Opinion ID: 6510
Heading Depth: 2
Heading Rank: 1

Heading: Did the district court err in granting summary judgment?

Text: 6 Granader asserts that the district court erred in granting summary judgment in favor of McBee, because McBee failed to meet his summary judgment burden. Granader argues that the district court granted summary judgment on all of his claims even though McBee's motion failed to mention his claim under Section 33 of the Texas Securities Act and his shareholder derivative claim. Granader argues that silence and omission cannot inform the district court of anything, nor identify parts of the record to support summary judgment. See N.L. Industries v. GHR Energy Corp., 940 F.2d 957, 965 (5th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 873, 116 L.Ed.2d 778 (1992) (This court rejected as disingenuous defendant's efforts to support summary judgment on all claims where it only sought summary judgment as to some claims.). 7 Granader argues that in granting summary judgment on the non-contract claims, the district court relied on the inaccurate view that he brought his cause of action only after the Bank failed and he lost his investment. Granader claims that he sued McBee in 1991 and sued the Bank on July 22, 1992, before the Bank failed on July 23, 1992. 8 Granader also argues that even if we believe that McBee met his summary judgment burden, clearly he met his burden of showing that genuine issues of material fact exist. Granader claims that McBee's motion is predicated on the following two arguments: (1) McBee made no representations to Granader, hence, Granader could not have relied on same; and (2) there was no agreement between McBee and Granader. Granader, however, claims that he presented evidence that McBee made oral representations about the Bank's stock in at least one Bank board meeting and that these representations were directly relayed to Granader by his brother, Dan Granader. 2 Granader also claims that he presented evidence that McBee made written representations about the Bank's stock in materials that the Bank directly relayed to Granader. Granader concludes that because of the conflicting evidence, fact questions exist for jury resolution. 9 Granader further argues that a substantial portion of his suit effectively involves fraud and misrepresentation of one specie or another. Granader claims that under Texas law, whether a fraud has been committed is a fact question to be determined by the trier of facts. Berquist v. Onisiforou, 731 S.W.2d 577, 580 (Tex.App.--Houston [14th Dist.] 1987, no writ). Finally, Granader argues that there are fact questions present in his shareholder derivative claim. He claims that although the funds from his purchase of new issue stock were to go to the Bank to provide additional working capital, the funds instead were diverted to McBee in exchange for old stock. 10 We review the district court's grant of summary judgment by reviewing the record under the same standards which guided the district court. Alexandria Associates, LTD., v. Mitchell Co., 2 F.3d 598, 600 (5th Cir.1993). A grant of summary judgment is proper when no genuine issue of material fact exists that would necessitate a trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S.Ct. 2548, 2552-54, 91 L.Ed.2d 265 (1986). In determining whether the grant was proper all fact questions are viewed in the light most favorable to the nonmovant. Questions of law, however, are decided de novo. Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir.1988). The moving party has the burden of showing that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Williams v. Adams, 836 F.2d 958, 960 (5th Cir.), reh. denied, en banc, 844 F.2d 788 (5th Cir.1988). Once the movant carries this burden, the burden shifts to the nonmovant to show that summary judgment should not be granted. Celotex, 477 U.S. at 324-25, 106 S.Ct. at 2553-54. A party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials of pleading, but must set forth specific facts showing the existence of a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57, 106 S.Ct. 2505, 2514-15, 91 L.Ed.2d 202 (1986). 11 The district court properly granted summary judgment in McBee's favor. McBee disproved, as a matter of law, at least one essential element of each of Granader's causes of action. By Granader's own admission, there was no agreement between him and McBee. Furthermore, they never discussed the purchase of the Bank's stock. Hence, Granader cannot prove his cause of action for breach of contract, because the uncontroverted evidence is that there was no agreement whatsoever between Granader and McBee. 12 Granader also cannot prove his cause of action for common law or securities fraud. Reliance is an element of both common law and statutory fraud in a securities transaction. Haralson v. E.F. Hutton Group, Inc., 919 F.2d 1014, 1025 n. 4 (5th Cir.1990) (Texas imposes civil liability for false representations of material facts or material promises that are relied on by [a plaintiff] in entering into [a real estate or stock] contract.). By his own admission, Granader cannot prove that he relied upon any representation, communication or statement by McBee when he purchased the Bank's stock. 13 Furthermore, Granader cannot prove that McBee's conduct constitutes grounds for recision pursuant to Section 33 of the Texas Securities Act. Although reliance is not required in a Section 33 action, materiality is. An omitted fact is material if, there is a 14 substantial likelihood that, under all the circumstances, the omitted fact would have assumed actual significance in the deliberations of the reasonable shareholder. Put another way, there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the total mix of information made available. 15 TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S.Ct. 2126, 2132, 48 L.Ed.2d 757 (1976). Granader's complaint that he would not have purchased the stock if he had known that the stock would be issued in his name rather than his children's names, does not, as a matter of law, rise to the level of materiality. 16 Finally, Granader cannot prove his claim for negligent misrepresentation. Reliance is an element of negligent misrepresentation. Federal Land Bank Ass'n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex.1991). By Granader's own admission, he cannot prove that he acted in reliance upon any representation, communication or statement by McBee when he purchased the stock. 17