United States Court of Appeals

For the Eighth Circuit

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No. 17-2759

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Donna K. Rains; Alice Belle Laurendine

lllllllllllllllllllllPlaintiffs - Appellants

v.

Oscar Homer “O.H.” Jones, III, et al.

lllllllllllllllllllllDefendants - Appellees

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Appeal from United States District Court 

for the Eastern District of Arkansas - Little Rock

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Submitted: April 10, 2018

Filed: September 24, 2018

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Before SMITH, Chief Judge, WOLLMAN and LOKEN, Circuit Judges.

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LOKEN, Circuit Judge.

This is a dispute among six siblings primarily over ownership and control of

OKISDA, Inc. (OKISDA), a family corporation their mother, Eunice Ashabranner,

established in 1974. In their First Amended Complaint, the Plaintiffs, sisters Donna

Rains and Alice Laurendine, assert multiple claims against OKISDA, their brother,

Oscar Homer Jones, III (“O.H.”), and sisters Karen Loden, India Huddleston, and
Sandra Ballard. After substantial, contentious discovery,the district court concluded 1

that “nearly all [the claims] hinge on whether the transfer of Class A [voting

common] stock from [Ashabranner’s revocable] Trust to Mr. Jones was valid.” The

court held the transfer valid and granted Defendants summary judgment dismissing

all claims. Plaintiffs appeal, contending the court made five reversible errors. 

Reviewing the grant of summary judgment de novo, we disagree and affirm. 

I. Background and Procedural History. 

In 1974, Ashabranner (nee Eunice Jones) incorporated OKISDA to own and

operate roughly 1,100 acres of farmland in Jefferson County, Arkansas. The Articles

of Incorporation authorized OKISDA to issue 26,000 shares of Class A voting

common stock and 26,000 shares of Class B non-voting common stock. At the June

1, 1974, organizational meeting, attended by incorporator Ashabranner and her

attorney, the corporation resolved that Ashabranner would be the sole director; that

Ashabranner would serve as President, Vice President, and Secretary-Treasurer; and

that Ashabranner subscribed for the authorized 26,000 shares of Class A voting

common stock and 26,000 shares of Class B non-voting common stock in exchange

for her interest in the Jefferson County farmland. Later that year, Ashabranner

transferred 4,333 shares of Class B non-voting stock to each of her six children. As

of December 1974, Ashabranner owned 26,000 Class A shares and two Class B

shares, and each child owned 4,333 Class B shares. 

More than twenty-five years later, Ashabranner transferred her 26,000 Class

A voting shares and two Class B non-voting shares to the Eunice K. Ashabranner

Trust, a revocable trust drafted by an attorney in Conway, Arkansas. But by 2008,

trustee Ashabranner was dissatisfied with the Trust’s successor trustee provision and

The Honorable Billy Roy Wilson, United States DistrictJudge for the Eastern 1

District of Arkansas. 

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consulted her accountant, Kirk Stone, and attorney Ted Drake, who had drafted a

prior will in the 1980s and served as counsel to OKISDA. Drake testified that the

Conway attorney “had done a revocable trust that wasn’t at all what Miss

Ashabranner wanted.” It bothered Ashabranner that the Trust “favored Donna and

made her trustee and gave her control over OKISDA.” On February 1, 2011,

Ashabranner signed a Second Restatement to the Trust drafted by Drake. Among

other changes, the restated Trust appointed O.H. the primary successor Trustee,

followed by Loden and Huddleston. Drake’s notes from the meeting state: “Mrs. A

was alone and obviously mentally competent. We went over trust and . . . order of

trustees. She said that is what she has always wanted. O.H. knows the business. 

Other two girls know it next best.” 

In March 2012, Ashabranner met with Stone, expressed concern that her

daughters might pressure O.H. to sell the farm, and said she wanted to give O.H.

control of OKISDA. After confirming that Ashabranner understood the import of a

decision to give up her sole control of the corporation, Stone emailed Ted Drake that

“[Ashabranner] would like to gift O.H. all the voting stock. . . . She understands this

gives O.H. control now. She is ok with O.H. having control. She does not want to

worry about the daughters being able to s[ell] the farm without O.H.’s approval.” 

Drake then orchestrated a series of actions to implement Ashabranner’s decision. 

On June 15, 2012, Ashabranner as sole voting shareholder elected herself,

O.H., Huddleston, and Loden to OKISDA’s Board of Directors. The next day, at a

special meeting, the expanded Board elected new officers and added a provision to 2

the Bylaws allowing “Informal Action” without a meeting if a majority of the Board

signed written consents describing the actionstaken. The following month, the Board

amended the Articles of Incorporation to authorize the issuance of 26,000 shares of

The Board elected Ashabranner President, O.H. Vice-President and General 2

Manager, Huddleston Secretary, and Loden Treasurer.

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Class C non-voting stock “with distribution on liquidation of the corporation limited

to [$1.00 per share] par value.” By contrast, the Class A and Class B shares

continued to have a par value of one dollar per share, but there was no limit to the per

share distribution they would receive upon liquidation. At the same meeting, the

Board authorized OKISDA to exchange 25,998 Class C shares for 25,998 Class A

voting shares held by Ashabranner’s revocable Trust. After this exchange, only two

Class A voting shares remained outstanding, held by the Trust. On September 24,

2012, with Ashabranner assole Trustee, the Trust transferred these two sharesto O.H. 

Rains, Laurendine, and Ballard received no notice of these 2012 transactions. 

On August 14, 2013, Ashabranner sent Rains, Laurendine, and Ballard a letter

expressing “my disappointment in each of you” and declaring: “Nothing has been

done behind anyone[’]s back as I am the sole owner of OKISDA, Inc., to this point

and will remain so until my death . . . .” Plaintiffs allege that, by August 16, two days

later, they learned the Trust had transferred the only two outstanding voting shares

to O.H. in September 2012. Ashabranner died on April 30, 2014. 

In June 2015, attorney Gene Ludwig sent all six siblings a letter stating that he

owned land adjacent to the OKISDA property and expressing interest in buying any

of the siblings’ interests in the land. Rains replied that she, Laurendine, and Ballard

would be willing to sell. On April 15, 2016, Plaintiffs represented by Ludwig filed

their initial complaint against O.H. and OKISDA. Plaintiffs alleged that the Trust’s

September 2012 transfer of two Class A shares violated the share transfer restriction

in OKISDA’s Bylaws. Plaintiffs sought specific enforcement of the restriction and

also asserted damage claims against O.H. for unjust enrichment, conversion, breach

of contract, and fraud committed by the share transfer and later actions. Defendants

asserted various affirmative defenses including that claims were barred by the statute

of limitations and the action should be dismissed for failure to join necessary parties.

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Plaintiffs filed the First Amended Complaint on September 23, 2016, adding

Loden, Huddleston, and Ballard as defendants. Plaintiffs alleged that O.H., Loden,

and Huddleston breached their fiduciary duties as OKISDA directors by facilitating

the September 2012 share transfer without notice to Plaintiffs; approving a loan from

OKISDA to O.H. at a below-market interest rate; mismanaging leasing of OKISDA

farmland; authorizing O.H. to drive a corporate truck; and having OKISDA

indemnify them for the costs of defending Plaintiffs’ suit. Plaintiffs sought a

declaration that Loden and Huddleston had waived any claim to the two Class A

shares and added Ballard as a necessary party defendant to assert any interest she had

in those shares. Plaintiffs also sought a statutory right to inspect OKISDA’s financial

records and expanded their fraud claim against O.H. to include an allegation that he 3

made misleading disclosures to the federal government regarding his work farming

the OKISDA land.

After months of discovery, all parties except Ballard moved for summary

judgment. All sought summary judgment on Plaintiffs’ claim that the September

2012 transfer violated the share transfer restriction in OKISDA’s Bylaws. The

district court granted the Defendants’ motions for summary judgment. Central to its

decision was the court’s conclusion that Plaintiffs’ breach of contract, breach of

fiduciary duty, conversion, unjust enrichment, and fraud claims, and much of the

relief sought, turned on the validity of the September 2012 transfer of Class A shares

from the Trust to O.H. The court held that the share transfer did not violate the

Bylaws’ transfer restriction. The court also concluded that the unlawful share transfer

claim, and all of Plaintiffs’ tort claims that accrued before April 15, 2013, were timebarred because Plaintiffs presented no evidence showing that the applicable threeyear statute of limitations should be tolled because of fraudulent concealment.

The district court did not address this claim; Plaintiffs do not raise it on 3

appeal. See generally Ark. Code Ann. § 4-26-715. 

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II. Discussion. 

The Statement of the Issues section of Plaintiffs’ Opening Brief presents five

issues on appeal. The fifth and last attacks the substantive core of the court’s

decision: “Whether the September 2012 transfer of the two Class A voting shares to

Oscar ‘O.H.’ Jones violated the OKISDA Inc. Bylaws.” Like the district court, we

will begin (and for the most part end) with that issue.

A. The Transfer Restriction Issue. The share-transfer restriction at issue is

Article VI, Section 3, of OKISDA’s original 1974 Bylaws. It provides:

(a) Before any shareholder in this corporation shall dispose of his

or her shares of stock by an inter vivos transfer, whether by sale, gift or

hypothecation, such shareholder shall first offer said stock for sale to the

corporation at a price to be determined as herein set forth. 

(b) Any share not purchased by the corporation within sixty (60)

days after receipt ofsuch offer shall be offered to the other shareholders

of the class ofstock being transferred, each to have the right to purchase

his or her aliquot part of the class to be transferred. If the offer is not

accepted within thirty (30) days after receipt thereof, the shareholder

desiring to transfer said stock shall have the right to transfer that portion

remaining to any other person but shall not transfer such shares without

giving the corporation and remaining shareholdersthe right to purchase

at a price and on the terms offered by such other person.

(c) The purchase price to be paid for the transfer ofstock pursuant

hereto shall be the book value of each share without consideration as to

intangibles such as good will . . . . 

(Emphasis added.) Defendants took no action pursuant to Section 3 before or after

the September 2012 transfer of two Class A voting shares from the Trust to O.H. 

Plaintiffs do not claim the transfer violated subsection 3(a) because the shares were

not first offered to OKISDA, as purchase by OKISDA would have left no voting

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shares outstanding. Nor do they claim a violation of the first sentence of subsection

3(b) for the obvious reason that there were then no “other shareholders of the class

of stock being transferred” who would have a right to purchase the two shares. 

Thus, the dispute turns on the second sentence of subsection 3(b), more

specifically, on whether Plaintiffs Rains and Laurendine, as holders of Class B nonvoting shares, are “remaining shareholders [who had] the right to purchase at a price

and on the terms offered by such other person,” the transferee O.H. Plaintiffs argued

the plain language of this sentence required the Trust, before it gifted the two shares

to O.H., to offer all Class B shareholdersthe right to acquire those shares on the same

terms, namely, by gift. The district court concluded:

Plaintiffs’ interpretation of the transfer restriction bylaw is

unreasonable. Under Plaintiffs’ interpretation, the transfer-restriction

bylaw gave Plaintiffs (who each held a little more than 8% of all

outstanding shares, were not on the board of directors, and held no

voting shares) veto power over the decision of a supermajority of all

shareholders, the holder of all voting shares, and the corporation’s board

of directors. 

* * * * *

Essentially, this bylaw gave shareholders of the same class of stock

being transferred a right of first refusal before shares were sold to an

outsider -- or, in the transfer-restriction bylaw’s terms, “any other

person.” Because [O.H.]Jones was a shareholder, he was not “any other

person.”

The transfer-restriction bylaw has four steps. . . . [Plaintiffs’]

nonsensical interpretation is avoided when the terms “remaining

shareholders” and “other shareholders of the class of stock being

transferred” are read as interchangeable.

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Reading other shareholders and remaining shareholders as

synonymous, allows the only reasonable interpretation of the bylaw.

On appeal, Plaintiffs argue their interpretation of subsection 3(b) is mandated

by the plain meaning of the terms “any other person” and “remaining shareholders,”

supported by evidence that Ashabranner always intended that each of her children

retain an equal interest in OKISDA. Like the district court, we disagree. 

Arkansas courts, like the courts of other States, apply contract-interpretation

principles in interpreting corporate bylaws. See Taylor v. Hinkle, 200 S.W.3d 387,

395-96 (Ark. 2004); see generally 8 Fletcher, Cyclopedia of the Law of Corporations

§ 4195 (2018). Like other contracts, when interpreting a contract among shareholders

restricting their freedom to transfer, “the rule is to ascertain the intention of the

parties and to give effect to that intention where this can be done consistently with

legal principles.” Owen v. Merts, 405 S.W.2d 273, 277 (Ark. 1966). Here, there

were not multiple “parties to a contract.” OKISDA was formed and its Bylaws

adopted by the sole owner of the corporation’s assets, Ashabranner. Under her

exclusive control,the corporation created two classes ofstock, voting and non-voting,

and issued all authorized shares to Ashabranner, its sole stockholder and director,

who then retained all Class A voting shares and gifted all but two Class B non-voting

shares in equal portions to her six children. 

Because the only intention to be determined is the intent of Ashabranner in

including Article VI, Section 3, in OKISDA’s 1974 Bylaws, it is not surprising that

neither Plaintiffs nor any Defendant argued to the district court that summary

judgment was improper because extrinsic evidence was needed to interpret an

ambiguous Bylaw. Rather, the two sides urged the court to adopt very different

interpretations of the second sentence ofsubsection 3(b). In these circumstances, the

role of the court is to determine, as a matter of law, the “more reasonable

construction” of Ashabranner’s intent. Fryer v. Boyett, 978 S.W.2d 304, 306 (Ark.

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App. 1998). This intent “isto be gathered, not from particular words and phrases, but

from the whole context of the agreement.” Owen, 405 S.W.2d at 277 (citation

omitted); see Spann v. Lovett & Co., 389 S.W.3d 77, 88-89 (Ark. App. 2012). 

1. Beginning with Plaintiffs’ textual argument, we disagree that, in this

context, the plain meaning of “any other person” necessarily includes O.H. Restraints

on alienation are generally disfavored. Thus, courts have interpreted similarly

worded restrictions-- preventing an existing shareholder from disposing of his or her

shares before offering them to the corporation or other shareholders -- as applying

only to transfers between current shareholders and outsiders. See, e.g., Birmingham

Artificial Limb Co. v. Allen, 194 So. 2d 848, 850 (Ala. 1967). Moreover, the second

sentence of subsection 3(b) gives remaining shareholders “the right to purchase at a

price and on the terms offered by such other person.” Here, there was no offer to

purchase by O.H.; the Trust transferred two Class A shares to O.H. by gift. As the

district court noted, it would be “nonsensical” to apply the four steps of Article VI,

Section 3, literally to this transfer. 

We also disagree that the plain meaning of “remaining shareholders” in this

context necessarily includes the holders of Class B non-voting shares. The word

“remainder” is defined as “the number left after subtraction or deduction.” Webster’s

Third New International Dictionary 1919 (1986). Here, Section 3 was obviously

intended to apply if one or more of Ashabranner’s six children wished to sell his or

her Class B non-voting shares. In this situation, a reasonable interpretation of the

second sentence of subsection 3(b) is that “remaining shareholders” are those Class

B shareholders who did not elect to purchase “his or her aliquot part” under the first

sentence of subsection 3(b). 

2. Turning to the other important inquiry in determining Ashabranner’s intent,

we disagree with Plaintiffs’ assertion that the summary judgment record established

that she intended that each of her children “retain an equal interest in OKISDA.” 

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Rather, the evidence established that, in 1974 and thereafter, Ashabranner intended

to establish and to retain sole control over the corporation, while transferring to her

children equal financial interests in the corporation’s assets (a typical parental

objective in dealing with a family enterprise). This intent was reflected in the 2012

transactionsthat attorney Drake orchestrated. By exchanging all but two of her Class

A voting shares for newly-authorized Class C non-voting shares having a limited

value upon liquidation, Ashabranner reduced her financial interest in OKISDA in the

event of her death. By then gifting the remaining two outstanding shares of Class A

voting stock to O.H., she was able to transfer her sole control in a manner that did not

substantially affect the siblings’ equal financial interests in OKISDA’s assets. 

For these reasons, we conclude the district court correctly ruled that, because

“other shareholders of the same class” and “remaining shareholders” should be

interpreted as synonymous, and because O.H. was not “any other person,” the Trust

did not violate Article VI, Section 3, of OKISDA’s Bylaws when it did not offer two

Class A voting shares to the Class B non-voting shareholders before transferring the

two shares to O.H Jones. 

B. Plaintiffs’ Other Contentions on Appeal. Plaintiffs argue the district court

erred in dismissing other claims without providing Plaintiffs advance notice and an

opportunity to respond. Rule 56(f) provides that the court may grant summary

judgment on grounds not raised or on its own “[a]fter giving notice and a reasonable

time to respond.” Even without notice, however, summary judgment may be granted

“on an issue not properly raised in the summary judgment motion if the district

court’s findings on properly addressed issues foreclose the unraised issue.” Heisler

v. Metro. Council, 339 F.3d 622, 632 (8th Cir. 2003), citing Interco Inc. v. Nat’l Sur.

Corp., 900 F.2d 1264, 1269 (8th Cir. 1990). Here, the district court concluded:

Because this[two-share] transfer was valid, Defendants breached

no bylaws, contract, or fiduciary duties; no property was converted; no

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one was unjustly enriched; and no fraud took place. Accordingly,

Defendants are entitled to summary judgment on these points. 

The issues raised by Plaintiffs on appeal do not include the merits of the district

court’s rulings dismissing their claims for unjust enrichment and breach of fiduciary

duty, only the court’s decision to grant summary judgment sua sponte without

providing Plaintiffs notice or an opportunity to respond. But this procedural

contention was waived. “Whether or not a party receives an advance signal that the

court might act sua sponte . . . any objection to that procedure is waived if the party

does not at least object after the court enters its order while the action is still

pending.” UnitedHealth Grp. Inc. v. Exec. Risk Specialty Ins. Co., 870 F.3d 856,

866-67 (8th Cir. 2017).

Although the only issue raised on appeal was waived in the district court, we

agree with the court that the validity of the stock transfer established that Plaintiffs’

other claims are foreclosed. 

1. Count Two alleged that O.H. was unjustly enriched by receipt of the two

Class A shares. That claim was directly foreclosed by the transfer’s validity. See

Davis v. Davis, 480 S.W.3d 878, 885 (Ark. App. 2016) (“One is not unjustly enriched

by receipt of that to which he is legally entitled.”). Plaintiffs also alleged that O.H.

was unjustly enriched after the September 2012 share transfer by being allowed to

drive a corporate truck, receiving loans from OKISDA he has not repaid, and

engaging in self dealing. But these are claims that O.H. injured the corporation by

abusing control lawfully acquired by the share transfer. “Any action to recover for

the alleged losses was derivative in nature and an individual suit was not the proper

route for relief.” Hames v. Cravens, 966 S.W.2d 244, 247 (Ark. 1998). 

2. Count Six alleged that O.H., Loden, and Huddleston breached fiduciary

duties by facilitating the invalid share transfer. This claim was directly foreclosed by

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the transfer’s validity. “A person standing in a fiduciary relationship with another is

subject to liability to the other for harm resulting from a breach of the duty imposed

by the relationship.” Long v. Lampton, 922 S.W.2d 692, 696-97 (Ark. 1996)

(emphasis added). Plaintiffs also alleged that O.H., Loden, and Huddleston, as

officers and directors of OKISDA, breached their fiduciary duty to Plaintiffs as

shareholders after the share transfer by their actions in controlling the corporation --

a below-market loan to O.H., misuse of retained earnings, self-dealing and imprudent

leasing practices, and O.H.’s use of the corporate truck, all without notice to

Plaintiffs. As explained, these are claims of injury to the corporation that may only

be asserted in a shareholder derivative action. See Hames, 966 S.W.2d at 246-47;

Walker v. Hyde, 798 S.W.2d 435, 437 (Ark. 1990). Thus, even if fact intensive, the

claims were properly dismissed. The claim that the director Defendants breached a

fiduciary duty to hold annual OKISDA shareholder meetingsin 2013, 2014, and after

2015 obviously fails for lack of injury, as Plaintiffs were not entitled to notice of or

the right to vote at these meetings.

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3. Finally, Plaintiffs argue the district court erred in concluding (i) that their

share transfer tort claimistime-barredwithout considering their allegation that O.H.’s

fraudulent concealment tolled the three-year statute of limitations; and (ii) that unjust

enrichment and breach of fiduciary duty claims accruing before April 15, 2013, are

time-barred despite Plaintiffs’ allegations of fraudulent concealment and of

continuing wrongful acts after the two-share transfer. As we have concluded that the

district court correctly dismissed these claims on the merits, we need not consider

Plaintiffs’ appeal of the court’s alternative statute of limitations rulings. 

For the foregoing reasons, the judgment of the district court is affirmed.

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The OKISDA Articles of Incorporation expressly provided that only 4

shareholders entitled to vote were entitled to notice of shareholder meetings. 

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