Gries v. Plaza Del Rio Management Corp.
335 P.3d 530
Ariz. Ct. App.2014Background
- Gries and Harper formed PDR in 1984; in 1985 they executed a shareholder’s agreement with equal ownership and a shotgun provision.
- The Retirement Agreement (2000) provided Harper manages PDR with 90% of net profits and Gries 10%, later disputed as to whether it was a shareholder’s agreement or an employment contract.
- Gries sued in 2011 seeking a declaration that the Retirement Agreement expired (Count 1), alleging fiduciary breaches (Count 2) and seeking dissolution (Count 3); Harper moved to buy Gries’s shares under A.R.S. § 10-1434.
- The superior court held the Retirement Agreement expired as a shareholder’s agreement (valid employment contract) and valued Gries’s shares, then stayed dissolution and allowed the Shotgun Provision to resolve the dispute.
- Gries attempted to exercise the Shotgun Provision to sell his shares to Harper for $1.5 million, leading the court to halt the dissolution and dismiss the amended complaint as moot, while awarding costs.
- Gries appealed the damages dismissal; Harper cross-appealed on several rulings including the determination that the Retirement Agreement was a shareholder’s agreement and the equity-based halting of dissolution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dissolution proceedings could be halted when Shotgun Provision was invoked | Gries argues dismissal should continue; dissolution remains needed | Harper argues dismissal moot because Shotgun resolves dispute | Yes; court may halt dissolution as equitable. |
| Whether the Retirement Agreement is a valid shareholder’s agreement under §10-732 | Gries contends it is within §10-732(A)(8) and satisfies §10-732(B) | Harper contends it is not signed by all shareholders and not a shareholder’s agreement | Not a valid shareholder’s agreement; it is an employment agreement. |
| Whether allowing Shotgun Provision exercise was fair and mooted dissolution | Gries claims inequity in forcing payment via Shotgun | Harper asserts voluntary choice and private contract defaulted dissolution | Equitable; Shotgun provision resolved dispute and dismissal proper. |
Key Cases Cited
- In re Strobel, 149 Ariz. 213 (1986) (aggrieved party principle in appeals under Rule 1)
- Flying Diamond Airpark, LLC v. Meienberg, 215 Ariz. 44 (App. 2007) (abuse of discretion standard for equitable relief)
- City of Phoenix v. Geyler, 144 Ariz. 323 (1979) (deference to trial court on factual–equitable determinations)
- Ariz. Downs v. Ariz. Horsemen’s Found., 130 Ariz. 550 (1981) (context for shall versus may in statutes)
- HCZ Const., Inc. v. First Franklin Fin. Corp., 199 Ariz. 361 (App. 2001) (shall/may interpretive approach in procedural statutes)
- In re Estate of Reynolds, 235 Ariz. 80 (App. 2014) (affirming ruling if correct for any reason)
- 1800 Ocotillo, LLC v. WLB Group, Inc., 219 Ariz. 200 (App. 2008) (private contracting freedom and §10-732 scope)
- State v. Cid, 181 Ariz. 496 (App. 1995) (read statutes together and harmonize terms)