Opinion ID: 1681759
Heading Depth: 3
Heading Rank: 1

Heading: Loss-of-control damages

Text: In considering loss-of-control damages, we recognize that, among other remedies, the plaintiffs sought to invalidate or rescind the stock redemption when they sued in 1996. Had Tully not transferred his 3,300 shares to TBC in 1986 or had that transfer been invalidated, he (and later his estate) would have remained the majority shareholder in TBC. Further, the children's trust, which before the stock redemption owned more shares of TBC stock than Buddy, would have exercised a substantial role in the management of TBC had the transfer of its 1,088 shares not occurred or had that transaction been rescinded. According to Hoffman's testimony and documentary evidence, had Price's malpractice not caused the plaintiffs to surrender their TBC stock, they would have received 88% (their aggregate ownership interests in the stock of TBC before the stock redemption) of all distributions by TBC during the statutory period. Assuming the plaintiffs owned the controlling shareholder interests they held before the stock redemption, their pro rata shares of the dividends paid to Buddy within the statutory period ($574,209 in 1994, $971,967 in 1995, and $1,162,470 in 1996) well exceeded, and alone constituted substantial evidence of, the $400,000 compensatory-damages award. The plaintiffs also proved that the salaries paid to Buddy as the president of TBC during the statutory period ($325,000 in 1994, $300,000 in 1995, and $350,000 in 1996) exceeded those paid to Tully before the stock redemption. [21] Further, it is undisputed that the plaintiffs could have managed TBC, steered its corporate direction, and enjoyed other benefits of ownership had they continued to control TBC after 1986. However, the plaintiffs initially lost control of TBC when the corporation redeemed its stock in 1986. [22] Evidence that damage continued within the statutory period from a wrong that first caused injury outside that period will not support an award of compensatory damages based on that wrong. See Serra, 850 So.2d at 270-71, 278-79. Although the plaintiffs proved that they incurred loss-of-control damage within the statutory period, their claim based on that damage was untimely under § 6-5-574, Ala.Code 1975, because it was not proximately related to any injury within the statutory period that resulted from Price's malpractice in his work on the IRS dispute.