Po-Boy Land Co. v. Mullins

384 S.W.3d 555, 2011 Ark. App. 381, 2011 Ark. App. LEXIS 420
CourtCourt of Appeals of Arkansas
DecidedMay 25, 2011
DocketNo. CA 10-1249
StatusPublished
Cited by10 cases

This text of 384 S.W.3d 555 (Po-Boy Land Co. v. Mullins) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Po-Boy Land Co. v. Mullins, 384 S.W.3d 555, 2011 Ark. App. 381, 2011 Ark. App. LEXIS 420 (Ark. Ct. App. 2011).

Opinion

JOHN B. ROBBINS, Judge.

| Appellant Po-Boy Land Company, which is a Hempstead County hunting club (“the Club”) appeals from a partial summary judgment in favor of appellees Kenneth Mullins, James Stinson, and Sam Tyson.1 Appellees are former members of the Club who filed suit in 2006 for wrongful expulsion, seeking dissolution of the Club due to the directors’ oppressive conduct. The court granted their requested relief, and the Club filed this appeal. Based on our review of the affidavits, corporate papers, and other matters considered by the circuit court, we conclude that summary judgment was inappropriate due to the existence of numerous issues of material fact. We therefore reverse and remand the court’s order.

| ¿The Club was formed in 1993 with the sole asset of 2000-plus acres in Hempstead County. It established itself as a closely held corporation, offering just fifteen shares of stock at $103,060 per share. .Ap-pellees Mullins and Stinson were original shareholders, and appellee Tyson later purchased his share in 1994. Stinson also acquired two additional shares during the 1990s.

The events leading to this lawsuit began in the fall of 2004 when the Club received information that Stinson wanted to sell one of his shares to a Mr. McQueen for $212,000, and that Tyson wanted to sell his share to a Mr. Clay for the same price. Neither McQueen nor Clay were current shareholders with the Club. Mullins, who attended the meeting with Tyson’s and Stinson’s proxies, provided the membership with details of the transactions and, according to Club president John Hearns-berger, stated that he had advised Stinson and Tyson on the sales price. During the meeting, Hearnsberger reminded his fellow members that the Club’s by-laws gave it the right of first refusal to buy the shares.2 The members expressed interest in this possibility, and the matter was referred to the Club’s board of directors.

On October 9, 2004, the board voted to acquire Tyson’s and Stinson’s shares at the $212,000 price. Mullins, who was a board member, voted against the purchases. The board also decided (with Mullins abstaining) to finance each purchase by assessing a percentage of [sthe price against the remaining shares. This resulted in Mullins being assessed $81,450.55 on his single share and Stinson (who owned two shares in addition to the one he was selling) being assessed $78,043.96. The Board sent assessment requests to all its members and notified Stinson and Tyson that it had voted to purchase their shares.

Not long thereafter, controversy arose on two fronts. First, Tyson emailed a board member stating, “This is not what I wanted to happen.” Tyson explained that he desired to sell his share to Clay and continue hunting at the Club as Clay’s guest. He also stated that he was unaware of certain Club rules and regulations, and he asked the Club to forward copies of its articles and bylaws to him. Despite Tyson’s misgivings, the Club informed him that it had purchased his share and that he no longer had Club privileges. Secondly, Mullins and Stinson refused to pay the assessments against their shares, citing the Club’s lack of authority to levy assessments for the purpose of repurchasing a member’s stock. As the dissension over this point mounted, Mullins announced that his share would be put up for sale as well.

The Club responded to Mullins’s and Stinson’s failure to pay their assessments by suspending their membership privileges and scheduling a board meeting to consider their expulsion. In December 2004, the board met and terminated their memberships on two grounds: 1) failure to pay the assessments, and 2) providing false information about McQueen’s $212,000 offer to Stinson. The latter ground was based on the board’s belief that Mullins and Stinson misrepresented that Stinson had a firm deal to sell his share to McQueen. The Board also rescinded its $212,000 offer to purchase Stinson’s share. President |4Hearnsberger appointed a committee to engage an appraiser for the purpose of establishing the value of Mullins’s and Stinson’s shares.

Meanwhile, Mullins, Stinson, and Tyson hired an attorney, who informed the board that all three men would sell their shares (five total) to the Club for $212,000 each. The Club apparently took this letter as proof that all three men were involved in a conspiracy to artificially increase the value of their stock, and the board scheduled a meeting to address Tyson’s conduct with regard to the sales. In April 2005, the board voted to terminate Tyson’s membership for “conduct unbecoming a member” and to rescind its offer to purchase Tyson’s share.

At some point, the Club obtained an appraisal that valued its shares at $93,100 each — an amount less than the original 1993 subscription price and far less than the price the Club agreed to pay at the October 2004 meetings. The Club informed appellees that it would pay that price for their shares.

Mullins, Stinson, and Tyson did not accept the Club’s offer to purchase their shares for $93,100. Instead, they sued the Club and its remaining members for wrongful expulsion, alleging the Club’s lack of authority to impose the assessments and other “oppressive” conduct. Their complaint sought an order enjoining the Club’s actions, declaring the Club’s actions null and void, awarding monetary damages, and dissolving the Club and appointing a receiver. The Club answered that it had the power to levy the assessments and that all three appellees had engaged in conduct unbecoming a member, warranting their expulsion. Following discovery, each side filed a motion for summary judgment with numerous | ¿attachments, including minutes of relevant meetings; corporate articles, bylaws, and other documents; and affidavits and depositions from almost all members and directors. After viewing the attachments and hearing the parties’ arguments, the circuit court entered a partial summary judgment, ruling that the Club’s assessments were improper; that the termination of appellees’ memberships was improper; that the Club’s actions were oppressive; and that the Club should be dissolved and a receiver appointed.

The Club now appeals from the summary-judgment order. It argues that, contrary to the court’s ruling, it possessed the authority to burden Mullins’s and Stin-son’s shares with assessments; that it had the power to expel Mullins and Stinson for not paying the assessments; that it had the power to expel all three appellees for conduct unbecoming a member, i.e., conspiring to inflate the price of their shares; and that it did not engage in oppressive conduct that would require corporate dissolution under Ark.Code Ann. § 4-27-14B0 (Repl.2001). As we will explain, issues of material fact remain on each of these issues, thereby precluding the entry of summary judgment.

With regard to the Club’s authority to levy assessments, both sides asked the circuit court to glean the extent of the Club’s assessment power by reviewing the language in its corporate documents. The court’s task was akin to contract interpretation. See William Meade Fletcher, Fletcher Cycolpedia of the Law of Private Corporations §§ 3640 & 4198 (Revs.2006 and 2001). See also Taylor v. Hinkle, 360 Ark. 121, 200 S.W.3d 387 (2004). The law of contract interpretation is well established. The court’s duty is to construe the meaning of the writing in accordance with the plain language employed. Machen v. Machen, 2011 Ark.

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Cite This Page — Counsel Stack

Bluebook (online)
384 S.W.3d 555, 2011 Ark. App. 381, 2011 Ark. App. LEXIS 420, Counsel Stack Legal Research, https://law.counselstack.com/opinion/po-boy-land-co-v-mullins-arkctapp-2011.