case strikingly similar to the instant one. In Brown, the plaintiff failed to allege any fraud or misrepresentation in the stock purchase agreement itself. Instead, the plaintiff was misled as to the purpose of the sale; he was not deceived as to the value he was to receive for his shares.
DEFENDANTS SLOAN AND HSG HAVE BEEN PROPERLY ALLEGED TO BE LIABLE EITHER AS "CONTROLLING PERSONS," AIDERS AND ABETTORS OR AS PENDENT PARTIES AND ARE NOT ENTITLED TO BE DISMISSED AS DEFENDANTS
Defendant Sloan first contends that a federal claim cannot be asserted against him since the two agreements, as a matter of law, are entirely separate and, as such, cannot give rise to a federal securities claim. (Def. Memo at 18.) However, the Court's decision that the two agreements are in fact a product of each other makes such a contention moot.
The second contention of defendant Sloan is that, even if the two agreements are considered as one, he cannot be held liable for any fraud in connection with an agreement to which he is not a party; hence, the Court cannot exercise jurisdiction over him. The defendant relies on this Court's opinion in Houlihan v. Anderson-Stokes, Inc., 434 F. Supp. 1324 (D.D.C.1977), which declined to exercise pendent jurisdiction over local law claims charging accountants with violation of state securities' statutes and reckless or negligent misrepresentation. However, the Court notes that the facts of this case are different. In Houlihan, this Court declined to exercise its pendent jurisdiction over the state law claims against the defendant accountants because it had already dismissed the federal claims against them. Id. at 1329. See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966).
The Court therefore finds that it is within its discretion in determining whether or not to exercise pendent jurisdiction. Crabtree Investments, Inc. v. Aztec Enterprises, Inc., 483 F. Supp. 211 (M.D.La.1980). The factors to be considered include, inter alia, judicial fairness to the litigants, convenience of the parties and witnesses, whether the federal courts have exclusive jurisdiction over the federal claim, whether the federal court will be asked to resolve difficult questions of state law, and whether joining the claims would unduly complicate matters for the court and the jury. Id. at 217. Additionally, the Court finds that the federal and non-federal claims of the plaintiff do in fact arise from a "common nucleus of operative facts." Aldinger v. Howard, 427 U.S. 1, 96 S. Ct. 2413, 49 L. Ed. 2d 276 (1976). Based on the foregoing, the Court finds that it must exercise its pendent jurisdiction and therefore join the defendant Sloan as a party to this action.
Finally, the defendant HSG claims that it should not be a party to this action since it was not involved in the stock purchase agreement entered into between the other individual defendants and plaintiff. (Def. Reply Memo at 25.) Defendant HSG states that the implicit suggestion that, because the individual defendants were allegedly a majority of the board of HSG, their joint acts are thus the acts of HSG is, for the reasons set forth in AHS's memo, a mere conclusion of law. (Def. Memo at 19.) The Court does not agree; instead, the Court finds that this is a question of fact that must be left to the jury. This is especially so where, as the plaintiff points out, the individual defendants owned approximately 66.9% of the stock of HSG prior to the closing on the stock purchase agreement, and 99% of the stock thereafter. (Pl. Aff. at 5-6.)
Accordingly, it is, by the Court, this 4th day of November, 1980,
ORDERED, that defendants' motion to dismiss plaintiff's complaint be, and the same hereby is denied; and it is
FURTHER ORDERED, that the defendants shall file an answer to the complaint within ten (10) days from the date hereof, pursuant to rule 12(a) of the Federal Rules of Civil Procedure; and it is
FURTHER ORDERED, that the parties shall appear before this Court for a status call as set forth by future order of this Court.