Opinions of the United
2009 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


1-7-2009

Pegasus Dev Corp v. John Hane
Precedential or Non-Precedential: Non-Precedential

Docket No. 07-4095




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"Pegasus Dev Corp v. John Hane" (2009). 2009 Decisions. Paper 2066.
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                                             NOT PRECEDENTIAL

    UNITED STATES COURT OF APPEALS
         FOR THE THIRD CIRCUIT
               __________

                   No. 07-4095
                   _________

  PEGASUS DEVELOPMENT CORPORATION

                           v.

                  JOHN HANE

                                 Defendant/Third Party Plaintiff

                           v.

            MARSHALL W. PAGON

                                 Third-Party Defendant

                       John Hane,

                                 Appellant




  On Appeal from the United States District Court
     for the Eastern District of Pennsylvania
              (D. C. No. 05-cv-06148)
    District Judge: Hon. Mary A. McLaughlin




    Submitted under Third Circuit LAR 34.1(a)
             on December 11, 2008

Before: MCKEE, SMITH and ROTH, Circuit Judges

         (Opinion filed: January 07, 2009)
                                       OPINION




ROTH, Circuit Judge:

       John Hane appeals from the District Court’s denial of his motion for summary

judgment, the grant of summary judgment in favor of Pegasus Development Corporation

(PDC) and Marshall Pagon, and the dismissal of Hane’s fiduciary duty claim against

PDC. We exercise plenary review, construing the claims and the evidence in the light

most favorable to the non-moving party. Sands v. McCormick, 

, 267–68 (3d

Cir. 2007); Farrell v. Planters Lifesavers Co., 

, 278 (3d Cir. 2000). We

assume the parties’ familiarity with the factual and procedural history, which we describe

only as necessary to explain our decision. We will affirm.

       As an initial matter, we reject Hane’s contention that the District Court failed to

review each summary judgment motion on its own merits and instead analyzed the cross

motions together. The District Court merely considered the motions together for stylistic

purposes, an appropriate means of analysis considering that the parties’ relationship is

governed by the Securities Purchase Agreement (SPA), an unambiguous written contract

between Hane’s company, Highcast, and PDC. Contrary to Hane’s assertion, however,

the District Court properly placed the burden on the moving party for each motion to

show the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477



                                              

, 323 (1986). Unfortunately for Hane, defendants properly prevailed on each

motion.

         First, no genuine issues of material fact precluded summary judgment in PDC’s

favor on its claim that it owed no further duty under the SPA. Section 4.2 sets forth

multiple conditions precedent to PDC’s obligation to purchase more shares in Highcast, at

least three of which have not been satisfied: (1) agreement on a “First Budget,” a term

narrowly defined in section 4.2(e),1 (2) delivery of a document “certifying that the

milestone applicable for such [share purchase] has been satisfied,” and (3) Hane’s

continued employment by PDC. For the same reason, the District Court appropriately

denied Hane’s summary judgment motion with respect to the share purchase.

         The District Court also properly rejected Hane’s estoppel and waiver arguments.

Hane cannot seriously argue that he was unaware that the aforementioned conditions

precedent had not occurred and so cannot rely on estoppel. See Burge v. Fidelity Bond

and Mortg. Co., 

, 420 (Del. 1994).2 Likewise, Hane failed to present

unequivocal facts demonstrating that PDC “intentionally relinquished” its contractual

right to require the satisfaction of the conditions precedent. Kallop v. McAllister, 678



   1
    Hane argues that the District Court placed undue emphasis on the lack of a particular
document titled “First Budget” in the record. The record contains no evidence suggesting
that Hane had even asked PDC to begin discussing a First Budget, however, and the
District Court was thus permitted to deduce that no First Budget was ever contemplated
or certified. See Celotex 

.
   2
       By its terms, the SPA is governed by Delaware law.

                                              

, 532 (Del. Super. 1996). Indeed, all conditions precedent explicitly “remain[ed]

in full force and effect” through the only Amendment made to the SPA.

       Hane’s claim regarding PDC’s failure to provide administrative services to

Highcast is equally misplaced. Hane concedes that the SPA contains no provision

obligating PDC to provide such services; rather, he argues that the parties intended to

modify their agreement. Hane’s evidence in support of this assertion—a single e-mail

exchange in which Hane wrote, “[i]f [PDC] can handle the books at an administrative

level without affecting the underlying deal that would be great for both of us”—does not

meet his burden to overcome Delaware law’s aversion to oral modification of written

agreements. See Reeder v. Sanford School, Inc., 

, 141 (Del. Super. 1979).

       The District Court properly rejected Hane’s claim that Pagon—PDC’s

representative on the Highcast board—had breached his fiduciary duties to Highcast.

Highcast’s charter was revoked in 2001 for failure to pay taxes, and it has not been

revived. Any board actions after revocation would have been “nullities and consequently

of no force or effect.” Cloverfields Improvement Assoc., Inc. v. Seabreeze Properties,

Inc., 

, 679 (Md. Ct. Spec. App. 1998).3 Therefore, Pagon could not have




breached any fiduciary duty by failing to attend a board meeting called for November 29,




   3
    Highcast was a Maryland corporation; thus, Maryland law applies to Hane’s fiduciary
duty claims. See In re: Reading Co., 

, 517 (3d Cir. 1983).

                                             4
2004.

        Finally, as a minority shareholder, PDC owed no fiduciary duty to Highcast’s

shareholders. See Shaw v. Davis, 

, 622 (Md. Ct. App. 1984). The district court

thus properly dismissed the fiduciary claim against PDC as a matter of law.

        Accordingly, we will affirm the judgment of the District Court.




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