Sunday, November 24, 2013

Frandsen v. Jensen-Sundquist Agency, Inc. case brief

Frandsen v. Jensen-Sundquist Agency, Inc. case brief summary
802 F.2d 941 (7th Cir. 1986)

Appellant minority shareholder sought review of the order of the United States District Court for the Western District of Wisconsin, which entered summary judgment in favor of appellee companies. Appellant brought a suit for breach of a stockholder agreement and tortious interference with a contract.

Appellant minority shareholder entered into a stockholder agreement with majority shareholders of appellee smaller company that gave appellant a right of first refusal in the case of the sale of the majority's stock and as a second option, a right to have his stock purchased at the same price as the stock was sold. Appellee larger company proposed to merge with appellee smaller company and later agreed instead to buy appellee smaller company's stock and assets and then to liquidate its assets. Appellant refused to consent and filed suit. He alleged that appellee smaller company breached its agreement and appellee larger company tortiously interfered with the agreement. The district court entered summary judgment for appellees.


  • On appeal, the court affirmed and held that the agreement applied where the majority stockholders sold their stock, which did not occur when appellee larger company purchased appellee smaller company. 
  • The sale of the majority block's shares was not the same as the sale of appellee smaller company's assets. 
  • Appellant had no right to block the sale of assets and was not protected from the proposed merger or the actual liquidation of appellee smaller company.

The court affirmed the entry of summary judgment and held that the agreement that gave appellant minority shareholder right of first refusal in the case of stock sale of majority did not apply to the sale of assets and liquidation of appellee company. Appellant's tortious interference with a contract claim also was meritless because appellee companies' conduct did not constitute unfair competition, and there was no breach of contract.

Recommended Supplements for Corporations and Business Associations Law

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