The opinion
High Point Bank & Trust Co. v. Sapona Mfg. Co., 2010 NCBC 11.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
RANDOLPH COUNTY 08 CVS 1065
HIGH POINT BANK AND TRUST
COMPANY, as Executor of the
Estate of Elizabeth M. Simmons,
Plaintiff,
v.
SAPONA MANUFACTURING COMPANY,
INC., ACME-McCRARY CORPORATION,
RANDOLPH OIL COMPANY, C.W.
McCRARY, JR., C. WALKER McCRARY,
III, W.H. REDDING, JR. a/k/a WILLIAM
H. REDDING, JR., S. STEELE REDDING,
ORDER & OPINION
JOHN O.H. TOLEDANO, JOHN O.H.
TOLEDANO, JR., ROBERT C.
SHAFFNER, BRUCE T. PATRAM,
JOHNNY R. KNOWLES a/k/a JOHNNY
R. KNOWLES, SR., DEAN F. LAIL,
VIRGINIA R. WEILER, JAMES W.
BROWN, JR., DONNIE R. WHITE a/k/a
DONALD R. WHITE, DIANE L.
DONAHUE, LARRY K. SMALL, LARRY
D. ELMORE, and M. GIL FRYE a/k/a
MICHAEL G. FRYE,
Defendants.
{1} These cross-motions for summary judgment require the Court to decide, as
a matter of law, whether the plaintiff minority shareholder has a right or interest in
the Defendant Corporations and, if so, whether those rights or interests are in need
of protection. See generally Meiselman v. Meiselman, 309 N.C. 279, 307 S.E.2d 551
(1983). The “right or interest” claimed by Plaintiff is the right to tender the shares
owned by decedent, Elizabeth M. Simmons, for redemption at fair value by each of
the Defendant Corporations. The Court concludes that Plaintiff has not established
a Meiselman right and grants summary judgment in favor of Defendants.
Roberson Haworth & Reese, PLLC by Robert A. Brinson, Thomas F. Foster,
and Christopher C. Finan for Plaintiff.
Ellis & Winters, LLP by J. Donald Cowan, Jr. and Schell Bray Aycock Abel &
Livingston PLLC by Doris R. Bray for Defendants.
Tennille, Judge.
I.
PROCEDURAL BACKGROUND
{2} Plaintiff High Point Bank and Trust Company (“Plaintiff” or the “Bank”),
as Executor of the Estate of Elizabeth M. Simmons (“Mrs. Simmons”), filed a Notice
of Designation contemporaneously with the Complaint in Randolph County on April
18, 2008. This matter was designated a mandatory complex business case by Order
of the Chief Justice of the North Carolina Supreme Court dated April 28, 2008, and
was subsequently assigned to the undersigned Chief Special Superior Court Judge
for Complex Business Cases.
{3} On October 20, 2009, the parties filed cross-motions for summary judgment
pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. Plaintiff and
Defendants each filed a memorandum of law in opposition to the other side’s motion
on November 20, 2009, and the Court heard oral arguments on February 8, 2010.
II.
THE PARTIES
{4} Plaintiff is the duly appointed and qualified Executor of the Estate of Mrs.
Simmons and is currently administering Mrs. Simmons’s estate.
{5} Defendant Sapona Manufacturing Company, Inc. (“Sapona”) is a
corporation duly organized and existing under the laws of the State of North
Carolina, with its principal place of business in Randolph County, North Carolina.
{6} Defendant Acme-McCrary Corporation (“Acme-McCrary”) is a corporation
duly organized and existing under the laws of the State of North Carolina, with its
principal place of business in Randolph County, North Carolina.
{7} Defendant Randolph Oil Company (“Randolph Oil”) is a corporation duly
organized and existing under the laws of the State of North Carolina, with its
principal place of business in Randolph County, North Carolina.
{8} Defendants C.W. McCrary, Jr., C. Walker McCrary, III, W.H. Redding, Jr.,
S. Steele Redding, John O.H. Toledano, John O.H. Toledano, Jr., Robert C.
Shaffner, Bruce T. Patram, Johnny R. Knowles, Dean F. Lail, Virginia R. Weiler,
and James W. Brown, Jr. served on the Board of Directors at Sapona.
{9} Defendants C.W. McCrary, Jr., C. Walker McCrary, III, W.H. Redding, Jr.,
S. Steele Redding, John O.H. Toledano, John O.H. Toledano, Jr., Bruce T. Patram,
Virginia R. Weiler, Donnie R. White, Diane L. Donahue, and Larry K. Small served
on the Board of Directors at Acme-McCrary. (See Pl.’s Ex. 11.)
{10} Defendants C.W. McCrary, Jr., C. Walker McCrary, III, John O.H.
Toledano, John O.H. Toledano, Jr., Robert C. Shaffner, Larry D. Elmore, and
M. Gil Frye served on the Board of Directors at Randolph Oil.
{11} Acme-McCrary, Sapona, and Randolph Oil will be referred to collectively
as the “Defendant Corporations,” and the parties listed in Paragraphs 8, 9, and 10
will be referred to collectively as the “Defendants.”
III.
FACTUAL BACKGROUND
{12} The pertinent and material facts are undisputed.
{13} Acme-McCrary has been in existence for over one hundred years. It was
formed by D.B. McCrary and T.H. Redding in 1909. (W.H. Redding, Jr. Dep. 13:11–
24.) It manufactures ladies hosiery and shape wear products. (W.H. Redding, Jr.
Interview 9:3–19.) Sapona is even older. It started in the 1800s. (W.H. Redding,
Jr. Dep. 20:3–4.) D.B. McCrary, T.H. Redding, and W.J. Armfield, Jr. purchased
Sapona in 1916. Sapona processes natural and synthetic yarn, including textured
nylon and covered spandex, and supplies Acme-McCrary and others with yarn
product. Sapona and Acme-McCrary have a close business relationship. The
companies share a number of services, including health insurance, accounting,
and other personnel services. (S. Redding Dep. 18:5–16.)
{14} Randolph Oil is in a different industry. It sells fuel oil, gasoline, and LP
gas at wholesale and retail and has several convenience store locations. (Elmore
Dep. 10:22–11:19.) It was founded in 1934 by C.W. McCrary, who was the son of
D.B. McCrary. The Redding and Armfield families are not significantly involved in
Randolph Oil and the business is currently run by Larry Elmore, who is not related
to any of the founding families. (Elmore Dep. 9:8–15.)
{15} Each company has a significant number of employees. Randolph Oil has
approximately 49 employees, one of whom is a shareholder. (Randolph Oil Aff. ¶ 2.)
Acme-McCrary has approximately 892 employees, five of whom are shareholders.
(Acme-McCrary Aff. ¶¶ 2–3.) Sapona has approximately 200 employees, two of
whom are shareholders. (Sapona Aff. ¶¶ 2–3.)
{16} The stock in each of the companies has been passed down through at least
two generations and perhaps more. Mrs. Simmons is the granddaughter of D.B.
McCrary, one of the founders of Acme-McCrary and Sapona, and the daughter of
C.W. McCrary, Sr., the founder of Randolph-Oil. (C. Simmons Aff. ¶ 9; Answer
¶ 10.) She inherited her shares in the Defendant Corporations from her parents.
(C. Simmons Aff. ¶ 9.) She is survived by her husband, Charles Simmons, and
their four children. (C. Simmons Aff. ¶ 6.) All are beneficiaries of the trust.
(C. Simmons Aff. ¶ 6.)
{17} There is evidence that Mrs. Simmons had been providing support for her
son, Bo, and placed the shares in trust to continue that support. (Allen Dep. 71:14–
72:7.) Such an action is not inconsistent with a belief that the dividends paid by the
Defendant Corporations would provide that support. There also is evidence from
the Bank’s trust officer that when she raised the possibility that some of the stock
in Defendant Corporations might have to be sold, Mrs. Simmons responded that
there wouldn’t be a problem without giving any explanation for why she did not
think there would be a problem. (Allen Dep. 72:8–15.)
{18} Over time, the ownership in each of the companies has been spread over a
larger number of shareholders as the founding owners and successive generations
have died and passed their ownership to their children. Acme-McCrary now has
eighty-one shareholders, while Sapona has fifty-one and Randolph Oil has twenty-
five. (Acme-McCrary Aff. ¶ 2; Sapona Aff. ¶ 2; Randolph Oil Aff. ¶ 2.) Non-family
members have become shareholders and approximately seventy-five percent of the
shareholders in Acme-McCrary and Sapona overlap. (S. Redding Dep. 18:5–11.)
{19} As a result of the increase in the shareholder base, each company has
adopted corporate governance practices normally associated with a corporation.
Regular shareholder meetings are conducted; shareholders are provided with
financial information; proxies are solicited; and dividends are paid. (Acme-McCrary
Aff. ¶¶ 5, 7; Sapona Aff. ¶¶ 5, 7; Randolph Oil Aff. ¶¶ 4, 6.) The companies also
conduct their businesses in accordance with modern management practices. (Acme-
McCrary Aff. ¶ 6; Sapona Aff. ¶ 6; Randolph Oil Aff. ¶ 5.)
{20} There is no evidence that there is a market for the minority shares held by
the Trust or any other minority shares. (S. Redding Dep. 29:7–25.) The shares of
all shareholders appear to be locked in absent some action on the part of a majority
of shareholders to address that deadlock.
{21} While there is no significant number of shareholder employees in the
companies, family members do participate at the board and officer levels. Seven of
the eleven members of the Board of Acme-McCrary are related to D.B. McCrary and
T.H. Redding, as well as four of the nine officers. (Acme-McCrary Aff. ¶ 4.) Seven
of the twelve directors of Sapona are related to the three original founders, as well
as four of the nine officers. (Sapona Aff. ¶ 4.) And at Randolph Oil, four of the
seven directors are members of the McCrary family, as well as two of the five
officers. (Randolph Oil Aff. ¶ 3.) In addition, there is substantial, but not complete,
overlap in the boards of Acme-McCrary and Sapona. (Answer ¶¶ 5–6.)
{22} All the Defendant Corporations have a history of paying dividends. (See
Sapona Aff. ¶ 7; Acme-McCrary Aff. ¶ 7; Randolph Oil Aff. ¶ 6.) Attached to this
Order and Opinion is a history of the recent dividends paid either to Mrs. Simmons
or the Bank as Trustee. See tbl.2. Equivalent per-share dividends were paid to all
other shareholders. There is no evidence in this record that those dividends were
determined in any way with reference to Mrs. Simmons’s or the Bank’s financial
situation. Every indication is that the boards of directors of the Defendant
Corporations exercised their business judgment in setting the dividend rate in
light of company earnings and business conditions.
{23} In only one instance have Acme-McCrary and Sapona purchased shares
from the estate of a deceased shareholder. In 1997 Tommy Redding, brother of
Steele Redding, died at age forty leaving behind a family with small children.
(W.H. Redding, Jr. Dep. 62:19, 63:13–15.) He was an employee, officer, and director
of Acme-McCrary. (W.H. Redding, Jr. Dep. 63:4–12.) His shares were held by
Wachovia Bank as Trustee under his will. Both companies, after considering their
financial condition and business prospects, offered to purchase all of the Trustee’s
shares in the corporations. (Defs.’ Interrog. Answers at 5–6.)
{24} Following that purchase, the two companies made a tender offer to all
shareholders to give them the opportunity to sell some of their shares back to the
companies. The tender offer letters were virtually identical except for price. Acme-
McCrary offered $51.00 a share for five thousand shares and Sapona offered $55.00
a share for five thousand shares. (Defs.’ Br. Supp. Mot. Summ. J. Ex. A, B.) Each
letter read in part:
Your Company is pleased to give you the opportunity to sell
some or all of your shares of _______common stock if you desire to do
so. Because there is no market for the Company’s stock, the
Company’s Board of Directors believes it appropriate that shareholders
be given the opportunity to liquidate their investment from time to
time. Therefore, the Company is offering to purchase up to 5,000
shares of its common stock for the price of ______ per share.
....
The offer to purchase stock is being made as an accommodation
to shareholders who may wish to liquidate some or all of their
investment in the Company.
(Defs.’ Br. Supp. Mot. Summ. J. Ex. A, B.)
{25} In January 2000, Sapona made a second tender offer to all shareholders,
offering to buy ten thousand shares at a price of $60.00 a share. (Defs.’ Br. Supp.
Mot. Summ. J. Ex. C.) The wording of the 2000 letter was virtually identical to the
wording of its 1997 letter. Mrs. Simmons did not tender any shares in response to
those three offers, nor did she communicate an understanding that all her shares
would be repurchased on her death. (See Allen Dep. 33:23–34:7.)
{26} It is undisputed that the directors of both Acme-McCrary and Sapona
recognized the problem of marketability that resulted from the wide diversity of
shareholders who did not participate in the day-to-day operations. As far as this
record discloses, there has never been any agreement among shareholders or by-law
or charter provision requiring any of the Defendant Corporations to repurchase the
shares of any shareholder. It also is clear that Acme-McCrary’s and Sapona’s
directors still have a policy of buying back shares on a prorated basis from all
shareholders from time to time when the directors believe the funds are available
to do so without harming the financial condition of the company.
{27} Randolph Oil has never made a tender offer to its shareholders and has
never purchased a deceased shareholder’s stock for its own account. It has acted
as a conduit for transfer of shares among shareholders. (See Elmore Dep. 13:19–
14:24.) It has never had a policy of making tender offers for shares.
{28} Following Mrs. Simmons’s death, the Bank wrote to all the Defendant
companies requesting that Mrs. Simmons’s shares be redeemed at fair market
value. (Defs.’ Br. Supp. Mot. Summ. J. Ex. D, E, F.) The Bank had George B.
Hawkins of Banister Financial, Inc. prepare an independent appraisal of the fair
value of shares that Mrs. Simmons’s estate held in each company.
Table 1: Fair Value and Total Value of Mrs. Simmons’s Shares
Company Number of Shares Value Per Share Total Value
Acme-McCrary 14,449 $23.97 $346,343
Sapona 20,950 $149.37 $3,129,302
Randolph Oil 815 $137.90 $112,389
(Acme-McCrary Report at 4; Sapona Report at 4; Randolph Oil Report at 4.)
{29} The boards of each of the Defendant Corporations have met to consider the
Bank’s demands and have rejected them. In the case of each company, individual
shareholders have made offers to purchase shares from the Bank at prices which
were well below the values determined by Mr. Hawkins. The Bank characterizes
those offers as coercive and oppressive in light of the refusal of the directors to
repurchase the shares. The Bank also points to some personality conflicts between
the Simmonses and the Toledanos arising from disputes over other property the
families owned together as evidence of oppression and bad faith.
IV.
SUMMARY JUDGMENT
{30} Summary judgment is proper “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that any party is entitled
to judgment as a matter of law.” N.C. R. Civ. P. 56(c). “An issue is ‘genuine’ if it
can be proven by substantial evidence and a fact is ‘material’ if it would constitute
or irrevocably establish any material element of a claim or a defense.” Lowe v.
Bradford, 305 N.C. 366, 369, 289 S.E.2d 363, 366 (1982) (citation omitted). “It is
not the purpose of the rule to resolve disputed material issues of fact but rather to
determine if such issues exist.” N.C. R. Civ. P. 56 cmt.
{31} The burden of showing a lack of triable issues of fact falls upon the moving
party. See, e.g., Pembee Mfg. Corp. v. Cape Fear Constr. Co., 313 N.C. 488, 491,
329 S.E.2d 350, 353 (1985). Once this burden has been met, the nonmoving party
must “produce a forecast of evidence demonstrating that [it] will be able to make
out at least a prima facie case at trial.” Collingwood v. Gen. Elec. Real Estate
Equities, Inc., 324 N.C. 63, 66, 376 S.E.2d 425, 427 (1989). Courts must exercise
caution in granting a motion for summary judgment. N.C. Nat’l Bank v. Gillespie,
291 N.C. 303, 310, 230 S.E.2d 375, 379 (1976).
V.
STATUTORY AUTHORITY
A.
SECTION 55-14-30(2)
{32} Section 55-14-30(2) of the North Carolina General Statutes provides that a
“superior court may dissolve a corporation . . . [i]n a proceeding by a shareholder if it
is established that . . . liquidation is reasonably necessary for the protection of the
rights or interests of the complaining shareholder.” N.C. Gen. Stat. § 55-14-30(2)(ii)
(2009) (emphasis added). Relief is not available for an individual shareholder who
simply needs the corporation to take some action for his or her own benefit. 1 There
must be a shareholder right or interest that is being contravened.
{33} If such a set of circumstances exist, the decision to dissolve the corporation
is within the court’s discretion. See Royals v. Piedmont Elec. Repair Co., 137 N.C.
App. 700, 704, 529 S.E.2d 515, 518 (2000) (citation omitted). When a court decides
that dissolution is appropriate, the defendant corporation is left with two options:
(1) face dissolution or (2) buy out the complaining minority shareholder’s shares at
fair value. 2 The buy-out alternative to dissolution, however, is only available to the
1 There is no question of the Trustee’s need in this set of circumstances. It has an estate and trust
whose only assets consist of stocks in closely held businesses. If those businesses do not provide
income to the trust, the Trustee cannot fulfill its duties to the beneficiaries under the trust
arrangement. This need, as realistic as it is, should be distinguished from a right or interest.
Although the need may justify the “reasonably necessary” prong of the statutory requirement, it does
not create a “right or interest” under statute or case law. The Trustee in this case is simply trying to
fulfill its obligations to the beneficiaries of the trust. It was dealt a poor hand to do so. (See Allen
Dep. 59:20–60:1.)
2
This Court has consistently held that it has the inherent power and statutory authority to structure
the terms under which the minority shareholder’s shares are purchased, and that power has been
affirmed on appeal. See Royals v. Piedmont Elec. Repair Co., 1999 NCBC 1 ¶ 61 (N.C. Super. Ct.
Mar. 3, 1999), http://www.ncbusinesscourt.net/opinions/1999%20NCBC%201.htm, aff’d, 137 N.C.
App. 700, 529 S.E.2d 515 (2000); Vernon v. Cuomo, 2010 NCBC 5 ¶ 12 (N.C. Super. Ct. Mar. 15,
2010), http://www.ncbusinesscourt.net/opinions/2010_NCBC_5.pdf. However, this Court does not
have the power to craft other flexible relief.
defendant corporation. 3 Trial courts are not at liberty to order a buyout under the
current statute. 4
{34} The Court will consider whether Plaintiff is entitled to judicial dissolution
under section 55-14-30(2)(ii) in part VI below. However, before doing so, the Court
will digress briefly to address the former version of the statute.
B.
SECTION 55-125.1
{35} A significant difference exists between the statutory framework in which
North Carolina courts analyzed Meiselman and the framework in existence today.
Section 55-14-30(2)(ii) of the North Carolina General Statutes was brought forward
from section 55-125(a)(4), which is discussed extensively in Meiselman. Russell M.
Robinson, II, Robinson on North Carolina Corporation Law § 28.11 & n.2 (7th ed.
2009). Former section 55-125.1 gave the trial court the power to order alternative
forms of relief. Specifically, it provided the following:
In any action filed by a shareholder to dissolve the corporation under
G.S. 55-125(a), the Court may make such order or grant such relief,
other than dissolution, as in its discretion it deems appropriate,
including, without limitation, an order . . . [p]roviding for the purchase
at their fair value of shares of any shareholder, either by the
corporation or by other shareholders, such fair value to be determined
in accordance with such procedures as the court may provide.
N.C. Gen. Stat. § 125(a)(4) (1986) (former version of N.C. Gen. Stat. § 55-14-30(2)(ii)).
In addition to the buyout at fair value option, the former statute also gave superior
courts other alternatives to dissolution, like altering corporate bylaw provisions and
prohibiting certain corporate actions. 5 After Meiselman, the Legislature eliminated
3 The perverse result of this limitation in this case is that the court cannot order the shares tendered
to be purchased. It can only order dissolution. Although it is highly unlikely that the Defendant
Corporations would not exercise their option to purchase, the possibility of dissolution does exist.
4 In this case, dissolution would deprive Plaintiff of the real benefit it seeks because dissolution
probably would not produce a fair market value for Mrs. Simmons’s shares. This dilemma suggests
a potential need for statutory amendment to provide more flexibility in remedies. In Meiselman, our
Supreme Court charged trial courts with the task of prescribing “the form of relief which the evidence
indicates is most appropriate, should it find that relief is warranted.” Id. at 306, 307 S.E.2d at 567.
That flexibility was provided by section 55-125.1, which is no longer in effect. See infra Part V.B.
5 Former section 55-125.1 gave the court the power to order or grant alternative remedies to
dissolution, including, without limitation, an order:
the alternative remedies to dissolution set forth in section 55-125.1. Courts do not
enjoy such broad powers under the current statute. Robinson, II, supra, § 28.12[2].
VI.
DISCUSSION
A.
MEISELMAN
{36} Because Plaintiff asserts a right or interest in the Defendant Corporations
under Meiselman, the Court begins with a review of that decision.
{37} In Meiselman, the Supreme Court of North Carolina remanded the case to
the trial court for a determination of the rights and interests of a plaintiff minority
shareholder. Meiselman v. Meiselman, 309 N.C. 279, 305–06, 307 S.E.2d 551, 566–
67 (1983). The Supreme Court held that the trial court erred in using standards of
oppression, overreaching, gross abuse, unfair advantage, and the like with respect
to the majority shareholder’s actions rather than focusing on the “rights or interests”
that the minority shareholder had in the defendant corporations and whether those
rights or interests needed protection. Id. That focus is significant in this case.
{38} Plaintiff asserts a right to tender the shares Mrs. Simmons owned in each
of the Defendant Corporations. If such a right exists, it needs protection because
the Defendant Corporations have refused to purchase the shares that Mrs. Simmons
owned. Thus, the central question is whether a buyout at fair value is an enforceable
right or interest under Meiselman. In the subparts below, the Court will consider
this question and determine whether the record before it warrants summary
judgment.
(1) [c]anceling or altering any provision contained in the charter or bylaws of the
corporation; or (2) [c]anceling, altering, or enjoining any resolution or other act of the
corporation; or (3) [d]irecting or prohibiting any act of the corporation or of
shareholders, directors, officers or other persons party to the action; or (4) [p]roviding
for the purchase at their fair value of shares of any shareholder, either by the
corporation or by other shareholders, such fair value to be determined in accordance
with such procedures as the court may provide.
N.C. Gen. Stat. § 125.1(a) (1986) (former version of N.C. Gen. Stat. § 55-14-30(2)(ii)).
1.
GENERAL PRINCIPLES
{39} The statutory right to judicial dissolution and the underlying rationale of
Meiselman are counter to the judiciary’s traditional deference to majority rule in
corporate management and to the business judgment rule. See Meiselman, 309
N.C. at 291–92, 307 S.E.2d at 559 (“Unfortunately, when dissension develops in
such a situation . . . ‘American courts traditionally have been reluctant to interfere
in the internal affairs of corporations.’”) (citation omitted). Justifying liquidation as
a tool for enforcing the rights or interests of a complaining shareholder, therefore,
requires a strong showing.
{40} Deference to majority rule and the business judgment rule may give way
under circumstances where such deference would (1) result in a loss of ownership
benefits by the complaining shareholder or (2) impose ongoing antagonistic
relationships on the defendant corporation in circumstances that require close
cooperation and a high degree of good faith and mutual respect. See id. at 293, 307
S.E.2d at 559–60. Those two concerns are prominent in Meiselman and the cases
that follow it.
{41} For example, on numerous occasions the court in Meiselman highlighted
the “vulnerable position a minority shareholder occupies in a close corporation” in
terms of the benefits of proprietorship. See, e.g., id. at 292, 307 S.E.2d at 559 (“Only
in the close corporation does the power to manage carry with it the de facto power
to allocate the benefits of ownership arbitrarily among the shareholders and to
discriminate against a minority whose investment is imprisoned in the enterprise.”).
It recognized that owners in a business that was run like a partnership expected
to receive the normal benefits associated with ownership (often defined by prior
involvements) and to participate in management. The court also emphasized the
need to avoid mandating adversarial relationships in closely held corporations
where the success of the business depends on the good faith, mutual respect, and
close cooperation of the participants. See id. at 289–90, 307 S.E.2d at 558–59.
{42} None of the underlying factors which drove the decision in Meiselman
are clearly found in this case. First, there has been no loss of ownership benefits
similar to the benefits lost in other Meiselman cases. 6 No one is being denied the
opportunity to work or compensation and fringe benefits. See id. at 302, 307 S.E.2d
at 565. The Trust continues to receive the benefits that all other shareholders are
receiving and that Mrs. Simmons received prior to her death. (See Sapona Aff. ¶ 7;
Acme-McCrary Aff. ¶ 7; Randolph Oil Aff. ¶ 6.) There are no claims of dissipation
or diversion of assets; and there are no claims of excessive salaries. Furthermore,
nothing in the record indicates that any of the Defendant Corporations accumulated
capital beyond the reasonable needs of their businesses. See I.R.C. §§ 531–37.
{43} Plaintiff has not moved to have larger dividends paid nor has it asserted
that the directors have violated their fiduciary duty in determining the level of
dividends to be paid. The Defendant Corporations have paid regular dividends
when their boards have determined it is financially in their best interest to do so.
This regular payment of dividends evidences the directors’ intent to free profits
for distribution rather than holding them captive or paying out excessive salaries.
There is no evidence that any of the directors are using the dividend policy as a
means of coercion or oppression against the Bank. Such action would significantly
and adversely impact all the other shareholders. 7
{44} The Defendant Corporation’s payment of dividends raises an interesting
point with respect to the definition of a close corporation. Meiselman contains no
determination of the maximum number of shareholders or other characteristics of
a close corporation in North Carolina. Our corporate governance statutes provide
that under certain circumstances minority shareholders may sue to compel the
payment of dividends. See N.C. Gen. Stat. § 55-6-40(i). Significantly, the statute
6 Traditional shareholder rights which are already protected by statute include notice of
shareholders’ meetings, cumulative voting, access to corporate books and records, and the right to
compel dividends. The Bank does not seek to enforce any of those rights at this time, nor does it seek
to enforce a previously existing right to participate in management. Mrs. Simmons never worked for
any of the Defendant Corporations and never participated in their management.
7 The large number of shareholders distinguishes this case from the typical Meiselman situation
with a small number of shareholders and a majority shareholder/manager who can withhold
dividends and benefits to coerce or oppress the minority. But see infra ¶ 50.
only applies to corporations having fewer than twenty-five shareholders. See id.
That statutory restriction is some indication that corporations with greater than
twenty-five shareholders are different from those with fewer shareholders. On the
other hand, it is clear that our Supreme Court believes the courts have the power to
compel payment of dividends on an equitable basis without regard to the number of
shareholders. See Robinson, II, supra, § 22.05[7]; Gaines v. Long Mfg. Co., 234 N.C.
331, 67 S.E.2d 355 (1951).
{45} Gaines stands for the proposition that the courts may intervene only if
directors are acting in bad faith and in an arbitrary or oppressive disregard of a
minority shareholder’s right. The standard for dividends in Gaines thus appears
to be different from the Meiselman standard. The former uses bad faith and
oppression, the latter rights and interests. Thus, under Gaines, the Bank could
seek to compel dividends if they were being wrongfully withheld even though the
Defendant Corporations may have more than twenty-five shareholders.
{46} Overall, the Defendant Corporations appear to be well-run in spite of
current economic challenges. The only benefit of ownership Plaintiff claims to have
lost is an alleged right of redemption. However, Plaintiff’s asserted right to have
Mrs. Simmons’s stock purchased at fair value on her death is not one of the rights
or interests which have been recognized by our courts as mandatory in the close
corporation setting. To create an absolute right of redemption of a minority interest
would place the other shareholders in close corporations at financial risk upon the
death of any shareholder.
{47} Second, there are no ongoing intracorporate problems creating the type of
antagonistic relationships which troubled the court in Meiselman. Mrs. Simmons
never worked for any of the Defendant Corporations in any capacity. (Allen Dep.
23:22–24:16.) She never sought employment with any of the corporations, nor was
she ever involved in the management. (Allen Dep. 25:15–18, 27:18–28:1.) Although
the Trustee attempted to secure a seat on the board of directors of Acme-McCrary
and Sapona, it made no other efforts to become involved in day-to-day management.
(Allen Dep. 43:18–44:2.) In addition, the majority of shares are owned by non-
employees whose only connection to the businesses is stock ownership. 8
{48} Third, the large number of shareholders and the absence of a controlling
majority shareholder also distinguish this case from Meiselman. The Defendant
Corporations functioned like corporations, not partnerships. Although Plaintiff
alleges that the majority of outstanding shares and the management have been
controlled by persons related by blood or marriage, no evidence suggests that the
Defendant Corporations have been operated like family partnerships. (Allen Dep.
67:10–25; Compl. ¶¶ 26, 66, 96.)
{49} There is no majority shareholder who owns a controlling block of stock and
the majority of shareholders do not work for their respective corporations. Only five
of Acme-McCrary’s eighty-one shareholders are employed by Acme-McCrary; only
two of Sapona’s fifty-one shareholders are employed by Sapona; and only one of
Randolph Oil’s twenty-five shareholders is employed by Randolph Oil. (Acme-
McCrary Aff. ¶ 2; Sapona Aff. ¶ 2; Randolph Oil Aff. ¶ 2.) Each of the Defendant
Corporations follow corporate formalities, and the majority of officers are not
related to any of the founding members. (Acme-McCrary Aff. ¶¶ 5–6; Sapona
Aff. ¶¶ 5–6; Randolph Oil Aff. ¶¶ 4–5.) Therefore, there is no need to protect the
Defendant Corporations against the kind of problems that would affect a business
with two or three shareholders who run the business like a partnership. 9 The facts
here simply do not fit the Meiselman mold.
{50} The Meiselman line of cases all involve businesses with a smaller number
of shareholders. See, e.g., Foster v. Foster Farms, Inc., 112 N.C. App. 700, 702, 436
S.E.2d 843, 845 (1993) (two shareholders); Lowder v. All Star Mills, Inc., 75 N.C.
App. 233, 235–36, 330 S.E.2d 649, 651–52 (1985) (four shareholders in one business,
five shareholders in the other business); Meiselman, 309 N.C. at 281–82, 307 S.E.2d
8 These shareholders have taken no action to create an expectation on the part of decedent or to
diminish her ownership benefits.
9 Because the Defendant Corporations in this case are no longer small family owned and operated
businesses (see W.H. Redding, Jr. Interview 83:18–84:7), there is no concern over acrimonious
relationships that would impede the performance of management.
at 553–54 (two shareholders). Nonetheless, it is conceivable that Meiselman could
apply to a business with more than a handful of shareholders. The Court has
considered Defendants’ ten shareholders or less argument. (See Defs.’ Mem. Supp.
Mot. Summ. J. at 10.) However, at this time, the Court is not prepared to enter a
ruling which would remove Meiselman considerations from corporations with some
specific number of shareholders. That does not mean that the Court should not
consider the number, composition, and rights and interests of the non-complaining
shareholders. Those are important considerations, especially given the large
number of shareholders in the Defendant Corporations.
{51} There is little doubt that the shareholder base in each of the Defendant
Corporations will become more fragmented in the future. 10 However, that does not
justify dissolution. The shareholders of these companies will have the same power
of the vote. A majority vote will control, as it does now.
{52} Without a clear understanding among a large and varied stockholder base,
the Court would be interjecting itself in a decision that generally would be made by
a board of directors and subject to the business judgment rule or the vote of the
majority of the shareholders. This is not the clear-cut partnership-like business
with a small number of shareholders who work in the business and who expect to
remain employed. Accordingly, this Court should defer to majority rule and the
application of the business judgment rule. As our Supreme Court recognized in
Meiselman, “[t]he principle of majority rule is in traditional legal thought a firmly
established attribute of the corporate form.” Id. at 292, 307 S.E.2d at 559. Where,
as here, there is no impediment to the majority of shareholders exercising their
voting rights, the courts should not intervene on behalf of a minority shareholder.
10 The creation of some effective plan for the repurchase of shares or creation of a market for
minority shares would be advantageous for the shareholders.
2.
REASONABLE EXPECTATIONS
{53} Again, the central question before the Court is whether a buyout at fair
value is an enforceable right or interest. The “rights or interests” inquiry under
Meiselman revolves around the concept of reasonable expectations. 11
{54} Meiselman has been the leading case for determining what rights or
interests are protected under North Carolina’s dissolution statute. It outlines a
four-step process for obtaining relief based upon the complaining shareholder’s
reasonable expectations and the circumstances giving rise to those expectations.
First, the complaining shareholder must prove he had one or more
substantial reasonable expectations that were known or assumed by
the other shareholders. Examples of such expectations might include
ongoing participation in the management of the company or secure
employment with the company. Second, he must demonstrate that the
expectation or expectations have been frustrated. Next, the complaining
shareholder must show that this frustration of expectations was not
the product of his own fault and was largely beyond his control.
Finally, he must show that the specific circumstances warrant some
form of equitable relief.
Royals v. Piedmont Elec. Repair Co., 137 N.C. App. 700, 705, 529 S.E.2d 515, 518
(2000) (citations omitted) (emphasis added). Because the Court grants summary
judgment in Defendants’ favor on the first prong of the analysis, it need not address
the remaining three prongs of Meiselman’s reasonable expectations analysis. 12
{55} Plaintiff does not claim an absolute right of redemption. Rather, its claim
to a right of redemption is based upon a reasonable expectation that allegedly
developed over an entire history of relationships and dealings. (See Pl.’s Br. Supp.
Mot. Summ. J. at 11.) As the North Carolina Court of Appeals explained in Royals:
11 This case presents a different slant on Meiselman in that it raises the question of who must know
about the expectations. Plaintiff’s evidence of the shareholders’ knowledge of her expectations is
based upon corporate action rather than the action of a majority shareholder. Plaintiff seeks to bind
the other shareholders based on board action by Sapona and Acme-McCrary to which the other
minority shareholders did not object. In effect, Plaintiff seeks to substitute the corporate defendant
for the majority shareholder in Meiselman. This case is distinguishable from Meiselman on that
ground alone.
12 The Court will briefly consider certain equities that would typically fall under the fourth prong of
the Meiselman analysis in part VI.A.3.
Meiselman states that a complaining shareholder’s reasonable
expectations cannot be viewed in a vacuum; rather they must be
examined and re-evaluated over the entire course of the various
participants’ relationships and dealings. Furthermore, these
expectations are not limited to those memorialized in the by-laws or
other written instruments; “[they] must be gleaned from the parties’
actions as well as their signed agreements.”
Id. at 706, 529 S.E.2d at 519 (alteration in original) (citing 2 F. Hodge O’Neal &
Robert B. Thompson, O’Neal’s Close Corporations § 9.30 (3d ed. 1998)).
{56} Plaintiff relies on an argument that each of the Defendant Corporations
and their shareholders should have known of Mrs. Simmons’s expectations based
upon one prior repurchase from a shareholder’s estate and three redemption letters
that two of the Defendant Corporations previously mailed to shareholders. (See Pl.’s
Br. Supp. Mot. Summ. J. at 13.) The Court rejects this argument.
{57} The right of redemption is a right generally spelled out in an agreement
that specifically sets out when the right is triggered, what the purchase price will
be, and how the purchase price will be paid. 13 In this case, Plaintiff is unable to
point to a specific agreement. 14 Instead, it directs the Court’s attention to certain
prior acts of the Defendant Corporations: (1) Acme-McCrary and Sapona redeeming
all of the shares of a deceased employee and shareholder, Tommy Redding, and (2)
Acme-McCrary and Sapona each sending a letter to shareholders indicating that
the companies were exploring ways to redeem stock. (C. Simmons Aff. ¶¶ 13, 15.)
{58} Such limited activity by the Defendant Corporations did not create a future
right of redemption for all the other shareholders. The Defendant Corporations
never adopted a redemption plan and never set up a reserve to cover the expense.
No other shareholders have appeared and testified that they expected either Mrs.
Simmons’s shares or their own shares to be repurchased upon their death. Other
shareholders have died without their shares being redeemed and without any offer
being made by Defendants or demand being made by the decedents’ estates. When
13
The Court recognizes that “expectation” evidence should not be limited to written agreements and
therefore considers the history of corporate activity.
14 It is unclear what that agreement would be under these circumstances. See infra ¶ 63.
Tommy Redding died, there was no expectation or demand. The boards of both
Acme-McCrary and Sapona acted voluntarily in light of his age, employment, and
young family.
{59} The court in Royals recognized that in certain circumstances a complaining
shareholder may have a reasonable expectation of having their shares purchased at
fair value. See Royals, 137 N.C. App. at 706, 529 S.E.2d at 519. However, such a
finding would require other shareholders to have known or assumed the same. Id.
{60} In this case, there is no clear showing that the other shareholders knew
or assumed that Mrs. Simmons expected her shares to be redeemed at fair value.
The larger the number of shareholders, the more difficult it becomes to determine
the expectations of every shareholder. 15 That difficulty is heightened where the
majority of shareholders are not involved in the business, as is the case with the
Defendant Corporations. Plaintiff does not offer any evidence of what the other
shareholders knew about Mrs. Simmons’s expectations or what their expectations
were. 16 It would be fair to assume that few, if any, of the other shareholders had
any personal knowledge of Mrs. Simmons’s expectations. 17
{61} In addition, the Court is troubled by the lack of any action on the part of
Mrs. Simmons that would have put the boards of directors or management on notice
of her expectations. There is nothing to show that Mrs. Simmons ever did anything
to indicate to the Defendants or other shareholders that she had an expectation of
redemption. To the contrary, when two of the Defendant Corporations offered her
the right to tender her shares, she declined. (Allen Dep. 33:23–34:9.) Her alleged
expectation that her shares in each of the Defendant Corporations would be readily
transferable was first made known to the Defendants after her death. No evidence
suggests that Mrs. Simmons ever communicated this expectation to any officer,
15 The large number of shareholders and the absence of a controlling majority shareholder also
signifies a departure from the family partnership environment and distinguishes this case from the
typical Meiselman claim. See supra ¶ 47.
16 In other Meiselman type cases, the expectation was one that was made known to the defendants or
was understandable based on the size of the business and the participation in it by the complaining
shareholder. However, Meiselman did not create new rights by estoppel in corporate relationships.
17 Defendants were not in any position to know her financial situation or her estate planning needs
as was the case in Royals. See infra ¶ 77 n.21.
director, or shareholder prior to that time. As the court in Meiselman explained,
“[p]rivately held expectations which are not made known to the other participants
are not ‘reasonable.’” Meiselman, 309 N.C. at 298, 307 S.E.2d at 563.
{62} Even though the stocks at issue were her primary assets, Mrs. Simmons
made no inquiry concerning the circumstances under which her shares would be
purchased when doing her estate planning. She never asked Defendants how and
when the shares would be purchased and what circumstances might prevent their
purchase. If this were a negligent misrepresentation case, Mrs. Simmons would
have been under a duty to make some inquiry to protect her expectations. If this
were a breach of contract case, Mrs. Simmons would have had to provide some form
of consideration for her redemption rights, and the contract would have had to have
been mutually enforceable.
{63} Moreover, even if this Court were to conclude that Mrs. Simmons and all
the shareholders of the Defendant Corporations did in fact have an expectation of
redemption, that expectation was not reasonable under the circumstances of this
case. In making this determination, the Court has considered the scope of the
buyback expectation allegedly created. Did Sapona and Acme-McCrary create an
expectation that any shareholder who died would have their shares repurchased at
fair market value or was the expectation that when a shareholder died, those two
companies would offer to buy back shares from all shareholders on a prorated basis?
{64} The only instance of a buyback from a decedent’s estate was the purchase
of shares from Tommy Redding’s estate in 1997. (C. Simmons Aff. ¶¶ 15–17.) When
Tommy Redding, an employee of Acme-McCrary, passed away unexpectedly at age
forty, Acme-McCrary and Sapona purchased all of Tommy Redding’s shares for the
benefit of his estate and made tender offers to all of their other shareholders. (W.H.
Redding, Jr. Dep. 63:13–15.) Up until that point there had never been a buyback
from an estate in the ninety-year history of either company, which is the primary
reason the number of shareholders had increased. When a shareholder died, his
beneficiaries became owners.
{65} If this one instance created a buyback expectation, then that expectation
would be for a buyback that applied to all shareholders on a prorated basis. An
expectation of such a broad obligation on the part of the corporations, however, is
not reasonable. The companies had no plan in place and no reserve funds for
financing such a broad buyback obligation. 18 Their businesses were being severely
challenged by foreign imports. (See Defs.’ Interrog. Answers at 12.) They also
had restrictions on their credit lines and faced the risk of having several large
shareholders pass away at the same time. Therefore, finding that the Defendant
Corporations had created an expectation of a buyback applicable to all shareholders
would have adverse consequences for the corporations.
{66} A buyback of all minority shareholders at fair market value—as opposed to
a valuation based on a discount for minority ownership—also is unrealistic. There
is no evidence that any other shareholder believed he or she had a similar right or
interest. There also is no evidence that Mrs. Simmons’s expectation was personal to
her. Her expectation had to apply to all shareholders. The directors could have
faced stiff fiduciary duty challenges from other minority shareholders if they had
decided to redeem Mrs. Simmons’s shares without offering to redeem shares of all
shareholders. That fiduciary duty explains the tender offer to other shareholders
in 1997 and 2000.
{67} Moreover, the tender offer letters from Sapona and Acme-McCrary make
no reference to estates or deceased shareholders. They are limited time offers
subject to maximum dollar limitations. The offers are prorated among the
shareholders. They speak only of the directors’ beliefs that it is “appropriate that
shareholders be given the opportunity to liquidate their investment from time to
time.” (Defs.’ Br. Supp. Mot. Summ. J. Ex. A, B, C (emphasis added).) The letters
acknowledge the illiquidity of the shares, but do not constitute a promise to solve
that problem for a deceased shareholder. 19
18 The companies could have afforded to buy back Mrs. Simmons’s shares alone without a prorated
buyback from other shareholders.
19 There is nothing unusual about the illiquidity of the shares of the Defendant Corporations. They
suffer from the same lack of marketability that applies to almost every minority interest in a
{68} The case for requiring redemption of Mrs. Simmons’s stock in Randolph
Oil is even weaker. It is uncontroverted that Randolph Oil has never purchased
shares for its own account from a deceased shareholder’s estate. It also has never
made a tender offer for shares. It only facilitated trades between shareholders.
Therefore, the expectation argument applies differently to Randolph Oil.
{69} As was the case with the other two Defendant Corporations, Mrs. Simmons
never participated in the management of Randolph Oil. She never communicated
any expectation to Randolph Oil’s management, and there was no way management
or the other shareholders could have known of her expectation of having her shares
in the company redeemed upon her death at fair market value.
{70} Plaintiff contends that its shares have been held captive. It draws the
Court’s attention to the fact that another shareholder or manager has sought to
purchase Plaintiff’s shares at less than fair market value and to minimal evidence
of animosity between Mrs. Simmons’s husband and Mr. Toladano. These two
situations are evidence of oppression, if anything. And Meiselman plainly teaches
that oppression is not the standard for determining rights and interests. It is
applicable only when determining the need for protection.
3.
EQUITABLE DISCRETION
{71} Meiselman also requires the Court to consider the impact a dissolution
order would have on all shareholders. See Meiselman, 309 N.C. at 297, 307 S.E.2d
at 562 (“[O]nce the shareholder has established [that a right or interest has been
contravened], the trial court . . . must exercise its equitable discretion and consider
the actual benefit and injury to all of the shareholders.”). In this case, the equities
weigh strongly against judicial dissolution.
{72} Even though our dissolution statute provides a buy-out alternative (see
supra ¶ 33), such an alternative is not always economically feasible. If, for some
reason, one of the Defendant Corporations could not buy back Mrs. Simmons’s
corporation whose shares are not publicly traded, and that illiquidity affects all shareholders, not
just Plaintiff. Defendants have taken no coercive action to cause the illiquidity.
shares, the corporation would face involuntary dissolution. Dissolution would
severely diminish the value of the other shareholders’ ownership interest, and
hundreds of employees could potentially lose their jobs. Dissolution also might
impose significant tax burdens on the other shareholders.
B.
ROYALS
{73} This Court conducted a Meiselman analysis in Royals and determined that
dissolution was reasonably necessary for the protection of the rights and interests of
the complaining minority shareholder. Royals v. Piedmont Elec. Repair Co., 1999
NCBC 1 ¶¶ 39, 49 (N.C. Super. Ct. Mar. 3, 1999), http://www.ncbusinesscourt.net/
opinions/1999%20NCBC%201.htm. That determination was affirmed on appeal.
See Royals v. Piedmont Elec. Repair Co., 137 N.C. App. 700, 710, 529 S.E.2d 515,
521 (2000).
{74} Plaintiff seeks essentially the same relief sought by the plaintiff in Royals,
redemption of a decedent’s shares at fair market value. Plaintiff cites Royals for the
proposition that a shareholder may have a reasonable expectation of receiving some
sort of fair value for his shares of stock. (See Pl.’s Br. Supp. Mot. Summ. J. at 11.)
What then distinguishes this case from Royals and justifies a different result? Each
case is context and fact specific.
{75} In Royals the deceased minority shareholder (“Glenn”) had a reasonable
expectation in receiving fair value for his shares based on a retirement planning
arrangement with the company. This arrangement was part of the company’s
succession and retirement planning. Royals, 1999 NCBC 1 ¶ 40. Glenn originally
expected the redemption to occur at a bargain price supplemented by a subsidized
compensation. Id. However, when the arrangement was modified to eliminate the
compensation component, the parties’ expectations changed. Royals, 137 N.C. App.
at 707, 529 S.E.2d at 519. Glenn then expected to have his shares in the company
redeemed at fair value rather than at a bargain price. Id.
{76} This Court and the North Carolina Court of Appeals found an expectation
and therefore a right of redemption in Royals. That right arose from a history of
retiring employees and shareholders selling their stock to fund their retirement in a
business with just a handful of shareholders, all of whom worked in the business. 20
No such history of succession is present in this case.
{77} Particular facts concerning the business also are significant. For example,
up until Glenn’s death all shares were owned by individuals who worked actively in
the company and the business had been run like a partnership. Glenn had devoted
most of his adult life to the business and had worked closely with management and
his son Buck, the majority shareholder. 21 Mrs. Simmons, on the other hand, never
worked for any of the Defendant Corporations and never worked closely with their
management or majority shareholder.
{78} In addition, the company in Royals only had a handful of shareholders, 22
whereas the Defendant Corporations had twenty-five to eight-one shareholders.
The number and composition of the non-complaining shareholders are important
considerations. But see supra ¶ 50. The Defendant Corporations in this case each
had a large number of shareholders. There could be a wide variance in interests
among the shareholders—some might welcome a prorated buyback while others
might find it financially disadvantageous.
{79} There also were significant elements of oppression present in Royals. A
single majority shareholder controlled the business. That shareholder knew about
his father’s financial needs and took steps to adversely affect his father’s financial
condition by terminating his father’s retirement consulting arrangement and by
making a less than book value offer for his father’s stock. He excluded the trustee
of his father’s estate (who represented thirty-nine percent of the shares) from any
involvement in management. He also withheld information about the company and
barred the trustee from the premises. This behavior raises two concerns articulated
20 For example, when Short’s father retired from the business, he sold his shares to his son to fund
his retirement. Then when Short retired from the business, he sold the majority of his shares to
Buck to fund his retirement.
21 Glenn, Buck, Short, and Short’s father worked closely together over the years and knew each of
their respective financial resources and plans.
22 Of the 990 shares outstanding, the complaining minority shareholders owned 434 shares, Buck
owned 506 shares, Short owned 1 share, and an employee named Steve Coe owned 49 shares.
Royals, 1999 NCBC 1 ¶¶ 7, 9.
in Meiselman: acrimonious relationships in small family-owned businesses and the
loss of a clear expectation of employment, compensation, and benefits based upon
decades of involvement in the business. None of these concerns are found in this
case. See discussion supra Part VI.A.1.
C.
FUTURE CLAIMS
{80} The Court also has considered the possibility of future redemption claims.
Are the Defendant Corporations under a duty to offer to purchase similar amounts
of stock from other shareholders or just to buy Mrs. Simmons’s shares? While the
Defendant Corporations may be able to afford such a redemption plan from a cash
standpoint now, it would not be practical for them to agree on a redemption plan
that did not take into account the future financial situation of the companies.
{81} The Bank argues that the Defendant Corporations can protect themselves
from future redemption claims by disavowing any intention to redeem stock of any
other shareholder in the future, thus eliminating a reasonable expectation on the
part of other shareholders. However, under that scenario, Mrs. Simmons’s estate
would receive a benefit no other shareholder receives. The Court doubts that a
current disavowal will deter the estate of any other shareholder from suing if a
right to redemption is recognized in this case.
VII.
CONCLUSION
{82} The Court concludes that Plaintiff is not entitled to involuntary dissolution
of any of the Defendant Corporations under section 55-14-30(2)(ii). Mrs. Simmons
did not possess an enforceable right or interest based upon a reasonable expectation
(shared by all shareholders) that her ownership in the Defendant Corporations
would be redeemed at fair value upon her death. Because the Court has found no
enforceable right or interest, it need not address the alternative relief provided for
under section 55-14-30. If an issue arises in the future with respect to the payment
of dividends, those rights can be protected under other statutes and equitable
principles.
{83} Therefore, based on the foregoing, it is hereby ORDERED, ADJUDGED,
and DECREED that Defendants’ Motion for Summary Judgment is GRANTED and
Plaintiff’s Motion for Summary Judgment is DENIED.
SO ORDERED, this 22nd day of June, 2010.
Table 2: Dividend History for Elizabeth M. Simmons
Sapona Acme-McCrary Randolph Oil
Year
Dividends Total Dividends Total Dividends Total
Per Share Dividends Per Share Dividends Per Share Dividends
1997 $2.70 $56,565.00 $1.75 $25,285.75 N/A N/A
1998 $2.70 $56,565.00 $1.75 $25,285.75 N/A N/A
1999 $2.70 $56,565.00 $1.40 $20,228.60 $5.00 $4,075.00
2000 $2.70 $56,565.00 None $0.00 $5.00 $4,075.00
2001 $2.70 $56,565.00 None $0.00 $5.00 $4,075.00
2002 $2.55 $53,422.50 None $0.00 $4.00 $3,260.00
2003 $2.70 $56,565.00 None $0.00 $3.00 $2,445.00
2004 $2.70 $56,565.00 $0.25 $3,612.25 $3.00 $2,445.00
2005 $2.70 $56,565.00 $0.75 $10,836.75 $3.00 $2,445.00
2006 $2.70 $56,565.00 $1.00 $14,449.00 $3.00 $2,445.00
2007 $2.75 $57,612.50 $1.00 $14,449.00 $3.00 $2,445.00
2008 $3.60 $75,420.00 $1.40 $20,228.60 $3.00 $2,445.00
Sapona Aff. ¶ 7; Acme-McCrary Aff. ¶ 7; Randolph Oil Aff. ¶ 6; Sapona Report at 4;
Acme-McCrary Report at 4; Randolph Oil Report at 4.