980 F.2d 1217 (8th Cir. 1992), 92-1076, Unigroup, Inc. v. O'Rourke Storage & Transfer Co.

Docket Nº:92-1076.
Citation:980 F.2d 1217
Party Name:UNIGROUP, INC., Appellee, v. O'ROURKE STORAGE & TRANSFER COMPANY; Appellant, Ransler Moving Systems; H.G. Bauer Moving & Storage, and Barton J. Winokur, Intervenors/Appellants.
Case Date:December 03, 1992
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

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980 F.2d 1217 (8th Cir. 1992)

UNIGROUP, INC., Appellee,



Ransler Moving Systems; H.G. Bauer Moving & Storage, and

Barton J. Winokur, Intervenors/Appellants.

No. 92-1076.

United States Court of Appeals, Eighth Circuit

December 3, 1992

Submitted Sept. 18, 1992.

Steven B. Feirson, Philadelphia, Pa., argued (Nancy J. Bregstein, Marshall Walthey, Mark A. Arnold and Matthew D. Menghini, on the brief), for appellant.

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Thomas E. Wack, St. Louis, Mo., argued (Abraham C. Reich, on the brief), for appellee.

Before McMILLIAN, WOLLMAN and LOKEN, Circuit Judges.

McMILLIAN, Circuit Judge.

Appellants O'Rourke Storage & Transfer Co. (O'Rourke), Ransler Moving Systems (Ransler), H.G. Bauer Moving & Storage (Bauer), and Barton J. Winokur (Winokur), as trustee for The Sidney and Marie Harrison Trust, record owner of stock formerly owned by Walker Transportation Co., appeal from an order entered in the United States District Court 1 for the Eastern District of Missouri, granting partial summary judgment 2 in favor of appellees UniGroup, Inc., and its directors. The district court held that under the plain language of the corporate by-laws appellees had no duty to pay "fair value," to repurchase UniGroup stock. UniGroup, Inc., v. O'Rourke Storage & Transfer Co., No. 89-2122-C-5, slip op. at 11-13 (E.D.Mo. Aug. 2, 1991) (memorandum). For reversal, appellants argue the district court erred in (1) construing the corporate by-law governing the repurchase of stock as a matter of law rather than submitting it to the jury, and (2) holding, as a matter of law, that there is no fiduciary duty to pay more than book value to repurchase stock. For the reasons discussed below, we affirm the order of the district court.


UniGroup incorporated as United Van Lines, Inc., in 1947, is a closely held corporation organized under the laws of the State of Missouri. It is wholly owned and controlled by 133 agents who are the sole shareholders. 3 Each shareholder acquires an equal 45 share voice in the corporate governance and in the election of directors and may participate in UniGroup's permanent lease fleet. Its eighteen directors are elected every two years and there are no outside directors. UniGroup does business through its network of independent moving and storage agents, all actively engaged in their own separate businesses. The agents provide UniGroup's sales and hauling services and own or lease virtually all of the household goods moving vans and rolling stock which bear UniGroup's name and logo.

In 1962, in an effort to maintain ownership in the hands of those who produce its revenue, the shareholders adopted a stock redemption provision. The provision, which was added to the corporate by-laws, provided in part that:

Any stockholder desiring to sell, transfer, or otherwise dispose of his shares of stock shall offer the same for repurchase by this Company or by someone designated by the Board of Directors of this Company at the book value thereof as shown on the books of the Company as of the end of the preceding calendar or six-months period, ending each June 30 and December 31.

On March 11, 1971, the shareholders amended that by-law to provide that any repurchase would be "at such price as the Board of Directors may from time to time determine but in no event less than the book value thereof." In 1987, the articles of incorporation were amended to require the corporate repurchase of stock whenever the shareholder ceased to be an active agent. That same year the by-laws were again amended to provide that the repurchase price could never be less than the amount paid for the stock:

The purchase price for any such shares shall be such price as the Board of Directors may from time to time determine but in no event less than the greater of

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(i) the book value thereof as shown on the audited financial statements of the Corporation as of the end of the fiscal year most recently completed prior to the date of purchase, or (ii) the price paid to the Corporation in connection with the original issuance of such shares.

Although UniGroup has enjoyed substantial growth and record earnings, 4 it has consistently refused to pay more than book value for the repurchase of stock except on one occasion when it paid a 50% premium. 5

In 1989, Winokur filed suit in the District Court for the Eastern District of Pennsylvania challenging UniGroup's attempt to force repurchase of the trust's stock at book value; the complaint alleged the book value was substantially less than fair value. In October 1989 UniGroup filed suit in Missouri state court against O'Rourke, seeking to force O'Rourke to sell its shares to UniGroup at book value. O'Rourke removed the action to the District Court for the Eastern District of Missouri and filed an answer and counterclaim. Winokur's suit was transferred to the District Court for the Eastern District of Missouri. Ransler, 6 Bauer 7 and Winokur then intervened in the O'Rourke action and filed nearly identical counterclaims against UniGroup and its directors, all seeking fair value for their shares. Winokur's lawsuit was consolidated with the O'Rourke action for purposes of discovery and was in effect dismissed without prejudice.

On August 31, 1990, after fifteen months of substantive discovery, appellees filed a motion for summary judgment on counts I, II and VI of appellants' counterclaims. Count I sought a declaration that the corporate by-law governing forced repurchases is illegal and unenforceable as applied by UniGroup; counts II and VI challenged the purchase price at book value as unfair and the seizure of shares as conversion. The district court heard oral arguments and considered written memoranda filed by the parties.

On August 2, 1991, the district court found that the plain language of the corporate by-law governing forced repurchases did not create a legal duty to pay more than book value and granted summary judgment in favor of appellees on counts I, II and VI. Slip op. at 11. Although appellants conceded in their opposition to the motion for summary judgment that the by-law is valid, they challenged its interpretation and application by UniGroup. The district court, however, rejected appellants' claim that the language of the by-law created a fiduciary duty on the part of UniGroup to pay "fair value." Id. at 11. The district court also denied appellants' motions for class certification and motions to supplement the record. Id. On December 2, 1991, the district court certified its partial summary judgment as a final judgment pursuant to Fed.R.Civ.P. 54(b). This appeal followed.



This case comes to us following the entry of summary judgment in district court. We review the district court's grant of summary judgment de novo, United States ex rel. Glass v. Medtronic, Inc., 957 F.2d 605, 607 (8th Cir.1992), and apply the same standards used by the district court. Thelma D. by Delores A. v. Board of Educ., 934 F.2d 929, 932 (8th Cir.1991). The question before the district court and this court on appeal is whether the record, when viewed in the light most favorable to

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the non-moving party, shows no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); see, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986);...

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