Opinion ID: 198503
Heading Depth: 2
Heading Rank: 2

Heading: Fraud in the Sale of Stock Rights

Text: We also affirm the grant of summary judgment against Wolfe on Wolfe's fraud counter-claim. Wolfe alleges that Kutsch fraudulently represented that Kutsch's sale of 51 percent of his stock in the company would yield only $1 million when it in fact resulted in Kutsch's receiving more than $10 million. Wolfe claims that, in reliance on these false representations and under pressure from Kutsch, he executed the Release and Waiver. In so doing he allegedly relinquished his 2.5 percent stock interest in CVG for substantially less than its true value. The district court examined the language of the BGP and Release and concluded that neither vested any ownership interest in Wolfe. It therefore held that, even if Kutsch had fraudulently misrepresented the value of the sale, Wolfe would be unable to show that he was injured -- he had no stock rights to relinquish -- and summary judgment was in order. We agree with the district court. In order to prove actionable fraud, Wolfe must be able to show that Kutsch's conduct caused him some harm. If Wolfe did not own rights to stock in the first instance, Kutsch's representations about the value of the merger, whether fraudulent or not, could not have injured him.There is no fraud in being induced to relinquish something you do not have. See, e.g., Powers v. Boston Cooper Corp., 926 F.2d 109, 111 (1st Cir. 1991). Wolfe forfeited nothing. None of the documents purports to directly vest in Wolfe an ownership interest in the company.Indeed, to the contrary, all of the evidence suggests that Wolfe never owned any stock in Catamount or its successors. Wolfe's original employment contract does not provide for an ownership interest, and the first section of the BGP expressly states that its purpose was to create a financial incentive for participants without transferring to [the participants] ownership of any capital stock of the Company. (emphasis added). Section 2(a) is also unambiguous: No ownership of any capital stock of the Company will be transferred or otherwise granted to any employee of the Company as a result of the designation or participation of such employee as a Participant. As before, Wolfe is not discouraged by the clear, written language of documents he signed; he forges ahead, offeringnumerous reasons why we should ignore this language. Only one such reason merits our attention. Wolfe argues that 11(d)of the BGP created tail rights which endured into 1993 and resulted inhis acquiring stock rights. This argument suffers from many flaws.Section 11(d) provided that, if the BGP were terminated prior to the end of a fiscal year and the stock sale compensation provision of 4(a) were triggered within a year of that termination, then former BGP participants would be entitled to compensation as if theBGP were still active. The BGP, however, was not terminated prior to the end of a fiscal year; rather, it simply expired after only one year on December 31, 1992. Kutsch never renewed the plan; he never designated Participants for fiscal year 1993; and Wolfe (as well as all the other former participants) never executed an accession agreement for 1993. Moreover, 4(a) requires that all of the outstanding Common Stock of the Company [be sold] in a single transaction. It is undisputed that Kutsch sold only 51 percent of his stock in the company. Thus, Wolfe's reliance on 11(d) is to no avail.