LP6.2 Lien v. Lien Essay

A. What type of business entity did Pete Lien & Sons, Inc. , operate when it was originally founded in 1944?. Pete Lien & Sons, Inc. operated a partnership when the business was originally founded in 1944. B. Who were the original three partners of Pete Lien & Sons, Inc. , when it was founded? The original partners were Bruce Lien, his brother Charles Lien, and their father Pete Lien Sr. C. When Pete Lien & Sons, Inc. , incorporated in 1952, the partners became ___________ of the corporation. When Pete Lien & Sons, Inc. , in 1952, the partners became equal shareholders of the corporation. D. How many people served on the corporation’s board of directors at the time of the lawsuit? At the time of the lawsuit, seven people served on the corporation’s board of directors. E. At the time of the litigation, who owned the majority of stock in the corporation and received more income and dividends than any other shareholder? Bruce Lien owned the majority of stock in the corporation and received more income and dividend than the other shareholders. F. What allegations did Bruce Lien assert his complaint in the civil action that he brought against the corporation and the other members of the board of directors in April 2000? Bruce Lien alleged minority shareholder oppression, breach of fiduciary duty and tortuous interference with prospective business relations or expectancy. G. Under what South Dakota statute did the trial court find that there was a shareholder deadlock in failing to elect directors? (example: (SDCL __-__-__) Under SDCL 47-7-34(3) That the shareholders are deadlocked in voting power, and have failed, for a period which included at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election of their successors H. What did the trial court determine to be the most equitable manner of breaking the deadlock? The trial court determined the most equitable manner of breaking the deadlock was a blind auction between Bruce and all the other shareholders for the sale of the corporation. I. When the trial court’s decision was appealed, did the South Dakota Supreme Court, agree that a deadlock existed? No, the Supreme Court did not agree a deadlock existed and reversed the trial court’s rulings. The Supreme Court stated, there was no showing that the shareholders were deadlocked in voting power because of Bruce’s refusal to attend the meeting and participate in the voting for new directors.