Swinney v. Keebler, Co.

480 F.2d 573 (4th Cir.1973)

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Nature of the Case

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Facts

Keebler (D) bought a controlling share of Meadors, a candy manufacturer. Keebler then wanted out of the candy business and decided to sell Meadors. Atlantic became involved in negotiations to buy Meadors from Keebler. The sale price was $235,000, and both parties negotiated rather quickly to do the deal. The first serious meetings were held on February 14, and the closing was done on February 19. Keebler had nothing further to do with Atlantic after the sale. Keebler made no inquiries as to Atlantic's plans for the future of Meadors. Atlantic never had the $235,000 on hand and had to take out a short-term loan before the purchase. The intent of Atlantic was to loot Meador and sell off its inventory for profit. Swinney (P), a bondholder of Meadors, sued Keebler for failing to investigate what the motives of Atlantic were before making the sale and for allowing Meadors to be looted by Atlantic. P claims that D breached his fiduciary duties by failing to investigate.