Royal American Managers, Inc. v. IRC Holding Corp., 885 F. 2d 1011 - Court of Appeals, 2nd Circuit 1989

Plaintiff-appellant Royal American Managers, Inc. ( RAM ) appeals from a judgment entered in the United States District Court for the Southern District of New York (Metzner, J.) dismissing claims grounded on section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, 15 U.S.C. § 78j(b) (1982) & 17 C.F.R. § 240.10b-5 (1988); section 12(2) of the Securities Act of 1933, 15 U.S.C. § 77l(2) (1982); and common law fraud. RAM instituted this action against IRC Holding Corporation ( IRC ), Joseph A. Ambriano (an officer and director of IRC), and IRC\u27s attorney, Gerald Dolman, after purchasing 49% of the stock of Interamerica Reinsurance Corporation ( Interamerica ), a New York-licensed reinsurance company wholly owned by IRC. RAM alleged that the purchase was based upon certain misrepresentations made by Dolman and Ambriano, one to the effect that prior approval of the transaction by the New York State Insurance Department ( NYSID ) would be unnecessary. RAM contended also, and maintains on appeal, that the purpose of the transaction has been frustrated because prior approval of NYSID in fact was required and not obtained. The claims were dismissed by the district court, some at the close of evidence for lack of proof, some in conformity with a jury verdict, and some by decision of the court after the verdict. See Royal American Managers, Inc. v. IRC Holding Corp., [1988-1989 Transfer Binder] Fed.Sec.L. Rep. (CCH) ¶ 94,091, at 91,095, 1988 WL 112881 (S.D.N.Y. Oct. 20, 1988). On appeal, RAM contends that the district court erred in: (1) dismissing for lack of proof the section 10(b), section 12(2) and common law fraud claims brought against Dolman; (2) refusing to permit amendment of the pleadings to include a claim against Dolman for professional malpractice; (3) deciding without submitting to the jury the section 12(2) claims against IRC and Ambriano; and (4) finding that IRC and Ambriano were not vicariously liable under section 12(2) for Dolman\u27s alleged misrepresentations. In addition, IRC and Ambriano appeal from the district court\u27s dismissal of their cross-claim against Dolman for malpractice, in the event any of RAM\u27s claims against them are reinstated. We affirm