Court Opinion

ID: 4674056
Source: CourtListenerOpinion
Date Created: 2021-04-02 00:00:38.216875+00
Date Added: 2024-06-11T08:03:18.262467
License: Public Domain

Case: 19-10350     Document: 00515805720          Page: 1    Date Filed: 04/01/2021

              United States Court of Appeals
                   for the Fifth Circuit                             United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                                                         April 1, 2021
                                   No. 19-10350                        Lyle W. Cayce
                                                                            Clerk

   Nicolas Salomon,

                                                            Plaintiff—Appellant,

                                       versus

   Kroenke Sports & Entertainment, L.L.C.; Outdoor
   Channel Holdings, Incorporated,

                                                         Defendants—Appellees.

                  Appeal from the United States District Court
                      for the Northern District of Texas
                            USDC No. 3:15-CV-666

   Before Jones, Smith, and Elrod, Circuit Judges.
   Per Curiam:*
          In 2013, Nicolas Salomon served as the president of two subsidiaries
   of Outdoor Channel Holdings, Inc.        With his venture partner, Pacific
   Northern Capital, LLC, Salomon pursued preliminary negotiations to
   purchase the two subsidiaries from Outdoor. The parties executed a term

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 19-10350      Document: 00515805720          Page: 2   Date Filed: 04/01/2021

                                    No. 19-10350

   sheet, which laid out various parameters of the potential sale. The only
   binding portion of the term sheet was the “Exclusivity” section, which
   established an exclusive period of negotiations with respect to a sale of the
   subsidiaries.
          The sale of the subsidiaries fell through—after a merger with Kroenke
   Sports & Entertainment, LLC, Outdoor decided not to go through with the
   deal. Salomon remained president of the subsidiaries for approximately one
   year until he was terminated. Shortly after he was terminated, he brought
   this lawsuit.
          Salomon alleged breach of contract against Outdoor, tortious
   interference with existing contract against Kroenke, tortious interference of
   prospective relations against Kroenke, breach of fiduciary duty against
   Pacific for breaching its fiduciary duties as joint venture partner to Salomon,
   aiding and abetting breach of fiduciary duty against Kroenke and Outdoor,
   unjust enrichment against Kroenke, Outdoor, and Pacific, and civil
   conspiracy against Kroenke, Outdoor, and Pacific.
          Defendants Kroenke and Outdoor moved for summary judgment on
   all claims. In addition, Kroenke and Outdoor moved to exclude the testimony
   of Salomon’s damages expert, and Salomon moved to exclude the testimony
   of Kroenke and Outdoor’s expert on public company mergers and
   acquisitions. After a Daubert hearing, the district court issued an order
   granting Salomon’s motion to exclude the defendants’ expert, granting in
   part and denying in part the defendants’ motion to exclude the testimony of
   Salomon’s expert, and granting the defendants’ motion for summary
   judgment as to all claims. Salomon timely appealed.
          Based on a review of the briefs, arguments, and pertinent portions of
   the record, we find no reversible error of fact or law in the district court’s
   summary judgment analysis or abuse of discretion in its exclusion of certain

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                                        No. 19-10350

   testimony offered by Salomon’s damages expert. We affirm essentially for
   the reasons stated in the district court’s thorough opinion and here need only
   summarize the essential failings of the appellant’s position.
          This is a contract interpretation case under Texas law.              The
   Exclusivity provisions formed a contract that related to the sale of the
   subsidiaries, but the parties disagree about whether there was breach under
   the facts of this case—whether Outdoor’s negotiations with Kroenke relating
   to Kroenke’s offer to acquire all of Outdoor’s outstanding stock implicated
   the Exclusivity provisions at all.
          “[A] parent corporation and its subsidiaries are distinct legal
   entities.” Docudata Recs. Mgmt. Servs., Inc. v. Wieser, 966 S.W.2d 192, 197
   (Tex. App.—Houston [1st Dist.] 1998, pet. denied); see also Cap. Parks, Inc.
   v. Se. Advert. & Sales Sys., Inc., 30 F.3d 627, 629 (5th Cir. 1994) (holding that
   a wholly-owned subsidiary was a “separate legal entity possessing its own
   separate assets and liabilities”). The sale of a parent company’s stock does
   not necessarily implicate agreements relating to the sale of subsidiaries. See
   id. (“[T]he transfer of the parent corporation’s stock and assets . . . does not
   affect the ownership of assets held by the subsidiary.”); Tenneco Inc. v. Enter.
   Prod. Co., 925 S.W.2d 640, 645 (Tex. 1996) (“[T]he purchaser of stock in a
   corporation does not purchase any portion of the corporation’s assets, nor is
   a sale of all the stock of a corporation a sale of the physical properties of the
   corporation.” (quoting McClory v. Schneider, 51 S.W.2d 738, 741 (Tex. Civ.
   App.—Amarillo 1932, writ dism’d))).
          We agree with the district court that, under the terms of the
   Exclusivity provisions, Outdoor did not breach by negotiating with Kroenke
   about the acquisition of Outdoor or by accepting Kroenke’s offer to acquire
   Outdoor’s stock.       The Exclusivity provisions concerned only the

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                                     No. 19-10350

   subsidiaries, and the sale of all of Outdoor’s stock was not equivalent to the
   sale of its subsidiaries.
          For Salomon’s claims against Kroenke and Outdoor arising from an
   alleged breach of fiduciary duty by Salomon’s venture partner Pacific, the
   parties disagree about what inferences are properly drawn from an attempted
   amendment to the original contract that included a signature line for Pacific
   but not for Salomon. We agree with the district court that Salomon failed to
   create a genuine issue of material fact with respect to whether Kroenke and
   Outdoor were aware that they were participating in an alleged breach of
   fiduciary duty by Pacific. Salomon’s speculations do not suffice. See Ramsey
   v. Henderson, 286 F.3d 264, 269 (5th Cir. 2002) (“‘[C]onclusory allegations,
   speculation, and unsubstantiated assertions are inadequate to satisfy’ the
   nonmovant’s burden in a motion for summary judgment.” (quoting Douglass
   v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1429 (5th Cir. 1996) (en banc))).
          Finally, the district court’s ruling to exclude in part the testimony of
   Salomon’s damages expert was not an abuse of discretion. The district court
   explained that the expert’s proposed testimony on benefit-of-the-bargain
   damages were based on an equity structure Salomon proposed to his venture
   partner Pacific but to which Pacific never agreed and thus, this testimony was
   “unreliable.” See Hoffman v. L & M Arts, 838 F.3d 568, 584 (5th Cir. 2016)
   (“‘[A] hypothetical, speculative bargain that was never struck and would not
   have been consummated’ cannot serve as a baseline for benefit-of-the-
   bargain damages . . . .” (quoting Formosa Plastics Corp., USA v. Presidio Eng’rs
   & Contractors, Inc., 960 S.W.2d 41, 50 (Tex. 1998))).
          The district court’s judgment is AFFIRMED.

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