United States District Court, N.D. California
September 21, 2005.
CARL MERNER and MERNER LAND COMPANY, Plaintiffs,
PETER W. MERNER, Defendant.
The opinion of the court was delivered by: CLAUDIA WILKEN, District Judge
ORDER REGARDING SCHEDULE FOR FURTHER BRIEFING
On July 3, 2003, the Court granted Plaintiffs Carl Merner's
(Carl) and Merner Land Company's (MLC) motion for summary
judgment, and enjoined Defendant Peter Merner (Peter) from
selling his shares of MLC stock in a way that would cause MLC to
lose its Subchapter S tax status. The Clerk entered judgment.
Peter appealed. The Ninth Circuit, in an unpublished decision,
held that as a minority-shareholder Peter did not owe a fiduciary
duty to Carl or MLC that would prevent him from selling his
shares in MLC to an entity that would cause MLC to lose its
Subchapter S tax status. Merner v. Merner, 129 Fed. Appx. 342
(9th Cir. March 18, 2005). The Ninth Circuit reversed and
remanded so that the Court could consider the remaining claims in
Carl's complaint. Id.
In its July 3, 2003 Order, the Court noted that it did not address Carl's and MLC's argument that they are entitled to
summary judgment and injunctive relief because Peter's sale of
his stock in MLC to a non-qualified entity would breach his
implied promise not to do so and violate the covenant of good
faith and fair dealing. The parties addressed that issue in their
previous papers, but concentrated on the fiduciary duty issue.
Therefore, the Court will allow the parties to further brief the
remaining issue if they so choose. The parties are ordered to
file a stipulated briefing schedule by September 30, 2005, and
the matter will be decided on the papers. If the parties fail to
file a stipulation by that date, the Court will make its ruling
based on the summary judgment papers already filed.
IT IS SO ORDERED.
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