Chain v. Ormonde Plantation Inc.
| Decision Date | 31 March 2020 |
| Docket Number | NO. 2017-CA-01733-COA,2017-CA-01733-COA |
| Citation | 303 So.3d 53 |
| Parties | Bobby Lee CHAIN Jr., in his capacity as the Executor of the Estate of Betty Chain, Deceased, Appellant v. ORMONDE PLANTATION INC., Charles T. Finnegan, Kenny Duff Jr., and Alben N. Hopkins, Appellees |
| Court | Mississippi Court of Appeals |
ATTORNEYS FOR APPELLANT: SAMUEL S. McHARD, PAUL MARION ANDERSON
ATTORNEYS FOR APPELLEES: ROBERT T. SCHWARTZ, CHRISTIAN J. STRICKLAND, EDGAR HYDE CARBY
BEFORE BARNES, C.J., WESTBROOKS AND LAWRENCE, JJ.
BARNES, C.J., FOR THE COURT:
¶1. Betty Chain (Chain) filed a complaint in the Adams County Chancery Court against Ormonde Plantation Inc. (Ormonde), a closely-held Mississippi corporation, and the majority shareholders of Ormonde: Charles T. Finnegan, Kenny Duff Jr., and Alben N. Hopkins. She filed the action to judicially dissolve the corporation, asserting related claims of conspiracy and requesting partition and a declaratory judgment. Chain's husband, Bobby L. Chain, had been a shareholder, but after he passed away, she became the successor-in-interest to his share. The primary asset Ormonde owned was a tract of real property in Adams County utilized for recreation and hunting.
¶2. The complaint arose when Chain desired to sell her share of Ormonde contrary to the procedure described in the Shareholders' Agreement (Agreement). Chain sued to dissolve the corporation because she alleged the Agreement regarding the buyout of her share was oppressive. In response, Ormonde filed a motion to dismiss the complaint based on numerous arguments. The chancery court granted the motion, and Chain appealed. Chain subsequently passed away during the pendency of this appeal, and this Court ordered that Bobby Lee Chain Jr. (Chain Jr.) be substituted as a party. We find that the complaint stated a claim that the Agreement was oppressive as applied. Accordingly, we reverse and remand for proceedings consistent with this opinion.
¶3. Ormonde was incorporated in 1987 and has been operating as a hunting, fishing, and recreational organization used by shareholders and their guests. The primary asset Ormonde owned was a tract of real property consisting of 1,841 acres located in Adams County, Mississippi. In 1999, the then shareholders of Ormonde, including Chain's predecessor-in-interest, Bobby L. Chain, executed the Agreement and agreed to abide by the corporate bylaws (Bylaws).
¶4. In 2014, Bobby L. Chain passed away, and his wife acquired his interest in Ormonde. At the time, the corporation was held by four shareholders, each having a twenty-five percent interest in the corporation: Chain, Finnegan, Duff, and Hopkins. It is undisputed Chain was not a direct owner of the property or a tenant in common, and she never saw or read the executed Agreement. On March 2, 2017, Chain sent a letter to Ormonde's president, Finnegan, requesting that her letter be accepted as "notice of [her] intention and an effort to fairly resolve [her] stock interest in Ormonde Plantation, Inc." She requested that the shareholders agree to an appraisal of the property so that she could receive fair compensation for her twenty-five percent share due to her failing health. Chain wrote:
I want to request that the shareholders agree on an appraiser, that a proper appraisal be done of the property, and that I am paid accordingly. The current method used to determine the value is totally subjective, without validation, and unfair. After thirty years, it is time to have a proper appraisal done so that each shareholder can know the true value of the land. This appraisal will either confirm or change the value determined by the current method, and the value confirmed by properly recognized methods should stand.
¶5. On March 14, 2017, the majority shareholders advised Chain via telephone that there would be a "regular" shareholders meeting held seven days later on March 21, 2017.1 This was not an annual meeting.2
¶6. On March 21, 2017, a "regular" shareholders' meeting was held, and Chain's letter was discussed. Minutes of the meeting reflect that Chain's son, Chain Jr., stopped by the meeting before it began to discuss matters pertaining to his mother. Chain Jr. stated he advised the shareholders that his mother had received a purchase offer of $1.5 million for her one-quarter share of Ormonde property. Under the Agreement, however, if Chain wanted to dispose or sell her share of Ormonde, she had to first offer to sell it to the other shareholders at the price they set at their last annual meeting. Pertinent parts of the Agreement are the following paragraphs:
The other shareholders claimed the $1.5 million was "more than it was worth," and they refused to permit Chain's acceptance of the offer, which was then withdrawn. Instead, the shareholders allegedly performed an evaluation of the stock under the procedure of the Bylaws and Agreement. The shareholders determined the future value of the stock to be $900,000. Although the other shareholders claimed the valuation was done according to the Agreement's procedures, they do not state the amount was set at a prior annual meeting for the entire year; instead, the amount appears to have been set just to deal with Chain's sale.
¶7. Next, Chain's letter and her buyout request were discussed. The shareholders agreed that the buyout was governed by the Bylaws and Agreement. The minutes quoted the pertinent part of paragraph three of the Agreement, which provided that if the shareholder desired to sell his share of stock, he should first offer to sell it to the corporation at the price determined by paragraph seven. The minutes stated that "[a]fter thorough discussion, it was unanimously agreed that Ormonde had no alternative but to follow the rules and regulations with regard to the evaluation and buyout requirements" established under the Bylaws and Agreement. The shareholders determined the buyout price for Chain's share was $900,000.3 On March 23, 2017, Ormonde's corporate secretary, Hopkins, sent Chain and the two other shareholders a cover letter attaching the minutes of the March 21 shareholders' meeting. Ormonde contends this mailing gave Chain notice of its intent to purchase her stock.
¶8. On May 1, 2017, Chain sued Ormonde and its majority shareholders for corporate dissolution, conspiracy, partition, and a declaratory judgment finding the Agreement void. Attached to the complaint was the Agreement, Bylaws, a boundary-line agreement, the March 2, 2017 letter from Chain to Ormonde's president, and the March 21 minutes. Chain alleged that the shareholders violated their fiduciary duties by illegally and fraudulently oppressing Chain as a minority shareholder in violation of the Business Corporation Act's section on judicial dissolution of a corporation, Mississippi Code Annotated section 79-4-14.30(a)(2)(ii) (Rev. 2013), "in a blatant attempt to improperly squeeze out/freeze out Betty." Chain also alleged damages as a result of the shareholders conspiring against her, and she requested the court to partition the property as a result of their misconduct. Finally, Chain requested a declaratory judgment stating the Agreement is void.
¶9. In June 2017, Ormonde answered the complaint and filed a motion to dismiss, claiming Chain's complaint must be dismissed because of an improper summons and complaint, lack of standing to pursue a partition suit as well as the other claims, and failure to state a claim for conspiracy. Additionally, Ormonde argued Chain's claims were barred by Mississippi Code Annotated section 79-4-14.34 (Rev. 2013), the statute governing election to purchase shares in lieu of dissolution; the existing Agreement; and the statute of limitations, waiver, laches, and the manifest assent of Chain or Chain's...
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