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opinion should not be published and is not precedent except under the limited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.
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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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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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