UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

E. DAVID GABLE & ASSOCIATES,

Plaintiff-Appellant,

v.

No. 97-1499

DEAN WITTER REYNOLDS,

INCORPORATED,

Defendant-Appellee.

Appeal from the United States District Court

for the District of Maryland.

John R. Hargrove, Senior District Judge.

(CA-96-1534-HAR)

Argued: September 24, 1998

Decided: November 23, 1998

Before LUTTIG and MOTZ, Circuit Judges, and

BULLOCK, Chief United States District Judge for the

Middle District of North Carolina, sitting by designation.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Richard Louis Gershberg, GERSHBERG & PEARL,

L.L.P., Owings Mills, Maryland, for Appellant. Kathleen A. Ellis,

PIPER & MARBURY, L.L.P., Baltimore, Maryland, for Appellee.

ON BRIEF: Lewis A. Dardick, Tina Sharma McCormack, GERSHBERG & PEARL, L.L.P., Owings Mills, Maryland, for Appellant.
John R. Wellschlager, PIPER & MARBURY, L.L.P., Baltimore,

Maryland, for Appellee.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

Appellant E. David Gable & Associates brought this diversity

action alleging, inter alia, breach of contract, breach of fiduciary

duty, negligence, and intentional interference with contract, arising

out of appellee Dean Witter Reynolds's suspension of trading in

appellant's stock account with Dean Witter. The district court granted

summary judgment in favor of Dean Witter on all counts. For the reasons that follow, we affirm.

I.

In March, 1996, E. David Gable opened two trading accounts with

account executive Mark Stull at the Baltimore office of Dean Witter

Reynolds, Inc. -- one in the name of Gable & Associates and the

other in the name of Grandname Ltd. ("Grandname"), a foreign corporation for whom Gable served as an agent.

On March 12, 1996, Gable deposited 100,000 shares of Texas

American Group, Inc. ("TXAG") stock into each account. On that

date, he informed Stull that he was also holding six million shares of

TXAG on behalf of Grandname. Stull encouraged Gable, then and on

several occasions thereafter, to deposit all six million shares with

Dean Witter. Between March 29 and April 12, Gable ordered a number of sales from the Gable & Associates account, and on April 10

deposited the six million shares of TXAG stock into the Grandname

account. On Friday, April 12, Gable ordered 300,000 shares to be

transferred from the Grandname account to the Gable & Associates

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account. Later that day, a trader in Dean Witter's New York office

informed Stull that Dean Witter would not trade TXAG shares from

the Gable & Associates account until an investigation of those shares

could be completed. Stull immediately informed Gable that there was

"a temporary stop on trading . . . because of an SEC investigation."

The next business day, Monday, April 15, Stull and his manager,

Daniel Deegan, tried to determine the reason for the trading suspension. In the process, Dino Sainati, a Dean Witter employee in the

Restricted Securities Department, advised Stull to fill out a questionnaire about the TXAG shares and call TXAG's transfer agent to

determine how many shares were outstanding. Meanwhile, Sainati

called Alan Humphrey, president of TXAG, to find out whether there

were any restrictions on the sale of the shares. Humphrey informed

him that the shares were subject to a one or two year holding period,

during which they were not to be sold.

On Tuesday, April 16, Stull advised Gable that the investigation

was an internal, rather than SEC, investigation. The next day, Gable

and his attorney David Pearl visited Stull's office and demanded

either the proceeds from sales on April 11 and 12 and the resumption

of trading or the turnover of all the Gable & Associates and Grandname shares. After several more meetings, Dean Witter informed

Gable and Pearl that it would no longer sell any of the TXAG shares.

On Monday, April 22, 1996, ten days after the initial trading suspension, Pearl faxed Dean Witter letters requesting transfer of all

TXAG shares to other brokerage firms. Dean Witter informed Pearl

that it could not accept faxed signatures, so the next day Pearl handdelivered letters with the same request. Three days later, on April 26,

Dean Witter transferred all 320,000 shares in the Gable & Associates

account to Merrill Lynch and all but 100,000 of the shares in the

Grandname account to Legg Mason. On May 1, while reviewing a

stock ledger of Grandname's account, Pearl discovered Dean Witter's

failure to transfer the 100,000 shares. Pearl called Dean Witter on that

date, and the broker transferred the remaining 100,000 shares, as it

had originally been ordered, to the Legg Mason account. Between

April 12, when Dean Witter suspended trading, and April 26, when

all but the 100,000 shares were transferred, TXAG stock price

dropped from $1.43 per share to $0.63.

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Gable & Associates filed this lawsuit on May 15, 1996. On

November 18, 1996, Dean Witter filed a motion for summary judgment, and by February 3, 1997, briefing on that motion had been

completed. Four days later, plaintiffs filed a Motion for Leave to

Amend the Complaint and a proposed amended complaint. The district court denied plaintiff's motion to amend and granted the defendant's motion for summary judgment on all counts. Gable &

Associates appeals the district court's orders denying its motion to

amend and granting summary judgment in favor of the defendant

Dean Witter.

II.

Gable & Associates first contends that the district court abused its

discretion by denying appellant's motion to amend its complaint in

light of evidence acquired from Dean Witter's eleventh-hour production of relevant documents. The district court denied the motion,

which was made after all briefs had been submitted on defendant's

motion for summary judgment, on the grounds that it was "prejudicial

to the opposing party and unduly late." Because we find that the timing of appellant's motion provided ample justification for the district

court's denial, we affirm the order.

Appellant argues that it did not have access to Dean Witter's internal policy manuals until they were produced late in the discovery process, and that it merely sought to amend its complaint to conform to

this newly acquired evidence. However, the theory appellant

advanced in its amended complaint, that appellee Dean Witter

breached its contract and fiduciary duty by not conducting its investigation in a timely manner, was available to appellant from the outset.

As appellee argues, the internal policies to which appellant refers in

its amended complaint simply reflect SEC regulations and case law

to which appellant had access at the time of its original pleadings. The

district court correctly concluded that appellee would be unduly prejudiced if appellant were permitted to shift the focus of its complaint

-- from a claim that appellee breached its contractual and fiduciary

duties merely by suspending trading to one that the suspension and

investigation were lawful but untimely -- in response not to newly

acquired evidence but to a persuasive summary judgment submission.

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Similarly, the "newly acquired" information assertedly justifying

appellant's attempt to amend Counts I and II, in which appellant

alleged appellee breached their contract by failing to trade on April

9 and on or about April 10, was actually information that was peculiarly within appellant's possession. An investor alleging liability for

failure to execute its trade orders may be expected to possess information at the time of its complaint, or at least before extensive briefing

has been conducted, regarding the volume and timing of its own sell

demands. As a result, the district court did not abuse its discretion by

denying a motion to amend after the summary judgment briefs had

been filed. See Lone Star Steakhouse & Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 941 (4th Cir. 1992). This is especially so

where, as here, the motion appears to be no more than "an apparent

attempt to avoid the likely effect of summary judgment." Kleinhans

v. Lincoln Savings Profit Sharing Trust, 810 F.2d 618, 625 (7th Cir.

1987). See also Jameson v. Arrow Co., 75 F.3d 1528, 1535 (11th Cir.

1996) (affirming denial of motion to amend filed one month after

motion for summary judgment); Cleveland v. Porca Co., 38 F.3d 289,

297-98 (7th Cir. 1994) (affirming denial of motion to amend filed

after close of discovery and briefing on motion for summary judgment). Because the district court did not abuse its discretion in concluding that an amendment of the complaint at such a late stage in the

case would unfairly prejudice appellee, we affirm the order denying

appellant's motion to amend.

III.

Appellant also argues that the district court erred in granting appellee's motion for summary judgment on its unamended complaint.

Because we find that the evidence in this case, after adequate time for

discovery, "is so one-sided that one party must prevail as a matter of

law," Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 251 (1986), we

affirm the district court's grant of summary judgment with regard to

all but a single count of appellant's complaint.

Three of the ten counts in appellant's complaint alleged damages

arising out of appellee's breach of its brokerage contract. In counts I

and II, appellant alleged that appellee breached its contract by failing

to execute sales ordered on April 9, 1996 and on or about April 10,

1996, for 20,000 and 62,000 shares, respectively, of TXAG stock. In

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response to appellee's brief in support of its motion for summary

judgment, after it had become clear that the claim had no factual

basis, appellant asked the district court to "construe" counts I and II

instead to allege that appellee had failed to trade 10,000 shares on

April 12, 1996.1 The district court refused to so construe the claim,

and because appellant had alleged no set of facts to support its breach

of contract allegations, granted the motion for summary judgment.

Even were we to "construe" the complaint as appellant would have us

do, evidence in the record clearly establishes that appellee sold 40,000

of the 50,000 shares it was instructed to sell on April 12, and no evidence was introduced to support the conclusion that Dean Witter

failed to trade the remaining 10,000 shares for any reason other than

an absence of buyers.

As another reason for granting summary judgment on Counts I and

II, the district court found that the contract, styled a "Partnership Certification of Investment Powers," in unambiguous terms permitted

Dean Witter, "subject to [its] policies" to "choose which instructions

to follow and which to disregard." Thus, according to the district

court, a suspension of trading in order to investigate suspicious

accounts did not violate the express terms of the contract, which the

court was required by Maryland law to "enforce[ ] as written."

Catalina Enterprises v. Hartford Fire Ins. Co., 67 F.3d 63, 65 (4th

Cir. 1995) (applying Maryland law). Appellant contends on appeal

that, in fact, a genuine dispute exists as to the meaning of the contractual provision in question and that summary judgment was therefore

not appropriate. Because appellant did not raise this argument in its

opposition to summary judgment below, we will consider it on appeal

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1 Appellant also contends that the district court should have amended

the pleadings to conform to the evidence pursuant to Fed. R. Civ. P.

15(b). However, the district court properly refused to do so, as Rule

15(b) refers to "issues not raised by the pleadings . . . tried by express

or implied consent of the parties." (emphasis added). As its terms would

suggest, Rule 15(b) is generally invoked when parties have actually gone

to trial. See, e.g., Aiken County v. BSP Division of Envirotech Corp., 866

F.2d 661 (4th Cir. 1989) (reversing district court's sua sponte 15(b) posttrial amendment of the pleadings). In addition, appellee has done nothing

to suggest "consent," express or implied, to the trial of issues outside the

four corners of appellant's original complaint.

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only where refusal to do so would be plain error or would result in

a fundamental miscarriage of justice. Muth v. United States, 1 F.3d

246, 250 (4th Cir. 1993).2 We decline to find either plain error or a

fundamental miscarriage of justice in the district court's literal reading of the unambiguous contractual terms in this case. Thus, because

appellant did not present any evidence to suggest that Dean Witter

had failed to trade in accordance with appellant's instructions and

because, in any event, it makes its argument of contractual interpretation for the first time on appeal, we affirm the district court's grant

of summary judgment on these claims.

In Count III, appellant alleged that appellee breached its contract

by failing to transfer the 320,000 shares of TXAG remaining in the

Gable account to Merrill Lynch until April 26, 1996, nine days after

appellant now contends it had orally instructed appellee to do so. The

district court granted summary judgment on this claim as well, concluding that the transfer instruction was not given until either April

22, by fax, or April 23, by letter, and that a three or four day delay

was reasonable and therefore could not constitute a breach of the contract. With regard to the effective date of the transfer order, appellant

itself alleged in its unamended complaint that the transfer order was

given on April 22. In its brief in opposition to Dean Witter's motion

for summary judgment, and again on appeal, appellant contended

nevertheless that it authorized the transfer on April 17. Even were we

inclined to construe appellant's complaint to allege a transfer order on

the earlier date, this claim is negated by the undisputed fact that, on

April 17, appellant had not yet opened another account into which the

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2 Appellant contends that it addressed the issue of the contract's

ambiguity in its brief opposing summary judgment, but in those pages

appellant actually concedes the literal interpretation it now rejects, relying instead on a broader argument about the intent of the parties and the

implied covenant of good faith. See J.A. at 103 (Plaintiff's Memorandum

in Opposition to Defendant's Motion for Summary Judgment)

("Although the written agreement between Gable and Dean Witter states

that Dean Witter may decide not to follow certain instructions, it was

never the intent of the parties to allow the defendant [such] sweeping

authority."); id. at 104 ("In order to determine the true intent of the parties in a fiduciary relationship, it is sometimes necessary to look not just

into the writing but also the nature of the parties' relationship and dealings.").

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shares could be transferred. The district court was therefore correct in

concluding that the record evidence could not support a finding that

appellant ordered the shares transferred on April 17 rather than upon

receipt of the written requests on April 22 and 23. Similarly, the district court could only conclude that there was no genuine issue of

material fact as to the reasonableness of a three or four day delay, as

appellant presented no evidence to dispute the deposition testimony

in the record that such transfers could take anywhere from ten days

to a month and a half. J.A. at 164-167 (testimony of George Johnson).

Thus, summary judgment in favor of appellee was appropriate on this

third breach of contract claim as well.

IV.

The district court properly granted appellee's motion for summary

judgment on the claims of intentional interference with contract

(Count VII), breach of fiduciary duty (Count VIII), and negligence

(Count X) primarily on the grounds that Dean Witter had a legal obligation to suspend trading in order to conduct an investigation, and

that it conducted that inquiry in a reasonable fashion. Under SEC regulations, broker-dealers like appellee have a duty to investigate suspicious trading. "[W]hen a dealer is offered a substantial block of a

little known security . . . where the surrounding circumstances raise

the questions as to whether or not the ostensible sellers may be merely

intermediaries for controlling persons or statutory underwriters, then

searching inquiry is called for." SEC Release No. 33-4445

(1962)(emphasis added), quoted in Br. of Appellee at 16. In this

instance, Dean Witter was presented with a large number of lowpriced shares of foreign origin issued by a relatively unknown company, thus triggering its obligation to conduct such an inquiry.

In its original complaint, appellant alleged liability arising out of

appellee's decision to conduct the investigation at all. In its proposed

amended complaint, the rejection of which by the district court we

affirm herein, appellant based its claims instead on the timing of the

investigation. Thus, although appellant now concedes that the circumstances indeed warranted a "searching inquiry," it insists that Dean

Witter was required to conduct the inquiry before trading in the

account was begun. As appellee argues in response, however, SEC

rules requiring investigation are derived from the Securities Act of

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1933 and the Securities Exchange Act of 1934, both of which were

designed for the protection of investors. Ernst & Ernst v. Hochfelder,

425 U.S. 185, 195 (1978). We cannot agree with appellant that this

obligation to protect investors simply evaporates after trading has

begun.

With this understanding of appellee's legal obligation in mind, we

proceed to consider the district court's grant of summary judgment on

counts relating to the conduct of the investigation. The district court

granted summary judgment on Count VII, tortious interference with

appellant's contract with Grandname, because appellant failed to produce evidence of appellee's "intentional acts, without justification or

privilege, designed to induce [a] third party to breach [its] contract"

with appellant, an element of the tort under Maryland law. See, e.g.,

Macklin v. Robert Logan Assocs., 334 Md. 287, 296-98 (1994).

Appellant claimed that its relationship with Grandname was harmed

when representatives of Dean Witter contacted executives of TXAG

to inquire whether there were restrictions on the sale of the shares.

Because the broker-dealer in conducting an investigation may not rely

upon the assurances of its customers or their counsel, SEC v.

Culpepper, 270 F.2d 241, 251 (2d Cir. 1959), or the absence of a

restrictive legend on the share certificate, Quinn & Co. v. SEC, 452

F.2d 943, 947 (10th Cir. 1971), we conclude that appellee had sufficient justification for its limited inquiries of TXAG. Furthermore,

appellant's claim, based as it is upon appellee's discharge of its legal

obligation, is foreclosed by the well-settled Maryland rule that there

can be no recovery for tortious interference with contractual relations

unless the alleged "interference" is either wrongful or unlawful.

Traveler's Indemnity Co. v. Merling, 326 Md. 329, 343 (1992).

Accordingly, because appellant produced no evidence that could

establish the elements of a tortious interference claim, we affirm the

grant of summary judgment as to Count VII.

In Count VIII, appellant claimed that appellee had breached its

fiduciary duty by failing to trade as requested. The district court

declined to consider whether the broker-client relationship is a fiduciary one, instead following Maryland state law in concluding that

Dean Witter in its capacity as agent had a duty to act in appellant's

best interests and to communicate truthfully all relevant information

to appellant. J.A. at 353 (district court order citing Huppman v. Tighe,

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100 Md. App. 655, 668 (1994)). Because Dean Witter was required

by law and internal policy to investigate the origin of the shares, however, we conclude as did the district court that it would have acted

improperly had it continued to trade the shares during the pendency

of its inquiry.

In its tenth count, appellant alleged damages from appellee's negligent conduct of its investigation. Again, appellant's amended complaint stressed the untimely nature of the investigation, while the

original complaint merely alleged that appellee violated its duty "by

conducting [its] investigation in an inappropriate, inconclusive, and

unreasonable manner, by not contacting the Plaintiff, Plaintiff's

securities counsel, or Plaintiff's transfer agent, when the existence

and identity of each were known or could have been easily determined by the Defendant." J.A. at 20 (emphasis added). In the unamended complaint, which is the only one we need consider, the

allegation of negligence is clearly limited to an objection to the specific manner in which the investigation was conducted. As we have

previously noted, in conducting its "searching inquiry," appellee was

under no obligation to begin or end its investigation by directing its

inquiries to the customer whose shares were being investigated. Thus,

the district court did not err in holding that Dean Witter did not act

negligently in choosing instead to contact TXAG directly regarding

restrictions on trading that may have been placed on the stock when

it was initially conveyed to Grandname.3 

V.

In Count XI, appellant alleged a breach of fiduciary duty arising

out of appellee's failure to transfer 100,000 of Grandname's shares to

the new Legg Mason account until May 1, 1996. In its original complaint, appellant alleged that Dean Witter improperly transferred those

100,000 shares to its transfer agent, resulting in Grandname's loss of

confidence in Gable and its consequent withdrawal of signing author-

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3 The district court's consideration of the timeliness issue with regard

to the negligence claim was unnecessary, but we do agree with its conclusion that it is "ludicrous to suggest that Defendant forfeited all rights

to investigation by failing to investigate the shares at the opening of the

accounts." J.A. at 356.

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ity. In granting summary judgment on this count, the district court

correctly found that there was no evidence in the record to support the

claim that the shares were transferred to appellee's transfer agent, and

concluded that the delay in transferring the shares was merely an

"oversight." On appeal, appellant has abandoned its contention that

the shares were transferred to a transfer agent, and alleges harm from

the decline in value of the shares during the nine days in which they

remained, improperly, in appellee's possession. Br. of Appellant at

42. Because this allegation of harm arising out of simple delay was

not raised below, it should not be considered on appeal. Muth, 1 F.3d

at 250. Even were we to consider this revised claim, there is no evidence to support a finding of any harm caused by the delay in transferring the shares, as none of the 5.65 million shares that were

properly transferred to the Legg Mason account on April 26 was sold

until July 8, 1996 -- more than two months after the disputed shares

were ultimately transferred.

Finally, in Count IX, appellant alleged a breach of fiduciary duty

arising out of Mark Stull's initial statement on April 12 that it was the

SEC, as opposed to Dean Witter, that had launched an investigation.

The district court acknowledged that Dean Witter had a duty to

inform appellant "of the investigation and the investigator's true identity." J.A. at 354. Nonetheless, the district court granted summary

judgment to Dean Witter, stating that a "mere" four day delay in

revealing the investigator's true identity was "clearly insignificant."

We do not believe that as a matter of law a delay of four days --

or two business days -- in the delivery of such relevant information

will always be insignificant. However, in this instance, appellant has

forecast no evidence to establish material harm from Dean Witter's

delay. Even when appellant ultimately learned on April 16th that it

was Dean Witter that had stopped trading and begun an investigation,

it did not order a transfer until April 22nd or April 23rd, which transfer was not completed until the 26th, when the shares traded at an

average price of $.63 per share. Appellant is of course entitled to the

inference that it would have acted with the same degree of dispatch

had it learned the correct identity of the investigator on April 12th --

especially given that it had on that date no account into which the

shares could be transferred. Appellant is therefore entitled to the

inference that it would have ordered the transfer either four or five

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business days later -- on the 18th or 19th -- and that the transfer

would have been completed on the 24th, when the share price averaged $.57, or six cents less than on the 26th. Thus, because appellant

presented no evidence to suggest that it would have, or could have,

executed a transfer any more quickly had it learned of the investigator's identity on April 12th rather than 16th, we can only conclude

that the delay was, in this case, legally insignificant.

CONCLUSION

For the reasons stated herein, we affirm the judgment of the district

court.

AFFIRMED

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