The opinion
ACCEPTED
07-15-00327-CV
SEVENTH COURT OF APPEALS
AMARILLO, TEXAS
11/20/2015 4:55:24 PM
Vivian Long, Clerk
No. 07-15-00327-CV
FILED IN
IN THE COURT OF APPEALS FOR THE
7th COURT OF APPEALS
AMARILLO, TEXAS
SEVENTH DISTRICT OF TEXAS AT AMARILLO
11/20/2015 4:55:24 PM
VIVIAN LONG
CLERK
HERRING BANCORP, INC.; C.C. BURGESS;
and C. CAMPBELL BURGESS,
Appellants/Cross-Appellees,
v.
JOHN MIKKELSEN, acting solely in his capacity as Trustee
of the John Mikkelsen Trust,
Appellee/Cross-Appellant.
On Appeal from the 46th Judicial District Court
Wilbarger County, Texas, Trial Court Cause No. 24,955
Honorable Dan Mike Bird, Presiding
BRIEF OF CROSS-APPELLANT
Lee F. Christie
State Bar No. 042317100
lfchristie@popehardwicke.com
Michael L. Atchley
State Bar No. 01397600
matchley@popehardwicke.com
POPE, HARDWICKE, CHRISTIE,
SCHELL, KELLY & RAY, L.L.P.
500 W. 7th Street, Suite 600
Fort Worth, Texas 76102
817.332.3245—Telephone
817.877.4781—Telecopier
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
Cross-Appellant/Appellee/Plaintiff:
John Mikkelsen, acting solely in his capacity
as Trustee of the John Mikkelsen Trust
Counsel for Cross-Appellant/Appellee/Plaintiff:
Lee F. Christie
State Bar No. 042317100
lfchristie@popehardwicke.com
Michael L. Atchley
State Bar No. 01397600
matchley@popehardwicke.com
POPE, HARDWICKE, CHRISTIE,
SCHELL, KELLY & RAY, L.L.P.
500 W. 7th Street, Suite 600
Fort Worth, Texas 76102
817.332.3245—Telephone
817.877.4781—Telecopier
Trial and Appellate Counsel
Brief of Cross-Appellant Page i
IDENTITY OF PARTIES AND COUNSEL (cont.)
Appellants/Cross-Appellees/Defendants:
Herring Bancorp, Inc.
C.C. Burgess
C. Campbell Burgess
Counsel for Appellants/Cross-
Appellees/Defendants:
Cornell D. Curtis
Thomas S. Leatherbury State Bar No. 24007069
State Bar No. 12095275 vernonlaw@sbcglobal.net
tleatherbury@velaw.com CORNELL D. CURTIS, P.C.
Manuel G. Berrelez 1716 Main Street
State Bar No. 24057760 Vernon, Texas 76834
mberrelez@velaw.com 940.552.9100—Telephone
Stephen S. Gilstrap 940.552.2655—Telecopier
State Bar No. 24078563 Trial and Appellate Counsel
sgilstrap@velaw.com
VINSON & ELKINS, LLP Tim Newsom
2001 Ross Avenue, Suite 3700 State Bar No. 00784677
Dallas, Texas 75201 tim@lovell-law.net
214.220.7700—Telephone John H. Lovell
214.999.7792—Telecopier State Bar No. 12609300
Appellate Counsel john@lovell-law.net
LOVELL, LOVELL,
NEWSOM & ISERN, L.L.P.
112 West 8th Avenue, Suite 1000
Amarillo, Texas 79101-2314
806.373.1515—Telephone
806.379.7176—Telecopier
Trial Counsel
Brief of Cross-Appellant Page ii
TABLE OF CONTENTS
Page
IDENTITY OF PARTIES AND COUNSEL ..........................................................i
INDEX OF AUTHORITIES ................................................................................... v
STATEMENT OF THE CASE ............................................................................. vii
STATEMENT REGARDING ORAL ARGUMENT ........................................ viii
TABLE OF ABBREVIATIONS ............................................................................ ix
ISSUES PRESENTED ..............................................................................................x
STATEMENT OF FACTS ....................................................................................... 1
SUMMARY OF THE ARGUMENT .................................................................... 19
ARGUMENT AND AUTHORITIES .................................................................. 20
ISSUE 1: The trial court excluded Mikkelsen’s evidence
of Appellants’ noncompliance with regulatory
requirements and failure to inform the Internal
Revenue Service and regulators that the
supposed Subchapter “S” conversion was
compromised as two classes of stock continue
to exist. Was this error? ......................................................... 20
ISSUE 2: The trial court denied Mikkelsen’s Motion
to Compel the discovery of net worth information.
Was this error? ........................................................................ 24
CONCLUSION ...................................................................................................... 26
PRAYER .................................................................................................................. 27
Brief of Cross-Appellant Page iii
SIGNATURE OF COUNSEL ............................................................................... 28
CERTIFICATE OF COMPLIANCE .................................................................... 29
CERTIFICATE OF SERVICE ............................................................................... 29
INDEX TO APPENDIX TO BRIEF OF CROSS-APPELLANT ....................... 30
Brief of Cross-Appellant Page iv
INDEX OF AUTHORITIES
Cases Page
Alamo Nat’l Bank v. Kraus,
616 S.W.2d 908 (Tex. 1981)................................................................. 22, 26
BMW of N. Am. v. Gore,
517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) ............................ 22
Ford Motor Co. v. Castillo,
279 S.W.3d 656 (Tex. 2009)....................................................................... 25
Gharda USA, Inc. v. Control Solutions, Inc.,
464 S.W.3d 338 (Tex. 2015)....................................................................... 21
In re Arpin America Moving Systems, LLC,
416 S.W.3d 927 (Tex. App.―Dallas 2013, orig. proceeding) ............... 25
In re Jacobs, 300 S.W.3d 35
(Tex. App.―Houston [14th Dist.] 2009, orig. proceeding) .................. 25
Lunsford v. Morris,
746 S.W.2d 471 (Tex. 1988)....................................................................... 25
McElroy v. Fitts,
876 S.W.2d 190 (Tex. App.―El Paso 1994, writ dism’d) ...................... 27
State v. Central Expressway Sign Assocs.,
302 S.W.3d 866 (Tex. 2009)....................................................................... 21
State Farm Mut. Auto. Ins. Co. v. Campbell,
538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003) ............................ 22
Tex. Mut. Ins. Co. Navarez,
312 S.W.3d 94 (Tex. App.―Dallas 2010, pet. denied) .......................... 25
Brief of Cross-Appellant Page v
Tony Gullo Motors I, L.P. v. Chapa,
212 S.W.3d 299 (Tex. 2006)....................................................................... 22
Vernon v. Perrien,
390 S.W.3d 47 (Tex. App.―El Paso 2012, pet. denied) ......................... 23
Rules and Statutes
Tex. Civ. Prac. & Rem. Code § 41.011 .............................................................. 22
Tex. R. App. P. 9.4 ............................................................................................... 29
Tex. R. App. P. 39 ...............................................................................................viii
Brief of Cross-Appellant Page vi
STATEMENT OF THE CASE
Nature of the Case: This is an appeal following a jury trial.
Plaintiff/Cross-Appellant Mikkelsen filed
suit contending that Appellants’ invalid
stock redemption constituted a breach of
Herring’s Articles of Incorporation and
therefore a breach of contract. Mikkelsen also
brought claims for declaratory judgment,
enforcement of inspection rights, breach of
fiduciary duty, civil conspiracy, and
unlawful oppression of a minority
shareholder. [1 CR 5-17; 2 CR 153-161] [App.
45-57; 58-66]
Trial Court: The 46th Judicial District Court, Wilbarger
County, Texas, Cause No. 24,955; the
Honorable Dan Mike Bird, presiding.
Trial Court’s Disposition: The trial court entered a Final Judgment on
June 16, 2015 incorporating a prior partial
summary judgment as well as the jury’s
verdict [2 CR 334; App. 1]. The trial court
denied Appellants’ Motion for Judgment
Notwithstanding the Verdict and Motion for
New Trial on August 19, 2015. [2 CR 409-
410].
Brief of Cross-Appellant Page vii
STATEMENT REGARDING ORAL ARGUMENT
Pursuant to Texas Rule of Appellate Procedure 39, Cross-Appellant
Mikkelsen requests oral argument. This Court’s decision will be
significantly aided by oral argument because the appeal involves a
somewhat complex set of facts and procedural history.
Brief of Cross-Appellant Page viii
TABLE OF ABBREVIATIONS
Mikkelsen: Appellee/Cross-Appellant/Plaintiff John Mikkelsen
Herring: Appellant/Cross-Appellee/Defendant Herring Bancorp, Inc.
CR: Clerk’s Record
RR: Reporter’s Record
App: Appendix
Brief of Cross-Appellant Page ix
ISSUES PRESENTED
ISSUE 1: The trial court excluded Mikkelsen’s evidence of Appellants’
noncompliance with regulatory requirements and failure to
inform the Internal Revenue Service and regulators that the
supposed Subchapter “S” conversion was compromised as two
classes of stock continue to exist. Was this error?
ISSUE 2: The trial court denied Mikkelsen’s Motion to Compel the
discovery of net worth information. Was this error?
Brief of Cross-Appellant Page x
STATEMENT OF FACTS
This case involves the purported redemption of shares of
Herring’s preferred stock. Herring is a bank holding company that
owns Herring Bank. Mikkelsen was previously Chairman of the Board
of Directors for Herring and the Bank, but he was ousted from these
roles in the 1990s when the Burgess family took control of both.
Mikkelsen later inherited some shares of Herring preferred stock from
his mother and was later assigned preferred shares by his brother
Mallory Mikkelsen.
When the Burgess family decided to convert Herring to a
Subchapter “S” corporation ― meaning that it could no longer have
preferred stock ― they concocted a scheme to permit all of the
preferred shareholders except Mikkelsen (that is, the Burgess family
and their friends) to trade their preferred stock for common stock.
Mikkelsen alone was commanded to sell his preferred shares back to
Herring for par value. Mikkelsen’s suit centers on his contention that
this unequal treatment of the preferred shares (permitting the
exchange of some but then “redeeming” Mikkelsen’s) violated the
company’s Articles of Incorporation and was void.
Brief of Cross-Appellant Page 1
Mikkelsen, as Trustee of the John Mikkelsen Trust, owns 300
shares of preferred stock in Herring.1 His chief complaint in this case is
that Herring violated its Articles of Incorporation because it permitted
all of Herring’s preferred stock except his to be exchanged for common
stock, and that his shares were singled out for “redemption,” meaning
that he was commanded to sell them back to the company for par
value. Mikkelsen filed this suit in the trial court, making claims for (1)
breach of contract, for violating the Articles of Incorporation, (2) a
declaratory judgment that the redemption was void and that
Mikkelsen continues to be a preferred shareholder, (3) a declaratory
judgment that Mikkelsen has the right to inspect the company’s books
and records, and (4) breach of fiduciary duty, oppression of a minority
shareholder, and conspiracy, as Mikkelsen contends that the
redemption scheme was the work of the Burgess family aimed at
singling him out and divesting him of any interest in Herring.
Mikkelsen’s involvement with Herring Bank began in 1969,
when he was elected to its Board of Directors.2 Mikkelsen’s
1 8 RR 47-48.
2 8 RR 21.
Brief of Cross-Appellant Page 2
grandfather-in-law was involved with the Bank when it was chartered
in 1903.3 Mikkelsen became Vice-Chairman of the Board in 1978, and
was elected Chairman of the Board in 1982.4 Herring Bancorp ― the
holding company that is a party to this case ― was formed in 1984.5
Herring Bancorp owns Herring Bank.6 Mikkelsen served as Chairman
of the Board of the Bank from 1982 until 1997, and served as Chairman
of the Board of Herring Bancorp from the time it was formed in 1984
until 1992.7
Appellant C.C. Burgess bought stock in Herring Bank in about
1972, and was elected to the Board of Directors in about 1973.8 C.C.
Burgess continues to serve on Herring Bancorp’s Board of Directors as
its Chairman.9 He is also Chairman of the Board of Directors of the
Bank.10
3 8 RR 18-19.
4 8 RR 22.
5 8 RR 23.
6 9 RR 16.
7 8 RR 27-28.
8 8 RR 27.
9 Id.; 9 RR 16
10 9 RR 16-17.
Brief of Cross-Appellant Page 3
Campbell Burgess is the son of C.C. Burgess.11 He has served as
Chief Executive Officer and Vice-Chairman of Herring Bancorp.12 He
has also served as Vice-Chairman of the Bank.13
C.C. Burgess gained an executive capacity with Herring in the
1990s, when the Burgess family acquired additional stock in the
company and took control of it.14 From that time forward, the Burgess
family, or trusts created for their benefit, have owned and controlled a
majority of Herring’s stock, and they have been in control of the Bank
and the holding company for all of that time.15 Members of the
Burgess family now comprise the entire Herring Board of Directors,
except for one seat, which is held by a long-time friend of Campbell
Burgess.16
When the Burgess family took control of the Bank in 1992, they
elected themselves to enough positions to take over the Board of
Directors, and they decided to oust Mikkelsen from his leadership
11 9 RR 95-96.
12 9 RR 17.
13 Id.
14 9 RR 18.
15 9 RR 18, 21.
16 9 RR 21, 75-76.
Brief of Cross-Appellant Page 4
role.17 One of the other shareholders, along with the local County
Attorney, brought a quo warranto proceeding, contending in essence
that the Burgesses had not been properly elected to their positions.18
That litigation was resolved in June or July 1992, by an agreement
under which, among other things, Mikkelsen and his family sold
essentially all of their shares in the holding company (all except for 180
shares, which were sold back to the company in 1998), and Mikkelsen
was provided a five-year contract to stay on as Chairman and Chief
Executive Officer until December 31, 1997.19 After this, Mikkelsen was
out of the Bank and the Burgesses were in complete control.20
The only Mikkelsen to retain any interest in the company after
that time was Mikkelsen’s mother, who had 300 shares of Herring’s
preferred stock (i.e., stock that has a specific par value and earns a
certain percentage dividend, but has no voting rights).21 There were
about 17,000 total shares of Herring preferred stock outstanding.22
17 8 RR 36-37; 9 RR 20-21.
18 8 RR 34-35.
19 8 RR 35-36.
20 8 RR 36-37.
21 8 RR 37.
22 Id.
Brief of Cross-Appellant Page 5
Mikkelsen’s mother died in 2005, at which time Mikkelsen (as
Trustee of the John Mikkelsen Trust) inherited 150 of the preferred
shares and his brother Mallory inherited the other 150 shares.23
Mallory later assigned his 150 shares to Mikkelsen (as Trustee of the
John Mikkelsen Trust).24
The Burgesses decided in 2006 to convert Herring from a
Subchapter “C” corporation to a Subchapter “S” corporation.25 This
was allegedly desired mainly to take advantage of the fact that
Subchapter “S” corporations are not taxed at the corporate level as
Subchapter “C” corporations are. Rather, Subchapter “S” corporations
are taxed more like partnerships; dividends are paid to the
shareholders, who pay taxes on that income, but the company itself is
not generally subject to income taxation.26 Mikkelsen initially
expressed to C.C. Burgess that he was not opposed to the conversion.27
23 8 RR 46-47.
24 8 RR 48-49.
25 8 RR 55-56, 59; 10 RR 88-89.
26 8 RR 56.
27 8 RR 59-60.
Brief of Cross-Appellant Page 6
To convert a corporation from Subchapter “C” to Subchapter
“S,” the company needs the consent of all shareholders,28 must
maintain no more than one class of stock,29 and must have no more
than 100 shareholders.30 As the company had preferred shares
outstanding, Herring would have to redeem those shares or convert
them to common stock.31
Herring’s preferred stock had been issued under specific
authority in the company’s Articles of Incorporation. The Articles also
set forth a specific, required procedure for redeeming the shares:
5. Redemption.
a. Preferred Stock. The Corporation, at the
option of the Board of Directors, may at any
time redeem the whole, or from time to time
redeem any part, of the Preferred Stock
outstanding by paying in cash therefor the sum
of $95 per share, plus all dividends declared
but unpaid thereon . . . .
***
Should only a part of the outstanding Preferred
Stock be redeemed, the redemption will be
effected by lot or pro rata, as prescribed by the
Board of Directors.32
28 10 RR 110-111.
29 8 RR 61; 9 RR 25.
30 9 RR 29-30.
31 8 RR 61.
32 12 RR PX-2 (App. 84) (emphasis added).
Brief of Cross-Appellant Page 7
The Articles of Incorporation are clear on this: if the company
wishes to redeem any preferred shares, it must either (1) redeem all of
them, (2) redeem some by lot [drawing], or (3) redeem some of them
by redeeming pro rata from each shareholder.33
Instead of following the Articles, the Burgesses decided on a
different scheme that resulted in bracketing and forcing out only the
Mikkelsen shares. C.C. Burgess and one other Board member labeled
themselves a two-person “committee” that concocted “criteria” for
permitting a preferred shareholder to “convert” their shares for
common stock in the company rather than to have the shares
redeemed.
In essence, the Burgess “committee” decided that a preferred
shareholder would be entitled to convert preferred shares to common
stock if (1) the preferred shareholder had a banking relationship with
Herring Bank, and (2) upon conversion, the shareholder would hold at
least 50 shares of common stock; any other preferred shares (i.e.,
33 8 RR 93.
Brief of Cross-Appellant Page 8
Mikkelsen’s) would be redeemed.34 There is no authority in the
Articles of Incorporation for such a set of “criteria” to determine which
preferred shares to redeem, and there is no authority in the Articles for
an “exchange” or “conversion” of preferred shares.
At the time this conversion scheme was created, there were 11
preferred shareholders, who together held a collective 17,147 preferred
shares.35 Those shareholders were (1) C.C. Burgess – 7882 shares ; (2)
Janie Slemp Burgess (C.C. Burgess’s wife36) – 576 shares; (3) Margo
Colquitt Burgess (C.C. Burgess’s former daughter-in-law37) – 1053
shares; (4) Harriet Burgess Myers (C.C. Burgess’s sister38) – 660 shares;
(5) Monarch Trust Co. (a trust company owned by the Burgess
family39) – 96 shares; (6) Kelly & Susan Couch Living Trust (Susan
Couch was a board member40) – 2940 shares; (7) Sharon Haney
Browning (cousin of board member Couch41) – 1470 shares; (8) Susan
34 8 RR 192; 9 RR 96-97.
35 9 RR 100-104; 12 RR PX-25 (App. 93).
36 8 RR 31; 9 RR 100.
37 9 RR 101.
38 9 RR 101.
39 9 RR 100.
40 9 RR 101.
41 9 RR 100-101.
Brief of Cross-Appellant Page 9
Spiller Culbertson (relative of board member Couch42) – 1470 shares;
(9) Vernon Parts, Inc. (a company owned by Jim Pennington43) – 1000
shares; (10) Mikkelsen – 150 shares; (11) Mallory Mikkelsen – 150
shares.44
As the preferred shares had a set par value of $95 per share,
Herring would have had to pay over $1,600,000.00 to redeem all 17,147
preferred shares ($95 x 17,147).45 The company obviously wished to
avoid such an expenditure, which is undoubtedly part of the reason
the Burgesses concocted the conversion scheme.
To convert the preferred shares to common stock, the company
calculated an exchange value based on the par value of the preferred
shares ($95 per share) and the book value of the common stock.46 The
book value of the common stock at that time was $698.10,47 meaning
that the conversion rate was about 7.34 preferred shares for one share
of common stock (698.10 / 95).48
42 9 RR 101.
43 9 RR 203.
44 12 RR PX-25 (App. 93).
45 9 RR 61.
46 9 RR 30-31.
47 10 RR 153.
48 Id.; 13 RR DX- 12 (App. 94).
Brief of Cross-Appellant Page 10
The conversion rate resulted in a calculation that the preferred
shareholders, if they converted to common stock, would receive these
numbers of common shares: (1) C.C. Burgess - 1072 shares; (2) Janie
Slemp Burgess – 78 shares; (3) Margo Colquitt Burgess – 143 shares; (4)
Harriet Burgess Myers – 89 shares; (5) Monarch Trust Co. – 13 shares;
(6) Kelly & Susan Couch Living Trust – 400 shares; (7) Sharon Haney
Browning – 200 shares; (8) Susan Spiller Culbertson– 200 shares; (9)
Vernon Parts, Inc. – 136 shares; (10) Mikkelsen – 20 shares; (11)
Mallory Mikkelsen – 20 shares.49
C.C. Burgess’s “criteria” for permitting conversion ― specifically,
the criterion denying conversion for anyone who would not have at
least 50 shares of common stock ― cut out only the Mikkelsen shares.
Monarch Trust Co. (the Burgess family company) already had other
shares of common stock, so it would have over 400 total shares after
conversion.50 Corporations cannot own stock in a Subchapter “S”
corporation, but the company assisted Monarch, and Vernon Parts,
49 10 RR 153; 13 RR DX- 12 (App. 94).
50 9 RR 53.
Brief of Cross-Appellant Page 11
Inc., to change the ownership of their shares so that they could then be
converted to common stock.51
The Burgesses offered no similar assistance to Mikkelsen. Rather,
the 50-share criterion cut only the Mikkelsens out of the chance to
convert to common stock (as they would have had about 40 shares
instead of the concocted 50-share requirement). There was no
legitimate reason for the 50-share requirement; C.C. Burgess testified
that it was just a number he and the other member of his two-person
“committee” invented.52 Though Board committees were required by
the company’s Bylaws to keep minutes, this “committee” kept no
minutes.53
Obviously, the Burgesses wanted to rid themselves of
Mikkelsen. He was the person they had already forced out of the Bank
once, and they did not want him involved any longer. Even though he
had expressed general initial agreement with the conversion to
Subchapter “S” status, they were concerned that he might ultimately
51 9 RR 203.
52 9 RR 57.
53 9 RR 49-50.
Brief of Cross-Appellant Page 12
oppose the idea, thus depriving the Burgesses of the unanimity
required for conversion.54
The only stated reason the Burgesses had for implementing any
criteria is that they wanted to limit the number of stockholders so that
they would not ultimately run afoul of the maximum of 100
shareholders.55 But the company would have had far fewer than 100
shareholders, and with the generational exception (under which lineal
relatives generally do not count against the 100-shareholder limit), the
company was nowhere close to the maximum number.56 There is no
evidence supporting the notion that ridding the company of
Mikkelsen and only Mikkelsen would translate to any significant
difference vis-à-vis the 100-shareholder maximum.
C.C. Burgess initially told Mikkelsen that all preferred shares
would be redeemed and/or exchanged into common stock.57
However, on September 22, 2006, Burgess sent Mikkelsen a letter
informing him that “[s]ince the conversion factor [for preferred and
non-voting common shares] will result in you and Mallory having
54 10 RR 110.
55 9 RR 27.
56 9 RR 30; 8 RR 77-78.
57 8 RR 61.
Brief of Cross-Appellant Page 13
only 19 shares of common stock each, we will be sending you and
Mallory a letter expressing the Bank’s intent to call your preferred
stock.”58 As this letter reflects, Mikkelsen and his brother were being
singled out for “special” treatment in the form of deprivation of their
preferred shares.
Although the other preferred shareholders were given the
opportunity to convert their shares to common stock,59 the Mikkelsens
were sent a “Notice of Redemption” informing them that their shares
would be redeemed:
This letter is to notify you that the board of
directors (the “Board”) of Herring Bancorp, Inc.
(the “Company”) has called for the redemption
(the “Redemption”) of your outstanding shares
of Preferred Stock (the “Preferred Stock”) of the
Company on November 20, 2006.
***
As a result of this process, the Board appointed
a committee to recommend the criteria for
determining which Preferred Stock
shareholders would be offered to exchange
their shares for the Company’s common stock
(the “Common Stock”), the nonvoting
Common Stock-Series A (the “Common Stock-
Series A”), or to have their shares redeemed.
The Board’s criteria for making this
58 8 RR 69; 12 RR PX- 9.
59 12 RR PX-18.
Brief of Cross-Appellant Page 14
determination included whether the Preferred
Stock shareholder had a banking relationship
with Herring Bank (the “Bank”), and whether
they would own at least 50 shares of Common
Stock upon the conversion. If these criteria
were met, the Board offered the Preferred Stock
shareholders the option to exchange their
shares for the Common Stock. If the Preferred
Stock shareholder did not meet these criteria,
the Board determined the Preferred Stock
shareholders would be redeemed.
***
From our conversations with you and the
Board’s determination regarding our classes of
stock, your Preferred Stock will be redeemed.60
Clearly, Defendants’ own “Notice of Redemption” draws a
distinction among the preferred shareholders and admits that only
some of the preferred shares were being redeemed for cash. The
Notice of Redemption also makes it clear that the procedure for
determining which of the preferred shares would be redeemed for
cash did not involve a drawing by lot or pro rata as mandated by the
Articles; instead, all but the Mikkelsen shares were “exchanged” for
common stock.
Mikkelsen did not surrender the 300 shares as demanded, but
instead pleaded with Burgess and Herring’s attorneys to permit him to
60 12 RR PX-13 (App. 90); 8 RR 80-81.
Brief of Cross-Appellant Page 15
convert the preferred shares to common stock, and reminded them
that the partial redemption violated the Articles of Incorporation.61
Mikkelsen’s requests were ignored, so he filed the underlying lawsuit
in 2008.62
Procedural History
In the court below, Mikkelsen asserted claims for (1) breach of
contract, (2) a declaration that the redemption was void and that he
continues to hold 300 shares of Herring’s preferred stock, (3) a
declaration that he has the right to inspect the company’s books and
records, and (4) breach of fiduciary duty, unlawful oppression of a
minority shareholder, and conspiracy.63
Well before the case went to jury trial, the trial court granted a
partial summary judgment in favor of Mikkelsen on his breach of
contract claim and declaratory judgment claims.64 Specifically, the
trial court found and concluded as a matter of law that (1) the
purported redemption of Mikkelsen’s preferred shares was
undertaken in violation of the company’s Articles of Incorporation and
61 8 RR 76; 8 RR 116-127.
62 8 RR 127.
63 1 CR 5-17 (App. 45-57); 2 CR 153-161 (App. 58-66).
64 1 CR 306-307 (App. 4-5).
Brief of Cross-Appellant Page 16
is void, and (2) Mikkelsen is, and continues to be, the holder of 300
shares of Herring’s preferred stock, and has all the rights appurtenant
thereto, including the right to inspect the company’s books and
records.65
During the trial, the trial court did not permit Mikkelsen to
introduce evidence of regulatory difficulties concerning the Burgesses
and the Office of the Comptroller of the Currency and the FDIC.66
Specifically, by way of an offer of proof, Mikkelsen offered evidence
that an order such as the trial court’s order granting Mikkelsen’s
Motion for Partial Summary Judgment invokes a duty on the part of
the Bank’s management to disclose the order to the IRS and
regulators.67 There was no such disclosure, and no disclosure on
Herring’s FDIC call reports.68 Additionally, Mikkelsen offered
evidence of Herring’s failure to comply with requirements of the
Office of the Comptroller of the Currency (the regulatory authority
governing national banks), that the bank surrendered its OCC charter
65 Id.
66 6 RR 10-14; 8 RR 142-144.
67 8 RR 220-221
68 8 RR 221-246; 12 RR PX-45, 46, 47, 52, 53 (App. 95-115), 54 (App. 116-141); 13 RR
DX-31, 41-46.
Brief of Cross-Appellant Page 17
and became a state bank, and that the FDIC essentially ordered
Campbell Burgess to cease his leadership role with the Bank.69 The
trial court refused to admit this evidence, even though Mikkelsen
urged that the evidence was critical in showing a pattern of improper
conduct.
The trial court also prevented Mikkelsen from introducing
evidence as to the net worth of the Appellants, and in fact precluded
Mikkelsen from being able to conduct discovery of the Appellants’ net
worth.70
At the conclusion of the trial, the jury found that Mikkelsen was
entitled to recover attorney’s fees in the amount of $127,442.00 through
trial, with additional amounts for appeals; found that C.C. Burgess
engaged in oppressive conduct toward Mikkelsen; found that
Campbell Burgess engaged in oppressive conduct toward Mikkelsen;
found that Mikkelsen was entitled to recover damages in the amount
of $23,314.80 for lost dividend income; found that C.C. Burgess did not
act with malice; found that Campbell Burgess did not act with malice;
69 8 RR 237-238; 12 RR PX-53-54 (App. 105-115; 116-141); 10 RR 216-232.
70 1st Supp CR 86-93 (App. 37-43; 44).
Brief of Cross-Appellant Page 18
did not find any exemplary damages; found that C.C. Burgess
breached fiduciary duties owed to Mikkelsen; found that Campbell
Burgess did not breach fiduciary duties owed to Mikkelsen; and found
no conspiracy.71
The trial court entered a Final Judgment incorporating the jury’s
verdict and the prior order on Mikkelsen’s Motion for Partial
Summary Judgment.72
SUMMARY OF THE ARGUMENT
Although Mikkelsen was largely successful in the trial court, he
was prevented from introducing evidence that was central to his effort
to obtain exemplary damages. The trial court erred by excluding
evidence of Appellants’ pattern of wrongdoing, which was crucial to
showing malice and other factors weighing on whether to award
exemplary damages and in what amount. The trial court also erred by
denying Mikkelsen’s Motion to Compel discovery of Appellants’ net
worth, which precluded Mikkelsen from developing and introducing
71 2 CR 228-258 (App. 6-36)
72 2 CR 334 (App. 1-3).
Brief of Cross-Appellant Page 19
the evidence of net worth that is also essential to his claim for
exemplary damages.
ARGUMENT AND AUTHORITIES
ISSUE 1: The trial court excluded Mikkelsen’s evidence of
Appellants’ noncompliance with regulatory
requirements and failure to inform the Internal Revenue
Service and regulators that the supposed Subchapter “S”
conversion was compromised as two classes of stock
continue to exist. Was this error?
At trial, Mikkelsen offered evidence relating to regulatory
problems encountered by Appellants, as well as Appellants’ failure to
report to regulators that the summary judgment order had been
entered. As the summary judgment order found that Mikkelsen
continued to own preferred shares in Herring, Herring had more than
one class of shareholders and its Subchapter “S” conversion was void
or at least in jeopardy. It is a critical omission for Appellants not to
bring this information to the attention of the IRS and the appropriate
regulators. Mikkelsen needed to present evidence of these matters to
show a continuing course of dishonest behavior. This evidence would
have assisted the jury in determining whether malice was present and
in determining whether to award exemplary damages. Lacking this
Brief of Cross-Appellant Page 20
critical evidence, the jury found in favor of Appellants on both of these
issues.
A trial court’s decision to admit or exclude evidence is reviewed
under an abuse of discretion standard. Gharda USA, Inc. v. Control
Solutions, Inc., 464 S.W.3d 338, 347 (Tex. 2015). Reversal is appropriate
if the error is harmful; that is, if it probably caused the rendition of an
improper judgment. State v. Central Expressway Sign Assocs., 302
S.W.3d 866, 870 (Tex. 2009). This Court should consider the entire
record in determining whether the evidentiary ruling was harmful. Id.
Mikkelsen need not show that “but for” the exclusion of the evidence a
different judgment would have resulted. Rather, the error was harmful
if the excluded evidence was crucial to a key issue. Id.
Here, the excluded evidence was crucial to the jury’s ability to
analyze whether to award exemplary damages and in what amount. In
making this determination, a jury is to consider (1) the nature of the
wrong, (2) the character of the conduct, (3) the degree of the
wrongdoer’s culpability, (4) the situation and sensibilities of the
parties concerned, (5) the extent to which the conduct offends a public
sense of justice and propriety, and (6) the defendant’s net worth.
Brief of Cross-Appellant Page 21
Alamo Nat’l Bank v. Kraus, 616 S.W.2d 908, 910 (Tex. 1981); Tex. Civ.
Prac. & Rem. Code § 41.011.
The trial court instructed the jury to consider the Kraus factors in
this case,73 but the jury was lacking crucial evidence pertaining to the
character of the conduct, the degree of culpability, the situation and
sensibilities of the parties, and a public sense of justice and propriety.
A factor in determining an award of exemplary damages is whether
the harm involved repeated acts or isolated incidents. Tony Gullo
Motors I, L.P. v. Chapa, 212 S.W.3d 299, 318 (Tex. 2006), citing State Farm
Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419, 123 S.Ct. 1513, 155
L.Ed.2d 585 (2003). A recidivist is generally more reprehensible, and
may be punished more severely, than a one-time offender. Id. at 309 n.
48, citing BMW of N. Am. v. Gore, 517 U.S. 559, 577, 116 S.Ct. 1589, 134
L.Ed.2d 809 (1996). Mikkelsen was denied an opportunity to
demonstrate the Appellants’ recidivism to the jury.
Although the Kraus factors generally relate to the amount of
exemplary damages, they are important here as to liability because the
“malice” that would justify an award of exemplary damages may be
73 2 CR 249-250 (App. 27-28).
Brief of Cross-Appellant Page 22
shown by direct or circumstantial evidence. See Vernon v. Perrien, 390
S.W.3d 47, 62 (Tex. App.―El Paso 2012, pet. denied).
Mikkelsen attempted to introduce evidence that the FDIC
essentially ordered the removal of Campbell Burgess from the Bank
because, among other things, he “engaged or participated in unsafe or
unsound banking practices, committed or engaged in acts, omissions,
or practices which constitute breaches of his fiduciary duty to the
Bank, and/or violated law or regulation; that the Bank suffered
financial loss and [Campbell Burgess] received financial gain or other
benefit as a result of such practices . . . and that such practices . . .
demonstrate [Campbell Burgess’s] personal dishonesty or willful or
continuing disregard for the safety or soundness of the Bank.”74
Mikkelsen also attempted to introduce evidence of an agreement
between the Bank and the Office of the Comptroller of the Currency
under which the Bank was required to undertake a series of actions to
remedy deficiencies in the Bank’s operations and that, instead of
74 12 RR PX-54 (App. 116); 8 RR 239-243, 245-246; 10 RR 217-218; 222; 225-232.
Brief of Cross-Appellant Page 23
complying, the Bank forfeited its decades-old national charter and
became a state bank.75
Mikkelsen also attempted to introduce evidence of the
Appellants’ failure to notify the Internal Revenue Service and the
FDIC of the potential existence of two classes of stock, after the trial
court had ordered that Mikkelsen continued to own preferred shares.76
If this crucial evidence had been admitted, the jury probably
would have concluded that C.C. Burgess and Campbell Burgess acted
with malice, and that their recidivism, their degree of culpability, and
a public sense of justice and propriety justified an award of exemplary
damages. The trial court erred in refusing to admit this evidence, and
the error was harmful in that it probably resulted in an improper
judgment on the issue of exemplary damages.
ISSUE 2: The trial court denied Mikkelsen’s Motion to Compel the
discovery of net worth information. Was this error?
Mikkelsen was also prevented from introducing evidence of the
Appellants’ net worth and, in fact, was not permitted to conduct
75 12 RR PX-53 (App. 95); 8 RR 235-239, 245-246; 10 RR 217-218; 222; 225-232.
76 8 RR 220-228; 232-235; 10 RR 216-232.
Brief of Cross-Appellant Page 24
discovery on the issue. The trial court denied Mikkelsen’s Motion to
Compel discovery of the Appellants’ net worth.77
A trial court’s discovery order is reviewed for abuse of
discretion. Tex. Mut. Ins. Co. v. Navarez, 312 S.W.3d 94, 103 (Tex.
App.―Dallas 2010, pet. denied). A trial court abuses its discretion
when it denies discovery going to the heart of a party’s case or when
the denial compromises a party’s ability to present a viable defense.
Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009).
A defendant’s net worth is relevant in a suit involving
exemplary damages. Lunsford v. Morris, 746 S.W.2d 471, 473 (Tex.
1988). Under the law applicable to this case, a plaintiff who is seeking
to recover exemplary damages is entitled to discovery of the
defendants’ net worth, and is not required to make a prima facie
showing of likely recovery before conducting such discovery. In re
Arpin America Moving Systems, LLC, 416 S.W.3d 927, 929 (Tex.
App.―Dallas 2013, orig. proceeding); In re Jacobs, 300 S.W.3d 35, 40-41
(Tex. App.―Houston [14th Dist.] 2009, orig. proceeding).
77 1st Supp. CR 86-93 (App. 37-43; 44)
Brief of Cross-Appellant Page 25
Here, the Appellants’ net worth is crucial evidence that
Mikkelsen needed in order to present his case for exemplary damages.
Mikkelsen’s pleadings request an award of exemplary damages.78 The
jury was instructed to consider net worth as one of the Kraus factors,79
but heard no evidence on the subject because the trial court did not
permit Mikkelsen to develop it. The order denying Mikkelsen’s
Motion to Compel discovery of net worth information was an abuse of
discretion that prevented Mikkelsen from developing crucial evidence
going to the heart of his case for exemplary damages. This denial
probably resulted in an improper judgment, and it should be reversed
and a new trial ordered on the issue of exemplary damages.
CONCLUSION
While Mikkelsen succeeded on most of his claims, the trial court
erred by denying him the opportunity to demonstrate Appellants’
dishonest recidivism and net worth. This error prevented Mikkelsen
from presenting evidence that was crucial to his claim for exemplary
damages. If the evidence had been admitted, the jury probably would
78 2 CR 160 (App. 65).
79 2 CR 249-250 (App. 27-28).
Brief of Cross-Appellant Page 26
have awarded Mikkelsen exemplary damages. The trial court’s
judgment should be reversed to the extent it fails to award exemplary
damages to Mikkelsen, the trial court’s order denying Mikkelsen’s
motion to compel discovery of net-worth information should be
reversed, Mikkelsen should be permitted to conduct net-worth
discovery, and the Court should order a new trial on the issue of
malice and exemplary damages to the extent permitted, or at a
minimum grant Mikkelsen this relief if the case is otherwise remanded
to the trial court.80
PRAYER
Mikkelsen respectfully requests the Court to reverse the Final
Judgment to the extent it fails to award exemplary damages to
Mikkelsen, to render judgment that Mikkelsen is entitled to recover
exemplary damages or to order a new trial on this issue, to order a
new trial on the issue of the amount of exemplary damages to be
awarded, to reverse the trial court’s Order denying Mikkelsen’s
80There is authority for remanding a case for a new trial on the issue of exemplary
damages. See McElroy v. Fitts, 876 S.W.2d 190, 199 (Tex. App.―El Paso 1994, writ
dism’d). However, should the Court determine such relief to be inappropriate,
Mikkelsen alternatively seeks remand on these issues if the case is otherwise
remanded.
Brief of Cross-Appellant Page 27
Motion to Compel discovery of net-worth information, to instruct the
trial court to order the discovery of such information, and to grant
Mikkelsen all other relief he is entitled to receive. Alternatively,
Mikkelsen seeks this relief in the event the case is otherwise remanded
to the trial court.
Respectfully submitted,
__/s/ Michael L. Atchley________
Lee F. Christie
State Bar No. 042317100
hray@popehardwicke.com
Michael L. Atchley
State Bar No. 01397600
matchley@popehardwicke.com
Pope, Hardwicke, Christie, Schell,
Kelly & Ray, L.L.P.
500 W. 7th Street, Suite 600
Fort Worth, Texas 76102
817.332.3245—Telephone
817.877.4781—Telecopier
ATTORNEYS FOR
CROSS-APPELLANT
Brief of Cross-Appellant Page 28
CERTIFICATE OF COMPLIANCE
1. This brief complies with the type-volume limitations of Texas
Rule of Appellate Procedure 9.4(i)(2)(B) because it contains 5,358
words, excluding the parts of the brief exempted by Texas Rule
of Appellate Procedure 9.4(i)(1).
2. This brief complies with the typeface requirements of Texas Rule
of Appellate Procedure 9.4(e) because this brief has been
prepared in a proportionally spaced typeface using “Microsoft
Word 2010” in 14-point “Book Antiqua” style font (12-point for
footnotes).
/s/ Michael L. Atchley
Michael L. Atchley
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing
document is being forwarded to all counsel of record via electronic
filing on November 20, 2015, as follows:
Thomas S. Leatherbury Cornell D. Curtis
State Bar No. 12095275 State Bar No. 24007069
tleatherbury@velaw.com vernonlaw@sbcglobal.net
Manuel G. Berrelez CORNELL D. CURTIS, P.C.
State Bar No. 24057760 1716 Main Street
mberrelez@velaw.com Vernon, Texas 76834
Stephen S. Gilstrap
State Bar No. 24078563
sgilstrap@velaw.com
VINSON & ELKINS, LLP
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
/s/ Michael L. Atchley
Michael L. Atchley
Brief of Cross-Appellant Page 29
No. 07-15-00327-CV
IN THE COURT OF APPEALS FOR THE
SEVENTH DISTRICT OF TEXAS AT AMARILLO
HERRING BANCORP, INC.; C.C. BURGESS;
and C. CAMPBELL BURGESS,
Appellants/Cross-Appellees,
v.
JOHN MIKKELSEN, acting solely in his capacity as Trustee
of the John Mikkelsen Trust,
Appellee/Cross-Appellant.
On Appeal from the 46th Judicial District Court
Wilbarger County, Texas, Trial Court Cause No. 24,955
Honorable Dan Mike Bird, Presiding
INDEX TO APPENDIX TO BRIEF OF CROSS-APPELLANT
Document Pages
Final Judgment (2 CR 335-336)................................................................ 1-3
Order on Motion for Partial Summary Judgment (2 CR 306-307) ..... 4-5
Jury Charge (2 CR 228-258) ................................................................... 6-36
Plaintiff’s Motion to Compel (1st Supp. CR 86-92) ........................... 37-43
Order Denying Plaintiff’s Motion to Compel (1st Supp. CR 93) ........ 44
Brief of Cross-Appellant Page 30
Document Pages
Plaintiff’s Original Petition (1 CR 5-17) .............................................. 45-57
Plaintiff’s First Amended Original Petition (2 CR 153-161) ............ 58-66
Herring Articles of Incorporation (12 RR PX-2) ................................ 67-89
Notice of Redemption (12 RR PX-13) .................................................. 90-92
List of Preferred Shareholders (12 RR PX-25) .......................................... 93
Shareholder List Showing Conversion Rate (13 RR DX-12) .................. 94
Herring Agreement with the OCC (12 RR PX-53) .......................... 95-115
FDIC Order Regarding Campbell Burgess (12 RR PX-54) ........... 116-141
Brief of Cross-Appellant Page 31
334334334334334
C.AUSE
CAUSE NO. 24,955
24.955 Sy _ ____ _ _ _ _ _ _ __
Oc~:_.iy
JOHN MIKKELSEN,
MIKK ELSEN. IN TH E DISTRICT COURT
[N THE
T'rust ee
acting solely in his capacity as Trustee
of the John M.ikkelsen
t\Aikke1sen Trust,
'rrust
Plaintiff.
Plaintiff:
v. WI LBARG ER COUNTY.
WILBARGER COUNTY TEXAS
HERRING
IIERRlNG BA.i."i"CORP,
BANCORP, INC.;INC;
c.c. BURGESS;
C.C. BURGESS, and
C. CAMPBELL.
CAMPBELl. BURGESS,
BURGESS.
Defendants. 46TH
46TI-I JUDICIAL DISTRICT
FINAL
FIN AL .JUDGMENT
,JUDG MENT
On January 30, 2015, calls~ came on to be heard, and John 1
20 [5 , this cause vlikkelscn.,
Mikkel sen, acting solely in
his capacity as Trustee of the John Mikkelsen Trust, Plaintiff.
Plaintiff, appeared in person and by att:orney
<.Htomey
of record and announced ready frrr
ofrecord trial , and Herring Bancorp,
lor trial, lotc., C.C.
Bancorp. Inc., C.C Burgess, and C. Campbell
Burgess, Defendants, appeared in
in person or by
by attorney of record
record and announced
announcc-d ready
read y for
lor trial,
and a jury having
havin g been previously
previollsly demanded,
dC.l11.anded. a jury consisting qu ~di1'ied jurors was duly
consi sting of 12 qualified
empaneled and the case proceeded to trial.
Irial.
Th{~ Court, by granting
The Plaimiffs lvfotion
gnmti ng Plaintiff's !vl01ion th
f(wr Partia.
Parti::l]I Surnmary
Su mmary .Judgment
Judgment on August 4,
4.
1, gmnted
201 I, gmntcd Plaintiff's
Plaintiff"s breach of contract claim in Count One of Plaintiffs
Plai ntiffs First Amended
Original P"lijiot], and the Order granting Plaintiff's
Origi nal Petit.ion, Plaintitrs Motion, attach~d hereto
MOlion, which is copied and attached
as Exhibit "A,"
"A." is incorporated herein. pect. to Count Four of Plaintiff's First Amended
rcSPCCt.lO
herein . With res
Original Petition,
Petition. which alleged that an October 2006 purported redemption of Plaintiffss preferred
ofPlaimifr
Ilcrring Bancorp,
shares in Herring Bancorp. In
Inc. constiiuted unlawful oppression of a rninority
c. constituted minority shareholder,
shareho lder, the
Court submiltcd
submitted said issue
isslle to the jury,
jury" and the jury returned.
returned its verdict
'.-'erdict in ace,ordance
accordance with the
instructions of
of the Court.
COtU1. The
Tlle charge of the Court
C(n1l1 and the verdict.
verd ict of
of the jjury
ury are copied and
F INAL
FfN ,Jfil.lGM
AL,} ENT
t iUC;MENT f',\(; E I
Appendix p. 1
334
335335335335335
Exh ibit " B" and incorporated
attached hereto as Exhibit purposes by
ineorpomted for all purposes by reference. Because the Court
COU l1
forPI
found for ~1intiff and it appears
Plaintiff ;;'ppears to the Court that rhe
fh e verdict
vcordict of the jury was for
fOT the Plaintiff
Plaintilf and
against Burgess, and C. Campbel!
again.st Defendant Herring Bancorp, Inc., C.C. Burge.ss, Carnpbell Burgess, the Court finds
that judgment should be rendered as herein
herei n provided. It is, therefore,
ORDERED.
ORDERED, ADJUDGED, and DECREED that Plaintiff.John Mikkelsen have and
tiHri PlaintiJI'John a.nd recover
from th.is Court a declarntory
from this declamtory judgment whereby this
th is Court declares, pursuant to the Texas
Dec.laratory jury· 's verdict.
Oechtratory Judgments Act and the jury's verd ict. that the purpo rted October 2006 and November
purported
2013 redempfions of the preferred
201 3 redemptions o f' Plaintiff John Mikkelsen were void and of no force or
preferrt:d shares of
eficct,
eft.ect. and did not deprive PI::lintiff hi s status as a prcforred
Plaintiff of his preferred shareholder ooff Herring Bancorp.
IJancorp,
Inc. Ac.cordingly,
A(..'C.ordingiy, Plaintiff ti mes had and has
Plai ntiff at all times ·has the right to inspect
ins pect the books and records of
Herring Bancorp, lnc.
Inc. The :finds that DeJendanr
'rhe Court further finds Dcf'~nd a n[ Herring
J.-h.~ rTing Bancorp,
Bancorp. Inc. breached its
An.icles of In.
Arti.cles Incorporation
c orporation and that Defondants c.c.
DeJendant<; C .C. Burgess and C. Campbell Burgess wrongfully
wTongfully
engaged
e.ngaged in oppressive conduct
cunduct towards
towards Plaintiff,
PlaintitT. as found
Ibund bbyy the jury. In cmmection therewith,
connect ion lhere.wilh.
find s, and it is ORDERED, A
the Court further finds, ADJ UDGED, and D
DJUDGED, DECREED
ECREED that the Plaintiff
remains a preferred shareholder of
uf said Herring
He.rring Bancorp,
Banco rp, Inc ., is entitled to
10 have and recover of
and from Defendant J·krring
H t'rring Bancorp,
Bancorp. Inc., C.C
C. C . Burgess,
Burgess. and C. Campbell Burgess, jointly
joint ly and
severally, judgment in the amount of $23, 1I2.00.
11 2.00, representing
rep.resenting prefened
preferred dividends on Plaintiff's
PlaintilTs
preferred shares i.n
prcforred IJcrring Bancorp, Inc. fron1
in !Ierring from and after October
Cktobcr 31,
31 2006,
2006. through December 331.
l,
20 14, plus
2014,
amount of $.;;S:..~212i?.:.'2.. --
plus prejudgment interest thereon through
tbrough the date of
$~'.ll7-....-L?:-" It is furtfa:r
furth er
o f judgment
j udgment rendered herein
herein in the
ORDERED. ADJU DG ED, and
ORDERED, ADJUDGED, ~md DECREED that
1hm Plaintiff Mikkelsen should
Plaintiff John M.ikkelsen sbould have and
recover of and from the Defendant H.crring B
f-lerrillg ancorp, Inc. judgment
Bancorp, j udgment for his reasonable and
n.~cs. as awarded
necessary attorneys' foes, award ed by the jury, amollnt of
j ury. in the amount of $1 27,442.00 for preparation
$127,442.00 preparati.on
"INALJL
FINAL r)(~!\II\l\T
.JtOGMl':NT PMa: 2
PAGl:::
·· -.....
Appendix p. 2
335
336336336336336
and trial ofchis
oftbis cause, and the addi
additional
t.ional sum of $25,000.00 for an appeal to the Court of Appeals,
of$25,OOO,QO Appea ls.
$10,000.00 for
fbI' representation the petition
representati on at t.hc pelition for
fo r review stage in the Supreme Court of Texas,
of'l'exas,
$10,000.00 meril briefing
$1 0,000.00 for representation at the merit brie fi ng stage
slagc in the Court Qf
lhe Supreme COUlt of Texas, and
$10,000.00
$10.000.00 for representation through oral argument and completion
wmpletion of proceedings in the
the
COlin of Texas. It
Supreme Court 'It is t11rther
further
ORDERED,
ORD ERED, ADJUDGED, t.hat all
and DECREED that
ADJUDGED. am] aU costs of court should ,Ire
s hould be and hereby are or
taxed jointly and
iilnd severally against Defendants Herr.ing Bancorp.
Defendants lIcrring Ihll1(',orp, Inc., C.C
C .C.. .13
Burgess,
urgcss, and C.
Campbell Burgess. It is further
funher
OR DERED, ADJUDGED,
ORDERED, ADJU DGED , and DECREED
D ECRE ED that the
the contract
co ntract award of$23 ,,1I I12,00
2.00 shall bear
interest from the date
dale this Judgment is signed at the rate
IhisJudgmcnt ratc often percent (10%) per annum until paid.
ItIt is further
ORDERED, AD.JUDGED,
ADJUDGED, and DECREED that the other monetary awards shall bear
Judgment is signed at the rate
interest from the date this .Judgment rale of (5%) per annum until paid.
five percent (5'%)
ofiive
It is further
ORDERr:::D. ADJUDGED, and DECREED that all relief not expressly herein granted is
ORDERED, ADJUDGED.
denied, and this is intended to be a fi nal,
nal. appealable judgrnent.
judgment.
SIGNEDthis
SIGNED this - 1.t It dayof
<lay of V..~.2015.
v'~,2015.
c:A ,
_~~~-
16)·.~~}_.
iT~1-
1 K
- · ·1~ : ;
r -
~ 1· - r
1
_ /J
·:)·//
. . ... _. ~:15itf1fi~y(,~-·
1·). . ..1·s:;-.:1'.~ '.'I~I f
A
_r; -1../ ( .. J.:)·-<~·1:;· --
•. --/-·-··-··-
PAGE 3
..,,,__...,.,.....
...
,..,_,,,_,,....,....,._ _.._ _ __ •.;."'·-·-
;.....;.;.;;,;;;·"-.;.;···::..:.~c ··.........
Appendix p. 3
336
306306
'~
.~
- .. fllEr)"- .-
Fs(EO~····
~,
~' ~~ lf_da.yof~~
The 4_d8Y of (4,L or
20L
At
-cro
At_cr:-D o'cloc':J<
o'clockJL_M: o'cloi:.li<
titl o'c!ockfLM:
Brenda Peterson
GjeT;k DisL ~Ol # liibarger Co.
._CAUSE NO.
NO_ 24,955
l3y~ Dep.;'Y
JOHN MIKKELSEN, § IN THE DISTRICT COURT
acting sol.ely
sol,ely in his capacity as Trustee §
of the John Mikkelsen Trust, §
§
Plaintiff, §
§
v. § WILBARGER COUNTY, TEXAS
§
HERRING BANCORP, INC.; §
C.C.
CC. BURGESS; and §
C. CAMPBELL BURGESS, §
§
Defendants_
Defendants. § 46TH JUDICIAL DISTRICT
ORDER
Plaintiffs Motion for Partial Summary Judgment ("Plaintiffs Motion") and Defendants'
Cross-Motion for Summary Judgment ("Defendants' Motion") came on for hearing on April 18,
201 L The Court finds Plaintiffs Motion was timely filed and that notice of Plaintiffs Motion
and the hearing thereon was duly and properly given. The Court also finds that Defendants'
Motion was timely filed and served by agreement of the parties, and hereby grants leave to file
and ser\ie
serVe the Motion on less than 21-days' notice prior to the hearing. The Court also finds that
Plaintiffs
Plaintiff s Response to Defendants' Motion was timely filed.
filed and served by agreement of the
parties, and hereby grants Plaintiff leave to file and serve the Response and the evidence attached
thereto, including discovery products, within seven days of the hearing. After considering
Plaintiff's
Plaintiff s Motion and the Response thereto, and after considering Defendants' Motion and the
Response thereto, and after considering the admissible summary judgment evidence and the
arguments of counsel, the Court finds that Plaintiffs Motion should be granted and Defendants'
Motion should be denied.
ORDER PAGEl
Appendix p. 4
!.
306
307307 ...·-·
'-' ~
~ - --
- -- ~------.~
~ ---- · -----
'--- -- -~---~~~-~-
----~~--
IT IS THEREFORE ORDERED that Defendants' Cross-Motion for Summary Judgment
is denied in its entirety.
IT IS FURTHER ORDERED that Defendants' Special Exceptions and Plea in Abatement
are overruled and denied.
IT IS FURTHER ORDERED that Plaintiffs Motion for Partial Summary Judgment is
granted in all respects.
The Court further finds as a matter of law that (1) the purported redemption of Plaintiffs
Plaintiff's
300 shares of preferred stock of Herring Bancorp, Inc. (the "Company.")
"Company," ) was undertaken in
violation of the Company's
Company' s Articles of Incorporation and is void and (2) that Plaintiff is, and
continues to be, the holder of 300 shares of the Company's preferred stock, and has all the rights
of300
appurtenant thereto, including the right to inspec the Company's books and records.
SIGNED "0 ili, 'if:- d., "f_-I-4~~~:""""'_ __ ' 2011.
Approved as to form:
Lee F. Christie, Counsel for Plaintiff
Jam es W.
James W. Bowen, Counsel for Defendants
ORDER PAGE2
Appendix p. 5
[ 307
228228228228228
CAUSE NO. 24,955
JOHN MIKKELSEN, Acting Solely in his 46TH DISTRICT
§ IN THE 46rn DlSTRJCT COURT
Capacity as Trustee of the John Mikkelsen §
Trust, §
§
Plaintiff/Counter Defendant, §
§
v. § IN AND FOR
§
§
BANCORP.,
HERRING BANCORP ., INC., C.C.
§
BURGESS and C. CAMPBELL BURGESS,
§
Defendants/Counter-Plaintiffs. § WILBARGER COUNTY, TEXAS
CHARGE TO THE JURY
LADIES AND GENTLEMEN OF THE JURY:
This case is submitted to you by asking questions about the facts,
facts, which you
yOll must decide
from the evidence you have heard in this trial. You are the sole judges of the credibility of the
witnesses and the weight to be given their testimony, but in matters of law, you must be governed
by the instructions in this charge. In discharging your responsibility on this jury, you will observe
all the instructions which have previously been given you. IJ shall now give you additional
instructions which you should carefully and strictly follow during your deliberations.
I.J.
deliberations.
Do not let bias, prejudice or sympathy play any part in your deliberations.
u.
II.
In arriving at your answers, consider only the evidence introduced here under oath and such
exhibits, if any, as have been introduced for your consideration under the rulings of the Court; that
is, what you have seen and heard in this courtroom, together with the law as given you by the Court.
Appendix p. 6
CHARGE TO THE JURY PAGE 1OF30
1 OF 30
228
229229229229229
In
10 your deliberations, you will not consider or discuss anything that is not represented by the
evidence in this
thi s case.
III.
Ill.
Since every answer that is required by the charge is important, no juror should state or
consider that any required answer is not important.
IV.
You must not decide who you think should win, and then try to answer the questions
accordingly. Simply answer the questions, and do not discuss nor concern yourselves with the effect
norconcem
of your answers.
v.
V.
You will not decide the answer to a question by lot or by drawing straws, or by any other
method of chance. Do not return a quotient verdict. A quotient verdict means that the jurors agree
tbe result to be reached
to abide by the reacbed by adding together each juror's figure and dividing by the number
eacbjuror's
of jurors to get an average. Do not do any trading on your answers; that is, one juror should not
agree to answer a certain question one way if others will agree to answer another question another
way.
VI.
You may render your verdict upon the vote often
of ten or more members of the jury. The same
ten or more of you must agree upon all of the answers made and to the entire verdict. You will not,
not.
therefore. enter into an agreement to be bound by a majority or any other vote or
therefore, of less than ten jurors.
If the verdict and all
aU of the answers therein are reached by unanimous agreement, the presiding juror
presidingjuror
shall sign the verdict for the entire jury. If
1f any juror disagrees as to any answer made by the verdict,
verdict.
Appendix p. 7
CHARGE TO THE JURY PAGE 2 OF30
PAGE2 OF 30
229
230230230230230
those jurors who agree to all findings shall each sign the verdict.
verdict.
VII.
These instructions are given to you because your conduct is subject to review the same as that
of the witnesses, parties, attorneys and the judge. If
thejudge. Ifit
it should be found that you have disregarded any
of these instructions, it will be jury misconduct and it may require another trial by another jury; then
all of our time will have been wasted.
VIII.
The presiding juror or any other who observes a violation of the Court's instructions shall
immediately warn the one who is violating the same and caution the juror not to do so again.
IX.
IX.
When words are used in this charge in a sense which varies from the commonly understood
meaning, you are given a proper legal definition, which you are bound to accept in place ofany other
meaning.
x.
X.
Answer by checking "Yes" or "No" to all questions unless otherwise instructed. A "Yes"
evidence, If you do not find that a preponderance
answer must be based on a preponderance of the evidence.
of the evidence supports a "Yes" answer, then answer "No." If the question directs you to give an
answer other than "Yes" or "No,"
"No," you must still base your answers on a preponderance of the
evidence with respect to each matter inquired about in the question. Preponderance of the evidence
means the greater weight and degree of credible testimony or evidence introduced before you and
admitted in evidence in this case.
XI.
Appendix p. 8
CHARGE TO THE JURY PAGE
PAGE33 OF 30
230
231231231231231
After you retire to the jury room, you will select your own presiding juror. The first thing
presidingjuror
the presiding juror will do is to have this complete charge read aloud together with the accompanying
instructions and then you will deliberate upon your answers to the questions asked in the verdict
form. It is the duty of the presiding juror to:
fonn.
(1) Preside during your deliberations.
(2) See that your deliberations are conducted in an orderly manner and in accordance with
the instructions in this charge.
(3) Write out and hand to the bailiff any communications concerning the case that you
desire to have delivered to the Judge.
(4) Conduct voting on each question.
(5) Write your answers to the questions in the spaces provided.
((6)
6) Certify to your verdict in the space provided for the presiding juror's signature, or to
obtain the signatures of all the jurors who agree with the verdict if your verdict is less than
unanimous.
XII.
You should not discuss the case with anyone, not even with other members ofthe jury, unless
all of you are present and assembled in the jury room. Should anyone attempt to talk to you about
the case before the verdict is returned, whether at the courthouse, or your home, or elsewhere, please
infonn the Judge of this fact.
inform
XIII.
When you have answered all the questions you are required to answer under the instructions
of the Judge and your presidingjuror
presiding juror has placed your answers in the spaces provided and signed the
infonn the bailiff at the door of the jury
verdict as presiding juror or obtained the signatures, you will inform
Appendix p. 9
CHARGE TO THE JURY PAGE 4 OF 30
PAGE40F30
231
232232232232232
room that you have reached a verdict, and then you will return into Court with your verdict.
SIGNED this :2()
:':;?() day of January, 2015.
20 15.
HaD~u
21fh/~
HONORABLE DAN MIKE BIRO
4611h11 District Court Judge
F,.t-) I I 30!,
P,/e;) 1/ )O/1 5
5-
A tVj
~Cf.~f{) A
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0;
0/ V~--~
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Appendix p. 10
CHARGE TO THE JURY PAGES5 OF 30
PAGE
232
233233233233233
DEFINITIONS AND INSTRUCTIONS
You are instructed that when words are used in the Questions in a sense which varies from
the meaning commonly understood, you will be given in this Charge a proper legal definition which
you are bound to accept in the place of any other definition or meaning. In answering the Questions
you shall give the following terms the following meanings:
1. The term "preponderance of the evidence" means the greater weight of credible
evidence presented in this case. If you do not find that a preponderance of the evidence supports a
no." A preponderance of the evidence is not measured by the number
"yes" answer, then answer " no,"
of witnesses or by the number of documents admitted in evidence. For a fact to be proved by a
preponderance of the evidence, you must find
fi nd that the fact is more likely true than not true. A fact
fac t
may be established by direct evidence or by circumstantial evidence, or both. A fact is established
by direct evidence when proved by documentary evidence or by witnesses who saw the act done or
heard the words spoken.
spoken . A fact is established by circumstantial evidence when it may be fairly and
reasonably inferred from other facts proved.
2. A fact may be established by direct evidence or by circumstantial evidence or both.
A fact is established by direct evidence when proved by documentary evidence or by witnesses who
saw the act done or heard the words spoken. A fact is established by circumstantial evidence when
it may be fairly and reasonably inferred from other facts proved.
3. "Mikkelsen" means Plaintiff John Mikkelsen,
Mikkel sen, acting solely in his capacity as Trustee
of the John Mikkelsen Trust and his agents, attorneys, and representatives acting in the course and
scope of their agency or employment.
CHARGE TO THE JURY PAGE 6 OF30
OF 30
Appendix p. 11
233
234234234234234
4. "Herring Bancorp"
Bancocp" means Herring Bancorp, Inc., and its agents, attorneys, employees,
officers, directors, and representatives acting in the course and scope oftheir agency or employment.
5. "C.C. Burgess" means c.c.
C.C. Burgess and his agents, attorneys, and representatives
acting in the course and scope of their agency or employment.
6. "Campbell Burgess" means C. Campbell Burgess and his agents, attorneys, and
representatives acting in the course and scope of their agency or employment.
7. The "Articles oflncorporation"
ofIncorporation" means and refers to the Articles oflncorporation
ofIncorporation of
Herring (Plaintiff's
(Plaintiff s Exhibit "2").
INSTRUCTION REGARDING BREACH OF ARTICLES OF INCORPORATION
You are instructed that the Court has previously determined, as a matter of law, that
Defendant Herring failed to comply with the Articles of Incorporation of Herring Bancorp when it
purported to involuntarily redeem Mikkelsen's preferred shares in 2006. However, this failure to
comply with the Articles of Incorporation, standing alone, is not sufficient to constitute minority
oppression or breach of fiduciary duty.
CHARGE TO THE JURY PAGE70F30
PAGE 70F 30
Appendix p. 12
234
235235235235235
OUESTION NO I:
QUESTION
What is a reasonable fee for the necessary services of Mikkelsen's attorney in connection
with the failure of Herring Bancorp to comply with the Articles of Incorporation?
In answering this Question,
Question. you are to consider the attorney's fees and expenses incurred and
reasonably anticipated to be incurred by Mikkelsen in enforcing his rights in this action and any
appeal thereof. In determining the amount of attorney's fees and expenses, you are to consider the
following:
• the time and labor involved, the novelty and difficulty of the questions involved,
involved. and the
skill required to perform the legal services properly;
• the likelihood that the acceptance of the particular employment will preclude other
employment by the lawyer;
• the fee customarily charged in the locality for similar legal services;
• the amount involved and the results obtained;
• the time limitations imposed by the client or the circumstances;
• the nature and length of the professional relationship with the client;
• the experience, reputation, and ability of the lawyer or lawyers performing the services;
and
• whether the fe.
feee is fixed or contingent on results obtained or uncertainty of collection
before the legal services have been rendered.
CHARGE TO THE JURY PAGE 8 OF 30
PAGE80F30
Appendix p. 13
235
236236236236236
Answer with an amount for each of the following:
a. For preparation in the trial court.
Ij
ANSWER: /a 'Z
La Z t/f~ ~o
tit$. d()
b.
b. For representation through appeal to the Court of Appeals.
ANSWER: _-1-.J.Ja.='f~/_..6?/lJ~,~112'------------
ANSWER: _-bJ4'J.;~,--",41fb",-,-,.
112"'---_ __ _ __ __ __
c. For representation at the petition for review stage in the Supreme Court of Texas.
ANSWER: _-'-;;-';~'-'8P"-",,,-,.Illl""---_ _ _ _ _ _ _ _ _ __
d.
d. For representation at the merits briefing stage in the Supreme Court of Texas.
ANSWER: _~~~~4.~~~U~~.uqb~_ _ ____________________
e. For representation through oral argument and the completion of proceedings in the
Supreme Court of Texas.
ANSWER: /P.I l~tl
/p, POt? . If?
ti'()
CHARGE TO THE JURY PAGE 9 OF 30
PAGE90F30
Appendix p. 14
236
237237237237237
OUESTION NO.
QUESTION NO.2:
2:
Do you find that C. C. Burgess engaged in oppressive conduct toward Mikkelsen?
"Oppressive conduct" means burdensome, harsh,
harsh. or wrongful conduct; a lack ofprobity and
fair dealing in the company's affairs to the prej
prejudice
udice of some members;
members; or a visible departure from
the standards of fair dealing and a violation of fair play on which each shareholder is entitled to rely.
It also means unfair treatment of minority shareholders by the directors or those in control
the corporation.
Answer "yes" or "no."
Answer: ~..._a6'..___ _ _ _ __
Answer: -----=
-~~'l}9Ai",--------
CHARGE TO THE JURY PAGE 100F30
10 OF 30
Appendix p. 15
237
238238238238238
OUESTION NO.3:
QUESTION NO. 3:
Do you find that Campbell Burgess engaged in oppressive conduct toward Mikkelsen?
"Oppressive conduct" means burdensome, harsh, or wrongful conduct; a lack of probity and
fair dealing in the company's affairs to the prejudice of some members; or a visible departure from
the standards of fair dealing and a violation of
affair fair play on which each shareholder is entitled to rely.
affair
It also means unfair treatment of minority shareholders by the directors or those in control
of the corporation.
corporation.
''yes" or "no."
Answer "'yes"
Answer: -"""""?'"l"t...41"'--------
--'9'1' "'<JiL----- - -
CHARGE TO THE JURY 11 OF 30
PAGE 11OF30
Appendix p. 16
238
239239239239239
-f--.r 4+ :2. "" 13
dd n o/~#f-.
QUESTION NO. 4:
What sum of money, if any, if paid now in cash, would fairly and reasonably compensate
Mikkelsen for his damages, if any, that proximately resulted from such oppressive conduct, if any,
if any.
you have found?
Consider the following elements of damages, if any.
any, and none other:
other: The lost dividend
21,, 2006 until January 26, 2015.
income on Mikkelsen's preferred shares from November 21
Answer in dollars and cents.
Answer: $ .j 3 3
,23, It( 8'0
3/t(
I
CHARGE TO THE JURY PAGE 12
120F30
OF 30
Appendix p. 17
239
240240240240240
NO.5:
QUESTION NO. 5:
Answer the following question only if you unanimously answered "yes"
'"yes" to Question No. 2.
No.2.
Otherwise, do not answer the following question.
To answer "Yes" to the following question, your answer must be unanimous. You may
answer "No" to the following question only upon a vote of
often
ten or more jurors. Otherwise, you must
not answer the following question.
Do you find by clear and convincing evidence that the harm
hann to Mikkelsen resulted from
malice?
"Clear and convincing evidence" means the measure or degree of proof that produces a firm
finn
belief or conviction of the truth of the allegations sought to be established.
"Malice" means a specific intent by C.C.
C,C. Burgess to cause substantial injury or harm to
Mikkelsen.
Answer "yes" or "no."
Answer: _ ·.-n.L..a..__
L. ''-_
_Lll1Jl' __
_____
CHARGE TO THE JURY \3 QF
PAGE 13 OF 30
Appendix p. 18
240
241241241241241
QUESTION
OUESTION NO. 6:
NO.6:
Answer the following question only if you unanimously answered "yes" to Question No. 3.
No.3.
Otherwise, do not answer the following question.
To answer "Yes" to the following question, your answer must be unanimous. You may
answer "No" to the following question only upon a vote
vole of ten or more jurors. Otherwise, you must
often
not answer the following question.
Do you find by clear and convincing evidence that the harm to Mikkelsen resulted from
malice?
"Clear and convincing evidence" means the measure or degree of proofthat produces a firm
belief or conviction of the truth of the allegations sought to be established.
established,
"Malice" means a specific intent by Campbell Burgess to cause substantial injury or harm
hann
to Mikkelsen.
Answer "yes" or "no."
AJo
'
..,
CHARGE TO THE JURY PAGE 140F30
Appendix p. 19
241
242242242242242
OUESTION NO.
QUESTION NO.7:
7:
Answer the following question only if you unanimously answered "yes" to Question No. 5.
No.5.
You must unanimously agree on the amount of any award of exemplary damages.
What sum of money,
money. if any.
any, paid now in cash, should be assessed against C.C. Burgess and
awarded to Mikkelsen as exemplary damages, if any.
any, for the conduct found in response to Question
2?
"Exemplary damages" means an amount that you may in your
yow discretion award as a penalty
or by way of punishment.
Factors to be considered in awarding exemplary damages, if any,
any. are-
a. The nature of the wrong.
b. The character of the conduct involved.
c. The degree of culpability of C.C.
C.c. Burgess.
d.
d. The situation and sensibilities of the parties concerned.
concerned.
e. The extent to which such conduct offends a public sense ofjustice and propriety.
propriety.
f. The net worth of C.C. Burgess.
Answer in dollars and cents, if any.
Answer: $_ _ _ __ __
CHARGE TO THE JURY PAGE 15 OF 30
OF30
Appendix p. 20
242
243243243243243
QUESTION NO.8:
NO. 8:
Answer the following question only ifyou unanimously answered "yes"
''yes" to Question No. 6. You
No.6.
must unanimously agree on the amount
amoWlt of any award of exemplary
exemplruy damages.
What sum of money,
money. ifany,
any. paid now in cash, should be assessed against Campbell Burgess and
awarded to Mikkelsen as exemplary damages, if any, for the conduct found
fOlUld in response to Question 3?
"Exemplary damages"
damages" means an amount
amoWlt that you
you may in your discretion award as a penalty or
by way of punishment.
Factors to be considered in awarding exemplary damages, if any, ar~
are--
a.
a The nature of the wrong.
b. The character of the conduct involved.
c. Burgess.
c. The degree of culpability of Campbell Burgess.
d. The situation and sensibilities of the parties concerned.
concerned.
e. The extent to which such conduct offends a public sense ofjustice and propriety.
f. The net worth of Campbell Burgess.
Answer in dollars and cents, if any.
Answer: $,_ _ _ _ _ _ __
CHARGE TO THE JURY PAGE 16 OF 30
Appendix p. 21
243
244244244244244
JURy QUESTION
JURY OUESTION NO. 9:
NO.9:
Do you find that C. C. Burgess used his personal control of Herring Bancshares to breach
fiduciary duties owed to Mikkelsen?
In connection with the foregoing question, you are instructed that a majority shareholder of
a corporation owes fiduciary duties to a minority shareholder and to show compliance with those
duties must show he acted fairly and equitably, in the utmost good faith with the most scrupulous
honesty, fully and fairly disclosing all important information to a minority shareholder such as
Mikkelsen.
Answer "yes" or ""no."
no."
Answer: -......:1"""t4>
Answer: _______
--'j'Vlill""-- - - - -_-
CHARGE TO THE JURY PAGE 17 OF 30
Appendix p. 22
244
245245245245245
QUESTION NO. I10:
0:
Do you find that Campbell Burgess used his personal control ofHerring Bancshares to breach
fiduciary duties owed to Mikkelsen?
In connection
cormection with the foregoing question,
question. you are instructed that a majority shareholder of
a corporation owes fiduciary duties to a minority shareholder and to show compliance with those
duties must show he acted fairly and equitably, in the utmost good faith with the most scrupulous
honesty, fully and fairly disclosing all important information to a minority shareholder such as
Mikkelsen.
Answer "yes" or "no."
Answer: />h
NfA
CHARGE TO THE JURY PAGE 18 OF 30
Appendix p. 23
245
246246246246246
-f1 y
1~ T yrvz
"'? ~.,~e.d
Arv.5 w-er e.J \Iy
\rYe..,
e-5 r
/"I'/ -fer-# 9 "/
-p-# "I !{)
I()
q, n ~~
qn5W"U' ¢:!=:-/(
¢:f:-/( I d~r-,;rCV/15'~-:;t;/f
~ ~ d"'-~_5'~"#(!
~~
QUESTION NO. 11:
What sum of money,
money. if any, if paid now in cash, would fairly and reasonably compensate
Mikkelsen for his damages, if any, that proximately resulted from such breaches of fiduciary duties,
if any you have found?
if
Consider the following elements of damages, if any, and none other: The lost dividend
income on Mikkelsen's preferred shares from November 21, 2006 until January 26, 2015.
Answer in dollars and cents.
0.. .:.00,,---_
Answer: $$,-~-----
--=:0-,- IJO _ __
CHARGE TO THE JURY PAGE 19 OF 30
Appendix p. 24
246
247247247247247
QUESTION NO. 12:
Answer the following question only if you unanimously answered "yes" to Question No. ii:
. . 7
f
Otherwise, do not answer the following question.
To answer "Yes" to the following question, your answer must be unanimous. You may
answer "No" to the following question only upon a vote often
of ten or more jurors. Otherwise, you must
not answer the following question.
Do you find by clear and convincing evidence that the harm to Mikkelsen resulted from
malice?
"Clear and convincing evidence" means the measure or degree of proof that produces a firm
belief or conviction of the truth of the allegations sought to be established.
"Malice" means a specific intent by C.C. Burgess to cause substantial injury or harm
hann to
Mikkelsen.
Answer "yes" or "no."
Answer: ___._
-1.I1~6
1.'J-".6____
_ _ _ __
_
CHARGE TO THE JURY PAGE 200F
20 OF 30
Appendix p. 25
247
248248248248248
OUESTIONNO.
OUESTION NO. 13:
Answer the following question only ifyou unanimously answered "yes" to Question No. 10.
1O.
Otherwise, do not answer the following question.
To answer "Yes" to the following question, your answer must be unanimous. You may
answer "No" to the following question only upon a vote of ten or more jurors. Otherwise, you must
often
not answer the following question.
Do you find by clear and convincing evidence that the harm to Mikkelsen resulted from
malice?
"Clear and convincing evidence" means the measure or degree of proofthat produces a firm
belief or conviction of the truth of the allegations sought to be established.
" Malice" means a specific intent by Campbell Burgess to cause substantial injury or harm
"Malice" hann
to Mikkelsen.
Answer "yes" or "no."
Answer: _ _ _ _ _ _ __
CHARGE TO THE JURY PAGE21OF30
PAGE 21 OF 30
Appendix p. 26
248
249249249249249
QUESTION
OUESTION NO. 14:
Answer the following question only ifyou unanimously answered "yes" to Question No. 12.
You must unanimously agree on the amount of any award of exemplary damages.
cfany damages.
What sum ofmoney, if any, paid now in cash, should be assessed against C. C. Burgess and
awarded to Mikkelsen as exemplary damages, if any, for the conduct found in response to Question
ifany.
9?
"Exemplary damages" means an amount that you may in your discretion award as a penalty
or by way of punishment.
Factors to be considered in awarding exemplary damages, if any,
any. are--
a. The nature of the wrong.
b. The character of the conduct involved.
c. The degree of culpability of C. C. Burgess.
d. The situation and sensibilities of the parties concerned.
d.
e. The extent to which such conduct offends a public sense of justice and propriety.
f. The net worth of C. C. Burgess.
Answer in dollars and cents, if any.
any.
Answer: $,_ __ _ __ __
CHARGE TO THE JURY
JVR Y PAGE 22 OF 30
Appendix p. 27
249
250250250250250
QUESTION
OUESTION NO. 15:
15:
Answer the following question only if you unanimously answered "yes" to Question No. 13.
You must unanimously agree on the amount of any award of exemplary damages.
money. if any, paid now in cash, should be assessed against Campbell Burgess
What sum of money,
any, for the conduct found in response to
and awarded to Mikkelsen as exemplary damages, if any.
O?
Question 110?
"Exemplary damages" means an amount that you may in your discretion award as a penalty
or by way of punishment.
Factors to be considered in awarding exemplary damages, if
ifany,
any, are-
a. The nature of the wrong.
b. The character of the conduct involved.
involved.
c. The degree of culpability of Campbell Burgess.
d. The situation and sensibilities of the parties concerned.
e. The extent to which such conduct offends a public sense of justice and propriety.
propriety.
f. The net worth of Campbell Burgess.
Answer in dollars and cents, if any.
Answer: $,_ _ _ _ __ _
CHARGE TO THE JURY PAGE 23 OF 30
PAGE23
Appendix p. 28
250
251251251251251
QUESTION NO. 16:
16:
Answer the following Question only
only if you have answered "yes" 9.
''yes" to Questions 2 or 9.
C . C. Burgess part of a conspiracy to wrongfully deprive Mikkelsen of his
Was C. hi s preferred
8ancorp?
shares in Herring Bancorp?
To be part of a conspiracy.
conspiracy, C. C. Burgess and another person or persons must have had
knowledge of. co urse of action that resulted in
of, agreed to, and intended a common objective or course
damages to Mikkelsen. One or more persons involved in the conspiracy must have performed
perfonned some
act or acts to further the conspiracy.
Answer "yes"
''yes" or "no."
" no ."
Answer:
Answer: -~AA'---"~'---------
_--L ",~,,--_______
./,·/ .
CHARGE TO THE JURY PAGE 24 OF 30
Appendix p. 29
251
252252252252252
QUESTION NO. 17:
Answer the following Question only if you had answered "yes" to Questions 3 or 10.
Was Campbell Burgess part of a conspiracy to wrongfully deprive Mikkelsen of his
preferred shares in Herring Bancorp?
To be part of a conspiracy,
conspiracy. Campbell Burgess and another person or persons must have had
knowledge of, agreed to, and intended a common objective or course of action that resulted in
damages to Mikkelsen. One or more persons involved in the conspiracy must have performed some
act or acts to further the conspiracy.
Answer "yes" or "no."
Answer:
Answer: IJa
l}tJ
TQ THE JURY
CHARGE TO PAGE 25 OF 30
Appendix p. 30
252
253253253253253
OUESTION
QUESTION NO. 18:
NO. 18:
What sum of money, if any, if paid now in cash, would fairly and reasonably compensate
Mikkelsen for his damages, if any, that were proximately caused by such conspiracy?
Consider the following elements of damages, if any.
any, and none other: The lost dividend
income on Mikkelsen's preferred shares from November 21,
2 1, 2006 until January 26, 2015.
Answer in dollars and cents.
Answer: $_ _ _ __ _ _
Answer:
- - -- - - -
CHARGE TO THE JURY PAGE 26 OF 30
PAGE260F30
Appendix p. 31
253
254254254254254
OUESTION 19:
QUESTION NO. 19:
ta Question No.
Answer the following question only if you unanimously answered "yes" to No. 16.
Otherwise, do not answer the following question.
question.
To answer "Yes" to the following question, your answer must be unanimous. You may
answer "No" to the following question only upon a vote often
of ten or more jurors. Otherwise, you must
not answer the following question.
yOll find by clear and convincing evidence that the harm to Mikkelsen resulted from
Do you
malice?
"Clear and convincing evidence" means the measure or degree ofproofthat produces a firm
frrm
beUefor
belief or conviction of the truth of the allegations sought to be established.
""Malice" C.C. Burgess to cause substantial injury or hann
Malice" means a specific intent by C.C. harm to
Mikkelsen.
Answer "yes" or "no."
Answer: _ _ __ _ __ _
CHARGE TO THE JURY PAGE 27 OF 30
Appendix p. 32
254
255255255255255
OUESTION NO. 20:
QUESTION
Answer the following question only ifyou unanimously answered "yes" to Question No. 17.
"yesUta
Otherwise, do not answer the following question.
To answer "Yes" to the following question, your answer must be unanimous. You may
often
answer "No" to the following question only upon a vote of ten or more jurors. Otherwise, you must
not answer the following question.
Do you find by clear and convincing evidence that the harm to Mikkelsen resulted from
malice?
"Clear and convincing evidence" means the measure or degree ofproofthat produces a firm
belief or conviction of the truth of the allegations sought to be established
established..
"Malice" means a specific intent by Campbell Burgess to cause substantial injury or harm
to Mikkelsen.
Answer "yes" or " no."
no. "
Answer: _ _ _ _ _ _ __
CHARGE TO THE JURY PAGE 28 OF30
OF 30
Appendix p. 33
255
256256256256256
QUESTION NO. 21:
Answer the following question only ifyou unanimously answered "yes" to Question No. 19.
"yes"la
You must unanimously agree on the amount of any award of exemplary damages.
What sum of money, if any, paid now in cash, should be assessed against C. C. Burgess and
if any, for the conduct found in response to Question
awarded to Mikkelsen as exemplary damages, ifany,
16?
"Exemplary damages" means an amount that you may in your discretion award as a penalty
or by way of punishment.
Factors to be considered in awarding exemplary damages, if
ifany,
any, are--
a. The nature of the wrong.
wrong.
b.
b. The character of
afthe
the conduct involved.
c. The degree of culpability of
ofC.
C. C. Burgess.
d.
d. The situation and sensibilities of the parties concerned.
e. The extent to which such conduct offends a public sense of justice and propriety.
f. The net worth of C. C. Burgess.
Answer in dollars and cents, if any.
any.
Answer: $,_ _ _ __ _ __
CHARGE TO THE JURY PAGE 29 OF 30
PAGE290F30
Appendix p. 34
256
257257257257257
OUESTION NO. 22:
QUESTION
Answer the following question only if you unanimously answered "yes" to Question No. 20.
You must unanimously agree on the amount of any award of exemplary damages.
money. if any, paid now in cash, should be assessed against Campbell Burgess
What sum ofmoney,
and awarded to Mikkelsen as exemplary damages, if any, for the conduct found in response to
Question 17?
17?
"Exemplary damages" means an amount that you may in your discretion award as a penalty
or by way of punishment.
Factors to be considered in awarding exemplary damages, if any, are-
a. The nature of the wrong.
b. The character of the conduct involved.
c. The degree of culpability of Campbell Burgess.
d. The situation and sensibilities of the parties concerned.
e. The extent to which such conduct offends a public sense of justice and propriety.
f. The net worth of Campbell Burgess.
Answer in dollars and cents.
cents, if any.
Answer: $_ _ _ _ _ _ __
CHARGE TO THE JURY PAGE 30 OF 30
Appendix p. 35
257
258258258258258
JUROR CERTIFICATE
We, the jury,
jul)'. havef answered the above and foregoing questions as herein indicated, and
herewith return same into court as our verdict.
(To be signed by the presiding juror if unanimous.)
'/
~~~did75&n/
-PRES G JUROR
(To be signed by those rendering the verdict if not unanimous.)
ifnot
Appendix p. 36
258
FILED
The~day of D ~ 20 ll4-
-\'
The..B_day U:.20 4-
At \h,· ~ o'clock_A_M:
t>- 1l <> o'clock~M: o'clock
Brenda Peterson
CAUSE NO. 24,955 By~~Crr:;;;L~
.~\....)
Deputy
JOHN MIKKELSEN, § fN
IN THE DISTRICT
DfSTRICT COURT
acting solely in his capacity as Trustee §
of the John Mikkelsen Trust, §
§
Plaintiff, §
§
v. § WILBARGER COUNTY, TEXAS
WILBARGERCOUNTY,
§
HERRING BANCORP, INC.; §
C.c. BURGESS; and
C.C. §
C. CAMPBELL BURGESS, §
§
Defendants. § 46TH JUDICIAL
JUDfCIAL DISTRICT
DfSTRICT
PLAINTIFF'S MOTION TO COMPEL
TO THE HONORABLE DAN MIKE BIRD, DISTRICT
DfSTRICT JUDGE:
COMES ·NOW
NOW John Mikkelsen, acting solely in his capacity as Trustee of the John
Mikkelse~
Mikkelsen Trust~
Trust, Plaintiff, and respectfully files this Motion to Compel, and for such would show:·
show:
I.
Overview
. ...
·.Pl~intiff
•Plaintiff reluctantly files this Motion to require the production of highly relevant .
documents regarding Defendants' net worth, as expressly authorized by Texas law.
II.
Net Worth Documents
On May 21, 2014, Plaintiff served his Third Request for Production of Documents to
Defendants, to which Defendants responded on June 20, 2014. The requests (and Defendants'
identical boilerplate
boileri)Iate objections) were the following:
PLAINTIFF'S MOTION TO COMPEL Page 1
Appendix p. 37
86
REQUEST FOR PRODUCTION NO. l:
1:
..
·. All finandal
financial statements provided by C. C. Burgess to any person within the
past five (5) years.
OBJECTION: Defendants object to this request to the extent that the documents
sought are neither relevant nor material to any issue to be decided by the trier of
fact nor are the documents sought reasonably calculated to lead to the discovery of
admissible evidence. TEX. R. C1v.CIV. P. 192.J(a).
192.3(a). Defendants further object to the
extent that the documents sought are proprietary in nature and confidential and are
not otherwise subject to disclosure and/or discovery. In addition, Defendants object
to the extent that unless and until Plaintiff obtains a fact finding from the trier of
fact which would entitle Plaintiff to offer and/or introduce evidence of such matters.
Defendants state that any obligation on the part of Defendants to respond to and/or
produce documents in connection with this request prior to such a fact finding from
the trier of fact is premature, unnecessary and an unreasonable invasion of
Ddendants are entitled ·to
Defendants' proprietary and/or privacy rights. Defendants to and
hereby move for a Protective Order so as to eliminate and/or minimize unnecessary
harassment and/or invasion of Defendants' property rights with respect to the
<;onfidential 'infonnation sought by this request and to the extent that the
confidential financial ·information
Court Orders production of such private, proprietary and/or confidential
documents, that such documents be submitted for in camera inspection by the Court
and further Orders circumscribing delivery, use, reproduction and/or dissemination
of such documents by Plaintiff. ·.
. .
REQUEST
REQUEST FOR PRODUCTION NO. 2:
NO.2:
. All financial statements provided by C. Campbell Burgess to any person
within the past five (5) years.
OBJECTION: Defendants object to this request to the extent that the documents
sought are neither relevant nor material to ·any
'any issue to be decided ..by
by the trier of
. fact nor are the documents sought reasonably calculated to lead to the discovery of
admissible evidence. T EX. R. CJV.CIV. P. 192.3(a). Defendants further object to the
extent that the documents sought are propriet.ary in nature and confidential and are
not otherwise subject to disclosure.
disclosure. and/or discovery. In addition, Defendants.object
Defendantsobject
to the extent that unless and until Plaintiff obtains a fact finding from the trier of
fact which would entitle Plaintiff to offer and/or introduce evidence of such matters.
matters.
Defendants state that any obligation on the part of Defendants to respond to and/or
produce documents in connection with this request prior to such a fact finding from
the trier
trier. of fact is premature, unnecessary and an unreasonable invasion of
Defendants' proprietary and/or privacy rights. Defendants are entitled to and
hereby move for a Protective Order so as to eliminate and/or minimize unnecessary
harassment and/or invasion of Defendants' property rights with respect to the
confidential financial information
infonnation sought by this request ·and
and to the extent that the
Court Orders production of such private, proprietary and/or confidential
PLAINTIFF'S MOTION TO COMl'EL
COMPEL Page 2
Page2
Appendix p. 38
87
- -~-. --"',-'----
..
documents, that such documents be submitted for in camera inspection by the Court
docilments,
delivery, use, reproduction and/or dissemination
and further Orders circumscribing delivery;
of such documents by Plaintiff.
REQUEST FOR PRODUCTION NO. 3:
NO.3:
If you object to Request for Production No. l1 or claim such documents do
not exist, any other documents which wou!d
would reflect
retlect the net worth of C. C. Burgess
at all times from 2006 to the present date.
OBJF,CTlQN: Defendants object to this request to
OBJECTION: (0 the extent that the documents
sought are neither relevant nor material to any issue to be decided by the trier of
fact nor are the documents sought reasonably calculated to lead to the discovery of
admissible evidence. TEX. R. C1v: eiV. P. 192..3(a). Defendants further object to the
extent that the documents [;Ought
sought urn prcprielary in Mture
are prcprietary niJture and confidential and are
not otherwise subject to disdo.:mre
disdo,ure and/or discc.very.
discGvery. :!·1 en adli.ition,
addition, Defendants object
to the extent that un~css and until Plai1~tiff
lln!ess <.md f~.ct finding from the trier of
PlaiJ,tiff obtains ''.'.1 fo.ct
fact which would entitle Pjaintiff to offer an<l/o;·
Plaintiffto introduce •~vidence
and/o;' 1ntroduce "vidence of such matters.
Defendants state that any obligation on the pa1tpru.1 of Defondants
Defendants to respond to and/or
produce documents in connection this request prior to such a fact finding from
(;onnection with th1s
the trier of
of fact is premature, unnecessary and an unreasonable invasion of
Defendants' proprietary and/or privacy rights. Defendants are entitled to and
hereby move for a Protective Order so as to eliminate and/or minimize unnecessary
harassment and/or invasion of Defendants' property rights with respect to the
confidential financial information sought by this request and to the extent that the
Court Orders production of of. such private, proprietary and/or confidential
documents, that such documents be submitted for in camera inspection by the Court
and further Orders circumscribing delivery, use, reproduction and/or dissemination
of such documents by Plaintiff.
"RODUCTION NO.
REQUEST FOR PRODUCTION 4:
NO.4:
. If you object to Request for Production No. !: or daim
claim such documents do
not exist, any other doc:umcnts
documents which would
woule! re.fleet the net worth of C. Campbell
reBect Ih'"
Burgess at ali times from 2006
200n to the present date. ·
OBJECTION: Defendants object to this requ~sl'to
request to the extent that the documents
sought are neither rel<:.vant
relevant nor material to any issue t0 to be decided by the trier of
fact nor are the documents sought reasonably cakuhted
cakul'lted to lead to the discovery of
I admissi~le evidence. TEX. R. Crv. P. 192.3(a). Defendants further object to the
admissible
I·
extent that the documents sought are proprietary in nature and confidential and are
not otherwise su~_ject
subject to disclosure.
disclosure, andlordiscovery.
and/ordiscovery. ln In addition, Defendants object
Plaintiff ohtains a fact finding from the trier of
to the extent that unless and until Plainiiff
Plainliffto
fact which would entitle Plain.t]ff ilitroduce.evidence of such matters.
to offer and/or ititroduce,ev.idence
th~ part
Defendants state. that any obligation on the ofDe.f:;ndants to respond to and/or
partofDd:;ndants
produce document~ cOllnection with this req·m~st
documents in connection reqm:st prior to such a fact finding
tinding from
PLAINTffl'''S
PLAINTIH'S MOTION TO CO;\'IPEL
COMPEL Page 3
Page3
Appendix p. 39
88
~~~"-~""
.-;.. '"'- ."
..•
the trier of fact is premature, uiui~cess~y
unrieccss';;'y··-- arid
and 'an
., an .,unreaSonable
unrea.Sonable invasion of
Defendants' proprietary and/or privac/i·ights..
privacy '!·ighls. oe"rendants
De'fendants are arc entitled to and
hereby move for a Protective Order so·as to .eliminate and/or minimize unnecessary
soastoeliminate
harassment and/or invasion of Defendants' .,property
property. rights with respect to the
infornlation sought by this request and to the extent that the
confidential financial information
Court Orders production of such private, proprietary and/or confidential
documents, that such documents be submitted for in camera inspection by the Court
and further Orders circumscribing delivery, use, reproduction and/or dissemination
of such documents by
This text is long and has been trimmed here. Open the source document for the complete record.