Court Opinion

ID: 2964574
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:27:42.18726+00
Date Added: 2024-06-11T11:42:57.827962
License: Public Domain

USCA1 Opinion

	

                            United States Court of Appeals
                                For the First Circuit
                                 ____________________

        Nos. 96-1734 and 96-1735

                               HAROLD S. ANSIN, ET AL.,

                                Plaintiffs, Appellees,

                                          v.

                         RIVER OAKS FURNITURE, INC., ET AL.,

                               Defendants, Appellants.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                    [Hon. Richard G. Stearns, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                                Cyr, Boudin, and Lynch,

                                   Circuit Judges.
                                   ______________

                                 ____________________

            Edward P. Leibensberger,  with whom John C. Fitzpatrick, Glenn  E.
            _______________________             ___________________  _________
        Deegan,  and  Nutter,  McClennen  &  Fish,  LLP  were  on  brief,  for
        ______        _________________________________
        appellees.
            Ames Davis,  with whom Nancy S.  Jones and Waller Lansden Dortch &
            __________             _______________     _______________________
        Davis were on brief, for appellants.
        _____

                                 ____________________

                                   February 3, 1997
                                 ____________________

                      LYNCH,  Circuit Judge.    This case  arises from  a
                      LYNCH,  Circuit Judge.
                              _____________

            series of transactions among  former fellow shareholders of a

            Mississippi  close corporation,  River  Oaks Furniture,  Inc.

            The  Ansins,1 Massachusetts  investors,  allege  that  Thomas

            Keenum and  Stephen Simons,  officers and directors  of River

            Oaks, fraudulently induced them to sell their shares in River

            Oaks ten  months before a successful  initial public offering

            ("IPO").   The  Ansins also  allege  that Keenum  and  Simons

            violated  the  contractual  terms  of  a  stock  subscription

            agreement  and  other  corporate  documents  by  causing   an

            unauthorized  transfer of a  number of the  Ansins' shares to

            other corporate insiders.  The Ansins sued Keenum, Simons and

            River  Oaks  Furniture  in federal  court  in  Massachusetts,

            alleging securities law violations under Section 10(b) of the

            Securities  Exchange  Act  of  1934,  conversion,  breach  of

            contract, breach  of fiduciary duty, common  law fraud, legal

            malpractice and a violation of Mass. Gen. Laws ch. 93A. 

                      The  jury found  for the  plaintiffs on  all counts

            then remaining in the case and  awarded both compensatory and

            punitive  damages.    Defendants  appeal  from  the  judgment

            against them, arguing that they  were entitled to judgment as

            a matter  of law on  all counts,  that the action  was barred

                                
            ____________________

            1.  The  plaintiffs  in  this  action are  Harold  S.  Ansin,
            Lawrence  J. Ansin (by the  executor of his  estate), and the
            Ansin  Foundation (a private  charitable trust), collectively
            "the Ansins."

                                         -2-
                                          2

            because of laches  and related doctrines,  and that both  the

            compensatory   and  punitive   damages  awards   are  legally

            unsustainable.     The  Ansins  cross-appeal   the  pre-trial

            dismissal  of their Mass. Gen.  Laws ch. 93A  claim, and also

            argue that the district judge improperly denied their request

            for prejudgment  interest.    They  also ask  this  court  to

            correct a clerical error in the judgment.

                                          I.

                      When the losing party challenges the sufficiency of

            the evidence, as  defendants do  here, this  court views  the

            record in  the light  most favorable to  the jury's  verdict.

            See Correa v. Hospital San Francisco, 69 F.3d 1184, 1188 (1st
            ___ ______    ______________________

            Cir.), cert. denied, 116 S.  Ct. 1423 (1995).  The  facts are
                   ____________

            described  as  the  jury   might  have  found  them,  drawing

            reasonable inferences in favor of the plaintiffs.

             A. The Ansin Investment in River Oaks
             _____________________________________

                      Lawrence  (Larry)  Ansin,  a  Massachusetts  fabric

            manufacturer, met Stephen Simons, then a furniture buyer with

            a Texas retailer, in the mid-1970s.  What began as a business

            relationship grew, over the next decade, into a friendship.  

            The  two men  vacationed  together and  visited each  other's

            homes.    In  1987,  Simons   started  his  own   upholstered

            furniture  company  in  Mississippi.   The  company  had  six

            original investors in addition to Simons; five of  these men,

            including Thomas Keenum, had  been involved with the start-up

                                         -3-
                                          3

            and   eventual  IPO   of   another   Mississippi   upholstery

            manufacturer.  The  sixth investor was Larry Ansin,  who was,

            at  that   time,  the   chief  executive  officer   and  sole

            shareholder of Joan Fabrics, a Massachusetts-based company.

                      River  Oaks  Furniture,  Inc.  was  incorporated in

            August  1987.  Larry Ansin's total  investment in the venture

            was $100,000, for  which he was  issued a certificate,  dated

            September  1, 1987, for 7,500  shares of common  stock.  That

            was  10% of  the  then-issued shares.    Simons owned  30,000

            shares and was president  of the company; Keenum  owned 7,500

            shares  and was secretary  and treasurer.   Keenum and Simons

            were two of the three members of the Board of Directors.

                      In  March 1988,  the  River Oaks  investors set  up

            another Mississippi corporation, R-O Realty, Inc., to     own

            real estate  which would then be leased  to River Oaks.  Each

            of the original investors contributed another $500 in capital

            and Larry  Ansin  was issued  a share  certificate for  437.5

            shares in R-O Realty.

                      In 1988, Larry Ansin decided to sell Joan Fabrics. 

            Larry  Ansin expected that, as part of such a transaction, he

            would have  to sign a non-competition  agreement, which would

            preclude him from owning  stock in another furniture company.

            Accordingly,  Larry Ansin  arranged  to sell  his River  Oaks

            shares to his father,  Harold Ansin, for the $100,000  he had

            originally invested.   The  Ansins executed a  Stock Purchase

                                         -4-
                                          4

            Agreement dated May 31, 1988.  Harold Ansin did  not know how

            many shares  he was  purchasing, but understood  that he  was

            buying his son's entire 10% interest in River Oaks.

                      In April  1992, Larry Ansin learned that  he had an

            inoperable brain tumor.  He died on June 24, 1993, before the

            commencement of this litigation.

            B. The Reduction of the Ansin Interest to 4,000 Shares
            ______________________________________________________

                      Harold  Ansin did not  sell any  of the  River Oaks

            shares until 1992.   Nonetheless, at some point in  1989, the

            Ansin  ownership interest  was  reduced from  7,500 to  4,000

            shares,  or from  10% to  4% of  the company.2   The  company

            issued  25,000  new  shares  in  1989,  but  that  legitimate

            dilution would only have reduced the Ansin stake to 7.5%.

                      Following  Harold  Ansin's  purchase  of  his son's

            shares, River Oaks did  not issue a new stock  certificate in

            Harold Ansin's name.   Harold Ansin was upset about  this and

            kept  asking Larry  to do  something about  it.   Larry Ansin

            wrote  to  Simons  twice  in  1989  requesting  a  new  share

            certificate for Harold.  Eventually, a certificate was issued

            on  September 22, 1989 which indicated that, as of January 1,

            1988, Harold Ansin owned 4,000 shares of River Oaks. 

                                
            ____________________

            2.  The River  Oaks 1988  tax return  lists  Harold Ansin  as
            owning 7,500 shares.   Harold Ansin's River Oaks 1988  K-1, a
            tax form  issued to  shareholders by the  corporation, states
            that  Ansin  owned 10%  of the  company.   Ansin's  1989 K-1,
            however,  indicated  that Ansin  now  owned  only  4% of  the
            company.  

                                         -5-
                                          5

                      The Stock Transfer Ledger of  River Oaks Furniture,

            which was not  actually typed up (from Keenum's  notes) until

            1993, shows Lawrence Ansin as originally owning 7,500 shares.

            However,  according  to the  Ledger,  Ansin transferred  only

            4,000  shares  to his  father on  January  1, 1988,  and then

            transferred 1,000 shares to Simons and 2,500 shares to Donald

            Franks,  another of  the  original River  Oaks investors,  on

            January 1, 1989.

                      Simons  testified that these  transfers of stock by

            Larry Ansin were  part of  a general  reallocation of  shares

            undertaken  in early  1989.   According  to Simons,  during a

            telephone  conversation in  February or  March 1989,  he told

            Larry Ansin that, in order to recruit talented new employees,

            the  company wished  to  issue 25,000  new  shares of  stock.

            Simons further testified that  Larry Ansin then orally agreed

            to  reduce his  ownership interest  to 4%.    However, Simons

            acknowledged that there is no record of this conversation nor

            any contemporaneous records  or correspondence  memorializing

            the transfers to  Simons and Franks.   Simons also  testified

            that he and Ansin only discussed percentages of ownership, as

            opposed  to numbers of shares, and that Ansin did not receive

            any money for the transfers.   Simons did not speak to Harold

            Ansin about the transfers. 

                      Thomas  Keenum,  who,  as  company  secretary,  was

            responsible   for  maintaining  the  Stock  Transfer  Ledger,

                                         -6-
                                          6

            testified that  no document,  other than his  personal notes,

            records these  stock transactions, and that  only Simons, and

            not the Ansins, ever communicated with him about the decrease

            in  the Ansin  ownership  interest.   Although other  capital

            transactions  are recorded  in the  minutes of  the Board  of

            Directors,  the Ansin  transfers  were not,  nor to  Keenum's

            knowledge,  were there  any  signed  agreements, letters,  or

            memoranda noting these transfers. 

                      The  foundation documents  of  River Oaks  included

            Articles   of  Incorporation,  By-Laws,  and  a  Subscription

            Agreement among the stockholders.  These documents regulated,

            among other  things, the transfer  of shares in  the company.

            Paragraph 12 of the Articles of Incorporation provided that:

                      before a transfer [of stock] may be made,
                      [the]  owner or  holder shall  notify the
                      secretary/treasurer  of this  corporation
                      in writing of the  number of shares to be
                      transferred,  the  certificate   involved
                      [and other pertinent information]. 

            The Subscription Agreement, which was "binding upon and shall

            inure to the  benefit of each individual  Stockholder and his

            respective  heirs,  executors,  administrators,  assigns  and

            legal  representatives,"  recited  that  "[e]ach  Stockholder

            agrees that all shares of Stock of the Company . . . shall be

            subject to the terms and conditions of Paragraph Number 12 of

            the Articles  of Incorporation."  The  By-Laws, which charged

            the secretary  with maintaining  the stock transfer  books of

            the corporation, 

                                         -7-
                                          7

            stated that:

             
                      Transfer  of  shares  of the  corporation
                      shall be made only on the stock  transfer
                      books of the corporation by the holder of
                      record   thereof   or   by    his   legal
                      representative . . . . 
             
            At   trial,  the  plaintiffs   argued  that  these  documents

            constituted an  enforceable  contract, and  that  defendants'

            unauthorized transfer  of 3,500  River Oaks shares  to Simons

            and Franks amounted to a breach of that contract.

            C. The Repurchase of the Ansin Interest and the IPO
            ___________________________________________________

                      The  original investors  in River  Oaks had  hoped,

            from the  beginning, eventually  to take the  company public.

            During  the first quarter of 1992, the company took the first

            step  of  talking  to an  investment  banker  about  a public

            offering.  Breck Walker, a managing director of J.C. Bradford

            &  Co.,  a  Nashville  investment bank,  visited  River  Oaks

            several  times during the first half of 1992, to evaluate the

            company's prospects as an IPO candidate.  

                      These  contacts  culminated in  an  April  23, 1992

            meeting  in  Nashville  between  the  River Oaks  management,

            including Keenum and Simons, and the J.C. Bradford commitment

            committee.3  At the meeting, River Oaks'  value was discussed

            and,  according to  the notes  of a   J.C.  Bradford analyst,

                                
            ____________________

            3.  The  commitment   committee  is  a  group   of  top-level
            executives  at  J.C.  Bradford   who  must  approve  all  IPO
            transactions. 

                                         -8-
                                          8

            Keenum  stated that a value of $25 million was "about right."

            Analyses prepared by J.C. Bradford for internal use projected

            a  range  of  values  from  $16.3  million  to  $31  million,

            depending on  the assumptions  used,  and similar  valuations

            were discussed with River Oaks personnel.

                      Shortly thereafter, J.C. Bradford  determined that,

            given  all  the circumstances,  including  market conditions,

            River Oaks  was not a  candidate for  an IPO in  1992.   J.C.

            Bradford advised River Oaks to wait until the  end of 1992 or

            early 1993 to see  if the company met its  projections before

            proceeding further.

                      At approximately the same  time, April 1992,  Larry

            Ansin  learned  that  he  had  a  brain  tumor.    After  his

            diagnosis,  Ansin asked Patrick  Maraghy, his tax planner, to

            act  as an  intermediary  in his  financial dealings.   Ansin

            continued to make his own decisions. 

                      In July  1992, Walter Billingsley,  the River  Oaks

            controller,  and Simons  contacted Maraghy  about refinancing

            River   Oaks'  debt.     Ansin,   like  the   other  original

            shareholders,  had previously signed  personal guarantees for

            bank loans to River Oaks; now, the Bank of Mississippi wanted

            another  personal guarantee  from Ansin  for $550,000  of new

            financing. Maraghy  communicated  the request  to Ansin,  who

            declined to  provide new guarantees  because he was  very ill

            and because he was no longer a shareholder of River Oaks.

                                         -9-
                                          9

                      Through August and  into September of 1992,  Simons

            continued to  call Maraghy frequently, pressuring  him to get

            Larry  Ansin  to reconsider  his decision.    At no  time did

            Simons  tell Maraghy that the  bank had agreed,  on August 5,

            1992, to proceed with the refinancing without a new guarantee

            from  Larry  Ansin.   Instead,  Simons  represented that  the

            company would have problems  without the new Ansin guarantee,

            and  that  people would  be thrown  out  of work.    In early

            September, Simons asked if Harold Ansin would sign a personal

            guarantee, but Harold Ansin declined. 

                      In  mid- to  late-September, Simons  called Maraghy

            and asked if the Ansins would be willing to  sell their stock

            back to River Oaks so that someone else could purchase it and

            provide the guarantee.  The Ansins agreed, believing that the

            sale would help Simons obtain the needed financing.

                      On  October  19,  1992,  Keenum  called Maraghy  to

            discuss  an  offer  of  $300,000  for  the Ansin  River  Oaks

            Furniture and  R-O Realty shares.   Keenum told  Maraghy that

            River Oaks had recently  bought out Keith Franklin,  the only

            other   non-management  shareholder,   for  $60,000   per  1%

            interest, indicating that  $300,000 was a fair  price for the

            Ansin's  4% interest in River Oaks.  Keenum also told Maraghy

            that the  R-O Realty shares  were valueless, as  R-O Realty's

            properties were heavily encumbered with debt. 

                                         -10-
                                          10

                      The Ansins  agreed to the sale,  believing that the

            price  was fair and that they were accommodating Simons' need

            for bank  financing.  Simons  wrote to Maraghy,  thanking him

            "for  helping me  resolve this  problem."4   The sale  of the

            Ansin shares for $300,000 was closed in November 1992.

                      In  board  meetings  on   November  19,  1992,  and

            December 1, 1992,  the directors of River Oaks authorized the

            resale of the  Ansin River  Oaks shares, for  the same  price

            River  Oaks  had  paid,  to Keenum,  Billingsley,  and  other

            original  River  Oaks  investors.    The  Board  had  already

            authorized the  resale  of the  Ansin  R-O Realty  shares  to

            Keenum, Simons and other insiders  on September 1, 1992, even

            though  the repurchase offer had not yet been made.  Everyone

            purchasing Ansin shares was familiar with the IPO discussions

            with J.C. Bradford.

                      Keenum  and Simons  acknowledge  that,  during  the

            repurchase  discussions, they  never  told Maraghy  about the

            meetings  with  J.C.  Bradford   or  about  the  prospect  of

            restarting  IPO discussions  in early  1993.   Although there

            were no  ongoing negotiations  in November  1992, Billingsley

            testified  that River  Oaks'  management knew  by October  or

            November  1992   that  the  company  would   meet  its  sales

            projections for 1992 and  so would meet the condition  set by

                                
            ____________________

            4.  Before finalizing the sale,  Harold Ansin transferred the
            shares to  the Ansin  Foundation, a family  charitable trust,
            for tax reasons.

                                         -11-
                                          11

            J.C.  Bradford for  following  up  on  the  IPO.    During  a

            conference  call on  December 7,  1992,  less than  two weeks

            after the  Ansin repurchase,  Ron Ashby, River  Oaks' outside

            auditor,  discussed the  impact  of  an  IPO on  River  Oaks'

            accounting  for employee  loans with  Keenum and  other River

            Oaks  personnel.   Ashby's notes,  made in  the month  or two

            prior to that call,  indicate that River Oaks was  looking at

            an IPO in July or August 1993.

                      Simons testified that, in one phone conversation in

            early  1992, he  told Larry  Ansin that  River Oaks  had made

            initial  contact with  an unspecified investment  banker, and

            that  Larry Ansin  thought  going public  was  a great  idea.

            However,  Harold Ansin,  Maraghy,  and  Susan Ansin,  Larry's

            wife,  all testified  that  Larry Ansin  never mentioned  the

            possibility of an IPO, even though they all stated that Larry

            discussed business with them regularly.

                      The  River Oaks board  approved an IPO  on March 1,

            1993.   Maraghy first learned  that an IPO  was being planned

            from a June 1993 newspaper article. By this time, Larry Ansin

            had died.

                      River Oaks went  public on August 26,  1993 for $12

            per share.  As part of the transaction, River Oaks effected a

            28.8 for 1 stock split on June 23, 1993.  This meant that the

            Ansins'  7,500  shares  would  have  become  216,000  shares.

            Additionally,   R-O  Realty   was  merged  into   River  Oaks

                                         -12-
                                          12

            furniture,  and  the R-O  Realty  shareholders  received $1.2

            million  of River  Oaks  stock.   From  the proceeds  of  the

            offering,  River  Oaks  distributed  $2,465,000  of  previous

            earnings to its pre-IPO shareholders.   

                      Finally, the plaintiffs learned from the prospectus

            of the existence of River Wood Products, Inc.  River Wood had

            been  established in  1991  to produce  furniture frames  for

            River  Oaks.   Although there  were no  significant financial

            benefits to  setting up River Wood as a separate corporation,

            a 1991 memo from Ashby indicated that "a political reason for

            setting  up . . .  separate corporations would  be to exclude

            certain current  River Oaks shareholders."   Harold Ansin was

            one of  the shareholders excluded.   At the time  of the IPO,

            River  Wood  shareholders  received   shares  of  River  Oaks

            Furniture stock. 

                      At trial, plaintiffs' expert testified that  if the

            Ansins had held 7,500  shares prior to the IPO and  then sold

            them at the  end of  the restricted period,  they would  have

            received  a  total  of  $4,179,140.    This  figure  included

            proportional allocations  of River Oaks Furniture  shares for

            the  Ansin R-O  Realty  shares and  for  a hypothetical  7.5%

            interest in River Wood Products.  It also included a share of

            the S-corporation distribution. 

                                         II.

                                         -13-
                                          13

                      The Ansins filed suit  on October 4, 1993, alleging

            securities  law violations, fraud,  breach of fiduciary duty,

            malpractice and  Mass. Gen.  L. ch.  93A claims  arising from

            defendants'  failure  to disclose  the  planned  IPO.   After

            discovery,  on  June  17,  1994, plaintiffs  filed  a  Second

            Amended  Complaint,   adding  a  conversion  claim   for  the

            reduction  of  the Ansin  interest  to  4,000  shares.    The

            district  court granted a  defense motion to  dismiss the ch.

            93A and malpractice claims on  October 12, 1994.  On July  5,

            1995, a Third Amended  Complaint was filed, which  included a

            breach of contract claim  arising from the same facts  as the

            conversion claim. 

                      On November  15, 1995,  the district  court granted

            defendant's  motion for  summary judgment  on the  conversion

            claim, finding that  the Massachusetts three-year statute  of

            limitations for  torts barred  any conversion claim  that the

            Ansins  should have discovered prior to October 4, 1990.  The

            district court found that  various 1989 tax documents, signed

            by Harold Ansin and indicating that he owned a 4,000 share or

            4% interest in River  Oaks, should have alerted Ansin  to the

            alleged conversion. 

                      The  remaining claims  were tried to  a jury.   The

            jury  returned  a  special  verdict  form  finding  that:  1)

            defendants violated  the Securities Exchange  Act and engaged

            in  common  law fraud  by  failing  to  disclose  the  public

                                         -14-
                                          14

            offering  discussions  with  J.C.  Bradford;  2)  River  Oaks

            committed  a breach of  contract when the  Ansin interest was

            reduced to 4,000 shares; 3) Simons and/or Keenum breached the

            fiduciary duty  owed by a dominant shareholder  to a minority

            shareholder by failing to  disclose the discussions with J.C.

            Bradford  and by failing to offer  the Ansins the opportunity

            to participate in River Wood Products, Inc.  The jury awarded

            compensatory damages of $1,082,400 against all defendants for

            the  fraud  claims, $1,209,600  against  River  Oaks for  the

            breach of contract, and $16,400 against Simons and Keenum for

            the breach  of  fiduciary duty.    It also  awarded  punitive

            damages under  Mississippi law of $25,000  against Simons and

            of $100,000 against Keenum.

                       The defendants  moved for judgment as  a matter of

            law  at the close of plaintiffs' case, after the verdict, and

            following  the  entry  of  judgment.    On  April  26,  1996,

            defendants moved, pursuant to Rule 49(a), Fed. R. Civ. P., to

            have the court address issues not submitted to the jury.  The

            district court denied these motions. 

                                         III.

                      Defendants make  numerous arguments with  regard to

            each  count of  the  verdict and  the  damages awarded.    We

            examine these contentions in turn.5

                                
            ____________________

            5.  Except  as  otherwise  noted,   the  parties  agree  that
            Mississippi  law is the relevant substantive law on the state
            law  claims, and  that  Massachusetts  provides the  relevant

                                         -15-
                                          15

            A. The Federal Securities and Common Law Fraud Claims
            _____________________________________________________

                       The federal securities claim alleged violations of

               10(b)  of the  Securities  Exchange  Act and  Rule  10b-5.

            Defendants  argue that  the district  court erred  in denying

            their motion for a judgment as a matter of law on the federal

            securities  law  and  Mississippi common  law  fraud  claims.

            Specifically, defendants assert that there was no evidence of

            omission  or  misrepresentation,  of  fraudulent  intent,  of

            materiality or of reliance.  

                      Review of  the district court's denial  of a motion

            for judgment as a matter  of law is plenary.  See  Correa, 69
                                                          ___  ______

            F.3d  at 1191.    As did  the district  judge, we  review the

            record in  the light most favorable to  the non-moving party.

            Id.   We will  "reverse the denial  of such a  motion only if
            ___

            reasonable persons could not have reached the conclusion that

            the jury embraced."   Sanchez v. Puerto Rico Oil Co., 37 F.3d
                                  _______    ___________________

            712, 716 (1st Cir. 1994).

                      The record shows sufficient evidence to support the

            jury's  verdict.    Defendants  contend  that  there  was  no

            material omission because Simons testified that he told Larry

            Ansin, in  early 1992,  about the  initial contact  with J.C.

            Bradford.  However, Simons himself never claimed that he  had

            told Ansin about J.C. Bradford's specific  recommendations as

            to the possible  timing of an IPO, or that  he had told Ansin

                                
            ____________________

            procedural provisions.

                                         -16-
                                          16

            about  the  valuation analyses  performed  by  the investment

            bank.  Nor did Simons or Keenum mention the possibility of an

            IPO to  Maraghy at the  time of  the negotiated sale.   Thus,

            even  crediting Simons'  uncorroborated testimony,  which the

            jury  need  not  do,  the jury  could  reasonably  find  that

            information about the IPO negotiations was omitted.

                      As to  evidence of intent, defendants  contend that

            there  was no possible  motive for fraud,  because River Oaks

            resold the Ansin shares  to other insiders at the  same price

            the  corporation had  paid  for them,  thereby depriving  the

            corporation  of the fruits of  its fraud.   However, the jury

            could  reasonably   infer,  from   the  evidence,  that   the

            individual defendants, officers and  directors of River Oaks,

            were working to  exclude the Ansins, the  only remaining non-

            management shareholders,  from the  River Oaks IPO,  and were

            seeking  ultimately  to  benefit  themselves  and  the  other

            Mississippi management shareholders at the Ansins' expense.

                      Defendants  also argue  that there was  no evidence

            that  the   undisclosed  information   was  material.     The

            materiality standard  under the federal securities  laws is a

            familiar  one:  Information  is   material  if  "there  is  a

            reasonable   likelihood  that  a  reasonable  investor  would

            consider it important."  Glassman v. Computervision Corp., 90
                                     ________    ____________________

            F.3d  617,  632 (1st  Cir. 1996);  see  also Shaw  v. Digital
                                               _________ ____     _______

            Equip.  Corp.,  82 F.3d  1194,  1219  (1st Cir.  1996)(citing
            _____________

                                         -17-
                                          17

            Basic, Inc. v. Levinson, 485 U.S. 224, 231-232 (1988)).  This
            ___________    ________

            court  has   repeatedly  held   that  the  question   of  the

            materiality of omitted information  is one peculiarly for the

            trier  of  fact.   See  Lucia  v.  Prospect  St. High  Income
                               ___  _____      __________________________

            Portfolio,  Inc., 36  F.3d  170, 176  (1st Cir.  1994)(citing
            ________________

            cases).

                      Defendants  contend that the prior discussions with

            J.C. Bradford were insignificant because no negotiations were

            ongoing  at the time of  the Ansin repurchase.   However, the

            evidence  showed  that less  than two  weeks after  the Ansin

            repurchase,  River Oaks' management was "looking at a July or

            August  1993" IPO,  and adjusting  its  accounting strategies

            accordingly.  This  is  not   a  case  where  the  defendants

            themselves "placed  no special  significance" on  the omitted

            information.   Cf. Jackvony v. RIHT Fin. Corp., 873 F.2d 411,
                           ___ ________    _______________

            415  (1st Cir. 1989); Taylor  v. First Union  Corp., 857 F.2d
                                  ______     __________________

            240,  244  (4th Cir.  1988)("vague  agreement"  as to  future

            merger not material where neither "the factual nor the legal"

            predicates  for  transaction  were  in place).    The  jury's

            conclusion  that the  earlier negotiations  were material  is

            patently reasonable.

                      Finally,  defendants  contend  that  there  was  no

            evidence  of  reliance on  the  omissions.   Because  of  the

            logical impossibility  of proving that  plaintiffs relied  on

            information  that they  did  not have,  "[p]ositive proof  of

                                         -18-
                                          18

            reliance on omissions is  not necessary where materiality has

            been established."  Holmes v. Bateson, 583 F.2d 542, 558 (1st
                                ______    _______

            Cir. 1978).  In any case,  Harold Ansin testified that he did

            rely on information obtained from Simons. 

                      Thus,  defendants'   insufficiency  arguments  with

            regard to the securities law and fraud claims are unavailing.

            A reasonable  jury could,  and did, conclude  that defendants

            intentionally defrauded  plaintiffs  by failing  to  disclose

            material information about the contemplated IPO.

            B. The Breach of Contract Claim
            _______________________________

                      The  defendants  also  argue that  what  plaintiffs

            styled a breach of contract claim is essentially a conversion

            claim, and  therefore barred  by the statute  of limitations.

            They also claim that the evidence was insufficient to support

            the jury verdict on this claim, and that Harold Ansin and the

            Ansin Foundation lack standing to bring this claim.

            1. Statute of Limitations
            _________________________

                      Defendants  argue  that  plaintiffs  simply  recast

            their time-barred  conversion claim  as a breach  of contract

            claim,6 and  that this claim  should therefore be  subject to

                                
            ____________________

            6.  Although  defendants  suggest  that plaintiffs  repleaded
            their  conversion  claim  as  breach of  contract  after  the
                                                               _____
            district judge  had found that  their tort claim  was barred,
            this is  factually incorrect.  Moreover,  the district judge,
            in his  opinion granting  summary judgment on  the conversion
            claim, specifically  noted that, although  the contract claim
            pleaded the same  facts, defendants had not moved for summary

                                         -19-
                                          19

            the  Massachusetts three-year  tort  statute  of  limitations

            (Mass. Gen. Laws ch. 260,  2A), rather than the Massachusetts

            six-year contract statute (Mass. Gen. Laws ch. 260,   2).7

                      Defendants  cite  Massachusetts  caselaw   for  the

            principle that "the determination  of whether the contract or

            tort  statute of  limitations  applies is  controlled by  the

            essential  nature of [the] claim."   Oliveira v. Pereira, 605
                                                 ________    _______

            N.E.2d 287, 290 (Mass.  1992).  This principle may  be useful

            in determining  what statute  of limitations  to  apply to  a

            statutory claim, where the  statute giving rise to  the cause

            of  action does not specify a limitations period.  See, e.g.,
                                                               ___  ____

            id. at  289-91.   It may  also apply in  the extreme  case in
            ___

            which  a  personal injury,  such  as  emotional distress,  is

            inappropriately cast as  a breach of contract.   See Pagliuca
                                                             ___ ________

            v. City of Boston, 626 N.E.2d 625, 628 (Mass. Ct. App. 1994).
               ______________

            However,  this  principle  has  not  been  held  to  restrict

            plaintiffs  to  a  single  theory  of  liability per  set  of

            operative  facts, where  such  facts can  fairly support  two

            theories of liability.  

                      Here, the  plaintiffs' claim  -- that  their shares

            were  transferred  without  their knowledge  or  consent,  in

            derogation   of   contractual   terms   --  can   be   fairly

                                
            ____________________

            judgment on that claim and that his ruling did not reach that
            count. 

            7.  The  parties agree  that  Massachusetts law  supplies the
            applicable statute of limitations.

                                         -20-
                                          20

            characterized as either an action for conversion or an action

            for breach  of contract.   It  does not involve  the type  of

            "accident[] resulting  in injuries to person  or property" on

            which the draftsmen of Massachusetts' three-year tort statute

            focussed.   Royal-Globe Ins. Co.  v. Craven, 585  N.E.2d 315,
                        ____________________     ______

            320  (Mass.  1992).    Rather,  it does  involve a  claim "to

            recover  from   another  money  which  in   equity  and  good

            conscience  he is not entitled to keep."   The latter type of

            claim, according  to the  Supreme Judicial Court,  is usually

            advanced in a contract action.  Kagan v. Levenson, 134 N.E.2d
                                            _____    ________

            415,  417 (Mass. 1956).   In these circumstances,  it was not

            error for the  district court to apply  the six-year contract

            statute of limitations to plaintiffs' contract claim.

            2.  Insufficiency  of the  Breach  of  Contract Evidence  and
            _____________________________________________________________

            Enforceability of Rights
            ________________________

                      The  defendants assert  that  there is  no evidence

            that  Larry Ansin did not  agree to the  reduction in shares.

            They  also deny  that the  foundation corporate  documents of

            River  Oaks created  enforceable  rights  in the  plaintiffs.

            This is simply not so.

                      As  with  the  fraud  claims,  defendants  rely  on

            Simons' uncorroborated report of his phone  conversation with

            Larry  Ansin.   With  regard to  the  contract claim,  Simons

            testified  that,  in early  1989,  Ansin orally  agreed  to a

                                         -21-
                                          21

            reduction in his  percentage of ownership.   Simons does  not

            assert that he mentioned specific numbers of shares to Ansin,

            nor does  he claim that  Ansin received any  compensation for

            these transfers.   Simons testified that Larry  Ansin did not

            agree  to  transfer  shares  to himself  or  to  Franks  (the

            recipients   of  the   shares).   Simons   and  Keenum   both

            acknowledged  that  there  was   no  documentation  of  these

            transfers.

                       Simons described a complex reallocation of shares,

            undertaken to allow shares to be issued to new key personnel.

            However,  Keenum  acknowledged that  25,000  new shares  were

            issued  in  1989, and  that  the  new employees  were  issued

            exactly 25,000 shares.   This negated  the reallocation as  a

            reason for the reduction in Ansin's shares.  Additionally, in

            the reallocation  described by Keenum, only  Harold Ansin had

            to  give  up  shares;  Simons' percentage  of  ownership  was

            diluted  by the new  issuance, but  he actually  gained 1,000

            shares (from the alleged transfer from Ansin). 

                      Even if  the jury  credited Simons' description  of

            Larry Ansin's  oral consent,  the jury could  have reasonably

            inferred  that Ansin only consented to dilution, and not to a

            transfer of  shares.  Additionally, when  evaluating a series

            of events that, judging from the trial exhibits, left a heavy

            paper trail,  the jury was  entitled to draw  inferences from

                                         -22-
                                          22

            the complete absence of contemporaneous  documentation of the
                ________________

            purported Ansin transfers.

                      Defendants  also  contend  that   the  foundational

            documents  of River  Oaks did  not create  any rights  in the

            Ansins with regard to transfers.  Defendants do not challenge

            the basic premise that, under Mississippi law, such documents

            may  form a contract.  Rather, they contend that the specific

            transfer  provisions  were  only   for  the  benefit  of  the

            corporation, and thus created  no rights in the shareholders.

            However,  the plain  language  of the  Subscription Agreement

            states that "this  Agreement shall be binding upon  and shall

            inure to the benefit of each individual Stockholder . . . and
            ___________________________________________________

            to the Company . . . ."  While the transfer provisions of the

            Articles  of  Incorporation and  the  By-Laws  may have  been

            primarily intended to prevent the unauthorized sale of shares

            to outsiders, as  defendants contend, this does not mean that

            they served no other purpose.

                      To  the  contrary, the  traditional  common law  of

            unauthorized   transfers   places   heavy   duties   on   the

            corporation:

                           Courts held that a corporation whose
                      stock was transferable only on  the books
                      of the company  was, to a certain  extent
                      at least, a  trustee for its shareholders
                      in respect to their stock. . . . [I]t had
                      to  respond in  damages  for  any  injury
                      sustained by  them in consequence  of its
                      negligence  or  misconduct.  .  .  . This
                      liability rested . . . upon the ground of
                      breach of contract  upon the part of  the

                                         -23-
                                          23

                      company,  of this undertaking to hold the
                      stock for the benefit  of the true  owner
                      of the certificate.

            12  Fletcher Cyclopedia of the Law of Corporations   5538, at
                ______________________________________________

            406   (perm.  ed.  1996)(footnotes  omitted).  Moreover,  the

            Cyclopedia explains that:

                           The shareholders also  have a  right
                      to  expect  that  the   corporation  will
                      observe its own bylaws in relation to the
                      transfer,  and  it   is  liable  for  any
                      damages  resulting to  them by  reason of
                      its failure to do so.

            Id. (footnotes omitted).
            ___

                      This authority  is sufficient to  rebut defendants'

            contention that  the plain  language of River  Oaks' transfer

            provisions  can  only  be  read  to  create   rights  in  the

            corporation.  The defendants  point to nothing in either  the

            documents  or in Mississippi law that would require a jury to

            conclude  that River  Oaks shareholders  had no  rights under

            these  documents as  to transfers.   Accordingly,  the jury's

            verdict on the breach of contract claim stands.

            3. Standing
            ___________

                      The defendants  assert  that Harold  Ansin and  the

            Ansin  Foundation lack  standing  to bring  a contract  claim

            because they were not in privity of contract with River Oaks.

            However,  defendants acknowledge  that  Larry Ansin's  estate

            would have standing to bring such a suit, were it not for the

            fact that,  in  their view,  Larry  Ansin acquiesced  in  the

            breach and  suffered no damages.   The jury  plainly rejected

                                         -24-
                                          24

            these  assertions.   Assuming  arguendo  that  defendants are
                                           ________

            correct  that, as a  matter of Mississippi  law, Harold Ansin

            could not bring  this suit,  we find that,  as Larry  Ansin's

            estate indisputably had standing,  this claim has no possible

            bearing on the outcome of the case.

            C. The Breach of Fiduciary Duty Claim
            _____________________________________

                      Defendants   take   the   position    that,   under

            Mississippi law, shareholders  may not  sue, as  individuals,

            for breach of fiduciary duty by the officers and directors of

            a  close   corporation.    However,   Mississippi  case   law

            recognizes  the ability of shareholders in close corporations

            to  sue for breach of fiduciary  duty.  See Fought v. Morris,
                                                    ___ ______    ______

            543 So. 2d 167, 172-73 (Miss. 1989).  The Mississippi Supreme

            Court has specifically stated,  in the context of a  suit for

            diversion of  corporate opportunity, that a  trial court may,

            "in the  case of a closely  held corporation, . .  . treat an

            action raising derivative claims as a direct action . . . and

            order an individual recovery."  Derouen v. Murray, 604 So. 2d
                                            _______    ______

            1086,  1091 n.2 (Miss. 1992).  Defendants' argument as to the

            fiduciary duty claim is without merit.

            D. Affirmative Defenses
            _______________________

                      Defendants  assert  that equitable  defenses barred

            both the contract claim and the fraud claims.  Defendants did

            not  submit  these  affirmative  defenses  -  laches, waiver,

            ratification and estoppel - to the jury.  Instead, in a post-

                                         -25-
                                          25

            trial motion pursuant to Rule 49(a), defendants requested the

            district  judge  to  rule   on  the  applicability  of  these

            affirmative defenses.  The district court denied this motion,

            without opinion.

                      Under Rule  49(a), if  the district court  does not

            make a finding  on an issue  not submitted  to the jury,  "it

            will be presumed on appeal that the lower court made whatever

            finding was necessary in order  to support the judgment  that

            was  entered."  9A  Wright  & Miller,  Federal  Practice  and
                                                   ______________________

            Procedure,   2507,  at 185-86 (1995);  see also Kavanaugh  v.
            _________                              ________ _________

            Greenlee Tool Co., 944 F.2d 7, 11-12 (1st Cir. 1991).  As the
            _________________

            district  court entered  a  judgment for  the plaintiffs,  we

            presume that  it found  that  defendants had  not proven  the

            claimed equitable defenses.

                      The defendants argue  that the  breach of  contract

            claim was  barred by  laches, based  on the district  court's

            finding,  in the context  of the  conversion claim,  that the

            Ansins should have discovered the reduction in their interest

            when  signing  the  1989  tax  documents.   The  defense  was

            prejudiced by  plaintiffs' delay  in filing suit  until 1993,

            defendants argue, because Larry Ansin died in the interim.

                      We review the district court's  determination as to

            laches for  abuse of  discretion.   See Murphy  v. Timberlane
                                                ___ ______     __________

            Reg'l  Sch. Dist.,  973 F.2d  13, 16  (1st  Cir. 1992).   The
            _________________

            parties have not adequately  addressed which law governs this

                                         -26-
                                          26

            issue.   However, Massachusetts and Mississippi  law (as well

            as  general  principles of  equity)  are  consistent on  this

            point,  and  so there  is no  need  to address  the conflicts

            question.

                      If the  statute of limitations  has not run,  as is

            the  case  here,  the  defendant  bears  a  heavy  burden  of

            demonstrating   the   unreasonableness  of   delay   and  the

            occurrence of prejudice.  See K-Mart Corp. v. Oriental Plaza,
                                      ___ ____________    _______________

            Inc.,  875 F.2d 907,  911 (1st Cir. 1989);  Hans v. Hans, 482
            ____                                        ____    ____

            So. 2d 1117, 1121 (Miss. 1986) ("no claim is barred by laches

            until the  limitation has attached"); cf.  Srebnick v. Lo-Law
                                                  ___  ________    ______

            Transit Mgmt., Inc.., 557 N.E.2d 81, 85 (Mass. Ct. App. 1990)
            ____________________

            ("As long  as there  is  no statute  of limitations  problem,

            unreasonable delay in pressing  a legal claim does not,  as a

            matter of  substantive law, constitute laches.").   Also, the

            district court  could  have found  that defendants'  unsavory

            conduct  precluded them  from  arguing that  they  reasonably

            relied  on the  plaintiffs' acquiescence  in the  transfer of

            shares.  See K-Mart  Corp., 875 F.2d at 911 (party seeking to
                     ___ _____________

            invoke laches should not "call . . .  attention to [its] left

            hand while  surreptitiously pocketing the family  jewels with

            [its] right hand").  Under these circumstances, it was not an

            abuse  of  discretion for  the  district  court to  find  the

            defense of laches inapplicable.

                                         -27-
                                          27

                      Defendants  also  argue that  plaintiffs' two-month

            delay between  learning of  the planned IPO  and filing  suit

            constitutes laches, waiver, estoppel, and ratification so  as

            to bar  the fraud  claims.   Any  claim of  prejudice to  the

            defendants from  this delay  is tenuous,  as Larry  Ansin had

            already died when Patrick Maraghy learned of the planned IPO.

             Given the maxim  that "he  who comes into  equity must  come

            with clean  hands,"  see, e.g,  Texaco Puerto  Rico, Inc.  v.
                                 ___  ____  _________________________

            Dep't  of Consumer Affairs, 60 F.3d 867, 880 (1st Cir. 1995),
            __________________________

            the district court  did not abuse its discretion by declining

            to  apply  these  equitable  defenses  to  plaintiffs'  fraud

            claims.

            E. Compensatory Damages 
            _______________________

            1. Securities Law
            _________________

                      The Supreme Court has  held that damages under Rule

            10b-5 should be "the difference between the fair value of all

            that  the . . . seller received and the fair value of what he

            would have  received had  there been no  fraudulent conduct."

            Affiliated Ute Citizens v.  United States, 406 U.S.  128, 155
            _______________________     _____________

            (1972);  see also Holmes,  583 F.2d at  562.   On the Ansins'
                     ________ ______

            securities law claim, the court instructed the jurors to find

            "the difference between what the Ansins actually received for

            their stock and what you believe they would have received had

            they  refused  to sell  or,  instead,  insisted on  different

            terms."  The jury was told that "the issue is not hindsight,"

                                         -28-
                                          28

            and that they "must evaluate the Ansins' decision in light of

            the facts and circumstances that existed at the time that the

            decision to sell was made."  

                      Defendants  argue  that the  district  court's jury

            instructions  as to  the damages  for the  fraud claims  were

            flawed, in that the district court failed to tell the jury to

            determine value as of the time of the fraudulent transaction,
                            __ __ ___ ____ __ ___ __________ ___________

            i.e. in November 1992.   The jury awarded damages of  $12 per

            share,  the public offering price  of River Oaks.8   This was

            less than the $17.40 a share which plaintiffs sought and more

            than the  damages defendants  say are the  maximum allowable.

            Defendants contend that the pre-IPO  value of the company was

            much lower, and  support this contention  by pointing to  the

            immediate  resale  of  the   Ansin  shares  to  knowledgeable

            insiders at the same price paid to the Ansins.

                      The federal securities statutes are not explicit as

            to  the proper  measure  of  damages.    Section  28  of  the

            Securities Exchange Act limits recovery to "actual damages on

            account of  the act complained of."   15 U.S.C.    78bb.  The

            definition of "actual damages," however, has been left to the

            courts.    This  question presents  difficulties,  which  are

                                
            ____________________

            8.  The jury  award apparently was based on  the premise that
            the  Ansins would have participated  in the 28.8  for 1 stock
            split.   The jury then  deducted the $300,000  the Ansins had
            actually  received  for  their  stock.   The  jury  did  not,
            apparently, include  compensatory damages for the  R-O Realty
            shares,  or for  the  S corporation  earnings distributed  to
            former shareholders at the time of the offering.

                                         -29-
                                          29

            greatest in cases involving closely held securities that have

            no  readily ascertainable  market value.    See 3  Bromberg &
                                                        ___

            Lowenfels, Securities Fraud & Commodities Fraud   9.1, at 228
                       ____________________________________

            (2d ed. 1996).

                       The trier of fact  may draw reasonable  inferences

            in determining "fair value," and "is not restricted to actual

            sale prices in a market so isolated and so thin" as one for a

            close corporation's stock.  Affiliated Ute, 406  U.S. at 155.
                                        ______________

            A   variety   of   factors,  including   anticipated   future

            appreciation,  may  affect the  value  of stock,  so  that an

            appraisal of value  "demand[s] a more  sophisticated approach

            than  the simple application of a price index to the shares."

            Holmes, 583 F.2d at 564.
            ______

                      Here, the  very nature of  the fraud was  to induce

            the plaintiffs to sell their stock at a time before the stock

            would appreciate  in value  due to  the contemplated IPO  and

            stock  split.   To  adopt defendants'  argument that  damages

            cannot exceed the price of the shares at the time of the sale

            would be to reward  and encourage such chicanery. Defendants'

            attempt  to  limit  plaintiffs' recovery  to  a  hypothetical

            "market"  price as of November 1992 is unavailing.  The trier

            of  fact was  entitled to infer  that a  reasonable investor,

            fully   informed  of  the   IPO  discussions,  including  the

            conditions  set by  J.C.  Bradford, would  not have  sold his

                                         -30-
                                          30

            stock in November 1992 for less  than his proportionate share

            of the IPO proceeds. 

                      The anticipated  appreciation in the  value of  the

            stock was  not unforeseeable.  Internal  River Oaks documents

            as  to planning and projections indicated that a 1993 IPO was

            anticipated.  J.C. Bradford analysts had suggested a range of

            values  for  the company  in  light of  the  anticipated IPO,

            information  which was  withheld from  the plaintiffs.   That

            these   analyses  and  projections   were,  to  some  extent,

            contingent  does  not  mean   that  they  are  irrelevant  to

            determining  fair value.   As  another  court of  appeals has

            said:

                      The  relevance  of  the  fact  [that  the
                      defendant close  corporation was involved
                      in merger negotiations]  does not  depend
                      on how things  turn out.   Just as a  lie
                      that overstates  a firm's prospects  is a
                      violation  even  if,  against  all  odds,
                      every fantasy comes true, so a failure to
                      disclose an important beneficent event is
                      a violation even if things later go sour.
                      The news . . . allows investors to assess
                      the worth  of the stock. .  . . Investors
                      will either hold  the stock  or demand  a
                      price  that  reflects the  value  of that
                      information.

            Jordan v. Duff  & Phelps, Inc.,  815 F.2d 429, 440  (7th Cir.
            ______    ____________________

            1987)(internal  citation omitted).   In  these circumstances,

            the IPO price was  a reasonable approximation of fair  value.

                                         -31-
                                          31

            We note it  was less  than the  aftermarket price  plaintiffs

            suggested as damages.9

                      Defendants draw our attention to two district court

            cases.   In Ross v. Licht, 263  F. Supp. 395 (S.D.N.Y. 1967),
                        ____    _____

            the court based damages for failure to disclose IPO plans not

            on   the IPO  price, but  on the lower  price obtained  in an

            intervening  private placement.  Id. at 411.  However, as one
                                             ___

            commentary  has  pointed   out,  the   court  was   "probably

            justified"  in using  the lower  measure because  the private

            placement  was   a  necessary  precondition   to  the  public

            offering.  Bromberg &  Lowenfels, supra,   9.1, at  228 n.12.
                                              _____

            Defendants have  pointed to no such determinative intervening

            event here.   Defendants also  point to Hutt  v. Dean  Witter
                                                    ____     ____________

            Reynolds, Inc., 737  F. Supp. 128 (D. Mass. 1990).   In Hutt,
            ______________                                          ____

            the accretion in  value was due  to the stock's trading  in a

            public  market  over  time.    The  court  accordingly  found

            plaintiffs' potential  profits to be "too  speculative."  Id.
                                                                      ___

            at 133.  Here,  by contrast, plaintiffs point to  a specific,

            planned-for event.  

                                
            ____________________

            9.  We also note  that the damages  here are consistent  with
            the rule of Janigan v. Taylor, 344 F.2d 781  (1st Cir. 1965).
                        _______    ______
            In  Janigan, this court held  that, when property  is sold to
                _______
            the  fraud-committing  party,  even  "future  accretions  not
            foreseeable at the time of the  transfer . . . are subject to
            another  factor, viz.,  that they  accrued to  the fraudulent
            party."  Id. at 786.  While the individual defendants did not
                     ___
            purchase  all the  Ansins'  stock, the  rest  of the  Ansins'
            shares were sold to  other knowledgeable River Oaks insiders,
            who thereby reaped the profits of defendants' fraud.

                                         -32-
                                          32

                      Because  we  affirm the  award  of  damages on  the

            federal securities law claim, we do not reach the state fraud

            claim.  Holmes, 583 F.2d at 560.
                    ______

            2. Breach of Contract
            _____________________

                      Defendants also appeal the  award of damages on the

            contract claim,  arguing the jury  should have  been told  to

            value damages "as  of the time of the  breach."  The district

            court instructed the jury to determine when  the Ansins would

            have  sold the  missing 3,500  shares, and to  determine what

            they would have received  at that time.  The  jury apparently

            determined that the  Ansins would have held the  shares until

            the IPO, and awarded  $12 per share, accounting for  the 28.8

            for  1  stock  split.    Whatever  the  merits  of defendants

            argument, they failed to object to the court's instruction at

            trial,  and so the issue has not been preserved for appeal.10

            See Fed  R. Civ.  P. 51; Pinkham  v. Burgess, 933  F.2d 1066,
            ___                      _______     _______

            1069  (1st Cir. 1991).   The  contract award  of compensatory

            damages is affirmed.

            F. Punitive Damages
            ___________________

                      Defendants argue that the award of punitive damages

            cannot  be sustained  because  such  damages are  unavailable

            under  the  securities   laws  and  under  Mississippi   law.

            Although the defendants are right  as to the securities laws,

                                
            ____________________

            10.  Defendants do not attempt to contend that the challenged
            instruction constituted plain error.

                                         -33-
                                          33

            see 15 U.S.C.   78bb, the district court correctly instructed
            ___

            the jury on the Mississippi law on punitive damages.

                      "The rule  in Mississippi is  settled that punitive

            damages are  not recoverable for a breach  of contract unless

            such breach is attended  by intentional wrong, insult, abuse,

            or  such  gross negligence  that  amounts  to an  independent

            tort."   Aetna Cas. and Sur. v. Steele,  373 So. 2d  797, 801
                     ___________________    ______

            (Miss. 1979).  Breach of  fiduciary duty has been  recognized

            by  the Mississippi  courts  as  an  "extreme  or  a  special

            additional  circumstance  where   punitive  damages  may   be

            awarded." Fought, 543 So. 2d at 173 (internal quotation marks
                      ______

            omitted).  The jury found such a breach of duty here.

                      Defendants contend that plaintiffs were required to

            adduce  evidence as  to  defendants' net  worth.   Plaintiffs

            correctly respond that, under  Mississippi law, the net worth

            inquiry is only one  factor to be considered where  the court

            seeks  to determine if  the punitive  damages awarded  by the

            jury  are so  excessively  disproportionate as  to shock  the

            conscience of  the court.   See  Bankers Life  & Cas. Co.  v.
                                        ___  ________________________

            Crenshaw,  483 So. 2d 254,  279 (Miss. 1985)  ("[N]o hard and
            ________

            fast  rule may be laid down with regard to the maximum amount

            of punitive damages that  may be awarded in a  given case.").

            That proportionality threshold  is not crossed here.   In any

            case, some evidence of defendants' net worth can  be inferred

            from the evidence as to their River Oaks holdings.   

                                         -34-
                                          34

                      "The  award  of  punitive  damages and  the  amount

            thereof is  within  the discretion  of  the trier  of  fact."

            Fought,  543 So.  2d at  173. "On  appeal, an  award will  be
            ______

            disturbed where it  is so excessive  that it evinces  passion

            and prejudice  on the part  of the  jury so as  to shock  the

            conscience  of  the  court."    Valley  Forge  Ins.   Co.  v.
                                            _________________________

            Strickland, 620 So. 2d 535, 541 (Miss. 1993)  On the facts of
            __________

            this case, there was  no abuse of discretion.   The award  of

            punitive damages is affirmed. 

                                         IV.

                      Plaintiffs appeal the dismissal of their Mass. Gen.

            Laws ch. 93A claim.  They also argue that  the district judge

            erred  in  failing  to  award  prejudgment  interest  and  in

            dismissing  their conversion  claim.   Because we  affirm the

            jury's award on  the contract  claim, we need  not reach  the

            Ansins' contention with respect to the conversion claim.  

            A. The 93A Claim
            ________________

                      Plaintiffs  claim that  the actions of  River Oaks,

            Simons, and Keenum in the various  transactions at issue here

            constitute unfair and deceptive business practices within the

            meaning of Mass.  Gen. Laws ch. 93A,    2,  11.  The district

            court  granted  judgment  on  the pleadings  for  defendants.

            Review is de novo.   United States v. Rhode  Island Insurers'
                      ________   _____________    _______________________

            Insolvency Fund, 80 F.3d 616, 619 (1st Cir. 1996).  
            _______________

                                         -35-
                                          35

                      Mass. Gen. Laws  ch. 93A gives  a private right  of

            action to any person  injured by "an unfair or  deceptive act

            or  practice" in  trade or  commerce "directly  or indirectly

            affecting the people of this Commonwealth."  Mass. Gen.  Laws

            ch. 93A,     2,  9.   Before January  1988,  the statute  was

            construed  as not applying to  securities laws claims    See,
                                                                     ____

            e.g.,  Cabot Corp.  v. Baddour,  477 N.E.2d  399,  402 (Mass.
            ____   ___________     _______

            1985).   In 1987,  the Massachusetts legislature  amended the

            definitions  section  of  the  statute so  that  "trade"  and

            "commerce"  now include  "the  advertising, the  offering for

            sale, rent or lease, the sale, rent, lease or distribution of

            . .  .  any  security."   Mass  Gen.  Laws  ch.  93A,   1(b).

            "Security"  is defined  broadly  under  Massachusetts law  to

            include any stock.  Mass. Gen. Laws ch. 110A,   401(k).

                      The Supreme Judicial Court has construed ch. 93A as

            covering  marketplace  transactions,  but   not  transactions

            "principally 'private in nature.'"  See Manning v. Zuckerman,
                                                ___ _______    _________

            444  N.E.2d 1262,  1266 (1983).   Transactions  between joint

            venturers and fiduciaries  who are  part of  a "single  legal

            entity" do  not meet  the statute's jurisdictional  "trade or

            commerce"  requirement.   Gilleran,  The Law  of Chapter  93A
                                                 ________________________

             2:18, at 38-39 (1989).  This principle was recently  clearly

            restated in Szalla v. Locke, 657 N.E.2d 1267 (Mass. 1995):
                        ______    _____

                           It is well established that disputes
                      between  parties in  the same  venture do
                      not fall within the scope of G.L. c. 93A,
                         11. . . .   The development  of c. 93A

                                         -36-
                                          36

                      suggests  that  the  unfair or  deceptive
                      acts  or  practices prohibited  are those
                      that   may    arise   between   discrete,
                      independent  business  entities, and  not
                      those  that  may  occur within  a  single
                      company.

            Id. at 1269 (internal citations omitted).  
            ___

                      Szalla,  in  offering  examples  of  the  types  of
                      ______

            disputes not  covered, cited Zimmerman v.  Bogoff, 524 N.E.2d
                                         _________     ______

            849  (Mass.  1988),  for  the principle  that  "c.  93A  [is]

            inapplicable to  transactions and disputes between parties to

            [a]  joint  venture  and   fellow  shareholders  in  a  close

            corporation."   It also cited Riseman  v. Orion Research, 475
                                          _______     ______________

            N.E.2d 398  (1985),  for  the principle  that  "c.  93A  [is]

            inapplicable  to claims by  [a] corporate stockholder against

            [a]  corporation  stemming  from  [a]  dispute  as  to  [the]

            internal governance  of  [the]  corporation."    Szalla,  657
                                                             ______

            N.E.2d at 1269.  

                      The  plaintiff  in  Szalla, who  was  the  business
                                          ______

            partner  of  the  defendant,  attempted  to  argue  that  the

            statutory definition of "trade  or commerce" included the act

            of "offering  for sale .  . . any  services."  Id.  at  1270.
                                                           ___

            The  trial court had found  that the plaintiff, upon becoming

            partners  with the defendant,  had "sold his  services to the

            business  entity  being formed  by the  parties."   Id.   The
                                                                ___

            Supreme Judicial  Court found  that, on these  facts "[t]here

            ha[d]  been  no commercial  transaction .  .  . in  the sense

            required by c.  93A . . . .   [T]he 'services contemplated by

                                         -37-
                                          37

            this definition are those  offered generally by a  person for

            sale to the public in a business transaction.'"  Id. (quoting
                                                             __

            Manning v. Zuckerman).
            _______    _________

                      Here,   plaintiffs   argue   that   the   statutory

            amendment,  which  included the  sale  of  securities in  the

            definition  of  "trade  or  commerce," makes  the  "trade  or

            commerce" inquiry  irrelevant.  We read  Szalla, particularly
                                                     ______

            its citation of Zimmerman, to require an independent analysis
                            _________

            of whether the transaction involved had a public aspect, even

            where the subject  matter of the  transaction is included  in

            the definitional section of the statute. 

                      Another  case, Puritan  Medical Center  v. Cashman,
                                     _______________________     _______

            596 N.E.2d 1004 (Mass.  1992), is of assistance.   There, the

            trial  court found  that  the defendants,  shareholders in  a

            close corporation, had engaged  in unfair and deceptive trade

            practices when  they locked the plaintiff  corporation out of

            space  that had  previously been  rented to  the corporation.

            Id.  at 1006.    On appeal  to  the Supreme  Judicial  Court,
            ___

            defendants argued that  they were  not liable  under ch.  93A

            because "the parties were acting as fiduciary participants in

            a closely  held corporation rather than  as separate entities

            in  a public market setting."  Id.  at 1012.  The SJC stated:
                                           ___

            "We agree," and reversed.  Id.  
                                       ___

                                         -38-
                                          38

                      After  explaining  that the  transactions  at issue

            were  principally  private  in  nature,  the Puritan  Medical
                                                         ________________

            Center opinion continued:
            ______

                      Further,   the    aggrieved   party   has
                                 ______________________________
                      available an alternative avenue of relief
                      _________________________________________
                      in  the  form of  a  suit  for breach  of
                      _________________________________________
                      fiduciary duty. 
                      ______________
                           [I]f  the  defendants committed  any
                      unfair    or    deceptive   acts,    they
                      necessarily  occurred  in the  context of
                      the parties' [shareholder] relationship .
                      . . or arose out of that relationship . .
                      . and not  in an arm's-length  commercial
                      transaction  between   distinct  business
                      entities.

            Id. at 1012 (emphasis added)(internal citations omitted).
            ___

                      Here, the Ansins' suit is largely premised on River

            Oaks'  status as a close corporation.  There is no suggestion

            that these events  could have  or did transpire  in a  public

            market   situation.    Moreover,  the  Ansins  have  actually

            recovered  on   a  fiduciary   duty  claim.  Guided   by  the

            Massachusetts precedents,  we find that this  dispute amongst

            shareholders  of  a  close  corporation  does  not  meet  the

            jurisdictional "trade or commerce" requirement  of Mass. Gen.

            Laws ch. 93A.  

            B. Prejudgment Interest
            _______________________

                      The  plaintiffs argue that the district court erred

            by failing  to award prejudgment interest.  The original jury

            instructions  contained no  mention of  prejudgment interest.

            At sidebar, plaintiffs' counsel  requested a jury instruction

            on prejudgment  interest "in order  to preserve our  right to

                                         -39-
                                          39

            prejudgment interest as awarded by anybody," the judge or the

            jury.  Accordingly,  after the jury returned its  verdict for

            plaintiffs, the  judge gave the jury  a special interrogatory

            on prejudgment interest, instructing the jury that "[w]hether

            you choose to  award interest  is entirely a  matter in  your

            discretion."  Plaintiffs' counsel did not object to this form

            of instruction.  The jury did not award prejudgment interest.

            Post-trial, plaintiffs moved for entry  of judgment including

            prejudgment interest.  The  district court denied this motion

            as moot.

                      Plaintiffs  argue,  on  appeal,  that  there  is  a

            presumption  in  favor  of  prejudgment  interest  under  the

            federal securities  laws, and  that the district  court judge

            failed to so instruct the jury.   Plaintiffs failed to make a

            contemporaneous   objection   to  the   form   of   the  jury

            instruction,  and,  absent  plain  error,  this  argument  is

            waived.   

                      However,  plaintiffs also  point out that,  under a

            Mississippi statute  enacted in  1989, judgments "shall  bear

            interest  at a per  annum rate set  by the  judge hearing the

            complaint from a date determined by such judge to be fair but

            in no  event prior to  the filing  of the complaint."   Miss.

            Code Ann.    75-17-7.  This statutory  language, they assert,

            mandates an award of prejudgment interest on their  state law

            claims.   We do not  read the statutory  language, which does

                                         -40-
                                          40

            not distinguish between  pre- and post-judgment interest,  so

            broadly.  The  Mississippi case law indicates that  the award

            of prejudgment interest remains  within the discretion of the

            trial judge.   See American Fire  Protection, Inc. v.  Lewis,
                           ___ _______________________________     _____

            653   So.   2d   1387,   1391   (Miss.   1995)(depending   on

            circumstances, prejudgment interest may or may not be proper,

            but  should   be  allowed   where  necessary   to  adequately

            compensate  plaintiff); Sunburst  Bank v.  Keith, 648  So. 2d
                                    ______________     _____

            1147, 1152  (Miss. 1995)  ("award of prejudgment  interest is

            normally left to the discretion of the trial judge").     

                      The  law of  this circuit similarly  recognizes the

            discretion of  the trial judge in  cases involving violations

            of  the  federal  securities  laws.    See  Riseman  v. Orion
                                                   ___  _______     _____

            Research, 749  F.2d 915, 921 (1st  Cir. 1984).  There  was no
            ________

            abuse of discretion in the trial court's decision to abide by

            the jury's finding on prejudgment interest.

                                          V.

                      Plaintiffs point to a clerical error in the Amended

            Judgment.  We therefore direct the Clerk of the United States

            District Court for the District of Massachusetts to amend the

            judgment so that postjudgment interest  accrues as of May 15,

            1996,  the date  of  the Original  Judgment.   In  all  other

            respects, the judgment is affirmed.
                                      _________

                                         -41-
                                          41