Tifft v. Stevens

• Decision Date: 28 July 1999
• Citation: 162 Or. App. 62,987 P.2d 1
• Parties: David TIFFT, individually and on behalf of Vision Plastics, Inc., and Vision Plastics, Inc., an Oregon corporation, Respondents— Cross-Appellants, v. Ronald STEVENS and Stevens Tool & Die, Co., Appellants—Cross-Respondents. Vision Plastics, Inc., an Oregon corporation, Cross-Respondent, and Ronald Stevens, Appellant— Cross-Respondent, v. David Tifft, Respondent— Cross-Appellant.
• Court: Oregon Court of Appeals

987 P.2d 1

162 Or. App. 62

David TIFFT, individually and on behalf of Vision Plastics, Inc., and Vision Plastics, Inc., an Oregon corporation, Respondents— Cross-Appellants, v. Ronald STEVENS and Stevens Tool & Die, Co., Appellants—Cross-Respondents.

Vision Plastics, Inc., an Oregon corporation, Cross-Respondent, and Ronald Stevens, Appellant— Cross-Respondent, v. David Tifft, Respondent— Cross-Appellant.

(9511--00118; CA A96357 (Control) and CA A96358)

Court of Appeals of Oregon.

Argued and Submitted March 11, 1999.

Decided July 28, 1999.

Jacob Tanzer, Portland, argued the cause for appellants—cross-respondents Ronald Stevens and Stevens Tool & Die, Co. With him on the briefs was Ball Janik LLP and James L. Buchal and Murphy & Buchal LLP.

Barnes H. Ellis, Portland, argued the cause for respondent—cross-appellant David Tifft. With him on the briefs were Charles F. Adams, Scott E. Crawford, and Stoel Rives LLP.

Mark M. McCulloch, Portland, argued the cause for cross-respondent Vision Plastics, Inc. With him on the brief was Powers McCulloch & Bennett LLP. Before De MUNIZ, Presiding Judge, and HASELTON and WOLLHEIM, Judges.

De MUNIZ, P.J.

In the first of these consolidated cases, plaintiff David Tifft, both personally and derivatively as a shareholder of Vision Plastics (Vision), sued Ronald Stevens and Stevens Tool & Die Co.,¹ claiming corporate oppression of a minority shareholder, ORS 60.661,² breach of fiduciary duty, and breach of a shareholder buy-sell agreement (the oppression case). In the second case, Ronald Stevens and Vision sought damages and injunctive relief against Tifft for alleged breach of the noncompetition and nonsolicitation provisions of the same shareholder buy-sell agreement (the M4U case). Both consolidated cases were decided in a bench trial in which the court generally found that Stevens had oppressed minority shareholder Tifft and also found that Tifft had violated noncompetition and nonsolicitation provisions of the shareholder buy-sell agreement. We discuss the court's rulings on the various claims in more detail below.

Stevens appeals in both cases, asserting that the trial court erred in denying his motion to dismiss Tifft's claims and in ordering Stevens to buy out Tifft's shares. Stevens further asserts that the trial court erred in rejecting his argument that Tifft's claims were barred by waiver and estoppel. Stevens also contends that the trial court erred in failing to dismiss Tifft's claim for breach of fiduciary duty against Stevens Tool & Die, as opposed to Stevens individually, and in entering judgment against Stevens Tool & Die on that claim. Finally, Stevens takes issue with the trial court's award of attorney fees to Tifft in the oppression case and in its denial of attorney fees to Stevens in the M4U case.

Tifft cross-appeals in both cases, arguing that the trial court erred in determining his damages in several respects in the oppression case and in denying his motion for leave to amend his complaint to seek prejudgment interest. In the M4U case, Tifft contends that the trial court erred in finding that he had breached the agreement and in awarding Vision $15,999.19 in damages. He further argues that the trial court erred in awarding attorney fees to Vision on that claim.

In its response to Tifft's cross-appeal in the M4U case, Vision attempts to raise in cross-assignments of error issues concerning the trial court's rulings that Tifft did not breach a fiduciary duty to Vision and that Vision was estopped from pursuing certain claims against Tifft³ However, neither of those subjects may properly be cross-assigned as error. See generally ORAP 5.57(2) (cross-assignment of error may not seek to reverse or modify the judgment on appeal). We therefore do not consider Vision's cross-assignments of error.

On the equitable corporate oppression claims, we "try the cause anew upon the record." ORS 19.415(3).⁴ On the legal claims for breach of contract, we review for errors of law. The facts set out below are as we find them on de novo review of the equitable claims and as supported by evidence in the record on the legal claims.

In 1988, Tifft and Gary Jarmusch wanted to start a plastic molding injection company but needed financing, so they approached Stevens, the owner of Stevens Tool & Die.⁵ Tifft, Jarmusch and Stevens formed Vision: Stevens held 51 percent of the stock while Tifft and Jarmusch each held 24.5 percent of the stock. Tifft and Jarmusch worked full time for Vision, while Stevens continued to work primarily at Stevens Tool & Die. Tifft, Jarmusch and Stevens entered into a stock buy-sell agreement that made the following provisions pertaining to Vision stock:

"4. Disposition of Stock During Lifetime. In the event any of the parties hereto during his or her lifetime shall desire to sell any portion or all of his capital stock of Corporation, and shall not have received the prior written consent of all of the other parties to this agreement, he may sell the same only after offering it to the other parties hereto in the following manner:

"(a) The party desiring to sell all or part of his shares shall give notice to the other parties, indicating that he has a bona fide offer for the sale of his shares stating the number of shares to be sold, the name and address of the person desiring to purchase the shares, and the sales price and terms of payment of such sale; such notice shall also contain an offer to sell such stock to the other parties to this agreement upon the terms and conditions as set forth in the aforesaid bona fide offer of sale, and shall also include a copy of all documents setting forth such offer of sale.

"(b) No party hereto shall present to the other parties hereto such notice of offer for the sale of his shares unless the person desiring to purchase the shares has made a bona fide offer for purchase of the stock of the offering shareholder and has paid to said shareholder earnest money on said purchase equal to five percent (5%) of the offered price.

"(c) For a period of thirty (30) days after the mailing of such notice, Corporation shall have the option to redeem all, but not less than all of the stock so offered. Within such time period, Corporation shall give notice to the other parties hereto of Corporation's exercise of its option. If Corporation fails to exercise such option, the other parties to this agreement shall each have a separate option to purchase all but not less than all, of such offered shares in amounts proportionate to such parties' respective share ownership. The other parties hereto shall have such options to purchase the shares for a period of fifteen (15) days after the termination of Corporation's option to redeem. The election to purchase shall be exercised by notice to the other parties hereto. The price to be paid by the other parties hereto shall not exceed the fair market value, as determined pursuant to paragraph 6(b).

" * * * * *

"5. Payment of the Purchase Price. The purchase price for all shares sold or redeemed pursuant to paragraph 4 shall be paid in full at closing; provided, that in the event the purchase price exceeds the sum of One Hundred Thousand Dollars ($100,000.00), such purchase price shall be paid as follows:

"Ten percent (10%) of the purchase price on closing, and the balance in 60 equal monthly installments, including interest on the unpaid balance at the rate of nine percent (9%) per annum from the date of closing, said installments to commence one month after the date of closing. The purchaser of the shares shall have the right to prepay any additional portion or all of the balance owing, without penalty.

" * * * * *

"6(b) The purchase price of the deceased shareholder's stock purchased hereunder shall be the fair market value as last determined by the parties hereto immediately preceding the date on which said shareholder shall have died, subject to subparagraph (e) hereof. Unless altered as herein provided, it is mutually agreed that the purpose of determining the purchase price to be paid for the deceased shareholder's stock, the fair market value of each share of stock including good will is, as of the date of this agreement, $100 per share [revised upward to $5,000 per share in December 1994].

"(c) The parties hereto may redetermine the value of the stock at any time upon unanimous consent, and shall redetermine the value of stock within 45 days following the end of each fiscal year. * * *."

The same agreement also contained several noncompetition clauses:

"22. Noncompete. Without the express prior written consent of all shareholders of the corporation, no shareholder shall, directly or indirectly, render services to or for the benefit of, engage in or operate, manage, own, or have any other interest in, or perform any services to, for or on behalf of any person, firm, or corporation or business that engages in any activity engaged in by the Corporation. Such restrictions shall be effective during the term of this agreement, any renewals hereof, without geographical limitation. Such restrictions shall be effective after the termination of this agreement for any reason whatsoever, for a period of three (3) years from said termination, and shall apply, with respect to the following geographical areas: The states of Oregon and Washington. Notwithstanding the foregoing, such restrictions shall not be effective (a) after the termination of this agreement, in the event that the Corporation declines to exercise its repurchase right pursuant to paragraph 17 hereof, nor (b) with respect to any business activities which are the same as or similar to those conducted by Ronald Stevens, dba Stevens Tool & Die, on the effective date hereof.

" * * * * *

"24. Nonsolicitation. Each party hereto acknowledges that the Corporation has developed or will develop profitable and potentially profitable business relationships with certain individuals and business entities. Each party therefore

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