# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 7- 27 59

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Don na K. Rain s; Ali ce Be ll e Lau ren di ne

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff s - Ap pe ll an ts

v.

Osc ar Ho m er “ O.H.” Jo ne s, II I, et al.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Eas te rn Dis tri ct of Ark an sa s - Li tt le Ro ck

__ __ __ __ __ __

Su bm it te d: Apri l 1 0, 2 01 8
Fi le d: Sep te m

be r 24 , 20 18

__ __ __ __ __ __

Befo re SM ITH, Chi ef J ud ge , W OLLMAN and LOKEN, Cir cu it Ju dg es

.

__ __ __ __ __ __

LOKEN, Ci rcu it Ju dg e.

Thi s is a di sp ut e am on g si x si bl in gs pr im ari ly o ve r own ers hi p an d co nt ro l of

OKISDA, I nc . ( OKISDA), a fa mi l y co rp or at io n th ei r m ot he r, Eun ic e Ash ab ran ne r,

es ta bl is he d in 19 74

. In th ei r Fi rs t Am en de d Co m pl ai nt

, th e Pl ai nt iff

s, si st ers Don na

Rai ns an d Al ic e Lau ren di ne , a ss ert m ul ti pl e cl ai m s ag ai ns t OKISDA, th ei r br ot he r,

Osc ar Hom er Jo ne s, III (“ O.H.”), an d si st ers Karen Lod en , In di a Hud dl es to n , an dSa

ndr a Bal la rd

. Afte r su bs ta nt ia l, co nt en ti ou s di sc ov ery, th e di st ric t co ur t co nc lud ed 1

t h a t “n e arl y al l [th e cl ai m s] hi ng e on whe th er th e tra ns fer of Cl as s A [v ot in g

co m m on ] st oc k fro m [Ash ab ran ne r’s rev oc ab le ] Trus t to Mr. Jo ne s was va li d.” The

co ur t h el d t he tra ns fer val id an d gra nt ed Defen da nt s su m m ary jud gm en t di sm is si ng

al l cl ai m s. Pl ai nt iff

s ap pe al

, co nt en di ng th e co u r t mad e fiv e rev ers ib le erro rs

. Rev ie win g t he gra nt of s um m ary jud gm en t de no vo , we di sa gr ee an d a ffi rm

.

I. Ba ck gr ou nd a nd Pro cedu ra l H is to ry

.

In 19 74 , As ha br an ne r (n ee Eun ic e Jo ne s) in co rp or at ed O K I S D A t o own an d

op erat e ro ug hl y 1,1 00 acre s of farm la nd in Je ffer so n Co un ty, Ark an sa s. The Arti cl es

of In co rp or at io n au th or iz ed OKISDA to is su e 26 ,00 0 sh ares of Cl as s A vo ti ng

co m m on st oc k an d 26 ,00 0 sh ares of Cl as s B no n- vo ti ng co m m on st oc k. At th e Ju ne 1, 19 74

, or ga ni zat io na l m eet in g, at te nd ed by in co rp or at or Ash ab ran ne r an d he r

at to rn ey , th e co rp or at io n reso lv ed th at Ash ab ran ne r wou ld be th e so le di rect or ; t ha t

Ash ab ran ne r wou ld se rv e as Pres id en t, Vice Pres id en t, an d Secr et ary-Treasu rer; an d

th at Ash ab ran ne r su bs cri be d fo r th e au th or iz ed 26 ,00 0 sh ares of Cl as s A vo ti ng

co m m on st oc k an d 26 ,00 0 sh ares of Cl as s B no n- vo ti ng co m m on st oc k in ex ch an ge

f o r he r in te res t in th e Je ffer so n Co un ty farm la nd

. Late r th at y ear, Ash a b r a n n e r

tra ns ferr ed 4,3 33 sh ares of Cl as s B no n- vo ti ng st oc k to each of he r si x ch il dr en

. As

of Decem be r 19 74

, Ash ab ran ne r own ed 26 ,00 0 Cl as s A sh ares an d t w o Cl as s B

sh ares , and each ch il d o wne d 4 ,33 3 C la ss B sh ares

.

Mo re th an twen ty-fiv e y ears la te r, Ash ab ran ne r tra ns ferr ed he r 26 ,00 0 Cl a ss

A vo ti ng sh ares an d two Cl as s B no n- v o t i n g s h a r es to th e Eun ic e K. Ash ab ran ne r

Trus t, a rev o c a b l e t r u s t dr aft ed by an at to rn ey in Co nwa y , Ar ka ns as

. Bu t by 2 00 8,

tru st ee Ash ab ran ne r was di ss at is fie d wit h th e Trus t’s su cces so r tru st ee pr ov is io n an d

The Hon or ab le Bi ll y Ro y W il so n, Uni te d St at es Dis tri ct Ju dg e fo r th e East ern 1

Dis tri ct of Ark an sa s.

-2

-co ns ul te d he r acco un ta nt

, Kirk St on e, an d at to r n e y Te d Drak e, who ha d dr aft ed a

pr io r w i l l in th e 19 80 s an d se rv ed as co un se l to OKISDA. Drak e te st ifi ed th at th e

C o nwa y at to rn ey “ ha d do ne a rev oc ab le tru st th at was n’t at al l wha t M i s s
Ash ab r a n n e r wan te d.” It bo th ered Ash ab ran ne r th at th e Trus t “ fav or ed Don na an d

m ad e he r tru st ee an d ga v e h e r c o nt ro l ov er OKISDA.” On Feb ru ary 1, 20 11

, Ash ab ran n e r s i g n e d a Seco nd Res ta te m en t to th e Trus t dr aft ed by Drak e. Am on g

ot he r ch an ge s, th e res ta te d Trus t ap po in te d O

. H

. t h e pr im ary su cces so r Trus te e,

fo ll owe d by Lod en an d Hud dl es to n. Drak e’s no te s from th e m eet in g st at e: “ Mrs

. A

was alo ne an d o bv io us ly m en ta ll y co m pe te nt . W e wen t o ve r tr us t an d . . . ord er o f

tru st ees

. Sh e s a i d t h at is wha t sh e ha s al way s wan te d. O.H. kn ows th e bu si ne ss

. Oth er t wo g irl s k no w it ne xt be st .”

In Mar ch 20 12

, Ash ab ran ne r m et wit h St on e, ex pr es s e d c o n c ern th at he r
da ug ht ers m ig h t p r e s su re O.H. to se ll th e farm

, an d sa id sh e wan te d to gi ve O.H.

co nt ro l of OKISDA. Afte r co nf irming th at Ash ab ran ne r un de rs to od th e im po rt of a
de ci si on to gi ve up he r so le co nt ro l of th e co rp or at io n, St on e em ai le d Ted Drak e th at

“ [Ash ab ran ne r] wou ld li ke to gi ft O.H. al l th e vo ti ng st oc k.

. . . Sh e un de rs ta nd s th is
gi ve s O.H. co nt ro l no w. Sh e is ok wit h O.H. h av in g co nt ro l. Sh e d oe s n ot want to

wor ry ab ou t th e d a u g h t ers be in g ab le to s[ el l] th e farm wit ho ut O.H.’ s ap pr ov al .”

Drak e th en orc he st rat ed a se rie s o f act io ns to im pl em en t As ha br an ne r’s de ci si on

.

On Ju ne 15

, 2 0 1 2

, Ash ab ran ne r as so le vo ti ng sh areh ol de r el ect ed he rs el f,

O.H., H ud dl es to n, an d Lo de n to OKISDA’s B oa rd of Dire ct or s. The ne xt da y , a t a

sp eci al m eet in g, th e ex pa nd ed Bo ard el ect ed ne w of fic ers an d ad de d a pr ov is io n to 2

th e By la ws al lo win g “ In fo rm al Acti on ” wit ho ut a m eet in g if a m ajor it y of th e Bo ard

si gn ed writ te n co ns en ts de sc rib in g th e act io ns ta ke n. The fo llo win g m on th

, th e Bo ard

am en de d th e Arti cl es of In co rp or at io n to au th or iz e th e is su an ce of 26,0 00 sh ares of

The Bo ard ele ct ed Ash ab ran ne r Pres id en t, O.H. Vice- Pres id en t and Gene ral 2

Man ag er, Hu dd le st on Secr et ary, an d Lo de n Tre as ur er.

-3

-Cl as s C no n- vo ti ng st oc k “ wit h di st rib ut io n on li qu id at io n of th e co rp or at io n li m it ed

to [$ 1.0 0 pe r sh are] pa r va lu e.” By co nt ras t, th e Cl as s A an d Cl as s B sh ares

co nt in ue d to ha ve a pa r va lu e of on e do ll ar pe r sh are, bu t th ere was no li m it to th e pe r
sh are di st rib ut io n th ey wou ld rece iv e up o n li qu id at io n. At th e sa m e m eet in g, th e

Bo ard au th or iz ed O K I S D A to ex ch an ge 25 ,99 8 Cl as s C sh ares fo r 25 ,99 8 Cl as s A

vo ti ng sh ares he ld by Ash ab ran ne r’s rev oc ab le Trus t. Afte r th is ex ch an ge , on ly two

Cl as s A vo ti ng s h a r es rem ai ne d ou ts ta nd in g, he ld by th e Trus t. On Sep te m be r 24

, 20 12

, wit h Ash ab ran ne r as so le Trus te e, th e Trus t tra ns ferr ed th es e two sh ares to O.H.

Rai ns , Lau ren di ne , an d Bal la rd rece iv ed no no ti ce of th es e 20 12 tra ns act io ns

. On Aug us t 14

, 20 13

, Ash ab ran ne r se nt Rai ns , Lau ren di ne , a n d Bal la rd a le tt er

ex pr es si ng “ m

y di sa pp oi nt m en t i n each of y ou ” an d de cl ari ng : “ Not hi ng ha s be en
do ne be hi nd an y on e[’] s ba ck as I am th e so le own er o f OKISDA, Inc ., to th is po in t

an d wil l rem ai n so un ti l m y de at h

. . . .” Pl ai nt iff

s al le ge th at

, by Aug us t 16

, two da y s

la te r, t h e y l e a r ne d th e Trus t ha d tra ns ferr ed th e on ly t wo ou ts ta nd in g vo ti ng sh ares

to O.H. in Se pt em

be r 20 12 . Ash ab ran ne r di ed on Apri l 3 0, 2 01 4.

In Ju ne 20 15

, at to rn ey Gen e Lud wig se nt al l si x si bl in gs a le tt er st at in g th at he

own ed la nd ad

jacen t to th e OKISDA pr op ert y an d ex pr es si ng in te res t in bu y in g an y
of th e si bl in gs ’ in te res ts in th e la nd

. Rai ns rep li ed th at sh e, Lau ren di ne , an d Bal la rd

wou ld be wil li ng to sel l. On Apri l 1 5, 2 01 6, Pl ai nt iff s re pr es en te d by Lud wig fil ed

th ei r in it ia l co m

pl ai nt ag ai ns t O.H. an d OKISDA. Pl ai nt iff s al le ge d th at th e Trus t’s
Sep te m be r 20 12 tra ns fer of two Cl as s A sh ares vi ol at ed th e sh are tra ns fer res tri ct io n

in OKISDA’ s B y la ws. Pl ai nt iff s s ou gh t s pe ci fic en fo rcem en t of t he res tri ct io n a nd

al so as se rte d da m ag e cl ai m s ag ai ns t O.H. fo r un jus t en ric hm en t, co nv ers io n, br each

of co nt ract

, an d frau d co m m it te d by th e sh are tra ns fer an d la te r act io ns

. Defen da nt s

as se rte d va rio us affi rm at iv e de fen se s in cl ud in g th at cl ai m s were ba rred by th e st at ut e

of li m it at io ns an d th e act io n sh ou ld be di sm is se d fo r fai lu re to joi n ne ces sa ry pa rti es

.

-4

-Pl ai nt iff s fil ed th e Fi rs t Am en de d C om pl ai nt on Sep te m

be r 23 , 20 16 , a dd in g
Lod en , Hud dl es to n, an d B al la rd as d efen da nt s. Plai nt iff s all eg ed th at O.H., Lod en ,

an d Hud dl es to n br each ed th ei r fid uc ia ry du ti es as OKISDA di rect or s by faci li ta ti ng

th e Sep te m

be r 20 12 sh are tra ns fer wit ho ut no ti ce to Pl ai nt iff s; ap pr ov in g a lo an fro m

OKISDA to O.H. at a be lo w-m ark et in te res t rat e; m is m an ag in g le as in g of OKISDA

farm l a n d ; au th or iz in g O.H. to dr iv e a co rp or at e tru ck ; an d ha vi ng OKISDA

in de m ni fy th em f

o r t h e co st s of de fen di ng Pl ai nt iff s’ su it

. Pl ai nt iff

s so ug ht a
de cl arat io n th at Lod en an d Hud dl es to n ha d w a i v e d an y cl ai m to th e two Cl as s A

sh ares an d ad de d Bal la rd as a ne ces sa ry pa rty de fen da nt to as se rt an y in te res t sh e ha d

in th os e sh ares

. Pl ai nt iff

s al so so ug ht a st at ut or y rig ht to in sp ect OKISDA’s fin an ci al

reco rd s an d ex pa nd ed th ei r frau d cl ai m ag ai ns t O.H. to in cl ud e an al le ga ti on th at he

3

m ad e m is le ad in g di sc lo su res to th e fed eral go ve rn m en t re ga rd in g h is work farm in g

th e OKISDA la nd

.

Afte r m on th s o f di sc ov ery, al l pa rti es ex cep t Bal la rd m ov ed fo r su m m ary jud gm en t. All so ug ht su m m ary jud gm en t on Pl ai nt iff s’ c l a im th at th e Sep te m

be r

20 12 tra ns fer vi ol at ed th e sh are tra ns fer res tri ct io n in OKISDA’s Byl aws

. The

di st ric t co ur t gr an te d th e Defen da nt s’ m ot io ns fo r su m m ary jud gm en t. Cen tra l to it s
de ci si on was th e co ur t’s co nc lu si on th at P l a i n ti ffs ’ br each of co nt ract

, br each of

f i d u c i a r y du ty, co nv ers io n, un jus t en ric hm en t, an d frau d cl ai m s, an d m uc h of th e
rel ie f so ug ht

, tu rn ed on th e va li di ty of th e Sep te m be r 20 12 tra ns fer of Cl as s A sh ares

fro m th e Trus t to O.H. The co ur t he ld th at th e sh are tra ns fer d id no t vi ol at e th e By la ws’ tra ns fer res tri ct io n. The co ur t al so co nc lu de d that th e un la wfu l sh are tra ns fer

cl ai m , an d al l of Pl ai nt iff

s’ to rt cl ai m s th at accr ue d be fo re Apr il 15

, 20 13

, were ti m eba rred be cau se Pl ai nt iff

s pr es en te d no ev id en ce sh owi ng th at th e ap pl ic ab le th reey ear s ta tu te of l im it at io ns sh ou ld be to ll ed be cau se of f rau du le nt co nc eal m en t.

The di st ric t co ur t di d no t ad dr es s th i s cl ai m ; Pl ai nt iff s do no t rai se it on 3

ap pe al . See g en eral ly A rk . Cod e Ann . § 4 -2 6- 71 5.

-5

-II . Dis cus si on

.

The St at em en t of the Is su es se ct io n of Pl ai nt iff s’ Ope ni ng Bri ef pr es en ts fiv e
is su es on ap pe al

. The fif th an d la st at ta ck s th e su bs ta nt iv e co re of th e co ur t’s

de ci si on : “ W he th er th e Sep te m be r 20 12 tra ns fer of th e two Cl as s A vo ti ng sh ares to

Osc ar ‘O .H.’ Jo ne s vi ol at ed th e OKISDA In c. By la ws.” Lik e th e d i s t ric t co ur t, we
wil l b eg in (an d fo r th e m os t p art en d) wit h t ha t i ss ue

.

A. The Tra ns fer Res tri cti on Is su e. The sh are- tra ns fer res tri ct io n at is su e is

Arti cl e VI, Sect io n 3 , of OKISDA’s o rig in al 19 74 By la ws. It pro vi de s:

(a) Befo re an y sh areh ol de r in th is co rp or at io n sh al l di sp os e of hi s

or he r sh ares of st oc k by an in te r vi vo s tra ns fer, whe th er by sa le

, gi ft or hypo th ecat io n, su ch sh areh ol de r sh al l fir st of fer sa id st oc k fo r sa le to th e

co rp or at io n a t a p ric e to be de te rm in ed as h erei n s et for th

.

(b ) Any sh are no t pu rch as ed by th e co rp or at io n wit hi n si xt y (6 0)
da y s aft er rece ip t of su ch of fer sh al l be of

fere d to th e ot he r sh areh ol de rs of th e cl as s of st oc k be in g tra ns ferr ed

, each to ha ve th e rig ht to pu rch as e hi s or he r al iq uo t pa rt of th e cl as s t o b e t r a n s f erre d. If th e of

fer is no t

acce pt ed wit hi n th irt y (3 0) da y s aft er rece ip t th ereo f, th e sh areh ol de r de si rin g to tra ns fer sa id st oc k sh al l ha ve th e rig ht to tra ns fer th at po rti on

rem ai ni ng to an y ot he r pe rs on bu t sh al l no t tra ns fer su ch sh ares wit ho ut gi vi ng th e co rp or at io n an d rem ai ni ng sh areh ol de rs th e rig ht to pu rch as e
at a pr ic e an d o n t he ter m s o ffer ed by suc h o th er p ers on

.

(c) The pu rch as e pr ic e to be pa id fo r th e tra ns fer of st oc k pu rs ua nt he ret o sh al l be th e bo ok va lu e of each sh are wit ho ut co ns id erat io n as to in ta ng ib le s s uc h a s g oo d wi ll

. . . .

(Em ph as is ad de d.) Def

en da nt s to ok no act io n pu rs ua nt to Sect io n 3 be fo re o r aft er

th e Sep te m

be r 20 12 tra ns fer of two Cl as s A vo ti n g s h a r e s f r om th e Trus t to O.H.

Pl ai nt iff s do no t clai m th e tra ns fer vi ol at ed su bs ect io n 3(a ) be cau se th e sh ares were

no t fir st of

fere d to OKISDA, as pu rch as e by OKISDA wou ld ha ve le ft no vo ti ng

-6

-sh ares ou ts ta nd in g. Nor do th ey cl ai m a vi ol at io n of th e fir st se nt en ce of su bs ect io n

3( b) fo r th e ob vi ou s reas on th at th ere were th en no “o t h er sh areh ol de rs of th e cl as s

of st oc k b ei ng tra ns ferr ed ” who wou ld ha ve a ri gh t t o p ur ch as e th e two sh ares

.

Thu s, th e di sp ut e tu rn s on th e se co nd se nt en ce of su bs ect io n 3( b)

, m or e

sp eci fic al ly, on whe th er Pl ai nt iff s Rai ns an d Lau ren di ne , as ho ld ers of Cl as s B no nvo ti ng sh ares , are “ rem ai ni ng sh areh ol de rs [wh o ha d] th e rig ht to pu rch as e at a pr ic e

an d on th e te rm s of

fere d by su ch ot he r pe rs on ,” th e tra ns fere e O.H. Pl ai nt iff s arg ue d

th e pl ai n la ng ua ge of th is se nt en ce req ui red th e Trus t, be fo re it gi fte d th e two sh ares

to O.H., to of

fer al l Cl as s B sh areh ol de rs th e rig ht to acq ui re th os e sh ares on th e sa m e

te rm s, n am el y , by gi ft. Th e d is tri ct co ur t co nc lu de d:

Pl ai nt iff s’ in te rp ret at i o n of th e tra ns fer res tri ct io n bylaw is

un r e a s o na bl e. Und er Pl ai nt iff s’ in te rp ret at io n, th e tra ns fer- res tri ct io n bylaw ga ve Pl ai nt iff

s (wh o each he ld a l i t tl e m or e th an 8% of al l

ou ts ta nd in g sh ares , were no t on th e bo ard of di rect or s , an d he ld no

v ot in g sh ares ) ve to po wer ov er th e de ci si on of a su pe rm ajor it y of al l
sh areh ol de rs , th e ho ld er of al l vo ti ng sh ares , an d th e co rp or at io n’s bo ard
of di rect or s.

* * * * *

Ess en ti al ly, th is bylaw ga ve sh areh ol de r s o f th e sa m e cl as s of st oc k
be in g tra ns ferr ed a rig ht of fir st refu sa l be fo re sh ares w e r e so ld to an

ou ts id er -- or , in th e tra ns fer- res tri ct io n bylaw’s te rm s, “ an y ot he r
pe rs on .” Bec au se [O.H.] Jo ne s was a sh areh ol de r, he was no t “ an y ot he r
pe rs on .”

The tra ns fer- res tri ct io n bylaw ha s fo ur st ep s.

. . . [Pl ai nt iff s’]

no ns en s i c a l in te rp ret at io n is av oi de d whe n th e te rm s “ rem ai ni ng sh areh ol de rs ” an d “o th er sh areh ol de rs of th e cl as s of st oc k be in g
tra ns ferr ed ” are read as i nt erch an ge ab le

.

-7

-Rea di ng ot he r sh areh ol de rs an d rem ai ni ng sh areh ol de rs as

syno nym ou s, al lo ws t he on ly reaso na bl e in te rp ret at io n o f th e b y la w.

On ap pe al

, Pl ai nt iff

s arg ue th ei r in te rp ret at io n of su bs ect io n 3( b) is m an da te d
by th e pl ai n m ean in g of th e te rm s “ an y ot he r pe rs on ” an d “ rem ai ni ng sh areh ol de rs ,”

su pp or te d by ev id en ce th at Ash ab ran ne r al way s in te n d e d th at each of he r ch il dr en

ret ai n a n e qu al in te res t i n OKISDA. Lik e th e d is tri ct co ur t, we d is ag ree.

Ark an sa s co ur ts , l ik e th e co ur ts of o t h e r St at es , a pp ly co nt ract -in te rp ret at io n

pr in ci pl es in in te rp ret in g cor po rat e b y la ws. See Tay lo r v. Hink le

, 20 0 S.W .3d 38 7,

39 5- 96 (Ark

. 20 04 ); se e ge ne ral ly 8 Fl et ch er, Cy cl op ed ia of th e Law of Co rp or at io ns § 41 95 (2 01 8). Lik e ot he r co nt ract s, whe n in te rp ret in g a co nt ract am on g sh areh ol de rs

res tri ct in g t h e i r free do m to tra ns fer, “ th e ru le is to as cert ai n th e in te nt io n of th e

pa rti es an d to gi ve effe ct to th at in te nt io n whe re th is can be do ne co ns is te nt ly wit h

le ga l pr in ci pl es .” Owen v. Mer ts

, 40 5 S.W .2d 27 3, 27 7 (Ark

. 19 66 ). H e r e , t h e r e

were no t m

ul ti pl e “ pa rti es to a co nt ract .” OKISDA was fo rm ed an d it s By la ws
ad op te d by th e so le own er of th e c o r p o r a t i o n ’s as se ts

, Ash ab ran ne r. Und er he r

ex cl us ive co ntr ol, the co rp orat io n crea te d two cl as se s of st oc k, vo ti ng an d no n- vo ti ng ,

an d is su ed al l au th or iz ed sh ares to As h a br an ne r, it s so le st oc kh ol de r an d di rect or , who th en ret ai ne d al l Cl as s A vo ti ng sh ares an d gi fte d al l bu t two Cl as s B no n- vo ti ng
sh ares in eq ua l p or ti on s t o h er s ix ch il dr en

.

Bec au se th e o n l y in te nt io n to be de te rm in ed is th e in te nt of Ash ab ran ne r in

in cl ud in g Arti cl e VI, Sect io n 3, in OKISDA’s 19 74 By la ws, it is no t su rp ris in g th at

n e i t h e r Pl ai nt iff

s no r an y Defen da nt arg ue d to th e di st ric t co ur t th at su m m a r y ju d g m en t was im

pr op er be cau se ex tri ns ic ev id en ce was ne ed ed to in te rp ret an

am bi gu ou s By la w. Rat he r, th e two si de s ur ge d th e co ur t to ad op t ve ry di ffer en t

in te rp ret at io ns of th e se co nd se nt en ce of su bs ect io n 3( b)

. In th es e ci rcu m st an ces , th e

ro le of th e co ur t is to de te rm in e, as a m at te r of la w, th e “ m or e r eas on ab le

co ns tru ct io n” of As ha br an ne r’s in te nt . Fry er v

. Bo y et t, 97 8 S.W .2d 30 4, 3 06 (Ark

.

-8

-App

. 19 98 ). Thi s in te nt “ is to be ga th ered

, no t fro m pa rti cu la r wor ds an d ph ras es , bu t

fro m th e who le co nt ex t of th e ag reem e n t

. ” O w e n , 40 5 S.W .2d at 27 7 (ci ta ti on

om it te d) ; s ee Sp an n v . Lov et t & Co ., 38 9 S .W .3d 77 , 88 -8 9 (Ar k. Ap p. 2 01 2)

.

1. Beg in ni ng wit h Pl ai nt iff s’ te xt ua l arg um en t, we di sa gr ee th at

, in t h is

co nt ex t, th e pl ai n m ean in g of “ an y ot he r pe rs on ” ne ces sa ril y in cl ud es O.H. Res tra in ts

on al ie na ti on ar e ge ne ral ly di sf av or ed

. Thu s, co ur ts ha ve in te rp ret ed si m il arl y

wor de d res tri ct io ns -- pr ev en ti ng an ex is ti ng sh areh ol de r fro m di sp os in g of hi s or he r
sh ares be fo re of

feri ng t h e m t o th e co rp or at io n or ot he r sh areh ol de rs -- as ap pl y in g

on ly to tra ns fers be twee n cu rren t sh areh ol de rs an d ou ts id ers

. See, e.g ., Bi rm in gh am

Arti fic ia l Lim

b Co

. v. All en , 19 4 So

. 2d 84 8, 85 0 (Ala

. 19 67 ). Mo reo ve r, th e se co nd

se nt en ce of su bs ect io n 3( b) gi ve s rem ai ni ng sh areh ol de rs “ th e rig ht to pu rc ha se at a

p r i c e a n d on th e te rm s of fere d by su ch ot he r pe rs on .” Here, th ere was no of fer to

pu rch as e by O.H.; th e Trus t tra ns ferr ed two Cl a s s A s h a r e s to O.H. by gi ft

. As th e
di st ric t co ur t n ot ed , it wou ld be “ no ns en si cal ” to ap pl y th e fo ur st ep s of Arti cl e VI,

Sect io n 3 , li te ral ly to t hi s t ran sf er.

W e al so di sa gr ee th at th e pl ai n m ean in g of “ rem ai ni ng sh areh ol de rs ” in th is

co nt ex t ne ces sa ril y in cl ud es th e ho ld ers of Cl as s B no n- vo ti ng sh are s

. Th e wor d

“ rem ai nd er” is de fin ed as “ th e nu m be r le ft aft er su bt ract io n or de du ct io n.” W eb st er’s

Thi rd New In te rn at io na l Dict io na ry 19 19 (1 98 6)

. H e r e , Sect io n 3 was ob vi ou sl y

in te nd ed to ap pl y

if o ne or m or e o f Ash ab ran ne r’s si x c hi ld ren wis he d to se ll hi s o r
he r Cl as s B no n- vo ti ng sh ares

. In th is si tu at io n, a reas o n a b l e i n te rp ret at io n of th e

se co nd se nt en ce of su bs ect io n 3(b ) is th at “ rem ai ni ng sh areh ol de rs ” are th os e Cl as s

B sh areh ol de rs who di d no t el ect to pu rch as e “ hi s or he r al iq uo t pa rt” un de r th e fir st

se nt en ce o f su bs ect io n 3 (b ).

2. Turn in g to th e ot he r im po rta nt in qu iry in de te rm in in g Ash ab ran ne r’s in te nt

,

we di sa gr ee wit h Pl ai nt iff s’ as se rti on th at th e su m

m ary jud gm en t reco rd es ta bl is he d

th at sh e in te nd ed th at each of h e r c h i l d ren “ ret ai n an eq ua l in te res t in OKISDA.”

-9

-Rat he r, th e ev id en ce est ab li sh ed th at

, in 19 74 an d t he reaf te r, Ash ab ran ne r in te nd ed

to es ta bl is h an d to ret ai n so le co nt ro l ov er the co rp or at io n, whil e tra ns ferr in g to he r
ch il dr en eq u a l f

i n a n ci al in te res ts in th e co rp or at io n’s as se ts (a typic al pa ren ta l

ob jecti ve in de al in g wit h a fam il y en te rp ris e). Thi s in te nt was refl ect ed in th e 20 12

tra ns act io ns th at at to rn ey Drak e or ch es tra te d. By ex ch an gi ng al l bu t two of he r Cl as s

A vo ti ng sh ares fo r ne wly-aut ho r i z e d Cl as s C no n- vo ti ng sh ares ha vi ng a li m it ed

va lu e up on li qu id at io n, Ash ab ran ne r red uc ed he r fin an ci al in te res t in OKISDA in th e

ev en t of he r de at h. By th en gi fti ng th e rem ai ni ng two ou ts ta nd in g sh ares of Cl as s A

vo ti ng st oc k to O.H., sh e was ab le to tra ns fer he r so le co nt ro l in a m an ne r th at di d no t

su bs ta nt ia ll y

affe ct th e si bl in gs ’ eq ua l fi na nc ia l i nt eres ts in OKISDA’ s as se ts

. Fo r th es e reas on s, we co nc lu de th e di st ric t co ur t co rrec tl y ru le d th at

, be cau se

“ ot he r sh areh ol de rs of th e sa m e cl a s s” an d “ rem ai ni ng sh areh ol de rs ” sh ou ld be

in te rp ret ed as syno nym ou s, an d be cau se O.H. was no t “ an y ot he r pe rs on ,” th e Trus t

di d no t vi ol at e Arti cl e VI, Sect io n 3, of OKISDA’s By la ws whe n it di d no t of fer two

Cl as s A vo ti ng sh ares to th e Cl as s B no n- vo ti ng sh areh ol de rs be fo re tra ns ferr in g th e

two sh ares to O.H Jon es

.

B. Pla in tif

fs ’ Othe r Con tent io ns on Appea l. Pl ai nt iff s arg ue the dis tr ic t co ur t

erre d i n d is m is si ng ot he r cl ai m s with ou t pro vi di ng Pl ai nt iff s adv an ce no ti ce an d a n

op po rtu ni ty to res po n d

. R u le 56 (f) pr ov id es th at th e co ur t m ay gr an t su m m ary jud gm en t on gr ou nd s no t rai se d or on it s own “ [a]fter gi vi ng no ti ce an d a reas on ab le

ti m e to res po nd .” Eve n wit ho ut no ti ce, ho wev er, su m m ary jud gm en t m ay be gr an te d

“ on an is su e no t pr o p e r l y r a i s e d in th e su m m ary jud gm en t m ot io n if th e di st ric t

co ur t’s fin di ng s on pr op erl y ad dr es se d is su es fo recl os e th e un rai se d is su e.” Heis le r

v. Met ro

. Co un ci l, 33 9 F.3 d 62 2, 63 2 (8 th Ci r. 20 03 ), ci ti ng In te rco In c. v. Nat’l Su r.

Co rp ., 90 0 F .2d 12 64 , 12 69 (8t h C ir. 1 99 0) . Here, th e d is tri ct co ur t co nc lu de d:

Bec au se th is [two -s ha re] tra ns fer was va li d, Defen da nt s br each ed

no bylaws

, co nt ract

, or fid uc ia ry du ti es ; no pr op ert y was co nv ert ed ; no

-1 0-on e was un jus tl y en ric he d; an d no frau d to ok pl ace

. Acco rd in gl y , Defen da nt s ar e en ti tl ed to su m m ary jud gm en t o n t he se po in ts

.

The is su es rai se d by Pl ai nt iff s on ap pe al do no t in cl ud e th e m eri ts of th e di st ric t

co ur t’s ru li ng s di sm is si ng th ei r cl ai m s fo r un jus t en ric hm en t an d br each of fid uc ia ry
du t y, on ly th e co ur t’s de ci si on to gr an t su m m ary jud gm en t su a sp on te wit ho ut

pr ov id in g Pl ai nt iff

s no ti ce or an op po rt u n i t y t o res po nd

. Bu t th is pr oc ed ur al

co nt en ti on was waiv ed

. “ W he th er or no t a pa rty rece iv es an ad va nc e si gn al th at th e

co ur t m ig ht act su a sp on te

. . . an y ob jecti on to th at pr oc ed ur e is waiv ed if th e pa rty

d o e s no t at le as t ob

ject af te r th e co ur t en te rs it s or de r whi le th e act io n i s s t i l l

pe nd in g.” Uni te dHe al th Grp

. In c. v. Exe c. Ri sk Sp eci al ty In s. Co

., 87 0 F

. 3 d 85 6,

86 6- 67 (8t h C ir. 2 01 7)

.

Alt ho ug h t he on ly is su e rai se d on ap pe al was waiv ed in th e d is tri ct co ur t, we

ag ree wit h th e co ur t th at th e va li di ty of th e st oc k tra ns fer es ta bl is he d th at Pl ai nt iff s’

ot he r cl ai m s ar e fo recl os ed

.

1. Co un t Two al le ge d th at O.H. was un jus tl y en ric he d by rece ip t of th e two

Cl as s A sh ares

. Tha t cl ai m was di rect ly fo recl os ed by th e tra ns fer’s v a l i d i t y. See

Dav is v. Dav is

, 48 0 S.W .3d 87 8, 88 5 (Ark

. App

. 20 16 ) (“ One is no t un jus tl y en ric he d
by rece ip t of t ha t t o wh ic h h e is leg al ly ent it le d.” ). Pla in ti ffs als o a ll eg ed th at O.H.

was un ju s t l y en ric he d aft er th e Sep te m be r 20 12 sh are tra ns fer by be in g al lo wed to

dr iv e a co rp o r at e tru ck

, rece iv in g lo an s fro m OKISDA he ha s no t rep ai d, an d

en ga gi ng in se lf de al in g. Bu t th es e are cl ai m s th at O.H. in jure d th e co rp or at io n by

ab us in g co nt ro l la wfu ll y acq ui red by t he sh are tra ns fer. “ Any acti on to reco ve r fo r

th e al le ge d lo ss es was de riv at iv e in na tu re an d an in di vi du al su it was no t th e pr op er

ro ut e fo r rel ie f.” Ham es v. Cr av en s, 9 66 S.W .2d 24 4, 2 47 (Ark . 19 98 ).

2. Co un t Si x al l e g e d th at O.H., Lod en , an d Hud dl es to n br each ed fid uc ia ry
du ti es by faci li ta ti ng th e in va li d sh are tra ns fer. Thi s cl ai m was di rect ly fo recl os ed by

-1 1-th e tra ns fer’s va li di ty. “ A pe rs on st an di ng in a fid uc ia ry rel at io ns hi p wit h an ot he r is

su bjec t to li ab il it y to th e ot he r fo r ha rm re su lt in g fr om a br ea ch of th e du ty imp os ed
by th e rel at io ns hi p.” Lo n g v

. La mpto n, 92 2 S.W .2d 69 2, 69 6- 97 (Ark

. 19 96 )
(em ph a s i s a d de d)

. Pl ai nt iff s al so al le ge d th at O.H., Lod en , an d Hud dl es to n, as

of fic ers an d di rect or s of OKISDA, br each ed th ei r fid uc ia ry du ty to Pl ai nt i f f s as
sh areh ol de rs aft er th e sh are tra ns fer by th ei r act io ns in co nt ro ll in g th e co rp or at io n

--

a be lo w-m ark et lo an to O.H., m is us e of ret ai ne d earn in gs , se lf- de al in g an d im pr ud en t

le as in g pr act ic es , an d O.H.’ s us e of th e co rp or at e tru ck

, a l l w i th ou t no ti ce to

Pl ai nt iff s. As ex pl ai ne d, th es e are clai m s of inju ry to th e co rp or at io n th at m ay on ly

be as se rte d in a sh areh ol de r de riv at iv e act io n. See Ham es , 96 6 S.W .2d at 24 6- 47 ;

W al ke r v. Hy de

, 79 8 S.W .2d 43 5, 43 7 (Ark

. 19 90 ). Thu s, ev en if fact in te ns iv e, th e
cl ai m s were pr op erl y di sm is se d. The cl ai m th at th e d ire ct or

Defen da nt s brea ch ed a
fid uc ia ry du ty to ho ld an nu al OKISDA sh areh ol de r m eet in gs in 20 13

, 20 14

, an d aft er

20 15 ob vi ou sl y fai ls fo r la ck of in jury, as Pl ai nt iff

s were no t ent it le d to no ti ce of or

th e ri gh t t o v ot e at th es e m eet in gs

. 4

3. Fi na ll y , P la in ti ffs arg ue th e di st ric t co ur t erre d i n c on cl ud in g (i ) th at th ei r
sh are tra ns fer to rt cl ai m is ti m e-ba rr ed w ith out co nsi deri ng th ei r al le ga ti on th at O.H.’ s

frau du le nt co nc eal m en t to ll ed th e th ree- y ear st at ut e of li m it at io ns ; an d (ii ) th at un jus t

en ric hm en t an d b reac h o f fi du ci ary du ty clai m s ac cru in g b efo re Ap ril 15 , 20 13 , are

ti m e-b arre d de sp it e P l ai nt iff s’ al le ga ti on s of frau du le nt co nc eal m en t an d of

co nt in ui ng wro ng fu l act s aft er th e two -s ha re tra ns fer. As we ha ve co nc lu de d th at th e
di st ric t c o u r t co rrec tl y di sm is se d th es e cl ai m s on th e m eri ts

, we ne ed no t co ns id er

Pl ai nt iff s’ app eal of t he co ur t’s al te rn at iv e st at ut e o f li m it at io ns rul in gs

.

Fo r th e fo reg oi ng reas on s, t he jud gm en t o f th e d is tri ct co ur t i s af fir m ed

.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

The OKISDA Arti cl es of In co rp or at io n ex pr es sl y pr ov id ed th at on ly 4

sh areh ol de rs en ti tl ed to vo te were en ti tl ed to no ti ce o f sh areh ol de r m eet in gs

.

-1 2-