1 Oppenheimer's claims against Green were dismissed after the trial court granted Green's

motion to compel arbitration. Accordingly, this appeal is limited to a determination of the claims

between Oppenheimer and Prudential.

1 United States Court of Appeals,

Fifth Circuit.

No. 95-50887

Summary Calendar.

Kaye Butler OPPENHEIMER, Plaintiff-Appellant,

v.

PRUDENTIAL SECURITIES INCORPORATED, also known as Prudential Bache Securities,

Inc.; and Robert E. Green, Defendants-Appellees.

Sept. 6, 1996.

Appeal from the United States District Court for the Western District of Texas.

Before GARWOOD, WIENER, and PARKER, Circuit Judges.

ROBERT M. PARKER, Circuit Judge:

FACTS

In March of 1987, Kaye B. Oppenheimer ("Oppenheimer"), opened an account with Thomson

McKinnon Securities ("TMS"). Robert E. Green 1 ("Green"), served as Oppenheimer's stockbroker

while her account was maintained at TMS . Aft er opening the account with TMS, Oppenheimer

purchased approximately 11 separate securities over a two-year period.

On or about July 1 7, 1989, TMS and Prudential Securities Incorporated ("Prudential")

entered into an asset purchase agreement (the "Asset Purchase Agreement"), to be effective on or

about September 22, 1989. In that agreement, Prudential agreed to purchase the business premises

and fixed assets of TMS as well as certain related leases and contracts. In addition, Prudential agreed

to hire certain former TMS employees whom it found acceptable. As a result, Prudential hired Green.

Because Oppenheimer did not provide TMS with instructions regarding the disposition of her

account, Prudential opened and maintained that account. Oppenheimer kept her account at Prudential2

until July of 1992, at which time she transferred her investments to another brokerage firm.

On or about August 12, 1993, Oppenheimer filed her Original Complaint. In her Original

Complaint, Oppenheimer asserted a laundry list of claims against TMS, Green, and Prudential, but

complained of only three specific transactions, all of which were initiated at TMS in March of 1987,

or earlier. Oppenheimer also accused Green and Prudential of mismanagement of her account after

it was transferred to Prudential, but did no t plead any facts wi th respect to the purported

mismanagement. Oppenheimer subsequently entered into an agreement with Prudential and Green

wherein the parties agreed that Prudential and Green would not be required to respond to the Original

Complaint until Oppenheimer amended. Oppenheimer filed her First Amended Original Complaint

on September 21, 1994.

Op penheimer's First Amended Original Complaint was virtually identical to the Original

Complaint except that it identified eleven other TMS transactions of which she complained. In

addition, she identified two tr ansactions that occurred wdential. Further, Oppenheimer claimed

Prudential was liable as a successor-in-interest for the TMS transactions because of the existence of

an indemnity provision in the Asset Purchase Agreement.

Prudential filed its Moti on to Dismiss for Failure to State a Claim, or in the Alternative,

Moti on for Summary Judgment and Moti on for a more definite statement. In its Motion to Dismiss,

Prudential sought to have all claims relating to the TMS transactions dismissed, or in the alternative,

denied by summary judgment as a matter of la w. Prudent ial also requested that Oppenheimer's

Prudential transactions be dismissed because it contended that she had incurred no loss from those

investments. Finally, Prudential requested t hat Oppenheimer be required to replead with greater

particularity the nature of her fraud claims, because Prudentia l contended that those claims lacked

meaningful factual support.

The trial court granted Prudenti al's mo t ion to require Oppenheimer to replead her claims

relating to Rule 10b-5 and § 10(b) of the Securities Exchange Act of 1934, her breach of fiduciary2 Pursuant to a court order, all matters in connection with this action were referred to a

magistrate on December 1, 1994. Because the district court ultimately adopted all of the

magistrate's findings in this action, all references are to the "trial court."

3 This evidence consisted of a list of certain Prudential customer accounts credited and a letter

from an in-house counsel at Prudential to the New York Stock Exchange enclosing a

supplemental list of credited accounts and containing a brief explanation with respect to

3 duty claims, her breach of contract claims, and her negligence claims against Green and Prudential. 2

In addition to requiring Oppenheimer to replead, the court also required Prudential to state which of

the transactions, of which Oppenhei mer co mplained, had actually occurred while Prudential

maintained her account. Oppenheimer then filed her Second Amended Original Complaint.

Oppenheimer's Second Amended Original Complaint varied little from the First Amended

Complaint. Oppenheimer reasserted a laundry list of purported causes of action including: (i)

vio lations of federal securities laws; (ii) constructive fraud; (iii) breach of fiduciary duty; (iv)

common law and statutory fraud; (v) violations of the Texas Deceptive Trade Pract ices Act

( "DTPA"); (vi) breach of implied warranty of fitness for a particular purpose; (vii) breach o f

contract; and (viii) negligence.

In response to the Second Amended Original Complaint, Prudential re-urged its Motion to

Dismiss and offered summary judgment evidence of the following: (i) that Prudential was not legally

responsible for TMS Transactions; (ii) that many of the complained of TMS transactions were never

even transferred to Prudential; (iii) that even assuming Oppenheimer's allegations with respect to her

Prudential transactions were true, Oppenheimer's monthly statements provided her with notice of any

failure of Green or Prudential to honor her instructions regarding the purchase of these investments;

and (iv) that Oppenheimer sustained no damages from her Prudential transactions.

Oppenheimer re spo nded by offering evidence of Prudential's crediting of certain of its

customer accounts victimized by an embezzlement scheme (hereinafter referred to as the

"Saddlebrook incident"). She contended that this evidence demonstrated that Prudential was liable

as a successor-in-interest for all TMS transactions occurring before the date of the Asset Purchase

Agreement. 3 The Saddlebrook incident involved a TMS cashier embezzling funds from TMSPrudential's discovery of a cashier's misappropriation of customer funds from Prudential accounts.

4 accounts from a Saddlebrook, New Jersey office. Soon after the transfer of certain TMS accounts

to Prudential, Prudential discovered the scheme, c o nfronted the cashier, and ultimately elected to

make restitution to its aggrieved customers.

Oppenheimer claimed the reimbursement of accounts was inconsistent with Prudential's claim

that it had no successor-in-interest liabilit y. Oppenheimer further argued that "Prudential ... waived

any righ t [it] may have had to claim that it did not assume [TMS] liabilities...." Addressing

Oppenheimer's "waiver" argument, the court ruled that evidence relating to the Saddlebrook incident

was inadmissible based on Oppenhei m er's failure to properly serve Prudential with an executed

subpoena by which Oppenheimer obtained evidence of the reimbursements. Further, the court found

that the evidence of reimbursement would be inadmissible pursuant to Fed.R.Evid. 408. Finally, t he

court found that, even if admissible, the Saddlebrook incident was totally unrelated to Oppenheimer's

claim of successor liabilit y and provided no issue of fact with respect to Prudential's liabilities for

TMS transactions. As a result, t he co urt granted Prudential's motion for summary judgment with

respect to the TMS transactions. The court dismissed the remainder of Oppenheimer's claims relating

to her Prudential transactions bec ause Oppenheimer was unable to support her allegations of

misrepresentations regarding those transactions.

Addressing Oppenheimer's breach of fiduciary duty claims, the court found the facts pled by

Oppenheimer in support of those claims insufficient to establish the existence of any fiduciary duty.

The court specifically noted that Oppenheimer failed to identify any specific acts which would impose

liabilit y on Prudential for any acts of Green. Because no contract existed between Oppenheimer and

Prudential or Green, the court dismissed her breach of contract claims. Fiegligence claims because

she failed to state a cause of action for negligence against Prudential. Oppenheimer appealed.

DISCUSSION

I. Successor-In-Interest Liability4 The Asset Purchase Agreement states, "[the] construction of this Agreement shall be

governed ... by the law applicable to contracts made ... in the state of New York...." Accordingly,

the district court analyzed the contract at issue under New York law, and none of the parties

5 On appeal, Oppenheimer challenges the district court's decision to grant Prudential's motion

for summary judgment on the issue of successor-in-interest liabilit y. She argues that the court erred

when it: (1) determined that evidence of the Saddlebro o k incident was inadmissible as a result of

Oppenheimer's failure to properly serve Prudential with notice of her subpoena to the New Yo rk

Stock Exchange ("NYSE"); (2) found that evidence of Prudential's decision to settle claims arising

from the Saddlebrook incident was inadmissible under Fed .R.Evid. 408; (3) determ i ned that

Prudential's decision to pay vict ims of the Saddlebrook incident did not result in a waiver of its right

to claim that it had no t assumed the liabilities of TMS; and (4) held that the Asset Purchase

Agreement did not indicate that Prudential assumed the liabilities of TMS.

We conduct a de novo review of a district court's grant o f summary judgment. F ireman's

Fund Ins. Co. v. Murchison, 937 F.2d 204, 207 (5th Cir.1991). No deference is given to the district

court and all reasonable inferences from the evidence must be resolved in favor of the nonmovant.

United States v. Diebold, Inc., 369 U.S. 654, 665, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962).

We will assume, arguendo, that Oppenheimer properly served Prudential with notice of the

subpoena duces tecum, and that Fed.R.Evid. 408 did not preclude the admission of evidence relating

to the Saddlebrook incident. However, we agree wit h t he district court's conclusion concerning

Oppenheimer's waiver argument.

The Saddlebrook incident did not involve any al leged misrepresentations of a registered

representative in connection with the purchase and sale of securities. It is an incident totally unrelated

to the claims being made by Oppenheimer in the instant case and pr esent s no issues of fact with

respect to Prudential's liabilities for TMS transactions. Consequently, the district court did not err

when it determined that the acent, did not result in a waiver o f it s right to claim that it had not

assumed the liabilities of TMS.

Under New York law, 4 the purchaser of corporate assets is not responsible for the liabilit iesdisputes the district court's choice of law.

6

of its predecessor unless (1) it expressly or impliedly assumes such liabilit y; (2) the two corporati ons

were merged into one; (3) the successor corporation is a mere continuation of its predecessor; or

(4) the transaction was fraudulently executed to escape such obligations. D iaz v. South Bend Lathe,

Inc., 707 F.Supp. 97, 99 (E.D.N.Y.1989) (internal citations omitted). Therefore, regardless of the

actions taken by Prudential in relation to the Saddlebrook incident, Prudential would not be liable for

the TMS transactions unless its actions brought it within one or more of the four exceptions to the

general propos it ion that a successor corporation is not liable for the acts of its predecessor

corporati on.

The district co urt analyzed each of these exceptions and found that none were applicable.

Oppenheimer does not contest the district court's findings as to three of the exceptions, but she does

challenge the district court's determination that the Asset Purchase Agreement did not indicate that

Prudential expressly or impliedly assumed the liabilities of TMS.

Oppenheimer claims that the language of the Asset Purchase Agreement between Prudential

and TMS is ambiguous with respect to whether or not Prud ent ial assumed the liabilities of TMS.

Accordingly, Oppenheimer argues th at there is an issue of fact that should preclude summary

judgment as to whether Prudential assumed the liabilities of TMS.

Whether a written agreement is ambiguous is a question of law to be resolved by the court.

Van Wagner Adv. Corp. v. S & M Enters., 67 N.Y.2d 186, 191, 501 N.Y.S.2d 628, 492 N.E.2d 756

(1986). Oppenheimer argues that the following sections of the Asset Purchase Agreement create an

ambiguity:

1(b) Limitations. Except as provided herein or in the Conversion Agreement, buyer will not

acquire any of the assets of Seller or any of its subsidiaries and shall not assume any liabilit ies

... of Seller of any nature whatsoever....

* * * * * *

n. Account Documentation. Seller will take all actions necessary to assure that Buyer shall

become the successor in interest in the account documentation of any non-objecting customer

that relates to the business of Seller and its Subsidiaries.7 * * * * * *

B. Indemnity. Seller hereby indemnifies Buyer and agrees to hold Buyer harmless against any

and all loss, liabilit y, obligation, damage, claim and e xpense of any nature whatsoever,

including, without limitation, reasonable atto rney's fees (collectively "Claims"), (I) arising

from or in conne ct io n with the conduct of any aspect of the retail brokerage business

conducted by Seller or its employees or agents at ... any of the adjusted premises.

Oppenheimer contends that these provisions, read together, indicate that when Prudential purchased

the customer accounts it also intended to assume the attendant liabilit ies arising from those accounts.

We disagree.

We find nothing ambiguous in the language of the Asset Purch ase Agreement concerning

what liabilit

ies Prudential intended to assume. Under the "Limitations" language, it is clear that

Prudential expressly stated that it was not assuming the liabilit ies of TMS. Nei

ther the account

documentation clause nor the indemnity clause creates an ambiguity on this point. In fact, the

indemnity clause supports this interpretation because it indemnifies Prudential from "any and all loss

... arising from or in connection with the conduct of any aspect of the retail brokerage business

co nducted by [TMS]." Consequently, we affirm the district court's decision to grant Prudential's

motion for summary judgment on the issue of successor-in-interest liability.

II. DTPA

The trial court dismissed Oppenheimer's DTPA claims because "[p]laint iff has failed to

provide Prudential with the appropriate notice as required by Texas Business and Commerce Code

§ 17.505(a)." We need not address the sufficiency of the notice provided by Oppenheimer, because,

regardless of the sufficiency of that notice, the proper remedy for insufficient notice is abatement not

dismissal. "[I]f a plaintiff files an action for damages under the DTPA without first giving the

required notice, and a defendant t imely requests an abatement, the trial court m ust abate the

proceedings for 60 days." H ines v. Hash, 843 S.W.2d 464, 469 (Tex.1992) (in t ernal citations

omitted) (emphasis added). Therefore, the district court erred when it dismissed, rather than abated,

Oppenheimer's DTPA claims. Based upon this error, we must vacate the district court's dismissal of

the DTPA claims and remand those claims for further consideration by the district court.8

III. Dismissal of Common Law Fraud and Statutory Fraud Claims

A district court may dismiss a claim only when it "appears beyond doubt that the plaint iff can

provide no set of facts in support of its claims that would provide a basis for relief." Woodward v.

Los Fresnos Indep. School Dist., 732 F.2d 1243, 1245 (5th Cir.1984) (internal citation omitted). The

plaint iff's complaint is to be construed in a light most favorable to the plaint iff, and the allegat ions

contained therein are to be taken as true. Mitchell v. McBryde, 944 F.2d 229, 230 (5th Cir.1991).

This court reviews the dismissal of a plaint iff's claims on a de novo basis. F irst Gibraltar Bank, FSB

v. Smith, 62 F.3d 133, 135 (5th Cir.1995) (internal citation omitted).

Oppenheimer's claim of statutory fraud was based upon Prudential's alleged violation of the

Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 of the Securities Exchange

Commission. In order to state a claim under Rule 10b-5, a plaintiff must allege, at a minimum, that

the defendant made (1) a false misrepresentations or omission, (2) of a material fact, (3) knowing its

falsity and intend ing t hat t he plaintiff rely on it, (4) that the plaintiff justifiably relied on the

misrepresentation or omission, and (5) suffered damage resulting from this reliance. S hores v. Sklar,

647 F.2d 462 , 468 (5th Cir.1981), c ert. denied, 459 U.S. 1102, 103 S.Ct. 722, 74 L.Ed.2d 949

(1983).

The elements that are necessary to state a claim of common law fraud are basically identical.

"The elements of fraud are a material misrepresentation, which was false, and which was either known

t o be false when made or was asserted without knowledge of its truth, which was intend ed to be

acted upon, which was relied upon, and which caused injury." DeSantis v. Wackenhut Corp., 793

S.W.2d 670, 688 (Tex.1990) (internal citations omitted).

In the instant case the only element that distinguishes statutory fraud from common law fraud

is the additional requirement for statutory fraud that the alleged fraudulent activity must be made in

connection with a particular purchase or sale of a security. B lue Chip Stamps v. Manor Drug Stores,

421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975); F irst V irginia Bankshares v. Benson, 559

F.2d 1307, 1315 (5th Cir.1977), ce rt. denied sub nom. Walter E. Heller & Co. v. First Virginia5 Oppenheimer's brief also addresses the trial court's decision to grant Prudential's motion for

summary judgment relating to her allegations which seek to impose liability on Prudential for

fraudulent transactions occurring prior to Prudential's acquisition of TMS. However, because we

have already determined that there is no successor-in-interest liability, we need not address these

alleged instances of fraud.

9 Bankshares, 435 U.S. 952, 98 S.Ct. 1580, 55 L.Ed.2d 802 (1978). Because this additional element

is not at issue on appeal, we will address the dismissal o f Oppenheimer's claims of statutory and

common law fraud together.

Oppenheimer's allegations of fraud are based upon two alleged occurrences. 5 Her first

allegation of fraud concerns Green's alleged misrepresentation to Oppenheimer that she would not

incur a sales charge on the transfer of funds from Massachusetts Financial Services Government

Securities High Yield Fund ("MFS") to the American Funds Group. In the second alleged instance

of fraud Oppenheimer contends that she instructed Green to purchase Fund A, but that Green

disregarded her instructions and purchased Fund B.

A. Hidden Sales Charge

The district court dismissed Oppe nheimer's statutory fraud claim relating to the alleged

hidden sales charge based upon its finding that Oppenheimer had failed to provide the amount of the

hidden sales charge or when it occurred "despite being ordered to do so by this Court in grant ing

Prudential's motion for a more definite statement." Similarly, the district court, citing Oppenheimer's

failure to comply with F ED .R.C IV .P ROC . 9, dismissed her claim of common law fraud.

"In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall

be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may

be averred generally ." F E D .R.C IV .P ROC

. 9(b). We agree with the district court and find that

Oppenheimer's failure to allege when the sales charge was incurred or the extent of her damages

related to t his alleged charge justified the district court in dismissing her claims of statutory and

common law fraud. S ee Hayduk v. Lanna, 775 F.2d 441, 445 (1st Cir.1985) (dismissal of fraud

counts after plaint iffs had opportuni ty to amend was justified where plaint iffs were notified before

amending that allegations failed to meet the particularity requirement of Rule 9(b)).10

B. Funds A & B

Oppenheimer's other alleged instance of fraud is based upon her contention that she

instructed Green to purchase Fund A but that he purchased Fund B instead. However, Oppenheimer

failed to allege that she was damaged by this alleged fraudulent act despite bein g specifically

instructed to do so by the court. Because of her failure to allege any damage associated with this

transaction, the district court was correct in dismissing her claims of statutory and common law fraud

based upon this transaction. Id.

IV. Oppenheimer's Other Claims

Oppenheimer also challenges the district court's order dismissing her claims of breach of

fiduciary duty, breach of contract, and negligence. However, she has not provided this court with

any sound argument or citation to relevant authority as to why we should reverse the district court's

dismissal of these claims. Consequently, we affirm the dismissal of these claims as well. S ee Randall

v. Chevron U.S.A., Inc., 13 F.3d 888 (5th Cir.) (in the absence of logical argumentation or citation

to authority, appellate court may decline to reach the merits of appellant's claims), cert. denied,

---

U.S. ----, 115 S.Ct. 498, 130 L.Ed.2d 408 (1994).

CONCLUSION

For the foregoing reasons, we AFFIRM the district court's grant of summary judgment on the

issue of Prudential's liabilit y as a successor-in-interest and the dismissal of Oppenheimer's claims of

statutory fraud, common law fraud, breach of contract, breach of fiduciary duty, and negligence. We

VACATE the dismissal of Oppenheimer's DTPA claims and REMAND those clai ms for further

proceedings consistent with this opinion.