11-1745-cv
Tiberius Capital v. PetroSearch Energy Corp, et al.,


                                    UNITED STATES COURT OF APPEALS
                                       FOR THE SECOND CIRCUIT

                                            SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed on or after
January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this
Court’s Local Rule 32.1.1. When citing a summary order in a document filed with this Court, a party
must cite either the Federal Appendix or an electronic database (with the notation “summary order”).
A party citing a summary order must serve a copy of it on any party not represented by counsel.

        At a stated term of the United States Court of Appeals for the Second Circuit, held at the Daniel
P. Moynihan United States Courthouse, 500 Pearl Street in the City of New York, on the 13th day of
June, two thousand twelve.

PRESENT:

          JOSEPH M. MCLAUGHLIN,
          JOSÉ A. CABRANES,
          SUSAN L. CARNEY,

                  Circuit Judges
_____________________________________

TIBERIUS CAPITAL, LLC,

                               Plaintiff-Appellant,

                     v.                                                      11-1745-cv

PETROSEARCH ENERGY CORPORATION, DOUBLE
EAGLE PETROLEUM CO., RICHARD D. DOLE,
GERALD N. AGRANOFF, RICHARD MAJERES, and
DAVID J. COLLINS,

                  Defendants-Appellees.
______________________________________

FOR PLAINTIFF-APPELLANT:                               BERNARD J. RHODES, Lathrop & Gage, LLP, Kansas
                                                       City, MO.

FOR DEFENDANTS-APPELLEES:                              PHILIP M. SMITH (Andrew M. Thomas, on the brief),
                                                       Patton Boggs LLP, New York, NY.
     Appeal from a judgment of the United States District Court for the Southern District of
New York (George B. Daniels, Judge).

     UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the District Court is AFFIRMED.

       Plaintiff-appellant Tiberius Capital, LLC, (“Tiberius”) appeals from a judgment entered
March 31, 2011, in the District Court granting the defendants-appellees’ motion to dismiss
Tiberius’s Amended Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a
claim upon which relief can be granted, and denying Tiberius’s cross-motion for partial summary
judgment under Federal Rule of Civil Procedure 56(c).

        In its Amended Complaint, Tiberius raised claims for violations of: (1) Section 14(a) of the
Securities Exchange Act of 1934, 15 U.S.C. § 78n(a), and Rule 14a-9 promulgated thereunder; (2)
Section 10(b) of the Securities Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated
thereunder; (3) Section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a); and (4) Nevada Revised
Statute (“NRS”) § 92A.390. It also raised related claims for fraud, intentional misrepresentation,
negligent misrepresentation, and breach of fiduciary duty. All of the claims arose from the merger of
defendant-appellant PetroSearch Energy Corporation (“PetroSearch”) into defendant-appellant
Double Eagle Petroleum Company (“Double Eagle”) in 2009 and relate to PetroSearch’s refusal to
provide dissenters’ rights of appraisal to Tiberius and other dissenting shareholders.1

        In a careful and comprehensive Memorandum and Order dated March 31, 2010, the District
Court granted the defendants’ motion to dismiss all claims. See Tiberius Capital LLC v. PetroSearch
Energy Corp., No. 09 cv 10270, 2011 WL 1334839 (S.D.N.Y. Mar. 31, 2011). Tiberius timely appealed
from the District Court’s judgment. Its appeal is limited to the related claims for illegal merger under
NRS § 92A-390 and for breach of fiduciary duty.

         We review a judgment of dismissal “de novo, accepting all well-pleaded allegations in the
complaint as true and drawing all reasonable inferences in the plaintiff’s favor.” S.E.C. v. Gabelli, 653
F.3d 49, 57 (2d Cir. 2011) (internal quotation marks and brackets). Our review encompasses not
only the complaint, itself, but also “any documents attached thereto or incorporated by reference
and documents upon which the complaint relies heavily.” Bldg. Indus. Elec. Contractors Ass’n v. City of
N.Y., – F.3d – , 2012 WL 1563919, at *3 (2d Cir. May 4, 2012) (internal quotation marks omitted).
To survive a motion to dismiss under Rule 12(b)(6), a complaint must “allege a plausible set of facts
sufficient ‘to raise a right to relief above the speculative level.’” Operating Local 649 Annuity Trust Fund
v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86, 91 (2d Cir. 2010) (quoting Bell Atl. Corp. v. Twombly,


        1
            Individual defendants Dole, Agranoff, Majeres, and Collins, were officers of PetroSearch.
                                                   2
550 U.S. 544, 555 (2007)).2 Applying these principles, and having conducted an independent, de novo,
review of the record on appeal, we affirm the judgment of the District Court for substantially the
reasons stated in its Memorandum and Order of March 31, 2010.

        As the District Court found, the doctrine of acquiescence precludes Tiberius from stating a
claim upon which relief can be granted relating to improper merger under NRS § 92A-390 and
breach of fiduciary duty. See Cohen v. Mirage Resorts, Inc., 119 Nev. 1, 15–18 (2003); Bershad v. Curtiss-
Wright Corp., 535 A.2d 840, 848 (Del. 1987) (“[W]hen an informed minority shareholder either votes
in favor of the merger, or like Bershad, accepts the benefits of the transaction, he or she cannot
thereafter attack its fairness. Since Bershad tendered his shares and accepted the merger
consideration, he acquiesced in the transaction and cannot now attack it.” (internal citation
omitted)).

        Tiberius argues it had no choice but to accept the Double Eagle shares because the Merger
Agreement provided that its shares of PetroSearch would be “cancelled and extinguished [and]
converted automatically . . . without any action on the part of . . . the holder of [the] shares.”
Appellant’s Br. at 30 (quoting Agreement and Plan of Merger, App’x. 361). In fact, the Merger
Agreement states that, at the close of the merger, each share of PetroSearch stock would be
“canceled and extinguished and be converted automatically into the right to receive that number of shares of
[Double Eagle] Common Stock equal to the Exchange Ratio.” Agreement and Plan of Merger, App’x. 361
(emphasis added). Thus, following the merger, PetroSearch still had to affirmatively exercise its right
to receive Double Eagle shares. By doing so, before filing this lawsuit challenging the merger, it
acquiesced in the merger as a matter of Nevada law. See Cohen, 119 Nev. at 15–16 (“[A] dissenting
shareholder generally loses the right to challenge a merger’s validity if he or she tenders the stock
and receives the merger price before initiating a suit disputing the validity of the merger.” (emphasis
added)).

         On appeal, Tiberius insists the doctrine of acquiescence does not apply because it was not
fully aware that PetroSearch did not qualify for an exemption from Nevada’s dissenters’ rights
statute for corporations with fewer than 2,000 shareholders. However, it is plain from the face of the
Amended Complaint that Tiberius did know that PetroSearch had fewer than 2,000 shareholders,
even if it did not know the precise number. As alleged in the Amended Complaint:

               PetroSearch ha[d] admitted on several instances in writing that it ha[d]
               fewer than 2,000 shareholders of record. First, Dole, in a letter to Tiberius
               on June 25, 2009, claimed that PetroSearch only needed approximately


        2
         Although complaints of securities fraud are subject to the heightened pleading
requirements imposed by Rule 9(b) of the Federal Rules of Civil Procedure (requiring the
circumstances allegedly constituting fraud to be pleaded with particularity), the fraud-based claims in
the Amended Complaint are not before us on appeal.
                                                   3
               1,600 tender offer packets from Tiberius to satisfy PetroSearch’s mailing
               requirement pursuant to Exchange Act Rule 14d-5. . . .

               Second, in PetroSearch’s Proxy Statement that was issued on or around
               July 6, 2009, PetroSearch stated on page 59 that its shares were held by
               approximately 1,700 holders of record, fewer than the 2,000 threshold
               necessary to avail itself of the exemption from offering dissenters’ rights
               under the Nevada General Corporation Law.

Am. Compl. ¶¶ 45–46.

         Moreover, Tiberius itself stated in a letter dated August 5, 2009, just prior to the closing of
the merger, that PetroSearch did not qualify for an exemption from having to offer dissenters’ rights
because “the exemption is only for companies which are either listed on a National Securities
Exchange included in the national market system for the National Association of Securities Dealers,
Inc. (which PetroSearch is not), or held by at least 2,000 stockholders of record (which PetroSearch
is not).” See Am. Compl. ¶¶ 77, 107. In short, the only plausible inference that can be drawn from
the facts alleged in the Amended Complaint is that Tiberius was fully aware that PetroSearch was
required to provide dissenters’ rights. Therefore, in accepting the merged shares prior to bringing a
suit challenging the merger, Tiberius acquiesced in the merger. See Cohen, 119 Nev. at 15–16 .

       Accordingly, we affirm the judgment of the District Court dismissing Tiberius’s claims under
Nevada’s dissenters’ rights statute, NRS § 92A-390, and for breach of fiduciary duty, inasmuch as
the doctrine of acquiescence bars both claims.

                                           CONCLUSION

       We have considered all of Tiberius’s arguments and find them to be without merit.
Accordingly, we AFFIRM the judgment of the District Court in its entirety.



                                                FOR THE COURT,
                                                Catherine O’Hagan Wolfe, Clerk of Court




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