Whitehorn v. Whitehorn Farms, Inc.

Summary

The Supreme Court of Montana affirmed the denial of Brian Whitehorn's claim that he was an oppressed minority shareholder of Whitehorn Farms, Inc. The court held that the corporation's failure to pay dividends or repurchase his shares did not establish oppression, and that his removal as an employee, officer, and director was justified by his conversion of corporate property. The court also concluded that no fiduciary duty to Brian had been breached.

Holdings

1. The District Court correctly held that Brian was not an oppressed minority shareholder. The evidence did not show dishonest, wrongful, oppressive, or squeeze-out conduct directed at his shareholder rights.
2. The corporation's failure to pay dividends and repurchase Brian's shares did not, under the circumstances, establish shareholder oppression or entitle Brian to a forced repurchase.
3. The corporation and controlling shareholders did not breach fiduciary duties to Brian by removing him as an employee, officer, and director after his misconduct.
4. The court declined to exclude Brian's shareholder-oppression arguments as an entirely new theory on appeal because the complaint had asserted shareholder oppression and the District Court had addressed that issue, although Brian had changed the emphasis of his argument.

Questions Presented

1. Whether the District Court erred in holding that Brian Whitehorn was not an oppressed minority shareholder.
2. Whether the corporation's failure to pay dividends, failure to repurchase Brian's shares, and lack of marketability of the shares constituted oppression.
3. Whether the majority shareholders breached fiduciary duties to Brian by removing him as an employee, officer, and director rather than pursuing less harmful alternatives.
4. Whether Brian's appellate arguments concerning shareholder oppression constituted an impermissible change in legal theory.

Disposition

affirmed