Scobie v. Scobie (In re 2015 Voting Tr. Agreement for Certain Shareholders of Mason Cos.)

• Decision Date: 14 February 2023
• Docket Number: 2020AP1937
• Parties: In the Matter of The 2015 Voting Trust Agreement for Certain Shareholders of Mason Companies, Inc.: v. Patrick S. Scobie and Lori A. Geissler, Defendants-Respondents, Nancy A. Scobie, Individually and as Trustee of the William M. Scobie and Nancy A. Scobie Revocable Trust and Timothy F. Scobie, Plaintiffs-Appellants-Cross-Respondents, Daniel J. Hunt, Defendant-Respondent-Cross-Appellant.
• Court: Wisconsin Court of Appeals

In the Matter of The 2015 Voting Trust Agreement for Certain Shareholders of Mason Companies, Inc.:

Nancy A. Scobie, Individually and as Trustee of the William M. Scobie and Nancy A. Scobie Revocable Trust and Timothy F. Scobie, Plaintiffs-Appellants-Cross-Respondents,
v.
Patrick S. Scobie and Lori A. Geissler, Defendants-Respondents,

Daniel J. Hunt, Defendant-Respondent-Cross-Appellant.

No. 2020AP1937

Court of Appeals of Wisconsin, District III

February 14, 2023

This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.

APPEAL and CROSS-APPEAL from an order of the circuit court for Chippewa County: Cir. Ct. No. 2017PR20 STEVEN P. ANDERSON, Judge. Affirmed.

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Before Stark, P.J., Hruz and Gill, JJ.

Per curiam opinions may not be cited in any court of this state as precedent or authority, except for the limited purposes specified in Wis.Stat. Rule 809.23(3).

PER CURIAM.

¶1 This lawsuit arises out of a family dispute over a voting trust created in 2015 by the shareholders of Mason Companies, Inc. Nancy A. Scobie and Timothy ("Tim") F. Scobie brought suit against Patrick ("Pat") S. Scobie, Lori A. Geissler, and Daniel ("Dan") J. Hunt^[1] for their "orchestrated and unlawful scheme to secure control over the direction and management of [Mason] for their personal benefit" by creating the voting trust "through … misrepresentations, deception and misconduct." In response, Dan counterclaimed against Nancy and Tim for abuse of process.

¶2 Nancy and Tim appeal from the circuit court's order denying their motion for partial summary judgment on their claims, granting the Defendants' motions for summary judgment, and dismissing Nancy and Tim's claims in their entirety with prejudice. They present five arguments on appeal: (1) the court erred by granting summary judgment on their claim to void the voting trust because of Pat's misrepresentations; (2) the court erred by concluding that Nancy had no marital property interest in her husband's stock; (3) the voting trust is void for lack of a proper purpose; (4) Pat and Lori breached their fiduciary duties to Tim and Nancy as trustees of the voting trust; and (5) the court erred by allowing costs to the Defendants not authorized by law. The court also denied Dan's

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motion for summary judgment on his abuse of process counterclaim, and Dan cross-appeals on that basis.

¶3 We reject the majority of Nancy and Tim's arguments and affirm the circuit court's rulings. We also affirm the court's dismissal of Dan's abuse of process counterclaim. On the issue of costs, however, we conclude that this court lacks appellate jurisdiction to consider whether the circuit court erroneously taxed some disbursements not authorized by Wis.Stat. § 814.04(2) (2019-20).^[2]

BACKGROUND

¶4 Mason is a family-run corporation based in Chippewa Falls, Wisconsin, that sells footwear and apparel. Pertinent to this appeal and cross-appeal, Mason's stock is divided into two classes: Class A voting shares and Class B nonvoting shares.^[3] The majority of the parties in this dispute-Nancy, Tim, Pat, and Lori-each own a percentage of Class A voting shares in Mason.

¶5 Nancy was married to William ("Bill") Mason Scobie for fifty-two years. Bill, who died on July 29, 2016, had previously served as Mason's president, CEO, and chairman of the board. For her part, Nancy never worked at Mason or served on its board of directors. At the time of his death, Bill owned 34.65% of all outstanding Class A shares, which he inherited from his family members. Nancy and Bill are Pat and Tim's mother and father, respectively.

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¶6 Pat and Tim each own 25.13% of the outstanding Class A shares of Mason, and they are both attorneys. Bill and Nancy gifted the brothers their Class A shares in 1993 and between December 2006 and August 2010.^[4] Pat is an estate planning attorney who has been on Mason's board of directors since 2004 and has served as chairman since 2009. Tim served on the board of directors from 2009 until February 2018 and served as Mason's vice president and general counsel until February 2017.

¶7 Lori is Pat and Tim's cousin. Lori is vice president of purchasing at Mason, and she has served on the board since 2006. Lori owns 5.26% of the outstanding Class A shares, which she received as a gift from her mother, one of Bill's sisters.

¶8 Dan is the only party to this dispute who is not a member of the extended Mason family. In 2004, Dan succeeded Bill as CEO and president of Mason, and he retired in 2019. Dan has never been a shareholder of Mason.

¶9 The dispute in this case centers around a voting trust agreement executed by Bill, Pat, Tim, and Lori on June 12, 2015 (the "2015 Voting Trust" or the "Agreement"). Nancy was involved in negotiating and drafting the 2015 Voting Trust, but Dan was not. The Agreement was drafted with the assistance of Attorney Mark Bradley. Lori was also represented by legal counsel during the negotiations.

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¶10 The 2015 Voting Trust's purpose, according to its terms, was "to secure continuity and stability of the voting of the shares of stock in the Company contributed by the Shareholders." Under the Agreement, Bill, Pat, Tim, and Lori each transferred all of their respective Class A shares into the 2015 Voting Trust, which resulted in more than ninety percent of the Class A shares of Mason residing in the 2015 Voting Trust.^[5] Bill, Pat, Tim, and Lori appointed themselves as trustees with exclusive authority to vote the Class A shares. Nancy was not made a trustee, and the Agreement provided that upon Bill's death, his Class A shares would remain in the 2015 Voting Trust under the control of Tim, Pat, and Lori as the three remaining trustees. Following Bill's death, however, Bill's beneficial interest in his Class A shares transferred to the William and Nancy Scobie Revocable Trust (the "Bill & Nancy Trust"), which Nancy would control as surviving spouse and successor trustee and beneficiary. The 2015 Voting Trust's initial term was twelve years, which the majority of trustees could extend for an additional ten years, or until 2037.

¶11 Bill passed away a little over a year after executing the 2015 Voting Trust. Seven months later, in February 2017, after a vote of Mason's board of directors, Dan terminated Tim as vice president and general counsel of Mason. The next year, in January 2018, Tim was removed from Mason's board of directors.

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¶12 Nancy initiated this lawsuit against the Defendants in March 2017, and Tim later joined as a plaintiff. The joint amended petition and complaint sought to void or terminate the 2015 Voting Trust based on five counts and eleven grounds.^[6] According to Nancy and Tim, the intended purpose of the 2015 Voting Trust was for the Class A shareholders to work together to develop a consensus and vote the shares "in the same manner." Toward that purpose, Nancy and Tim claim that while discussing how the 2015 Voting Trust would work, Bill asked what would happen if Tim and Pat could not agree on a matter requiring a vote of Class A shares after Bill's death. Pat's response, according to Nancy and Tim, was that Pat and Tim would terminate the 2015 Voting Trust if they could not agree. Nancy and Tim claim, however, that was never Pat's plan. Instead, they assert that Pat and Lori's intention was "to vote the shares to prevent Tim from

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exercising any power in the direction of the company, and to ensure their own control over Mason, including security in their own lucrative positions."^[7]

¶13 In response to Nancy and Tim's suit, Dan filed a counterclaim alleging abuse of process. He argued that Nancy and Tim's claims were frivolous, made in bad faith, and filed "as a means to seek revenge against" Dan for his "perceived participation in the termination" of Tim as general counsel and Tim's removal from Mason's board of directors.

¶14 Nancy and Tim moved for partial summary judgment on their claims that the 2015 Voting Trust was void and that it should be terminated. The Defendants filed cross-motions for summary judgment, seeking dismissal of all of Nancy and Tim's claims. Dan also moved for summary judgment on his abuse of process counterclaim.

¶15 The circuit court ultimately granted the Defendants' motions and dismissed Nancy and Tim's petition in its entirety and with prejudice. The court concluded that Nancy and Tim had failed to show that "the purpose of the 2015 Voting Trust was to disenfranchise or defraud shareholders" or that the purpose involved anything illegal, unlawful, or improper. According to the court, the Agreement "was a lawful contract, negotiated with the benefit of experienced legal counsel and sophisticated, intelligent, educated, and fully competent parties, with

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consideration for its creation and execution, and a valid and unambiguous integration clause and a valid and unambiguous non-reliance clause." The court further concluded that the Agreement "should be enforced according to its terms" and without consideration of "[a]ny oral or written representations" "not included in the four corners of the" Agreement that were allegedly made to Bill and Tim to induce them to enter into the 2015 Voting Trust. The court also denied Dan's motion for summary judgment as to his abuse of process counterclaim.

¶16 Nancy and Tim appeal, and Dan cross-appeals. On November 16, 2020, Nancy and Tim filed their notice of appeal from the circuit court's final order entered on October 2, 2020, which granted the Defendants' motions for summary judgment and granted Nancy and Tim's motion for summary judgment on Dan's counterclaim. The October 2 order also generally awarded the Defendants' costs and fees and stated that it was a final order for purposes of appeal. On November 10, 2020, Nancy and Tim objected to the Defendants' Bills of Costs. After a hearing on February 22, 2021, the court entered its Order on Bill of Costs, Taxation and Judgment on April 1,...