Opinion ID: 374068
Heading Depth: 1
Heading Rank: 4

Heading: Genuine Issues of Material Fact as to Paul Y. Hughes

Text: 24 Plaintiffs allege that defendant Hughes, along with the other defendants in the case, fraudulently led plaintiffs to believe that ASI had a working computer operation at a time when he knew that no such computer existed. Plaintiffs have presented numerous documents and substantial testimony to support their allegations. Defendant Hughes' responses to the evidence presented by the plaintiffs raise several genuine issues of material facts.
25 Plaintiffs claim that the liability of defendant Hughes arises from his activity between April and November, 1971. During that period, it is asserted, Hughes was in charge of the operations of ASI, and he was the main contact between ASI and its franchisees. Record, vol. II, at 163. Because of Hughes' efforts, the franchisees continued to believe in the existence and utility of ASI's computer program, and they claim that Hughes was largely responsible for their continuing devotion of time, effort, and money to their ASI franchises. Plaintiffs cite to several letters, depositions and affidavits which illustrate Hughes' active involvement with the franchisees and his role in the fraudulent ASI scheme. See, e. g., Record, vol. I, at 200-249. 26 Hughes vehemently denies playing any major role in the ASI hierarchy. His Answer to Motion for Reconsideration sets forth a statement of undisputed material facts not challenged by plaintiffs. The undisputed material facts are that Hughes never engaged in the sale or marketing of franchises; that he had no authority to set policy or to commit the company to any course of action; and that his activities were limited to specific internal responsibilities. Record, vol. II, at 174. 27 Hughes is correct in his statement that these facts are material, but to say they are undisputed is to ignore the voluminous file in this case. The record is replete with numerous references to Hughes' takeover of ASI in June, 1971, and there is deposition and documentary evidence that he worked in an unsupervised capacity, contacting and corresponding with various ASI franchisees. Record, vol. I, at 219. Clearly, the allegations in the case make Hughes' participation in ASI a material issue of fact, and there is no question that the parties vigorously dispute the nature of that participation. Such a dispute is not properly resolved on a motion for summary judgment.
28 Plaintiffs rely on the deposition of Hughes' co-defendant Edward T. Carroll to show that Hughes knew during the summer of 1971 that there was no working computer at ASI. Carroll testified that he and Hughes had discussed the absence of a computer numerous times, and that Hughes knew there was no computer because we went to a manual operation. Deposition of Edward T. Carroll at 74-76. Plaintiffs also refer to Hughes' sworn testimony in the Spiegel criminal prosecution. There Hughes testified that during the period from May through August, 1971 his function was to find people to help out with the manual utility auditing operation since the computer thing had apparently bogged down. Record, vol. 39, at 191, United States v. Spiegel, 604 F.2d 961 (5th Cir. 1979). 29 Having presented testimony that Hughes knew by mid-summer of 1971 that no working ASI computer existed, plaintiffs then show how Hughes led plaintiffs to believe the contrary. The affidavit of plaintiff Keiser states that 30 during the summer of 1971 and through the fall of 1971, particularly September through late October and November, 1971, Affiant had a number of telephone conversations with Defendant PAUL Y. HUGHES. During the course of those conversations, PAUL Y. HUGHES related that the auditing analysis program was not going as well as expected for there were problems with the computer and its program. 31 Record, vol. I, at 297 (emphasis added). The plaintiffs also point to certain letters and news bulletins sent to them by Hughes which make reference to your printouts, telephone printouts, and mailings that were jumbled by the computer. Record, vol. I, at 200-205. 32 Defendant Hughes, in his Answer to Motion for Reconsideration, Record, vol. I, at 250, attempts to rebut the evidence presented by plaintiffs by explaining that the use of the words printouts and computer in his correspondence did not refer to a utility auditing computer. While Hughes' rebuttal of the plaintiffs' evidence may appear persuasive, the weighing or evaluating of evidence is not our task, nor that of the trial judge, on a motion for summary judgment. Clearly the documents and testimony presented by the parties reveal a genuine jury issue as to whether Hughes fraudulently represented to the plaintiffs that ASI had a working computer operation at a time when he knew that no computer actually existed.
33 Plaintiffs allege that their reliance on the false and fraudulent representations of defendant Hughes caused them to suffer monetary damages. The affidavit of plaintiff Fleck attests to his reliance on Hughes' statements of August 16, 1971 that a computer program existed and was operating. On that day, Fleck had lunch with Hughes and another ASI employee in Atlanta. During a long discussion of the relative merits of the computer method of analyzing overcharges, Hughes indicated that there was a computer, that the computer and the computer program were operating, and that the computer was checking all accounts sent in by ASI dealers for overcharges. Hughes also discussed a new ASI computer program and the affirmative effect it would have upon ASI's utility auditing services. He stated that the new computer program was much better than the prior one, and would be able to accomplish more utility audits at a greater speed than previously possible. Plaintiff Fleck's affidavit states 34 that following the luncheon meeting with Defendant PAUL Y. HUGHES, and based upon the statements and representations of Defendant PAUL Y. HUGHES and his strict reliance thereon, Affiant went to ASI's office and made a down-payment on a second ASI dealership. Affiant states that he paid a fee of $5,000.00 by certified check on the afternoon of August 16, 1971, for this second dealership. . . . 35 Affiant reiterates that the payment of $5,000.00 on August 16, 1971 . . . was paid by Affiant in reliance upon the representations and statements of Defendant PAUL Y. HUGHES relative to the new computer program then being utilized by ASI. If Affiant had known that there was no computer or computer program, Affiant would not have made a further investment. 36 Record, vol. I, at 302. 37 Defendant Hughes counters the reliance claim by asserting that Fleck came to Atlanta to pay his deposit on a franchise which had been sold to him previously. Since Fleck had already purchased the franchise, he obviously did not rely on any subsequent statements by the defendant. To further dispel the plaintiffs' reliance argument, Hughes pointed out in oral argument that the check which Fleck brought to Atlanta was dated three days prior to the August 16, 1971 meeting date. Plaintiffs responded that although Fleck was interested in buying a franchise at that time and brought a check to the Atlanta meeting, he did not decide to purchase a franchise until he had heard the representations by Hughes. This series of assertions and responses by the respective parties indicates that a genuine issue exists as to whether the plaintiffs actually relied on the alleged misrepresentations of Paul Y. Hughes. Such an issue ought not be decided by summary judgment.