Mr. Kleban argues that Jennifer LaSota, an employee of CDDT who coordinated the construction of Checkers restaurants, also worked for Mr. Terzakis and thus, Mr. Terzakis must have known restaurants costs were not under control. Ms. LaSota, however, has presented an affidavit stating she kept her work for CDDT separate from her work for Mr. Terzakis and that the only regular contact she had with Mr. Terzakis was to inform him when the contractor was breaking ground at each Checkers site. (LaSota aff. PP 3,5). As noted above, however, Mr. Terzakis appears to have gained intimate knowledge of the financial operations of CDDT and regularly reported at CDDT senior staff meetings, indicating he was kept apprised of CDDT's financial situation. Given the totality of the evidence, a reasonable fact finder could conclude Mr. Terzakis knew the facts regarding restaurant costs.
Nevertheless, Mr. Kleban's argument suffers from a more serious problem. Nowhere in his Rule 12(N) statement does he present the slightest evidence that restaurant costs exceeded the $ 575,000 estimate in material degree. In his response to Mr. Terzakis' motion, Mr. Kleban states only that his deposition testimony "rebuts" the premise that statements were not material and that for me to conclude otherwise would be "reversible error." (Pl. Memorandum at 14). A court cannot be expected to comb the record, including unspecified pages of a deposition, to find statements that the court might find material. Richards v. Combined Ins. Co. of Am., 55 F.3d 247, 251 (7th Cir. 1995). This is particularly true where, as here, a party fails to even identify the facts from which the court might draw an inference of materiality.
Next, Mr. Kleban complains that Mr. Terzakis falsely represented that the Elmhurst Checkers would generate between $ 2 million and $ 2.5 million in revenue per year. As above, Mr. Kleban has presented no evidence that this was an unreasonable prediction when it was made and thus, the statement is not actionable under 10b-5.
Mr. Kleban also argues that Mr. Terzakis told him that CDDT was responsible for cost overruns. Notably, Mr. Kleban testified it was Mr. Singer who told him CDDT would be responsible for cost overruns. (Kleban Dep. at 121). Now, at summary judgment, Mr. Kleban presents the affidavit of Mr. Nastav to argue that it was Mr. Terzakis who made the allegedly false statement. (Nastav Aff. P 4). Regardless of this inconsistency, the comment is directly contradicted by the PPM. Under the heading "Risk Factors" and the sub-heading "Construction Risks," the PPM notes that "the costs of construction may exceed the amount budgeted or there may be cost overruns that exceed the General Partner's allotment for contingencies which would make it necessary for the General Partner to seek additional financing. " (Pl. App. A at 35)(emphasis added). Oral representations which are directly contradictory to the PPM are not actionable. Carr, 95 F.3d at 547.
Mr. Kleban also argues Mr. Terzakis omitted material facts during the January, 1992 meeting. According to Mr. Kleban, Mr. Terzakis did not state that CDDT was to become the general partner of the Southwest Partnership and all other limited partnerships developing Checkers restaurants. The only evidence Mr. Kleban presents on this point are letters indicating CDDT was to become the general partner of Southwest Partnership and a certificate of amendment. (Pl. App. L, O. P). The one letter that indicates it was sent to Mr. Terzakis is dated July 21, 1992, five months after the January meeting. (Pl. App. O). Mr. Kleban presents no argument that the omission was material. Also, as noted above, Mr. Kleban must point to an affirmative statement that was misleading due to Mr. Terzakis' alleged omission. Schlifke, 866 F.2d at 944. Mr. Kleban has not cited any other statement by Mr. Terzakis that was misleading due to the alleged omission. For all of these reasons, this omission is not actionable.
Mr. Kleban alleges Mr. Terzakis did not disclose he was drawing management fees for services rendered at various restaurant cites. Mr. Terzakis admits this disclosure was not made, but notes the one-time management fee only amounted to one hundred dollars. Again, Mr. Kleban has not indicated how this omission is material or what affirmative statement was misleading due to the omission. "There must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the 'total mix' of information made available." TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449, 48 L. Ed. 2d 757, 96 S. Ct. 2126 (1976). There is no evidence that Mr. Terzakis' receipt of a one-time hundred dollar management fee would have significantly altered the mix of information available to Mr. Kleban.
Mr. Kleban also alleges Mr. Terzakis did not inform him that Mr. Terzakis was buying property that would later be developed as Checkers restaurants for the Southwest Partnership and CDDT. This argument, however, is directly contradicted by Mr. Kleban's deposition testimony indicating Mr. Singer informed him that there was already an exclusive agreement with Mr. Terzakis to purchase land and lease it back to CDDT. (Kleban Dep. at 18). Further, Mr. Kleban admits that in the November, 1991 meeting with Mr. Terzakis he discussed the possibility of getting involved in the purchase and lease-back of land. Id. This alleged omission is not actionable.
Mr. Kleban also suggest that Mr. Terzakis did not inform him that he had consented to CDDT's assignment of its leasehold interest in the Oak Lawn Checkers to United Capital Leasing in exchange for an equipment lease. Again, Mr. Kleban offers no argument that such an omission was material. Mr. Kleban may not simply proffer omissions and expect to proceed without presenting some evidence or argument that the omission would have significantly altered the information available to him. The court is left guessing at what relevance Mr. Terzakis' omission had to Mr. Kleban's decision to invest. Further, the PPM states that Southwest Partnership anticipated taking loans that would encumber the Partnership's leasehold interest. (Pl. App. A at 22). Thus, Mr. Kleban should already have been aware of the omitted information. Additionally, Mr. Kleban has not pointed to any statement that was misleading due to this omission.
The statements and omissions discussed above are the only ones supported by Mr. Kleban's evidence. None of these statements or omissions are actionable under Rule 10b-5. Accordingly, summary judgment is granted for Mr. Terzakis on Mr. Kleban's May, 1992 investment.
B. August, 1992 Investment
Although Mr. Kleban never testified to meeting Mr. Terzakis in June, 1992, Mr. Kleban has presented the affidavit of Joseph Scard, stating he met with Mr. Terzakis and Mr. Kleban in June, 1992. Mr. Scard states that Mr. Terzakis represented that he and Mr. Singer were seeking $ 30 million dollars in funding to develop Checkers restaurants. Mr. Kleban presents no evidence that this statement was untrue or material. This is the only new statement Mr. Kleban alleges was made, and is supported by evidence, between the May, 1992, investment and the August, 1992, investment. Since it is insufficient to maintain a 10b-5 action, Mr. Kleban's August, 1992 investment claim does not survive summary judgment.
C. September, 1993 Investment
Mr. Kleban has not presented any statements or omission from Mr. Terzakis between August, 1992 and September, 1993, that influenced his September, 1993 investment. Accordingly, Mr. Kleban's September, 1993 investment claim does not survive summary judgment.
After considering the evidence submitted in opposition to the motion for summary judgment, I conclude that summary judgment should be granted as to all of Mr. Terzakis' alleged misrepresentations and omissions.
Elaine E. Bucklo
United States District Judge
Dated: February 11, 1998