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ESTATE OF GRANT v. U.S. NEWS & WORLD REPORT

June 12, 1986

ESTATE OF BEN GRANT, Plaintiff,
v.
U.S. NEWS & WORLD REPORT, INC., et al., Defendants



The opinion of the court was delivered by: PARKER

 Barrington D. Parker, Senior District Judge:

 This proceeding is brought on behalf of Ben Grant, deceased, a former employee of U.S. News & World Report, Inc. ("U.S. News" or "Company"). Plaintiff Estate asserts in a multi-count complaint various federal and pendent common-law claims against five defendants, arising from Grant's former employment with U.S. News. Named as defendants are U.S. News; John Sweet, a former member of its Board of Directors; the U.S. News Profit-Sharing Plan ("the Plan"); the Madana Realty Company ("Madana"), a wholly-owned subsidiary of U.S. News; and American Appraisal Associates, Inc. ("American Appraisal"), an independent appraisal firm. *fn1" The gravamen of the charges against the defendants is that they were responsible for a deliberate undervaluation of the Company's assets and stock, which in turn resulted in an undervaluation of retirement benefits due Grant upon his separation from U.S. News.

 Mr. Grant died in 1982. His interests are represented by his widow, Elizabeth B. Grant, who has obtained the requisite authority from the appropriate court allowing her to undertake this suit on behalf of his estate. The Grant Estate was formerly a plaintiff in the class action suit brought in February 1984 by employees who left the Company between 1974 and 1981 and who similarly claim that their retirement benefits were undervalued. Charles S. Foltz, et al. v. U.S. News & World Report, Inc., et al., C.A. No. 84-0447. *fn2" However, in 1985 the Estate, along with three other former members of the Board of Directors, was excluded from membership in the class, with leave to proceed separately. The Court concluded that the directors had interests which differed from and possibly conflicted with those of the remaining members of the class which included only former employees. Plaintiff Estate filed the complaint in this proceeding on January 17, 1986, later amended in February 1986. This case was consolidated on March 3, 1986 with the ongoing Foltz class action suit and a third proceeding, David B. Richardson, et al. v. U.S. News & World Report, Inc., et al., C.A. No. 85-2195, a suit brought by former employees who left U.S. News in 1982.

 Read in light of this Court's ruling on defendants' motions for summary judgment in Foltz, 627 F. Supp. 1143 (1986), and the Order consolidating the proceedings, the Estate's amended complaint charges defendants U.S. News, John Sweet, and American Appraisal variously with violations of section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 of the Securities Exchange Commission, 17 C.F.R. § 240.10b-5; Section 404(a) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1104(a), as enforced by section 502(a)(3), 29 U.S.C. § 1132(a)(3); and with the commission of common-law fraud. U.S. News and Sweet are also charged with unjust enrichment, negligence and negligent misrepresentation. Against the Profit-Sharing Plan, plaintiff asserts a claim for benefits due under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B).

 This proceeding is presently before the Court on defendants' motion for summary judgment. While defendants invoke several defenses, they rely chiefly upon the argument that the Estate's claims are time-barred. The parties have completed exhaustive discovery. Their supporting affidavits, appendices to statements and counter-statements of material facts not in dispute, legal memoranda and arguments of counsel have been fully considered. Because the Court agrees that the controlling statutes of limitations bar plaintiff's cause of action as a matter of law, the Court does not reach defendants' other arguments but grants their motion on limitations grounds. The Estate's complaint is dismissed with prejudice. The reasons for that determination are set out below.

 I. BACKGROUND

 A.

 Over the course of his employment, Grant served in several responsible posts of U.S. News including that of Supervising Editor, Associate Editor, and later Managing Editor. Beginning on January 1, 1970, he transferred from the news department to the corporate management department of the Company, where he served as Executive Vice President and as a member of the Board of Directors for five years ending December 31, 1974.

 During the years Mr. Grant served as Managing Editor of U.S. News, he frequently wrote on matters relating to business and corporate matters. *fn3" As Executive Vice President, he was authorized to serve as acting Chief Executive Officer in the event of any temporary vacancy in that position. While a member of the Board of Directors, he served on its Investment Committee, whose function was to oversee management of the Company's pension plan and the investments of the Profit-Sharing Plan. At the same time that Grant served on the U.S. News Board, he also served as a member of the Board of Directors, and as a vice president of Madana Realty Company for 20 months from mid-March 1973 to December 31, 1974. Madana oversaw the Company's extensive and potentially valuable real estate holdings in the West End of Washington, D.C., which are central to the subject matter of these consolidated lawsuits.

 B.

 In 1984, U.S. News, along with its interest in the real estate holdings, was sold to Mortimer Zuckerman, a real estate and publishing entrepreneur. Earlier, in 1981, a series of joint ventures for purposes of developing the real estate was entered into between U.S. News and a Zuckerman concern, Boston Properties, Inc. *fn6" In acquiring U.S. News, Mr. Zuckerman paid approximately $2,800 per share of stock, or roughly $176 million. Ten years earlier, when Mr. Grant retired, the stock was appraised at only $65 per share. Accordingly, his Estate, together with the Foltz and Richardson plaintiffs, *fn7" charges that U.S. News, acting in concert with American Appraisal, intentionally depressed the value of its stock, and hence of his retirement benefits, principally by not reflecting in the appraisals of the stock the full value of the Company's real estate holdings and the control premium that he asserts should have been attributed to the 50,000 shares of Class A stock held by the Plan.

 II. ANALYSIS

 Because the Grant Estate now brings a claim based upon events occurring no later than January 1975, when Grant's retirement benefits were disbursed, defendants maintain that the instant suit is time-barred. Even if the running of the statute of limitations were tolled during the pendency of Grant's participation in the Foltz class action, the defendants point out, the time for filing has long since passed. Plaintiff counters by asserting that the nature of defendants' acts require that the statute be tolled under the doctrine of fraudulent concealment, a claim advanced with more or less success by the Foltz plaintiffs in response to defendants' motions for summary judgment in that suit. *fn8" Yet because Mr. Grant held several senior management positions in the last five years immediately preceding his retirement, the defendants urge that he had ready access to, and had the means and the opportunity to discover, relevant information that would preclude either him or his estate from relying upon equitable tolling of the statute of limitations. In sum, defendants assert that, as a matter of law, Grant's official status rendered it unreasonable for him to fail to pursue his claims in a timely fashion and that, therefore, summary judgment is warranted.

 A.

 Relevant Statutes of Limitations

 The present complaint advances claims under federal securities law and ERISA, as well as various common-law claims. Accordingly, an analysis of the relevant statutes of limitations ...


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