Robinson v. Lagenbach

• Citation: 439 S.W.3d 853
• Decision Date: 02 September 2014
• Docket Number: No. ED 100958.,ED 100958.
• Parties: Joan L. ROBINSON, Appellant, v. John F. LAGENBACH, et al., Respondents.
• Court: Court of Appeal of Missouri (US)

439 S.W.3d 853

Joan L. ROBINSON, Appellant

v.John F. LAGENBACH, et al., Respondents.

No. ED 100958.

Missouri Court of Appeals, Eastern District.

Sept. 2, 2014.

John G. Beseau, St. Louis, MO, for appellant.

Paul J. Puricelli, Clayton, MO, for respondents.

Opinion

LAWRENCE E. MOONEY, Judge.

The plaintiff, Joan Robinson, appeals the summary judgment entered by the Circuit Court of St. Louis County in favor of the defendants, John Langenbach, Judy Longbrook, and Perma–Jack Company, in Robinson's action against them. We affirm in part, and reverse and remand in part.

Because we conclude that a majority of the directors had authority to remove Robinson from her position as company president and treasurer, we deny Robinson's first two points and affirm the trial court's judgment with regard to this question. Furthermore, because Robinson has alleged no action taken by Langenbach that breaches his fiduciary duty to Robinson as a trustee of the voting trust, we affirm the judgment insofar as Robinson challenges the grant of summary judgment on this basis.

Robinson's remaining challenges involve shareholder oppression, breach of the defendants' fiduciary duties as directors and controlling shareholders, and application of the business-judgment rule. Resolution of these challenges requires making credibility determinations and choosing among competing inferences, which are not permitted at the summary-judgment stage. Therefore, we reverse and remand for trial on these issues.

Facts and Procedural Background

In 1975, George Langenbach incorporated Perma–Jack Company, a franchisor of a foundation steel-piering system. Plaintiff Robinson and Defendants Langenbach and Longbrook are George Langenbach's children. In 1985, in anticipation of his retirement and transfer of the company to his children, George Langenbach established a voting trust for the company, appointing Robinson and Langenbach as the two trustees. In 1988, Robinson, Langenbach, and Longbrook were named as the company's three directors. The three siblings now own the shares of the company in equal portions.

Prior to June 20, 2012, Robinson served as president and treasurer of the company, and Langenbach served as vice-president and secretary. Robinson's son and one of Langenbach's daughters also worked for the company. Robinson was responsible for the administrative side of the business while Langenbach was responsible for recruiting, communicating with, and visiting new and prospective franchisees. Both Robinson and Langenbach had responsibility for maintaining franchisee relationships. Longbrook served as a director but had no role in the day-to-day operations of the company.

Significant differences developed among the parties concerning the management, policies, and direction of the company. Langenbach asked Robinson to resign, and she refused. At a special meeting on June 20, 2012, Langenbach and Longbrook voted in their capacity as directors to remove Robinson as president and treasurer, and her employment with the company and that of her son were terminated. A two-thirds majority of the directors appointed Langenbach as president. The board of directors later appointed Langenbach's daughter as secretary of the company, and she began working for the company full-time. Langenbach's other daughter began part-time employment with the company.

Robinson sued the defendants for breach of fiduciary duty and for dissolution of the company or other equitable relief based on shareholder oppression and waste and misapplication of corporate assets. Robinson's first amended petition also sought relief for wrongful termination, but she dismissed this claim. Robinson also abandoned her claims of waste and misapplication of corporate assets.¹ The trial court granted the defendants' motion for summary judgment, and denied Robinson's motion for partial summary judgment without rendering findings of fact or conclusions of law. Robinson appeals.

Robinson claims the trial court erred in granting summary judgment for the defendants and in denying her motion for partial summary judgment based on the court's implicit determination that the directors could legally remove Robinson as president and treasurer despite the language of the voting trust. Further, Robinson claims the trial court erred in granting summary judgment for the defendants because the evidence was sufficient to support her claims of shareholder oppression and breach of fiduciary duty and because the evidence does not support the defendants' entitlement to the protection afforded by the business-judgment rule.

Standard of Review

Summary judgment allows a trial court to enter judgment for the moving party where the party demonstrates a right to judgment as a matter of law based on facts about which there is no genuine dispute. ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Our review is essentially de novo. Id. When considering an appeal from summary judgment, we review the record in the light most favorable to the party against whom the court entered judgment. Id.

The axiom that we view the record “in the light most favorable to the non-movant” means that the movant has the burden to establish a right to judgment as a matter of law on the record as submitted. Id. at 382 ; Cardinal Partners, LLC v. Desco Investment Co., L.L.C, 301 S.W.3d 104, 109 (Mo.App.E.D.2010). If the movant requires an inference to establish the right to judgment as a matter of law, and the evidence reasonably supports any inference other than, or in addition to, the movant's inference, a genuine dispute exists, and the movant's prima facie showing fails. Id.

Authority of the Directors to Remove Robinson as President and Treasurer

In her first point, Robinson claims the trial court erred in granting summary judgment for the defendants based on the assumption that the directors had authority to remove her as president and treasurer of the company. She contends that because the disputed resolution purporting to grant such authority violated the terms of the voting trust, the defendants lacked the authority to remove her. In her second point, Robinson claims the trial court erred in denying her motion for partial summary judgment because the disputed resolution removing her as president and treasurer of the company, passed and enforced without corporate authority, violated the individual defendants' fiduciary duties to the plaintiff. Because they involve resolution of the same issue—whether Langenbach and Longbrook could legally remove Robinson as president and treasurer of the company despite the language of the voting trust—we consider these two points together.

We construe corporate articles and by-laws pursuant to the general rules of contracts. Ironite Products Co., Inc. v. Samuels, 985 S.W.2d 858, 861 (Mo.App.E.D.1998). Interpretation of a contract is a question of law. Systemaire, Inc. v. St. Charles County, 432 S.W.3d 783, 787 (Mo.App.E.D.2014).

Article III, Section 1 of the company's original by-laws adopted in 1975 provides in relevant part that “[t]he property and business of the corporation shall be controlled and managed by a board of one director.” Amendments to the by-laws increased the number of directors. Since 1988, Robinson, Langenbach, and Longbrook have served as the three directors of the company. Article III, Section 6 of the company's original by-laws provides that a majority of the full board of directors shall constitute a quorum for the transaction of business. This section continues: “The action of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.” Article IV, Section 2 of the company's original by-laws addresses the tenure of officers and provides in relevant part:

Any officer or agent appointed by the Board of Directors may be removed by the Board of Directors whenever in the judgment of the Board the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

In 1985 the company's sole director at that time, George Langenbach, amended the bylaws to provide for the position and duties of a chairman of the board as the chief executive officer of the company, to designate the president as the chief operating officer of the company, and to renumber the sections within Article IV. The current Article IV, Section 4, as amended in 1985, provides in relevant part that “[t]he President shall be the chief operating officer of the corporation and shall exercise general supervision, direction, management and control over all the business and affairs of the corporation, subject at all times to the control of the Board of Directors.”

Except as set forth here, the by-laws as relevant to our inquiry remained unchanged since their inception. Langenbach and Longbrook, representing two-thirds of the directors, voted at a special meeting to remove Robinson as president and treasurer of the company. Constituting a two-thirds majority of the directors, Langenbach and Longbrook possessed authority to take this action according to the company's by-laws.

Robinson contends, however, that the voting trust agreement established in 1985 precludes such action because Article 5 of the voting trust required the unanimous consent of the two trustees—namely Robinson and Langenbach—to the resolution that removed Robinson as president and treasurer, and that such consent was not obtained. Article 5 of the voting trust is titled “Trustees' Rights in Stock.”² Robinson argues that Article 5 of the voting trust requires the trustees to unanimously approve or veto every resolution of any character whatsoever adopted by the board of directors. We disagree. Such an interpretation would render the board of directors superfluous and transfer power for all corporate decisions to the trustees who vote the shareholders' stock.

It is a general principle that...