Tim Laske, Individually and on Behalf of Others v. Mark Krueger, Werner Sublette, Ron Phillips and Charles Zeman

CourtMissouri Court of Appeals
DecidedJanuary 10, 2023
DocketWD85173
StatusPublished

This text of Tim Laske, Individually and on Behalf of Others v. Mark Krueger, Werner Sublette, Ron Phillips and Charles Zeman (Tim Laske, Individually and on Behalf of Others v. Mark Krueger, Werner Sublette, Ron Phillips and Charles Zeman) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tim Laske, Individually and on Behalf of Others v. Mark Krueger, Werner Sublette, Ron Phillips and Charles Zeman, (Mo. Ct. App. 2023).

Opinion

In the Missouri Court of Appeals Western District TIM LASKE, INDIVIDUALLY AND ) ON BEHALF OF OTHERS, ) ) WD85173 Appellant, ) ) OPINION FILED: v. ) January 10, 2023 ) MARK KRUEGER, WERNER ) SUBLETTE, RON PHILLIPS AND ) CHARLES ZEMAN, ) ) Respondents. )

Appeal from the Circuit Court of Adair County, Missouri The Honorable Tracey A. Mason-White, Judge

Before Division Four: Gary D. Witt, Chief Judge, Presiding, Mark D. Pfeiffer, Judge and John Torrence, Special Judge

Tim Laske ("Laske"), individually and on behalf of others similarly situated, appeals

the Circuit Court of Adair County's ("trial court") judgment granting the motion to dismiss

filed by Mark Krueger, Werner Sublette, Ron Phillips, and Charles Zeman (collectively,

"Respondents"). On appeal, Laske argues the trial court erred in dismissing his petition

because Laske's claims against Respondents are direct claims, not derivative claims, in that

the alleged breach by Respondents harmed the shareholders only, not the corporation, and only the shareholders will be entitled to recover as damages the difference between the

price Respondents negotiated for their stock and what was available in the market. On

appeal, Respondents filed a motion to dismiss for lack of appellate jurisdiction that was

taken with the case. We deny Respondents' motion to dismiss the appeal and affirm the

judgment of the trial court.

Factual and Procedural History1

As alleged in the petition, Laske was a shareholder of Bancorp, Inc. ("Bancorp")

and owned 263 shares of Bancorp stock, representing 3.16% of the issued shares. In fall

of 2016, the Bancorp Board of Directors ("Board") began exploring a sale of Bancorp.

Connections Bancshares, Inc. ("Connections") was the first potential buyer and made an

initial offer to purchase all issued stock of Bancorp for $963 per share. On September 13,

2016, Respondents organized a meeting of Bancorp's top shareholders at which

Connections presented a Letter of Intent ("LOI") to purchase all the outstanding stock of

Bancorp. The proposal presented two choices for the shareholders: the shareholders could

sell their stock outright for a purchase price of $1,025 per share, or the shareholders could

opt to buy into Connections stock by exchanging their Bancorp stock at $910 per share for

a minimum of 1,200 shares of Connections stock at the price of $115 per share. The LOI

also contained a "no shop" provision, which stated that "Sellers agree that it will not

negotiate or discuss the sale of the Bank assets with another party until" a purchase

1 On appeal from a motion to dismiss, we "assume the factual allegations contained in the petition are true and make no attempt to weigh their credibility or persuasiveness." Fenlon v. Union Elec. Co., 266 S.W.3d 852, 854 (Mo. App. E.D. 2008).

2 agreement has been executed. Connections gave Bancorp shareholders until October 7,

2016, to accept the terms of the LOI.

Bancorp's shareholder agreement contains a "Drag-Along Option," which states that

if shareholders owning 70% or more of the outstanding shares of stock agree to sell their

stock to a third party or merge with or into another entity, those wishing to sell or merge

can require all shareholders to participate in the transaction and forfeit their option rights.

Respondents moved forward with Connections's offer and arranged meetings with

shareholders to argue in favor of the offer. In doing so, Respondents withheld information

from shareholders, including information about other interested buyers and other potential

offers. Respondents were aware of at least three other banks interested in submitting higher

bids to Bancorp, but none of the other potential buyers was allowed to conduct due

diligence. On November 18, 2016, after Connections's LOI had expired, one potential

buyer, Alliant Bank, offered to purchase Bancorp for $8,750,000, or $1,050 per share.

Alliant Bank later increased its offer to $9,250,000, or $1,109 per share.

Bancorp received legal advice that a formal process to explore the other offers

would be advisable after Connections's LOI had expired. Bancorp's president, Sam

Berendzen ("Berendzen"), called a special meeting of shareholders on November 28, 2016,

and explained that Bancorp's attorney had suggested starting the process over to consider

other potential buyers. Berendzen explained that the organization and initial process

utilized in the potential sale of Bancorp was unsatisfactory and legally unsound. However,

Respondents pressed the Connections offer on the shareholders by urging them to ignore

potential buyers and commit to only dealing with Connections. Although the majority of

3 shareholders present at the meeting voted in favor of starting the process over to consider

other offers, the minutes of the meeting reflect that 54% of the shares allegedly represented

at the meeting voted to continue to negotiate exclusively with Connections. This vote count

was accomplished by adding a "yes" vote from the largest shareholder who was not present

at the meeting, but no other absent shareholders' votes were sought or added to the count.

Bancorp then focused exclusively on Connections's offer and did not solicit any other offers

after the November 28, 2016, meeting. Respondents withheld information from the

shareholders regarding the other proposals made to purchase Bancorp. Respondents also

excluded from meetings the one director who objected to proceeding exclusively with

Connections.

On February 2, 2017, the Board announced that 70% of shareholders had signed a

stock purchase agreement with Connections, and, pursuant to the "Drag-Along Option," all

shareholders would be forced to accept Connections's terms. Respondents personally

benefitted from the agreement with Connections, and several members of the Board

secured positions on the Connections board of directors. The structure of the agreement

allowed Respondents to benefit from the stock-exchange option, but many shareholders

did not own enough stock to participate in the exchange option without adding additional

funds. In the final agreement, Connections purchased Bancorp's stock for $1,050 per share.

The last proposal from Alliant Bank offered to buy Bancorp's stock for $1,109 per share.

Laske filed a class action petition on behalf of all Bancorp stockholders who sold

their Bancorp stock to Connections. In the petition, Laske alleged Respondents breached

their fiduciary duties of care and loyalty to act in the best interest of the shareholders by

4 securing a transaction that offered the best value available to the shareholders, and

Respondents breached their fiduciary duties through self-dealing by securing substantial

compensation as members of the Connections board of directors. Laske alleged that he

and the class were directly harmed by Respondents' actions. Respondents filed a motion

to dismiss, which was granted by the trial court, because Laske lacked standing to bring a

direct action against Respondents. The trial court held that Laske must bring a derivative

action against Respondents on behalf of the corporation. The trial court issued an order

granting Respondents' motion to dismiss on October 27, 2021, and issued its judgment on

January 31, 2022.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Gieselmann v. Stegeman
443 S.W.2d 127 (Supreme Court of Missouri, 1969)
Fenlon v. Union Electric Co.
266 S.W.3d 852 (Missouri Court of Appeals, 2008)
Place v. P.M. Place Stores Co.
950 S.W.2d 862 (Missouri Court of Appeals, 1997)
Walters Bender Strohbehn & Vaughan, P.C. v. Mason
316 S.W.3d 475 (Missouri Court of Appeals, 2010)
Tooley v. Donaldson, Lufkin, & Jenrette, Inc.
845 A.2d 1031 (Supreme Court of Delaware, 2004)
Siefert v. Leonhardt
975 S.W.2d 489 (Missouri Court of Appeals, 1998)
Dawson v. Dawson
645 S.W.2d 120 (Missouri Court of Appeals, 1983)
Centerre Bank of Kansas City National Ass'n v. Angle
976 S.W.2d 608 (Missouri Court of Appeals, 1998)
Daniel B. Nickell v. Michael F. Shanahan, Sr.
439 S.W.3d 223 (Supreme Court of Missouri, 2014)
Dunn v. Precythe
557 S.W.3d 454 (Missouri Court of Appeals, 2018)

Cite This Page — Counsel Stack

Bluebook (online)
Tim Laske, Individually and on Behalf of Others v. Mark Krueger, Werner Sublette, Ron Phillips and Charles Zeman, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tim-laske-individually-and-on-behalf-of-others-v-mark-krueger-werner-moctapp-2023.