Koch Development Corporation and Daniel L. Koch v. Lori A. Koch, as Personal Representative of the Estate of William A. Koch, Jr.
2013 Ind. App. LEXIS 482
| Ind. Ct. App. | 2013Background
- KDC and Will Koch family shareholders entered a Share Purchase and Security Agreement in 2002 governing buyouts of decedent shares.
- Section 5 required purchase/redemption within 180 days after death at a stipulated price or based on a time-based formula; time was expressly of the essence.
- Will died in 2010; Lori A. Koch was appointed personal representative of the Estate.
- Dan Koch (KDC president) and KDC repeatedly sought to avoid or modify the buyout, including salary increases and plans to keep Will’s shares.
- On December 7, 2010, KDC and Dan tendered a buyout offer far below the agreed price, including an improper setoff against Will’s promissory note; the Estate rejected the tender and filed suit in January 2011 for declaratory judgment.
- The trial court found multiple material breaches by KDC and Dan, concluded the Estate was excused from selling, and awarded ownership of 49,611.6 shares to the Estate
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Were KDC and Dan’s tender and conduct a material breach of the Agreement? | KDC/Dan breached by underpaying per share and misusing setoff. | Price and procedures were proper or can be adjusted under Exhibit 5.1.2. | Yes; material breach established. |
| Did the improper tender excuse the Estate from performing? | Estate should be excused due to KDC/Dan breaches. | Estate must perform notwithstanding breaches. | Yes; breaches excused Estate from performing. |
| Was the time-is-of-the-essence provision enforceable and did it impact performance? | Time was essential, delaying tender violated terms. | boilerplate language; not essential. | Yes; time was of the essence and breached. |
| Did Restatement factors support the finding of material breach and relief from performance? | Restatement factors show material breach; relief appropriate. | Restatement factors do not compel relief against performance. | Yes; Restatement analysis supported material breach and relief. |
Key Cases Cited
- Hardy v. S. Bend Sash & Door Co., 603 N.E.2d 895 (Ind. Ct. App. 1992) (writing suffices to show price agreement when minutes reflect agreement)
- Wilson v. Lincoln Fed. Sav. Bank, 790 N.E.2d 1042 (Ind. Ct. App. 2003) (breach excuses other party from performance)
- Satterthwaite v. Estate of Satterthwaite, 420 N.E.2d 287 (Ind. Ct. App. 1981) (dead man’s statute rendering testimony incompetent)
- Krukemeier v. Krukemeier Mach. & Tool Co., Inc., 551 N.E.2d 885 (Ind. Ct. App. 1990) (no implied condition precedent; life-insurance context distinguished)