World Egg Bank, Inc. v. Nesco Inv., LLC

Our Appeals Court rules that where a minority shareholder dissents from the sale of a corporation, the fair value of those shares is determined at the date of the sale.

A 50% plus owner in a corporation wanted to sell his stock and dissolve a corporation objection of the minority owner.  The majority owner sent a demand to the minority owner that said the stock would be sold to his partner. Great! The minority owner proclaimed she did not plan to vote for such a nutty proposal. She demanded money for her shares.  At the meeting, the majority owner approved the sale and dissolution with his white-shoe law firm.  Yet the closing of the corporation did not occur until six months later when it was valuated and its assets were conveyed to another company through an asset purchase agreement. Say what?

This litigation was whether the date of the shareholder meeting or the date of the valuation and subsequent conveyance/sale should be used to value her shares.  The trial court concluded that the shares should be valued at the shareholder meeting (a wait-and-see game & inviting fraud) when the corporation authorized the sale.  The Court of Appeals disagreed. So do we.

The Arizona statute defining dissenting shareholders’ rights is pretty clear.  Under the statute, a shareholder may “dissent from and obtain payment of the fair value of the shareholder’s shares in the event of . . . consummation of a sale or exchange. . . .”  A.R.S. § 10-1302(A)(3).  And the statute also provided that the fair value is “the value of the shares immediately before the effectuation of the corporate action.”  A.R.S. § 10-1301(4).  Reading these provisions together, the Court concluded that the later date should be used to value her shares.

We have said for over 34 years, there are four times when litigations occur in a closely held business: Fraud, divorce, when it makes a bunch of money, or when it loses a bunch of money. If any of the big three here (not divorce) apply to your business or investments, give us a call at 602.319.6899. We can help you!

We also handle, Breach of contract, Non-compete agreements, Non-disclosure agreements, Employee theft and embezzlement, Insurance purchases and enforcement of policy coverage, Negotiation and/or enforcement of commercial leases, Negligence and gross negligence resulting in losses, Intentional acts causing a company to suffer damages, Tortious interference with contractual relationships, Unjust enrichment, Real Estate fraud, Consumer fraud, Conversion/Theft, Intentional and/or negligent misrepresentation, Business torts and Real estate title and escrow.

Over the last 32 years, we have filed scores of claims for common law fraud, RICO, AZRAC, and fraudulent schemes.
Common law fraud involves a dispute between two people or business entities. It almost always comes from a contractual relationship that went bad or an investment scheme. Unlike criminal fraud cases in which the defendant can go to prison if convicted, in a civil fraud case, the judgment will only be for money. There is strict liability for many types of investment frauds. Lawyers often threaten jail in a civil fraud case, but it never happens. These types of threats border on extortion. The AG, Police or FBI will seldom get involved in a civil dispute where individuals are alleging fraud.
Contract law, common law fraud and, real estate fraud is what we do.
Our years of experience and reputation for being (AAA) Available, Able, and Articulate have earned us the distinction of being among the top small law firms in Scottsdale, Arizona. Please call Bill Miller at 602.319.6899 with questions about your fraud case.

We also handle, Breach of contract, Non-compete agreements, Non-disclosure agreements, Employee theft and embezzlement, Insurance purchases and enforcement of policy coverage, Negotiation and/or enforcement of commercial leases, Negligence and gross negligence resulting in losses, Intentional acts causing a company to suffer damages, Tortious interference with contractual relationships, Unjust enrichment, Real Estate fraud, Consumer fraud, Conversion/Theft, Intentional and/or negligent misrepresentation, Business torts and Real estate title and escrow. Call Bill miller at 602.319.6899

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