Griggs v. Webber (In Re Webber)

MEMORANDUM OPINION

I. INTRODUCTION

This Memorandum Opinion addresses the issue of whether Dr. William Griggs, Ph. D. (Griggs) deceived Tony L. Webber (the Debtor) into entering a Stock Purchase Agreement. The Debtor claims that Griggs, now deceased, and his wife, Joan Griggs (Mrs. Griggs), deceived him into entering the Stock Purchase Agreement, that the Stock Purchase Agreement is therefore null and void, and that he is relieved from making the remaining payments for Griggs’ stock. Mrs. Griggs, the sole beneficiary of her late husband’s estate, claims that, after making several payments for Griggs’ stock, the Debtor defaulted and therefore breached the Stock Purchase Agreement. Mrs. Griggs now seeks judgment against the Debtor for the remaining amount owed under the Stock Purchase Agreement and Promissory Note associated therewith. For the reasons set forth below, this Court holds that Griggs and his wife did not deceive the Debtor into entering the Stock Purchase Agreement. Consequently, Mrs. Griggs is entitled to the remaining payments from the *354 Debtor for his purchase of Griggs’ stock. This Opinion sets forth how this Court has arrived at its decision.

On July 6, 2006 and July 7, 2006, this Court held a hearing in the above referenced adversary proceeding. A simultaneous hearing was also held on the Debt- or’s Objection to Mrs. Griggs’ Proof of Claim (Claim No. 3). On July 11, 2006, pursuant to Federal Rule of Civil Procedure 52, as incorporated into Federal Rule of Bankruptcy Procedure 7052, this Court made its oral Findings of Fact and Conclusions of Law. This Court has reduced its Findings of Fact and Conclusions of Law to writing in this Memorandum Opinion, which will be entered on the docket. To the extent that any of this Court’s oral Findings of Fact and Conclusions of Law conflict with this Court’s written Findings of Fact and Conclusions of Law, the written Findings of Fact and Conclusions of Law shall govern and shall be considered amendments to the oral Findings of Fact and Conclusions of Law. The Court reserves the right to make any additional Findings and Conclusions as may be necessary or as requested by any party.

II. FINDINGS OF FACT

1.Griggs was a Fulbright Scholar who earned a Ph. D. in museum history from Texas Tech University. After earning this degree, he became the Director of the Panhandle Plains Museum in Canyon, Texas. Thereafter, he became the Chairman of the Texas Antiquities Committee. Eventually, he came to work in Houston. He was very well respected in the museum industry, and in 1987 founded a company in Houston called International Museum Corporation d/b/a Southwest Museum Services (the Company).

2. Griggs held 50% of the stock when he founded the Company.

3. When Griggs was in the process of establishing the Company, Griggs convinced the Debtor to join him in running the Company by offering him a 50% ownership in this entity. The Debtor accepted Griggs’ offer and became the owner of the other 50% of the Company.

4. A stock certificate for 500 shares evidenced the Debtor’s 50% ownership of the Company. Similarly, Griggs’ stock certificate for 500 shares evidenced his 50% ownership of the Company. [Griggs’ Exhibit No. 17.]

5. Griggs and the Debtor were the only officers of the Company. Griggs was the President and the Treasurer. The Debtor was the Vice-President and the Secretary. Additionally, Griggs and the Debtor were the only Directors of the Company, with Griggs serving as Chairman of the Board. [Debtor’s Exhibit No. 1.]

6. The Company was in the business of raising money for the construction of museums and designing and constructing exhibits for museums. Griggs’ primary role was to develop clients for the Company; the Debt- or’s primary role was to design and construct the exhibits for the clients whom Griggs brought to the Company. Griggs’ role of developing business was crucial to the Company’s success, and the Debtor has always known this fact.

7. In 1997, the Debtor made a proposal to Griggs to purchase Griggs’ 50% ownership of the Company for the amount of $430,000.00. Griggs declined this offer.

8. In 2000, the Debtor again made a proposal to Griggs to purchase his *355 50% ownership of the Company for the amount of $430,000.00. [Griggs’ Exhibit No. 32.] Griggs again declined this offer.

9. In 2001, Griggs brought in a significant piece of business to the Company when he secured a contract with Shell Oil Company, which generated substantial revenues for the Company and net income for Griggs and the Debtor. Indeed, in 2001, Griggs and the Debtor received bonuses exceeding $500,000.00.

10. The Debtor gave Sterling Bank a written financial statement dated March 22, 2002 [Griggs’ Exhibit No. 13.] in which he represented that the value of his stock in the Company was $566,800.00.

11. In early April of 2002, Griggs underwent a physical examination in order to procure an insurance policy-

12. The results of this physical examination showed that Griggs had elevated liver enzymes. After learning about these results, Griggs scheduled an appointment with his family doctor, Dr. Kevin Giglio (Dr. Giglio).

13. On April 22, 2002, Griggs met with Dr. Giglio, who decided to schedule a CT biopsy for Griggs.

14. On April 25, 2002, Griggs and the Debtor wrote a letter to Ben B. Turner (Turner),an attorney in Houston who has represented the Company in various legal matters. [Debtor’s Exhibit No. 7.] The letter set forth that Griggs and the Debt- or — concerned over what would happen to the Company if Griggs or the Debtor suddenly died — had both decided to enter into an agreement whereby in the event of Griggs’ or the Debtor’s death, the survivor would purchase the stock of the deceased for the sum of $750,000.00, payable over a period of two years at an interest rate of 8% per annum. Griggs and the Debtor asked Turner to draft the agreement, which Turner did. [See Finding of Fact No. 17.]

15. In early May of 2002, Griggs underwent a CT biopsy. [See Griggs’ Exhibit No. 25A.] Dr. Giglio reviewed the results of this biopsy and referred Griggs to M.D. Anderson Cancer Center for treatment. Id.

16. By no later than May 14, 2002, Griggs was diagnosed with cancer. At some point thereafter and well before December 6, 2002, the Debt- or became aware of this diagnosis.

17. On May 24, 2002, Griggs and the Debtor, in their capacities as stockholders of the Company, executed a document entitled “International Museum Corporation Stock Purchase Agreement.” [Griggs’ Exhibit No. 29.] Article II, Section 2.02 of this agreement expressly states that the Company and “the Stockholders mutually agree that the total value of all shares of stock for the further determination of the offering price thereof as hereinafter provided shall be a total of $1,500,000.00.” Id. Further, Article II, Section 2.03 provides that if either Griggs or the Debtor dies, the surviving shareholder shall be allowed to purchase the deceased shareholder’s stock at the purchase price of $750,000.00. Id.

18. On June 12, 2002, Griggs met with Dr. Yohuda Patt at M.D. Anderson Cancer Center. [Griggs’ Exhibit No. 25A.] Dr. Patt’s written report states that Griggs had a cancerous *356 tumor in his liver. Id. The report does not set forth what Dr. Patt told Griggs about this tumor. See id. Dr. Patt’s report reflects that he wanted more tests performed on Griggs and that Griggs would return later in the month to discuss the results of the tests and what measures should be taken. Id. Dr. Patt’s written report also states as follows:

PHYSICAL EXAMINATION: This is an entirely asymptomatic 69 year old gentleman who looks younger than his stated age, in no acute distress, in no discomfort.... The patient continues to work in his business.

Id.

19.On June 27, 2002, Griggs met again with Dr. Patt, whose written report sets forth that Dr. Patt discussed the tumor with Griggs and recommended chemotherapy as the treatment. [Debtor’s Exhibit No. 21.] Dr. Patt’s report states the following:

Thus, we have a patient with a stigmata of cryptogenic cirrhosis of unknown etiology. He has now developed mul-tifocal cholangiocarcinoma. The tumor is quite extensive in the liver and involves the portal vein with evidence of portal hypertension. I discussed with the patient the possibility of starting him on chemotherapy in view of the extent of his disease. I discussed with him the possibility of the fact that the median survival is at best 15 months. I explained to the patient that with the treatment with the Gem-zar, amifostine and cisplatin, he has a chance of between 10 to 20% of inducing antitumor response with minimal toxicity. The potential for neutrope-nia, thrombocytopenia and fluid accumulation have all been explained, and the patient expressed verbal understanding and gave verbal consent to proceed with this treatment.

[Id. at 143.]

20. In August of 2002, Griggs told the Debtor that he (i.e., Griggs) was ill.

21. On August 14, 2002, Griggs gave the Debtor a preliminary listing of major projects. [Debtor’s Exhibit No. 15.] This list set forth the names of 15 museums with which the Company might enter into a business relationship. Id. The projected revenues were $75,000,000.00. Id.

22. On August 21, 2002, Griggs again met with Dr. Patt at the M.D. Anderson Cancer Center. [Griggs’ Exhibit No. 25D.] Dr. Patt’s notes do not reflect what, if anything, Dr. Patt told Griggs about his prognosis. Id. However, Dr. Patt wrote the following:

CT scan of the abdomen shows the multicentric hepatic tumor. The primary liver lesion with perfusion abnormalities has not significantly changed in appearance. The other lesions in both right and left lobe of the liver may actually be somewhat smaller when reviewed; however, this was reviewed by the radiologists who think that they are bigger, but my impression is that they are smaller, if anything.

ASSESSMENT AND PLAN: In view of the probable stability of the disease on the CT scan, the decrease in the CA-125 and the good tolerance of the treatment, I decided to continue the patient on the same treatment. In view of the ascites which is increasing, I will start the patient on spironolac-tone 200 mg q.d. and Lasix 20 mg q.o.d. or twice weekly. The patient will continue the same treatment *357 q.2weeks. He will come back for re-staging in approximately two months.

PHYSICAL EXAMINATION: Physical examination reveals this youthful looking 69-year-old gentleman who looks younger than the stated age and in no acute distress and in no discomfort .... There is no pain.

[Griggs’ Exhibit No. 25D.]

23. In September of 2002, Griggs told the Debtor that he (i.e., Griggs) had a few spots on his liver.

24. On October 23, 2002, Griggs returned to the M.D. Anderson Cancer Center to meet with Dr. Melanie Thomas, who had taken over for Dr. Patt upon the latter’s departure from the Center. [Griggs’ Exhibit No. 25F.] The notes of this meeting, which were written by a physician’s assistant named Deborah Siegler, do not reflect what, if anything, Dr. Thomas told Griggs about his prognosis. However, the following is contained in these notes:

RADIOGRAPHIC DATA: The patient underwent a re-staging evaluation. The chest x-ray showed no evidence of metastatic disease. The CT scan of the abdomen showed a large, dominant lesion in the right lobe of the liver with multiple, metastatic nodules throughout both lobes of the liver that showed very, very slight progression when compared to August. However, when we reviewed the film, it appears to be almost stable disease. There was a tiny amount of paracolic ascites on the right....

Mr. Griggs is a 69-year-old gentleman from Houston who in late 05/02 was diagnosed with a multifocal, int-rahepatic cholangiocarcinoma. He has been treated with 8 courses of GAP. He has shown no improvement, but it looks like at best he has some stable disease. He tolerates chemotherapy extremely well having only some minor fatigue on day 2. Therefore, we would like to proceed and give him another 2 courses of GAP and doses of gemcitabine at 750 mg/m2 and cisplatin 25 mg/m2 both on day 1 and day 15. He will return for re-staging in 2 months.

[Griggs’ Exhibit No. 25F.]

25. On October 24, 2002, Griggs sent a memorandum to the Debtor setting forth that no disclosure should be made of ownership changes in the Company unless and until the transfer of stock was completed. [Debtor’s Exhibit No. 8.]

26. On or about November 14, 2002, Griggs, or someone at his request, drafted a document entitled “Preliminary Draft of Contract Sale Between William C. Griggs and Tony Webber for the Sale of Stock of Southwest Museum Services.” [Debtor’s Exhibit No. 3.] This document reflected, among other things, that the Debtor would pay Griggs $750,000.00 to purchase Griggs’ 50% stock interest in the Company. Id.

27. In late November or early December 2002, Griggs told the Debtor that his cancer was in remission and that he was through with his chemotherapy. Griggs was not a medical doctor or an expert.

28. On or about December 6, 2002, Griggs and the Debtor executed a document entitled “Stock Purchase Agreement.” [Debtor’s Exhibit No. 6.] This agreement evidences the transaction between Griggs and the Debtor whereby Griggs sold his 500 shares of the Company to the Debtor for the amount of *358 $750,000.00. The Debtor purchased the stock owned by Griggs, by paying cash in the amount of $50,000.00 to Griggs and simultaneously executing and delivering to Griggs a promissory note (the Note) in the original principal amount of $700,000.00 bearing interest at 8% per annum. [Griggs’ Exhibit No. 5.] As collateral for the Note, the Debtor gave a security interest to Griggs in the stock which Griggs sold to the Debtor. Evidence that the Debtor intended to convey a security in this stock to Griggs is found in two documents: (1) the Note; and (2) the Stock Purchase Agreement. The last paragraph of the Note, which the Debtor signed, expressly states that “[t]he payment of this note is secured by the stock of William C. Griggs in International Museum Corporation d/b/a Southwest Museum Services.” (Griggs’ Exhibit No. 5.) The last sentence in paragraph III of the Stock Purchase Agreement expressly states that “[a]s security for the payment of the note, Griggs’ stock will be endorsed for transfer but held by the attorney for the Company, Ben B. Turner, Jr. (Turner) until final payment is made.” [Griggs’ Exhibit No. 4.] Finally, the Debtor expressly stated at trial that the stock that he purchased from Griggs secured repayment of the Note. Turner still has possession of the stock. In paragraph seven of the Stock Purchase Agreement, Griggs “agreed to continue to work for the Company at the present pay rate and with the present allowances. He will physically be in the Company offices or on Company business for at least three working days per week, not counting any time off because of illness.” [Debtor’s Exhibit No. 6.]

29. On December 17, 2002, Griggs underwent his last chemotherapy treatment.

30. On January 8, 2003, Griggs returned to the M.D. Anderson Cancer Center for a follow-up meeting with Dr. Thomas. [Griggs’ Exhibit No. 25H.] Dr. Thomas’ notes from this meeting do not reflect what, if anything, she told him about his prognosis. See id. However, she did write the following:

INTERVAL HISTORY: The patient is a 69-year-old gentleman from Houston who was diagnosed with mul-tifocal unresectable intrahepatic cho-langioearcinoma in 05/02. He had been followed and treated by Dr. Patt until I took over his care in 10/02. The patient was initially treated by Dr. Patt with two courses of GAP chemotherapy. At presentation, he had small to moderate volume disease, primarily in the right lobe of the liver. On his initial restaging in late August, he was felt to have stable disease and was continued on GAP chemotherapy. He was last seen by us on 10/23/02. At that time the patient had been tolerating his chemotherapy extremely well with essentially no symptoms other than fatigue on days 2 and 3. He continues to work neai-ly full time as a consultant and designer of museum exhibits. Of note, the patient is also a historian and writer, and currently is writing his third book. In late 10/02 we again felt that his disease was essentially stable. We opted to continue him on GAP chemotherapy. He has now received four more treatments and presents here today for restaging. Overall, again he continues to tolerate GAP chemotherapy ex *359 tremely well. He will have fatigue on days 2 and 3, which causes him to spend most of the day lying around the house. There is no nausea, vomiting, no other abdominal pain, no mu-cositis, no fevers or chills. He has been able to travel and again works essentially full time. His appetite is good. He is eating well. There is no headache, no shortness of breath, no chest discomfort, no abdominal pain, no change in bowel or bladder habits. There is no neurological change, no numbness or tingling in his fingers or toes.

RADIOGRAPHIC DATA: I reviewed his old films in detail. There is an increase in what was previously a small amount of ascites, although it is still a small amount of fluid. He does appear to have some progression of his hepatic metastases; however, he still has a small to moderate volume disease and there is not significant progression. Overall, however, given the doubling of his CA 125 as well a[s] some progression on the CT scan, overall this picture is consistent with progressive disease.

ASSESSMENT AND PLAN: This is a 69-year-old man with unresectable cholangiocarcinoma who has had an approximately seven month period of essentially stable disease on GAP chemotherapy which he has tolerated very well. Unfortunately, at this time he appears to have progressed both in terms of tumor marker and also on the CT findings. Since he has such a good performance status, he would like to continue some sort of systemic treatment. For options, we discussed single-agent Xeloda as well as possible chemoembolization. At this time, due to his work schedule, his preference is to not undergo chemoembolization in that it involves a multiple-day admission to the hospital. Therefore, we will start on Xeloda at 2 g/m2 in divided dose per day. He was counseled as to all the side effects of Xeloda. He will return to clinic with me in three weeks for interval chemotherapy check. The plan would be to give him two courses of Xeloda and then repeat the restaging evaluation.

PHYSICAL EXAMINATION: ... General: He appears younger than his stated age, very pleasant, well-appearing man in no acute distress.

Id.

31. On or about January 28, 2003, Griggs gave the Debtor a list of “One Million Dollar Plus Prospects.” [Debtor’s Exhibit No. 16.] This list reflected potential revenues of $57,700,000.00.

32. On February 3, 2003, Griggs returned to the M.D. Anderson Cancer Center for another follow-up meeting with Dr. Thomas. [Debt- or’s Exhibit No. 25L] Dr. Thomas’ notes from this meeting do not reflect what, if anything, she told him about his prognosis. Id. However, she did write the following:

INTERVAL HISTORY: The patient is a 69-year-old man from Houston who was diagnosed with multifocal unresectable intrahepatic cholangio-carcinoma in 05/02. He was initially treated with 2 courses of GAP chemotherapy. On his initial restaging in late August, he was felt to have stable disease and was continued on GAP. As of early January, he has completed a total of 6 months of GAP chemotherapy which he tolerated very well. He had been essentially a Zubrod 0-1 with some ongoing fatigue as his major complaint. However, he was oth *360 erwise able to work nearly full-time. In early January, he was found to have shown some progressive disease, and the GAP chemotherapy was discontinued. At that time, he was started on oral Xeloda at a dose of 2,000 mg/m2 per day divided dose. His last dose of Xeloda was 01/22. Overall, he tolerated the Xeloda extremely well. He does complain that it makes him feel fatigued; however, no more than on his previous chemotherapy. He does take one short nap usually per day. He had one episode of diarrhea on day 7 for which he took Imodium. Otherwise, his bowel and bladder habits have been within normal limits. He denies any mucositis. There is no hand-foot syndrome, no complaints of neuropathy. He does feel that he has somewhat less abdominal discomfort than previously. Specifically, he occasionally would have some very intermittent and mild shooting pains in his upper abdomen which he had attributed to the presence of his tumor. He notes that for the last several week he has not had any of these.

ASSESSMENT AND PLAN: The patient is a 69-year-old gentleman with multifocal unresectable cholan-giocarcinoma, with the bulk of his tumor in the right lobe of his liver. He tolerated full-dose Xeloda extremely well without any significant side effects. He may be having some mild clinical benefit with a decrease of abdominal discomfort. He will receive course # 2 based on a BSA of 2.0 of 4 pills b.i.d. for 14 days. He will start these on 02/05. At the end of February, he will undergo restaging evaluation and return to my clinic the first week in March. He should also continue his Lasix which is 20 mg p.o. q.o.d., and spironolactone 200 mg p.o. q.d.

[(Griggs’ Exhibit No. 251).]

33. The Debtor gave Sterling Bank a written financial statement dated March 31, 2003, in which he represented that the value of his stock in the Company was $1,500,000.00. [Griggs’ Exhibit No. 13.] The Debtor owned 100% of the stock of the Company on this date.

34. Griggs worked at the Company up until April 12, 2003. He worked full-time in December of 2002, and in January and much of February of 2003. Thereafter, he worked part-time.

35. On April 17, 2003, Griggs died. Mrs. Griggs was appointed the independent executrix of Griggs’ estate. Mrs. Griggs is Griggs’ sole heir.

36. Upon Griggs’ death, the Debtor became President of the Company.

37. On June 30, 2003, the Note matured. At some point in June of 2003, the Debtor asked Mrs. Griggs to extend the maturity of the Note until March 31, 2004. When the Debtor asked Mrs. Griggs to extend the maturity of the Note, the Debtor did not complain to her that her late husband had made any misrepresentations to him about his health. Mrs. Griggs agreed to the Debtor’s request. The Debtor made some payments on the Note after Mrs. Griggs granted this extension request, but eventually stopped making the payments.

38. The Debtor gave Sterling Bank a written financial statement dated August 31, 2003, in which he represented that the value of his stock in the Company was $4,200,000.00. [Griggs’ Exhibit No. 13.] As of *361 August 31, 2003, the Debtor owned 100% of the stock of the Company.

39. On March 1, 2004, the Debtor stopped making payments on the Note. Prior to this date, the Debtor had made payments totaling $525,000.00. As of the date of the trial, July 6, 2006, the total amount of unpaid principal was $180,930.00, and the total amount of accrued unpaid interest was $43,423.20. Thus, the total amount of unpaid principal and accrued unpaid interest owed under the Note as of July 6, 2006, was $224,353.20.

40. The Debtor gave Sterling Bank a written financial statement dated May 31, 2004, in which he represented that the value of his stock in the Company was $3,000,000.00. [Griggs’ Exhibit No. 13.] As of May 31, 2004, the Debtor owned 100% of the Company.

41. On July 29, 2004, Mrs. Griggs filed suit against the Debtor in District Court in Harris County, Texas to enforce the terms of the Note and the Stock Purchase Agreement (the State Court Lawsuit). [Adversary No. 06-3158, Docket No. 1, Exhibit No. A-1J

42. On August 30, 2004, the Debtor filed his Original Answer to Mrs. Griggs’ Original Petition in the State Court Lawsuit. [Adversary No. 06-3158, Docket No. 1, Exhibit No. A-2.]

43. On or about October 11, 2004, the appraisal firm of McClure, Schu-macher & Associates, L.L.P. sent the Debtor, in his capacity as President of the Company, an appraisal of the value of the stock of the Company. [Debtor’s Exhibit No. 18.] The transmittal letter and the appraisal itself both state that the value of the stock as of December 31, 2002, was $900,000.00. [Id., ¶ 4, 27]. At some point thereafter, McClure, Schumacher & Associates L.L.P. revised its appraisal and concluded that the fair market value of the Company as of December 31, 2002 was not $900,000.00, but rather in the range of $300,000.00 to $500,000.00.

44. The Debtor gave Sterling Bank a written financial statement dated April 30, 2005, representing that the value of his stock in the Company was $3,000,000.00 [Griggs’ Exhibit No. 13.] As of April 30, 2005, the Debtor still owned 100% of the stock of the Company. At the time that the Debtor gave this financial statement to Sterling Bank, the Debtor had already received the appraisal setting forth that the Company’s value at $900,000.00 as of December 31, 2002.

45. On or about February 6, 2006, the Debtor filed his Chapter 11 voluntary petition. [Case No. 06-30434, Docket No. 1.]

46. On February 7, 2006, the Debtor removed the State Court Lawsuit to this Court. [Adversary No. 06-03158, Docket No. 1.] This suit was assigned Adversary Proceeding number 06-03158 (the Adversary Proceeding).

47. On February 14, 2006, the Debtor filed a Counterclaim against Mrs. Griggs in the Adversary Proceeding. [Adversary No. 06-03158, Docket No. 5.]

48. On February 15, 2006, Mrs. Griggs filed a Motion to Remand the State Court Lawsuit back to the Harris County District Court. [Adversary No. 06-03158, Docket No. 6.]

*362 49. On March 1, 2006, Mrs. Griggs, through her attorney, William C. Boyd (Boyd), filed her Proof of Claim for $180,930.00. [Claim No. 3.] She attached only the Note to her claim.

50. On March 7, 2006, the Debtor filed a Response opposing the Motion for Remand in the Adversary Proceeding. [Adversary No. 06-03158, Docket No. 9.]

51. On March 7, 2006, the Debtor also filed an Objection to Mrs. Griggs’ Proof of Claim. [Case No. 06-30434, Docket No. 17.]

52. On March 21, 2006, in the Adversary Proceeding, Mrs. Griggs filed her Answer to the Debtor’s Counterclaim in the Adversary Proceeding. [Adversary No. 06-03158, Docket No. 12.]

53. On March 22, 2006, in the Main Case, Mrs. Griggs filed her Response to the Debtor’s Objection to her Proof of Claim. [Case No. 06-30434, Docket No. 25.]

54. On March 27, 2006, this Court held a hearing on Mrs. Griggs’ Motion for Remand, and this Court denied the Motion. An order to that effect was entered on the docket on the same day. [Adversary No. 06-03158, Docket No. 13.]

55. On March 31, 2006, Turner wrote a letter to the Debtor setting forth, among other things, that Turner still had in his possession the 500 shares of the Company owned by Griggs that had been sold to the Debtor on December 6, 2002. [Griggs’ Exhibit No. 18.] Turner concluded his letter by stating “I would be happy to deliver that certificate to you when you have completed the terms of the Stock Purchase Agreement and I have been advised by Mrs. Griggs that you have done so.” Id.

56. The claims register reflects that on April, 6, 2006, Mrs. Griggs, through her attorney, Boyd, filed an Amended Proof of Claim in the above referenced Chapter 11 case. In fact, no Amended Proof of Claim was filed.

57. The Company continues to distribute written information about itself to the public. These materials about the Company include a profile of Griggs setting forth that he founded the Company. [Griggs’ Exhibit No. 19.]

58. Since he became a shareholder of the Company, the Debtor has had complete access to the Company’s books and records.

59. The Debtor testified that Griggs and he were “partners and trusting friends,” and Griggs never did anything to undermine his integrity. The Debtor also testified that Griggs was an optimistic individual. Mrs. Griggs testified that her husband never thought that he would die so soon.

60. The Debtor visited Griggs when Griggs was in the hospital.

61. The Debtor testified that he does not know what Griggs was told by the physicians who treated and/or examined Griggs.

62. The Debtor himself did no due diligence in November and December of 2002 with respect to any aspect of the stock sale, including conducting any investigation about the state of Griggs’ health.

63. The Debtor testified that he never reached any agreement with Griggs as to how long Griggs would contin *363 ue to work at the Company after the December 6, 2002 stock sale.

64. There is no evidence of any “key man” insurance. Accordingly, this Court finds no such insurance ever existed.

65. There is no evidence of any $600,000.00 insurance policy. Accordingly, this Court finds no such insurance policy ever existed.

66. There is no evidence that Griggs or Mrs. Griggs ever changed beneficiaries on any insurance policy. Accordingly, this Court finds that no such changes was ever made.

67. The Debtor knew that Griggs did not pass his physical in April 2002, and the Debtor also knew that the insurance policy sought to be procured by the Debtor undergoing this physical was never procured. The Debtor knew these facts well in advance of the closing on the stock sale that took place on December 6, 2002.

68. Boyd is counsel for Mrs. Griggs. He received his law degree from Texas Tech University in 1968, and has been practicing law for over 35 years. He has extensive experience trying lawsuits. His firm represents Mrs. Griggs on a contingency basis whereby his firm will receive 33)é% of the amount of any judgment awarded to Mrs. Griggs. Most of the cases handled by Boyd’s firm are done on a similar contingency basis. As with most of its clients, Boyd’s firm has no written agreement with Mrs. Griggs. Both Boyd and his firm have utmost trust in Mrs. Griggs, and believe that she will ensure that the 33fee is paid out of any judgment awarded to her against the Debtor.

69. Because Boyd’s firm represents Mrs. Griggs under a contingency arrangement, Boyd has not sent Mrs. Griggs any monthly invoices, nor has he kept time sheets. Moreover, Boyd cannot segregate with precision the time that he has spent prosecuting the claim under the Note against the Debtor from the time that he has spent defending against the counterclaims brought by the Debtor. Boyd testified that prosecuting the claim and defending against the counterclaims are so intertwined that it is not easy to separate out the work. He estimates that 60-75% of his time has been spent prosecuting the claim and 25^40% of his time has been spent defending against the counterclaims. Boyd has spent in excess of 400 hours representing Mrs. Griggs in this lawsuit. In his opinion, $60,000.00 is a reasonable fee for this representation. If the appeal is taken to the District Court, Boyd believes that a reasonable fee for representing Mrs. Griggs on this appeal would be $7,500.00. If an appeal is thereafter taken to the Fifth Circuit, Boyd believes that a reasonable fee for representing Mrs. Griggs would be $5,000.00.

70. Macon D. Strother (Strother), the Debtor’s special counsel for this suit, testified that the value of his time for prosecuting the counterclaims and defending against Mrs. Griggs’ claim totaled $53,000.00.

71. If Boyd had taken on representation of Mrs. Griggs on an hourly basis, he would have billed $150.00 per hour when the suit was filed in 2004, and the rate would have been *364 increased to $200.00 for services rendered in 2006.

III. CONCLUSIONS OF LAW

A. Griggs did not owe a fiduciary duty to the Debtor.

The Debtor asserts that: (1) Griggs owed him a fiduciary duty; (2) Griggs violated this duty by failing to make sufficient disclosure to the Debtor about his cancer; and (3) the Debtor has suffered damages by virtue of having purchased Griggs’ stock for $750,000.00 believing that a healthy Griggs would continue to work at the Company for many years to come.

This Court finds that Griggs did not owe the Debtor a fiduciary duty. Generally, “[a] fiduciary duty requires the fiduciary to place the interest of the other party before his or her own.” Hoggett v. Brown, 971 S.W.2d 472, 487 (Tex.App.—Houston [14th Dist.] 1997, pet. denied) (citing C rim Truck & Tractor Co. v. Navistar Int’l Transp. Corp., 823 S.W.2d 591, 593-94 (Tex.1992); Hallmark v. Port/Cooper-T Smith Stevedoring Co., 907 S.W.2d 586, 592 (Tex.App.—Corpus Christi 1995, no writ)). In Texas, there are two classifications of fiduciary relationships: “[1] a formal fiduciary relationship that arises as a matter of law, such as principal/agent or partners[;] and [2] an informal fiduciary relationship arising from a confidential relationship ‘where one person trusts in and relies upon another, whether the relation is moral, social, domestic or merely personal.’ ” Hoggett, 971 S.W.2d at 487 (quoting Crim Truck & Tractor Co., 823 S.W.2d at 593-94; Hallmark, 907 S.W.2d at 592). Fiduciary relationships are unique and not easily conferred; “the mere fact that one subjectively trusts another does not alone indicate that confidence is placed in another in the sense demanded by fiduciary relationships because something apart from the transaction between the parties is required.” Hoggett, 971 S.W.2d at 488 (citing Kline v. O’Quinn, 874 S.W.2d 776, 786 (Tex.App.—Houston [14th Dist.] 1994, writ denied), cert. denied, 515 U.S. 1142, 115 S.Ct. 2579, 132 L.Ed.2d 829 (1995)). Typically, “whether such a duty exists depends on the circumstances.” Hoggett, 971 S.W.2d at 488 (citing Kaspar v. Thorne, 755 S.W.2d 151, 155 (Tex.App.—Dallas 1988, no writ); Schoellkopf v. Pledger, 739 S.W.2d 914, 920 (Tex.App.—Dallas 1987), rev’d on other grounds, 762 S.W.2d 145 (Tex.1988)).

With respect to a formal fiduciary relationship, a corporate officer’s fiduciary duty generally runs only to the corporation and not to individual shareholders. Hoggett, 971 S.W.2d at 487-88. In Hoggett v. Brown, both parties were directors and shareholders of the company; nevertheless, the court held that there was no formal fiduciary relationship. 971 S.W.2d at 488. The court explained that “a co-shareholder in a closely held corporation does not as a matter of law owe a fiduciary duty to his co-shareholder.” Hoggett, 971 S.W.2d at 488 (citing Kaspar, 755 S.W.2d at 155; Schoellkopf, 739 S.W.2d at 920). 1

In this dispute, Griggs and the Debtor were co-shareholders because they each owned fifty percent of the Company’s stock. (Griggs’ Exhibit No. 17.) The Company was closely held because Griggs and the Debtor were the only shareholders and each held the same amount of stock. See Hoggett, 971 S.W.2d at 488. There *365 was no formal fiduciary relationship between Griggs and the Debtor on account of their co-shareholder relationship. Id. This conclusion holds true even though Griggs and the Debtor were the only officers and directors of the Company. (Debtor’s Exhibit No. 1.) Griggs owed a fiduciary duty only to the Company, not the Debtor. Hoggett, 971 S.W.2d at 488.

An informal fiduciary relationship arises when “influence has been acquired and abused, [and] confidence has been reposed and betrayed.” Crim Truck & Tractor Co., 823 S.W.2d at 594. Further, “it exists where a special confidence is reposed in another who in equity and good conscience is bound to act in good faith and with due regard to the interest of the one reposing confidence.” Texas Bank and Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex.1980). Merely because a relationship has been cordial and of long duration does not necessarily amount to a confidential relationship. Hoggett, 971 S.W.2d at 488 (citing Crim Truck & Tractor Co., 823 S.W.2d at 594; Hallmark, 907 S.W.2d at 592). “The existence of a confidential relationship is a question of fact, but becomes a question of law if the issue is one of no evidence.” Crim Truck & Tractor Co., 823 S.W.2d at 594. Therefore, a fiduciary duty only arises from a confidential relationship when the evidence shows that: (1) influence was acquired and then abused; and (2) the confidence was reposed and betrayed.

In the suit at bar, Griggs and the Debt- or did not have an informal confidential relationship giving rise to a fiduciary duty. Although there is evidence that the Debtor and Griggs had a relationship of trust and confidence in each other, the Debtor has not established that there was influence or an abuse of influence in the relationship. [Finding of Fact No. 59.] Indeed, as equal shareholders and officers of the company, Griggs and the Debtor were responsible for different but equally important aspects of the Company. [Findings of Fact Nos. 4, 5.] Griggs was responsible for developing clients, and the Debtor was in charge of designing and constructing the exhibits; there was no evidence that Griggs exercised influence over the Debtor in business operations. [Findings of Fact Nos. 4, 5, 6.] Further, there is no evidence that confidence was betrayed because, after the stock sale, the Company continued to disseminate positive information about Griggs. [Finding of Fact No. 57.] Additionally, confidence was not betrayed because as a 50% shareholder and officer of the Company, the Debtor had complete access to the books and records of the Company at all times during the negotiations. [Finding of Fact No. 58.] Indeed, as early as April of 2002, the Debtor had concluded on his own that the value of Dr. Griggs’ stock was $750,000.00 [Finding of Fact No. 14.] Finally, there was no confidence betrayed because the Debtor failed to conduct his own due diligence to ensure the December 6, 2002 transaction was fair. [Finding of Fact No. 62.] Because the evidence does not reflect that Griggs’ confidential relationship with the Debtor resulted in an abuse of influence and a betrayal of confidence, no fiduciary duty was created.

Even if this Court is incorrect and Griggs did owe a fiduciary duty to the Debtor, Griggs did not breach this duty. There is no evidence that Griggs exerted an abuse of influence or betrayed any trust when both men were equal shareholders with equal access to the Company’s books and records. [Findings of Fact Nos. 4, 58.]

Moreover, even if this Court is incorrect and there was a breach of a fiduciary duty, the Debtor failed to prove that he sustained an injury. The evidence *366 shows that prior to the death of Griggs, the Company’s stock was worth $1,500,000.00, and over four months after the death of Griggs, the Company’s stock was worth $4,200,000.00. [Findings of Fact Nos. S3, 35, 38.]

Finally, even if this Court is incorrect and the Debtor did suffer damages, the alleged breach of duty was not the proximate cause of these damages because there was an intervening cause. According to the testimony of Mr. Schumacher, an appraiser from McClure, Schumacher & Associates, in addition to the death of Griggs, the loss of the Shell Oil Company contract was a major reason for the low appraisal value of the Company for the year 2002. [Findings of Fact Nos. 9, 43.]

B. Griggs and his wife did not conspire against the Debtor.

The Debtor next asserts that Griggs and his wife conspired to deceive him into purchasing the shares of stock owned by Griggs for the sum of $750,000.00. This Court disagrees.

To prove a civil conspiracy in Texas, a plaintiff must satisfy the following elements: “(1) two or more persons; (2) an object to be accomplished; (3) a meeting of minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result.” Murray v. Earle, 405 F.3d 278, 293 (5th Cir.2005) (quoting Massey v. Armco S