Bruggemann, et al. vs. Amacore Group, et al.

Filing 228

ORDER: Plaintiffs' Motion for Summary Judgment 178 is DENIED. Defendants' Motions for Summary Judgment 207 208 213 are GRANTED IN PART. Signed by Judge James S. Moody, Jr on 5/31/2011. (LN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

TY BRUGGEMANN, et al.,
Plaintiffs,
v.

Case No. 8:09-cv-2562-T-30MAP

THE AMACORE GROUP, INC., et al.,
Defendants.
_____________________________________/

ORDER
THIS CAUSE comes before the Court upon motions for summary judgment filed by
Plaintiffs and Defendants Amacore, Marcus, and Shafer (Dkts. 178, 207, 208, and 213). The
Court, having reviewed the motions, the responses thereto, and the record evidence,
concludes that the motions should be granted to the extent that the fraudulent inducement
claims asserted by Plaintiffs Welch, Burton, Fleischer, and Johnson against Amacore,
Marcus, and Shafer fail as a matter of law. Summary judgment should also be granted in
favor of Marcus on Plaintiffs’ common law fraud claims.
DISCUSSION
This case arises from a dispute related to a merger agreement (the “Merger
Agreement”) entered into between Defendant The Amacore Group, Inc. (“Amacore”), LBS
Acquisition Corp. (“LBS”), a wholly-owned subsidiary of Amacore, and Lifeguard Benefit
Services, Inc. (“Lifeguard”). LBS merged with and into Lifeguard. Plaintiffs were all

Lifeguard shareholders. During the time period leading up to the merger, Defendants Clark
Marcus and Jay Shafer were Amacore officers. Marcus was the chief executive officer of
Amacore and Shafer was the president of Amacore. According to Plaintiffs, they were to
receive $12,348,855 of Amacore stock.
Specifically, to facilitate the taking over of the assets of Lifeguard, an entity in which
Plaintiffs each had an ownership share, Amacore decided to form a corporation which would
be a wholly owned subsidiary of Amacore. Thereafter, the wholly owned subsidiary would
merge with Lifeguard, with Lifeguard being the surviving entity. In exchange for agreeing
to merge in that fashion, the existing Lifeguard shareholders, i.e., Plaintiffs, would be issued
shares of stock from Amacore and Amacore would pay off Lifeguard’s existing debt.
The focus of this case is the parties’ dispute related to the merger, with both sides
suing each other over alleged fraud that occurred before and after the execution of the
Merger Agreement. The record reflects numerous material disputed facts related to alleged
fraudulent statements that were made before the execution of the Merger Agreement.
Plaintiffs allege that Defendants Amacore, Shafer, and Marcus made purposeful
misrepresentations during the course of the negotiation and ultimate consummation of the
merger between Amacore and Lifeguard. Plaintiffs also allege that subsequent to the merger,
Defendants failed to issue the shares of stock owed to Plaintiffs pursuant to the Merger
Agreement.
Plaintiffs originally filed this action in the United States District Court for the District
of New Jersey. This case was then transferred to this Court and the Court consolidated this
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case with a similar case pending before it, which was filed, in part, by Amacore against
Plaintiffs pursuant to the same Merger Agreement. The parties agreed that Amacore’s claims
against Plaintiffs would be filed in this action as a counterclaim. The parties then filed
numerous motions to dismiss, which this Court granted and denied in part.
This case is again at issue upon Plaintiffs’ motion for summary judgment and
Defendants Amacore, Marcus, and Shafer’s motions for summary judgment. Plaintiffs move
for summary judgment on Amacore’s counterclaim, which consists of claims against
Plaintiffs Ty Bruggemann and Rocky Williams for fraudulent inducement, fraud, conspiracy
to commit fraud, breach of fiduciary duties, breach of employment agreement, unjust
enrichment, and breach of Florida’s Deceptive and Unfair Trade Practices Act, and a claim
of indemnification for breach of representations and warranties against all Plaintiffs.
Defendant Amacore moves for summary judgment on Plaintiffs’ claims of fraudulent
inducement, unjust enrichment, and breach of the covenant of good faith and fair dealing.
Defendant Marcus moves for summary judgment on Plaintiffs’ claims of fraudulent
inducement and common law fraud. Finally, Defendant Shafer moves for summary judgment
on Plaintiffs’ claims of fraudulent inducement and common law fraud.
Upon review of the record, the Court concludes that it is nearly impossible to grant
summary judgment in favor of any party on any claims because the record is rife with
material disputed facts. And the Court may not decide a genuine factual dispute at the
summary judgment stage. Fernandez v. Bankers Nat’l Life Ins. Co., 906 F.2d 559, 564 (11th
Cir. 1990). “[I]f factual issues are present, the Court must deny the motion and proceed to
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trial.” Warrior Tombigbee Transp. Co. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir.
1983). A dispute about a material fact is genuine and summary judgment is inappropriate
if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.
Here, the record is disputed on the issue of whether Plaintiffs, other than Bruggemann,
were even bound by the Merger Agreement. Notably, the Merger Agreement references a
Joinder Agreement, which was not executed by any Plaintiff. The Joinder Agreement was
to have the effect of making each stockholder of Lifeguard (i.e., each Plaintiff) a party to the
Merger Agreement and appointing Bruggemann the stockholder representative.

The

uncertainty of this key fact affects the fraudulent inducement claims and the indemnification
claims. It is also relevant to the issue of whether some Plaintiffs have unjust enrichment
claims, i.e., if they were not parties to the Merger Agreement, they may have unjust
enrichment claims against Amacore. These are all issues for the jury.
This uncertainty is not aided by Plaintiffs’ contradictory statements on this issue.
Indeed, in some filings, Plaintiffs argue that they are not bound by the Merger Agreement
because they never executed it or the Joinder Agreement. However, Plaintiffs also attempt
to assert claims against Amacore, Marcus, and Shafer for breach of the Merger Agreement,
breach of the implied covenant of good faith and fair dealing, and fraudulent inducement,
three claims that assume privity of contract.
There is also evidence in the record suggesting that the parties might have amended
the Merger Agreement to waive the representation and warranty provisions of the Merger
Agreement, which would have an impact on Amacore’s claims for indemnification for breach
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of representations and warranties against Plaintiffs. And there is an ambiguity in the Merger
Agreement as to the limitations period to file a claim for indemnification.
For these reasons, the Court is hesitant to grant summary judgment in favor of any
party.1 However, given Plaintiffs Welch, Burton, Fleischer, and Johnson’s admissions in
their depositions that they were not fraudulently induced by Shafer, Marcus, or any other
representative of Amacore to enter into the Merger Agreement (assuming they are even
parties to the Merger Agreement), the Court will grant summary judgment in favor of Shafer,
Marcus, and Amacore on their fraudulent inducement claims.2 Notably, Welch, Burton,
Fleischer, and Johnson’s testimony reflected that they did not rely upon any statements made
by Schafer and/or Marcus, which were either made directly to them (with respect to Welch),
or to Bruggemann (with respect to Burton, Fleischer, and Johnson).
The Court will also grant summary judgment in favor of Marcus and against all
Plaintiffs on the common law claim of fraud because it is undisputed that Marcus was no
longer an Amacore employee as of late August 2008.
The Court will now briefly touch upon some of the parties’ arguments in favor of or
against summary judgment. First, Plaintiffs’ argument that Defendants did not establish their
damages is devoid of any merit. Defendants’ failure to adequately respond to Plaintiffs’

1

Importantly, the factual disputes discussed in this Order are not the only material disputed facts in

this case.
2

Although Williams admitted that he never discussed the merger with Marcus or Shafer prior to the
execution of the Merger Agreement, he stated that he relied upon Bruggemann’s recommendation to execute
the Merger Agreement, which was, in turn, based on Marcus and Shafer’s alleged fraudulent statements.
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discovery requests on the issue of damages does not warrant an assumption that Defendants
do not have any damages. Significantly, Plaintiffs did not file a motion to compel related to
these allegedly deficient discovery responses. And Plaintiffs’ remaining arguments in favor
of summary judgment fail due to the material disputed facts discussed above.
Second, the Court discussed the economic loss rule at length in its orders on the
parties’ motions to dismiss and is not persuaded by Marcus’ argument that it should bar the
fraud claims asserted against him in his individual capacity.
Third, Amacore’s argument regarding the corporate veil doctrine is devoid of any
merit. Florida law is clear that “individual officers and agents of a corporation may be held
personally liable for their tortious acts, even if such acts were committed within the scope
of their employment or as corporate officers.” Wadlington v. Continental Medical Services,
Inc., 907 So. 2d 631, 633 (Fla. 4th DCA 2005).
Fourth, the integration clause contained in the Merger Agreement does not preclude
fraudulent statements of inducement. And the record contains material disputed facts on the
issue of the content of these fraudulent statements. Contrary to Defendants’ argument, the
record contains examples of specific statements made by Shafer and/or Marcus that could be
actionable. Simply put, this issue is for the jury.
Fifth and finally, the record reflects that the fraudulent representations allegedly made
by Shafer and/or Marcus were not all about “future” events, despite counsels’ attempts to
insert the word “future” in their deposition questioning. Again, this is an issue for the jury.
It is therefore ORDERED AND ADJUDGED that:
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1.

Plaintiffs’ Motion for Summary Judgment (Dkt. 178) is DENIED.

2.

Defendants’ Motions for Summary Judgment (Dkts. 207, 208, and 213) are
GRANTED IN PART.

DONE and ORDERED in Tampa, Florida on May 31, 2011.

Copies furnished to:
Counsel/Parties of Record
S:\Even\2009\09-cv-2562.mts4sumjudg.frm

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