A recent unpublished decision on dissolution and shareholder injury revisits the Supreme Court’s decision in Notz. In Altergott v. Helene Altergott Family Corporation, 2008 AP1944 (June 16, 2009), the District 3 court of appeals cited Notz in its holding that the primary injury was to the corporation, rather than to the plaintiff shareholder.
[O]ur definition of oppressive conduct “requires that those in control of a corporation willfully treated some of the shareholders in a wrongful manner to which other shareholders were not subjected.”
Step one in bringing (or defending) a shareholder oppression/dissolution claim must be to identify the primary injury and the injured.
On April 29, 2009, a very divided Wisconsin Supreme Court addressed, in a thorough if fractured manner, issues of direct claims for breach of fiduciary duty to a minority shareholder and judicial dissolution. The decision in Notz v. Everett Smith Group, et. al, 2006AP3156, arises from a motion to dismiss, so it is particularly instructive for those of us drafting or responding to initial pleadings. However, don’t make the mistake of thinking this case will be a quick read.
The unanimous Court permitted Notz’s fiduciary breach claims based on a so-called “constructive dividend” to proceed, along with his claim for judicial dissolution. This decision was exhaustively explained, with Roggensack writing a separate concurrence (joined by Gableman) and Bradley also writing a separate concurrence (joined by Abrahamson). Ziegler did not participate.
Where Bradley and Abrahamson parted ways with the rest was on the majority’s dismissal of Notz’s claims for breach of fiduciary duty based on loss of corporate opportunity. Bradley’s arguments that the majority’s reasoning is inconsistent are definitely worth having a look at.
