V&E Secures Texas Supreme Court Victory for Herring Bancorp
The Texas Supreme Court has ruled in favor of Herring Bancorp, Inc. and bank executives C.C. Burgess and C. Campbell Burgess in a long-running dispute over the redemption of preferred shares held by John Mikkelsen as part of the bank’s conversion into a Subchapter “S” Corporation.
Without requesting briefing on the merits, on January 26, 2018, the high court denied a petition for review filed by Mikkelsen challenging an Amarillo Court of Appeals decision reversing his trial court victory and an award of more than $127,000 in attorney’s fees against Herring Bancorp. The case is now set to return to the trial court to consider Herring Bancorp’s claim for attorney’s fees.
The underlying dispute began in 2008, when Mikkelsen filed suit claiming that Herring Bancorp had breached its Articles of Incorporation by failing to redeem his preferred shares properly two years earlier. Mikkelsen also asserted minority oppression and breach of fiduciary duty claims against C.C. Burgess and C. Campbell Burgess.
In 2011, the state trial court granted Mikkelsen’s motion for partial summary judgment on his breach of contract claim related to the validity of the 2006 redemption. In light of that ruling, Herring Bancorp again redeemed Mikkelsen’s preferred shares in 2013 to cover what he allegedly was owed under the Articles of Incorporation.
In January 2015, after a three-day jury trial, the jury awarded Mikkelsen more than $23,000 in compensatory damages based on its findings that C.C. Burgess and C. Campbell Burgess engaged in oppressive conduct, and it awarded Mikkelsen more than $127,000 in attorneys’ fees through trial plus $55,000 in conditional appellate fees based on Mikkelsen’s breach of contract claim. The trial court entered judgment in June 2015, which included a declaratory judgment in favor of Mikkelsen that the 2006 redemption and the 2013 tender were invalid.
Herring Bancorp and the Burgesses engaged V&E to take the lead on post-trial motions and the appeal. The trial court denied Herring Bancorp and the Burgesses’ post-trial motions. Herring Bancorp and the Burgesses then filed an appeal. Mikkelsen also filed a cross-appeal on certain evidentiary issues.
In a complete vindication for Herring Bank and the Burgesses, the Amarillo Court of Appeals held that both the 2006 redemption and the 2013 tender were valid under the terms of the Articles of Incorporation and issued a declaratory judgment to that effect. The court of appeals also rendered judgment against Mikkelsen on his minority oppression, breach of fiduciary duty, and attorneys’ fees claims.
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