Coy R. Grogan and John H. Henson brought this diversity action against Frank J. Garner, Jr., alleging that Garner committed common law fraud, breached his fiduciary duties, and violated Sec. 10(b) of the Securities Exchange Act of 1934. The suit arises from the sale by Garner of stock in STI-Kansas to North American Car Corporation (NACC). A jury returned a verdict for Grogan and Henson and awarded $249,000 actual damages on each of three counts as well as punitive damages of $24,900 on the fraud claim.

After the jury returned its verdict and the judgment was filed, Grogan and Henson filed a motion for an award of prejudgment interest on the judgment. Garner moved for a judgment notwithstanding the verdict or a new trial and to amend the judgment as duplicitous. The court1 held that Grogan and Henson individually could receive no more than $249,000 in actual damages and $24,900 for punitive damages on the fraud claim but did not require the plaintiffs to elect the count upon which the judgment for actual damages was based. The court also awarded prejudgment interest only as to the Sec. 10(b) claim at nine percent per annum from April 17, 1979, to the date of the judgment. Garner appeals.

Our review of the record in the light most favorable to the verdict holder, Lowe v. E.I. Dupont deNemours Co., 802 F.2d 310, 311 (8th Cir.1986), reveals the following facts. STI-Missouri was a Missouri corporation established by Frank Garner, Jr., in 1976. Garner's son, Franklin III, originally was the sole stockholder and president of the corporation. The elder Garner eventually began working full-time for STI-Missouri, at which time his son relinquished all capital stock in the corporation to his father. In 1976, Garner invited both Grogan and Henson to join STI-Missouri as employees in return for 100 shares, approximately ten percent, of the company stock. Grogan and Henson accepted the offer and paid approximately $800 each for their shares. At the same time, several other individuals also became minority shareholders in the corporation.2 Garner retained approximately fifty-five percent of STI-Missouri shares, and until the time the corporation was sold, he served as president and chief executive officer.

In 1977, Garner began investigating the possibility of forming a wheel shop to supply wheels for the railcars that STI-Missouri repaired and refurbished. Garner estimated that start-up costs would total 3.5 to 4 million dollars. However, he needed $50,000 immediately for a down payment on equipment and construction. Garner obtained the approval of STI-Missouri shareholders to have STI-Missouri borrow $100,000 so that funds could be loaned to STI-Kansas by STI-Missouri.3 The STI-Kansas debt was carried as an account receivable on STI-Missouri's books, thereby enhancing the net worth of STI-Missouri.

In January, 1978, NACC expressed to Garner its interest in buying STI-Missouri's car shops, which by then were located in several states. After two and one-half months of negotiations, NACC discontinued its efforts to buy the company. At the same time, Garner was still attempting to raise working capital for STI-Kansas. He notified all STI-Missouri shareholders in May, 1978, that he would like to incorporate STI-Kansas and that shareholders of STI-Missouri could purchase one percent of STI-Kansas for $40,000, with STI-Missouri retaining twenty to thirty percent of STI-Kansas stock. All STI-Missouri shareholders, including Grogan and Henson, declined Garner's offer, and Garner did not further pursue this plan.

On October 10, 1978, Garner notified all shareholders of the annual STI-Missouri shareholders meeting. In his letter, Garner stated that the meeting was for the purpose of reviewing the company's financial position and discussing the status of the wheel shop and other subsidiary car shops. In the meantime, NACC had expressed renewed interest in purchasing STI-Missouri and its affiliates, including the wheel shop. On October 17, 1978, NACC presented Garner with a letter of intent to purchase STI-Missouri, a number of the car shops, and the wheel shop. The sale was subject to final approval of NACC's board of directors and all shareholders of the STI enterprise. Because he now had a firm offer from NACC, Garner testified, he contacted each STI-Missouri shareholder by telephone and urged him to attend the October 21 meeting. Both Grogan and Henson attended.

On September 26, 1978, approximately one month before the shareholders meeting, STI-Kansas was incorporated, with Garner as its sole shareholder. At the time of incorporation, STI-Kansas remained unfunded and indebted to STI-Missouri. Grogan and Henson both testified that they were unaware of either the incorporation or of Garner's status as sole stockholder. On September 30, Garner purchased 500 shares of STI-Kansas common stock for one dollar per share, and on October 17, he purchased another 170 shares at the same price.4

Although Garner at one time had offered one percent of STI-Kansas for $40,000, he now determined, as reflected in a series of memos dated October 2, 1978, to distribute STI-Kansas stock to certain employees of the company in exchange for one dollar per share and an employment commitment.5 These transactions were completed on November 17, 1978, after the October 21 meeting but before closing the sale to NACC.

The parties' versions of what happened at the October 21 meeting differ substantially. Grogan and Henson testified that Garner represented to the shareholders that the 2.3 million dollar offer from NACC included the purchase of all STI facilities, including STI-Kansas.6 NACC's letter of intent which, according to Grogan and Henson, Garner never distributed, revealed that NACC offered to pay separately for STI-Kansas by a stock exchange and extended an employment offer to Garner. Ultimately, NACC swapped shares of its parent corporation, Tiger International, valued at over 2.5 million dollars, for shares of STI-Kansas. Grogan and Henson claim that they did not learn of the separate consideration tendered for STI-Kansas until 1983. Had they known of the full transaction, they claim, they would not have agreed to sell their stock to NACC.

Garner, on the other hand, presented evidence that he disclosed at the October 21 meeting that he was the sole shareholder in STI-Kansas and that he distributed NACC's letter of intent. He also testified that he offered both plaintiffs the opportunity to become employees of STI-Kansas, but both failed to pursue the offer. Garner and John Buffalo further testified that Grogan received and reviewed the sales agreement before the closing on December 28 and 29, 1978. Grogan denies this. Garner and others also testified that all STI shareholders received a memorandum dated December 4, 1978, which set out the separate consideration for STI-Kansas. The plaintiffs deny receiving this memo.

On December 28 and 29, 1978, NACC purchased both corporations. Grogan and Henson received approximately $230,000 in cash and notes for their STI-Missouri stock. Besides cash and notes, Garner received for his STI-Kansas shares Tiger International stock worth $1,700,460 and an employment contract with NACC. Tom Garner and Jim Buffalo, the other two STI-Missouri shareholders also holding stock in STI-Kansas, received Tiger International stock worth $215,730 and $203,040 respectively. The remaining seven STI-Kansas shareholders received Tiger International stock valued at $418,680. The total value of exchanged Tiger International stock was $2,537,910.

Grogan and Henson claim they were not advised before, during, or after the October 21 meeting (1) that the wheel shop had been incorporated in September, 1978; (2) that STI-Kansas stock was sold for one dollar per share and employment commitments; (3) that those purchasing STI-Kansas stock from Garner were handpicked employees and relatives; and (4) that NACC paid a separate consideration, by way of Tiger International stock worth over 2.5 million dollars, for STI-Kansas. They allege that Garner misrepresented to them that the proposal of sale included the full consideration for both STI-Missouri and STI-Kansas. They urge that they were at all times led to believe that STI-Kansas was a division of STI-Missouri and that their ten percent interest in STI-Missouri properly included a proportionate interest in the assets of STI-Kansas. They therefore argue that they were entitled to ten percent of the value of the Tiger International stock, based on their ten percent ownership of STI-Missouri. Grogan and Henson claim they were individually defrauded when Garner misrepresented the terms of NACC's offer, and that by his actions, Garner breached a fiduciary duty owed them and violated Sec. 10(b) of the Securities Exchange Act of 1934.

Garner appeals, citing numerous errors that we will attempt to summarize: (1) the plaintiffs had no standing to sue because any injury sustained was to the corporation, requiring a derivative action; (2) the plaintiffs failed to prove sufficient evidence to sustain their claims for liability and damages; (3) the trial court committed various errors in its jury instructions; (4) the trial court erred in refusing to allow certain expert testimony; (5) the trial court erred in granting a post-verdict award of prejudgment interest on the Sec. 10(b) claim; and (6) the trial court erred in not requiring the plaintiffs to elect among remedies.

We turn initially to the question of whether the suit should have been brought as a derivative action. The parties agree that Missouri law controls the issue. Whether a suit is properly brought as an individual action turns on whether the plaintiff has suffered an injury distinct from one incurred by the corporation. As one commentator has observed, "[i]f the injury is one to the plaintiff as a stockholder and to him individually, and not to the corporation, as where the action is based on a contract to which he is a party, or on a right belonging severally to him, or on a fraud affecting him directly, it is an individual action." 12B Fletcher Cyclopedia Corporations Sec. 5911 (Perm.Ed.1984) (emphasis added); see also Gieselmann v. Stegeman, 443 S.W.2d 127 (Mo.1969). In such a case, an individual stockholder may sue to redress direct injury to himself, even if the same violation also injured the corporation. 12B Fletcher supra.

In Dawson v. Dawson, 645 S.W.2d 120 (Mo.App.1982), a shareholder in the corporation sued individually and derivatively for an injunction and an accounting regarding an alleged illegal stock transfer from a director to another stockholder. The plaintiff claimed standing based upon his characterization of the director owing a fiduciary duty to each shareholder. While agreeing that a director is in a fiduciary relationship with shareholders as a whole, the court determined that "[c]orporate shareholders cannot in their own right and for their own personal use and benefit maintain an action for the recovery of corporate funds or property improperly diverted or appropriated by the corporation's officers and directors." 645 S.W.2d at 125. The court noted that "[w]here a complaint relates to the direct injury of the plaintiff, however, a derivative action may not be necessary." Id. Because the plaintiff failed to set forth facts showing how he had been individually harmed as a result of the improper stock transfer, the Missouri court concluded that he lacked standing to sue individually. Id.

We find Dawson inapposite to the facts in this case. Here, Grogan and Henson are not seeking redress for the misappropriation of corporate assets or property or for any wrong suffered by the corporation. Instead, they seek individual damages because Garner deceived them about the circumstances under which NACC acquired the STI enterprise. When this evidence is viewed in the light most favorable to the plaintiffs, as we are bound to do, there exists proof of misrepresentation by Garner that the entire consideration to be paid was in exchange for STI-Missouri and the assets of the wheel shop. Grogan and Henson allege additional evidence of fraud in Garner's failure to inform them of NACC's offer to buy separately the assets of the wheel shop, which was represented by Garner to be unfunded at that time, for an additional 2.5 million dollars. Grogan and Henson do not allege that Garner withheld assets of STI-Missouri; all the corporate assets of STI-Missouri, including STI-Kansas, were transferred for consideration to NACC when it acquired 100% of the STI stock. Neither do they challenge the overall consideration tendered in the stock transfer.7

Moreover, in Gieselmann v. Stegeman, 443 S.W.2d 127 (Mo.1969), the Missouri Supreme Court held that in an action based upon a tort where an injury is done directly to a shareholder, the shareholder may bring suit on an individual basis and need not resort to a derivative action. Gieselmann involved six stockholders who brought an individual suit against several other shareholders and the corporation. The plaintiffs claimed that they had been fraudulently deprived of controlling stock in the corporation and of positions on the board and as officers. As the court noted, not every allegation in the petition was appropriate for an individual action. However, "[t]he gravamen of the pleading * * * [was] injury to the plaintiffs as individuals," 443 S.W.2d at 131 (emphasis in original), and the court allowed the individual suit to stand.8

There should be little question that the plaintiffs have standing to sue for their personal harm. The plaintiffs were asked to sell their stock for a stated price as represented in Garner's proposal of sale. Although the proposal concerned the sale of STI-Missouri, Garner made it clear that the shareholders should "fully understand what the offer would mean to you personally before making your decision to sell or not to sell." The shareholders were told that the consideration set forth was the full price to be paid for the STI enterprise, including the "Assets of the wheel shop (Not funded at this time)." This was an overall representation that NACC was paying the consideration set forth for all of the assets, including the wheel shop, and that plaintiffs' shares were to be ten percent of the entire consideration paid. Grogan and Henson had every right to believe that their ten percent interest included the assets of STI-Kansas as well as those of STI-Missouri.

Grogan and Henson testified and we must assume the jury found that on October 21, 1978, they did not know that Garner had incorporated the wheel shop and, with a few hundred dollars, purchased shares in it soon to be worth over two million dollars. Grogan and Henson also did not know that Garner had selectively distributed part of these shares to his relatives and certain employees. At the time of the NACC offer to buy the shares of stock of STI-Missouri, as communicated to the shareholders by Garner, Grogan and Henson were led to believe that STI-Missouri still owned all the assets of STI-Kansas and relied on that understanding when they approved the sale of their STI-Missouri shares of stock. Such reliance was reasonable considering that Garner represented in his May, 1978, letter that STI-Missouri would "retain 20-30% of STI-Kansas" after STI-Missouri shareholders purchased percentages of STI-Kansas. Such reliance is also reasonable in light of the proposal of sale that listed the wheel shop as one of the "subsidiaries" of STI-Missouri.

No doubt, the plaintiffs could have brought a derivative action had they known all the facts at the October 21 meeting. However, this action does not turn solely on Garner's misappropriation of wheel shop assets but on the direct fraud committed by him when he misrepresented the terms of NACC's offer. In short, Garner's fraudulent actions prevented the plaintiffs from realizing the true value of their shares and maximizing that value in the sale to NACC. Grogan and Henson were directly harmed by Garner's misrepresentations, and they properly brought suit as individuals so harmed.9

Garner next argues that Grogan and Henson failed to produce sufficient evidence to sustain the jury's verdict. Although the record contains conflicting versions of the various transactions, the jury obviously believed the plaintiffs' version of what happened. This court cannot disturb a jury verdict if there is substantial evidence, viewed in the light most favorable to the plaintiffs, to support the verdict. United States v. Lewis, 759 F.2d 1316, 1352 (8th Cir.), cert. denied, --- U.S. ----, 106 S. Ct. 406, 88 L. Ed. 2d 357 (1985).

As part of his argument, Garner contends that there was insufficient evidence to establish causation for the alleged damages because neither plaintiff was an STI-Kansas shareholder. As we have already discussed, Garner miscomprehends the essence of the plaintiffs' claims. Grogan and Henson acknowledge that they were not STI-Kansas shareholders. They do not claim a right to be STI-Kansas shareholders, nor do they claim a preemptive right to buy STI-Kansas stock at one dollar per share. Their allegations are grounded in Garner's fraudulent misrepresentation of the terms of the sale to NACC. Because of these misrepresentations, neither plaintiff was aware of the true value of his STI-Missouri stock. See Myzel v. Fields, 386 F.2d 718, 733 (8th Cir.1967), cert. denied, 390 U.S. 951, 88 S. Ct. 1043, 19 L. Ed. 2d 1143 (1968). This is especially significant not only in terms of dollar value, but also of bargaining power. NACC's offer was conditioned on 100% shareholder approval of the sale. Garner's fiduciary duties as a director and officer of STI-Missouri included the duty to disclose fully the terms of a sale affecting the plaintiffs' interests in STI-Missouri. We find substantial evidence, as did the jury, to support proof of fraud committed by Garner against the plaintiffs.

Garner contends that the trial court committed various errors in its jury instructions. The trial court has broad discretion to instruct the jury in the form and language it considers a fair and adequate presentation of substantive law. Garnes v. Gulf & Western Mfg. Co., 789 F.2d 637, 642 (8th Cir.1986). This court reviews jury instructions to determine whether, taken as a whole, they are confusing or misleading in presenting the principles of law applicable to the case. Des Moines Bd. of Waterworks v. Alvord, Burdick & Howson, 706 F.2d 820, 823 (8th Cir.1983).

We believe that the instructions as a whole fairly and adequately presented the substantive law and were neither misleading nor confusing so as to prejudice the defendant. Garner challenges instructions 6, 7, 12, 23, 24, and 29, not because they misstated Missouri law, but because they resulted in "redundant overkill" when the court separately instructed on misrepresentation and nondisclosure. To simultaneously instruct the jury on both, however, would have required the court to discuss dissimilar legal elements in one instruction. We find the court's separate instructions more in keeping with the objective of facilitating the jury's understanding of the substantive law.

Garner also challenges instructions 8, 9, 25, and 26, which relate to Garner's breach of fiduciary duty. The instructions described Garner's fiduciary duties to the plaintiffs as well as to the corporation. As we have already explained, Garner had a fiduciary duty to disclose fully to the plaintiffs the terms of NACC's offer, including the provisions relating to the wheel shop. The jury was properly instructed that it could find Garner guilty of breach of fiduciary duty if he failed to disclose the complete terms of the offer.10

We also find the district court was within its discretion when it used the appropriate legal terms to differentiate the various theories in the case. Much of Garner's objection to the instructions focuses on their form. He claims that they were not set out under the systemized approach mandated by the Missouri Approved Jury Instructions. We have noted on other occasions, however, that while instructions pertaining to claims for relief under diversity jurisdiction must fully and properly instruct on all the elements of controlling state law, the form of state-approved jury instructions is not binding on the district court. Ferren v. Richards Mfg. Co., 733 F.2d 526, 530 (8th Cir.1984) (Missouri jury instructions).11

Garner next contends that the district court erred when it refused to allow the expert testimony of Richard Sewell, an accountant. Garner claims that Sewell's testimony regarding the tax consequences in 1978 of selling both STI-Missouri and STI-Kansas in one transaction would have critically undermined the plaintiffs' case. Sewell was allowed to testify about various STI financial statements, but plaintiffs' counsel objected when Sewell was asked about the tax ramifications of the sale of a business entity similar to the STI enterprise.12

The court excluded Sewell's testimony because Garner had failed to reveal in answers to interrogatories that he planned to use this expert testimony. Plaintiffs' Interrogatory No. 11 inquired, pursuant to Fed.R.Civ.P. 26(b)(4)(A)(i), as to the identity of the defendant's expert witnesses and the subject of their testimony. Garner's answer to this interrogatory did not indicate that the tax consequences of the transaction was a subject area to be testified to by an expert. After examining the interrogatory answer and questioning counsel about it, the district court excluded Sewell's testimony regarding potential tax ramifications of the sale. Generally, an appellate court will reverse the district court's decision to exclude evidence only when there has been an abuse of discretion. See SCNO Barge Lines, Inc. v. Anderson Clayton & Co., 745 F.2d 1188, 1192 (8th Cir.1984). The trial court did not abuse its discretion when it refused to admit this evidence.

Damages, Prejudgment Interest, and Election of Remedies

Garner's final two claims of error relate to the damages awarded. Garner argues that the trial court erred in granting the plaintiffs' post-verdict motion for prejudgment interest on the Sec. 10(b) claim and in not requiring the plaintiffs to elect the count under which they recovered their judgment. As we stated earlier, the jury originally awarded both Henson and Grogan $249,000 on each of the three counts, plus $24,900 punitive damages on the fraud count. The court adjusted the award so that each plaintiff received only one award of $249,000 plus punitive damages and prejudgment interest.

Punitive damages are not permitted in a Sec. 10(b) claim. Nye v. Blyth Eastman Dillon & Co., 588 F.2d 1189, 1200 (8th Cir.1978). At one time, federal courts struggled with the question of whether Sec. 28(a), 15 U.S.C. Sec. 78bb, of the Securities Exchange Act of 1934 prohibits an award of punitive damages in a pendent state claim, even if state law permits such damages.13 The courts now appear to uphold uniformly punitive damages awarded under these circumstances. See, e.g., Nye v. Blyth Eastman & Dillon, supra at 1200; Ryan v. Foster & Marshall, Inc., 556 F.2d 460, 464 (9th Cir.1977); Falks v. Koegel, 504 F.2d 702, 706-07 (2d Cir.1974); Coffee v. Permian Corp., 474 F.2d 1040, 1044 (5th Cir.), cert. denied, 412 U.S. 920, 93 S. Ct. 2736, 37 L. Ed. 2d 146 (1973); Young v. Taylor, 466 F.2d 1329, 1337 (10th Cir.1972).

While the case law, including that of this circuit, clearly allows for recovery of punitive damages in pendent state claims, we have not before been faced with whether punitive damages on a common law claim and prejudgment interest on a federal claim are both recoverable when the plaintiff has prevailed on both. Unlike punitive damages, prejudgment interest in a Sec. 10(b) claim is permitted and is within the sound discretion of the trial court.14 See Blau v. Lehman, 368 U.S. 403, 414, 82 S. Ct. 451, 457, 7 L. Ed. 2d 403 (1963); Woods v. Barnett Bank, 765 F.2d 1004, 1014 (11th Cir.1985).15

Garner's argument that the plaintiffs may not recover duplicitous damages is well taken, but we do not believe this requires an "election of remedies" in its traditional sense. Election of remedies is, in the words of one commentator, "the legal version of the idea that a plaintiff may not have his cake and eat it too." D. Dobbs, Remedies Sec. 1.5 at 14 (1973). A plaintiff must elect among remedies when he has available inconsistent remedies for the redress of a single right. A plaintiff, for example, may sue for damages for the conversion of property or he may bring a replevin action to recover the property itself. See Myzel v. Fields, supra at 740-41. The doctrine and the cases interpreting it often "do no more than prevent double recovery," although the principle is not always clearly expressed or properly used. Dobbs, supra. However, the doctrine is remedial, and neither it nor the federal rules of pleading require an election of substantive theories. Dobbs, supra at 16; see also Fed.R.Civ.P. 8(a).

Grogan and Henson are not seeking inconsistent remedies requiring an election in the typical sense. They did not ask for a rescission of the contract of sale to NACC along with money damages. Cf. Randall v. Loftsgaarden, --- U.S. ----, 106 S. Ct. 3143, 3153, 92 L. Ed. 2d 525 (1986) (plaintiff in Sec. 10(b) case in some circumstances may choose between rescission and actual damages). They sought and were awarded money damages for the amount they considered their fair share of the overall consideration paid by NACC for the assets of STI-Missouri as represented by Garner.16 They were also awarded punitive damages on the fraud count and prejudgment interest on the Sec. 10(b) count.17

When a federal securities claim overlaps with a pendent state law claim, the plaintiff is entitled to the maximum amount recoverable under any claim. Jacobs, The Measure of Damages in Rule 10b-5 Cases, 65 Geo.L.J. 1093, 1166 (1977). This does not require an election of remedies. Instead, Grogan and Henson are each entitled to the greatest amount recoverable under any single theory pled, with actual damages plus prejudgment interest representing one single amount and actual damages plus punitive damages representing the other single amount. Randall v. Loftsgaarden, 106 S. Ct. at 3156 (Blackmun, J., concurring) (parties who prevailed on Sec. 10(b) claim and on Sec. 12(2) claim entitled to select the damage amount more favorable to them); Aboussie v. Aboussie, 441 F.2d 150, 157 (5th Cir.1971) (jury award under common law count upheld; new trial ordered to determine damages under 10b-5, with caveat that if federal damages are less than common law damages, the federal damages are extinguished); cf. McDonald v. Johnson & Johnson, 776 F.2d 767, 770 (8th Cir.1985) (fraud and contract claims constitute separate causes of action because defendant's illegal acts occurred at separate and distinct times; therefore, plaintiffs' collection of contract judgment does not preclude litigation of fraud claim). We therefore conclude that Grogan and Henson may receive one award of damages under either the Sec. 10(b) claim or the common law claim, whichever is the greatest, and upon satisfaction of the judgment, the lesser damages are deemed extinguished.

The judgment in favor of Grogan and Henson is affirmed as to liability; the judgment for damages is modified in accord with the principles set forth herein.