David W. Brandt, John A. Brandt, and Roy Brandt v. Dean S. Somerville, Margaret D. Somerville, and Posilock Puller, Inc.

Summary

The Supreme Court of North Dakota reviewed a shareholder action involving alleged breaches of fiduciary duties, misappropriation of corporate opportunities, and the valuation and purchase of minority shareholders' stock. The court affirmed findings that the defendants' conduct was not fraudulent or illegal but was unfairly prejudicial with respect to certain corporate opportunities, upheld the stock transfer agreement's book-value provision, and approved the remedy awarded by the trial court.

Holdings

1. The trial court's findings that the defendants did not act fraudulently, illegally, or in bad faith toward the Brandts, but did unfairly prejudice them by misappropriating Posilock's corporate opportunity, were not clearly erroneous.
2. The stock-transfer agreement was binding, the condition concerning adoption of bylaws was satisfied, and the book-value provision controlled the buyout because the agreement's price was not unreasonable under the circumstances.
3. The trial court did not abuse its discretion in awarding damages and ordering the buyout under the stock-transfer agreement's formula as a remedy for the misappropriation of Posilock's corporate opportunity.
4. The trial court did not clearly err in finding that manufacturing component parts was a Posilock corporate opportunity and that Posilock had the capacity and financial ability to pursue it.
5. The trial court did not abuse its discretion in denying the Brandts' motions to amend their complaint to seek punitive damages.
6. The trial court did not abuse its discretion in denying or limiting discovery concerning DMI, excluding Dean Somerville's financial statement as irrelevant, or permitting the defendants to deposit the award with the clerk.

Questions Presented

1. Whether the trial court's findings regarding the Brandts' fiduciary-duty, fraud, disclosure, freeze-out, and corporate-opportunity claims were clearly erroneous.
2. Whether the stock-transfer agreement was enforceable and whether its book-value provision controlled the buyout of the Brandts' shares.
3. Whether the trial court abused its discretion in fashioning a remedy for the misappropriation of Posilock's corporate opportunity.
4. Whether the trial court abused its discretion by denying the Brandts' motions to amend the complaint to seek punitive damages.
5. Whether the trial court abused its discretion in denying or limiting discovery concerning DMI and excluding Dean Somerville's financial statement as irrelevant.
6. Whether the trial court erred in permitting the defendants to deposit the buyout and damages award with the clerk and in altering the interest award.
7. Whether the trial court clearly erred in finding that Posilock had the capacity and financial ability to pursue the opportunity to manufacture its own parts.
8. Whether the trial court abused its discretion in calculating the remedy by treating Dynamics 360 as integrated with Posilock.

Disposition

affirmed