Busse v. United Panam Financial Corp., 222 Cal. App. 4th 1028

Panam Financial, a subprime auto-loan public company controlled effectively by founder Guillermo Bron (≈38–40% ownership; chairman; board allies), was taken private in a 2010–2011 management buyout at $7.05/share. Plaintiffs are former minority shareholders (Busse; the Bortel trust) who objected.
Plaintiffs filed suit alleging breach of fiduciary duty and seeking either rescission (set-aside) of the buyout or, alternatively, "rescissory damages." Demurrer sustained without leave to amend; plaintiffs appealed.
Central statutory provision: Corporations Code §1312. Subdivision (a) generally makes appraisal the exclusive remedy for dissenting shareholders; subdivision (b) provides an exception when a party to the reorganization is "directly or indirectly controlled by, or under common control with" another party.
Legal question: whether §1312(b) restores common-law causes of action (including money damages for breach of fiduciary duty) to dissenting shareholders in common-control buyouts, or instead only permits equitable relief to set aside/rescind the transaction (while appraisal remains the exclusive monetary remedy).
Court of Appeal accepted plaintiffs’ factual allegations (demurrer posture) and held plaintiffs adequately pleaded common control but concluded §1312(b) does not allow monetary damages — it permits only the set-aside/remedial route (with procedural protections such as notice and judicial findings).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does §1312(b) permit monetary damages ("rescissory damages") against controlling insiders in a common-control buyout?	§1312(b) is an exception to §1312(a); it preserves common-law rights in common-control cases, including suits for breach of fiduciary duty and damages.	§1312(b) is a narrow exception that allows plaintiffs to attempt to set aside/rescind the transaction; it does not revive a free-standing statutory right to money damages (appraisal remains the exclusive monetary remedy).	Held: §1312(b) does not allow monetary damages; plaintiffs are limited to equitable set-aside/rescission (appraisal remains the exclusive remedy for monetary recovery).
Did plaintiffs sufficiently plead common control to proceed on a §1312(b) set-aside theory?	Allegations that Bron owned ~40%, controlled board elections, publicly admitted substantial influence, and placed directors who never lost reelection show direct/indirect control.	Defendants contended plaintiffs failed to plead sufficient common control to invoke §1312(b).	Held: Plaintiffs adequately alleged common control under the pleading standard; claim to set aside the buyout survives demurrer and must be resolved on the facts below.

Beechwood Securities Corp. v. Associated Oil Co., 104 F.2d 537 (9th Cir.) (early appraisal‑statute construction; minority limited to value remedy)
Giannini Controls Corp. v. Superior Court of Los Angeles County, 240 Cal.App.2d 142 (Cal. Ct. App.) (reaffirmed appraisal as exclusive remedy; rejected equitable rescission as alternative)
Gallois v. West End Chemical Co., 185 Cal.App.2d 765 (Cal. Ct. App.) (statutory scheme intended to permit mergers despite dissent while providing compensation mechanism)
Sturgeon Petroleums, Ltd. v. Merchants Petroleum Co., 147 Cal.App.3d 134 (Cal. Ct. App.) (interpreted §1312 as preserving appraisal exclusivity and treating §1312(b) as a limited exception)
Steinberg v. Amplica, Inc., 42 Cal.3d 1198 (Cal.) (California Supreme Court: appraisal is the exclusive remedy under §1312(a); appraisal can account for fiduciary breaches)
Hellum v. Breyer, 194 Cal.App.4th 1300 (Cal. Ct. App.) (pleading indirect control may be sufficient; control often a factual inquiry)
Jones v. H. F. Ahmanson & Co., 1 Cal.3d 93 (Cal.) (recognition of fiduciary duties of controlling shareholders to minority)
Singhania v. Uttarwar, 136 Cal.App.4th 416 (Cal. Ct. App.) (post‑Steinberg application: §1312(a) bar applies despite alleged disclosure failures; appraisal remedy upheld)