Mason v. Mason
| Decision Date | 13 May 2022 |
| Docket Number | 17 CVS 1724 |
| Citation | 2022 NCBC 24 |
| Parties | JULIE SMITH MASON, Plaintiff, v. RICHARD S. MASON, Defendant. |
| Court | Superior Court of North Carolina |
Davis Hartman Wright, LLP by John Charles Bircher, for Plaintiff Julie Smith Mason. [1]
J.M Cook, P.A. by J.M. Cook, for Defendant Richard S. Mason.
ORDER AND OPINION ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
1. THIS MATTER is before the Court on the 16 April 2021 filing of Plaintiff's Motion for Summary Judgment (the "Motion") brought pursuant to Rule 56 of the North Carolina Rules of Civil Procedure (the "Rule(s)"). (Pl.'s Mot. Summ. J., ECF No. 273 ["Pl.'s Mot"].)
2. For the reasons set forth herein, the Court GRANTS in part and DENIES in part the Motion.
3. Plaintiff Julie Smith Mason ("Plaintiff") initiated this action in her capacity as a minority shareholder seeking the judicial dissolution of the former defendant to this action, Multiflora Greenhouses, Inc. ("MGI"). As a result of stipulations and agreements made by the parties in the course of the litigation, the remaining issue left for determination is the value of Plaintiff's interest in MGI, which is due to be paid to Plaintiff by Defendant Richard S. Mason ("Defendant").
4. The Court sets forth here only those portions of the factual and procedural history relevant to its determination of the Motion. The Court does not make findings of fact when ruling on motions for summary judgment. "But to provide context for its ruling, the Court may state either those facts that it believes are not in material dispute or those facts on which a material dispute forecloses summary adjudication." Ehmann v. Medflow, Inc., 2017 NCBC LEXIS 88, at *6 (N.C. Super. Ct. Sept. 26, 2017).
5. Plaintiff filed her Complaint on 13 December 2017, asserting claims for dissolution of MGI and breach of fiduciary duty against Defendant. (Compl. 6-8, ECF No. 4.) Specifically, Plaintiff stated that she "is entitled to judicial dissolution of [MGI], unless [MGI] elects to purchase her shares at their fair value in accordance with procedures as the court may provide pursuant to N.C. G.S. § 55-14-13." (Compl. ¶ 36.)
6. At the time this action was initiated, Plaintiff and Defendant were married but legally separated and together owned a combined majority of the shares of MGI: Plaintiff owned 39.65% of outstanding shares and Defendant owned 39.63% of the outstanding shares. (Compl. ¶ 8.) Plaintiff and Defendant were also the sole directors of MGI. (Compl. ¶ 9.) Plaintiff acted as MGI's Vice President, Treasurer, and Secretary. (Compl. ¶ 10.) Defendant acted as MGI's President and CEO and managed MGI's employees, including two shareholder-employees. (Compl. ¶ 11.)
7. Defendant and MGI filed a joint Answer on 22 January 2018. (Answer, ECF No. 8.) Defendant asserted in what is titled the "Third Defense" that dissolution of MGI is not an appropriate remedy because Defendant, in his individual capacity, "is willing to purchase the Plaintiff's shares at their fair value, in accordance with such procedures as the Court may provide." (Answer 2.)
8. The parties submitted their Case Management Report on 21 February 2018. (Case Management Report, ECF No. 9 ["CMR"].) The parties represented that Defendant "is agreeable to purchase [Plaintiff's] interests in MGI for fair value pursuant to a valuation process to be agreed upon by the parties or imposed by the Court[, and] the issue before the Court is one of valuation only rather than disputing the right to dissolution." (CMR ¶¶ 1, 3.A.) It was made clear to the Court early in this litigation that there was an agreement between the parties that Defendant was to purchase Plaintiff's share in MGI for "fair value." (Case Management Rep. 8, ECF No. 9.) This agreement was later memorialized by the parties in a written stipulation. (Joint Stip. Re. Date of Valuation of Multiflora Greenhouses, Inc. 1, ECF No. 43 ["Joint Stipulation"].)
9. On 4 May 2018, Plaintiff filed a Motion for Appointment of a Receiver or, in the Alternative, Preliminary Injunctive Relief, and Motion for Temporary Restraining Order (the "Receivership Motion"). (ECF No. 29.) Plaintiff requested that the Court appoint a receiver to oversee MGI and made a request in the alternative that the Court preliminarily enjoin Defendant and MGI from taking certain action with respect to MGI and MGI's wholly owned subsidiary, Austram, LLC ("Austram"). On 16 May 2018, Plaintiff filed a Motion for Appointment of Referee (the "Referee Motion"). (ECF No. 38.)
10. On 6 August 2018, the Court held a hearing on the Receivership Motion and the Referee Motion. (See ECF No. 73.) During the hearing, Defendant, through counsel, represented to the Court that a receivership was unnecessary, among other reasons, because Defendant had agreed to buy Plaintiff's shares in MGI for fair value and would make sure that the company would continue in operation by paying whatever debts and obligations came due.
11. Following the 6 August 2018 hearing, the Court entered the Order on Plaintiff's Motion for Receiver or Preliminary Injunction and Motion for Referee (the "Injunction"). (Pl.'s Mot. for Receiver or Prelim. Inj. & Mot. for Referee, ECF No. 82 ["Inj."].) The Court denied Plaintiff's request for the appointment of a receiver and a referee but granted in part Plaintiff's request for a preliminary injunction and effectively enjoined Defendant from taking certain actions while operating MGI. (Inj. ¶¶ 16, 21, 24-25.)
12. Shortly after entry of the Court's Injunction, on 24 September 2018, MGI's attorney, without consulting with Plaintiff, filed with the United States Bankruptcy Court a voluntary petition for relief pursuant to Chapter 11 of the United States Bankruptcy Code. (ECF No. 97.)
13. On 16 April 2019, Plaintiff filed a Motion for Criminal Contempt (the "Contempt Motion") alleging that Defendant willfully and intentionally violated the Injunction entered by the Court. (ECF No. 129.)
14. On 17 April 2019, Plaintiff filed a Notice of Voluntary Dismissal without Prejudice, dismissing all of her claims against MGI. (ECF No. 137.)
15. On 26 November 2019, after a duly noticed evidentiary hearing, the Court entered its Order on Motion for Criminal Contempt Regarding Guilt (the "Contempt Order"). See Mason v. Mason, 2019 NCBC LEXIS 79, at *15-16 (N.C. Super. Ct. Nov. 26, 2019).
16. The Court made the following findings of fact in the Contempt Order:
Mason, 2019 NCBC LEXIS, at *18-20.
17. Even in the midst of the proceedings on the Contempt Motion, Defendant recognized his obligation to purchase Plaintiff's shares in MGI. On 23 May 2018, the parties filed a Joint Stipulation Regarding Date of Valuation of Multiflora Greenhouses, Inc. agreeing that the date of valuation of MGI "for the purpose of establishing a value for Defendant Richard Mason's buy out of Plaintiff Julie Mason's shares shall be the date of the parties' marital separation, October 16, 2017." (Joint Stipulation 1.) On 3 August 2018, Defendant submitted an affidavit to the Court, which in part states "I have stipulated to the Court that I will acquire Plaintiff's stock in MGI[, ]" confirming for a third time that Defendant agreed to purchase Plaintiff's share in MGI (Aff. Richard S. Mason ¶ 54, ECF No. 80 ["R. Mason Aff."].)
18. On 25 June 2019, Plaintiff filed a Status Report as to Plaintiff's Claims Against Richard Mason, in part requesting the Court address the MGI valuation issues. (ECF No. 155.)
19. On 30 July 2019, in the domestic proceedings between the parties, the parties entered into a Stipulation and Consent Order pursuant to which the parties agreed "that any claims either may have against the other regarding the value, if any, and distribution of the stock each party owns in [MGI] are within the jurisdiction of the Business Court . . . and such claims may be resolved at either party's election by asserting an appropriate claim in the pending action in the Business Court[.]" (Proposed Compl., Ex. C ¶ 3)
20. Notwithstanding this express agreement between the parties after resolution of...
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