UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________
No. 95-30323
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JULES SCHWING, on behalf of Jules B. Schwing,
Individually and as Testamentary Executor obo
Marie Landry Schwing Succession,
Plaintiff-Appellant,
versus
NEW IBERIA BANCORP, INC.; JAMES W. SCHWING,
SR.; ERNEST FREYOU,
Defendants-Appellees.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Louisiana
(94-CV-2119)
_________________________________________________________________
June 26, 1996
Before POLITZ, Chief Judge, JONES, and BENAVIDES, Circuit Judges.
By EDITH H. JONES, Circuit Judge:*
This appeal arises from ongoing disputes between
shareholders over whether the bank owned by New Iberia Bancorp,
Inc. ought to be put up for sale. Appellant Jules Schwing, the
minority shareholder pressing for sale, has zealously pursued
litigation in two federal district court suits to affect the
*
Pursuant to Local 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opinion should not be published and is not precedent except under the limited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 Local Rule 47.5.4.
conduct of shareholder meetings. The first suit, involving the
shareholder meeting eventually held December 28, 1994, was resolved
by mutual agreement with the court’s assistance. The controversy
on appeal here is whether the second suit was similarly resolved
and rendered moot. Appellant Jules Schwing contends it was not.
We disagree and affirm.
Schwing filed suit on January 6, 1995, three days after
a board of directors meeting amended corporate bylaws with regard
to the conduct of the next shareholders’ meeting. Schwing’s
complaint alleged breaches of fiduciary duty by the directors under
Louisiana law and breaches of proxy rules under federal law. His
complaint asserted that appellees violated the proxy rules by
failing to disclose their proposed amendment to the bylaws and by
sending a letter to shareholders on December 29, 1994, to the
effect that a shareholder proposal to create a committee to
investigate possible sale of the bank had “failed” to be approved
by a sufficient number of shareholders at the previous day’s
meeting.
District Judge Haik, sitting in for Judge Doherty, heard
argument on Schwing’s temporary restraining order and preliminary
injunction motions a week later and denied both. No testimony was
taken at the hearing, although both parties had briefed their
positions. Judge Haik’s order has written through it “denied” on
the face of appellant’s proposed order granting temporary and
preliminary injunctive relief.
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Judge Haik appears to have been strongly influenced by
two facts. First, counsel for Schwing had completely misread the
impact of the bylaw as to the deadline for submitting shareholder
proposals before the next shareholder meeting. In reality, Jules
Schwing had plenty of time to do what he intended to do to
influence the meeting and selection of new directors. Second,
Jules Schwing, himself a director, had attended the January 3 board
meeting at which the complained-of bylaw was adopted, and he voted
for it without objection or complaint. Judge Haik must have
reasonably wondered why the adoption of a bylaw in which appellant
concurred could have breached the fiduciary duty of other directors
toward dissenting minority shareholders. Judge Haik concluded, in
short, that there was no irreparable harm done to Jules Schwing.
Appellant nevertheless believed he was entitled to an
evidentiary hearing on his complaint and so importuned Judge
Doherty at the earliest possible moment.1 Judge Doherty held a
nearly three-hour telephone conference with all counsel on
Schwing’s “motion to reconsider,” after which she denied it. In a
subsequent hearing held February 13, Judge Doherty reiterated her
denial of the motion to reconsider, observing that Judge Haik had
three times told her that he intended to and did deny the requests
1
Later, appellant attempted to amend his complaint to add a new claim
based on a letter sent to the shareholders by management on January 13, 1995.
Judge Doherty struck this proposed amendment, and Schwing has not explicitly
briefed any error in her denial to this court. The issue is therefore deemed
abandoned. Gladden v. Roach, 864 F.2d 1196, 1198 n.1 (5th Cir. 1989).
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for temporary restraining order and preliminary injunctive relief.
Judge Doherty therefore decided that the instant case was
effectively dismissed, and counsel for Schwing declared that under
that interpretation, “I’m out of court.”
Schwing now comes to this court, seeking a hearing on the
preliminary injunction and a declaration, contrary to the view of
the district court, that his case is not moot. Neither of these
contentions is persuasive. The order of hearing Schwing’s
contentions may have been somewhat irregular, in view of Judge
Haik’s statement that he was leaving the case for a more complete
hearing before Judge Doherty, followed by Judge Doherty’s
conclusion that a hearing on the motions for both TRO and
preliminary injunctive relief had been held by Judge Haik.
Nevertheless, Schwing had nearly three hours in a teleconference on
his motion for reconsideration to persuade Judge Doherty of his
position, and he failed. The “irregularity” was spawned as much as
anything by Schwing’s initial misunderstanding of the deadlines
fixed by the old and new bylaws, an error that he and his counsel
should never have made.
Further, there was no need for an evidentiary hearing on
the preliminary injunction. Schwing has never pointed to a single
material disputed fact issue that required an evidentiary hearing
to resolve. On the contrary, the events on which Schwing’s
complaint was based are not controverted by appellees. Only their
legal significance was in dispute. Through his briefing and
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opportunity for extensive argument to the district court, Schwing
fully presented his motion for preliminary injunction. There was
no denial of fair hearing on the request.
While Schwing also vigorously asserts that the case is
not moot, a close reading of the record proves the opposite.
First, Schwing admits that he misunderstood the bylaw
provision relating to the deadline date for shareholder proposals.
That issue, the main focus of his motion for temporary restraining
order, is clearly moot.
Second, his complaint concerning the December 29 letter
to shareholders is no longer viable for several reasons. The
controversy represented by the December 29 letter, over the
formation of a shareholder committee to explore the sale of the
bank, has been resolved favorably to Jules Schwing by the Louisiana
Court of Appeals. New Iberia Bancorp, Inc., et al v. Jules A.
Schwing, et al consolidated with Jules A. Schwing, et al v. New
Iberia Bancorp, Inc., Nos. 95-867 and 95-868 (December 6, 1995).
Because Schwing won this case in state court, there is no reason
for him to pursue an injunction against proxy violations on the
scope of disclosure about that matter in federal court. We also
note there was a serious question whether the December 29 letter
might even be a proxy solicitation covered under SEC Rule 14a-9,
when it plainly had nothing to do with shareholder “solicitation”
or with the other matters concerning the April, 1995 shareholder
meeting that Schwing has complained of. Finally, the December 29
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letter, while aggressively asserting the bank’s position that the
shareholder proposal had “failed,” could hardly have been
”misleading”; as the bank points out, the position management took
in the December 29 letter was consistent with the position espoused
by the bank in the proxy materials submitted before the December 28
shareholders’ meeting. Significantly, those proxy materials had
been agreed to by Schwing as part of the resolution of the previous
federal district court case.
Third, Schwing’s attempt to amend his complaint to
challenge the January 13 letter sent by the board of directors
(reporting the adoption of the amended bylaw) was stricken by the
court and is not before this court. As well, Schwing’s oral
complaint about the sale of corporate treasury shares was never
properly before the district court or this court.
In short, the only matters complained of in Schwing’s
January 6 complaint -- relating to the January 3 amendment of the
bylaws which he approved and the December 29 letter to
shareholders -- have been disposed of, rendering those
controversies between the parties moot. From what appears in the
record, the district court has heroically managed this case and
appellant’s previous case to resolve repeated “failures to
communicate”. The district court was not, however, required to
conduct an ongoing inquisition of the appellees’ conduct based on
every event that happened after the filing of appellant’s complaint
in this action. Once the specific matters charged by the complaint
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were put in their proper context, and the parties made certain
agreements relating to those matters, no further relief could be
granted by the court.
The judgment of the district court is AFFIRMED.
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