UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

DELCO STORE #152, INCORPORATED;
DELCO STORE #153, INCORPORATED;
DELCO STORE #155, INCORPORATED;
DELCO STORE #148, INCORPORATED;
DELCO STORE #149, INCORPORATED;
DELCO STORE #150, INCORPORATED;
                                                                 No. 97-2694
DELCO STORE #151, INCORPORATED,
Plaintiffs-Appellees,

v.

BILLIE LEA WOODWARD, Executrix of
the Estate of Philip D. Woodward,
Defendant-Appellant.

Appeal from the United States District Court
for the Eastern District of North Carolina, at Greenville.
Malcolm J. Howard, District Judge.
(CA-94-39-4-H3)

Argued: December 1, 1998

Decided: March 29, 1999

Before WILLIAMS and MICHAEL, Circuit Judges, and
MICHAEL, Senior United States District Judge for the
Western District of Virginia, sitting by designation.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Robert Harry Tiller, PARKER, POE, ADAMS & BERN-
STEIN, L.L.P., Raleigh, North Carolina, for Appellant. Trawick
Hamilton Stubbs, Jr., STUBBS & PERDUE, P.A., New Bern, North
Carolina, for Appellees. ON BRIEF: Warren W. Davis, SAND-
BERG, PHOENIX & VON GONTARD, St. Louis, Missouri, for
Appellant.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

The plaintiffs, closely held corporations (called Delcos) that oper-
ate Pizza Hut delivery and carryout stores, were granted a summary
judgment determining (1) that they (the Delcos) were not required,
under principles of estoppel, to redeem the shares of a deceased one-
third owner and (2) that judicial dissolution of the Delcos would not
be appropriate. The defendant, who is the administratrix of the
deceased owner's estate, appeals, and we affirm.

I.

This case involves what should be done with stock, in closely held
corporations, that was previously owned by Philip Woodward, the
defendant's deceased husband. For years, Woodward and his two
business partners, Keith Thomas and Bernard Butler, each held an
equal, one-third share in the Delcos. In addition to the Delcos, the
three partners also owned a number of sit-down, or"red roof," Pizza
Hut restaurants. When Thomas died in 1995, Butler bought his shares.
Thus, this case involves the Delcos, now managed by Butler (the sole
remaining partner), and Mrs. Woodward, who represents the interest
of her husband's estate in the Delco stock.

This is not the first lawsuit involving Butler and Mrs. Woodward.
The disposition of Mr. Woodward's stock in the Pizza Hut ventures
has been the focus of litigation for several years. In fact, in the settle-

                     2
ment of one case, which involved the "red roof" restaurant operations,
the estate received approximately $4 million for Mr. Woodward's
shares. The disposition of Woodward's stock in the Delcos remains
to be resolved, however. Mrs. Woodward has said that she wants to
sell, and the Delcos at one time wanted to buy, the Woodward shares.
The parties could not agree on a price, however, and differed on
whether the shares were subject to a Stock Redemption Agreement
(SRA) the partners had developed in 1980. Specifically, as to the
SRA the dispute centered on whether the SRA would dictate the price
and terms of any purchase of stock by the Delcos from the Woodward
estate.

In an effort to resolve the matter, the Delcos filed suit in the East-
ern District of North Carolina against Mrs. Woodward, as executrix.
The Delcos sought a declaration that the Woodward stock was subject
to redemption under the SRA and requested an order compelling arbi-
tration on valuation. In a counterclaim Mrs. Woodward sought,
among other things, a declaratory judgment that the SRA did not
apply to the estate's stock, a determination that judicial dissolution
was appropriate, compensatory and punitive damages, and an
accounting. Notwithstanding her desire to get out of the pizza busi-
ness, Mrs. Woodward alleged that Butler had tried to shut her out of
the Delcos' affairs, that he had denied her financial information, and
that he was misusing Delco assets.

In August 1995, several weeks before the scheduled trial date in
this case, the Delcos issued additional stock. Butler purchased a num-
ber of these shares. Mrs. Woodward (on behalf of the estate), how-
ever, declined to buy additional stock, believing that she "should sell
the Delco stock and . . . should not become more involved." As a
result, the estate's ownership proportion declined considerably. At
approximately the same time, the Delcos changed their position in the
lawsuit, arguing that the companies were under no obligation to
redeem the Woodward stock under the SRA. Following the Delcos'
shift in position, Mrs. Woodward filed an additional counterclaim,
charging that the doctrine of equitable estoppel precluded the Delcos
from changing their position.

When the dispute intensified, the district court appointed a magis-
trate judge as special master to consider the question of valuation and

                    3
to deal with other matters, such as discovery disputes. The special
master filed his report, in the form of proposed findings of fact and
conclusions of law, on February 3, 1997. The special master proposed
the following determination: that the estate's interest in the Delcos
was worthless; that the SRA did not apply to the estate's shares; that
Mrs. Woodward could not, as a matter of law, rely on the doctrine of
equitable estoppel; and that judicial dissolution was inappropriate.
Thus, according to the special master, the Delcos should be freed of
any obligation to redeem the estate's shares.

Shortly after receiving the special master's report, the district court
granted Mrs. Woodward judgment as a matter of law"that the SRA
does not apply to the [estate's] shares." The Delcos then moved for
summary judgment on the remaining issues. The district court granted
this motion, concluding "as a matter of law, and in its discretion" that
Mrs. Woodward was not entitled to relief on her claim of equitable
estoppel and that judicial dissolution was inappropriate. The court
noted that in reaching its decision it had not relied on the special mas-
ter's recommendation on valuation. Specifically, the court said,
"[a]lthough Magistrate Judge Dixon went to painstaking lengths to
evaluate the parties' contentions regarding the value of the Delco
shares and recommended to the court that such value be determined
as zero, the determination of the Delco's stock value is not germane
to the court's above findings of law."

Mrs. Woodward contends on appeal that the district court (in grant-
ing summary judgment to the Delcos) improperly relied on the special
master's report, erred in rejecting her equitable estoppel argument,
and erred in concluding that judicial dissolution was inappropriate.

II.

Mrs. Woodward first contends that the district court made its sum-
mary judgment decision with a "complete lack of .. . foundation,"
relying blindly on the special master's report. We disagree.

The district court did praise the special master's report, stating that
the court could not "envision composing a more soundly drafted and
analytically correct decision." In addition, the district court said that
it was "not inclined to reinvent the wheel by unnecessarily reiterating

                     4
the myriad of issues that were fully presented both during the [special
master's] trial and since." Despite this praise for the special master's
work, the district court was careful to note that it had "conducted an
independent and exacting review of [the master's] recommendations."
The court was thus careful to note that it had made its own indepen-
dent judgment, both "as a matter of law, and in its discretion." After
reviewing the district court's summary judgment order, we are con-
vinced that the court conducted the required de novo review of the
special master's proposed legal conclusions. See Stauble v. Warrob,
Inc., 

, 697 (1st Cir. 1992).

Mrs. Woodward further contends that the district court was indi-
rectly influenced by the special master's proposed finding that the
estate's shares were worthless. She insists that the district court did
not "realize the relationship between the master's analysis and the
other issues in this case." Specifically, she claims that the special
master paid scant attention to the legal issues once he had decided that
the shares were worthless. Again, our review of the district court's
order leads us to conclude that the master's recommendation on valu-
ation did not sway the district court from exercising judgment that
was fully independent. Indeed, the district court emphasized that the
special master's recommendation on valuation was irrelevant to the
court's summary judgment determination.

III.

Mrs. Woodward next argues that the district court erred in granting
summary judgment on the issues of equitable estoppel and judicial
dissolution. We review a district court's award of summary judgment
de novo. See Nielsen v. Gaertner, 

, 112 (4th Cir. 1996).
Summary judgment is appropriate "if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any mate-
rial fact and that the moving party is entitled to a judgment as a matter
of law." Fed. R. Civ. P. 56(c).

A.

Mrs. Woodward asserts that the doctrine of equitable estoppel bars
the Delcos from refusing to redeem her deceased husband's shares.

                     5
On appeal she says that the district court was wrong to conclude on
summary judgment that she "has shown no entitlement to . . . equita-
ble estoppel."

Mrs. Woodward must establish three elements for a claim of estop-
pel: intentional misrepresentation (or culpable negligence), reasonable
reliance, and detriment. See Deal v. North Carolina State Univ., 

, 362 (N.C. App. 1994). Mrs. Woodward alleges that the
Delcos intentionally misrepresented several material facts that she
relied on to the detriment of the estate. She charges that the Delcos
misrepresented that the SRA applied to the estate's shares, that Pizza
Hut would not allow her to sell the shares to anyone but Butler, and
that the Delcos were not worth much money. All of these misrepre-
sentations, Mrs. Woodward says, prevented her from selling the
shares, which have declined in value since this suit was filed. We con-
clude that Mrs. Woodward's equitable estoppel argument is without
merit. Even assuming that the Delcos made the alleged misrepresenta-
tions, the undisputed record and controlling case law make clear that
Mrs. Woodward did not reasonably rely on any misrepresentations.

Mrs. Woodward first contends that she relied on the Delcos' asser-
tion that the SRA applied to the estate's holdings. Whether the SRA
covers the estate's stock, however, is a legal question. A party is not
entitled to rely on an opposing party's statements of law. Tenneco
Chemicals, Inc. v. William T. Burnett & Co., 

, 665 (4th
Cir. 1982). Thus, although the record may indicate that several
months before the suit someone (perhaps in Butler's accounting firm)
thought that the SRA did not cover the Delcos, that fact is of no con-
sequence to the question of reliance. In any case, Mrs. Woodward did
not rely on the Delcos' position: she contended from the start that the
SRA did not apply to the estate's shares.

In a twist on the same argument, Mrs. Woodward argues that she
relied on the Delcos' initial indication of interest in buying the shares.
To succeed on this claim, however, Mrs. Woodward must show that
the Delcos intentionally or negligently misrepresented their initial
interest. Mrs. Woodward has proffered no evidence that any initial
indication of interest was intentionally or negligently misrepresented.

Mrs. Woodward next contends that she relied on the Delcos' asser-
tion that Pizza Hut would not allow franchise splitting (that is, Pizza

                     6
Hut would not permit diverse ownership within a franchise area).
Thus, according to Mrs. Woodward, she feared Pizza Hut would not
allow her to sell the estate's shares on the open market. However, all
of the parties, including Mrs. Woodward, were aware, prior to the
beginning of this litigation, that Pizza Hut would allow some forms
of franchise splitting. Nor is there evidence that Mrs. Woodward
sought any clarification from Pizza Hut on this matter. For these rea-
sons, we conclude that Mrs. Woodward was not entitled to rely on the
Delcos' statements about franchise splitting.

Finally, Mrs. Woodward argues that she reasonably relied on the
Delcos' misrepresentation of the stock's value. But Mrs. Woodward
surely did not rely on the Delcos on the important question of value
because she developed her own figure with the advice of an expert.

For all of these reasons, Mrs. Woodward's equitable estoppel argu-
ment is without merit, and the district court's award of summary judg-
ment to the Delcos on that issue was appropriate.

B.

Finally, Mrs. Woodward claims that the estate is entitled to judicial
dissolution under N.C. Stat. § 55-14-30 and that the Delcos should not
have been granted summary judgment on that issue either.

In order to obtain an order of judicial dissolution under North Car-
olina law, a party must show that "liquidation is reasonably necessary
for the protection of the rights or interests of the complaining share-
holder." See N.C. Stat. § 55-14-30 (1997); see also Meiselman v.
Meiselman, 

, 563 (N.C. 1983). Specifically, a plaintiff
must show (1) that she had a reasonable expectation that was known
or assumed by the other party, (2) that was frustrated (3) through no
fault of her own, and (4) that the totality of the circumstances war-
rants equitable relief. See 

.

Mrs. Woodward maintains that the estate had a reasonable expecta-
tion that it would receive distributions and financial information from
the Delcos, that Delco assets would not be pledged without her
knowledge or approval, that Delco corporate opportunities would not

                    7
be squandered, and that the estate would be able to obtain a fair value
for her deceased husband's stock. All of these reasonable expecta-
tions, she contends, were frustrated by no fault of her own. She says,
therefore, that she is entitled to the remedy of judicial dissolution.

Mrs. Woodward's reasonable expectations cannot be judged in a
vacuum. Instead, we must evaluate what she reasonably could have
expected in light of her relationship with the Delcos (or Mr. Butler)
and her stated desire to get out of the pizza business. First, Mrs.
Woodward has testified that the estate did not want to remain a Delco
shareholder, that she did not want to be an officer or director of the
Delcos, and that the estate did not want to purchase any additional
stock. In other words, for the most part, Mrs. Woodward (as execu-
trix) had no expectation of obtaining the things she now wants. Sec-
ond, the Delcos had never issued dividends* or held formal annual
stockholder meetings prior to Mr. Woodward's death. In fact, follow-
ing Mr. Woodward's death, the Delcos held formal meetings to
enable Mrs. Woodward to participate. Third, it appears that the Del-
cos have not frustrated Mrs. Woodward's expectation of receiving fair
value for her husband's shares. The estate's expert testified that the
shares could be sold to a third party for approximately $500,000 "rel-
atively eas[ily]," and Mrs. Woodward has not shown that that option
is no longer available to her. Finally, Mrs. Woodward's assertions
that the Delcos misused assets or squandered corporate opportunities
are not of sufficient gravity to render judicial dissolution an appropri-
_________________________________________________________________
*Under North Carolina law the Delcos were unable to issue distribu-
tions during the years in question because their financial condition was
so weak. North Carolina law provides:

          No distribution may be made if, after giving it effect:

          (1) The corporation would not be able to pay its debts as they
          become due in the usual course of business; or

          (2) The corporation's total assets would be less than the sum
          of its total liabilities plus . . . the amount that would be needed,
          if the corporation were to be dissolved at the time of the distribu-
          tion, to satisfy the preferential rights upon dissolution of share-
          holders whose preferential rights are superior to those receiving
          the distribution.

N.C. Gen. Stat. § 55-6-40(c) (1997).

                    8
ate remedy. We therefore affirm the summary judgment denying that
remedy.

IV.

The district court's order awarding summary judgment to the plain-
tiffs is affirmed.

AFFIRMED

                   9