found that you've been deprived of the opportunity alienate your shares at trial this is how the supreme court is instructing the lower court to calculate damages the issue that we're really confronted with is one of speculation because we know in ahmanson the court is telling us where a shareholder is deprived of his opportunity to transact shares we don't know when he would have sold in ahmanson we were deprived of that opportunity because the stairs were made on saleable by virtue of creating a separate corporation with the control block that made the minority shares essentially unsaleable in this case mr de mint shares were made on  the damages is real although the amount is speculative equity demands that the minority shareholders be placed in a position at least just favorable is that of the majority the wrongdoer has created the uncertainty in this case not only does the court's award not place mr denecke in as good a position as mr donohue in fact it puts him in a worse position because the twelve percent shares that mr dimmick have increased mr donohue shares in fact mr the next twelve percent shares got essentially redistributed to the rest of the shareholders and they all got the benefit here mr donahue the record shows sold his shares for six million dollars and if you take twelve percent of that mr donahue was unjustly enriched seven hundred thousand dollars but all the shares that was all mr donahue shit was a were there other minority did mr donahue not notify the other people the other their other minority shareholder sixty percent of the companies owned by other people including your client miss i don't know that it bears on how the decision should come out here but to gets it he can see us from everybody from your standpoint and then are there some people who got a cut of he left  everybody got shares except several shareholders got left behind mr dimmock was one mr stang line was another ok that's shares on the date they were converted those in an effort to avoid speculation about when mr dimmock would have sold the shares the court imposed a remedy on mr dimmick that is impossible and because those shares that mr dimmock was supposed to get when the transaction closed on january thirty thousand nine hundred ninety six were ten dollars a share he would have received forty two thousand shares for his twelve percent interest he would have received forty four hundred twenty thousand burden of transfer restrictions and then the court is saying and then i'm going to say you would have alienated them anyway in other words we take the burden of these lockups and restrictions but we don't get the benefit of them there's not a there they could not have been very standard in an asset purchase deal just that you don't get the shares right away and so the shares could not have been sold for two years and the evidence is mr donahue didn't sell his shares they could not have been transferred people don't buy the value that the judge put on it the expert reza kind of hard to get around now and say now on our own case was incorrect the  the expert is valuing the expectancy of getting something in two years not the shareholder shares that he doesn't have even if comments and doesn't address the situation california law on conversion because the rule there is that with stock that rate rises and falls in value and you are deprived of the opportunity to sell it because you don't know it's been converted you get the elective choice to get the value of the shares at a time when you reasonably should have known when you knew when you had an opportunity to do something about it the result of this case to avoid speculation is to pick a war mr dimmick a fraction of the damages that mr donohue got for converting those very same shares the law doesn't provide for that it doesn't countenance telling of breaching fiduciary duty who converted twelve percent of a company that mr d entitlement to your penalty for that is you get all the appreciation of those shares you never should've taken and you're going to benefit by that to the tune of the appreciation in those shares during the period of time that nobody could sell including you there's no evidence in the record that anybody was able to transact any of the shares in violation of the one forty four restrictions the two year hold back because they didn't have the shares and then the liquidating trust that they held back even some of the last for the shares at the end does this does do we really want to send the message to the breeching who do share it and if we do we're the only people doing it because the conversion cases across the nation where it's st tell you you don't get to do that you don't get to convert shares with your only risk being having the refund the money that they were worth on the day you took them otherwise mr donohue the with the clarity of hindsight can know that stock has been converted and someone didn't know majority a director has breached issue sherrie duty and deprived a shareholder of the value of his stock and the stock itself that the duty who's reaching for you sure has taken that stock gets the benefit of the appreciation during the time he's taken it and hasn't told the plane to think about it this way the record shows that mr donahue decided who got shares and didn't get shares and somewhere along the way he granted mr demick fully vested shares and then changed his mind and decided to take them back in violation of law since mr dimmock didn't know about it mr duck money who had all this power mr donahue could just watch and see what the stock did and then decide whether he was going to give mr dimmick the shares depending on what it did if it goes up in value dramatically mr donahue keeps it and the only punishment he suffers is what they were worth when he when he took them otherwise he can just give them back and say gee they went down so here take them back that's not the way it works and there's just there's not one case cited by the of pelleas to support the conclusion that you're going to value them on the date they were taken when he didn't know couldn't mitigate couldn't do anything to cover and buy shares and enjoy the rapid ronna can you imagine as of the date of the transaction which was january thirtieth one thousand nine hundred sixty there's absolutely nothing in the record as suggest that in fact the testimony was uniform that that interest could be hypothecated it could be sold it could be transferred the stock could not have been sold on the fact the document itself established that judge reid if i can address your question about whether or not mr donohue concealed anything from anybody the minority shareholders or others mr donahue d a statement to to the plaintiff in this instance and i might add that regard that judge carney who heard eight days of evidence on this matter observe the demeanor of all the witnesses concluded that he did not think that mr donahue quote just step back and see if i can put that into context the plaintiffs sought a constructive trust over the e tec shares as part of the relief in the lawsuit that relief was not granted the plaintiff also cite compensation compensatory damages that leave relief was granted the value of the compensation was based upon the par value of the e tec shares which was the consideration for the poly scanning gas that's as of the date of the transaction the par value was ten dollars but both experts for both sides testified that when you are looking at the value of the consideration as of the date of the transaction the e tec paid for those assets th what i would like to talk about though is the judge's finding unwavering finding that mr demick engaged in purely relational conduct and turned his back on mr obviously judge carney believe that that has on the impact equitably on the relief that was available to mr demick it's certainly impacted his decision whether or not a construct of trust would be warranted and while we don't have any quarrel with what judge carney did below and calculation of damages and resolving the case it's our position in the case never should have gotten to judge carter and that by his predecessors failure to grant our motion for summary judgment based on the statute of limitations and then judge carney's later failure to grant our judgment as a matter of law on the same issue based upon not only the undisputed decided decided to turn his back on his former colleagues the undisputed facts were that had he called any of his former colleagues and asked a question as simple as how's it going that he would have learned of either the e tec transaction having occurred or he would have alerted all got don't call us we'll call you in the context of providing further engineering services yes he was told that by mr denton who was not a member of the control group by the way on with your answer ok but how do you pick up the phone and made a phone call he would have learned of the e tec transaction but more importantly in his mind and a lot of the interest that mr hundred four he never received one he claims to have been promised continuing medical benefits those were ended within and two and a half months all of those  does that if anything i mean a company with a new theory beauty or the directors of the present who ever has it has even more of an obligation to make sure that the guy is posted with respect to the value or status of shares well yes but i think that again it cuts both ways but it comes back because if in fact that was the expectation that expectation was not met in fact it was dash i mean demick never asked for a share certificate he never asked for anything in writing confirming his interest to make by his own admission thought that the company was destined to fail and he didn't want to be stranded in tucson so yes while there may be more of an expectation on the fire you cheri here are those advanced expectations were clearly not in that not even close to being literally the sky is falling and in fact the roof of the facility and caved in and the information departed to mr demick was companies in dire financial straits we just had this horrible physical disaster and just thought you'd want to know at that point in time to make my son admission didn't ask any further questions of this person or anybody else he didn't call mr donahue he didn't call any of his friends that that were it at paul i stand to find out exactly what this did  guess that's the point i'm making here too was there a duty to inquire we believe there was there is no case directly on point in california there are cases from other jurisdictions that suggest strongly that there is when you are a substantial shareholder  three was the on notice that his interest was in jeopardy that was my point you were citing to you the dash promises or expectations about his compensation and about his medical benefits that if mr donahue isn't willing to take care of those then why drawer underneath a bunch of junk i mean you know maybe it was worth ten dollars maybe it was worth a thousand or maybe it was worthless and i'd think lost interest i didn't even know it existed  still understand i understand i understand your point but let me let me just make this observation his interest wasn't in the stock certificate interest was twelve percent ownership in the country in the company and whether or not represented by a stock certificate if he had been a partner with a twelve percent interest you would know that a certificate we have had a duty to inquire absolutely our suggestion is that in this context with a close corporation and certainly when mr democrats are notice that the company is in dire financial strai if it is at a natural disaster and never any confidence in it anyway but clearly mr demick had a duty however slight to follow the track of his own investment but a discounted values or something in the records showing that the judge actually discounted that value because of the hold up and lock up again and the record references would be the testimony of mr curry and the testimony of mr  confusion the value that the experts placed upon those shares as of the date of the transaction was derived using a discount off part that the judge did not discount that figure further he record of the interest in the restricted stares that's correct now looking at this from a standpoint of a constructive trust which says that he produced here he cannot profit from the breach of that duty then isn't there another way of looking at the damages here well there is certainly and i theory that's been promoted by the plaintiff which i think is fallacious and the reason for that is it goes back again to judge carney's determination that that basically mr demick bias on the lesson was an ostrich and that has an effect in equity when weighing an appropriate compensation or an appropriate manner in which to compensate mr deming the argument has been made that there should be some discourse with my mr donohue because of later transactions that he made but in fact because of judge carney's determination that mr demick did nothing when he could have done something  easily could have known about all of it and didn't and chose voluntarily not to and judge hardy believe that that has a significant impact on the compensation that would be fairly due him and also has an impact on the argument that there should be against the facts that have been found by judge carney you have to use january thirty first is the valu mr donahue's interest in the forty percent interest in those shares was about eight hundred fifty thousand dollars twelve percent of that was less than one hundred thousand dollars yet just carney awarded mr demick few hundred  day when and i realize you don't agree with these facts but when you did find out about it but no you're right i got there rather than the data conversion seems like an arbitrary date it was not an arbitrary date in fact  does not address the amount of damages but whether the damages resulted from the breach you are right i don't agree with that statement now right and in fact if you look at this it's not just the research we did that's what it showed because of mr gimmicks conduct as well as the fact that to use any other date would be speculative judge carney chose that date and compensated mr demick for basically the time that he would that that of those funds are that award by tacking on interest to ten percent of you looked at the miers case inter party california so we're called thirty three thirty six i'm sure i have your honor as i believe that recognizes that the second prong of thirty three thirty six is only to be invoked if the doesn't apply to the amount of profits but rather the profits resulted from the breach and i guess my point is is that there are no profits to point to resulting from the breach all that existed when he sold the company and it was ten dollars a share was the low price that the tech stock transacted on the day that the judge are you saying the fair market value you know that was a ten dollars a share correct the out that is correct now that now let me make a point he said mr jinnah could have sold the shares on that day if he could have sold the shares on that day he could've sold them for ten dollars a share because that's what he tech shares were trading for sometimes you can sell an interest in something that it is not readily salable at that time that's the way i read to discount it's argued for here you start out with the value of ten dollars a share and then you say but you can't sell it somebody's going to pay sixty per cent of that or porty percent of that and say i'll look at the future and so that would fix the very market value is that right the fair market value of the interest that you could not  interest in i think what they're trying to do is value a promise to you to sell them when i can sell them in other words like a promissory note or something where you don't have the money but your i'm willing to pay you and i won't pay the full value but i'll pay you something less than that because i think the stock will be worth something down the pike so i'll go right on that basis that right course mr dimmick would have had if he was if he was invited into this transaction or are given the opportunity participate that his shares entitle him to sign an agreement agreeing not to do that so i guess yes he could have breached his agreement sold him to somebody on a one of those underhanded i'm selling unregistered securities and violation of federal security law rule one forty four i'm preaching my contract and by the way i don't have the shares but when i get them i'm going to give them to you if you went through all those machinations in theory you can sell anything i mean in theory you can sell the legal drugs to and but this sale you let me let me i mean let me try to address the court's concern in the record there's the transaction where polly's gang corporation that mr democrat has twelve percent interest was converted to poly scanning it is record there's the income tax returns are put in where mr dimmock is listed as a twelve percent sure shareholder policy and court in california for a corporation to sell all or substantially all of its assets you need you need the of more than the shareholders there was no shareholder vote here mr dimmick under california law as a twelve percent shareholder could have kept that an asset sale from happening california protects minority shareholders you have more than ten percent interest you didn't get noticed that there was no shareholder vote there was no notice to shareholders now there was something else that mr donahue did mr well as argue there was no concealment here in the record the r two seventy court never had any shareholders therefore the board of directors can wind up and dissolve this corporation without any notice to the shareholders this was required by e tec as a condition proceeding to close and therefore was filed the day before that transaction closed there were shareholders of holly scan corp and mr dimmock was one of them he was required to receive statutory notice both of the sale and the wind up of policy and corp and mr donohue decided under penalty of perjury to misrepresent the shareholder status so that mr gimmick wouldn't find out and as a consequence of that false document he was able to  dimmick in the dark and for that he profited immensely because mr donohue did honor the restrictions on the transfer and was forced to hold his shares including the portion that he got from mr demick in violation exponentially higher values the that donahue got the choice when to sell his shares mr gimmick did not under those circumstances mr donahue profited from received approximately six million dollars for his forty percent interest which included a twelve percent bump of what it would have been for mr demick so if you take twelve percent of what mr donohue received for his shares the property would be the actual data donahue sold them or the an average of those dates right in the interview apply a constructive cross there are correct and that gets you to mr donahue profiting receiving for mr dimmick five percent interest for his mr romney's forty percent of mr demick twelve percent interest seven hundred thousand dollars so mr donahue even with the interest and everything else is coming out with constructor corrupt i think the it's two ways to get at the same thing and which is essentially he doesn't get to keep the benefit of having breached here he clearly then if that and mr dimmick may have made a worse choice than donna he were a better choice in terms of when he sold but we'll never know because mr dimmick never got the chance and in those circumstances the cases are uniform across the country that the shareholder gets more than simply forced out of his shares on a date when he doesn't know about