Levco Tech, Inc. v. Kelly

Syllabus

The defendants E and S, shareholders of the plaintiff, L Co., a family owned company, appealed to this court from the judgment of the trial court determining, inter alia, that the defendants R, J and D owned the majority of the outstanding shares of L Co.'s common stock. S had been the president, and M, her husband, had been the secretary of L Co. since its founding. M, S and their children, E, R, D, A and P, each owned ten of the seventy shares of the common stock issued by L Co. In 2012, when D had concerns about her marriage, she purportedly created a trust and transferred her ten shares to S, as trustee for D's children. Neither D nor S consulted counsel regarding the making of the trust, and, within forty-eight hours, S agreed with D that the transfer was not a good idea and took steps to undo it. In 2015, R acquired D's ten shares and A's ten shares, thereby giving him ownership of thirty shares. After P's son, J, executed an option to purchase six of P's shares, R believed that he and J controlled thirty-six shares of L Co.'s stock and gave notice to the other board members of a meeting in which he proposed to elect himself to the new position of chairman of the board and chief executive officer. On November 20, 2015, in an effort to block R from having majority control of L Co., E drafted a stock purchase agreement under which L Co. would issue to E twelve new shares and provide a loan to help him pay for the stock. At 1:50 p.m. that day, notice was sent via e-mail to the other board members, stating that the board would conduct a meeting at 2:15 p.m. to effectuate the stock purchase agreement. R, J and D were out of state at that time and did not attend the meeting, at which a contested majority of the board, including E and S, approved the stock purchase agreement. The next day, J and P, who also had voted to approve the stock purchase agreement, signed documents to revoke their votes, and E, S and M signed a document approving the removal of all board mem