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Guller v. Waks

Court of Appeals of Missouri, Eastern District, Fourth Division

December 26, 2017

JAMES GULLER, Plaintiff/Appellant,
MICHEL WAKS, Defendant/Respondent.

         Appeal from the Circuit Court of the City of St. Louis

          Honorable David L. Dowd


          Lisa Van Amburg, Judge

         James Guller appeals the trial court's summary judgment in favor of his former business partner, Michel Waks, in this dispute involving Guller's departure from their jointly-owned company. We affirm.


         Cooperative Home Care, Inc. (CHC) was formed by Waks's mother-in-law in 1986. Waks and his wife, Ruth Sontag, took over the business in 1990 and hired Guller as a salesman in 1997. In 1998, Waks and Guller entered into an operating agreement as equal shareholders and executed a Restrictive Stock Agreement (RSA) providing for the continuation of the company in the event of a shareholder's departure, death, or disability. As relevant here, the purpose of the RSA is stated in the recitals as follows:

The Stockholders and the Company believe it is in their mutual best interest to provide for continuity and harmony in the management and policies of the Company. It is the mutual purpose of the Stockholders and the Company: (a) to provide certain options to the Stockholders and to the Company to purchase a Stockholder's Shares prior to any voluntary lifetime or involuntary transfer by such Stockholder and upon the termination of Waks' or Guller's employment with the Company; … and (f) to provide an option to Waks to purchase all of the Shares of Guller in the event the Stockholders agree they are unable to work together.

         Article II of the RSA sets forth the triggers and procedures for a shareholder buy-out. In short, if any shareholder wishes to sell his shares or receives a bona fide offer from a third party, he must first notify the other shareholder, who has the option to purchase those shares at the lesser of either the price dictated by the valuation terms of the RSA (Article IX) or the same price offered by the third party, whichever is less. Article IX provides for a purchase price of fair market value as determined by appraisers appointed by each party, reconciled using averages. These features are discussed further below as relevant to particular points.

         From 1998 to 2009, CHC's board of directors was comprised of Waks, Sontag, Guller, and Guller's wife, JoAnne. The Gullers divorced in 2009, and their dissolution judgment divested JoAnne of all interest and role in the company. In the years that followed, tensions mounted between the parties. According to Waks, Guller was ineffective and deceitful in his management of the company. According to Guller, he wished to sell the company starting in 2014 and discussed it openly with Waks, but Waks rejected the idea. In early June 2015, Guller explored an opportunity to sell the company to a third party, Michael Laycob, and facilitated Laycob's due diligence inspection of CHC's operations and finances. Around that same time, Waks decided to terminate Guller's employment. On June 26, 2015, Guller received a formal letter of intent from Laycob seeking to buy CHC for $5 million. Three days later, Waks terminated Guller for cause and excluded him from the premises. Waks subsequently obtained an appraisal of CHC and attempted to purchase Guller's shares in the company as provided in the RSA.

          Guller refused to accept payment and instead filed a petition to dissolve the company pursuant to §351.467, though the accompanying business plan proposed a sale of the entire company rather than dissolution. Waks filed a counterclaim alleging breach of contract and seeking declaratory and injunctive relief to enforce the buy-out and prohibit Guller from disclosing confidential information or attempting to sell the company. The parties filed cross-motions for summary judgment and statements of uncontroverted material facts with supporting affidavits, depositions, and other evidence.

         The trial court entered summary in favor of Waks, reasoning that §351.467 was inapplicable here in that the RSA governs the parties' rights and obligations in the event of a third-party offer or termination of employment. The court further found that Guller's termination was effective and properly ratified by CHC's board, including by Guller himself by acquiescence. Consequently, the court ordered Guller to accept the buy-out and pay Waks's attorney fees as required by the RSA.

         Guller appeals and asserts that the trial court erred in that: (1) §351.467 applies notwithstanding the RSA, (2) the letter of intent did not constitute a bona fide offer, (3) Guller's termination was invalid, (4) Guller did not acquiesce to his termination, (5) the valuation of Guller's shares did not comply with the RSA, and (6) Guller was entitled to discover Waks's unredacted attorney invoices.

         Standard of Review

         Appellate review of summary judgment is de novo, viewing the record in the light most favorable to the party against whom judgment was entered. Comp & Soft, Inc. v. AT & T Corp., 252 S.W.3d 189, 194 (Mo. App. E.D. 2008). "The purpose of summary judgment is to resolve cases in which there is no 'genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law.' Rule 74.04(c)(6)." Id. "Where the 'genuine issues' raised by the non-movant are merely argumentative or imaginary, summary judgment is proper." Id.


         Applicability ...

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