Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Sery v. Federal Business Centers

November 14, 2008


The opinion of the court was delivered by: Chesler, U.S.D.J.


This matter comes before the Court on the motion filed by Plaintiffs/Counterclaim Defendants Michael, Matthew and David Sery (hereinafter referred to as "Plaintiffs") for summary judgment on the seven (7) counterclaims of Defendants/Counterclaim Plaintiffs Federal Business Centers, Inc. ("FBC"), Peter C. Visceglia, Christine Kanter and Frank D. Visceglia (hereinafter referred to as "Defendants") [Docket Entry No. 186]. Plaintiffs assert that they are entitled to summary judgment on Defendants' counterclaim that the Serys breached fiduciary duties owed to Federal Business Centers, Inc. and to their fellow FBC shareholders (Counterclaim I); on Defendants' counterclaim that the Serys, by marketing and imminently transferring their FBC shares, are in breach of their contractual obligations to preserve FBC's Subchapter S status (Counterclaim II); on Defendants' counterclaims that Plaintiffs are liable to Defendants for contribution and indemnification (Counterclaims III, IV); on Defendants' counterclaim that Michael Sery misrepresented the views of his family members to the FBC Board of Directors (Counterclaim V); on Defendants' counterclaim for tortious interference based on Plaintiffs' alleged marketing of the entire FBC real estate portfolio (Counterclaim VI); and on Defendants' counterclaim that Plaintiffs breached confidentiality agreements by, inter alia, disclosing confidential information about FBC to entities who either were not interested in purchasing the FBC shares or were sharing the confidential information with third parties (Counterclaim VII). For the reasons set forth below, Plaintiffs' motion for summary judgment will be GRANTED as to Counterclaims II, V, VI and VII. The Court DENIES Plaintiffs' motion for summary judgment on Counterclaims I, III and IV. Those counterclaims are DISMISSED without prejudice.


This action involves various counterclaims arising out of efforts by Plaintiffs Michael Sery, Matthew Sery and David Sery to sell or transfer their shares in FBC. FBC is a closely held Subchapter S corporation of which Plaintiffs and Defendants Peter C. Visceglia, Christine Kanter and Frank D. Visceglia, Jr. (the "Individual Defendants") are shareholders. In 1997, each individual FBC shareholder consented to FBC's election to be treated as a Subchapter S corporation under the Internal Revenue Code. In consenting to Subchapter S election, the Serys executed Internal Revenue Form 2553, which states that the consent to Subchapter S election is "binding and may not be withdrawn after the corporation has made a valid election." In addition, the Serys executed a Qualified Subchapter S Trust Election pursuant to Section 1361(d)(2) of the Internal Revenue Code in which they consented to election and attested that their various trusts were qualifying shareholders of S corporations.

Since March 3, 2006, Plaintiffs and Defendants have been involved in litigation based on Plaintiffs' allegations that Defendants have engaged in shareholder oppression and breached fiduciary duties. The Court recently granted summary judgment in favor of Defendants' on these allegations. Plaintiffs have confirmed their plans to appeal the Court's decision. In order to finance the ongoing litigation, Plaintiffs claim that they have borrowed money from Vail Associates, LLC and have pledged a portion of their FBC shares as collateral for the repayment of the loan. (Plaintiffs' SUF ¶¶ 20-22.) Plaintiffs assert that they will soon default on their loan obligation and be required to transfer a portion of their FBC shares to Vail Associates in order to satisfy their obligation. (Id.) It is uncontroverted that FBC will lose its Subchapter S status if any shareholder sells stock in FBC to an entity that is not qualified to hold stock in a Subchapter S corporation. See 26 U.S.C. § 1362(d)(2). Plaintiffs claim that the anticipated transfer of their FBC shares to Vail Associates will cause FBC's Subchapter S status to terminate. (Plaintiffs' Brief at 2.)

Defendants have filed their counterclaims seeking a determination of the Plaintiffs' rights and duties based on the Subchapter S election to which Plaintiffs consented. According to Defendants, Plaintiffs have actively marketed their FBC shares and threatened to transfer their shares to an unqualified entity in order to coerce Defendants into buying out Plaintiffs of their FBC stock. (Defendants' Opposition Brief at 5.) Defendants maintain that, on December 21, 2006, the Serys informed them that Plaintiffs planned to "go nuclear" in their dispute with Defendants on December 26, 2006. (Defendants' Opposition Brief at 6.) Specifically, Plaintiffs allegedly threatened to enter into an agreement to sell FBC stock to an unqualified entity, thereby causing the loss of FBC's Subchapter S status. (Id.) Based on this alleged threat, Defendants filed the instant counterclaims on December 26, 2006. Among other things, Defendants claim that Plaintiffs are barred by their fiduciary duties and by contractual obligations from selling or transferring their FBC shares in a manner that will cause the loss of FBC's Subchapter S status. (Answer ¶¶ 42-56.) Plaintiffs respond that common law fiduciary duties do not apply to the proposed transfer of their FBC shares and assert that they are under no contractual obligation to preserve FBC's Subchapter S status because no such contract exists. (Plaintiffs Brief at 1.) To date, Plaintiffs have not transferred their FBC shares to Vail Associates or any other entity.

In addition to filing counterclaims for breach of fiduciary duty and breach of contract based on Plaintiffs' anticipated transfer of FBC stock to an unqualified entity, Defendants also counterclaim for indemnity and contribution in the event that Plaintiffs prevail on their shareholder oppression claims. Based on this Court's prior grant of summary judgment in favor of Defendants on the shareholder oppression claims, both parties agree that the contribution and indemnification counterclaims are moot. Defendants additionally counterclaim alleging that Plaintiff Michael Sery, as a member of the FBC Board of Directors, misrepresented the views of his family to fellow members of the FBC Board. At oral argument, Defendants conceded that they are no longer pursuing their misrepresentation counterclaim.

Finally, Defendants have filed counterclaims based on Plaintiffs marketing of their FBC stock to potential buyers. According to Defendants, Plaintiffs have tortiously interfered "with FBC's relationships with its tenants, prospective tenants, real estate brokers, employees and commercial lenders by purporting to market FBC's entire real estate portfolio." (Answer ¶ 69.) Moreover, Defendants allege that Plaintiffs have breached confidentiality agreements by disclosing FBC's confidential and proprietary information to third parties with knowledge that these parties had no intention of considering the purchase of FBC stock. (Answer ¶ 78.)

Plaintiffs dispute the allegations related to the marketing of their FBC stock. They maintain that they have never marketed the entire FBC real estate portfolio. (Plaintiffs SUF ¶ 18.) Plaintiffs do acknowledge that they received a third party offer for the purchase of FBC's portfolio, but insist that the offer was unsolicited. (Plaintiffs' Brief at 30-31.) With regard to Defendants' counterclaim for breach of confidentiality agreements, Plaintiffs respond that Defendants have failed to offer any admissible evidence on the essential elements of their counterclaim. Specifically, they contend that Defendants have not introduced any evidence tending to show "that the offer received from a third party for FBC's assets is confidential information, that this third party offer was based on non-public information, that the [P]laintiffs had an obligation to keep this third party offer confidential, or that there is any admissible evidence that FBC suffered any damage as a result..." (Id. at 3.)

Defendants have sought to dismiss their counterclaims without prejudice under Fed. R. Civ. P. 41(a), contending that the claims are not ripe. Alternatively, Defendants oppose the summary judgment motion on the merits.


A. Summary Judgment Standard of Review

Summary judgment is appropriate under Fed R. Civ. P. 56(c) when the moving party demonstrates that there is no genuine issue of material fact and the evidence establishes the moving party's entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A factual dispute is genuine if a reasonable jury could return a verdict for the non-movant, and it is material if, under the substantive law, it would affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party's evidence'is to be believed and all justifiable inferences are to be drawn in his favor.'" Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255).

"[W]ith respect to an issue on which the nonmoving party bears the burden of proof... the burden on the moving party may be discharged by'showing'--that is, pointing out to the district court--that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325. Once the moving party has satisfied its initial burden, the party opposing the motion must establish that a genuine issue as to a material fact exists. Jersey Cent. Power & Light Co. v. Lacey Township, 772 F.2d 1103, 1109 (3d Cir. 1985). The party opposing the motion for summary judgment cannot rest on mere allegations and instead must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; Siegel Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1130-31 (3d Cir. 1995). "[U]nsupported allegations... and pleadings are insufficient to repel summary judgment." Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990); see also Fed. R. Civ. P. 56(e) (requiring nonmoving party to "set forth specific facts showing that there is a genuine issue for trial"). "A nonmoving party has created a genuine issue of material fact if it has provided sufficient evidence to allow a jury to find in its favor at trial." Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001).

If the nonmoving party has failed "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial,... there can be'no genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.