Sutton v. FedFirst Financial Corp.

GRAEFF, J. This appeal arises from a merger between FedFirst Financial Corporation (“FedFirst”) and CB Financial Services, Inc. (“CB Financial”). After the merger agreement was announced, Larry Sutton, appellant, a former shareholder of FedFirst, filed a lawsuit against the two companies. He sought to enjoin the merger, alleging that: (1) FedFirst’s ⁵³ directors breached fiduciary duties owed to FedFirst’s shareholders; and (2) CB Financial aided and abetted the “breaches of fiduciary duty in connection with the Proposed Acquisition.” On September 19, 2014, the circuit court dismissed Mr. Sutton’s direct claims with prejudice. On appeal, Mr. Sutton presents one multi-part question for our review, 1 which we have reorganized and reworded, as follows: 1.

Did the circuit court err in granting the motion to dismiss the claims against the directors of FedFirst? 2. Did the circuit court err in granting the motion to dismiss the claims against CB Financial? CB Financial and FedFirst present an additional question for our review, which we have reworded and rephrased slightly, as follows: Should this Court dismiss this appeal as moot because the merger between FedFirst and CB Financial, which has now been consummated, cannot be undone, leaving Mr. Sutton with no relief that the Court can order? For the reasons set forth below, we conclude that the appeal is not moot, and we shall affirm the judgment of the circuit court. ⁵⁴ FACTUAL AND PROCEDURAL BACKGROUND The Merger Agreement On April 15, 2014, FedFirst and CB Financial announced that the two corporations had executed a merger agreement that, if approved by the stockholders of a majority of the outstanding shares of stock, would result in the merger of FedFirst and CB Financial. 2 The merger agreement provided that FedFirst shareholders would receive either $23.00 in cash or 1.1590 shares of CB Financial common stock in exchange for each FedFirst share.

The FedFirst shareholders could elect to receive cash or stock, or a combination thereof, subject to the requirement in the agreement that 65% of the total shares of FedFirst would be exchanged for CB Financial stock and 35% would be exchanged for cash. 3 Mr. Sutton’s complaint estimated that the value of the merger was approximately $54.5 million dollars. Pursuant to the merger agreement, FedFirst President and Chief Executive Officer Patrick G. O’Brien would become the Executive Vice President and Chief Operating Officer of Community Bank, a wholly owned subsidiary of CB Financial through which CB Financial conducted its operations. Fed-First directors John J. LaCarte, John M. Swiatek, Richard B. Boyer, and Mr. O’Brien would join the board of directors of CB Financial. The stockholders were advised that some of FedFirst’s officers and directors obtained interests in the merger that were not shared by stockholders generally.

For example, all outstanding stock options would be terminated and the holders of the stock options would receive a cash ⁵⁵ payment equal to the number of shares multiplied by the amount by which $23.00 exceeded the “exercise price” of the stock option. Cash payments for directors included the following: Patrick G. O’Brien (President and CEO) $446,314; Richard B. Boyer (Vice President) $193,958; Jamie L. Prah (Senior Vice President and Chief Financial Officer) $199,996; Henry B. Brown III (Senior Vice President and Chief Lending Officer) $161,862. Cash payments to all non-employee directors (5 persons) totaled $538,708. Moreover, the agreement accelerated the vesting of Fed-First restricted stock awards, resulting in restricted stock awards becoming “fully vested upon the occurrence of a change in control and each share of restricted stock will be converted into 1.1590 shares of CB common stock.” 4 Finally, with respect to Exchange Underwriters, Inc., an insurance agency in which FedFirst owned 80% equity interest and Mr. Boyer owned 20% interest, FedFirst would buy out Mr. Boyer’s 20% interest prior to the closing of the merger, and Mr. Boyer would continue to be employed as Chief Executive Officer of the company following the merger.

The Merger Agreement also included covenants that protected CB Financial’s interests and encouraged the completion of the merger. Initially, FedFirst agreed that it would not initiate, solicit, or knowingly encourage any other acquisition proposals (e.g., a merger or tender offer). The agreement, however, did not preclude FedFirst from considering unsolicit ⁵⁶ ed offers, as long as they were “superior proposals.” Moreover, FedFirst agreed to promptly notify CB of such inquiries, proposals or offers received by, any such information requested from, or any such discussions or negotiations sought to be initiated or continued with FedFirst or any of its representatives indicating, in connection with such notice, the name of such Person and the material terms and conditions of any inquiries, proposals or offers.[ 5 ] Finally, “in order to induce CB to enter into this Agreement, and to reimburse CB for incurring the costs and expenses related to entering into this Agreement and consummating the transactions contemplated,” the agreement included a termination fee of $2,750,000, which FedFirst agreed to pay in the event that it terminated the agreement. The S-4 Registration Statement On June 13, 2014, CB Financial filed a Registration Statement (Form S-4) with the United States Securities and Exchange Commission (“SEC”).

On July 28, 2014, CB Financial filed an amended S-4 with the SEC (hereinafter “the S-4”), which was more than 300 pages long and included a plethora of information about the companies and the proposed merger. It included, inter alia, the following: • A letter to stockholders of FedFirst explaining the proposed transaction and advising that the approval of the merger agreement required the affirmative vote of the holders of a majority of the outstanding shares of Fed-First common stock. • A summary providing a description of the two companies and the highlights of the merger. ⁵⁷ • A detailed discussion of the risks associated with the merger (e.g., the price of CB Financial stock may decrease after the merger, and/or “FedFirst stockholders will have reduced ownership and voting interest after the merger”) and risks related to CB Financial (e.g., “Changes in interest rates may reduce CB’s profits and impair asset values”). • Selected historical financial information for both companies. • A description of the special meeting of the stockholders during which the stockholders would vote on the merger. The S — 4 also included a detailed chronological account of the negotiation of the merger. It explained that, in January 2013, Patrick G. O’Brien, President and Chief Executive Officer, of FedFirst, met with Barron P. McCune, Jr., President and Chief Executive Officer of CB, at Mr. McCune’s invitation, to discuss a possible business combination of their two institutions.

No price or other terms were discussed at this meeting. In February 2013, Mr. O’Brien and Mr. LaCarte met with FedFirst’s financial advisor, Mufson Howe Hunter, “to examine the current [Mergers & Acquisitions (“M & A”) ] market in the bank and thrift industry and review the financial characteristics of a possible business combination between CB and FedFirst.” In March, the FedFirst board of directors discussed the issue and “observed that there were many compelling strategic business reasons for a combination with CB, including their complementary market areas and similar corporate cultures.” FedFirst did not, however, pursue a transaction with CB or any other company at that time. In August, the following occurred: [T]he FedFirst board of directors met to discuss its strategic alternatives. Representatives of Mufson Howe Hunter were present at the meeting, as was a representative of Kilpatrick Townsend & Stockton LLP, outside legal counsel to FedFirst.

Representatives of Mufson Howe Hunter reviewed with the directors bank and thrift stock market trends; compared key balance sheet and profitability met ⁵⁸ rics of FedFirst to those of comparable companies in Pennsylvania; examined FedFirst’s historical and projected financial performance; provided an update on the M & A market in the bank and thrift industry; reviewed with the directors the financial characteristics of a possible business combination between CB and FedFirst; and identified potential acquirers of FedFirst, evaluated their likely interest, and analyzed their capacity to pay based on certain transaction assumptions. Legal counsel reviewed with the directors their fiduciary duties in the context of a business combination with another company. In September, the FedFirst board of directors “authorized Mufson Howe Hunter to contact three selected parties regarding their interest in a possible business combination with FedFirst.” It “determined that the business risks resulting from awareness in the local banking community of FedFirst’s interest in a business combination outweighed the benefit of contacting additional companies that were unlikely to have the interest or ability to complete a transaction with FedFirst.” By October, FedFirst had received responses from each of the three companies. The first company (Bank A) initially indicated that it had an interest in acquiring FedFirst, but by November, Bank A lost interest in pursuing a merger with FedFirst.

Because “none of the other parties considered by FedFirst were likely to be more interested in a business combination with FedFirst than CB, FedFirst decided to restart discussions with CB.” After further discussions with CB Financial, the following occurred: On February 14, 2014, CB provided FedFirst with a nonbinding letter of interest for a business combination between the two companies. CB proposed the merger of FedFirst into CB valued at $21.80 per share of FedFirst common stock, with the exchange of 65% of the outstanding shares of FedFirst common stock for shares of CB common stock and the remaining 35% exchanged for cash. CB conditioned the transaction on FedFirst purchasing from ⁵⁹ Mr. Boyer his 20% minority interest in Exchange Underwriters prior to closing. On February 27, 2014, FedFirst delivered its mark-up of the letter of interest and communicated its view on the value of the merger consideration, which was that the merger consideration should be increased to a value of $23.00 per share.

On March 6, 2014, CB agreed to increase the value of the merger consideration to $23.00 per share, and on March 7, 2014 delivered a revised letter of interest..... During the course of negotiations, the parties also discussed the method of calculating the exchange ratio and agreed that the exchange ratio would be determined at the time of signing the definitive merger agreement by dividing $23.00 by the volume-weighted average price of CB common stock over the prior 20 trading-day period. CB did not agree to FedFirst’s request to reduce the termination fee from 5% of the transaction value to 4% of the transaction value, but did agree to make the termination fee reciprocal. The directors discussed the proposal and consulted with legal counsel.

They ultimately voted to accept the letter of interest, and the following occurred: On March 28, 2014, Luse Gorman Pomerenk & Schick, PC, special counsel for CB delivered an initial draft of the merger agreement. Over the ensuing days, the parties negotiated the terms of the merger agreement and ancillary documents. In particular, the parties negotiated the various representations and warranties to be made by each of them, the terms of the covenants that restrict the activities of the parties pending completion of the merger, including the “no-shop” provision that restricts the ability of FedFirst to seek alternative transaction proposals, the treatment of various employee benefit plans and agreements, and the expense limitation on director and officer liability insurance. The parties also discussed the details with respect to the composition of CB’s board of directors following the merger, agreed that CB would take action to amend its articles of ⁶⁰ incorporation to eliminate pre-emptive rights in connection with future share issuances, worked out the details with respect to the purchase of the minority interest in Exchange Underwriters, and agreed that the listing of CB common stock on the Nasdaq Stock Market would be a condition to closing.

On April 14, 2014, the FedFirst board of directors met to consider the merger agreement. Representatives of Mufson Howe Hunter presented a financial analysis of the transaction and gave its opinion that “the consideration to be received by the stockholders of FedFirst under the merger agreement [was] fair, from a financial point of view, to the holders of FedFirst common stock.” The board of directors then unanimously approved the definitive merger agreement. That same day, on April 14, 2014, the CB Financial board of directors unanimously approved the definitive merger agreement, and the merger agreement was executed by officers of FedFirst and CB Financial. A joint press release was issued, announcing the execution of the merger agreement and the terms of the merger.

After providing the events leading to the merger, the S-4 set forth a discussion of FedFirst’s reasons for the merger, stating that the FedFirst board of directors “unanimously determined that the merger agreement [was] in the best interests of FedFirst and its shareholders.” The S-4 listed a number of factors considered, including: • [the Board’s] belief that the merger will result in a stronger commercial banking franchise with a diversified revenue stream, strong capital ratios, a well-balanced loan portfolio and an attractive funding base that has the potential to deliver a higher value to FedFirst’s shareholders as compared to continuing to operate as a stand-alone entity; * * * • the expanded possibilities, including organic growth and future acquisitions, that would be available to the com ⁶¹ bined company, given its larger size, asset base, capital, market capitalization and footprint; • [ ] that the value of the merger consideration for holders of FedFirst common stock at $28.00 per share, represents a premium of 15% over the $20.06 closing price of Fed-First common stock on NASDAQ on April 10, 2014, which is the most recent date on which FedFirst common stock traded prior to April 14, 2014; • [the opinion of the independent financial advisor that the merger consideration was fair]; • [ ] that the merger consideration consists of a combination of CB common stock and cash and that FedFirst shareholders will be given the opportunity to elect the form of consideration that they wish to receive, giving FedFirst shareholders the opportunity to participate as stockholders of CB in the benefits of the combination and the future performance of the combined company generally; • [ ] that upon completion of the merger FedFirst shareholders will own approximately 42% of the outstanding shares of the combined company; • the perceived limited opportunities for a strategic partnership with another financial institution, at a similar or higher price, having characteristics that would achieve the benefits for FedFirst stockholders that the board believes will be achieved through the merger with CB; [and] • the equity interest in the combined company that Fed-First’s existing shareholders will receive in the merger, which allows such shareholders to continue to participate in the future success of the combined company. The S-4 contained further information, including the following: ⁶² • A summary of the Fairness Opinion provided by Mufson Howe Hunter & Company LLC, FedFirst’s financial ad-visor, including the financial data upon which Mufson Howe Hunter relied to render its opinion (the full text of the Fairness Opinion was attached to the end of the S-4). • A description of the consideration stockholders would receive in the merger, including detailed hypothetical examples regarding how the two types of consideration (cash and stocks) would be apportioned based on the potential elections of FedFirst stockholders. 6 • A section discussing the “Interests of Certain Persons in the Merger that are Different from Yours,” which described the unique benefits received by FedFirst’s officers and directors. • A discussion of the management of CB Financial and the roles of FedFirst’s officers and directors after the merger, ⁶³ including detailed information about compensation and benefits. • The Agreement and Merger Agreement (provided in full in Annex A of the S-4). Proceedings Below On April 21, 2014, Mr. Sutton filed a class action and derivative lawsuit against FedFirst, its seven individual directors, and CB Financial. 7 Mr. Sutton asserted: In any situation where the directors of a publicly traded corporation undertake a transaction that will result in either a change in corporate control or a break-up of the corporation’s assets, the directors have an affirmative fiduciary obligation to act in the best interests of the company’s shareholders, including the duty to obtain maximum value under the circumstances. He alleged that the individual directors violated, and are violating, the fiduciary duties they owe to [Mr. Sutton] and the other public shareholders of FedFirst, including their duty of candor and duty to maximize shareholder value.

As a result of the Individual Defendants’ divided loyalties, [Mr. Sutton] will not receive adequate, fair or maximum value for their FedFirst common stock in the Proposed Acquisition. Mr. Sutton also alleged, inter alia, that the deal included “preclusive deal mechanisms which effectively discourage other bidders from making successful topping bids,” and “the Proposed Acquisition will allow CB Financial to purchase FedFirst at an unfairly low price while availing itself of FedFirst’s significant value.” The first count of the amended complaint alleged a breach of fiduciary duty against the individual defendants. It asserted that the directors had ⁶⁴ initiated a process to sell FedFirst that undervalues the Company and vests them with benefits that are not shared equally by FedFirst’s public shareholders. In addition, by agreeing to the Proposed Acquisition, Defendants have capped the price of FedFirst at a price that does not adequately reflect the Company’s true value.

Mr. Sutton sought to have the court enjoin the vote on the merger, stating that the plaintiff had no adequate remedy at law. The second count alleged that CB Financial and FedFirst aided and abetted the individual directors’ breach of fiduciary duty. In that regard, it alleged that CB Financial “knowingly assisted the Individual Defendants’ breaches of fiduciary duty in connection with the Proposed Acquisition, which, without such aid, would not have occurred,” and as a result, Mr. Sutton “will be damaged in that [he has] been and will be prevented from obtaining a fair price for [his] shares.” The third count sought declaratory relief. Mr. Sutton requested a declaration that: (1) the vote should be enjoined, (2) the proposed acquisition was unlawful and unenforceable and the merger agreement “and/or the transactions contemplated thereby, should be rescinded and the parties returned to their original position.” In the Prayer for Relief, the amended complaint stated, as follows: WHEREFORE, Plaintiff demands injunctive relief, in his favor and in favor of the Class, and against the Defendants, as follows: A. Declaring that this action is properly maintainable as a class action, certifying Plaintiff as Class representative and certifying his counsel as class counsel and derivative counsel; B. Declaring and decreeing that the Proposed Acquisition was entered into in breach of the fiduciary duties of the Individual Defendants and is therefore unlawful and unenforceable, and rescinding and invalidating any merger agreement or other agreements that Defendants entered ⁶⁵ into in connection with, or in furtherance of, the Proposed Acquisition; C. Preliminarily and permanently enjoining Defendants, their agents, counsel, employees and all persons acting in concert with them from consummating the Proposed Acquisition; D. Directing the Individual Defendants to exercise their fiduciary duties to obtain a transaction that is in the best interests of FedFirst’s shareholders; E. Imposing a constructive trust, in favor of Plaintiff and the Class, upon any benefits improperly received by Defendants as a result of their wrongful conduct; F. Awarding Plaintiff the costs and disbursements of this action, including reasonable attorneys’ and experts’ fees; and G. Granting such other and further equitable relief as this Court may deem just and proper.

On June, 19 and 20, 2014, FedFirst (the company and the individual directors) and CB Financial, respectively, filed motions to dismiss the complaint for failure to state a claim. FedFirst provided five arguments in its motion: (1) Mr. Sutton lacked standing to bring a direct claim against Fed-First’s Board for breach of fiduciary duties; (2) Mr. Sutton failed to overcome the business judgment rule; (3) Mr. Sutton’s allegations of omissions in the Registration Statement failed to meet Maryland’s materiality standard; (4) the Fed-First Board was under no duty to maximize shareholder value; and (5) to the extent that Mr. Sutton alleged that FedFirst aided and abetted the individual directors’ alleged breaches of fiduciary duties, Mr. Sutton failed to adequately allege any elements of an aiding and abetting claim against FedFirst. 8 CB Financial reiterated some of FedFirst’s arguments in its motion, and it argued that, even if there was a breach of ⁶⁶ fiduciary duty by the directors of FedFirst, Mr. Sutton had not alleged any specific facts from which it could be inferred that CB Financial “knowingly participated” in such a breach. On July 29, 2014, after CB Financial filed the S-4 with the SEC, Mr. Sutton filed an amended complaint, adding the allegation that the S-4 “omits material information about the Proposed Acquisition that must be disclosed to FedFirst’s shareholders to enable them to make a fully informed decision.” On August 12, 2014, FedFirst filed an amended motion to dismiss. On September 2, 2014, Mr. Sutton voluntarily dismissed his derivative claim, leaving only his direct claim.

On September 17, 2014, Mr. Sutton filed a motion for a preliminary injunction, requesting that the court enjoin FedFirst from holding a shareholder vote on the proposed merger. On September 18, 2014, the court heard argument on the defendants’ motions to dismiss. In an order dated September 19, 2014, the circuit court dismissed Mr. Sutton’s direct claims, with prejudice. On October 17, 2014, Mr. Sutton filed a Notice of Appeal.

On January 14, 2015, the circuit court issued its Memorandum Opinion. The court explained that it was granting the motions to dismiss for the following reasons: (1) Mr. Sutton “failed to assert a direct injury necessary to bring [a] direct claim” because he “failed to demonstrate how the alleged injury [was] ‘separate and distinct’ from that suffered from other shareholders”; (2) Shenker v. Laureate Education, Inc., 411 Md. 317 , 983 A.2d 408 (2009), “only applies in the limited context of a cash-out merger that will result in a change of control, which [was] not contemplated by the Proposed Transaction,” and therefore, the case does not provide Mr. Sutton with a direct cause of action against the FedFirst Board for breach of common law duties of candor and maximization of shareholder value; (3) even if Mr. Sutton could maintain his direct claim against the FedFirst Board, his allegations were insufficient to rebut the presumptions afforded to the directors by the business judgment rule; (4) “the alleged omissions in the Registration Statement are wholly immaterial”; and (5) ⁶⁷ Mr. Sutton “failed to allege an underlying breach of fiduciary duty,” and therefore, his “aiding and abetting claims fail as a matter of law.” On January 15, 2015, Mr. Sutton filed an amended notice of appeal. Post-Dismissal Events Mr. Sutton did not move to stay the merger pending his appeal, and the parties have represented that, on October 31, 2014, FedFirst and CB Financial completed the merger. 9 On November 7, 2014, CB Financial filed a motion to dismiss the appeal as moot, arguing that, “because the merger has now occurred, there is no relief that this Court can order, rendering [Mr.] Sutton’s appeal moot.” On November 10, 2014, FedFirst filed a similar motion to dismiss, arguing that Mr. Sutton “did not move to stay the Circuit Court’s order,” the merger has already been completed, “FedFirst ceased to exist as an entity,” “the consideration has been distributed to FedFirst shareholders,” and therefore, Mr. Sutton’s “appeal is moot because there is no effective remedy which this Court can provide.” On November, 21, 2014, Mr. Sutton filed an opposition to the motions to dismiss, arguing that the “consummation of the merger does not make it impossible for the trial court to grant the relief requested.” He argued that, even if the merger could not be undone, he “made clear in his complaint that he would seek damages that he ... suffered as a result of Defendants’ conduct.” In an order filed on December 16, 2014, this Court denied appellees’ motions with leave to seek that relief in their briefs. ⁶⁸ Additional facts will be discussed as necessary in the discussion that follows. DISCUSSION I. Mootness Before addressing the merits of Mr. Sutton’s claims, we address appellees’ argument in their initial motions, and reiterated in their briefs, that this case should be dismissed because it is moot. “A case is moot when there is no longer an existing controversy when the case comes before the Court or when there is no longer an effective remedy the Court could grant.” Prince George’s Cnty. v. Columcille Bldg.

Corp., 219 Md.App. 19, 26 , 98 A.3d 1043 (2014) (quoting Suter v. Stuckey, 402 Md. 211, 219 , 935 A.2d 731 (2007)). “This Court does not give advisory opinions; thus, we generally dismiss moot actions without a decision on the merits.” Green v. Nassif, 401 Md. 649, 655 , 934 A.2d 22 (2007) (quoting Dep’t of Human Res., Child Care Admin. v. Roth, 398 Md. 137, 143 , 919 A.2d 1217 (2007)). “In rare instances, however, we ‘may address the merits of a moot case if we are convinced that the case presents unresolved issues in matters of important public concern that, if decided, will establish a rule for future conduct.’” Roth, 398 Md. at 143-44 , 919 A.2d 1217 (quoting Coburn v. Coburn, 342 Md. 244, 250 , 674 A.2d 951 (1996)). Appellees argue that this Court “should dismiss this appeal as moot because the only meaningful relief sought by the amended complaint — enjoining the merger — cannot be granted because the merger has already occurred and cannot be unwound.” They assert: “FedFirst’s Merger into CB Financial was finalized in October 2014 and the proceeds have been distributed to the shareholders. There is nothing more that this Court can do, other than find that the appeal is moot.” If Mr. Sutton’s sole claim for relief was to enjoin the merger, we would agree that the appeal was moot. In that regard, National Collegiate Athletic Association v. Tucker, ⁶⁹ 300 Md. 156 , 476 A.2d 1160 (1984), is instructive.

In Tucker , two students of Johns Hopkins University filed a complaint and motion for injunction against the National Collegiate Athletic Association (NCAA), arguing that, pursuant to the NCAA’s bylaws, they had not “used up one of their four seasons of eligibility for intercollegiate competition by participating in Fall lacrosse scrimmages prior to transferring to Hopkins.” 300 Md. at 157 , 476 A.2d 1160 . The circuit court granted the students’ motion for an injunction, ordering the NCAA to allow them to play for the remainder of the season. Id. at 158 , 476 A.2d 1160 . The NCAA noted an appeal, but by the time the case was heard by the Court, the season had ended.

Id. The Court of Appeals dismissed the appeal, stating: “[S]imply put, the season is over. Accordingly, because the only question before us is the appropriateness of the issuance of the interlocutory injunction, we hold that the appeal is moot.” Id. at 159 , 476 A.2d 1160 . Other cases reiterate the rule that, once the act sought to be enjoined has occurred, any appeal of the issue is moot.

See Hagerstown Reprod. Health Servs. v. Fritz, 295 Md. 268, 271 , 454 A.2d 846 (appeal from injunction prohibiting abortion moot where abortion performed), cert. denied, 463 U.S. 1208 , 103 S.Ct. 3538 , 77 L.Ed.2d 1389 (1983); Banner v. Home Sales Co. D., 201 Md. 425, 428 , 94 A.2d 264 (1953) (“[T]he general rule is ‘that the court should confine itself to the particular relief sought in the case before it, and refrain from deciding abstract, moot questions of law which may remain after that relief has ceased to be possible.”) (quoting Montgomery Cnty. v. Maryland-Washington Metro. Dist., 200 Md. 525, 530-31 , 92 A.2d 350 (1952)). In Brill v. General Industrial Enterprises, Inc., 234 F.2d 465 (3d Cir.1956), the Court of Appeals for the Third Circuit addressed an issue similar to the one presented here.

In that case, stockholders of a corporation sought to enjoin a shareholder vote on the sale of the corporation’s physical assets, asserting that the sale price was inadequate. Id. at 467 . The trial court dismissed the complaint, and the sale ⁷⁰ occurred. Id. at 468 .

The appellate court dismissed the appeal, explaining that “an appeal from a decree dismissing a complaint seeking an injunction, or refusing to grant an injunction, will not disturb the operative effect of such a decree, and where the act sought to be restrained has been performed, the appellate courts will deny review on the ground of mootness.” Id. at 469 . 10 Mr. Sutton recognizes these mootness principles. He concedes that he “can no longer enjoin the Stockholders’ vote on the Transaction or the Closing,” but he contends that the case is not moot because “the trial court can order the unwinding of the merger transaction or grant other relief ... if the case is remanded.” With respect to such “other relief,” Mr. Sutton asserts that, although “rescission of the [transaction (versus rescissory damages) is admittedly unlikely, it is plausible that, on remand, [he] will convince the Circuit Court to ‘impose a constructive trust,’ ” in his favor “upon any benefits improperly received by [appellees] as a result of their wrongful conduct.” He further asserts that, although no monetary damages claims appear in the ad damnum section of the complaint, there was “explicit reference to [his] claim of damages” throughout the complaint, and on remand, the court has “the power ... to allow an award of money in the form of compensatory damages and/or rescissory damages for [a]ppellant’s direct injury.” 11 ⁷¹ A. Unwinding the Merger With respect to the argument that this case is not moot because the circuit court on remand could “unwind” the merger between FedFirst and CB Financial, Mr. Sutton raised this contention in his response to appellees’ initial motion to dismiss the appeal, which he adopts by reference in his brief. In his brief, he concedes that this relief “is admittedly unlikely,” but he has not abandoned the claim, so we will address it. Mr. Sutton contends that, in his complaint, he requested that the court rescind the merger agreement.

Accordingly, he contends his claim to rescind the agreement, and therefore any resulting merger, preserves a remedy precluding this court from dismissing this case as moot. Neither party cites any Maryland case addressing whether, or under what circumstances, a court can “unwind” a completed corporate merger. Accordingly, we look to other courts for guidance. Delaware courts addressing this issue repeatedly have held that, once a merger is consummated, it generally is impracticable for it to be undone. 12 For example, in McMillan v. Intercargo Corporation, 768 A.2d 492, 500 (Del.Ch.2000), the ⁷² Delaware Court of Chancery stated: “Having unsuccessfully attempted to obtain an injunction against the consummation of the merger, the metaphorical merger eggs have been scrambled.

Under our case law, it is generally accepted that a completed merger cannot, as a practical matter, be unwound.” Similarly, in In re Lukens Inc. Shareholders Litigation, 757 A.2d 720, 728 (Del.Ch.1999), aff'd sub nom. Walker v. Lukens, Inc., 757 A.2d 1278 (Del.2000), the court explained: “[Plaintiffs’ demand for rescission of the transaction is plainly futile. ... [I]t goes without saying that at this juncture it is ‘impossible to unscramble the eggs.’ Money damages [are] the only possible form of relief available.” Accord Weinberger v. UOP, Inc., 457 A.2d 701, 714 (Del.1983) (concluding that a “long completed” cash-out merger was “too involved to undo”); Coggins v. New England Patriots Football Club, Inc., 397 Mass. 525 , 492 N.E.2d 1112, 1119 (1986) (rescission of a merger is inequitable and not feasible where the merger had long been completed and “the interests of the corporation and of the plaintiffs will be furthered best by limiting the plaintiffs’ remedy to an assessment of damages”). Based on this case law, it is clear that the unwinding of a long-ago completed corporate merger generally is not practicable. Although that determination, in some cases, would be one for the trial court, several appellate courts have concluded, on the facts of the case, that rescission is not a viable remedy.

See Bank of New York Co. v. Northeast Bancorp, Inc., 9 F.3d 1065, 1066 (2d Cir.1993); Coggins, 492 N.E.2d at 1119 . We similarly conclude here. In light of the representation that the agreement involved a 54.5 million dollar merger, with more than two million shares of publicly traded stock and an integration of corporate management, that occurred almost a year ago, we hold that rescission is not a potential remedy that would preclude a finding that the appeal is moot. B. Rescissory Damages Although rescission is not practicable, there is a possibility that, if Mr. Sutton prevailed on his claim, he could be ⁷³ awarded rescissory damages.

In In re Orchard Enterprises, Inc. Stockholder Litig., 88 A.3d 1, 38 (Del.Ch.2014), the Court of Chancery of Delaware explained: “Rescissory damages are ‘the monetary equivalent of rescission’ and may be awarded where ‘the equitable remedy of rescission is impractical.’ ” (quoting Strassburger v. Earley, 752 A.2d 557, 579-81 (Del.Ch.2000)). Accord Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1134, 1144 (Del.Ch.1994), aff'd, 663 A.2d 1156 (Del.1995). The court explained: “[T]he Weinberger court held that when a merger has been successfully challenged, the possible forms of monetary relief include an out-of-pocket measure of damages equal to what a stockholder would have received in an appraisal, viz., the fair value of the stockholder’s shares.” Orchard Enter., 88 A.3d at 40 . Because rescissory damages in lieu of actual rescission is a possible form of relief if Mr. Sutton were to prevail on his claims, we hold that this case is not moot.

Accordingly, we proceed to address Mr. Sutton’s claims on the merits.

II

Substantive Claims Mr. Sutton contends that the circuit court erred in granting the motions to dismiss filed by FedFirst and CB Financial. We will address the claims with respect to each of the appellees separately. Before doing so, however, we will address the proper standard of review of a motion to dismiss and discuss generally shareholder lawsuits against corporations. A. Standard of Review “A trial court may grant a motion to dismiss if, when assuming the truth of all well-pled facts and allegations in the complaint and any inferences that may be drawn, and viewing those facts in the light most favorable to the non-moving party, ‘the allegations do not state a cause of action for which relief may be granted.’ ” Latty v. St. Joseph’s Soc. of Sacred Heart, Inc., 198 Md.App. 254, 262-63 , 17 A.3d 155 (2011) ⁷⁴ (quoting RRC Northeast, LLC v. BAA Md., Inc., 413 Md. 638, 643 , 994 A.2d 430 (2010)).

The facts set forth in the complaint must be “pleaded with sufficient specificity; bald assertions and conclusory statements by the pleader will not suffice.” RRC, 413 Md. at 644 , 994 A.2d 430 . “ ‘We review the grant of a motion to dismiss de novo.’ ” Unger v. Berger, 214 Md.App. 426, 432 , 76 A.3d 510 (2013) (quoting Reichs Ford Road Joint Venture v. State Roads Comm’n, 388 Md. 500, 509 , 880 A.2d 307 (2005)). Accord Kumar v. Dhanda, 198 Md.App. 337, 342 , 17 A.3d 744 (2011) (“We review the court’s decision to grant the motion to dismiss for legal correctness.”), aff'd, 426 Md. 185 , 43 A.3d 1029 (2012). We will affirm the circuit court’s judgment “ ‘on any ground adequately shown by the record, even one upon which the circuit court has not relied or one that the parties have not raised.’ ” Monarc Constr., Inc. v. Aris Corp., 188 Md.App. 377, 385 , 981 A.2d 822 (2009) (quoting Pope v. Bd. of Sch. Comm’rs, 106 Md.App. 578, 591 , 665 A.2d 713 (1995)). 13 B. Shareholder Suits Against Corporate Boards of Directors The board of directors of a corporation generally manages the business of the corporation.

Werbowsky v. Col- ⁷⁵ lomb, 362 Md. 581, 598-99 , 766 A.2d 123 (2001); George Wasserman & Janice Wasserman Goldsten Family LLC v. Kay, 197 Md.App. 586, 609 , 14 A.3d 1193 (2011). Shareholders ordinarily are not permitted to interfere in the management of the company because they are owners of the company, not managers. Werbowsky, 362 Md. at 599 , 766 A.2d 123 ; Wasserman, 197 Md.App. at 609 , 14 A.3d 1193 . Corporate directors, however, do not have unlimited authority.

They are subject to the fiduciary duties set forth in Md.Code (2014 Repl.Vol.) § 2-405.1 of the Corporations and Associations Article (“CA”). CA § 2-405.1(a) provides that directors must perform their duties in good faith in a manner that he or she reasonably believes to be in the best interests of the corporation, and “[w]ith the care that an ordinarily prudent person in a like position would use under similar circumstances.” 14 These duties, however, are “to the corporation and not, at least directly, to the shareholders.” Werbowsky, 362 Md. at 599 , 766 A.2d 123 . 15 Because director fiduciary duties relating to management do not extend to shareholders, a shareholder generally does not have a direct action against the directors, and any action taken against the directors requires the shareholder to file a derivative action. Wasserman, 197 Md.App. at 609-10 , 14 A.3d 1193 . As the Court of Appeals explained in Waller v. Waller, 187 Md. 185, 189-90 , 49 A.2d 449 (1946): ⁷⁶ It is a general rule that an action at law to recover damages for an injury to a corporation can be brought only in the name of the corporation itself acting through its directors, and not by an individual stockholder, though the injury may incidentally result in diminishing or destroying the value of the stock.

The reason for this rule is that the cause of action for injury to the property of a corporation or for impairment or destruction of its business is in the corporation, and such an injury, although it may diminish the value of the capital stock, is not primarily or necessarily a damage to the stockholder, and hence the stockholder’s derivative right can be asserted only through the corporation. The rule is advantageous not only because it avoids a multiplicity of suits by the various stockholders, but also because any damages so recovered will be available for the payment of debts of the corporation, and, if any surplus remains, for distribution to the stockholders in proportion to the number of shares held by each. The Court of Appeals has explained a shareholder’s derivative action as follows: “The nature of the derivative proceeding is two-fold. First, it is the equivalent of a suit by the shareholders to compel the corporation to sue.

Second, it is [a] suit by the corporation, asserted by the shareholder on its behalf, against those liable to it. The corporation is the real party in interest and the shareholder is only a nominal plaintiff. The substantive claim belongs to the corporation.... The proceeding is typically brought by a minority shareholder, because a majority or controlling shareholder can usually persuade the corporation to sue in its own name.” Werbowsky, 362 Md. at 599 , 766 A.2d 123 (quoting 13 William Meade Fletcher et al., Cyclopedia of the Law of Private Corporations § 5941.10 (1995 Rev. Vol.)). “In a derivative action, any recovery belongs to the corporation, not the plaintiff shareholder.” Shenker, 411 Md. at 344 , 983 A.2d 408 . 16 ⁷⁷ There are situations, however, where a shareholder may bring a direct action against alleged corporate wrongdoers.

Such a cause of action arises “when the shareholder suffers the harm directly or a duty is owed directly to the shareholder, though such harm also may be a violation of a duty owing to the corporation.” Shenker, 411 Md. at 345 , 983 A.2d 408 . Accord Matthews v. Headley Chocolate Co., 130 Md. 523, 526 , 100 A. 645 (1917) (shareholders may sue directly where “they have suffered some peculiar injury independent of what the company has suffered”); Mona v. Mona Elec. Group, Inc., 176 Md.App. 672, 697 , 934 A.2d 450 (2007) (shareholder may bring direct action to enforce a right that is personal to him or her). See also Boland v. Boland, 423 Md. 296, 316-17 , 31 A.3d 529 (2011) (a derivative action involves a corporate right, whereas a direct claim involves a cause of action involving a wrong against the shareholder individually).

The Court of Appeals has explained: Cases where direct harm is suffered by shareholders include, for example, actions to enforce a shareholder’s right to vote or right to inspect corporate records. That the plaintiff suffered his or her injury in common with all other shareholders is not determinative of whether the injury suffered is direct or indirect. See Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031, 1033 (Del.2004) (noting that the issue of whether a claim should be brought derivatively or directly turns on