Pell v. Weinstein
United States District Court for the Middle District of Pennsylvania
March 20, 1991, Decided ; March 20, 1991, Filed
JAMES F. McCLURE, JR., UNITED STATES DISTRICT JUDGE
This action was commenced [**2] by plaintiffs on November 26, 1988. In response to the defendants' motions to dismiss the complaint, plaintiffs filed an amended complaint on March 7, 1989, pursuant to Fed. R. Civ. P. 15(a). Once again, all of the defendants have filed motions to dismiss the complaint.
This action arises from the acquisition of PacStar Corporation, Inc., ("PacStar"), by a corporation known as Coated Sales, Inc., ("Coated Sales"). The plaintiffs, Richard Pell, James Miller and James O'Brien, were all shareholders in PacStar at the time of its acquisition. The complaint alleges that Coated Sales' acquisition of PacStar was completed through, and accompanied by, violations of federal and state securities laws, federal criminal statutes and other tortious activities.
II. RELEVANT FACTS
The facts as alleged in the amended complaint may be summarized as follows:
PacStar and Coated Sales were in the textile business. Coated Sales publicly touted a corporate strategy of acquiring other textile companies and approached PacStar for that purpose. Subsequently, Coated Sales acquired PacStar through three agreements: an Agency Agreement dated July 1, 1986; an Employment Agreement dated July 1, 1986; [**3] and an Agreement and Plan of Merger ("Merger Agreement") dated March 2, 1987 (collectively "the Agreements").
Pursuant to the Agency Agreement, PacStar was to act as Coated Sales' exclusive sales agent for certain products. The Agency Agreement also granted Coated Sales the option to merge PacStar into Coated Sales or an affiliate by purchasing the PacStar stock for cash and 100,000 shares of Coated Sales restricted common stock. Coated Sales' option was exercisable at its discretion, throughout the term of the Agency Agreement, which expired on June 30, 1988.
At the time the Agency Agreement was entered into, plaintiff Richard Pell was the sole shareholder of PacStar. Pell agreed that his PacStar stock would remain subject to Coated Sales' option, that he would not dispose of his stock in any manner which would preclude the option and, in the event Pell chose to use his PacStar stock to compensate Timothy Lafferty and plaintiffs James Miller and James O'Brien, Pell agreed to transfer the stock to these employees "subject to the option".Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.
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759 F. Supp. 1107 *; 1991 U.S. Dist. LEXIS 3362 **; Fed. Sec. L. Rep. (CCH) P95,893
RICHARD M. PELL, JAMES R. MILLER and JAMES O'BRIEN, Plaintiffs, v. MICHAEL WEINSTEIN, ERNEST GLANZ, RICHARD BOBER, BRUCE M. BLOOM, PHILIP KAGAN, PHILIP ERARD, FINKLE & ROSS, Certified Public Accountants, and DENIS LUSTIG, a Certified Public Accountant, Defendants
Sales, stock, amended complaint, prospectus, Counts, plaintiffs', merger, enterprise, mail, financial statement, termination, parties, auditing, offering, limitations period, merger agreement, communicated, obligated, privity, racketeering activity, securities fraud, wire fraud, fraudulent, predicate, pattern of racketeering activity, cause of action, material fact, misrepresentation, acquisition, conditions
Securities Law, Statute of Limitations, Initial Offerings, False Statements, Civil Procedure, Tolling of Statute of Limitations, Discovery Rule, Criminal Law & Procedure, Fraud, Securities Fraud, Elements, Governments, Legislation, Time Limitations, General Overview, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Dismissal, Involuntary Dismissals, Securities Exchange Act of 1934 Actions, Implied Private Rights of Action, Deceptive & Manipulative Devices, Initial Offerings of Securities, Definitions, Blue Sky Laws, Offers & Sales, Business & Corporate Compliance, Contract Formation, Acceptance, Meeting of Minds, Releases & Waivers, Exchange Act Compliance, Contracts Law, Elements of Proof, Reliance, Civil Liability, Fraudulent Interstate Transactions, Elements of Proof, Securities Act Actions, Torts, Fraud & Misrepresentation, Negligent Misrepresentation, Business & Corporate Law, Directors & Officers, Management Duties & Liabilities, Duties & Liabilities, Causes of Action & Remedies, Breach of Contract, Agency Relationships, Authority to Act, Contracts & Conveyances, Liability of Principals, Authorized Acts of Agents, Scope of Authority, Racketeering, Racketeer Influenced & Corrupt Organizations Act, RICO Actions, Causes of Action, Pleadings, Heightened Pleading Requirements, Fraud Claims, Postoffering & Secondary Distributions, Heightened Pleading Requirements, Pleading & Practice, Rule Application & Interpretation, Third Parties, Beneficiaries, Claims & Enforcement, Breach, Breach of Contract Actions, Negligence