section 10(b) of the Securities 

Exchange Act and Rule 10b-5 thereunder); Bowman v. Presley, 212 P.3d 

1210, 1218 (Okla. 2009) (“a false material misrepresentation” is an element 

of actual fraud). 

 For his breach of contract claim, Farley must prove that Stacy orally agreed 

to pay him a 14% return on his investment and that the investment would 

remain liquid, because he argues that “he entered into an oral contract with 

Appellees and was led to believe that the investment documents reflected 

the agreed-upon terms that he would earn [14%] interest per annum, and 

could liquidate at any time.” Pl.-Aplt.’s Opening Br. at 38. 

 For his state securities fraud and constructive fraud claims, Farley must 

prove that Stacy prevented him from reading the investment documents or 

encouraged him not to read them. Farley argues that the district court 

erroneously applied Zobrist v. Coal-X, Inc., 708 F.2d 1511, 1518 (10th Cir. 

1983), to impute knowledge of the investment documents to him as of the 

two investment dates because he was prevented from reading them or 

encouraged not to do so. He also argues that Stacy’s misleading statements 

tolled the statute of limitations for these claims until Farley actually 

discovered the fraud. 

 For his breach of fiduciary duty claim, Farley must prove the existence of a 

fiduciary relationship, which, under Oklahoma law, “springs from an 

attitude of trust and confidence and is based on some form of agreement, 

either express or implied, from which it can be said the minds have been 

met to create a mutual obligation.” Quinlan v. Koch Oil Co., 25 F.3d 936, 

942 (10th Cir. 1994) (emphasis and internal quotation marks omitted). 

This claim therefore requires evidence about the nature and extent of the 

Farley-Stacy relationship, as well as proof of an express or implied 

agreement with Stacy. 

Even as the non-moving party, Farley must “do[] more than simply show[] 

there is some metaphysical doubt as to the material facts.” Neustrom v. Union Pac. 

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R.R. Co., 156 F.3d 1057, 1066 (10th Cir. 1998) (internal quotation marks omitted); 

see also Fed. R. Civ. P. 56(c)(1) (a party asserting that a fact is genuinely disputed 

must cite to particular parts of the record, such as depositions, documents, affidavits, 

or discovery responses); W.D. Okla. LCvR56.1(d) (same). He has not done so. 

Farley’s summary judgment and appellate briefs virtually ignore Stacy. Farley 

does not point to—and our careful review of the record did not uncover—evidence of 

a single misrepresentation by Stacy. The limited evidence that Farley has presented 

relates only to Ross, such as excerpts from Ross’s deposition transcript and Farley’s 

own sworn affidavit discussing his friendship with Ross and statements that Ross 

supposedly made before the investment.3

 But Ross is no longer a party to this appeal, 

and Farley has neither argued nor established that Stacy is somehow liable for Ross’s 

statements. Furthermore, Farley has not presented any evidence as to the nature or 

extent of his relationship with Stacy, let alone established a close personal or 

fiduciary one. 

 3 See, e.g., Aplt. App., Vol. III at 409 (“[Ross] promised me that I would 

receive a [14%] return on my investment.”); id. at 410 (“Ross also claimed to have 

put [$2 million] into the Fund himself . . . .”); id. (“Based on Ross’s promises, I 

agreed to invest $390,000 . . . .”); see also Pl.-Aplt.’s Opening Br. at 10 

(characterizing his “actual contract claim” as “relat[ing] to the oral representations 

made by Ross”); id. at 20-21 (listing as material facts “Ross’s admission that the 

parties were close friends,” “Ross’s admission that he had never known Appellant to 

read lengthy documents such as the Private Placement Memorandum,” “Ross’s 

admission that he knew that Appellant preferred to orally discuss investments rather 

than himself be responsible for reading through documents relating to them,” “Ross’s 

admission that the contents of the Private Placement Memorandum may not be 

accurate,” Ross’s knowledge “that Appellant was not a proficient reader,” and Ross’s 

failure to explain the meaning of “alternative investments” or Farley’s ability to opt 

out). 

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The only references to Stacy occur within the allegations in Farley’s unverified 

First Amended Complaint, which generally implicate Stacy by lumping him and Ross 

together. Although Farley cites those allegations, this pleading cannot constitute 

summary judgment evidence as to Stacy’s role in the failed investment. Rather, 

Farley “must come forward with facts supported by competent evidence.” 

Nahno-Lopez v. Houser, 625 F.3d 1279, 1283 (10th Cir. 2010); accord Phillips v. 

Calhoun, 956 F.2d 949, 951 n.3 (10th Cir. 1992) (“Unsubstantiated allegations carry 

no probative weight in summary judgment proceedings.”); Conaway v. Smith, 

853 F.2d 789, 792 n.4 (10th Cir. 1988) (“[A] nonmoving party may not rely merely 

on the unsupported or conclusory allegations contained in pleadings to rebut the 

movant’s factual proof in support of the motion for summary judgment.”). Because 

Farley has not presented any record evidence about Stacy so as to raise a genuine 

issue of material fact for his claims, we affirm the district court’s grant of summary 

judgment. 

B. Other Issues on Appeal 

Farley argues that the district court erred in accepting and granting Stacy’s 

motion for summary judgment because it was filed five days after the dispositive 

motions deadline, per Stacy’s pattern of persistently disregarding court rules and 

deadlines. While we have “repeatedly insisted that pro se parties follow the same 

rules of procedure that govern other litigants,” Garrett v. Selby Connor Maddux & 

Janer, 425 F.3d 836, 840 (10th Cir. 2005) (internal quotation marks omitted), we 

agree with the district court that Farley has not shown any prejudice from this brief 

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filing delay. Stacy did not raise any new issues; he adopted Ross’s arguments 

verbatim and Farley had ample opportunity to respond to them. The district court 

thus appropriately construed the Rules “to secure the just, speedy, and inexpensive 

determination of every action and proceeding,” Fed. R. Civ. P. 1. 

Farley also argues that the case should be reassigned to a different judge upon 

remand to assure a fair and impartial tribunal. This argument is moot in light of our 

decision to affirm. 

III. CONCLUSION 

For these reasons, we affirm the district court’s grant of summary judgment. 

Entered for the Court 

Monroe G. McKay 

Circuit Judge 

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