John R. Baur v. Baur Farms, Inc. and Robert F. Baur
2013 Iowa Sup. LEXIS 73
| Iowa | 2013Background
- Baur Farms, Inc. (BFI) is a closely held family farm corporation formed in 1966 with a buyout provision based on “book value” per share as of the most recent fiscal year.
- Minority shareholder Jack Baur has not sold his stock despite decades of negotiations; BFI and its majority shareholder Bob have controlled governance and dividends.
- The bylaws’ buyout provision set a book value per share (1984: $686) and allowed sale to the corporation or other shareholders at that value if no agreement on a different price.
- BFI had never paid dividends; Jack sought dissolution or a fair value buyout due to lack of return on his equity and alleged oppressive conduct.
- The district court dismissed after Jack rested; the court of appeals remanded for trial; the Iowa Supreme Court reverses and remands for de novo review under a reasonable expectations standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What standard governs oppression of a minority shareholder? | Jack argues oppression under a reasonable expectations standard. | BFI contends no oppression shown; book value and buyout terms control. | Adopted a reasonable expectations standard for oppression in Iowa. |
| Did the district court err by dismissing before full evidence on fair value was heard? | Jack contends dismissal prevented proper record on fair value. | BFI asserts trial court correctly found no oppression. | Remanded for further proceedings to develop a full record on fair value. |
| Is the last offered price by BFI within the range of fair value? | Jack asserts repeated offers failed to reflect true value due to no return on equity. | BFI argues offers were within plausible value range given book value and lack of dividends. | Remand guided by proper standard; not dispositive on value at this stage. |
| Should the appeal be timely and properly before the court? | Rule 1.904(2) motion tolling issue supported timely appeal. | BFI argued untimely appeal. | Jurisdiction found; timing Tolling analyzed and resolved in favor of appeal. |
Key Cases Cited
- Cookies Food Prods., Inc. v. Lakes Warehouse Distrib., Inc., 430 N.W.2d 447 (Iowa 1988) (fiduciary duty and minority protections in closely held firms; oppression context)
- Maschmeier v. Southside Press, Ltd., 435 N.W.2d 377 (Iowa Ct. App. 1988) (oppression framework and reasonable expectations in close corporations)
- Lange v. Lange, 520 N.W.2d 113 (Iowa 1994) (de novo review standard for equity oppression claims)
- Baker v. Commercial Body Builders, Inc., 507 P.2d 387 (Ore. 1973) (oppression and buyout valuation in close corporations)