                          UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


FRED MUELLER; BONNIE HORNER,           
              Plaintiffs-Appellants,
                 v.
                                                  No. 02-2091
CLAYTON A. THOMAS; DONALD E.
CLARKE; CLYDE HEINTZELMAN,
             Defendants-Appellees.
                                       
            Appeal from the United States District Court
         for the Eastern District of Virginia, at Alexandria.
               Claude M. Hilton, Chief District Judge.
                          (CA-02-331-A)

                      Argued: September 24, 2003

                      Decided: December 19, 2003

    Before WILKINSON and GREGORY, Circuit Judges, and
              HAMILTON, Senior Circuit Judge.



Affirmed by unpublished per curiam opinion.


                             COUNSEL

ARGUED: John Martin Wood, REED SMITH, L.L.P., Falls Church,
Virginia, for Appellants. John Paul Corrado, MORRISON & FOER-
STER, L.L.P., McLean, Virginia, for Appellees. ON BRIEF: Frank
T. Pimentel, REED SMITH, L.L.P., Falls Church, Virginia, for
Appellants. Stephen M. Colangelo, John A. Trocki, III, Brett A. Wal-
ter, MORRISON & FOERSTER, L.L.P., McLean, Virginia, for
Appellees.
2                        MUELLER v. THOMAS
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).


                             OPINION

PER CURIAM:

   Plaintiffs Fred Mueller and Bonnie Horner are the former owners
of FreBon International Corporation, a telecommunications company
that they sold to Net2000 Communications in June 2000. Mueller and
Horner subsequently filed suit against a number of Net2000’s offi-
cers, alleging that the officers fraudulently misrepresented and failed
to disclose material facts. The district court dismissed the suit, how-
ever, finding that Mueller and Horner were not entitled to rely on any
oral representations inconsistent with the written purchase agreement
for FreBon, and also that the officers lacked any duty of disclosure.
Because the district court properly construed the parties’ purchase
agreement and the relevant securities laws, we affirm.

                                  I.

   Mueller and Horner are the former co-owners of FreBon Interna-
tional Corporation ("FreBon"), a video conferencing service. In June
2000, Mueller and Horner agreed to sell FreBon to Net2000 Commu-
nications, Inc. ("Net2000"), a former local exchange carrier. Repre-
senting Net2000 in the sale were three senior officers and directors at
Net2000: Clayton Thomas, Chairman of the Board of Directors and
Chief Executive Officer; Donald Clarke, Executive Vice-President,
Chief Financial Officer, and Treasurer; and Clyde Heintzelman, Presi-
dent and a Director.

   On June 28, 2000, the parties executed a Stock Purchase Agree-
ment ("Agreement"), pursuant to which Mueller and Horner agreed to
sell all of their stock in FreBon to Net2000 in exchange for cash,
Net2000 stock, and an earnout provision. The earnout provision
allowed Mueller and Horner to earn as much as an additional $15 mil-
lion if FreBon met certain financial milestones as a wholly-owned
subsidiary of Net2000 during the next year. At the same time that
                         MUELLER v. THOMAS                           3
Net2000 entered into the Stock Purchase Agreement with Mueller and
Horner, it also consummated a $200 million credit facility with TD
Securities ("Credit Facility").

   When FreBon did not meet the financial targets outlined in the
Agreement, Mueller and Horner did not realize the benefits of the
earnout provision. They then filed suit against Net2000 in September
2001 for breach of the Agreement. When Net2000 filed for bank-
ruptcy two months later, Mueller and Horner abandoned their breach
of contract claim and initiated the present fraud action against
Net2000 officers Clarke, Thomas, and Heintzelman. Specifically,
Mueller and Horner claimed that the Net2000 officers had misrepre-
sented material facts during negotiations over the Agreement and
failed to disclose the terms of the Credit Facility. According to Muel-
ler and Horner, the Net2000 officers’ misrepresentation and omission
of material facts violated federal and state securities laws and also
constituted common law fraud and constructive fraud.

   The district court dismissed Mueller and Horner’s complaint. It
held that Mueller and Horner were not justified in relying on the
Net2000 officers’ alleged misrepresentations, and that Mueller and
Horner had failed to assert any basis on which the Net2000 officers
had a duty to disclose the Credit Facility. Mueller and Horner now
appeal from the district court’s grant of the Net2000 officers’ motion
to dismiss.

                                  II.

   Mueller and Horner first allege that during negotiations over the
Agreement in April and May 2000, Clarke and Thomas fraudulently
misrepresented several material facts, thereby inducing Mueller and
Horner to agree to Net2000’s acquisition of FreBon. According to
Mueller and Horner, Clarke and Thomas represented that the telecom-
munications network of Net2000 would support FreBon’s videocon-
ferencing systems; that Mueller and Horner would have operational
control of FreBon as a wholly-owned subsidiary of Net2000, at least
during the one-year period of the earnout provision; and that Net2000
would make various efforts to support FreBon’s sales objectives, such
as by training its employees regarding FreBon’s services or authoriz-
ing FreBon to hire additional sales and marketing personnel. In addi-
4                        MUELLER v. THOMAS
tion, Clarke allegedly misrepresented that Net2000 would provide the
support necessary to meet the Agreement’s revenue targets; and that
Net2000 would take other reasonable commercial efforts to help
Mueller and Horner achieve the earnout. Mueller and Thomas assert
that all of these representations were false.

   The district court’s response was twofold. First, the court held that
Mueller and Thomas should not have relied on the alleged misrepre-
sentations that are directly addressed in the Agreement, because they
had signed an Agreement that "expressly made such representations
conditional." For instance, Article 5.14(2) of the Agreement states
that Net2000 will train its sales and marketing personnel regarding
FreBon’s services. And Article 5.14(3) and (4) state that Net2000 will
authorize FreBon to hire additional sales and marketing personnel.
However, Article 5.14 makes all of the obligations set forth in that
section — like training and hiring personnel — "subject to change at
any time based on [Net2000’s] business conditions, the competitive
marketplace, and directives from [Net2000’s] executive management
and/or Board of Directors." The district court therefore concluded that
Mueller and Horner could not justifiably rely on earlier oral represen-
tations by the Net2000 officers, because the Agreement had expressly
conditioned those representations and left Net2000 free to adjust its
obligations to Mueller and Horner. See, e.g., Foremost Guar. Corp.
v. Meritor Sav. Bank, 910 F.2d 118, 120 (4th Cir. 1990).

   As for the alleged misrepresentations that are not covered in the
Agreement, like whether Net2000’s telecommunications network
would support FreBon’s videoconferencing system or whether Muel-
ler and Horner would retain control of FreBon during the one-year
period of the earnout, the district court concluded that the Agreement
"superseded" these prior oral representations. Article 9.3 of the
Agreement states that the documents signed by the parties "constitute
the entire agreement among the Parties" and "supersede[ ] any prior
understandings, agreements or representations." According to the dis-
trict court, Mueller and Horner therefore were not entitled to rely on
any additional oral representations not incorporated into the Agree-
ment.

                                  III.

  Mueller and Horner further contend that the terms of the Credit
Facility were unknown to them and were not disclosed to them by the
                          MUELLER v. THOMAS                             5
Net2000 officers. Those terms included minimum revenue and earn-
ings requirements, which, if not met, were an event of default under
the Credit Facility. Default permitted TD Securities to control
Net2000 and ultimately to force Net2000 to reorganize in bankruptcy.
Mueller and Horner claim that, without knowing the terms of the
Credit Facility, they were unable to adequately assess the risk of sell-
ing FreBon to Net2000. Mueller and Horner do not dispute, however,
that they knew of the existence of the Credit Facility and never asked
about its specific terms. They assert only that the Net2000 officers
had an independent fiduciary duty as control persons, corporate insid-
ers, and substantial shareholders of Net2000 to disclose the Credit
Facility’s terms.

   The district court, however, found that Mueller and Horner had not
alleged any basis on which the Net2000 officers had a duty to disclose
the Credit Facility’s terms. The federal securities laws do not give rise
to a duty to disclose; rather, "the duty to disclose material facts arises
only where there is some basis outside the securities laws, such as
state law, for finding a fiduciary or other confidential relationship."
Fortson v. Winstead, McGuire, Sechrest & Minick, 961 F.2d 469, 472
(4th Cir. 1992). As the district court noted, a contract between sophis-
ticated commercial parties transacting at arm’s length generally does
not create a fiduciary relationship under Virginia state law. See, e.g.,
Diaz Vincente v. Obenauer, 736 F.Supp. 679, 695 (E.D. Va. 1990).
And Mueller and Horner have not argued that the language of the
Agreement itself explicitly creates such a fiduciary relationship.

                                   IV.

   Having reviewed the briefs and heard oral argument, we find that
the district court properly interpreted the parties’ purchase agreement
and the relevant securities laws. The district court’s dismissal of the
action in this case is therefore

                                                            AFFIRMED.
