Sunday, November 24, 2013

Pedro v. Pedro case brief

Pedro v. Pedro case brief summary
489 N.W.2d 798 (Minn.App. 1992)


CASE SYNOPSIS
Appellant majority shareholders sought review of a decision of the United States District Court, for the District of Ramsey County, Minnesota, which on remand awarded damages to respondent minority shareholder for breach of fiduciary duty and for wrongful termination of lifetime employment under Minn. Stat. § 302A.751(3a).

CASE FACTS
The majority shareholders and minority shareholder were brothers who owned a closely held corporation. When the minority shareholder sought an investigation into missing corporate funds, he was fired by the majority shareholders. The minority shareholder filed this action. The lower court on remand awarded extensive damages to the minority shareholder, and the majority shareholders appealed.

DISCUSSION

  • On appeal the court affirmed the findings. 
  • The court held that there were many examples of the majority shareholders not acting openly, honestly, and fairly with the minority shareholder and that their own admissions supported a finding of a breach of fiduciary duty. 
  • The court held that measure of damages for the buyout of the minority shareholder was proper. 
  • The court held that the fair value of the shares was greater than the purchase price for the buyout; the difference was the measure of the minority shareholder's damage resulting from having been forced to sell his shares in the company. 
  • The court held that it was reasonable for the lower court to determine that the minority shareholder had a contract not terminable at will.

CONCLUSION
The court held that the facts of the case supported the lower court's findings that the majority shareholders breached their fiduciary duties to the minority shareholder and wrongfully terminated his contract for lifetime employment.


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