Post on 10-Apr-2017
2017 Fourth District BarSpring Case Review
Business Cases
March 22, 2017
Wendy Gerwick CoutureAssociate Professor of Law
University of Idaho
Non-Profit Corporate Governance Breach of Fiduciary Duty Fair Value of Minority Shares Recovery of Deficiency
X
Kemmer v. Kemmer, 161 Idaho 463 (Dec. 30, 2016) (Justice Burdick).
President/Senior Pastor: Tapani
Secretary/Treasurer:K. Kemmer
Directors:SmithD. KemmerDolph
President/Senior Pastor: Tapani
Secretary/Treasurer:K. Kemmer
Directors:SmithD. KemmerDolph
President/Senior Pastor:Newman
Kemmer v. Kemmer, 161 Idaho 463 (Dec. 30, 2016) (Justice Burdick).
President/Senior Pastor: Tapani
Secretary/Treasurer:K. Kemmer
Directors:SmithD. KemmerDolph
President/Senior Pastor:Newman
BYLAWSReplacing vacancy in senior pastorate requires majority vote of voting membership
Kemmer v. Kemmer, 161 Idaho 463 (Dec. 30, 2016) (Justice Burdick).
President/Senior Pastor: Tapani
Secretary/Treasurer:K. Kemmer
Directors:SmithD. Kemmer (oral)Dolph (by action)
Kemmer v. Kemmer, 161 Idaho 463 (Dec. 30, 2016) (Justice Burdick).
President/Senior Pastor: Tapani
Secretary/Treasurer:K. Kemmer
Directors:SmithD. Kemmer (oral)Dolph (by action)
Idaho Nonprofit Corporation ActI.C. § 30-30-607. Resignation of directors(1) A director may resign at any time by
delivering written notice to the board of directors, its presiding officer or to the president or secretary.
. . .
Kemmer v. Kemmer, 161 Idaho 463 (Dec. 30, 2016) (Justice Burdick).
President/Senior Pastor: Tapani
Secretary/Treasurer:K. Kemmer
Directors:SmithD. Kemmer (oral)Dolph (by action)
Idaho Nonprofit Corporation ActI.C. § 30-30-607. Resignation of directors(1) A director may resign at any time by
delivering written notice to the board of directors, its presiding officer or to the president or secretary.
. . .
Supreme Court:• MAY do so at any time• BUT exclusive means is by written notice
Kemmer v. Kemmer, 161 Idaho 463 (Dec. 30, 2016) (Justice Burdick).
President/Senior Pastor: Tapani
Secretary/Treasurer:K. Kemmer
Directors:SmithD. Kemmer Dolph
Unilaterally called a Special Meeting of the membership to elect new slate of directors:
SmithNewmanMiller
Kemmer v. Kemmer, 161 Idaho 463 (Dec. 30, 2016) (Justice Burdick).
President/Senior Pastor: Tapani
Secretary/Treasurer:K. Kemmer
Directors:SmithD. Kemmer Dolph
Unilaterally called a Special Meeting of the membership to elect new slate of directors:
SmithNewmanMiller
Idaho Nonprofit Corporation Act§ 30-30-502. Special meeting(1) A corporation with members shall hold a special meeting of members:
(a) On call of its board or the person or persons authorized to do so by the articles or bylaws; or
(b) Except as provided in the articles or bylaws of a religious corporation if the holders of at least ten percent (10%) of the voting power of any corporation sign, date and deliver to any corporate officer one (1) or more written demands for the meeting describing the purpose or purposes for which it is to be held.
Kemmer v. Kemmer, 161 Idaho 463 (Dec. 30, 2016) (Justice Burdick).
Non-Profit Corporate Governance Breach of Fiduciary Duty Fair Value of Minority Shares Recovery of Deficiency
X
Prehn v. Hodge, 161 Idaho 321 (Dec. 8, 2016) (Justice W. Jones).
The Source Store, LLC
Prehn Bandak Brown & Claiborne
HodgeManaging Member
The Source Store, LLC
Prehn Bandak Brown & Claiborne
HodgeManaging Member
The Source, LLC
HodgeManaging Member &
Majority Owner
Brown & Claiborne
Prehn v. Hodge, 161 Idaho 321 (Dec. 8, 2016) (Justice W. Jones).
The Source Store, LLC
Prehn Bandak Brown & Claiborne
HodgeManaging Member
The Source, LLC
HodgeManaging Member &
Majority Owner
Brown & Claiborne
Prehn v. Hodge, 161 Idaho 321 (Dec. 8, 2016) (Justice W. Jones).
The Source Store, LLC
Prehn Bandak Brown & Claiborne
HodgeManaging Member
The Source, LLC
HodgeManaging Member &
Majority Owner
Brown & Claiborne
• Idaho Uniform Limited Liability Company Act: managers owe company & its members duties of care and loyalty
• LLC Operating Agreement: Hodge owed duty to company & its members to “exercise reasonable skill, care and business judgment”
• Court’s Order of Dissolution: all members required to participate & cooperate “in a manner which is fully transparent, accountable, fair & equitable to all members”
Prehn v. Hodge, 161 Idaho 321 (Dec. 8, 2016) (Justice W. Jones).
Non-Profit Corporate Governance Breach of Fiduciary Duty Fair Value of Minority Shares Recovery of DeficiencyX
Wagner v. Wagner, 160 Idaho 294 (Apr. 27, 2016) (Justice Horton).
Wanooka Farms, Inc.
Majority Minority
Wanooka Farms, Inc.
Majority Minority
I.C. § 30-29-1434. Election to purchase in lieu of dissolution(4) If the parties are unable to reach an agreement as provided for in subsection (3) of this section, the court, upon application of any party, shall . . . determine the fair value of the petitioner's shares as of the day before the date on which the petition under section 30-29-1430(2), Idaho Code, was filed or as of such other date as the court deems appropriate under the circumstances.
Wagner v. Wagner, 160 Idaho 294 (Apr. 27, 2016) (Justice Horton).
Wanooka Farms, Inc.
Majority Minority
I.C. § 30-29-1434. Election to purchase in lieu of dissolution(4) If the parties are unable to reach an agreement as provided for in subsection (3) of this section, the court, upon application of any party, shall . . . determine the fair value of the petitioner's shares as of the day before the date on which the petition under section 30-29-1430(2), Idaho Code, was filed or as of such other date as the court deems appropriate under the circumstances.
Gives courts the flexibility & discretion to consider all relevant facts & circumstances of the particular case
Wagner v. Wagner, 160 Idaho 294 (Apr. 27, 2016) (Justice Horton).
Wanooka Farms, Inc.
Majority Minority
I.C. § 30-29-1434. Election to purchase in lieu of dissolution(4) If the parties are unable to reach an agreement as provided for in subsection (3) of this section, the court, upon application of any party, shall . . . determine the fair value of the petitioner's shares as of the day before the date on which the petition under section 30-29-1430(2), Idaho Code, was filed or as of such other date as the court deems appropriate under the circumstances.
FN6. “The outcome of this trial brings to mind the acronym ‘GIGO’ or ‘garbage in, garbage out.’ . . . The quality of a court’s factual findings can be no better than the quality of the evidence the parties provide to it.”
Wagner v. Wagner, 160 Idaho 294 (Apr. 27, 2016) (Justice Horton).
Wanooka Farms, Inc.
Majority Minority
I.C. § 30-29-1434. Election to purchase in lieu of dissolution(4) If the parties are unable to reach an agreement as provided for in subsection (3) of this section, the court, upon application of any party, shall . . . determine the fair value of the petitioner's shares as of the day before the date on which the petition under section 30-29-1430(2), Idaho Code, was filed or as of such other date as the court deems appropriate under the circumstances.
Wagner v. Wagner, 160 Idaho 294 (Apr. 27, 2016) (Justice Horton).
Wanooka Farms, Inc.
Majority Minority
I.C. § 30-29-1434. Election to purchase in lieu of dissolution(4) If the parties are unable to reach an agreement as provided for in subsection (3) of this section, the court, upon application of any party, shall . . . determine the fair value of the petitioner's shares as of the day before the date on which the petition under section 30-29-1430(2), Idaho Code, was filed or as of such other date as the court deems appropriate under the circumstances.
Court has discretion to pick another date.
Wagner v. Wagner, 160 Idaho 294 (Apr. 27, 2016) (Justice Horton).
Wanooka Farms, Inc.
Majority Minority
I.C. § 30-29-1434. Election to purchase in lieu of dissolution(4) If the parties are unable to reach an agreement as provided for in subsection (3) of this section, the court, upon application of any party, shall . . . determine the fair value of the petitioner's shares as of the day before the date on which the petition under section 30-29-1430(2), Idaho Code, was filed or as of such other date as the court deems appropriate under the circumstances.
• Discount for Lack of Corporate Control (DLOC)
• Discount for Lack of Marketability (DLOM)
Wagner v. Wagner, 160 Idaho 294 (Apr. 27, 2016) (Justice Horton).
Non-Profit Corporate Governance Breach of Fiduciary Duty Fair Value of Minority Shares Recovery of DeficiencyX
AgStar Financial
AgStar Financial v. Northwest Sand & Gravel, 2017 WL 727771 (Feb. 24, 2017); AgStar Financial v. Gordon Paving, 2017 WL 752327 (Feb. 27, 2017) (Justice J. Jones).
Gordon Paving
$9MM
Promise to repay
AgStar Financial
AgStar Financial v. Northwest Sand & Gravel, 2017 WL 727771 (Feb. 24, 2017); AgStar Financial v. Gordon Paving, 2017 WL 752327 (Feb. 27, 2017) (Justice J. Jones).
Gordon Paving
$9MM
Promise to repay
Gordon Paving’s Real Property
Gordon Paving’s Personal Property
AgStar Financial
AgStar Financial v. Northwest Sand & Gravel, 2017 WL 727771 (Feb. 24, 2017); AgStar Financial v. Gordon Paving, 2017 WL 752327 (Feb. 27, 2017) (Justice J. Jones).
Gordon Paving
$9MM
Promise to repay
Gordon Paving’s Real Property
Gordon Paving’s Personal Property
Guarantors
Guarantee
AgStar Financial
AgStar Financial v. Northwest Sand & Gravel, 2017 WL 727771 (Feb. 24, 2017); AgStar Financial v. Gordon Paving, 2017 WL 752327 (Feb. 27, 2017) (Justice J. Jones).
Gordon Paving
$9MM
Promise to repay
Gordon Paving’s Real Property
Gordon Paving’s Personal Property
Guarantors
Guarantee
AgStar Financial v. Northwest Sand & Gravel, 2017 WL 727771 (Feb. 24, 2017); AgStar Financial v. Gordon Paving, 2017 WL 752327 (Feb. 27, 2017) (Justice J. Jones).
I.C. § 6-108. Deficiency judgments--Amount restrictedNo court in the state of Idaho shall have jurisdiction to enter a deficiency judgment in any case involving a foreclosure of a mortgage on real property in any amount greater than the difference between the mortgage indebtedness, as determined by the decree, plus costs of foreclosure and sale, and the reasonable value of the mortgaged property, to be determined by the court in the decree upon the taking of evidence of such value.
AgStar Financial
AgStar Financial v. Northwest Sand & Gravel, 2017 WL 727771 (Feb. 24, 2017); AgStar Financial v. Gordon Paving, 2017 WL 752327 (Feb. 27, 2017) (Justice J. Jones).
Gordon Paving
$9MM
Promise to repay
Gordon Paving’s Real Property
Gordon Paving’s Personal Property
Guarantors
Guarantee
AgStar Financial v. Northwest Sand & Gravel, 2017 WL 727771 (Feb. 24, 2017); AgStar Financial v. Gordon Paving, 2017 WL 752327 (Feb. 27, 2017) (Justice J. Jones).
I.C. § 6-108. Deficiency judgments--Amount restrictedNo court in the state of Idaho shall have jurisdiction to enter a deficiency judgment in any case involving a foreclosure of a mortgage on real property in any amount greater than the difference between the mortgage indebtedness, as determined by the decree, plus costs of foreclosure and sale, and the reasonable value of the mortgaged property, to be determined by the court in the decree upon the taking of evidence of such value.
AgStar Financial v. Northwest Sand & Gravel, 2017 WL 727771 (Feb. 24, 2017); AgStar Financial v. Gordon Paving, 2017 WL 752327 (Feb. 27, 2017) (Justice J. Jones).
I.C. § 6-108. Deficiency judgments--Amount restrictedNo court in the state of Idaho shall have jurisdiction to enter a deficiency judgment in any case involving a foreclosure of a mortgage on real property in any amount greater than the difference between the mortgage indebtedness, as determined by the decree, plus costs of foreclosure and sale, and the reasonable value of the mortgaged property, to be determined by the court in the decree upon the taking of evidence of such value.
“Where a secured creditor who holds more than one source of security for the same debt seeks a deficiency judgment after having foreclosed on mortgaged real property and obtained title to such real property by credit bid in the foreclosure sale, the Court should utilize equity powers to consider the debt satisfied where the reasonable value of the real property is litigated and determined to be substantially greater than the debt.”
AgStar Financial v. Northwest Sand & Gravel, 2017 WL 727771 (Feb. 24, 2017); AgStar Financial v. Gordon Paving, 2017 WL 752327 (Feb. 27, 2017) (Justice J. Jones).
I.C. § 6-108. Deficiency judgments--Amount restrictedNo court in the state of Idaho shall have jurisdiction to enter a deficiency judgment in any case involving a foreclosure of a mortgage on real property in any amount greater than the difference between the mortgage indebtedness, as determined by the decree, plus costs of foreclosure and sale, and the reasonable value of the mortgaged property, to be determined by the court in the decree upon the taking of evidence of such value.
“Where a secured creditor who holds more than one source of security for the same debt seeks a deficiency judgment after having foreclosed on mortgaged real property and obtained title to such real property by credit bid in the foreclosure sale, the Court should utilize equity powers to consider the debt satisfied where the reasonable value of the real property is litigated and determined to be substantially greater than the debt.”
Dissent
Thank you!Wendy Gerwick Couture
Associate Professor of LawUniversity of Idaho
wgcouture@uidaho.edu