                     United States Court of Appeals,

                             Fifth Circuit.

                              No. 94-20362.

   CONTICOMMODITY SERVICES, INC. and Continental Grain Company,
Plaintiffs-Counter-Defendants-Appellees,

                                        v.

                   David J. RAGAN, et al., Defendants,

 David J. Ragan and Joe O. Ragan, Defendants-Counter-Plaintiffs-
Appellants.

                             Sept. 12, 1995.

Appeal from the United States District Court for the Southern
District of Texas.

Before POLITZ, EMILIO M. GARZA and STEWART, Circuit Judges.

     STEWART, Circuit Judge:

     As part of multidistrict litigation, ContiCommodity Services,

Inc. and Continental Grain Company (together referred to herein as

"Conti")1 filed suit against David J. Ragan and Joe O. Ragan for

damages arising from financial market trading activity attendant to

the closing of Conti's Houston branch office.                 ContiCommodity

Services,   Inc.    v.   Ragan,   No.       H-84-4652   (S.D.Tex.);   In   re

ContiCommodity Services, Inc., Securities Litigation, 733 F.Supp.

1555 (N.D.Ill.1990).       The Ragans filed a counterclaim against

Conti, asserting inter alia that these damages arose because Conti

had breached its contract to finance their debit balances and had

made defamatory statements about David Ragan.             The district court

granted in part Conti's motion for summary judgment against the

     1
      ContiCommodity Services, Inc., was a fully owned subsidiary
of Continental Grain Company.

                                        1
Ragans, and the Ragans appeal.    We affirm.

                                 FACTS

     In 1981, Conti hired David Ragan to work in its Houston, Texas

branch office.   He conducted arbitrage trading, ranging from less

speculative hedged positions to more speculative cash trading, for

his customers and for his own account.2        Conti routinely loaned

money to Ragan's customers to finance trading activity, so that the

customers had to deposit only a percentage of the transaction

amount.   The value of the customer's securities or commodities

"position" could be expressed simultaneously in several ways which

include (1) the net3 face value of the position;      (2) as the net

market value of the position;    (3) as the net face or market value

of the position, minus the amount financed and associated fees or

interest cost.    By early 1984, the Houston branch office had




     2
      "Arbitrage trading is the simultaneous purchase and sale of
the same or equivalent securities or commodities in different
markets or on different exchanges at different prices, in order
to profit from the price differences between markets." In re
ContiCommodity Services, Inc., Securities Litigation, 733 F.Supp.
at 1562.
     3
      The securities or commodities could be (1) purchased in
anticipation of an increase in market value and later sold; (2)
sold—or borrowed from elsewhere and sold (i.e., "sold short")—in
anticipation of a decrease in market value and later purchased
for return to the pre-sale owner of the security. These various
options could be done at the same time in different markets, or
at different times but with the same security or commodity, as
noted above in footnote 2. "Net" value, as used in this
sentence, refers to the net value of the purchases and the short
sales. In addition, the cash securities could be purchased and
held until maturity, at which time the face value and interest
due on the security could be used to repay any amount that was
financed.

                                   2
sustained losses and Conti decided to close it.4              The instant facts

arise from Conti's decision to close out the customers' accounts in

conjunction with the closing of its Houston office.

     Conti filed suit against David Ragan, alleging fraudulent and

fictitious transactions.        The Ragans filed a counterclaim against

Conti.     In this counterclaim, David Ragan alleged that Conti

breached its contract with him, tortiously interfered with David

Ragan's employment contract, reputation, and prospective customer

relationships by making defamatory statements, and fraudulently

concealed its decision to close the Houston office.                      Joe Ragan

alleged    that   Conti   breached       its    contractual       and    fiduciary

obligations by closing out his positions and thereby keeping him

from reducing or offsetting his losses.

     Many of the claims of the numerous parties to this case and

related cases in this multidistrict litigation were disposed of in

Illinois   before     United    States       District   Judge     Hart    and   are

documented   in   a   written    opinion.        See    In   re   ContiCommodity

Services, Inc., Securities Litigation.            Among Judge Hart's rulings

were summary judgments entered on several of the Ragans' claims

against Conti. Judge Hart transferred the remaining claims between

Conti and the Ragans to the United States District Court for the

Southern District of Texas where United States District Judge Black


     4
      By the time it closed on May 24, 1984, Conti's Houston
branch office had incurred more than $55 million in trading
losses for the accounts of its arbitrage and speculative
customers. The closing of the Houston office spawned numerous
lawsuits in which approximately two million documents were filed.


                                         3
rendered a final summary judgment against the Ragans on their

remaining claims.    The Ragans appeal this final summary judgment,

as well as some of the judgments entered by Judge Hart.         The

parties agree that Texas law is applicable to these state law

claims.

                              DISCUSSION

     The Ragans argue that the Texas district court erred in

entering summary judgment because the evidence was sufficient to

defeat the motion for summary judgment and because it reached

issues that either were not appealed or had been decided by Judge

Hart.

        We review the district court's grant of summary judgment de

novo.     International Shortstop, Inc. v. Rally's, Inc., 939 F.2d

1257, 1263 (5th Cir.1991), cert. denied, 502 U.S. 1059, 112 S.Ct.

936, 117 L.Ed.2d 107 (1992).   Summary judgment is appropriate when

the moving party shows that there is no genuine issue of material

fact.   Id.   The moving party may make this showing by pointing out

the lack of evidence to support the nonmoving party's case.   Duffy

v. Leading Edge Products, Inc., 44 F.3d 308, 312 (5th Cir.1995);

Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 913 (5th Cir.1992),

cert. denied, --- U.S. ----, 113 S.Ct. 98, 121 L.Ed.2d 59 (1992).

Once this showing is made, summary judgment is proper against the

nonmoving party when the nonmoving party "fails to make a showing

sufficient to establish the existence of an element essential to

that party's case, and on which that party will bear the burden of

proof at trial."    Celotex Corp. v. Catrett, 477 U.S. 317, 321, 106


                                  4
S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986);          Duffy, 44 F.3d at 313-14.

In   order     to   defeat   a   properly   supported   motion   for   summary

judgment, the nonmoving party must direct the court's attention to

admissible evidence in the record which demonstrates that it can

satisfy a "fair-minded jury" that it is entitled to a verdict in

its favor.          International Shortstop, Inc., 939 F.2d at 1263;

Howell, 897 F.2d at 192.          At this point, the mere allegations in

the complaint are not sufficient;           the non-movant is required to

identify specific evidence in the record, and to articulate the

"precise manner" in which that evidence supported their claim.

Id.;       Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir.1994), cert.

denied, --- U.S. ----, 115 S.Ct. 195, 130 L.Ed.2d 127 (1994).

       We shall address the summary judgment entered as to David

Ragan and Joe Ragan, respectively.

A. Summary Judgment Against David Ragan5

       Criminal charges were instituted against David Ragan for

fraudulent      and   fictitious    trade   transactions   in    the   form   of

eighteen counts of mail and wire fraud.          A jury found him guilty on

all eighteen counts.         On July 16, 1993, while Ragan's conviction

was on appeal to this court, Judge Black granted summary judgment

in favor of Conti and against David Ragan because "David Ragan's

criminal conviction eliminates any genuine issue of material fact

regarding the issue of truth...."6

       5
      References in this subsection to "Ragan" refer to David
Ragan.
       6
      Judge Black's "Final Judgment", filed April 14, 1994,
referred to this July 16, 1993 order as the basis for final

                                        5
         Before transfer of this case to Texas, Judge Hart had

dismissed Ragan's tortious interference with employment claims "to

the extent claims are made based on any employment relationship

other than the one with Merrill Lynch", and had dismissed Ragan's

claims     of     tortious       interference      with      customer     and    business

relations because Ragan presented "no nonhearsay testimony showing

that   counterdefendants            provided     any    false   information           to   the

customers."            In   re   ContiCommodity        Services,     Inc.,   Securities

Litigation, 733 F.Supp. at 1581.                   Judge Hart's reasoning was as

follows:

       There is evidence from which it can be inferred that
       counterdefendants intended to induce David Ragan's firing.
       David Ragan has also presented evidence to support the claim
       that the information provided by counterdefendants caused
       David Ragan's dismissal from Merrill Lynch.     David Ragan,
       however,   has   not   presented  specific   facts   showing
       counterdefendants caused the loss of any other employment.

In   the   "Final       Judgment"     at    bar,   Judge     Black    granted      summary

judgment    against         Ragan   on     all   remaining      claims.         The    basis

expressed        for    this     judgment    was    that      (1)    Ragan's     criminal

conviction settled the question of the truth of Conti's allegedly

tortious        and    defamatory     statements        in    Conti's     favor;           (2)

therefore, there is no longer a genuine issue of material fact

about the truth of these statements;                    and (3) therefore summary

judgment is proper.              There being no statutory or jurisprudential

basis for the proposition that a criminal conviction satisfies the

truth inquiry in a civil proceeding for defamation or tortious



judgment against David Ragan. Ragan challenges as error the use
of his conviction as the basis for summary judgment against him.

                                             6
interference by way of these statements, neither party argues on

appeal that Judge Black entered summary judgment against David

Ragan for the correct reasons.7

         The district court's grant of summary judgment against David

Ragan, on the basis of his conviction which was on appeal at the

time of judgment, was improper. Nevertheless, summary judgment may

be affirmed on grounds other than the basis of the district court's

decision.     See Howell Hydrocarbons, Inc. v. Adams, 897 F.2d 183,

193 (5th Cir.1990);      see also, Matter of Lewisville Properties,

Inc., 849 F.2d 946, 950 (5th Cir.1988) and cases cited therein.    We

shall therefore address de novo whether the judgment was proper

despite its improper basis.

         Accusations or comments about an employee by his employer,

made to a person having an interest or duty in the matter to which

the communication relates, have a qualified privilege.     Schauer v.

Memorial Care Systems, 856 S.W.2d 437, 449 (Tex.App.—Houston [1st

Dist.] 1993) (citations omitted).       This privilege protects such

communications in the absence of actual malice.

         In the defamation context, actual malice does not include ill

will, spite or evil motive.     Hagler v. Proctor & Gamble Mfg. Co.,

884 S.W.2d 771 (Tex.1994).     "Actual malice" is a term of art which

is defined as "the making of a statement with knowledge that it is




     7
      The conviction was reversed on appeal to this court because
the record did not show a sufficient connection between David
Ragan and the charged offenses. United States v. Ragan, 24 F.3d
657, 660 (5th Cir.1994).

                                   7
                                          [8]
false, or with reckless disregard               of whether it is true."        See

Duffy, 44 F.3d at 313, quoting Carr v. Brasher, 776 S.W.2d 567, 571

(Tex.1989). A finding of such malice requires "sufficient evidence

to permit the conclusion that the defendant in fact entertained

serious doubts as to the truth of his publication."                      Hagler,

quoting Casso v. Brand, 776 S.W.2d 551, 558 (Tex.1989);                Duffy, Id.

Where the employee claims that the employer made such references

and accusations about him to one with a common interest (such as

the employee's     new   employer),   and       the   employer   has    pled   the

affirmative defense of qualified privilege, Texas law places on the

plaintiff the burden of proof at trial with respect to malice.

Duffy, 44 F.3d at 313-14, citing Dun & Bradstreet, Inc. v. O'Neil,

456 S.W.2d 896, 898 (Tex.1970).           Thus, in the instant case, it

matters not whether such statements were true or whether the

statements were made to Merrill Lynch and the Chicago Board of

Trade:     if there is no clear evidence of "actual malice", then

summary judgment was proper on these claims.                See and compare,

Duffy v. Leading Edge Products, Inc., 44 F.3d at 313-316.

         The plaintiff employee must show that the defendant employer

acted with malice in order to overcome the affirmative defense of

qualified privilege.     In its answer to Ragan's counterclaim, Conti

pled the defense of qualified privilege. The strongest evidence of


     8
      "Reckless disregard" is defined as a high degree of
awareness of probable falsity which the plaintiff shows by
presenting "sufficient evidence to permit the conclusion that the
defendant in fact entertained serious doubts as to the truth of
his publication." See Duffy, 44 F.3d at 313, quoting Carr v.
Brasher, 776 S.W.2d 567, 571 (Tex.1989).

                                      8
malice is that Conti made these statements prior to having any

concrete or objective indication of any wrongdoing on Ragan's part.

Ragan argues that Conti's admission that it had nothing to support

the   allegedly    defamatory    statements   until   after   it    made   the

statements means that Conti had actual malice.          Conti argues that

the information which was later found by outside auditors confirmed

the   suspicions    which   it   had   communicated   in   the     challenged

statements.   Neither of these arguments is more probable than the

other and, without weighing the evidence, we find that Ragan has

not made a showing that is sufficient to constitute the "clear

evidence" of malice required to defeat a properly supported motion

for summary judgment.       Thus, in the absence of such a showing,

Conti was entitled to summary judgment against Ragan even if the

statements at issue were false.

      Ragan also argues that Judge Black erred in dismissing all of

his claims because he did not appeal Judge Hart's decision to deny

Conti's summary judgment motion as to the Merrill Lynch portion of

his tortious interference claims or as to his defamation claims.

Our review of Judge Black's grant of summary judgment is de novo.

Judge Black did not articulate any basis for summary judgment other

than Ragan's criminal conviction, and thus did not address Judge

Hart's prior decision.       The record before us shows that, as a

matter of law, there is no genuine issue of material fact regarding

Conti's qualified privilege defense.          For this reason, we affirm

the entry of summary judgment and do not address these arguments.

       Ragan also argues that the loss of his trading license in


                                       9
conjunction with Conti's alleged wrongful conduct effectively ended

his career in securities and commodities.           He challenges Judge

Hart's disposition of that claim as well as his claim of tortious

interference with his non-Merrill Lynch employment and customer

relationships.    He   asserts   that   he    has   shown   a   reasonable

likelihood that, if he had not lost his trading license due to

Conti's accusations, he would enter into "business relations" with

prospective clients or employers and that, therefore, Judge Hart's

dismissal of his claim of interference with business relationships

should be reversed.    We disagree.   As we state in In re Burzynski,

989 F.2d 733, 739 (5th Cir.1993),

     The requisite elements [for an action for tortious
     interference with prospective business relations] are: 1) a
     reasonable probability that the plaintiff would have gotten a
     contract, 2) malicious and intentional action by the defendant
     which aborted the prospective business relationship, and 3)
     actual harm to the plaintiff.

Conti has carried its initial burden to show the absence of

evidence that it acted with malice.          Thus, absent a showing by

Ragan that Conti acted in a malicious and intentional manner, there

is no genuine issue of material fact on this element of Ragan's

claims of tortious interference.      We have already determined that

Ragan has failed to show malice as the term of art is used in the

context of alleged defamatory statements made by an employer and

thus has failed to make a showing sufficient to establish an

element which is both essential to his case and on which he would

bear the burden of proof at trial.            Here, the malicious and

intentional actions alleged by Ragan are the alleged damaging

statements made by his employer. For this reason, we also conclude

                                 10
that Ragan has not shown a genuine issue of fact as to the

"malicious     and   intentional     action"    element   in   his   tortious

interference claims.       Moreover, the record discloses potentially

damaging statements made by Conti, but Ragan does not identify

evidence that the statements were made to one who does not have a

common interest.9       Therefore, Ragan must show malice in order to

overcome Conti's qualified privilege defense.

     There being no genuine issue of material fact as to a critical

element   of    David    Ragan's     claim     of   tortious   interference,

defamation, slander, & libel, summary judgment against him was

proper.

     David Ragan also challenges Judge Hart's entry of summary

judgment against him on his claims of breach of contract.              Conti

correctly points out that the arguments Ragan asserts on appeal

were not presented in the response to Conti's summary judgment

motion that was before Judge Hart.           For this reason, we will not

revisit Judge Hart's decision on this issue.

B. Summary Judgment Against Joe Ragan10

     Joe Ragan challenges Judge Black's dismissal of his claims for

damages allegedly sustained by Conti's orders to close out the

positions in his account.          By the time that Judge Black granted

final summary judgment against Ragan, the only question remaining

     9
      Both Merrill Lynch and the Chicago Board of Trade had an
interest similar to that of Conti's interest as Ragan's employer.
See and compare, Duffy and Dun & Bradstreet, Inc.
     10
      References in this subsection to "Ragan" refer to Joe
Ragan. Joe Ragan did not challenge the summary judgment entered
by Judge Hart.

                                      11
was whether there was a positive balance in Ragan's account at the

time    it   was   closed.   Ragan   had    provided    no   indication   that

particular trades were challenged.             See In re ContiCommodity

Services,     Inc.,   Securities   Litigation,    733    F.2d    at   1569-70.

Accordingly, Judge Hart had determined that, unlike the conversion

claim of other Conti customers which were based upon improper

trades, Joe Ragan's conversion claim was that Conti converted the

balances in his account and not that Conti improperly closed out

their positions.      In re ContiCommodity Services, Inc., Securities

Litigation, Id.

        Ragan now contends that his claim is one for damages due to

loss of the value (at maturity) of the securities in his account

and is not a claim for conversion.         Ragan asks this court to accept

as accurate for purposes of damages calculation the value that the

securities would have at maturity, rather than the market value of

the securities at or near the time they were sold by Conti.11              He

contends that it is Conti's seizure of the securities that gave

rise to his damage claim, without regard to what Conti did with

them after it took them from his account;              on this basis, Ragan

argues that his claim is not one of conversion.              This argument is

not persuasive.


       11
      Ragan presented some evidence that his position in these
securities finally would have become "positive" some four months
after the allegedly improper acts of Conti. However, he cites
and we have found no statutory or jurisprudential basis for a
finding that, as a matter of law, four months is a "reasonable"
time to form the basis for calculating his requested "but for
Conti's liquidation" damages in the type of trading that was done
in his account.

                                     12
      A review of Ragan's counter-claim and the arguments in support

thereof which were made before Judge Hart show that Judge Hart's

"conversion" characterization was accurate.              The record shows no

indication that Ragan tried to reinvest in the market or challenged

the actions of Conti in closing out his account.           Ragan argues that

because Conti stopped financing his trades, Conti prevented him

from reentering the market—yet he does not point to any summary

judgment evidence that he demanded either reinstatement of his

positions or some other action to remedy the situation.              A failure

to   either   reinvest   or    demand    reinstatement     of   one's   trading

position amounts to a decision to get out of the market and not

risk a further loss.      See and compare, Chipser v. Kohlmeyer & Co.,

600 F.2d 1061, 1067-68 (5th Cir.1979).               We find no statutory or

jurisprudential basis to support Ragan's insistence that the value

of Ragan's account is the face value of the securities in the

account.      Moreover, Ragan has not shown that he is entitled to

relief based on this method or other methods of valuation.                   We

affirm the district court judgment as to Joe Ragan.

                                 CONCLUSION

      As discussed above, appellants have not shown that there

exists a genuine issue of material fact in this case.             Accordingly,

we AFFIRM Judge Black's judgment which dismissed the remaining

claims   of    David   Ragan   and   Joe     Ragan   against    ContiCommodity

Services, Inc. and Continental Grain Company.




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