# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 4- 34 51

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Jo se ph H. W hi tn ey

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

The Guys, Inc .; Ag or a So lu ti on Co rp .; MyBil li ng Serv ic es , Inc .; In fo Bil li ng , Inc .; MyT el es erv ic es , Inc .; Lau ren Tel, In c.; Gre en TreeDat a, In c.; Lo wCo st Bi ll in g, In c.; You rBi ll in gS ol ut io ns , Inc .; MySup erLo tt o, In c.; M y Pri zeAward s C or p.; MyServi ceAn dS up po rt, In c.; XYZ, In c.; J oh n R . Mo rri so n

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

__ __ __ __ __ __

Su bm it te d: Jan ua ry

11 , 20 16
Fi le d: Ju ne 24 , 20 16

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Befo re WOL LMAN, MELLOY, and COLLOTON, Cir cu it Ju dg es

.

__ __ __ __ __ __
MELLOY, Circu it Ju dg e.

Jo se ph H. W hi tn ey ap pe al s fro m a gr an t of su m m ary jud gm en t fin di ng hi s
cl ai m s t im e b arre d. We affi rm

.I.

W hi tn ey en te red in to a bu si ne ss rel at io ns hi p wit h Jo hn R. Mo rri so n. W hi tn ey
ch arac te riz es th e rel at io ns hi p as a pa rtn ers hi p th at ev en tu al ly i n v o l v ed se ve ral

co rp or at io ns

. W e di sc us se d th e rel at io ns hi p a nd th e v ari ou s co rp or at io ns in a pr io r

op in io n an d do no t rep eat th os e fact s he re. See W hi tn ey v. The Guys, In c., 70 0 F.3 d

11 18 , 11 21 –2 3 (8 th Cir . 20 12 ).

In th e pr io r ap pe al

, we re v i e w ed a gr an t of a m ot io n to di sm is s. Id

. at 11 21

. W e affi rm ed th e di st ric t co ur t’s ch oi ce-o f-l aw an d st at ut e-o f-l im it at io ns ru li ng s as to

se ve ral cl ai m s an d al so it s gr ou pi ng of cl ai m s an d di sm is sa l of red un da nt cl ai m s. Id

. W e h el d, h owe ve r, th at W hi tn ey ha d s uf fic ie nt ly ple ad ed sh areh ol de r-ri gh ts cla im s

un de r Dela ware la w to m eet th e pl au si bi li ty st an da rd s of Ash cro ft v. Iq ba l, 55 6 U.S.

66 2, 67 8 (2 00 9)

, an d Bel l Atl an ti c Co r p o r a t i on v. Twom

bl y , 55 0 U.S. 54 4, 55 5
(2 00 7) . Id.

On rem an d, th e d e f

e n d an ts fil ed an an swe r an d co un te rcl ai m s. The

co un te rcl ai m s al le ge d W hi tn ey ha d ca use d pa y m en ts of ab ou t $2 00 ,00 0 to be di ve rte d

fro m on e of th e su bjec t co m pa ni es to a ba nk acco un t ul ti mat e l y c on tro ll ed by

W hi tn ey

. W hi tn ey ch arac te riz es th e di ve rs io n as a rig ht f u l s e l f -h el p rem ed y to

cap tu re a po rti on of fu nd s he be li ev ed he was en ti tl ed to rece iv e fro m th e en te rp ris e.

Eve nt ua ll y , th e pa rti es fil ed cro ss m ot io ns fo r su m m ary jud gm en t. The di st ric t

c o u rt, ap pl y in g Dela ware la w, de te rm in ed th at a th ree- y ear st at ut e of li m it a t i o n s

1

ap pl ie d an d th at th e fil in g of th e or i g i n a l c o mpla in t in Octo be r 20 10

, se rv ed as th e

refe ren ce p oi nt for cal cu la ti ng th e la te st po ss ib le da te of pe rm is si bl e cl ai m accr ua l:

Octo be r 20 07

.

The Hon or ab le Jo hn R. Tun he im

, Uni te d St at es Dis tri ct Ju dg e fo r th e Dis tri ct 1

of Mi nn es ot a.

-2

-Usi ng th is da te

, th e co ur t ci te d an em ai l W hi tn ey ha d se nt to Mo rri so n on Ju ly

20

, 20 07

. In th e em ai l

, Wh i t n e y c o mpla in ed to Mo rri so n ab ou t a la ck of acce ss to

in fo rm at io n or in co m e fro m th e co m pa ni es

. The co ur t al so refe ren ced de p o s i t i o n

te st im on y fro m W hi tn ey in whi ch W hi tn ey de sc rib ed th e em ai l as referen ci ng al l of

hi s al le ge d in te res ts in th e va rio us co m pa ni es

. In th e de po si ti on te st im on y , W hi tn ey
cl ai m ed to ha ve de m an de d do cu m en ta ti o n a n d fin an ci al reco rd s fo r “ m on th s an d

m on th s” pr io r to se nd in g th e em ai l. Fi na ll y , W hi tn ey st at ed th at

, a f t er he se nt th e

em ai l and rece iv ed no res po ns e, he m et wit h an at to rn ey in Ju ly or Aug us t 20 07 bu t

di d no t in it ia te su it u n t il Octo be r 20 10

. The di st ric t co ur t he ld th e em ai l sh owe d

W hi tn ey was , at a m in im um , on in qu iry no ti ce by Ju ly 20

, 20 07 th at Mo rri so n was

no t re co gn iz in g h is st at us or r ig ht s as a sh areh ol de r in th e co m pa ni es

.

The c ou rt al so co nd uc te d an an al y si s to de te rm in e whe th er th e sh areh ol de r
cl ai m s at iss ue were of th e type th at accr ue on ce or whe th er new cl ai m s “ re-a ccru e”

wit h each ad di ti on al co rp or at e act th e pl ai nt iff f i n d s ob jecti on ab le (e.g

., wit h each

fai lu re to pa y di vi de nd s or fai lu re to sh are reco rd s, et c.). The di st ric t co ur t he ld th at

,

no t on ly was W hi tn ey on in qu iry no ti ce of sh areh ol de r-ri gh ts cl ai m s pr io r to Octo be r

20 07 , b ut an y su bs eq ue nt de ni al of sh areh ol de r rig ht s or sh areh ol de r s t a t u s di d no t

res ul t in a ne wly accr ue d cl ai m

. As su ch

, th e Ju ly or Aug us t 20 07 da te co nt ro ll ed fo r

st at ut e-o f-l im it at io ns pu rp os es

. In so ho ld in g, th e di st ric t co ur t ex pr es sl y no te d th at

W hi tn ey ha d fai le d to pr es en t arg um en t on th e is su e of on go in g cl ai m accr ua l or th e

co nt in ui ng -v io la ti on do ct rin e.

Th e co ur t th en co nd uc te d a ch oi ce-o f-l aw an al y si s fo r th e de fen da nt s ’

co un te rcl ai m s, he l d D e la ware la w ap pl ie d, an d di sm is se d th e co un te rcl ai m s on

st at ut e-o f-l im it at io ns gr ou nd s. W hi tn ey ap pe al s. The de fen da nt s do no t app eal th e

gr an t o f su m

m ary jud gm en t o n t he co un te rcl ai m s.

-3

-III.

W e rev ie w a gr an t of su m m ary jud gm en t de no vo , vi ewin g th e reco rd in t h e

li gh t m os t fav or ab le to th e no nm ov in g pa r ty an d dr awin g al l reas on ab le in fere nc es

in th at pa rty’ s fav or

. Hit t v. Hars co Co rp ., 35 6 F.3 d 92 0, 92 3– 24 (8 th Ci r. 20 04 ).

Su m m ary jud gm en t is ap pr op ria te whe n th ere ex is t no ge nu in e qu es ti on s of m at eri al

fact an d th e cas e can be de ci de d as a m at te r of la w. Fed

. R. Ci v. P. 56 (c). “ The re is

no ge nu in e is su e of m at eri al fact whe n ‘the reco rd ta ke n as a who le co ul d no t le ad a

rat io na l tri er of fact to fin d fo r th e no nm ov in g pa rty.’ ” Grag e v. N. St at es Po wer Co .- Mi nn ., 81 3 F.3 d 10 51

, 10 52 (8 th Ci r. 20 15 ) (q uo ti ng Torg ers on v. Ci ty of Ro ch es te r,

64 3 F .3d 10 31 , 10 42 (8t h C ir.2 01 1) (en ba nc )).

On ap pe al

, W hi tn ey arg ue s th at he was a sh areh ol de r of th e se ve ral co m pa ni es

an d th at th e di st ric t co ur t erre d in ho ld in g ot he rwis e. He al so arg ue s th e di st ric t co ur t

erre d in it s st at ut e-o f-l im it at io ns an al y si s be cau se he was no t on in qu iry no ti ce pr io r

to Octo be r 20 07

. As in th e di st ric t co ur t, he pr es en ts no arg um en ts co nc ern in g to ll in g

of th e st at ut e of li m it at io ns , on go in g cla im ac cr ua l, or a po te nt ia l co nt in ui ng -v io la ti on

th eo ry

.

W hi tn ey ’s arg um en t co nc ern in g hi s st at us as a sh areh ol de r is m is pl aced

. The

di st ric t co ur t d id no t h ol d th at he was or wa s n ot a sh areh ol de r of an y co rp or at io ns

. Rat he r, th e co ur t he ld cl ai m s as se rti ng su ch st at us were un ti m el y be cau se he was on

in qu iry no ti ce of su ch cl ai m s in J u ly or Aug us t 20 07

, y et he di d no t fil e su it un ti l

Octo be r 20 10

.

W hi tn ey arg ue s th at th e Ju ly 20

, 20 07 em ai l an d a c c o mp a nyin g de po si ti on

te st im on y are in co nc lu si ve an d le av e op en a tri ab le qu es ti on of fact as to whe th er he

was on in qu iry no ti ce p rio r to Octo be r 20 07 . The em ai l at is su e st at ed :

-4

-Jo hn

, W e ne ed to ha ve a se rio us ta lk

. I ha ve ab so lu te ly NO id ea wha t is go in g

on at Ago ra. I ha ve ne ve r se en fin an ci al s. I ha ve ne ve r se en a PENNY FROM
THIS ENTITY. W he re are th e ta x ret ur ns ? ? ? ? W he re is th e K-1 ? Thi s is no
way to ru n a bu si ne ss , I am feel in g th at y ou are sc rewi ng m e ou t of m y sh are. You m ig ht al read y ha ve wit h th is co rp or at e m is h m as h. th is is no t fai r to tre at

m e li ke th is

. Fo r al l I kn ow th ere is so m e ta x li ab il i t y th at th at I owe !!! It is
ti m e to co m e cl ean wit h y ou r pa rtn er ab ou t y ou r in te nt io ns

. W e SHOULD be

m ak in g a LOT of m on y

. Are y ou ta ki ng it ou t? ? ? ? W he re is it i f n o t

. . . ?

W he ne ve r I as k an y em

pl oyee I ge t th is st on ewal l, “ ta lk to Jo hn ”. I ha ve tri ed

to ni cel y ge t in fo an d y ou jus t pu t m e of f. Tim e an d ti m e ag ai n. I ne ed

an swe rs I wan t to se t a ti m e ne xt week to ha ve th is di sc us si on

. It’s ti m e to st op th e BS an d t al k. . . . JOSEPH

As pe r W hi tn ey ’s o w n d e po si ti on te st im on y , th is em ai l fo ll owe d “ m on th s an d

m on th s” of req ue st s fo r reco rd s an d ap pl ie d to W hi tn ey ’s pu rp or te d in te res ts in al l of

th e va rio us co rp or at io ns

. The se un di sp ut ed fact s, co up le d wit h t h e fact th at th e
ab se nc e of an y res po ns e to th e em ai l cau se d hi m to co ns ul t wit h an at to rn ey , sh ow a

reas on ab le jury co ul d reac h bu t on e co nc lu si on : Wh i t n e y w a s on in qu iry no ti ce no

la te r th an Aug us t 20 07 th at Mo rri so n an d th e va rio us co rp o r a t i o n s were no t

reco gn iz in g o r ho no rin g h is pu rp or te d s ha reh ol de r ri gh ts

. 2

W hi tn ey ’s t h e o r y o f t he cas e in th e al te rn at iv e is th at he an d Mo rri so n were 2

pa rtn ers an d th at Mo rri so n br each ed a fid uc ia ry du ty by m is ap pr op ria ti ng co rp or at e
pr ope rt y

. Pa rt ne rs hi p- rel at ed fid uc ia ry cl ai m s, ho wev er, al so ha ve a th ree- y ea r sta tut e of li m it at io ns

. Del. Co de Ann

. ti t. 10

, § 81 0 6

. A n d h ere, W hi tn ey pr es en te d no

ev id en ce of m is ap pr op ria ti on wit hi n th e th ree- y ear li m it at ion s pe ri od, so th e fid uc ia ry du ty cl ai m is al so ba rred

. Fi na ll y , to th e ex te nt W hi tn e y f r a mes hi s cl ai m s as a de m an d fo r an acco un ti ng , we ag ree wit h th e di st ric t co ur t th at acco un ti ng is a

rem ed y , no t an in de pe nd en t cau se of act io n. St ev an ov v. O’ Co nn or , Ci v. No. 38 20

, 20 09 W L 1 05 96 40 , a t *1 5 (Del . C h. Apr . 2 1, 2 0 0 9) (“ A c la im fo r an acco un ti ng in
th e Co ur t of Ch an cery ge ne ral ly refl ect s a req ue st fo r a pa rt i c u l a r t ype of rem ed y , rat he r th an an eq ui ta bl e cl ai m in an d of it se lf.” ); se e al so Co x v. Mo rtg

. Elec

. Reg is tra ti on Sy s., In c., 79 4 F. Su pp

. 2d 10 60

, 10 65 (D. Mi nn

. 20 11 ) (“ Mo reo ve r, th is

req ue st fo r eq ui ta bl e rel ie f is pr em is e d o n d e fen da nt s li ab il it y in co un ts II– V.
Bec au se th os e cl ai m s warra nt di sm is sa l, th e cl ai m fo r acco un ti ng al so fai ls .”), aff’d,

-5

-W hi tn ey co un te rs th at do cu m en ts an d in fo rm at io n he rece iv ed as la te as 20 06

su gg es te d he was a sh areh ol de r su ch th at he co ul d no t ha ve be en on in qu iry no ti ce in

Ju ly or Aug u s t 20 07

. W hi tn ey ’s arg um en t fai ls in two reg ard s. Fi rs t, it wou ld be

s u r pr is in g if a pl ai nt iff as se rti ng a sh areh ol de r-ri gh ts cl ai m di d no t po ss es s s o me

ev i d e n c e fro m an earl ie r po in t in ti m e to su pp or t hi s th eo ry of sh areh ol de r st at us

. The re is

, th eref

or e, no th in g in co ns is te nt ab ou t fin di ng in qu iry no ti ce in Aug us t 20 07

ev en if m at eri al s fro m 20 06 ot he rwis e su gg es te d W hi tn ey was a sh areh ol de r. Mo re

i mp o rta nt ly, ho wev er, an y su ch ol de r st at em en ts

, rep res en ta ti on s or ev id en ce o n l y

crea te a tri ab le qu es ti on of fact as to in qu iry no ti ce if, on th e who le

, th e res ul ti ng

reco rd wou ld p e rm it reas on ab le juro rs to fin d in W hi tn ey ’s fav or

. Torg ers on , 64 3

F.3 d at 10 42

. Here, no th in g W hi tn ey refe ren ces fro m pr io r t o 2 0 0 7 sh ows a

reas on ab le juro r m ig ht fai l to co nc lu de W hi tn ey was on in qu iry no ti ce of hi s po te nt ia l

sh areh ol de r-ri gh ts cla im s at lea st as o f Aug us t 2 00 7.

W hi tn ey al so a rg ue s th at he ha d no no ti ce fro m th e de fen da nt s th at th ey

co nt es te d hi s sh areh ol de r st at us un ti l 20 11 whe n th e de fen da nt s fil ed a m em or an du m

in su pp or t of th ei r m ot io n to di sm is s. In th at m e mo r a n d u m, th e de fen da nt s

affi rm at iv el y as se rte d th at fu nd s W hi tn ey earl ie r ha d co nt rib ut ed t o th e en te rp ris e

were lo an s rat he r th an a sh areh ol de r’s eq u i t y co nt rib ut io n. Acco rd in g to W hi tn ey , th e 20 11 m em or an du m , rat he r th an an y st at em en ts or ev en ts fro m 20 07

, pr ov id ed

in qu iry no ti ce t ha t t he de fen da nt s d id no t co ns id er h im to be a sh areh ol de r.

W hi tn ey m is co nt ru es th e na tu re o f i n q u i r y an d act ua l no ti ce. The 20 11

m em or an du m

ser ve d a s an ex pr es s repu di at io n of W hi tn ey ’s pu rp or te d s ha reh ol de r

st at us

. W hi tn ey of

f e rs no au th or it y to su pp or t th e pr op os it io n th at an ex pr es s an d

affi rm at iv e de ni al of su ch st at us is req u i red to crea te in qu iry no ti ce. In fact it ru ns

68 5 F.3 d 66 3 (8 th Ci r. 20 12 ). In th e ab se nc e of a ti m el y su bs ta nt iv e cl ai m , W hi tn ey is no t en ti tl ed to an acco un ti ng

. See Ja co bs on v. Dry so n Accep ta nc e Co rp ., Ci v. No.
17 68 4, 20 02 W L 75 47 3, at *4 (Del

. Ch

. 20 02 ) (“ If [th e pl ai nt iff ] ha s no en fo rcea bl e rig ht to st oc k, t he act io n fo r an acco un ti ng wil l al so fai l.”)

.

-6

-co un te r to th e co nc ep t of in qu iry no ti ce to de man d su ch a st at em en t— a st at em en t

ex pr es sl y rep ud ia ti ng a cl ai m to sh areh ol de r st at us se rv es as act ua l no ti ce rat he r th an

in qu iry n ot ic e. Si m

pl y pu t, th e fai l ur e or refu sa l to ho no r sh areh ol de r rig ht s, whe n

c l e a rly kn own by th e pu rp or te d sh areh ol de r, su ffi ces to crea te in qu iry no ti ce. S e e
Elu v Hol di ng s (BVI) Ltd

. v. Dot om i, LLC, C.A. No. 68 94 -VCP, 20 13 W L 12 00 27 3,

at *1 0 (Del

. Ch

. Mar

. 26

, 20 13 ) (fi nd in g a pu rp or te d sh areh ol de r to be on in qu iry

no ti ce whe n, aft er at te m

pt in g to ex erci se st oc k pu rch as e op ti on s, h e r e c e i ve d no
do cu m en ts an d pa rti ci pa te d in no m an ne r in t h e c o r po rat io n, an d st at in g, “ Not

rece iv in g do cu m en ts of th is so rt sh ou ld ha ve al ert ed a reas on ab le in ve st or to th e fact

th at [th e co rp or at io n] di d no t co ns id er [th e pl ai nt iff ] a sh a r e h o l d e r.”). And

, in

ge ne ral

, an ou ts ta nd in g qu es ti on of fact reg ard in g whe th er a pl ai nt iff was or was no t

a sh areh ol de r “ do es no t crea te a ge nu i n e f a c t d is pu te ab ou t whe th er [th e pl ai nt iff ]

kn ew en ou gh to pu t he r on in qu iry no ti ce, and th us di d no t excu se he r fro m m ak in g

a reas on ab le in qu iry to pr ot ect he r rig ht s.” Egn er v. Talb ot s, In c., 21 4 P.3 d 27 2, 28 0
(Ala sk a 20 09 ). Here, as in Elu v an d Egn er, W hi tn ey was on in qu iry no ti ce whe n he

kn ew he was no t be in g tre at ed as a sh areh ol de r. A r e a s o n a b l e jury wou ld be

co m pe ll ed to co nc lu de th at th e Ju ly 20

, 20 07 em ai l an d th e acco m pa nyin g de po si ti on

te st im on y sh ow s uc h n ot ic e.

W e aff irm th e jud gm en t o f th e d is tri ct co ur t. 3

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

W e d en y as m oo t Whi tn ey ’s pen di ng m ot io n t o s up pl em en t t he reco rd

. 3

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