Excelsior v. Windley (329 F. Supp. 2d 1328, 2004)

ORDER

STORY, District Judge.

Plaintiffs, shareholders in one of the Defendant corporations, brought this action alleging that they were wrongfully frozen out in connection with a transfer and acquisition of corporate assets. Plaintiffs are the following investment funds: APA Excelsior III, L.P., APA Excelsior III/Offshore, L.P., APA/Fostin Pennsylvania Venture Capital Fund, L.P., and Landmark Equity Partners V, L.P. (collectively referred to as the “Patrieof Plaintiffs”); Humana, Inc. (“Humana”); and Fostin Capital Associates II LP (“Fostin Capital”). Defendant Healthfield, Inc. (“HFI”) is a corporation providing home healthcare services that was founded in 1986 by Defendant Rod Windley. Plaintiffs were investors in HFI. In November 1996, HFI became a wholly-owned subsidiary of Defendant Healthfield Holdings, Inc. (“HHI”). In exchange for new financing, HHI gave a security interest in all of HFI’s assets, including its stock, to Finova Capital Corporation (“Finova”) in 1998. After sending numerous notices of default, Finova commenced foreclosure proceedings against HHI in early 2001. Finova foreclosed on HHI’s assets and held a public foreclosure auction on March 9, 2001. Defendants Four Seasons Healthcare, Inc. (“FSHI”), and Four Seasons Healthcare, LLC (“FSHLLC”) (collectively, “Four Seasons”), which are owned by Windley, purchased HHI’s assets at the auction.

Now before the Court for consideration are: Defendants’ Motion for Summary Judgment [81-1] and Oral Argument [81— 2]; Plaintiff APA’s Motion for Summary Judgment on Counterclaim [84-1]; Plaintiff Humana’s Motion for Summary Judgment on Federal Securities Claim [85-1]; Plaintiff Fostin Capital’s Motion for Summary Judgment on Non-Securities Claims [89-1]; Defendant’s Motion to Strike and to Disregard and Exclude Unauthenticated Documents [116-1]; Defendant’s Motion to Disregard and Exclude Certain Inadmissible Documents [121-2]; Plaintiffs’ Motion to Enforce July 22 Order [138-1]; and Plaintiffs’ Motion for Permission to Name Expert Witnesses [138-2]. Having considered the record and the parties’ briefs, the Court enters the following Order.

As an initial matter, the Court finds that the parties’ briefs and exhibits are sufficient to enable the Court to rule on the pending motions; accordingly, Defendants’s Motion for Oral Argument [81-2] is hereby DENIED. The Court turns to a number of outstanding evidentiary issues before considering the parties’ motions for summary judgment.

1. Evidentiary Issues

A. Defendants’ Motions to Disregard and Exclude Certain Evidence

Defendants raise objections to Plaintiffs’ evidence attached to the affidavits of Col-lette Adams and Patti Stanley. In an Order entered March 31, 2004, the Court rejected Defendants’ motions to strike the affidavits, but nevertheless concluded the affidavits were insufficient to authenticate the documents attached thereto. The Court reserved ruling on Defendants’ other evidentiary objections. Those objections are now before the Court for consideration.

Attached to Collette Adams’ affidavit are forty-five documents. With respect to most of those documents, Defendants concede that they can be authenticated by deposition testimony. However, Defendants specifically challenge six documents that they contend cannot be authenticated by any record evidence and contain hearsay: Plaintiffs’ Exhibits 57, 58, 59, 60, 61, and 69. These six documents were produced in response to a non-party subpoena by a financial firm named Kugman & Associates (“Kugman”).

In ruling on a motion for summary judgment, a court may consider only evidence that would be, admissible at trial. White v. Wells Fargo Guard Servs., 908 F.Supp. 1570, 1577 (M.D.Ala.1995). However, evidence produced for summary judgment need not be in an admissible form if it could be reducible to admissible form for trial. United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1444 (11th Cir.1991).

Generally, documents must be properly authenticated in order for them to be considered on summary judgment. Burnett v. Stagner Hotel Courts, Inc., 821 F.Supp. 678, 683 (N.D.Ga.1993). Federal Rule of Evidence 901(a) provides that “[t]he requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.” “To meet this standard, the proponent need only demonstrate a rational basis for its claim that the evidence is what the proponent asserts it to be.” United States v. Coohey, 11 F.3d 97, 99 (8th Cir.1993). Thus, courts may look to other evidence in the case to determine whether a challenged document meets the standard of Rule 901. See, e.g., Itel Capital Corp. v. Cups Coal Co., 707 F.2d 1253, 1259 (11th Cir.1983) (examining other evidence and determining document was properly admitted-under Rule 901).

With the exception of an invoice (Pis.’ Ex. 60), the documents here all purport to be correspondence, or drafts of correspondence, prepared at Kugman to be conveyed to Defendants or FinOva. Defendants contend these documents were never identified by their authors, recipients, or custodians in depositions. Plaintiff responds, however, that these documents were produced in response to a subpoena that requested “any and all documents which in any way relate to the foreclosure sale of Healthfield, Inc.... and all correspondence with any person employed at or representing Healthfield, Inc. or Four Seasons Healthcare, Inc. from January 1, 2000 through August 31, 2001.” Kugman’s general counsel stipulated that all documents produced by Kugman were accurate copies responsive to the subpoena. Moreover, he stipulated that the firm did not have a records custodian, but that he had contacted the parties necessary to ensure that Kugman properly responded to the subpoena.

The Court has reviewed all of the six challenged documents. They fall within the relevant timeframe specified in the subpoena and are consistent with the undisputed facts showing there was some negotiation between Windley, Finova, and Kugman prior to the foreclosure. Moreover, based on deposition testimony regarding these documents, the Court concludes that they have been sufficiently identified and connected to the circumstances of this case to provide a basis for being considered in connection with the pending motions for summary judgment. (See, e.g., Kugman Dep. at 81-83 (discussing “Four Seasons Healthcare Proposal” referenced in Pis.’ Ex. 57); id. at 87-88 (testifying with respect to Pis.’ Ex. 58, “Kit’s a letter I prepared that is addressed to Michael Keller and Randy Abrahams at Finova.”); id. at 104-05 (stating Pis.’ Ex. 60, an invoice, appeared to have been prepared by Kugman firm); id. at 111-12 (stating, with respect to Pis.’ Ex. 61, “I would guess that I did send the letter”); id. at 130-31 (testifying to circumstances referenced in Pis.’ Ex. 69); Abrahams Dep. at 109-111, 121 (connecting Pis.’ Ex. 59 with circumstances of case).)

Defendants also argue that these documents are offered for the truth of the matter asserted and are therefore hearsay; they contend that the business records exception in Federal Rule of Evidence 803(6) is inapplicable here. Plaintiffs respond that these documents are not hearsay because the statements in them were made by Defendants’ agent, Kugman. Plaintiffs further emphasize that Kugman was authorized to speak on Defendants’ behalf at the time the challenged exhibits were written.

The Court need not decide whether Kugman was acting as Defendants’ agent because it finds that the documents are not offered for the truth of the matter asserted. See Fed.R.Evid. 801(c) (defining hearsay). Instead, the documents are offered to show such things as knowledge, state of mind, and prior planning. Accordingly, Defendants’ Motion to Strike Affidavit of Collette Adams and to Disregard and Exclude Unauthenticated Documents [116-1] is hereby DENIED in part.

In Defendants’ Motion to Disregard and Exclude Certain Inadmissible Documents [121-2], Defendants challenge the following additional documents attached to Patti Stanley’s affidavit: Plaintiffs’ Exhibits 39, 59, 62, 70, 71, 72, 73, 75, 76, 77, 78, 81, 82, 83, 84, 85, 86, 90, and 91. It has not been necessary for the Court to consider these objections to reach its conclusions at summary judgment. At trial, Defendants may renew any objections to evidence that has not been discussed herein. Thus, Defendant’s Motion to Disregard and Exclude Certain Inadmissible Documents [121-2] is hereby DENIED without prejudice.

B. Plaintiffs’ Motion to Enforce and for Permission to Name Expert Witness

1. Motion to Enforce

Plaintiffs contend that Defendants failed to comply with the Court’s Order entered July 23, 2003, regarding the production of financial documents. That Order gave Defendants five days within which to produce to Plaintiffs any audited and unaudited financial statements of FSHI as may exist for January 1, 2000 through April 25, 2003. According to Plaintiffs, Defendants waited six weeks and then produced only a single document titled “Four Seasons Healthcare, Inc. and Subsidiaries Consolidated Financial Statements December 31, 2002 and 2001 (With Independent Auditors’ Report Thereon).” (The “September 2003 document”) (Pis.’ Mot. to Enforce Ex. 2.) Yet Plaintiffs contend that Defendants have regularly provided many third parties with various financial documents they now claim do not exist.

Defendants respond that they had already produced the financial statements required by this Court’s Order prior to its entry date. Moreover, they contend that the document produced six weeks following the July 23, 2003 Order was created after the close of discovery and more than five days after the Order. Thus, that document was not contemplated by Plaintiffs’ discovery requests or the Court’s Order. Finally, Defendants admit that they have other financial records, such as computer files, but they contend that Plaintiffs did not timely move to compel those records.

Although the Court stated that monthly, annual, and quarterly statements should be produced, it also noted that Defendants’ contention that there were no quarterly statements was undisputed. (Order of July 23, 2003 at 2.) Moreover, contrary to Plaintiffs’ assertion, the Order did not require Defendants to turn over drafts of financial statements. Plaintiffs’ Motion to Compel [67-1] did not raise the issue of drafts, nor do drafts appear to be at issue in the language of their Interrogatory No. 15 or Request for Production No. 12, both of which were reprinted in Plaintiffs’ Motion to Compel. Even if Plaintiffs’ original discovery requests were broader, additional types of documents, such as drafts, are beyond the scope of the July 23, 2003 Order which Plaintiffs move to enforce.

Defendants have produced evidence showing their compliance with the July 23, 2003 Order. In the now-pending Motion, Plaintiffs seek to obtain documents that were beyond the scope of that Order. Accordingly, Plaintiffs’ Motion to Enforce [138-1] is hereby DENIED.

2. Permission to Name Expert Witness

Plaintiffs contend that the September 2003 document reveals that Defendants have “cooked their books,” giving rise to Plaintiffs’ need for two expert witnesses. Plaintiffs contend that they need one expert to evaluate Defendants’ computers and any backup documents, and to determine whether any files have been destroyed. They argue that the second expert can then determine why FSHI’s income as reported in the September 2003 document increased over the financial statements that Defendants previously produced, and can assist in determining the value of FSHI. Finally, Plaintiffs state that these discrepancies did not become evident until after the close of discovery, when Defendants delivered their 2001 audited financial statements (in May 2003) and then the 2002 audited financial statements (in September 2003).

Defendants respond that Plaintiffs should not be able to obtain additional discovery through an expert who would search computer files. With respect to both experts, Defendants contend that Plaintiffs failed to name any experts during the discovery period. Finally, Defendants explain that the changes in numbers from the discovery documents to the September 4, 2003 document simply reflect adjustments made following FSHI’s 2002 audit.

The Court concludes that Plaintiffs are not entitled to name expert witnesses at this late date. As for the computer expert, the Court will not allow Plaintiffs to do indirectly what they cannot do directly-that is, obtain other financial records after the close of discovery. As for the valuation expert, the Local Rules provide that experts who will be used at trial must be designated “sufficiently early in the discovery period” to permit appropriate depositions. N.D. Ga. Local R. 26.2(C). Moreover, “[a]ny party who does not comply with the provisions of the foregoing paragraph shall not be permitted to offer the testimony of the party’s expert, unless expressly authorized by court order based upon a showing that the failure to comply was justified.” Id. The Court finds that Plaintiffs’ failure to comply in this case was not justified. Plaintiffs premise their argument on this being a case involving complex financial transactions, but it was readily apparent during discovery that complex financial transactions would be at issue. The need for an expert should have been apparent during discovery. Although Defendants made certain productions following the close of discovery, Plaintiffs have failed to show evidence of the blatant “cooking of books” they allege.

Based on all the foregoing, the naming of experts is not justified. Accordingly, Plaintiffs’ Motion for Permission to Name Expert Witnesses [138-2] is hereby DENIED.

II. Motions for Summary Judgment

Defendants have moved for summary judgment on all ■ of Plaintiffs’ claims. Plaintiff Fostin Capital has moved for summary judgment on certain of the non-securities claims, stating that all parties join in the brief and motion. Plaintiff APA Excelsior III, LC has moved for summary judgment on Defendants’ counterclaim, stating that all parties join in the brief and motion. Finally, Plaintiff Humana moves for summary judgment on the federal securities claims, stating that all parties join in the brief and motion.

Factual Background

The following facts are undisputed except as otherwise described.

A. The History of HFI and HHI

As noted above, Windley founded HFI in 1986. Plaintiffs became involved with the company when they purchased $8 million of stock in HFI in 1992. This transaction was governed by a “1992 Securities Purchase Agreement.” (See Defs.’ Ex. CC). In November 1996, HFI became a wholly-owned subsidiary of HHI by virtue of a Merger Agreement. (Defs.’ Ex. AA.) As a result, Plaintiffs’ shares in HFI were voluntarily converted to shares in HHI. (Id. ¶ 4.1.) The stock in HFI was the only asset of HHI. Subsequently, Plaintiffs invested approximately an additional $1 million in the Companies.

By 1998, Plaintiffs held several positions on the HHI Board of Directors. The Pa-tricof Plaintiffs’ representative on the Board was George Jenkins, an individual who had familiarity and expertise in investing. Humana’s representative on the Board was George Emont, another individual with familiarity and expertise in investing. Fostin Capital’s representative on the Board was Thomas Levine, a knowledgeable businessman with familiarity and expertise in investing.

During that time, Plaintiffs believed that Windley was doing an inadequate job as President and CEO of the Companies. (Jenkins Dep. (Ex. M) at 127-28; Emont Dep. (Ex. H) at 164-65; Beckman Dep. (Ex. G) at 146-52; Defs.’ Exs. KK (draft investment thesis describing HHI’s history of poor management and replacement of CEO), LL (similar description in transaction summary), MM (same in investment thesis).) Plaintiffs’ representatives on the Board testified in their depositions that they did not trust Windley. For example, Emont testified that he did not trust Windley beginning sometime between 1997 and 1999 and he believed at that time that Windley lied to him. (Emont Dep. (Defs.’ Ex. H) at 155-56.) Similarly, Jenkins stated that he would not believe Windley under oath because Windley had misled Jenkins many times. (Jenkins Dep. (Defs.’ Ex. L) at 269.) Levine testified that over a period of time from the late 1990’s to the present, Levine developed an increasing concern about whether Windley was truthful and forthcoming to his investors. (Levine Dep. (Defs.’ Ex. 0) at 146-48.) As a result of these concerns, Tom Robbins became the Companies’ President and CEO on about November 30, 1998. Windley remained the Chairman of the Board.

The Companies experienced financial difficulty beginning in at least 1998. As a result, HHI sought and obtained new financing from Finova in 1998. As part of this agreement, in which Plaintiffs participated, HHI pledged the stock in HFI as collateral for the loan and gave Finova a right to foreclose in the event of default. (Jenkins Dep. (Ex. L) at 185; Defs.’ Ex. W; Defs.’ Ex. XX; Defs.’ Ex. YY.) To secure the Finova financing, Windley was required to loan $2 million to HHI and to personally guarantee approximately $2 million of the Finova loan. (Strange Dep. (Ex. S) at 218; Defs.’ Ex. UU (promissory note from HHI to Windley for $2 million); Windley Dep. (Ex. T) at 125.)

Even after obtaining the new Finova loan, the Companies struggled financially. Although the parties dispute the degree to which the Companies were in poor financial condition, they agree that on March 31, 1999, Finova sent HHI what would be the first of several notices of default. (Defs.’ Ex. BB.) Among the reasons for default were an overadvance of approximately $1.6 million and a net worth of less than negative $5.5 million. (Id. Schedule I.) According to Cynthia Lumpkin, who was the Chief Financial Officer of the Companies beginning in early 2000, HHI’s liabilities exceeded its assets by approximately $20 million in early 2001. (Lump-kin Aff. (Defs.’ Ex. C) ¶ 4.) Moreover, Plaintiffs had written down the value of their investment in HHI, though they did so “on a conservative basis.” (Levine Dep. (Ex. O) at 96; see also Defs.’ Ex. PP; Emont Dep. (Ex. H) at 126-28; Patricof Dep. (Ex. Q) at 56-58.) Further, Windley personally loaned money to the companies to cover certain expenses such as payroll and payroll taxes. (Lumpkin Dep. (Defs.’ Ex. P) at 135-37.) According to Defendants, by February 2001, the total of the loans and interest owed to Windley by HHI and- HFI was in excess of $3 million. (Id. at 133; Defs.’ Ex. U (including various tabulations of amounts owed to Windley); Lumpkin Aff. (Defs.’ Ex. C) ¶ 9.)

In June 2000, Finova sent a demand letter to HHI that emphasized the events of default and HHI’s poor financial condition, and contemplated a meeting between Finova and HHI. (Defs.’ Ex. II.) Shortly thereafter, Finova and HHI’s management held a meeting in Scottsdale, Arizona. During that meeting, Finova indicated that HHI needed to find a buyer for HFI, or other financing; Finova also indicated that it was actively considering foreclosing on its loan., (Hughes Dep. (Defs.’ Ex. K) at 185-86.)

Needing alternatives to foreclosure, HHI solicited various proposals for recapitalizing and/or selling the Companies. One of these proposals took the form of a Letter of Intent from Westar Capital (“Westar”). (Compl. Ex. 1; Robbins Dep. (Defs.’ Ex. R) at 262-64.) The proposal in Westar’s Letter of Intent would have given Westar equity in HHI, but would have left the existing shareholders, including Plaintiffs, with nothing more than warrants to purchase some of HHI’s equity. (Compl. Ex. 1; Jenkins Dep. (Defs.’ Éx. L) at 178-80.) Although Jenkins was not satisfied by the terms of this Letter of Intent, he testified that “[i]f that was the ultimate structure and the best we could do, it would have been an acceptable transaction in the context of my role as a board member to see that this company got refinanced.” (Jenkins Dep. at 179; but see Defs.’ Ex. GG (Jan. 5, 2001 email from Jenkins to Robbins enumerating the terms of the Westar ■ proposal that were unsatisfactory to Jenkins).)

Westar and other potential bidders for the Companies were concerned that Fino-va would require full repayment of its loans. (Robbins Dep. (Defs.’ Ex. R) at 190; Abrahams Dep. (Defs.’ Ex. E) at 65-66.) Robbins, the Companies’ President and CEO, was charged with ensuring that the due diligence process went smoothly for investors like Westar. (Robbins Dep. (Defs.’ Ex. R) at 185-86.) However, there is some evidence that Windley was supposed to arrange a meeting between Wes-tar and Finova but did not do so. (Emont Dep. Oct. 31, 2002 at 115 (opining Windley had responsibility to arrange the meeting); Jenkins Dep. Oct. 25, 2002 at 271-72 (stating Windley had relationship with Fino-va).) Westar never made a binding offer to purchase HHI, and.its non-binding Letter of Intent expired in January 2001.

The Companies entered February of 2001 at least $16.5 million in debt to Fino-va, more than $2 million in debt to Wind-ley, approximately $10 million in debt to Medicare, and $7 million in debt to other creditors, some of which were antecedent and had begun, or threatened to begin, collection litigation. (Lumpkin Aff. (Defs.’ Ex. C) at ¶¶ 4-5; Hughes Dep. (Defs.’ Ex. K) at 192-93; Lumpkin Dep. (Defs.’ Ex. P) at 344; Windley Dep. (Defs.’ Ex. T) at 183.) In all, HHI’s liabilities exceeded assets by approximately $20 million. At that time, Finova was “sweeping” some of HFI’s accounts (excluding some operating and payroll accounts) and retaining a substantial portion of the swept funds. (Lumpkin Mar. 27, 2003 Dep. (Defs.’ Ex. P) at 106-07, 132.) In spite of these financial issues, there is some evidence that the company’s financial condition and cash flow had improved in the six months prior to foreclosure. (Abrahams Dep. at 99, 149.)

In early 2001, Finova itself was experiencing financial difficulties; Finova filed for bankruptcy on March 7, 2001. (Abra-hams Aff. (Defs.’ Ex. B.) ¶ 5.) Defendants contend that Finova’s growing financial difficulties meant that Finova would no longer be tolerant of HHI’s defaults and wished to end the lending relationship. (Id.; Defs.’ Ex. JJ (July 11, 2001 memo from Robbins to HHI Board of Directors emphasizing Finova’s desire “to exit the relationship as rapidly as possible”).) As described infra, however, Plaintiffs argue that Finova secretly intended a continuing relationship with Windley and HHI. (See Pis.’ Exs. 50 (“Four Seasons Healthcare Proposal” dated Jan. 24, 2001), 58 (draft terms of Healthfield restructuring memo dated Feb. 1, 2000).)

On February 22, 2001, Finova sent HHI a Notice of Default and Foreclosure (the “Foreclosure Notice”), cataloguing various events of default and announcing that it was foreclosing on all collateral pledged by HHI, including its equity in HFI. (Defs.’ Ex. DD.) The February 22 Notice stated that the public foreclosure auction was to take place on March 9, 2001. (Id.)

B. The Heart of the Dispute: Wind-ley’s and Finova’s Pre-Foreclosure Actions

Plaintiffs contend-and Defendants deny-that Windley engaged in secret negotiations with Finova for many weeks prior to the foreclosure. According to Plaintiffs, Defendants knew about Finova’s foreclosure weeks or months beforehand, and were planning to buy the Companies at the foreclosure and freeze Plaintiffs out of the deal. Defendants explain that Windley was negotiating with Finova in an attempt to restructure the existing loans and in hopes of avoiding foreclosure. Following is a sampling of the relevant evidence.

Plaintiffs point to the testimony of several individuals who indicated that negotiations between Windley and Finova had been ongoing for weeks prior to the Foreclosure Notice. (Anderson Dep. at 25-27; Abrahams Dep. at 83, 86, 88-89, 109-11, 113; Kugman Dep. at 87-90, 96-97.)

To corroborate this testimony, Plaintiffs point to Plaintiffs’ Exhibit 50, entitled “Four Seasons Healthcare Proposal” and dated January 24, 2001. The Proposal includes a “Transaction Objective,” which states that “[t]he proposed transaction will provide a capital restructuring of Health-field, creating an accretive event for FOUR SEASONS’s debt partners, and establish a key player in the home healthcare services industry.” (Pis.’ Ex. 50 at I.) Under the heading, “Elements of the Transaction,” the Proposal states: “FOUR SEASONS will acquire certain assets and stock from. Healthfield, Inc. It is contemplated Finova will foreclose on Healthfield to protect its security interests.” (Id. (emphasis added))

Plaintiffs also point to correspondence between Kugman, Windley, and Finova referencing a so-called “Four Seasons Healthcare Proposal.” On January 27, 2001, for example, an employee of Kugman wrote to Defendants’ in-house counsel, John T. Ennis, Sr., regarding “[t]he latest draft of the Four Seasons Healthcare proposal.” (Pis.’ Ex. 57.) On February 1, 2001, Mr. Kugman wrote a draft letter to Finova regarding the “Terms of Health-field Restructuring.” (Pis.’ Ex. 58.) In this draft letter, Kugman stated that Windley was in “agreement with the majority of the proposed terms,” which dealt with a term loan of $15.4 million and a company named Four Seasons Healthcare, and Kugman requested “minor modifications” regarding interest payments and the Company’s control of cash. (Id.)

Plaintiffs further contend that Windley incorporated FSHI for the purpose of using it as a vehicle to acquire the stock at the foreclosure sale. They note that Windley incorporated FSHI on February 16, 2001-just a few days prior to the Foreclosure Notice. (Pis.’ Ex. 6 at 6.) Windley testified, however, that the initial incorporation of FSHI was not done for the purpose of bidding on the Healthfield stock at the foreclosure. (Windley Dep. Mar. 12, 2003 (Defs.’ Ex. RRR) at 468-69. But see Kugman Dep. at 90 (“Mr. Windley did tell me that there was a company that he had formed previously that I think was dormant called Four Seasons, and that at some point they may consider a bid for the assets if-if it came down to that.”).) Wind-ley did sign the incorporating documents on or around March 9, 2001, so that FSHI could participate in the foreclosure auction. (Id. at 7.) Prior to its incorporation, FSHI had been discussed as performing a variety of functions, including recapitalization of HHI in an effort to avoid foreclosure or the potential purchase of a home-care program at Georgia Baptist Hospital. (Id. at 50, 468; Windley Aff. (Defs.’ Ex. DDD) ¶¶ 46-47.)

Defendants contend that Windley was working in January and early February 2001 to prevent foreclosure. (Windley Aff. II (Defs.’ Ex. DDD) ¶ 41 (so stating).) Windley states that he had no plans and took no action to purchase or bid for the Companies prior to the February 22 Notice. (Id. ¶¶ 42-45.) He submits that he was negotiating with Finova at this time to restructure the loan on behalf of Health-field to prevent foreclosure. (Id. ¶¶ 37-40.) Abrahams corroborates this assertion. (Abrahams Aff. (Defs.’ Ex. AAA) ¶ 9 (“As far as I am aware, ... proposals to Finova were always made pertaining to Healthfield Companies and proposed as alternatives to foreclosure.”) Abrahams further asserts that at least one of these proposals “involved using a company called ‘Four Seasons Healthcare’ as a vehicle for a one-time infusion of capital as a part of a last attempt to forestall foreclosure.” (Id. ¶ 10.))

On February 22, 2001, when Windley received the Foreclosure Notice, he sent memoranda to Jenkins, Emont, and Levine. (Defs.’ Exs. DD, RR.) In the memorandum to Jenkins and Emont (which he enclosed in his memorandum to Levine), Windley wrote,

I have been informed by Finova that they have called our loan, my guaranty, and elected to foreclose on Healthfield and sell the company via public sale. This is a most unfortunate turn of events but given Finova’s own situation of pending Chapter 11, apparently they felt that this was prudent given the circumstances.

I have enclosed the information that we received from Finova, notified Gary Snyder and immediately undertaken a damage control plan with our employees, referral sources and vendors. Tom, Tony and I are working diligently to minimize disruption and manage this process.

As all of you are aware, this is a very bad day at the office for me personally, not to mention my looming personal guaranty. This is a situation that I intend to fight with every effort that I am able to muster and mount a bid for the company on behalf of the management team. We have a solid team and I am confident that we can come forward with a credible offer. I would like to invite each of you to participate with me in this endeavor and co-invest. I would ultimately like for all of us to recoup our investments.

Feel free to call me with any questions.

(Pis.’ Ex. DD).

The day he received the Foreclosure Notice, Windley called Abrabams at Fino-va to plead that Finova not foreclose in light of the improving performance of Healthfield Companies. (Ennis Dep. (Defs.’ Ex. J) at 540-41; Abrahams Dep. (Defs.’ Ex. E) at 105-06). Abrahams told Windley that Windley would have to talk with other people at Finova, and that Fino-va was in bankruptcy and wanted its loan paid off. (Ennis Dep. (Defs.’ Ex. J) at 541-43.) Abrahams testified that Finova was planning to foreclose independently (Abrahams Dep. (Defs.’ Ex. E) at 160), which he states was without regard to the wishes of Windley. (Abrahams Aff. (Defs.? Ex. B) ¶7; see also Windley Aff. (Defs.’ Ex. D) ¶ 8).

In early March, Kugman arranged an Escrow Agreement between FSHI, Fino-va, and Kugman as escrow agent. (See Pis.’ Ex. 66.) On March 5, 2001, a total of $1 million was wired to this escrow account at Windley’s direction. Five hundred thousand dollars were wired by Rob Griffin and came from the Companies’ operating account, and an additional $500,000 were wired by Lisa Shunnarah from her joint account with Windley. The wire by Griffin came from HFI funds; according to Defendants, this money was in partial repayment of Windley’s loans to the Healthfield Companies. (Windley Dep. (Defs.’ Ex. T) at 22-24; Lumpkin Dep. (Defs.’ Ex. P) at 131-32.) Windley testified that he needed the money to have “the qualification in order to bid at the foreclosure.” (Windley Dep. (Defs.’ Ex. T) at 23.) Robbins, the Companies’ CEO, and the Plaintiffs were not informed of this transfer. According to Ennis, however, such a payment was in “the normal course of business.” (Ennis Dep. (Defs.’ Ex. J) at 332.)

A teleconference was held on March 8, 2001; all of the members of the Board were included in at least part of the conference, as were bankruptcy counsel. At that time, Jenkins proposed putting HHI into Chapter 11 bankruptcy. (Robbins Dep. (Defs.’ Ex. R) at 149-150; Jenkins Dep. (Defs.’ Ex. L) at 189-92; Emont Dep. (Defs.’ Ex. H) at 205.) During the teleconference, a poll was taken and Robbins, Windley, Ennis and Emont opposed Jenkins’ bankruptcy proposal. (Emont Dep. (Defs.’ Ex. H) at 205; Robbins Dep. (Defs.’ Ex. R) at 150; Ennis Dep. (Defs.’ Ex. J) at 323; Jenkins Dep. (Defs.’ Ex. L) at 191.) Also discussed during the teleconference was the fact that Windley would mount a bid and Jenkins might also do so on behalf of Plaintiffs. (Ennis Dep. (Defs.’ Ex. J) at 144-48; Emont Dep. (Defs.’ Ex. H) at 73-76.)

Prior to the foreclosure auction, there were no stated objections to either Windley’s or Jenkins’ plans to bid at the auction. Plaintiffs declined to join in Windley’s bid for HFI. Instead, Jenkins informed Windley that Plaintiffs were going to place their own bid for HFI at the foreclosure auction. (Jenkins 30(b)(6) Dep. (Defs.’ Ex. M) at 95-96; Robbins Dep. (Defs.’ Ex. R) at 135; Strange Dep. (Defs.’ Ex. S) at 251.)

Several of those present at the March 8 conference directed that a letter be sent to Finova placing it on notice of potential lender liability and reserving rights against it. A draft letter was prepared, but it was never sent to Finova. Defendants explain that the draft was not sent on the advice of counsel because it contained strong rhetoric. (Robbins Dep. (Defs.’ Ex. R) at 622-23; Ennis Dep. (Defs.’ Ex. J) at 295-321, 840-43.) Apparently, some attempt was made to reach Jenkins about the language of the letter but he was not reached. (Ennis Dep. (Defs.’ Ex. J) at 302-05.) Plaintiffs emphasize that they were never informed of the decision not to send the letter.

In addition, Plaintiffs contend that payroll taxes were discussed at the March 8 conference. Apparently, taxes were owed in the approximate amount of $900,000, and Plaintiffs wanted those to be paid before the foreclosure because of their concerns about personal liability. (See En-nis Dep. at 171-72 (stating Robbins was told to see how much money was available and pay as much as he could); Pis.’ Ex. 74 at 1 (Kugman’s notes reflecting expressed desire to have payments made).) No payments on payroll taxes were made prior to the foreclosure, and Plaintiffs contend that as a result there was extra company cash to be acquired at the foreclosure sale. (.See Pis.’ Ex. 6 at 10 (showing cash assets when company was acquired in excess of $3 million).)

C. Foreclosure

The foreclosure auction was held in Chicago on March 9, 2001, and was conducted by the law firm of Latham & Watkins, which represented Finova with respect to the foreclosure. Advertisements for the auction were published in the National Association for Home Care (“NAHC”) Report (an industry trade journal), the Atlanta Journal Constitution, and the Birmingham News. Finova charged Kugman with generating interest in the auction. More than a dozen prospective bidders were contacted and notified of the impending auction. Approximately twenty potential bidders availed themselves of the opportunity to conduct a due diligence review of the Healthfield Companies prior to the auction. Two potential bidders attended the auction: FSHI and the Phoenix Group. Plaintiffs did not attend the auction or participate in the bidding. After FSHI placed its bid, the Phoenix Group declined to bid and Finova accepted FSHI’s bid.

FSHI’s bid for HFI’s stock incorporated the following consideration: (1) $1 million in cash; (2) assumption of the full balance of Finova loans, estimated at $16.4 million; (3) the issuance of a warrant that would allow Finova to purchase twenty percent of the equity of FSHI for “a nominal exercise price;” and (4) the assumption of the approximately $25 million remainder of HHTs obligations. (See Pis.’ Ex. 7 at DS 08679-80.) The total purchase price was approximately $41,681,000. (Id.) Finova financed the transaction. At the closing, Windley accepted further terms from Fi-nova, including a conversion of $2.6 million he had loaned Healthfield Companies into equity and a personal guaranty of $2.7 million. (Windley Aff. (Defs.’ Ex. D) ¶ 16.)

At the foreclosure sale, David Heller, the attorney running the sale stated, “[a]nd again, so that there’s misunderstanding, this bid does not catch us by surprise. We have been in constant discussions with Four Seasons and negotiations. It’s been ongoing for some time. We thank Four Seasons for its interest and for its bid.” (Pis.’ Ex. 80 at 8 (Tr. of Public Sale).)

D. Procedural History

Plaintiffs filed a predecessor to this case on October 5, 2001. (APA Excelsior III v. Windley, No. L01-CV-2662-RWS.) Plaintiffs filed a voluntary dismissal without prejudice on October 30, 2001, apparently because the parties were involved in settlement negotiations. Plaintiffs filed the instant case on November 21, 2001. In the Complaint, Plaintiffs allege the following causes of action:

I. Violations of Federal Securities Exchange Act of 1934, section 10(b) and Rule 10b-5 promulgated thereunder, against all Defendants.

II. Common Law Fraud or Intentional Misrepresentation and Statutory Fraud, Misrepresentation, or Deceit, and Fraud by Suppression of Fact in a Confidential Relationship, against all Defendants.

III. Conflict of Interest, against Wind-ley.

IV. Breach of Fiduciary Duties and Oppression of Minority Shareholders, against Windley.

V. Fraudulent Conveyance, against all Defendants.

VI. Deceptive Trade Practices, against all Defendants.

VII. Breach of Contract, against Wind-ley, HFI, and HHI; Breach of Implied Covenant of Good Faith and Fair Dealing, against Windley, HFI, and HHI; Tortious Interference, against FSHI and FSHLLC.

VIII. Accounting, Resulting or Constructive Trust, Restitution of Unjust Enrichment and Declaratory Relief, against all Defendants.

Defendant FSHI counterclaimed with a single count, alleging that Plaintiffs committed tortious interference with business relations and prospective business relations in connection with their activities in filing this lawsuit. As described previously, several motions for summary judgment are now pending.

Discussion

A. Standards

Summary judgment is appropriate only when the pleadings, depositions, and affidavits submitted by the parties show that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court should view the evidence and any inferences that may be drawn in the light most favorable to the non-movant. Adickes v. S.H. Kress & Co., 898 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). The party seeking summary judgment must first identify grounds that show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24,106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden then shifts to the non-movant, who must go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

B. Motions for Summary Judgment on Plaintiffs’ Claims

1. Federal Securities Claims

Cause of Action I of Plaintiffs’ Complaint is a claim under § 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 promulgated thereunder, and controlling person liability under § 20(a). Defendants and Humana have moved for summary judgment on the federal securities claims.

a. Standing

Two standing issues must be resolved prior to assessing the substantive elements of the claims. To have standing to bring a private securities claim under § 10(b) or Rule 10b-5, one must be a purchaser or seller of securities. Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975); see Kaplan v. UtiliCorp United, Inc., 9 F.3d 405, 408 (5th Cir.1993) (plaintiff who lacked standing for direct action under § 10(b) also lacked standing for § 20(a) controlling person claim). First, the parties contest whether Plaintiffs owned HFI stock at the time of the foreclosure. sale and hence, whether Plaintiffs may sue HFI for securities violations. Second, the parties contest whether the “forced seller doctrine” applies and consequently, whether Plaintiffs have standing to sue HHI.

i. Plaintiffs’ ownership of HFI securities

To assess Plaintiffs’ standing to sue HFI for securities violations, the Court must resolve whether Plaintiffs retained any ownership of HFI stock following its merger and conversion of shares. The Merger Agreement provides that a wholly-owned subsidiary of HHI, “Sub,” will merge with and into HFI. (Defs.’ Ex. AA. at ¶ 1.1.) Thereafter, HFI becomes the surviving corporation and is a wholly-owned subsidiary of HHI. (Id.) By virtue of the merger, each share of HFI is to be “converted into and represent the right to receive” one corresponding share of HHI stock. (Id. ¶ 4.1.) Further, the Agreement provides that shares of HFI stock prior to the merger must be surrendered and will be deemed surrendered. (Id. ¶ 4.2.)

This scenario appears to be what is sometimes called a “reverse triangular merger,” in which a target corporation (here, HFI) becomes a wholly-owned subsidiary of a parent corporation (HHI) without any change in its corporate existence. See Binder v. Bristol-Myers Squibb, 184 F.Supp.2d 762, 771-72 (N.D.Ill.2001) (applying Delaware law) (explaining various mergers). The effect of this transaction is that shareholders in the target corporation (HFI) lose their shares in the subsidiary and become shareholders of the parent (HHI). See Lewis v. Ward, No. Civ.A. 15255, 2003 WL 22461894, at *1 (Del.Ch. Oct.29, 2003) (describing such a merger and loss of shares in subsidiary). This result comports with the language of the Merger Agreement. (See Defs.’ Ex. AA at DS 06560 (“the stockholders of Healthfield [HFI] immediately prior to the Merger shall become stockholders of Holdings [HHI]”).)

Based on the foregoing, the Court holds that Plaintiffs no longer owned shares of HFI after the Merger Agreement went into effect. Those shares were converted into shares of HHI. The Court further notes that all of the complained-of actions took place following the merger, and Plaintiffs have not challenged the merger itself. Thus there appears to be no reason why Plaintiffs should be treated as stockholders of HFI for purposes of this suit. Cf. Schreiber v. Carney, 447 A.2d 17, 22 (Del.Ch.1982) (plaintiff, whose shares were converted in merger, had standing to bring state derivative action where he sought to challenge actions taking place prior to and in connection with merger). Accordingly, Defendants’ Motion for Summary Judgment is hereby GRANTED as to HFI on Cause of Action I; Humana’s Motion for Summary Judgment on Federal Securities Claims is hereby DENIED as to HFI on these same claims.

ii. Forced seller doctrine

The parties contest the application of the “forced seller doctrine.” As noted above, a party must be a purchaser or seller of securities to have standing under § 10(b) and Rule 10b-5. Some courts have relaxed this rule by way of the forced seller doctrine. See Dudley v. Southeastern Factor & Finance Corp., 446 F.2d 303, 307 (5th Cir.1971) (“a shareholder should be treated as a seller when the nature of his investment has been fundamentally changed from an interest in a going enterprise into a right solely to a payment of money for his shares’’); Herpich v. Wallace, 430 F.2d 792, 806 (5th Cir.1970) (describing general rule). But see Isquith v. Caremark Int’l, 136 F.3d 531, 536 (7th Cir.1998) (holding forced seller doctrine is no longer good law).

By the June 2002 Order, this Court rejected Defendants’ argument that the doctrine is no longer viable and denied their motion to dismiss on that basis. Defendants ask the Court to reconsider that ruling; however, they make no' effort to meet the standards for reconsideration. See Deerskin Trading Post, Inc. v. United Parcel Serv. of Am., Inc., 972 F.Supp. 665, 674 (N.D.Ga.1997) (a motion for reconsideration should not be used to reiterate arguments that have been made previously, but “should be reserved for certain limited situations, namely the discovery of new evidence, an intervening development or change in the law, or the need to correct a clear error or prevent a manifest injustice”). As discussed in the June 2002 Order, the Court considers itself bound by former-Fifth Circuit authority applying the forced seller doctrine. See Alley v. Miramon, 614 F.2d 1372, 1385 (5th Cir.1980); Dudley, 446 F.2d 303; Coffee v. Permian Corp., 434 F.2d 383 (5th Cir.1970); Hooper v. Mountain States Sec. Corp., 282 F.2d 195, 203 (5th Cir.1960).

No party has made any attempt to analyze the elements of the forced seller doctrine. Plaintiffs simply contend that it applies, and Defendants simply argue that it should not. Neither is sufficient at the summary judgment stage. Courts have generally required the following elements of the forced seller doctrine: (1) a drastic reduction in the value of the plaintiffs investment; (2) a causal relationship between the alleged fraud and the altered nature of the plaintiffs investment; and (3) an elimination of the prior business entity as a result of the complained-of business transactions. Richard B. Gallagher, Who is “Forced Seller” for Purposes of Maintenance of Civil Action Under § 10(b) of Securities Exchange Act of 1934, 59 AL.R.Fed. 10, 1982 WL 198735 (2004); see Dudley v. Southeastern Factor & Fin. Corp., 446 F.2d 303, 307 (5th Cir.1971)(stating general principles). The Court concludes that there is sufficient evidence in the record from which a jury could find the first two elements. The parties’ failure to point to evidentiary support for the presence or absence of the third element, however, is fatal at the summary judgment stage.

As the Court described in the June 2002 Order, a shareholder may be treated as a seller when his investment has been so fundamentally changed as to leave him with nothing more than a claim for payment of money. Dudley, 446 F.2d at 307. More particularly, a right to “payment of money” in the Fifth Circuit has always arisen in the context of a liquidation of assets. See Alley, 614 F.2d 1372; Dudley, 446 F.2d 303; Coffee, 434 F.2d 383. A foreclosure is distinguishable from liquidation for purposes of the forced seller doctrine. Amesen v. Shawmut County Bank, N.A., 504 F.Supp. 1077, 1082 (D.Mass.1980).

In Amesen, for example, the court dismissed a claim alleging facts very similar to those here because the corporation involved had not been liquidated. There, the plaintiff shareholders alleged that the defendant bank and other third-party defendants had orchestrated a foreclosure of the corporation’s assets. Id. at 1081. An auction was held, and all the corporation’s assets were sold to a new corporate entity that was run by some of the defendants and financed by the defendant bank that had initiated foreclosure. Id. The plaintiffs were left with stock of little or no value in a corporation that had ceased its active existence but never been liquidated. Id.

The court held that these allegations were insufficient to survive a motion to dismiss because the corporation had not been liquidated. The court reasoned that when liquidation occurs, there is no doubt that any ownership interest in a company has been converted to claims of cash. Id. at 1082 (citing Dudley, 446 F.2d 303). Even though liquidation may be a formality where a corporation’s sole assets were the foreclosed-upon stock, the court explained that it is proper and in keeping with the policies emphasized in Blue Chip Stamps to construe the forced seller doctrine narrowly. Id. In sum, the court concluded that the plaintiffs spoke not as investors but “as shareholders complaining of alleged corporate mismanagement.” Id.; see also Batchelder v. N. Fire Lites, Inc., 630 F.Supp. 1115, 1120-21 (D.N.H.1986) (even though corporation continued to exist only as shell, argument that shares were “valueless” could not succeed because plaintiffs still had ownership interest in corporation). See generally Jacobs v. Winthrop Fin. Assocs., 77 F.Supp.2d 206 (D.Mass.1999) (recognizing continued viability oiAmesen’s reasoning).

Amesen’s reliance on Fifth Circuit authority, and its reasoning, make it particularly persuasive to this Court. Yet the parties have provided nothing to show how its principles might apply in this case. Plaintiffs have pointed the Court to no evidence showing the corporate status of the Healthfield Companies. They state, without citation to evidence, that “[a]s a result of the foreclosure sale, FSHI and Mr. Windley wound up immediately owning all the assets of Healthfield Holdings, Inc.” (PI. Humana Inc.’s Statement of Material Facts as to Which There is no Genuine Issue to be Tried on Fed. Sec. Claims [85] ¶ 62.) Defendants dispute this statement, and write that “Hollowing the foreclosure auction, Four Seasons Healthcare, Inc. owned the stock of Healthfield, Inc. subject to a $41 million debt and a personal guarantee by Rod Windley.” (Defs.’ Resp. to PL Humana’s Statement of Material Facts [108] ¶ 62.) Next, Plaintiffs state that “[t]he Minority Shareholders, who had invested a total of approximately $10 million, wound up with nothing.” (PL Humana Inc.’s Statement of Material Facts [85] ¶ 63.) Once again, this statement is supported by no citation to evidence. Defendants’ response sheds no further light on the matter: “Plaintiffs retained ownership of their stock and warrants in HHI, but HHI had no, or virtually no, assets after the foreclosure auction.” (Defs.’ Resp. to Pl. Humana’s Statement of Material Facts [108] ¶ 63.) This response lacks any citation to evidence.

As noted above, the facts alleged here are very similar to those alleged in Ame-sen. Unlike Amesen, however, this case is at the summary judgment stage. The parties here had the opportunity to show the Court evidence relating to the status of HHI and whether Plaintiffs have nothing more than a claim for cash; both parties failed to do so. Moreover, the Court in the June 2002 Order put the parties on notice that liquidation could be an issue. (See June 2002 Order at 15.) This lack of showing precludes Humana’s Motion for Summary Judgment on the Federal Securities Claims. The Court therefore turns to whether-presuming Plaintiffs could show the forced seller doctrine is applicable at trial-Defendants are nevertheless entitled to summary judgment as to the substantive elements of the securities causes of action. See Gerrard v. A.J. Gerrard & Co., 285 F.Supp.2d 1331, 1348 (S.D.Ga.2003) (denying plaintiffs’ motion for summary judgment on securities claims but considering remaining elements to reach conclusion on defendant’s motion for summary judgment).

b. Elements of § 10(b) claims

Section 10(b) makes it unlawful for any person “[t]o use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe,” and Rule 10b-5 promulgated thereunder, making it unlawful “[t]o make any untrue statement of material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.” 15 U.S.C. § 78j; 17 C.F.R. § 240.10b-5.

To prevail on a securities fraud claim under section 10(b) and Rule 10b-5, a plaintiff must show: (1) a misstatement or omission of a material fact, (2) made with scienter, (3) on which plaintiff relied, (4) that proximately caused his injury. See Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194, 1202 (11th Cir.2001); Robbins v. Roger Prop., Inc., 116 F.3d 1441, 1447 (11th Cir.1997); Ross v. Bank South, N.A., 885 F.2d 723, 728 (11th Cir.1989) (en banc).

i Material false statements

Plaintiffs have catalogued numerous statements they contend are false, along with numerous omissions. The Court concludes that there are genuinely disputed issues of material fact with respect to at least three misrepresentations or material omissions: Windley’s omission in not disclosing that he was using $500,000 of company money in support of his bid; his omission in not disclosing his pre-foreclosure negotiations with Finova; and his statements implying that the cost of restructuring the Finova loan would require repayment of the entire loan.

Materiality is met where disclosure of the false statement or omission “would alter the total mix of facts available to the investor and if there is a substantial likelihood that a reasonable shareholder would consider it important to the investment decision.” In re World Access, Inc., 310 F.Supp.2d 1281, 1290 (N.D.Ga.2004) (internal quotations omitted). With respect to the $500,000, Defendants claim that this omission was immaterial because (a) Plaintiffs were not entitled to this money; and (b) HHI could not have used it to mount its own bid. As Defendants explain, the $500,000 was not owed to Plaintiffs; it either would have been paid to creditors or it would have been “swept” by Finova prior to foreclosure. (Abraham Aff. (Defs.’ Ex. B) ¶ 17.) This argument, however, misses the point: had Plaintiffs known about Windley’s use of the money, Plaintiffs would have been more cautious. They could have notified Finova and demanded the return of the money, possibly preventing Windley from mounting his bid. Given the financial status of the company and the impending foreclosure, it seems almost inescapable that a jury could find that this omission was material.

Likewise, Windley’s failure to inform Plaintiffs about his previous negotiations with Finova and that Finova was willing to refinance most of the debt was material. Plaintiffs have provided evidence showing that they would have pursued a similar bid had they known this was a possibility. By withholding this information, Windley denied Plaintiffs the ability to assess the situation fully. Defendants argue that Windley could not have disclosed his planned bid because it would have been a securities violation. This argument is a red herring because Defendants provide no evidence that Windley failed to disclose the information for that reason, or that if he had, it would as a matter of law somehow excuse his conduct. Based on the foregoing, the Court concludes that, taking the evidence in the light most favorable to Plaintiffs, a jury could reasonably find that Windley made material false statements or omissions.

ii. Made with scienter

The parties do not dispute that this element is met. Furthermore, the Court concludes that there is sufficient evidence from which a jury could find this element. Scienter means “a mental state embracing intent to deceive, manipulate, or defraud.” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 194 n. 12, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976). In the Eleventh Circuit, a showing a severe recklessness is sufficient to satisfy the scienter element. Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194, 1202 (11th Cir.2001). Severe recklessness is more than mere simple or even inexcusable neglect, but must be an extreme departure from the standards of ordinary care. Id.; see also Druskin v. Answerthink, Inc., 299 F.Supp.2d 1307, 1323 (S.D.Fla.2004). There is no dispute that Windley knew of the $500,000 and Finova’s willingness to finance his bid. There is also evidence that he was aware of the Plaintiffs’ concern about the Companies’ financial situation and the impending foreclosure-and more specifically, about their interest in mounting their own bid. A jury could infer from the facts that the standard of ordinary care-which here included making decisions in the best interest of the Companies rather than for Windley personally-was departed from in the extreme in this case.

in. Reasonable reliance

Presuming Plaintiffs could show that the forced seller doctrine is applicable, they must show causation, but not reliance. Reliance is “unnecessary in the limited instance when no volitional act is required and the result of a forced sale is exactly that intended by the wrongdoer .... What must be shown is that there was deception ... and that this was in fact the cause of plaintiffs injury.” Vine v. Beneficial Fin. Co., 374 F.2d 627, 635 (2d Cir.1967); see also Alley v. Miramon, 614 F.2d 1372, 1385 (5th Cir.1980) (reaffirming, following Blue Chip Stamps, Fifth Circuit’s adoption of Vine); Kirwin v. Price Communications Corp., 274 F.Supp.2d 1242, 1249-50 (M.D.Ala.2003) (describing rule that reliance is not required in forced seller cases).

Defendants argue that the Eleventh Circuit mandates that reliance is required in all 10(b) cases. The cases they cite for this proposition, however, do not involve the forced seller doctrine and are therefore inapposite. See generally Gochnauer v. A.G. Edwards & Sons, 810 F.2d 1042 (11th Cir.1987) (examining reliance in traditional 10(b) case where standing and forced seller doctrine were not at issue); Huddleston v. Herman & MacLean, 640 F.2d 534, 548 (5th Cir. Unit A Mar.1981) (stating reliance is required in all 10b-5 cases, but not considering special circumstances of forced seller cases).

iv. Causation

In ordinary 10b-5 cases, the causation element requires both “transaction causation” and “loss causation.” Bruschi v. Brown, 876 F.2d 1526, 1530 (11th Cir. 1989). Transaction causation requires a plaintiff to show that the defendant’s actions induced the transaction-usually a sale of securities. Id.; In re Checkers Sec. Litig., 858 F.Supp. 1168, 1177 (M.D.Fla. 1994). Loss causation requires the plaintiff to show that the falsehood was in some reasonably direct, or proximate way, responsible for his loss. Bruschi, 876 F.2d at 1530; Checkers, 858 F.Supp. at 1177.

Defendants acknowledge that transaction causation is “another way of describing reliance.” Robbins v. Roger Props., 116 F.3d 1441, 1447 (11th Cir.1997). As set forth above, reliance is not an element in forced seller cases.' While causation is a required element, it is only loss causation that the Plaintiffs must show. Shores v. Sklar, 647 F.2d 462, 480 (5th Cir. May 1981); Kirwin v. Price Communications Corp., 274 F.Supp.2d 1242, 1250 (M.D.Ala.2003). With respect to loss causation, “the plaintiff need not show that the defendant’s act was the sole and exclusive cause of the injury he suffered;” the plaintiff need only show that it was a substantial or significant contributing cause. Bruschi, 876 F.2d at 1531. Thus, plaintiffs may not recover where their loss is a result of market conditions or a company’s insolvency. Id. Instead, the fact misstated must be of a nature calculated to bring about the result that occurred. Id.

Here, Defendants essentially argue that any loss to the Plaintiffs was caused by HHI’s insolvency, not by any misstatements or omissions by Windley. They emphasize that it is uncontroverted that HHI was in default and that Finova was entitled to foreclose on its valid security interest. Neither Plaintiffs nor Defendants could have stopped the auction, Defendants argue. Plaintiffs’ emphasis, however, appears to be on preventing the “freezeout,” not necessarily the foreclosure itself. They state that had they known about the $500,000, they could have notified Finova and at least prevented Wind-ley from keeping the money. They further argue that had they known Finova would be willing to accept a bid with only $1 million cash, it is undisputed that they could have prepared a bid in this price range.

Taking all the facts and reasonable inferences in the light most favorable to Plaintiffs, the Court concludes there are genuine issues of material fact whether Windley’s actions caused Plaintiffs’ loss. The key to this conclusion is that a jury could reasonably conclude that Windley’s actions in taking the $500,000 and failing to disclose his negotiations with Finova were calculated to bring about the result of Plaintiffs’ freezeout. Certainly Windley’s actions were not the sole cause of Plaintiffs’ loss, but circumstances such as Wind-ley’s relationship with Finova, his interest in competing corporations, and his actions in taking $500,000 from a company about to be foreclosed upon, could be viewed by a jury to have caused Plaintiffs’ freezeout. On the other hand, a jury could conclude that Plaintiffs’ loss was merely a result of changing financial conditions such that loss causation has not been met. Accordingly, Defendants are not entitled to summary judgment as to the § 10(b) and Rule 10b-6 portions of Plaintiffs’ claims against Wind-ley.

c. Corporate liability

Both sides address corporate liability in the context of their § 20(a) controlling person discussions. The § 20 controlling person liability is not, however, the exclusive means by which a corporate entity may be liable. Paul F. Newton & Co. v. Tex. Commerce Bank, 630 F.2d 1111, 1119 (5th Cir.1980) (“§ 20 does not supplant or exclude the application of common law principles of agency, in particular the doctrine of respondeat superior, in an action brought under the Securities Exchange Ac