Guilfoyle v. Olde Monmouth Stock Transfer , 2014 NV 78 ( 2014 )

130 Nev., Advance Opinion 78
IN THE SUPREME COURT OF THE STATE OF NEVADA
PAUL GUILFOYLE, AN INDIVIDUAL; No. 60478
AND CITYPOINT, LLC, A NEW YORK
LIMITED LIABILITY COMPANY,
Appellants,
vs.
F
OLDE MONMOUTH STOCK OCT 02 2014
TRANSFER COMPANY, CO., INC.,
Respondent. 13 4 0101
7 i
Appeal from a district court order granting summary
judgment. Eighth Judicial District Court, Clark County; Kathleen
Delaney and Susan Scann, Judges.
Affirmed.
Gordon Silver and Michael N. Feder and Joel Z. Schwarz, Las Vegas;
Goodwin Procter, LLP, and Lloyd Winawer, Menlo Park, California,
for Appellants.
Lionel Sawyer & Collins and Charles H. McCrea, Jr., and Ketan D.
Bhirud, Las Vegas,
for Respondent.
BEFORE THE COURT EN BANC.
OPINION
By the Court, PICKERING, J.:
We consider the liability of a stock transfer agent to a
stockholder for giving an allegedly incomplete and misleading answer to a
question about its requirements for removing a restrictive legend on his
stock. Under NRS 104.8401 and NRS 104.8407 a transfer agent must, on
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proper request, register a transfer of securities without unreasonable
delay. But these statutes do not support liability here because the
stockholder did not ask the transfer agent to remove the legend and
reissue him clean shares and, without a request to act, the agent's
statutory duty to register a requested transfer does not arise. The
stockholder's common law claims also fail, because they are not supported
by competent evidence. We therefore affirm summary judgment for the
transfer agent.
I.
Appellants Paul Guilfoyle and Citypoint, LLC (collectively
Guilfoyle), held stock in Pegasus Wireless Corp., a Nevada corporation.
Respondent Olde Monmouth Stock Transfer Co., Inc. was the transfer
agent for Pegasus. Guilfoyle's stock carried the following legend
restricting its sale: "The shares represented by this certificate have not
been registered under the Securities Act of 1933, as amended and may not
be sold or transferred without registration under said Act or an exemption
therefrom." Guilfoyle believed that he had held the stock long enough and
met the other requirements needed to qualify his stock for an exemption
from registration under Securities and Exchange Commission (SEC) Rule
144, 1 and he asked John Lechner, a restricted securities client advisor at
Deutsche Bank Securities, Inc. (DBS), about removing the restrictive
legend so the stock could be resold. Lechner in turn asked Barbara
'Rule 144 provides a safe harbor under section 4(1) of the Securities
Act of 1933, 15 U.S.C. § 77a et seq., and permits shareholders to sell their
restricted securities, provided they meet certain conditions, including
volume and holding period limitations, and adequate public information is
available. 17 C.F.R. § 230.144 (2013).
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Walters, a DBS employee, to look into it. Walters located a telephone
number and email address for Pegasus and left word that she wanted
"their corporate counsel information . . . [s]o that we [could] request an
opinion to remove the legend."
Key to this appeal, Walters also called and spoke to someone
at Olde Monmouth, Pegasus's transfer agent. Walters' call to Olde
Monmouth was essentially anonymous. She did not identify herself, the
company she worked for, or Guilfoyle, saying only that she was calling
from a brokerage firm about a client holding restricted Pegasus stock.
Olde Monmouth has no record of the call, and Walters has given varying
accounts of it. In her deposition, Walters testified that she said "we were
looking to locate corporate counsel" information for Pegasus; in the
affidavit she furnished Guilfoyle, Walters avers that she asked Olde
Monmouth "to provide the name of counsel from whom it would accept a
legal opinion that the restrictive legends could be removed from Pegasus
stock certificate." Either way, Olde Monmouth responded by giving her
the name and contact information for a lawyer named John Courtade,
whom Pegasus had written Olde Monmouth several weeks earlier to
designate as its counsel for legend removals under SEC Rule 144.
According to Walters, her telephone conversation with Olde
Monmouth was brief, lasting "[m]aybe longer than a minute, not longer
than five." When the call ended, Walters called Courtade. He expressed
surprise that someone at Olde Monmouth had given her his name and said
he could not provide an opinion letter unless directed to do so by Pegasus.
Walters did not call Olde Monmouth back to tell them about Courtade's
rebuff or communicate with Olde Monmouth again concerning Pegasus
stock.
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Olde Monmouth has internal written "procedures for removing
legends under Rule 144," which, not surprisingly, draw on the Uniform
Commercial Code (UCC) provisions governing securities transfers and
SEC Rule 144 as written at the time the events in this case occurred. See
infra note 2. The procedures require that a registered broker/dealer
present the share certificates, properly endorsed, to Olde Monmouth with
supporting signature guarantees and documents, including "a completed
copy of signed and filed Forms 144," and a seller's certification "stating
that the shareholder is not an affiliate of the issuer, nor has been for the
preceding 90 days, and that the shares have been beneficially held for at
least one year" Additionally, "[t]he share certificate(s) should be
accompanied by a legal opinion from the Issued's] SEC attorney (stating
that the sale is not in violation but in fact is in compliance with the
exemption from registration requirements of Federal Securities laws)." If
all criteria are met, Olde Monmouth "shall immediately remove the legend
from the shares and transfer the shares into 'street name." If the request
arrives otherwise complete but with no supporting legal opinion, the
procedures direct that it be forwarded to the issuer's SEC attorney with a
request for "the appropriate legal opinion." Should a request arrive
supported by "a legal opinion from someone other than the Issuer's SEC
Attorney (an 'outside opinion')," again, the procedures direct that Olde
Monmouth "forward all [the] documents to and request [the appropriate]
legal opinion from the Issuer's SEC Attorney." Finally, if "the Issuer's
SEC Attorney has not responded to the request for approval of the outside
legal opinion after 15 days," Olde Monmouth will process the legend
removal request based on the outside opinion.
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Olde Monmouth did not disclose these internal procedures to
Walters or mention that Courtade was the fourth in a series of lawyers
Pegasus had designated as SEC counsel over the past year. But DBS
client adviser Lechner was a "major player in restricted securities" and
Walters, whose job was to "assist in obtaining legend removals from
stock," already knew that a Rule 144 opinion from outside counsel might
be used to support a request for legend removal. This is shown by
Walters' email to Lechner sent the day she spoke to Olde Monmouth and
Courtade, wherein Walters relates her lack of success rousing anyone at
Pegasus, her unhelpful conversation with Courtade, and a pending dispute
between Pegasus and an affiliate's co-founder, Tsao, over Tsao's restricted
stock. Noting the lack of industry consensus at that time (2006) over
legend removal not connected to an actual sale, she suggests Guilfoyle
(and Citypoint) "may want to solicit their own counsel to render an opinion
to remove the legend under 144(k)." 2
Guilfoyle never submitted his shares to Olde Monmouth with
a request to remove the legend. Nor, from what appears, did he bring his
shares to his broker, DBS, or complete DBS's form "request for removing a
restrictive legend," so DBS could initiate the process. He also did not
pursue a Rule 144 opinion from independent counsel DBS's records show
that Walters and another DBS employee called and emailed Pegasus
21n February 2008, subsection 144(k) was eliminated and
substantively similar provisions were added to other parts of SEC Rule
144. See 17 C.F.R. § 230.144(b)(1)(i) (2013). The facts giving rise to this
suit predated these amendments.
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several more times, to no avail. Meanwhile, Pegasus stock plummeted,
rendering Guilfoyle's stock essentially valueless.
Sometime later, the SEC learned that two of the principal
officers of Pegasus had defrauded investors by, among other things,
issuing shares to their relatives and falsely reporting that the shares went
to pay off outstanding promissory notes that, in fact, were backdated and
bogus, thus diluting the value of legitimate investors' shares. The SEC
pursued the officers civilly and criminally, ultimately obtaining a consent
decree and convictions.
Guilfoyle sued Pegasus and its defalcating officers and
recovered judgment against them. When Pegasus filed bankruptcy,
Guilfoyle commenced suit against Olde Monmouth. His theory was (and
is) that Olde Monmouth misled Walters into believing only an opinion
letter from Pegasus's corporate counsel would do when, in fact, Olde
Monmouth would have accepted an opinion letter from independent
counsel and removed the legend if Pegasus proved nonresponsive;
removing the legend, Guilfoyle alleges, would have enabled him to sell his
shares before their value fell. He also faults Olde Monmouth for not
advising Walters that Courtade had only recently been named and was
the fourth in a series of counsel Pegasus had designated over the
preceding year. On these bases, Guilfoyle asserted claims for: (1) violation
of NRS 104.8401 and NRS 104.8407; (2) negligent and fraudulent
misrepresentation; (3) aiding and abetting Pegasus's officers' breach of
fiduciary duty; and (4) conspiracy.
After discovery and amendment of the pleadings, the district
court granted Olde Monmouth's motion for summary judgment Guilfoyle
appeals.
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Because the district court resolved this case on summary
judgment, our review is de novo and we take the facts and the reasonable
inferences to be drawn from them in the light most favorable to the
nonmoving party. Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d
1026, 1029 (2005). We will affirm if the record, viewed in that light, shows
that there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law. NRCP 56. "Conjecture
and speculation do not create an issue of fact." Stockmeier v. State, Bd. of
Parole Comm'rs, 127 Nev. „ 255 P.3d 209, 212 (2011).
A.
At common law, "a transfer agent [could not] be held liable to
a stockholder in damages for . . . failure to act to remove [restrictive]
legends," or refusal to register a requested stock transfer. Kenler v. Canal
Nat'l Bank, 489 F.2d 482, 485 (1st Cir. 1973). "Such failure or refusal was
merely nonfeasance for which the .. . agent was liable to the corporation
alone, and for which [the corporation] in turn was liable to those injured
thereby, because a stock transfer agent owed no duty to a shareholder."
12 William Meade Fletcher, Cyclopedia of the Law of Corporations § 5525
(2004). Article 8 of the UCC, enacted in Nevada as NRS 104.8101 through
NRS 104.8511, partially abrogates the common law as to transfer agents.
See UCC § 8-407 cmt. 1(1994). It makes a transfer agent's duty the same
as an issuing corporation's in performing the statutory functions involved
in processing a request to register a transfer of securities. NIPS 104.8407. 3
3 Like UCC § 8-407 (1994), NRS 104.8407 provides: "A person acting
as . . . transfer agent . . . for an issuer in the registration of a transfer of its
continued on next page . . .
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Guilfoyle asserts that Olde Monmouth violated its statutory
duties to him under the UCC. Since NRS 104.8407 defines a transfer
agent's duty in terms of an issuer's, we look to NRS 104.8401, entitled
"[d]uty of issuer to register transfer," in assessing Guilfoyle's UCC claim.
Under NRS 104.8401, "[i]f a certificated security in registered form is
presented to an issuer with a request to register transfer," the issuer
"shall register the transfer" provided the following criteria are met:
(a) Under the terms of the security, the
person seeking registration of transfer is eligible
to have the security registered in his or her name;
(b) The endorsement or instruction is made
by the appropriate person or by an agent who has
actual authority to act on behalf of the appropriate
person;
(c) Reasonable assurance is given that the
endorsement or instruction is genuine and
authorized;
(d) Any applicable law relating to the
collection of taxes has been complied with;
(e) The transfer does not violate any
restriction on transfer imposed by the issuer in
accordance with NRS 104.8204;
(0 A demand that the issuer not register
transfer has not become effective under NRS
104.8403, or the issuer has complied with
. . . continued
securities, in the issue of new security certificates or uncertificated
securities or in the cancellation of surrendered security certificates has the
same obligation to the holder or owner of a certificated or uncertificated
security with regard to the particular functions performed as the issuer
has in regard to those functions."
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subsection 2 of that section but no legal process or
indemnity bond is obtained as provided in
subsection 4 of that section; and
(g) The transfer is in fact rightful or is to a
protected purchaser.
"If any of the preconditions do not exist, there is no duty to register
transfer." UCC § 8-401 cmt. 1 (1994); see also Catizone v. Memry Corp.,
897 F. Supp. 732, 736 (S.D.N.Y. 1995) (a transfer that violates the federal
securities laws "cannot be considered rightful," meaning that a transfer
agent "has no duty to register a transfer" in that instance). But if the
statutory terms are met, so that "[the] issuer is under a duty to register a
transfer of a security, the issuer is liable to the person presenting a
certificated security ... or his or her principal for loss resulting from
unreasonable delay in registration or failure or refusal to register the
transfer." NRS 104.8401(2).
The phrase "request to register transfer" in NRS 104.8401(1)
applies to a request to remove a restrictive legend from a person's shares,
equally with its more obvious object of a request to register a transfer of
shares from one person to another. The "realities of the securities transfer
process" are such that "[w]here certificated stock is transferred, the
issuance of a new certificate to the transferee is normally an integral step
in that process. And where the stock is restricted, the issuance of a new,
clean certificate to the transferor is normally the essential first step."
Bender v. Memory Metals, Inc., 514 A.2d 1109, 1115 (Del. Ch. 1986). Thus,
"even without a request to register a transfer of the underlying stock, the
issuer's duty"—and, by extension, a transfer agent's duty—"to register a
transfer of shares under Section 8-401 extends to a request to issue to the
owner a new clean certificate for the same amount of shares." J. William
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Hicks, Resales of Restricted Securities § 4:5 (2014) (discussing UCC § 8-401
(1994)).
While NRS 104.8401(1) can apply to legend removal requests,
it does not apply here because Walters' brief telephone call with Olde
Monmouth did not meet the statute's requirements for a "request to
register transfer." The statutory "duty to register transfers exists only if:
a registered security is presented to it; the certificate is accompanied by a
request to register the transfers; and the requestor has satisfied the
preconditions that subsection 8-401(1) authorizes the issuer to impose
before registering the transfer." 7 Frederick H Miller, Hawk land
Uniform Commercial Code Series § 8-401:02 (2013). Presentation of a
properly supported "request to register transfer" (or here, request to
remove a legend) is the sine qua non of an NRS 104.8401 claim: "Perhaps
the most obvious requirement that must be satisfied before the ... duty to
register a transfer arises [is] that the certificate be presented." Id. And,
the other conditions stated in NRS 104.8401(1) must be satisfied as well.
See Kolber v. Body Central Corp., 967 F. Supp. 2d 1061, 1066 (D. Del.
2013) (the issuer was not obligated to respond to a shareholder's emails
before the shareholders actually requested legend removal backed by a
Rule 144 opinion as required by the restrictive legend in that case);
Schloss v. Danka Bus. Sys., PLC, No. Civ. 0817 (DC), 2000 WL 282791, at
*7 (S.D.N.Y. Mar. 16, 2000) (dismissing complaint where the shareholders
"did not allege that they presented the stock certificates in transferable
form[;] there was no duty on defendants to transfer shares with restrictive
legends on them"); Merkens v. Computer Concepts Corp., 76 F. Supp. 2d
245, 250 (E.D.N.Y. 1999) (under Delaware law, which adopts the UCC, the
issuer is not required to register a transfer until it receives the signature
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guarantee required by Del. Code Ann. tit. 6, §§ 8-401(1)(b) and 8-402
(1995)); 4 Nash v. Coram Healthcare Corp., No. 96 Civ. 0298 (LMM), 1996
WL 363166, at *3 (S.D.N.Y. June 28, 1996) (dismissing shareholder
complaint alleging breach of duty to register a securities transfer where
the shares were not presented for transfer).
Here, Guilfoyle did not meet any of the requirements of NRS
104.8401(1). Neither he nor his broker, DBS, presented his Pegasus
shares to Olde Monmouth or asked Olde Monmouth to remove their
restrictive legend. During her call with Olde Monmouth, Walters did not
identify Guilfoyle or his circumstances, so Olde Monmouth would have
had no way of knowing whether Guilfoyle could meet the requirements in
NRS 104.8401(1) (much less the registration exemption requirements in
SEC Rule 144). Viewing the facts in the light most favorable to Guilfoyle,
the most that can• be said is that Walters asked for "the name of counsel
from whom it would accept a legal opinion that the restrictive legends
could be removed" from an unknown number of Pegasus stock certificates.
In response, Olde Monmouth furnished contact information for Pegasus's
designated SEC counsel. Olde Monmouth was not statutorily obligated to
do more. See Kolber, 967 F. Supp. 2d at 1066 (the issuer was not liable to
the stockholder under the UCC where, after providing contact information
for the issuer's attorney, it did not answer follow-up emails asking about
specific procedures; the issuer did timely provide an opinion from
corporate counsel).
4 Del.
Code, Ann. Tit. 6, § 8.401(1)(b) (1995) was renumbered in 1997
(71 Del. Laws, c. 75, § 1, eff. Jan. 1, 1988) to § 8.401(a)(3); the operative
language remains identical.
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Olde Monmouth's failure to disclose its internal procedures for
dealing with outside counsel's opinions is not the legal equivalent of a
refusal to timely process a request to register a transfer or remove a
legend. The cases on which Guilfoyle relies for that proposition,
principally Bender and American Securities Transfer, Inc. v. Pantheon
Industries, Inc., 871 F. Supp. 400, 403-04 (D. Colo. 1994), are
distinguishable. In both, the shareholder requested that the restrictive
legend be removed and tendered the stock certificates for reissuance.
Bender, 514 A.2d at 1118 (noting that "Bender presented her shares to
[the issuer] to register the transfer"); Pantheon, 871 F. Supp. at 402(noting that the shareholder "submitted the certificate to [the transfer
agentl and requested that a new stock certificate be issued. . . without the
restrictive legend"). The dispute was whether, given the competing
demands and conflicting legal opinions, the transfer qualified as "rightful"
in the meaning of UCC § 8-401(1). Bender, 514 A.2d at 1116-17; Pantheon,
871 F. Supp. at 402. In this case, by contrast, Guilfoyle and his broker,
DBS, never engaged the statutory transfer process by submitting a
transfer request. Cf. Nash, 1996 WL 363166, at *3 (distinguishing Bender
and similar cases because "the shares in this instance were neither in
registered form nor presented to the issuer" for transfer). Summary
judgment on Guilfoyle's NRS 104.8401 and NRS 104.8407 claim thus was
proper.
B.
As noted above, at common law a transfer agent's duty in
respect to registering a transfer ran to the corporation, not the
shareholder, so the transfer agent was not liable to the shareholder for
mere nonfeasance But "misfeasance," as distinguished from nonfeasance,
"was at common law, and remains, a recognized basis for a lawsuit by a
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shareholder against a transfer agent." Campbell v. Liberty Transfer Co.,
No. CV-02-3084, 2006 WL 3751529, at *17 (E.D.N.Y. Dec. 19, 2006). 5
Guilfoyle's negligent and fraudulent misrepresentation, aiding and
abetting, and conspiracy claims arguably assert misfeasance, so we turn to
them next.
1.
In Nevada, negligent misrepresentation and fraudulent
misrepresentation both require that the defendant supply "false
information," Halcrow, Inc. v. Eighth Judicial Dist. Court, 129 Nev. ,
, 302 P.3d 1148, 1153 (2013) (stating the elements of a negligent
misrepresentation claim, citing Restatement (Second) of Torts § 552
(1977)), or make a "false representation." Bulbman, Inc. v. Nev. Bell, 108
Nev. 105, 111, 825 P.2d 588, 592 (1992) (stating the elements of a
fraudulent misrepresentation claim). Here, Olde Monmouth gave a
truthful answer to Walters' telephone inquiry for "the name of counsel
from whom it would accept a legal opinion": John Courtade was Pegasus's
designated counsel for SEC Rule 144 opinions; per its written internal
procedures, Olde Monmouth (a) would not process a transfer request
without soliciting approval from him as Olde Monmouth's designated SEC
counsel; and (b) would accept an SEC 144 exemption opinion from
Courtade.
5 We express no opinion as to whether NRS 104.8401 and NRS
104.8407 displace the common law remedies available against a transfer
agent for misfeasance. Cf. Clancy Sys. Int'l, Inc. v. Salazar, 177 P.3d
1235, 1239 (Colo. 2008) (holding that Colorado's UCC-based counterpart to
NRS 104.8401 displaces common law claims against an issuer for wrongful
delay or failure to process a request to register a transfer of securities).
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Except for Courtade's contact information, Walters' phone
conversation with Olde Monmouth approximates what Guilfoyle could
have learned by consulting the SEC's website:
Even if you have met the conditions of Rule 144,
you can't sell your restricted securities to the
public until you've gotten the legend removed from
the certificate. Only a transfer agent can remove
a restrictive legend. But the transfer agent won't
remove the legend unless you've obtained the
consent of the issuer—usually in the form of an
opinion letter from the issuer's counsel—that the
restrictive legend canS be removed.
U.S. Securities and Exchange Commission, Rule 144: Selling Restricted
and Control Securities, https://www.sec.gov/investor/pubs/rule144.htm
(last visited Sept. 9, 2014) (emphasis added). Walters did not request
more information and Olde Monmouth did not provide Walters "false
information" or make a "false representation of fact" in response to the
generic inquiry she made. That Olde Monmouth provided Walters correct
information dispositively distinguishes Nevada National Bank v. Gold
Star Meat Co., Inc., 89 Nev. 427, 430, 514 P.2d 651, 653 (1973), on which
Guilfoyle relies, wherein the defendant bank's officer had attested as to a
company's creditworthiness, even though the company was "not in fact a
depositor in his bank and. . . he had no accurate means of assessing [its]
credit status."
The "deemed approved" mechanism in Olde Monmouth's
internal procedures for situations where an issuer's counsel ignores a
forwarded request for legend removal based on an outside opinion for more
than 15 days was not information Olde Monmouth needed to volunteer
during a five-minute phone call from an unidentified brokerage firm
employee. Guilfoyle suggests that Olde Monmouth deliberately sent
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Walters on a wild goose chase by giving her contact information for
Courtade. But the uncontroverted evidence belies this allegation. Olde
Monmouth presented competent evidence establishing that (1) it processed
26 requests to have legends removed from Pegasus shares during the
relevant time period, 23 of which it honored and three of which it rejected
as incomplete or assertedly not qualifying under SEC Rule 144; (2) it
would have done the same for Guilfoyle if DBS had presented a request on
his behalf; and (3) it had no agreement, tacit or express, with Pegasus not
to process legend removal requests from persons not part of its officers'
fraudulent scheme. The high turnover in corporate counsel at Pegasus,
while unusual, does not support that, when Walters called, Olde
Monmouth knew or had reason to know that Courtade would refer her
back to Pegasus and that Pegasus would not respond. 6 Guilfoyle's
argument that, when Olde Monmouth spoke to Walters it knew it needed
to disclose more than Courtade's name and contact information to prevent
its statement from being misleading is conjectural and therefore fails. Cf.
Restatement (Second) of Torts § 551(2)(b) (1977) (imposing a duty on a
"party to a business transaction . . to exercise reasonable care to disclose
to the other before the transaction is consummated. . . matters known to
him that he knows to be necessary to prevent his partial or ambiguous
statement of the facts from being misleading"). To the extent Guilfoyle
relies on events that occurred after Walters' call to impose a duty to
supplement its original response, he cannot prevail because, among other
6 Theseveral transfer requests supported by outside opinions that
Olde Monmouth forwarded to Courtade, to which Courtade did not object,
were not acted on until after the Walters call.
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reasons, Walters did not identify herself or Guilfoyle to Olde Monmouth so
Olde Monmouth could contact her. She also did not call Olde Monmouth
again to ask for help when she ran into problems with Pegasus. See id. §
551(2)(c) & (d) (discussing duties of updated disclosure with respect to
subsequently acquired facts).
Guilfoyle argues that Olde Monmouth and he, through
Walters, had a special relationship giving rise to a duty of full disclosure.
See id. § 551(2)(a) (stating duty of disclosure that arises by virtue of "a
fiduciary or other similar relation of trust and confidence between"
parties). The record offers no evidence to support this claim. Olde
Monmouth did not step outside its role of transfer agent, cf. Affiliated Ute
Citizens of Utah v. United States, 406 U.S. 128, 152 (1972) (if the "bank
had functioned merely as a transfer agent, there would have been no duty
of disclosure here"); there was no "special relationship" by which Guilfoyle
or Walters "reasonably impartfed) special confidence in the defendant and
the defendant would reasonably know of this confidence." Dow Chem. Co.
v. Mahlum, 114 Nev. 1468, 1486, 970 P.2d 98, 110 (1998), overruled in
part on other grounds by GES, Inc. v. Corbitt, 117 Nev. 265, 271, 21 P.3d
11, 15 (2001).
2.
Aiding and abetting the breach of a fiduciary duty has four
required elements: (1) there must be a fiduciary relationship between two
parties, (2) that the fiduciary breached, (3) the defendant third party
knowingly and substantially participated in or encouraged that breach,
and (4) the plaintiff suffered damage as a result of the breach. In re
Amerco Derivative Litig., 127 Nev. „ 252 P.3d 681, 701-02 (2011);
Mahlum, 114 Nev. at 1490, 970 P.2d at 112. Assuming Pegasus breached
a fiduciary duty to Guilfoyle, Guilfoyle failed to present evidence that Olde
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Monmouth knowingly and substantially participated in or encouraged that
breach. Guilfoyle presented no evidence to show that Olde Monmouth
knew about Pegasus's lack of responsiveness to Walters, let alone that
Olde Monmouth knowingly participated in or encouraged Pegasus's
actions. Summary judgment thus was proper on Guilfoyle's civil aiding or
abetting a breach of fiduciary duty claim.
3.
Finally, the record reveals no genuine issue of material fact as
to Guilfoyle's civil conspiracy claim. Actionable civil conspiracy arises
where two or more persons undertake some concerted action with the
intent "to accomplish an unlawful objective for the purpose of harming
another," and damage results. Consol. Generator-Nevada, Inc. v.
Cummins Engine Co., 114 Nev. 1304, 1311, 971 P.2d 1251, 1256 (1998).
Thus, a plaintiff must provide evidence of an explicit or tacit agreement
between the alleged conspirators. Mahlum, 114 Nev. at 1489, 970 P.2d at
112. Summary judgment is appropriate if there is no evidence of an
agreement or intent to harm the plaintiff Consol. Generator-Nevada, 114
Nev. at 1311, 971 P.2d at 1256.
Guilfoyle presented evidence that Pegasus asked Olde
Monmouth to restrict certain shareholders (chiefly, the former co-founder
of an affiliate, Tsao, and those related to him) from transferring shares,
because, according to Pegasus, they did not qualify for exemption from the
federal securities registration laws. In return, Pegasus agreed to
indemnify Olde Monmouth for any damages arising out of Olde
Monmouth's failure to lift the restrictive legend on these specific
shareholders' stock certificates. However, Guilfoyle was not one of the
shareholders Pegasus listed as restricted and nothing in the record
suggests that Olde Monmouth would not have processed a legend removal
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request on his behalf in due course, as it did for more than 20 other
Pegasus shareholders during the relevant time period.
Thus, even considering this evidence in the light most
favorable to Guilfoyle, it does not show an issue of fact as to Guilfoyle's
conspiracy claim. Although direct evidence of an agreement to harm the
plaintiff is not required, Guilfoyle has presented no circumstantial
evidence from which to infer an agreement between Pegasus and Olde
Monmouth to harm Guilfoyle. See Consol. Generator-Nevada, 114 Nev. at
1307, 1311, 971 P.2d at 1253, 1256 (affirming summary judgment on the
plaintiffs conspiracy claim because there was no evidence that the two
defendants had agreed and intended to harm the plaintiff, even where the
defendants were aware that there were problems with the product
purchased by plaintiff).
We therefore affirm the district court's grant of summary
judgment in favor of Olde Monmouth.
We concur:
S
Hardesty
o..A itAt\ ,J.
J.
J.
Saitta
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