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."
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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
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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
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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,
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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.
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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