Opinion ID: 1873693
Heading Depth: 1
Heading Rank: 13

Heading: Andrew and Pennfield Raised Bill's and Sydney's Alleged Disqualification to the District Court

Text: The original pleadings show that before the district court issued its 2004 order, Pennfield and Andrew raised the specific issues that they now contend the district court never decided. One of the claims in Pennfield's original and amended complaint was that Bill's attempt to transfer the shares to himself had violated his fiduciary duty to Pennfield. Pennfield sought a temporary and permanent injunction preventing Bill from taking any action regarding Pennfield's right to redeem the estate's shares. Andrew made the same allegations in his original and amended counterclaim against Pennfield and in his crossclaim against Bill. Like Pennfield, he also sought a temporary and permanent injunction preventing Bill from taking any action regarding Pennfield's right to redeem the estate's shares. In addition, Andrew specifically alleged that Bill's acts constituted an unlawful preference of Bill's personal interests over Pennfield's best interests, that Bill and Sydney were not disinterested directors, and that Andrew was the only independent director who could act regarding Pennfield's rights in the 1988 agreement. Andrew joined Pennfield's requests for relief. In addition, he sought a declaration that Bill's actions were self-dealing and taken in bad faith. As noted, in the district court's 2004 order, it concluded that Pennfield had waived its right to redeem R.W.'s shares under the 1960 agreement. It reasoned that allowing Pennfield to redeem them would be inconsistent with R.W. and Bill's intent that Bill would remain the majority shareholder. The court denied Andrew's other claims regarding Bill and Sydney's conflicts of interest. In Pennfield I, Andrew and Pennfield did not assign as error the district court's overruling of their claims that (1) Bill should be enjoined from taking any action regarding the estate's shares because he had breached his fiduciary duties to Pennfield or (2) Bill and Sydney had conflicts of interest that disqualified them from voting on the waiver. Andrew and Pennfield's failure to assign as the error the district court's adverse rulings on these issues was perhaps a tactical decision. As noted, in Pennfield I, they mainly argued that redemption of the estate's shares was mandatory. Raising on appeal Bill's and Sydney's alleged disqualification to vote on the redemption would have arguably been a concession that redemption was not mandatory. But, as discussed below, they are now bound by their failure to raise alternative arguments on issues that the district court decided against them.