Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-04274/USCOURTS-ca8-05-04274-0/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
Cause of Action: 

---

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-4274

___________

James E. Weber, Trustee of the *

James E. Weber Revocable Trust *

u/d 2/18/04, *

*

Plaintiff-Appellant, *

v. * Appeal from the United States

* District Court for the

Iowa State Bank and Trust Company of * Southern District of Iowa.

Fairfield, Iowa; Iowa State Financial *

Services Corporation; Bill Adam; * [PUBLISHED]

Nelson Anderson; Joe Carr; Sarah *

Cochran; David C. Eastburn; Mike *

Greiner; Pat McMahon; Jay Silverman; *

Jon Simplot; Tom Thompson; Steve *

Triplett, *

*

Defendants-Appellees. *

___________

Submitted: May 17, 2006

Filed: August 10, 2006 

___________

Before WOLLMAN, BRIGHT, and BOWMAN, Circuit Judges.

___________

PER CURIAM.

James Weber, a former shareholder of Iowa State Bank and Trust Company of

Fairfield, Iowa ("the Bank"), sued the Bank over its decision to enact a reverse stock

Appellate Case: 05-4274 Page: 1 Date Filed: 08/10/2006 Entry ID: 2076882
1

The Honorable Ronald E. Longstaff, United States District Judge for the

Southern District of Iowa.

2

Iowa Code section 490.1302.4. states

A shareholder entitled to appraisal rights under this chapter is not

entitled to challenge a completed corporate action for which appraisal

rights are available unless such corporate action meets one of the

following standards:

-2-

split that effectively eliminated Weber's shares. The district court1

 granted the Bank's

motion for summary judgment, dismissing Weber's action, and Weber now appeals.

We affirm. 

We state the undisputed facts. For more than fifty years, Weber, a Florida

resident, held a minority of shares in the Bank. In 1999, defendant Iowa State

Financial Services ("Holding Company") formed to purchase the Bank's outstanding

shares. Most of the Bank's shareholders were given the option to transfer their shares

in the Bank into Holding Company shares. Weber, along with certain other

shareholders outside of Iowa, was not given the option to transfer his shares; he was

given the choice of keeping his Bank stock or accepting cash for the shares. Weber

chose to keep his shares in the Bank.

In the fall of 2004, the Bank decided to effectuate a reverse stock split for the

purpose of eliminating the Bank's minority shareholders. This would allow the Bank

to reduce some costs and simplify some corporate procedures. The Bank informed

Weber that he could seek an appraisal if he felt the Bank had underpaid him for his

shares. Weber did not seek an appraisal. Instead, he filed the instant lawsuit,

contesting the Bank's right to engage in a reverse stock split. 

Iowa law specifically states that an appraisal is the sole and exclusive remedy

for a shareholder in the event of a reverse stock split.2

 Iowa Code § 490.1302.4.

Appellate Case: 05-4274 Page: 2 Date Filed: 08/10/2006 Entry ID: 2076882
a. It was not effectuated in accordance with the applicable provisions of

division X, XI, or XII or the corporation's articles of incorporation,

bylaws, or board of directors' resolution authorizing the corporate action.

b. It was procured as a result of fraud or material misrepresentation.

(Weber does not assert that he meets either of the listed exceptions.)

-3-

Under section 490.1302.4., a shareholder is "not entitled to challenge a completed

corporate action for which appraisal rights are available." As the district court

observed in its expansive and well-reasoned opinion, this shareholder and appellant

completely failed to follow the statutory prerequisites for a determination of the value

of his stock above what the Bank offered. Under these circumstances, the district

court properly dismissed Weber's claim. Weber v. Iowa State Bank of Fairfield, Iowa,

et al, No. 4:05-CV-79 (Oct. 25, 2005). 

We AFFIRM. 

______________________________

Appellate Case: 05-4274 Page: 3 Date Filed: 08/10/2006 Entry ID: 2076882