The opinion of the court was delivered by: GASCH
Presently before the Court are four motions: (1) the motion for a preliminary injunction of plaintiff Horizon Corporation ("Horizon"), (2) the motion for pretrial conference and for a trial date of defendants constituting the "Anselmi group," (3) the cross-motion relating to discovery of plaintiff Horizon, and (4) the motion for an order authorizing the issuance of the final election report of defendants Anselmi group. For the reasons set forth below, the Court denies the first motion, denies the second motion without prejudice to its renewal by any party at a later date, denies the third motion, and grants the fourth motion.
Plaintiff Horizon is a Delaware corporation whose executive offices are located in Tucson, Arizona. Its common stock is registered with the Securities and Exchange Commission ("SEC") pursuant to section 12(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78l (b), and is listed on the New York Stock Exchange. It is engaged in the development of planned communities in Arizona, New Mexico, and Texas, the sale of improved and unimproved lots, the sale and rental of houses, and the operation of certain related commercial facilities.
Named as defendants are twenty individuals, a limited partnership, and a corporation. Eighteen of the individual defendants John M. Anselmi, Paul D. Anselmi, William A. Anselmi, A. M. Carollo, Sr., V. Michael Crockett, Albert A. Etcheverry, Rockie E. Gamber, Clarice J. Giovanini, Joseph E. Giovanini, Isadore Handmaker, Stanley L. Heiner, William W. Kingery, Jr., Gene W. Schneider, Randy E. Stelk, Paul Syphus, Mario Temperini, Michael J. Vase, and Harold G. Ward and the Colorado-based limited partnership, Giovanini Investments, Ltd., are referred to herein as the "Anselmi group." The only two individual defendants who are not included herein as members of the Anselmi group are Frank Solomon and John Woodcock.
The remaining defendant, United Cable Television Corporation ("United Cable"), is also not included herein as a member of the Anselmi group. United Cable is a Delaware corporation whose executive offices are located in Denver, Colorado. Its common stock is registered with the SEC pursuant to the Exchange Act and is traded over-the-counter. Four of the individual defendants are associated with United Cable. Defendants Carollo and Joseph Giovanini are directors of United Cable, defendant Kingery is a vice president of United Cable, and defendant Schneider is the president and chief executive officer of United Cable.
On September 11, 1979, plaintiff filed its complaint in this action. The complaint sets forth five counts. The first count alleges that defendants have violated and continue to violate section 13(d) of the Exchange Act, as amended, 15 U.S.C. § 78m(d), and rule 13d-1, 17 C.F.R. § 240.13d-1, promulgated thereunder in that their Schedule 13D was not timely filed and that their Schedule 13D and their first, second, and third amendments thereto contained material misstatements and omissions regarding "the composition of the group, the date and nature of its formation, its intentions with regard to Horizon, and its transactions in and holdings of Horizon common stock."
The second count alleges that defendants have violated and continue to violate sections 14(a), 14(d), and 14(e) of the Exchange Act, 15 U.S.C. §§ 78n(a), 78n(d) & 78n(e), and rule 14a-9, 17 C.F.R. § 240.14a-9, promulgated thereunder in that their Schedules 14B were not timely filed and contained material misstatements and omissions. The third count alleges that defendants have violated and continue to violate section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder in that they have manipulated the market for Horizon stock.
The fourth count alleges that defendants violated section 14(d) of the Exchange Act, 15 U.S.C. § 78n(d), and rule 14d-1 17 C.F.R. § 240.14d-1, promulgated thereunder in that they failed to file a Schedule 14D-1 in connection with a tender offer that they intend to make. The final count alleges that defendants circulated a letter to Horizon stockholders dated September 6, 1979 and an accompanying proxy statement in opposition to management that were "false and misleading in numerous respects."
The complaint further alleges that defendants' violations of the Exchange Act have caused plaintiff and its stockholders irreparable injury. To remedy these violations, plaintiff seeks to have this Court enjoin defendants from soliciting any proxies from Horizon stockholders for the annual meeting of Horizon stockholders scheduled for September 27, 1979, from exercising any proxies obtained from Horizon stockholders at the annual meeting, from voting any shares of Horizon common stock at the annual meeting, and from acquiring or disposing of any Horizon common stock. Plaintiff also seeks an award of damages, compensation for attorneys' fees and costs, and such other relief as the Court deems just and proper.
C. Chronology of the Litigation.
On September 12, 1979, one day after the complaint was filed, the Court held a hearing on plaintiff's motions for a temporary restraining order, for expedited discovery, and for an order appointing special process servers. On the following day, September 13, 1979, the Court denied the motion for a temporary restraining order and granted the other two motions.
The Court next scheduled a hearing on plaintiff's motion for a preliminary injunction for September 24, 1979. On that date, plaintiff's counsel in open Court stated that plaintiff needed to conduct more discovery and requested that the hearing on plaintiff's motion for a preliminary injunction be delayed until this discovery was concluded. The Court granted this request, but nevertheless heard testimony from defendant Schneider, who testified about his and the Anselmi group's activities with respect to Horizon, and his and several group members' association with United Cable.
The annual meeting was held as scheduled on September 27, 1979. According to the tentative final report of the inspectors of election, holders of record representing 3,358,242 shares of Horizon common stock were present in person or by proxy at the annual meeting, and the tentative final count of the voting at the meeting is as follows:
On October 9, 1979, plaintiff filed a notice of depositions stating its intention to take the depositions of thirty individuals. On October 12, 1979, defendants Anselmi group moved for a protective order regarding this notice of depositions. The Court heard oral argument on this motion on October 15 and 19, 1979. At the October 19 hearing, the parties' counsel informed the Court that they had agreed to a schedule of depositions during the period commencing on October 23, 1979 and ending on November 21, 1979. In a memorandum-order dated October 19, 1979, the Court ordered the parties to comply with this schedule.
On November 9, 1979, defendants Anselmi group moved for pretrial conference and for a trial date. Plaintiff opposed this motion, and on November 21, 1979 filed a cross-motion relating to discovery, in which it proposed to take fifty-nine more depositions commencing on December 17, 1979 and ending on February 1, 1980. Defendants Anselmi group opposed this cross-motion, and on November 30, 1979 filed a motion for an order authorizing the issuance of the final election report. Plaintiff opposed this motion.
On December 20, 1979, the Court held an evidentiary hearing on the four pending motions: (1) plaintiff's motion for a preliminary injunction; (2) defendants Anselmi group's motion for pretrial conference and for a trial date; (3) plaintiff's cross-motion relating to discovery; and (4) defendants Anselmi group's motion for an order authorizing the issuance of the final election report. At this evidentiary hearing, the Court heard the testimony of seven witnesses. Plaintiff called three witnesses: (1) Sidney Nelson, plaintiff's chief executive officer; (2) Raymond S. Troubh, a partner in the investment banking firm of Lazard Freres & Cie.; and (3) Russell Houseman, the head of the solicitation division of D. F. King & Company, Inc. Defendants Anselmi group called four witnesses: (1) Kevin Conwick, a partner in the law firm of Holme Roberts & Owen; (2) J. William Robinson, a principal of Georgeson & Company; (3) defendant Schneider; and (4) defendant John Anselmi. During the course of the testimony of the seven witnesses, the Court received various exhibits into evidence. At the conclusion of ...