Po-Boy Land Co. v. Mullins
2011 Ark. App. 381
| Ark. Ct. App. | 2011Background
- Po-Boy Land Company, a Hempstead County hunting club formed in 1993, is a closely held corporation with 15 shares; Mullins and Stinson were original shareholders, Tyson joined in 1994, and Stinson acquired two additional shares in the 1990s.
- In fall 2004, Stinson proposed selling his share to McQueen and Tyson proposed selling his share to Clay; the club exercised its right of first refusal to purchase the shares, and the board voted on October 9, 2004 to acquire Tyson’s and Stinson’s shares for $212,000, with Mullins abstaining.
- The board funded the purchases by assessing all members, including Mullins and Stinson; Mullins and Stinson refused to pay the assessments, leading to suspension of membership privileges and an impending expulsion.
- In December 2004 the board expelled Mullins and Stinson on two grounds: failure to pay assessments and alleged misrepresentation about McQueen’s offer; the board rescinded its offer to purchase Stinson’s share, and an appraisal process for valuation of shares was initiated.
- Mullins, Stinson, and Tyson sought to sell their shares back to the Club for $212,000 each, hired counsel, and alleged oppressive conduct; in April 2005 Tyson was expelled for conduct unbecoming a member, and the Club later obtained an appraisal valuing shares at $93,100 each, which the Club offered to pay but was rejected by appellees.
- Appellees filed suit in 2006 seeking dissolution of the Club, injunctions, damages, and appointment of a receiver; the circuit court granted partial summary judgment striking down some assessments, expulsion, and oppression, and dissolving the Club with a receiver appointed.
- The Club appealed, arguing it had authority to levy assessments, could expel members for nonpayment and conduct unbecoming, and that there was no oppressive conduct requiring dissolution; the appellate court reversed and remanded for lack of a trial on disputed issues of material fact.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to levy assessments to repurchase shares | Mullins argues assessments authorized repurchase of shares; Club contends authority exists under documents. | Club contends its bylaws and governing documents authorize assessments for such purposes. | Material facts remain; summary judgment improper. |
| Authority to expel Mullins and Stinson for nonpayment | Expulsion for nonpayment was improper absent authorized assessments and lawful procedure. | Expulsion justified by nonpayment and conduct unbecoming; board had discretion. | Material facts remain; summary judgment improper. |
| Expulsion for conduct unbecoming (misrepresentation/conspiracy to inflate price) | No conduct unbecoming; no proven conspiracy to inflate stock value. | Alleged misrepresentation and conspiracy supported expulsion. | Material facts remain; summary judgment improper. |
| Dissolution and oppression under Ark. Code Ann. § 4-27-140(B) | Dissolution warranted due to oppressive conduct by directors. | No oppression proven; club actions within authority. | Material facts remain; summary judgment improper. |
Key Cases Cited
- Taylor v. Hinkle, 360 Ark. 121 (2004) (contract interpretation framework for by-law disputes)
- Lee v. Mansour, 104 Ark.App. 91 (2008) (summary judgment limited to determining lack of triable issues)
- Acuff v. Bumgarner, 371 S.W.3d 709 (Ark. App. 2009) (summary-judgment posture when material facts remain)
- Deltic Timber Corp. v. Newland, 374 S.W.3d 261 (Ark. App. 2010) (reversal of summary judgment where issues of fact exist)
- Beckworth v. Diamante, 379 S.W.3d 752 (Ark. App. 2010) (summary-judgment standard in corporate disputes)