Articles Posted in Business Law

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The Supreme Court affirmed in part and reversed and remanded in part the judgment of the district court that thwarted Plaintiff’s attempt to expel her brother, Defendant, from the family’s limited liability partnership and that dissolved the partnership between them. Defendant counterclaimed on the issue of attorneys fees, arguing that the district court erred in awarding fees to Plaintiff. The Supreme Court held (1) the district court erred by concluding that Defendant was not subject to the buy-out provisions of the partnership agreement and that judicial dissolution of the partnership was necessary; and (2) the district court was divested of its authority to award attorneys’ fees more than sixty days after the motion for fees was filed. View "Ballou v. Walker" on Justia Law

Posted in: Business Law

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Thomas Cherewick and Ronald Henry and Landowners all owned property in Remington Ranch, a real estate development comprising several subdivisions. Landowners filed a complaint against Cherewick, Henry, and the development’s property owner’s association, alleging, as relevant to this appeal, that Henry and Cherewick took actions that were either unauthorized or exceeded their authority as directors and officers of the association. Henry and his company, Western Investments, Inc., brought several counterclaims against Landowners, including defamation and tortious interference with business relations and prospective economic opportunity. The district court granted summary judgment against all parties on their respective claims. The Supreme Court affirmed, holding that the district court (1) did not err in granting Landowners summary judgment on Henry’s and Western Investment’s counterclaims for conspiracy and other alleged tortious conduct; and (2) did not abuse its discretion in denying Henry’s and Cherewick’s motion for attorney fees after they prevailed on Plaintiff’s claims against them. View "Henry v. Sullivan" on Justia Law

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Junkermeir, Clark, Campanella, Stevens, P.C. (Junkermeir) was a Montana accounting firm with offices in several Montana cities. Junkermeir lost its Bozeman branch office after the majority of its Bozeman shareholders decided to start their own firm, taking a significant number of Junkermier’s clients with them. Junkermeir filed a complaint against the former shareholders, claiming breach of contract and breach of fiduciary duty. The district court dismissed the breach of contract claim on summary judgment, concluding that the contractual covenant restricting competition that Junkermeir sought to enforce was unenforceable. After a trial, the district court ruled that most of the former shareholders owed no legal duty to Junkermeir and that while the remaining former shareholder breached his fiduciary duty to Junkermeir, Junkermeir failed to prove awardable damages from that breach. The Supreme Court reversed in part and affirmed in part, holding that the district court (1) erred in ruling that the agreement was not an enforceable contract; and (2) did not err in concluding that only one former shareholder breached a fiduciary duty but erred in concluding that Junkermeir was not entitled to collect any damages stemming from that breach. View "Junkermier, Clark, Campanella, Stevens, P.C. v. Alborn, Uithoven, Riekenberg, P.C." on Justia Law

Posted in: Business Law, Contracts

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David Kulko, Ilsa Kaye, and Michael Horn were the sole shareholders, directors, and officers of Davail, Inc. Kulko sued Kaye, Horn, and Davail for dissolution of Davail, shareholder oppression, fraudulent conduct, and breach of fiduciary duties. Eventually, the parties agreed to dissolution of Davail. The district court entered an order granting dissolution and appointed a receiver. The court then dismissed Kulko’s claims for lack of subject matter jurisdiction, concluding that dissolution is an exclusive remedy and that dissolution of Davail eliminated the case or controversy. The Supreme Court reversed and remanded for reinstatement of the case, holding that the district court (1) erred when it concluded that Kulko could not pursue punitive or compensatory damage claims against Davail’s other shareholders because he already sought and obtained dissolution of Davail; and (2) erred in dismissing Kulko’s claim because the court did not lose subject matter jurisdiction over the case upon entering the dissolution order. View "Kulko v. Davail" on Justia Law

Posted in: Business Law

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Fay Posnien, an exclusive agent for Allstate incorporated as Posnien Inc. sold the agency to Baird 7. Baird 7 subsequently executed an exclusive agency agreement with Allstate. The agency was successful following the transfer until Baird’s termination as an agent. Baird 7 chose to receive a termination payment from Allstate rather than transfer its economic interest to an approved buyer. Allstate withheld its disbursement of the funds and filed a complaint in interpleader to determine whose lien had priority to the termination payment. Posnien counterclaimed against Allstate, alleging conversion. At issue in this case was the scope of the security interest that Posnien was granted when it sold its economic interest in the agency book of business to Baird 7. The district court concluded that Posnien lacked rights in the collateral of the economic interest in the Allstate agency sold to Baird 7 and therefore could not sustain a claim for conversion against Allstate. The Supreme Court reversed the entry of judgment in favor of Allstate and remanded for entry of partial summary judgment on liability in favor of Posnien, holding that Posnien held an economic interest in the book of business, which satisfied the liability elements of conversion. View "Allstate v. Posnien" on Justia Law

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The Bixby family owned approximately one-third of Wyo-Ben’s class A stock. In 2011, Wyo-Ben’s shareholders voted to reclassify the shares to give class B shares the right to vote, which resulted in an overall decrease to the Bixby voting rights. The Bixby family dissented and, after the vote, sent a payment demand for all of their shares. Wyo-Ben, Inc. filed a petition seeking a declaration that the dissenters were not entitled to any payment for their class B shares and contesting the dissenters’ demand for a high value of the class A shares. The Bixbys, in turn, sought a declaration that they were entitled to payment for both classes of shares at the higher value. The Bixbys also counterclaimed, asserting that Wyo-Ben’s decision to dilute their voting rights constituted oppressive conduct. The district court dismissed the oppression claim and ruled that the Bixbys were not entitled to be paid for their class B shares under Montana’s dissenters’ right statute. The Supreme Court primarily affirmed, holding that the district court did not err in (1) dismissing the Bixbys oppression claim; (2) denying class B payments to all but one of the Bixby appellants; and (3) valuing the class A shares. View "Wyo-Ben, Inc. v. Bixby" on Justia Law

Posted in: Business Law

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In 2010, plaintiffs and Tidyman’s Management Services Inc. (TMSI) filed a complaint against Michael A. Davis and John Maxwell in their capacities as officers and directors of TMSI and/or its subsidiary, Tidyman’s LLC, alleging breach of corporate duties arising out of a merger between TMSI and SuperValu, which created Tidyman’s LLC. Plaintiffs requested punitive damages and attorney fees. The merger at issue occurred despite advice from a financial advisor TMSI had retained that the company should be sold, and the complaint alleged that the directors and officers had misrepresented the merit of the transaction. TMSI is a Washington corporation with its principal place of business in Montana, and was a member of Tidyman’s LLC; employee shareholders owned TMSI. A corporate liability insurance policy was in place that purported to insure Davis and Maxwell against liability incurred in their positions as officers and directors of Tidyman’s LLC. The Policy was to provide a legal defense for Davis and Maxwell throughout the federal ERISA litigation. The issues this case presented to the Montana Supreme Court were: (1) whether the District Court was correct in concluding Montana law, rather than Washington law, applied in this case; (2) whether the District Court erred in concluding that the corporate liability insurer breached its duty to defend without analyzing coverage under the policy; (3) whether the District Court erred in denying the insurer a hearing and discovery on reasonableness and collusion related to the stipulated settlements; and (4) whether the District Court erred by awarding pre-judgment interest, or in its determination of when the interest began accruing. The Montana Court concluded that genuine issues of material fact regarding reasonableness precluded summary judgment on the amount of the stipulated settlements. Accordingly,the Court reversed judgment on the stipulated settlements and remanded this case for further proceedings. The Court affirmed on all other issues. View "Tidyman s et al. v. Davis et al." on Justia Law

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In 1988, Faith Lutheran Church of Great Falls, Inc., which held certain property in its own name, affiliated with the Evangelical Lutheran Church of America (ELCA) denomination. In 2010, seventy-one percent of members voted to terminate Faith Lutheran’s affiliation with ELCA. Thereafter, the majority continued as Faith Lutheran, and approximately half of the minority formed the group that would become New Hope Lutheran Ministry. New Hope subsequently filed an action seeking a declaration that the minority was the rightful owner of all church property, including property held by the Foundation for the Endowment of Faith Lutheran Church, Inc. The district court determined that New Hope was entitled to all Faith Lutheran property and all property held by the Foundation. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) correctly determined that New Hope was entitled to property held by Faith Lutheran because the ninety percent super-majority necessary for Faith Lutheran to retain the property under its constitution was not obtained; but (2) erred in holding that New Hope was entitled to the Foundation’s property because New Hope failed to prove that an express trust existed over the Foundation’s property in favor of the church members. View "New Hope Lutheran Ministry v. Faith Lutheran Church of Great Falls, Inc." on Justia Law

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C.R. Weaver formed Mikart Transport, LLC in January 2011. At that time, the articles of organization named Weaver and Michael Smith as members or managers. In March 2011, Smith submitted a credit application with Tri-County Implement, Inc. After Smith failed to pay Tri-County for work it performed on two vehicles, including a Volvo semi-truck titled in Weaver's name, Tri-County refused to release the Volvo from its possession pursuant to its asserted agisters' lien on the vehicle. Weaver subsequently filed a complaint against Tri-County. In response, Tri-County filed a counterclaim against Weaver and a third-party complaint against Mikart. The district court entered judgment against Mikart, ordering it to pay for the work it performed, and awarded Tri-County attorney fees and costs. The court also held Mikart, Smith, and Weaver jointly and severally liable for these amounts. The Supreme Court reversed the portion of the district court's imposition of personal liability on Weaver for the work performed on the two vehicles, as there was no basis to hold Weaver individually liable for the obligations of Mikart to Tri-County. Remanded. View "Tri-County Implement, Inc. v. Weaver" on Justia Law

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Bank and Lumber Company had business and financial relationships with Sawmill. A few years into its operation, Sawmill began experiencing serious financial difficulties. Sawmill defaulted on approximately $1.4 million in loan obligations to Bank and owed Lumber Company approximately $900,000. Proceedings were initiated in bankruptcy court and district court. While the cases were pending, Sawmill was destroyed by fire. Bank recovered approximately $980,000 from Sawmill's insurance proceeds. In a subsequent case between Bank and Lumber Company, the jury determined that neither Bank nor Lumber Company was entitled to recover damages from the other. The Supreme Court affirmed, holding that the district court did not abuse its discretion in refusing to admit into evidence a particular letter written by the Bank president. View "H.E. Simpson Lumber Co. v. Three Rivers Bank of Mont." on Justia Law