Opinion ID: 2152755
Heading Depth: 1
Heading Rank: 4

Heading: issues

Text: [¶ 10.] Whether the trial court erred when it found that while the directors were deadlocked, CBPM had not been threatened with irreparable damage. [¶ 11.] The parties agree they are deadlocked. They also agree SDCL 47-7-34 [2] allows the trial court to liquidate a corporation when the directors are deadlocked and irreparable damage has occurred, or is threatened, or when the acts of the directors are illegal, oppressive or fraudulent. The trial court found that while the directors were deadlocked as to the management of the business, CBPM was not threatened with, nor was it suffering irreparable damage. [¶ 12.] Longwell cites Black v. Graham, 266 Ga. 154, 464 S.E.2d 814 (1996) for authority that a corporation is threatened with irreparable damage when there are only two equal stockholders acting as directors, who are wholly unable to agree on the management of the business. The Georgia court determined that this factual scenario created a hostile and static situation threatening irreparable harm to the corporation. Id. at 815. [¶ 13.] In South Dakota, [a]n injury is irreparable ... where ... it cannot be readily, adequately, and completely compensated [] with money. Maryhouse, Inc. v. Hamilton, 473 N.W.2d 472, 475 (S.D.1991) (quoting 42 Am.Jur.2d Injunctions § 49 (1969)). [¶ 14.] In Landstrom v. Shaver, 1997 SD 25, ¶ 41, 561 N.W.2d 1, 9, we noted that SDCL 47-7-34 does not leave the trial courts with two draconian options of helplessly dismissing outright a proven cause of action or ordering the dissolution of a corporation[.] Rather, we held that a trial court has discretion, within its broad powers of equity, to create an appropriate remedy based on the evidence presented.... The statute does not actually mandate liquidation ... but rather provides that the court has this ultimate power to liquidate. (internal citations omitted). [¶ 15.] In this case, the parties are unable to agree on the management of CBPM. However, this case differs from Black, in that Longwell has been shown to have wasted or concealed corporate assets, thus creating the deadlock. CBPM was still functioning without Longwell at the time of the trial. Longwell has offered to sell and Koehler has offered to purchase Longwell's interest in CBPM. There is a pending lawsuit concerning the enforcement of the provisions of a buy/sell agreement. [¶ 16.] Under these circumstances, we find that the trial court correctly concluded that Longwell failed to meet his burden of proving that CBPM was threatened with irreparable injury.