Burcham v. Unison Bancorp, Inc.

• Decision Date: 26 September 2003
• Docket Number: No. 88,582.,88,582.
• Citation: 77 P.3d 130,276 Kan. 393
• Parties: J. THOMAS BURCHAM; JOHN D. HUNKELER, M.D.; J. PETER GATTERMEIR, as Trustee of the J. Peter Gattermeir Revocable Trust, Laura C. Gattermeir Revocable Trust, and Amy S. Gattermeir Revocable Trust; BARBARA J. GATTERMEIR, as Trustee of the Barbara J. Gattermeir Revocable Trust; THOMAS A. McDONNELL; and JEAN WEITKAMP McDONNELL, Appellants, v. UNISON BANCORP, INC., and STEPHEN D. BUNTEN, Appellees.
• Court: Kansas Supreme Court

276 Kan. 393

77 P.3d 130

J. THOMAS BURCHAM; JOHN D. HUNKELER, M.D.; J. PETER GATTERMEIR, as Trustee of the J. Peter Gattermeir Revocable Trust, Laura C. Gattermeir Revocable Trust, and Amy S. Gattermeir Revocable Trust; BARBARA J. GATTERMEIR, as Trustee of the Barbara J. Gattermeir Revocable Trust; THOMAS A. McDONNELL; and JEAN WEITKAMP McDONNELL, Appellants, v. UNISON BANCORP, INC., and STEPHEN D. BUNTEN, Appellees.

No. 88,582.

Supreme Court of Kansas.

Opinion filed September 26, 2003.

John L. Vratil, of Lathrop & Gage, L.C., of Overland Park, argued the cause, and C. David Barrier, was with him on the briefs for appellants.

Michael E. Waldeck, of Niewald, Waldeck & Brown, P.C., of Kansas City, Missouri, argued the cause, and Laura T. Goettsch, of the same firm, was with him on the brief for appellee Unison Bancorp, Inc.

Spencer J. Brown, of Deacy & Deacy, L.L.P., of Kansas City, Missouri, argued the cause, and Dale L. Beckerman, of the same firm, was with him on the brief for appellee Stephen D. Bunten.

The opinion of the court was delivered by

LUCKERT, J.:

Plaintiffs, minority stockholders of Unison Bancorp, Inc. (Unison), filed a four-count petition alleging that Unison breached a Stockholders' Agreement; that Unison and Stephen D. Bunten, Unison's president and a member of the board of directors, tortiously interfered with a contract for sale of plaintiffs' Unison shares to Gold Banc, Inc. (Gold); that Unison and Bunten tortiously interfered with plaintiffs' business expectancy in that sale; and that Unison and Bunten breached a fiduciary duty owed to plaintiffs. Plaintiffs appeal from the district court's order denying them summary judgment on the first count and granting summary judgment in favor of the defendants on all four counts.

We affirm the trial court's decision to grant defendants' and deny plaintiffs' motions for summary judgment on Count I, breach of contract, and to grant defendants' motion for summary judgment on Count II, tortious interference with a contract. We also affirm the trial court's decision to grant summary judgment in favor of Unison on the breach of fiduciary duty claim, Count IV. However, we reverse the granting of defendants' motions for summary judgment on the claim of interference with plaintiff's business expectancy, Count III, and on the breach of fiduciary duty claim against Bunten, Count IV.

FACTS

Plaintiffs J. Thomas Burcham, Dr. John Hunkeler, Peter and Barbara Gattermeir (as trustees), and Tom and Jean McDonnell are minority stockholders of defendant Unison Bancorp, Inc., collectively owning a total of 8.07% of Unison's shares of common stock. Burcham also holds an option to purchase an additional 2,500 shares. Unison is a bank holding company which owns all the outstanding shares of stock of Western National Bank. Defendant Stephen D. Bunten is president and chief executive officer of Unison and Western National Bank.

Malcolm Aslin was instrumental in the formation of Unison. Aslin was initially chairman of the board of Unison, but left that position in 1999 to serve as president of another holding company, Gold Banc, Inc. Aslin owns 2.75% of Unison's outstanding stock.

Gold became a Unison stockholder in 1998 when Unison obtained financing from Gold in order to acquire the Burlington Bank. Gold owns 4.62% of Unison's outstanding stock.

All of the plaintiffs are parties to a Stockholders' Agreement with Unison. The Stockholders' Agreement and Offering Circular describing it explain the restrictions on a stockholder's transfer of shares. Additionally, the Stockholders' Agreement requires a stock-holder who plans to transfer stock to notify Unison and the other stockholders. Upon receipt of the notice the company has the option to purchase the shares. If the company does not exercise the option, the other stockholders may exercise their options. There are further restrictions if the sale results in change of control.

The Stockholders' Agreement defines a "change of control" as any person or group of persons acquiring 35% or more of the outstanding shares of Unison. Under section 2.7(b) of the Stockholders' Agreement, if a proposed sale involves a change of control, all of the other stockholders must be given the opportunity to sell their shares at the same price and pursuant to the same terms and conditions or a majority of the stockholders must approve the sale.

Since its formation in 1995, several offers have been made to purchase Unison. Plaintiff Burcham, who controls Missouri Bank and Trust, made two offers to purchase Unison before 1998, but both offers were refused. Gold also made two offers to purchase Unison, one in 1998 while Aslin was on the Unison board and one in 1999 after Aslin had left Unison to join Gold. The Unison board unanimously rejected both offers. According to Aslin, after one of the offers from Unison, Bunten met with Aslin and requested a 5-year personal compensation package from Gold if there was an acquisition by Gold. Aslin declined the proposal.

In 1999, after Unison had rejected Gold's second offer, plaintiff Burcham contacted Aslin to see if Gold would be interested in purchasing his Unison shares. After Burcham and Aslin reached an agreement, the other plaintiffs who were friends of Burcham asked to be included in the deal, and Aslin agreed. By letter dated September 17, 1999, Aslin offered $21 per share for all of plaintiffs' Unison stock including the 2,500 shares on which Burcham held an option.

In the letter, Gold confirmed that the purchase of plaintiffs' shares would not result in a "change of control" as defined in the Unison Stockholders' Agreement. The letter also provided that the sale was subject to several conditions including that (1) Unison and its other stockholders did not exercise their rights to purchase the stock as provided in the Stockholders' Agreement, (2) Gold obtained approval of the Federal Reserve for the acquisition of the Unison shares, (3) the representations and warranties made by the plaintiffs remained true and correct at the closing date, and (4) no material adverse change in Unison or Western National Bank occurred.

The plaintiffs notified Unison and provided written copies of their letter agreements to sell their Unison stock to Gold. Neither plaintiffs nor Unison ever notified the other stockholders of the proposed sale.

Unison's counsel Edward Dolson responded to plaintiffs by letter, informing them that Unison had no obligation to exercise its right to purchase their shares because Gold's offer was not a "fixed, unconditional offer." Dolson stated that Unison would not consider whether to exercise its right of first refusal until Gold had obtained Federal Reserve approval and had waived the "material adverse change" condition of the agreement.

The minutes of the November 1999 board meeting show that Bunten reported on Gold's conditional offer to buy plaintiffs' shares. Bunten informed the board that, because the offer was conditioned upon Federal Reserve approval, no action by Unison was required. The January 2000 board minutes show that Bunten reported Gold's application to the Federal Reserve for approval of its purchase of the Unison shares. Bunten recommended that if the Federal Reserve approved the transaction and Unison was faced with the decision whether to buy the shares that Unison not do so. The board unanimously agreed to adopt that policy. In general, the board believed the $21 price per share to be too high.

Shortly after receiving notice from the plaintiffs of the proposed sale of their shares to Gold, Dolson contacted a St. Louis attorney to draft a stockholders' rights plan or "poison pill." According to the summary of the plan, the purpose was to protect the company and its stockholders from unwanted takeover bids. When the plan's provisions are triggered, all of the stockholders, other than the takeover bidder, are issued rights to acquire additional stock for nominal consideration. This has the effect of shifting negotiations regarding the transaction from the individual stockholders to the board. Under the plan adopted by Unison, the triggering event was a person acquiring or agreeing to acquire 20% ownership of the company. According to Dolson, the board intentionally set the trigger point high enough so that the plan's provisions would not be triggered by the proposed sale to Gold of the plaintiffs' 8% ownership.

Unison adopted its Stockholder Rights Plan (Rights Plan), or poison pill, on December 16, 1999. Shortly thereafter, Unison informed its stockholders of the new Rights Plan by letter. Several Unison directors testified in their discovery depositions that the board adopted the Rights Plan, in part, because of a perception that Gold intended a hostile takeover of Unison. At least one director believed Gold was planning to file an application for Federal Reserve approval which would involve a change of control of Unison. However, according to the deposition testimony of the directors, the Rights Plan was not intended or expected to frustrate Gold's purchase of only the plaintiffs' 8% ownership.

On January 12, 2000, Gold filed an application for Federal Reserve approval of a proposal to acquire at least 33.33% of Unison's outstanding stock. The application also stated that Gold was seeking approval of "the acquisition by [Gold] of direct ownership to vote 100% of the voting shares" of Western National Bank and Unison. However, the notice published in the Federal Register stated that Gold had applied to acquire 33.33% of the voting shares of Unison and thereby to acquire indirect control of Western National Bank.

Former Gold board member, Keith Bouchey, testified in his deposition that Gold applied for 33 1/3% so that Gold would not have to file another application if Unison stockholders other than plaintiffs were willing to sell. Aslin had prepared a list of other Unison stockholders from whom more stock might be acquired. The list was...