Forbes v. Goldenhersh
| Decision Date | 17 November 1994 |
| Docket Number | No. 93CA1951,93CA1951 |
| Citation | 899 P.2d 246 |
| Parties | Alan K. FORBES, an individual; Michael T. Murray, an individual; Renee Romain, as the Personal Representative of the Estate of Joseph E. Romain, an individual; and Doyle E. Young, an individual, suing derivatively as shareholders on behalf of Enervest Corporation, a Colorado corporation; and Alan K. Forbes, individually, Plaintiffs-Appellants, v. Randy S. GOLDENHERSH, George W. Holbrook, Jr., Bradley Resources Company, Hot Springs Power Company and Nevada Geothermal Power Partners, L.P., Defendants-Appellees. . V |
| Court | Colorado Court of Appeals |
Dixon & Snow, P.C., Jerre W. Dixon, Rod W. Snow, Steven Janiszewski, Denver, for plaintiffs-appellants.
Biermann & Fretz, P.C., Joseph H. Fretz, Dirk T. Biermann, Denver, for defendants-appellees.
Opinion by Judge TAUBMAN.
In this action challenging the validity of the transfer of a corporate asset, plaintiffs, Alan K. Forbes, Michael T. Murray, Renee Romain, as the personal representative of the estate of Joseph E. Romain, and Doyle E. Young, suing derivatively as shareholders on behalf of Enervest Corporation, and Alan K. Forbes, individually, appeal the trial court's judgment entered in favor of defendants, Randy S. Goldenhersh, George W. Holbrook, Jr., Bradley Resources Company, Hot Springs Power Company, and Nevada Geothermal Power Partners. We affirm.
This appeal involves one of five cases that were consolidated at trial. Enervest was organized as a Colorado corporation in 1987 to create, manage, buy, and sell energy and power generating projects. Holbrook and Goldenhersh (the Holbrook group) controlled a majority of the Enervest shares and held two of the six positions on the board of directors. Conversely, Forbes, Murray, Romain, and Young (the Forbes group) represented only a minority of the Enervest shares but held four of the six director positions. The Forbes group brought a shareholder's derivative suit against the Holbrook group to set aside the transfer of an opportunity, known as "the Munson opportunity," from Enervest to the Holbrook group and its assigns, or for damages for the alleged wrongful transfer.
Prior to trial, the court entered partial summary judgment for the Forbes group on its claim that the transfer was not validly authorized by the directors or the shareholders of Enervest. The trial court granted the partial summary judgment motion because the transfer was not made in accordance with Enervest's by-laws and the Holbrook group had not provided any evidence that the informal approval of the transfer was consistent with the customs and practices of the corporation. On the first day of trial, the court denied a motion by the Holbrook group to reconsider the partial summary judgment entered against it for the same reasons. However, in its final judgment, the trial court reconsidered its partial summary judgment ruling because it concluded that the Holbrook group had provided sufficient evidence to demonstrate that the transfer, although not in compliance with the by-laws, was consistent with the customs and practices of the corporation. The Forbes group claims that it relied on the partial summary judgment ruling and, thus, was prejudiced because it did not know the court would hear evidence on the validity of the transfer.
The trial court upheld the transfer of the Munson opportunity on multiple, alternative bases: the transfer was validly authorized by informal corporate action; the transfer was fair to Enervest and its shareholders; there was no "corporate opportunity"; and the Forbes group's claims were barred by laches. Accordingly, if we agree with the trial court on any ground, we must affirm its decision.
Enervest had two major undertakings, one of which was the Munson opportunity. A company known as Munson Geothermal, Inc., owned contract and leasehold rights to develop geothermal resources in Nevada. Munson Geothermal went into bankruptcy and its development of geothermal resources was stayed pending approval from the bankruptcy court.
In May 1989, Enervest began exploring the possibility of acquiring the Munson opportunity. Enervest made a proposal to the bankruptcy court to obtain the rights to develop the Munson opportunity. In October 1989, the proposal was approved. By March 1990 Enervest was nearly insolvent. To acquire and develop the opportunity, it was critically important for Enervest to maintain a high level of credibility as an energy project developer. All the directors believed that, in order to develop the Munson opportunity, it would have to be conveyed out of Enervest and into another entity. All the directors also recognized that substantial new amounts of capital were needed to continue with development of the Munson opportunity and that Enervest had no capital for that purpose.
On March 20, 1990, a meeting of the Enervest directors and shareholders was held by conference call. Because of the locations of the various directors and shareholders it had been a regular policy and practice of Enervest from its inception to hold shareholders and/or directors meetings by conference telephone call. At the March 20 meeting, Holbrook suggested that Bradley Resources, an entity with which he was affiliated, should buy the Munson opportunity. He proposed that Bradley pay Enervest the amount of expenses it had put into developing the Munson opportunity plus a net profit interest. The other directors and shareholders asked Holbrook to put his proposal in writing so that they could consider it further. Since they could not resolve all the issues during that meeting, the directors and shareholders agreed to continue the meeting until March 30, 1990. The directors and shareholders met on that date, but failed to make a final decision.
At that meeting, Holbrook estimated that Enervest had spent $30,000 on the Munson opportunity to date. Therefore, Bradley proposed to purchase the right to develop it for $30,000 ($20,000 in cash and a promissory note for $10,000), plus 10 percent of the net profits. None of the directors or shareholders was prepared to vote on the proposal at that time. Consequently, Goldenhersh proposed that he call each director within the next few days to obtain his vote on the Bradley proposal. The directors and shareholders unanimously accepted this method of proceeding.
After the meeting, Goldenhersh contacted Murray, Romain, and Young by telephone to obtain their votes on the final proposal. Goldenhersh then drafted the minutes of the meeting to reflect the final vote in favor of transferring the Munson opportunity from Enervest to Bradley. The trial court found that Murray, Romain, Holbrook, and Goldenhersh voted for the proposal, and that Young voted against it. Goldenhersh did not call Forbes or give him an opportunity to vote because Forbes had previously expressed his opposition to the Bradley proposal both verbally and in writing. Therefore, Goldenhersh recorded Forbes' vote as being against the proposal.
Bradley made payments in accordance with its obligation on the assumption that its proposal had been accepted. After acquiring the Munson opportunity from Enervest, Bradley conveyed it to Holbrook, who in turn conveyed it to the Hot Springs Power Company. The trial court found that, although the Forbes group was dissatisfied with the Bradley proposal, it made no objection to the transfer prior to commencing this litigation.
The trial court also found that, throughout its existence, Enervest had a practice of following corporate formalities at some times and ignoring them at others. The corporation, through its directors and shareholders, had approved these informal procedures, and no one had ever objected to this practice. Activities which were frequently performed informally included meetings by telephone conference, meetings without minutes or other records, making major decisions without minutes or written consents, and insufficient and inadequate meeting notice.
The Forbes group contends that the trial court, having entered partial summary judgment against the Holbrook group on the legality of the transfer of the Munson opportunity from Enervest, erred in considering the evidence on that issue during the trial and in reversing its partial summary judgment in its final judgment. Alternatively, it argues that it was prejudiced when the trial court did not give it notice that the legality of the transfer remained an issue for trial. We perceive no error in the trial court's treatment of the issue.
There is no Colorado case law directly on point. However, when the Colorado and Federal Rules of Civil Procedure are essentially identical, case law interpreting the federal rule is persuasive in analysis of the Colorado rule. Harding Glass...
To continue reading
Request your trial
-
Antolovich v. Brown Group Retail, Inc., 04CA1528.
... ... 60(b)(3), case law interpreting the federal rule is persuasive in analysis of the Colorado rule. See Forbes v. Goldenhersh, 899 P.2d 246, 249 (Colo.App.1994)(C.R.C.P.56); see also Aspen Skiing Co. v. Peer, 804 P.2d 166, 174 (Colo. 1991) (relying on ... ...
-
McDonald v. Zions First Nat'l Bank, N.A.
...court either enters judgment on all the claims at issue, or certifies its order as final under C.R.C.P. 54(b). See Forbes v. Goldenhersh, 899 P.2d 246, 249 (Colo. App. 1994).¶ 36 For example, a party may seek revision of an order granting summary judgment by filing a motion pursuant to C.R.......
-
Jones v. Feiger, Collison & Killmer
...not precluded under the doctrine of the law of the case from revising or reversing its prior order on that issue. See Forbes v. Goldenhersh, 899 P.2d 246 (Colo.App.1994); 6 Moore's Federal Practice, supra, § 56.20. Nevertheless, to avoid creating an unnecessary pitfall for the unwary and, i......
-
Rutt v. Poudre Educ. Ass'n.
... ... Forbes v. Goldenhersh, 899 P.2d 246, 249 (Colo.App.1994) (when there is no Colorado case law directly on point and the pertinent portions of the Colorado ... ...
-
Rule 54 JUDGMENTS; COSTS.
...Constr. & Dev. Co., 44 Colo. App. 499, 619 P.2d 80 (1980); Harding Glass Co. v. Jones, 640 P.2d 1123 (Colo. 1982); Forbes v. Goldenhersh, 899 P.2d 246 (Colo. App. 1994); State ex rel. Salazar v. Gen. Steel Domestic Sales, LLC, 129 P.3d 1047 (Colo. App. 2005). The proper function of a review......
-
Rule 56 SUMMARY JUDGMENT AND RULINGS ON QUESTIONS OF LAW.
...free to reconsider an earlier partial summary judgment ruling absent the entry of judgment under C.R.C.P. 54(b). Forbes v. Goldenhersh, 899 P.2d 246 (Colo. App. 1994). Where summary judgment order reserved until trial on all issues other than the amount of admitted liability, and one of the......
-
Family Business Entities: Preserving Wealth and Minimizing Taxes
...taken by directors valid even though corporation had only two directors instead of three required by statute); Forbes v. Goldenhersh, 899 P.2d 246 (Colo.App. 1994) (verbal approval by four of six with two opposed was valid when votes incorporated into minutes of meeting, even though formal ......
-
Chapter 9 - § 9.1 SUMMARY JUDGMENTS, GENERALLY
...P.2d 441 (Colo. App. 1990); Trans Cent. Airlines v. McBreen & Assocs., 31 Colo. App. 71, 497 P.2d 1033 (1972).[5] Forbes v. Goldenhersh, 899 P.2d 246 (Colo. App. 1994).[6] C.R.C.P. 54(b). [7] C.R.C.P. 56(d).[8] Discovery Land & Dev. Co. v. Colorado-Aspen Dev. Corp., 40 Colo. App. 292, 577 P......