Laske v. Krueger
| Docket Number | WD85173 |
| Decision Date | 10 January 2023 |
| Parties | TIM LASKE, INDIVIDUALLY AND ON BEHALF OF OTHERS, Appellant, v. MARK KRUEGER, WERNER SUBLETTE, RON PHILLIPS AND CHARLES ZEMAN, Respondents. |
| Court | Missouri Court of Appeals |
Appeal from the Circuit Court of Adair County, Missouri The Honorable Tracey A. Mason-White, Judge
Before: Gary D. Witt, Chief Judge, Presiding, Mark D Pfeiffer, Judge and John Torrence, Special Judge
Tim Laske ("Laske"), individually and on behalf of others similarly situated, appeals the Circuit Court of Adair County's ("trial court") judgment granting the motion to dismiss filed by Mark Krueger, Werner Sublette, Ron Phillips, and Charles Zeman (collectively "Respondents"). On appeal, Laske argues the trial court erred in dismissing his petition because Laske's claims against Respondents are direct claims, not derivative claims, in that the alleged breach by Respondents harmed the shareholders only, not the corporation, and only the shareholders will be entitled to recover as damages the difference between the price Respondents negotiated for their stock and what was available in the market. On appeal, Respondents filed a motion to dismiss for lack of appellate jurisdiction that was taken with the case. We deny Respondents' motion to dismiss the appeal and affirm the judgment of the trial court.
Factual and Procedural History[1]
As alleged in the petition, Laske was a shareholder of Bancorp, Inc. ("Bancorp") and owned 263 shares of Bancorp stock, representing 3.16% of the issued shares. In fall of 2016, the Bancorp Board of Directors ("Board") began exploring a sale of Bancorp. Connections Bancshares, Inc. ("Connections") was the first potential buyer and made an initial offer to purchase all issued stock of Bancorp for $963 per share. On September 13, 2016, Respondents organized a meeting of Bancorp's top shareholders at which Connections presented a Letter of Intent ("LOI") to purchase all the outstanding stock of Bancorp. The proposal presented two choices for the shareholders: the shareholders could sell their stock outright for a purchase price of $1,025 per share, or the shareholders could opt to buy into Connections stock by exchanging their Bancorp stock at $910 per share for a minimum of 1,200 shares of Connections stock at the price of $115 per share. The LOI also contained a "no shop" provision, which stated that "Sellers agree that it will not negotiate or discuss the sale of the Bank assets with another party until" a purchase agreement has been executed. Connections gave Bancorp shareholders until October 7, 2016, to accept the terms of the LOI.
Bancorp's shareholder agreement contains a "Drag-Along Option," which states that if shareholders owning 70% or more of the outstanding shares of stock agree to sell their stock to a third party or merge with or into another entity, those wishing to sell or merge can require all shareholders to participate in the transaction and forfeit their option rights. Respondents moved forward with Connections's offer and arranged meetings with shareholders to argue in favor of the offer. In doing so, Respondents withheld information from shareholders, including information about other interested buyers and other potential offers. Respondents were aware of at least three other banks interested in submitting higher bids to Bancorp, but none of the other potential buyers was allowed to conduct due diligence. On November 18, 2016, after Connections's LOI had expired, one potential buyer, Alliant Bank, offered to purchase Bancorp for $8,750,000, or $1,050 per share. Alliant Bank later increased its offer to $9,250,000, or $1,109 per share.
Bancorp received legal advice that a formal process to explore the other offers would be advisable after Connections's LOI had expired. Bancorp's president, Sam Berendzen ("Berendzen"), called a special meeting of shareholders on November 28, 2016, and explained that Bancorp's attorney had suggested starting the process over to consider other potential buyers. Berendzen explained that the organization and initial process utilized in the potential sale of Bancorp was unsatisfactory and legally unsound. However, Respondents pressed the Connections offer on the shareholders by urging them to ignore potential buyers and commit to only dealing with Connections. Although the majority of shareholders present at the meeting voted in favor of starting the process over to consider other offers, the minutes of the meeting reflect that 54% of the shares allegedly represented at the meeting voted to continue to negotiate exclusively with Connections. This vote count was accomplished by adding a "yes" vote from the largest shareholder who was not present at the meeting, but no other absent shareholders' votes were sought or added to the count. Bancorp then focused exclusively on Connections's offer and did not solicit any other offers after the November 28, 2016, meeting. Respondents withheld information from the shareholders regarding the other proposals made to purchase Bancorp. Respondents also excluded from meetings the one director who objected to proceeding exclusively with Connections.
On February 2, 2017, the Board announced that 70% of shareholders had signed a stock purchase agreement with Connections, and, pursuant to the "Drag-Along Option," all shareholders would be forced to accept Connections's terms. Respondents personally benefitted from the agreement with Connections, and several members of the Board secured positions on the Connections board of directors. The structure of the agreement allowed Respondents to benefit from the stock-exchange option, but many shareholders did not own enough stock to participate in the exchange option without adding additional funds. In the final agreement, Connections purchased Bancorp's stock for $1,050 per share. The last proposal from Alliant Bank offered to buy Bancorp's stock for $1,109 per share.
Laske filed a class action petition on behalf of all Bancorp stockholders who sold their Bancorp stock to Connections. In the petition, Laske alleged Respondents breached their fiduciary duties of care and loyalty to act in the best interest of the shareholders by securing a transaction that offered the best value available to the shareholders, and Respondents breached their fiduciary duties through self-dealing by securing substantial compensation as members of the Connections board of directors. Laske alleged that he and the class were directly harmed by Respondents' actions. Respondents filed a motion to dismiss, which was granted by the trial court, because Laske lacked standing to bring a direct action against Respondents. The trial court held that Laske must bring a derivative action against Respondents on behalf of the corporation. The trial court issued an order granting Respondents' motion to dismiss on October 27, 2021, and issued its judgment on January 31, 2022. Laske filed another civil action in the trial court asserting the same claims against Respondents as a derivative action (Laske II) on November 21, 2021. Laske voluntarily dismissed his petition in Laske II on September 12, 2022.
On appeal, Laske argues the trial court erred in granting Respondents' motion to dismiss for lack of standing because Laske had standing to bring a direct suit against Respondents because only the shareholders, not the corporation, were harmed by Respondents' breaches of fiduciary duties. Respondents filed a motion to dismiss Laske's appeal for lack of appellate jurisdiction.
"The standard of review for an appeal from a dismissal for lack of standing is de novo." Courtright v. O'Reilly Automotive, 604 S.W.3d 694, 699 (Mo. App. W.D. 2020). "A motion to dismiss for failure to state a claim is solely a test of the adequacy of the plaintiff's petition." Dunn v. Precythe, 557 S.W.3d 454, 456 (Mo. App. W.D. 2018) (internal quotations omitted). "The petition states a cause of action if it sets forth any set of facts that, if proven, would entitle the plaintiffs to relief." Id. (Internal quotation omitted).
As an initial matter, we must first determine whether we have jurisdiction to decide the merits of Laske's appeal. Respondents argue that, although the trial court issued a judgment, it did not meet the requirements of a final judgment for purposes of appeal. We disagree.
"Any involuntary dismissal shall be without prejudice unless the court in its order for dismissal shall otherwise specify." Rule 67.03.[2] "The general rule is that a dismissal without prejudice is not a final judgment and, therefore, is not appealable." Walters Bender Strohbehn & Vaughan, P.C. v. Mason, 316 S.W.3d 475 477 (Mo. App. W.D. 2010). "An exception to this general rule is that an appeal can be taken where the dismissal has the practical effect of terminating the litigation in the form presented by the plaintiff." Id. at 477-78. "If the dismissal was such that refiling of the petition at that time would be a futile act, then the order of dismissal is appealable." Id. at 478. "[W]hen the effect of the order is to dismiss the plaintiff's action and not the pleading merely, then the judgment entered is final and appealable because the dismissal amounts to an adjudication on the merits." Id. "[D]ismissals without prejudice have been held appealable in such cases where the dismissal was based on statutes of limitations, theories of estoppel, a plaintiff's lack of standing, failure of the petition to state a claim where the plaintiff chose not to plead further, failure of the plaintiff in a medical malpractice action to file the health care provider affidavit...
To continue reading
Request your trial