IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 09-30708

ELIZABETH BOLTON HASSINGER; MARY BOLTON JENNINGS,

Individually and as trustee of the James K. Jennings, III Trust and as trustee

of the Elizabeth Bolton Jennings Trust; ROBERT H BOLTON, JR.;

CATHERINE HASSINGER DRENNAN; MARY HASSINGER SCHMIDT; ET

AL,

Plaintiffs - Appellants,

v.

JP MORGAN CHASE & COMPANY,

Defendant - Appellee.

Appeal from the United States District Court

for the Eastern District of Louisiana

USDC No. 2:06-CV-2931

Before JONES, Chief Judge, and HIGGINBOTHAM and ELROD, Circuit

Judges.

PER CURIAM:

*

This case involves a complicated fact pattern with a simple legal issue: 

Do proceeds from a settlement agreement represent post-merger consideration?

JPMorgan Chase & Company (JPMorgan) paid shareholders cash to settle their

United States Court of Appeals

Fifth Circuit

F I L E D

August 30, 2010

Lyle W. Cayce

Clerk

Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not *

be published and is not precedent except under the limited circumstances set forth in 5th Cir.

R. 47.5.4.

Case: 09-30708 Document: 00511219493 Page: 1 Date Filed: 08/30/2010
No. 09-30708

securities class action in relation to a merger. Appellants assert that this

money should be treated as additional money paid for the merger and that

because they are former debenture holders, JPMorgan must pay them an equal

amount of cash. Because we agree with the district court that Appellants have

failed to demonstrate a genuine issue of material fact as to whether the

settlement constitutes post-merger consideration, we AFFIRM.

Prior to the merger of JPMorgan’s predecessor, Banc One, and First

Commerce Corporation (First Commerce), Appellants owned convertible

debentures in First Commerce. Under the Trust Indenture Agreement, which

governed such debentures, debenture holders could, before December 1, 2000,

convert the principal amount of their debentures into First Commerce common

stock at an established conversion ratio. The Trust Indenture Agreement also

included an anti-dilution provision, which secured the debenture holders’ right

to receive, in the event of a merger, the same monetary consideration for

debenture stock as an ordinary shareholder. Thus, when First Commerce

merged with Banc One in 1998, the conversion ratio for the debentures was

modified so that debenture holders would, upon conversion, receive the same

merger consideration as the common stockholders.

Subsequently, however, former First Commerce shareholders sued Bank

One (Banc One’s successor ) and its corporate officers for securities violations

1

under §§ 11, 12(a)(2), and 15 of the Securities Act (the “Levitan action”). 

15 U.S.C. §§ 77k, 77l(a)(2) and 77o. The shareholders claimed that Banc One

and its officers overstated the value of Banc One’s credit card division, which

inflated its overall value. Consequently, First Commerce shareholders overpaid

The case before this court concerns the merger between Banc One and First

1

Commerce. Banc One later merged with First Chicago to become Bank One, and in 2004,

Bank One merged with JPMorgan. By the time of the JPMorgan merger, the Appellants’

debentures had been converted. 

2

Case: 09-30708 Document: 00511219493 Page: 2 Date Filed: 08/30/2010
No. 09-30708

for Banc One shares. The Levitan action eventually became a class action with

a class defined as former First Commerce shareholders who retained their

shares until August 24, 1999—the time at which the information underlying the

lawsuit became public. Some Appellants attempted to join the Levitan action,

but the case manager denied their requests.

On October 31, 2005, JPMorgan, as successor to Banc One, settled the

Levitan shareholder suit without admitting liability. In exchange for dropping

all legal action with respect to the merger, JPMorgan paid the Levitan class

$33.9 million, which equates to approximately $0.89 per share of potentially

eligible stock. Following the settlement, Appellants sued JPMorgan for breach

of contract under § 13.04(f) of the Trust Indenture Agreement, asserting that

the settlement proceeds were “post-merger” consideration. In ruling on the

parties’ motions for summary judgment, the district court rejected Appellants’

theory and concluded that the settlement proceeds were not post-merger

consideration.

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

the same legal standards used by the district court. Moss v. BMC Software, Inc.,

610 F.3d 917, 922 (5th Cir. 2010). “Summary judgment is proper ‘if the

pleadings, the discovery and disclosure materials on file, and any affidavits show

that there is no genuine issue as to any material fact and that the movant is

entitled to judgment as a matter of law.’” Id. (quoting Fed. R. Civ. P. 56(c)(2)).

On cross motions for summary judgment, the court reviews each motion

independently, viewing the evidence and inferences in the light most favorable

to the non-moving party. Tidewater Inc. v. United States, 565 F.3d 299, 302 (5th

Cir. 2009). “If there is no genuine issue and one of the parties is entitled to

prevail as a matter of law, [this] court may render summary judgment.” Shaw

Constructors v. ICF Kaiser Eng’rs, Inc., 395 F.3d 533, 539 (5th Cir. 2004)

(citations omitted).

3

Case: 09-30708 Document: 00511219493 Page: 3 Date Filed: 08/30/2010
No. 09-30708

The Levitan settlement agreement is a contract, Estate of Kokernot, 112

F.3d 1290, 1294 (5th Cir. 1997), and therefore, this court interprets it pursuant

to general contract law principles, Treaty Pines Invs. P’ship v. Comm’r, 967 F.2d

206, 211 (5th Cir. 1997). Under Louisiana law, “[c]ontracts have the effect of law

for the parties,” La. Civ. Code Ann. art. 1983, and the “[i]nterpretation of a

contract is the determination of the common intent of the parties, La. Civ. Code

Ann. art. 2045. “When the words of a contract are clear and explicit and lead to

no absurd consequences, no further interpretation may be made in search of the

parties’ intent.” La. Civ. Code Ann. art. 2046. Moreover, “[a] contract should not

be interpreted in an unreasonable or strained manner . . . to enlarge or to

restrict its provisions beyond what is reasonably contemplated by unambiguous

terms or [to] achieve an absurd conclusion.” P.D. & An.D. v. S.W.L., 993 So.2d

240, 245 (La. Ct. App. 2008).

Here, we agree with the district court that “debenture holders are entitled

[under § 13.04(f) of the Trust Indenture Agreement] to any subsequent payment

received by shareholders, so long as that payment specifically adjusts the price

shareholders received for their stock at the time of merger.” Appellants,

however, have failed to bring forth any evidence that would entitle them to

additional monies under § 13.04(f). Indeed, as the district court observed,

Appellants’ “only evidence that the settlement specifically adjusted the price

paid to shareholders at the time of the merger is the settlement agreement

itself,” and “the settlement agreement specifically disclaims any liability on

behalf of [JPMorgan] or damages on behalf of the [Appellants].” In addition,

Appellants have failed to point to any language in the settlement agreement that

“equates the payment of additional monies with additional value for the

shareholder’s stock at the time of merger.”

Accordingly, we agree with the district court that Appellants “have failed

to demonstrate a genuine issue of material fact as to whether the Levitan

4

Case: 09-30708 Document: 00511219493 Page: 4 Date Filed: 08/30/2010
No. 09-30708

settlement constitutes post-merger consideration.” We AFFIRM the judgment

of the district court essentially for the reasons stated in its careful and thorough

orders, dated April 1, 2009 and July 23, 2009.

5

Case: 09-30708 Document: 00511219493 Page: 5 Date Filed: 08/30/2010