Court Opinion

ID: 6594111
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:00:43.339545+00
Date Added: 2024-06-11T15:57:45.938000
License: Public Domain

USCA11 Case: 21-12034        Date Filed: 07/20/2022   Page: 1 of 6

                                            [DO NOT PUBLISH]
                              In the
         United States Court of Appeals
                  For the Eleventh Circuit

                    ____________________

                           No. 21-12034
                    ____________________

ANGUS F. MCDUFFIE,
STEVEN M. RAFSKY,
GRETA RAFSKY,
RONALD LANG,
LARRY SCHUMER,
ARIEL H. MARTIN,
as personal representative of the
Estate of deceased
Gary Hendershot,
WILLIAM J. BRASSARD,
AMY D. BRASSARD,
                                                Plaintiffs-Counter
                                           Defendants-Appellants,
versus
USCA11 Case: 21-12034        Date Filed: 07/20/2022   Page: 2 of 6

2                     Opinion of the Court               21-12034

SUE BOSEVICH,
as Executrix of the Estate of deceased
Dan Sautner,
BRIAN AUSTIN,
MICHAEL MCLANE,
HAWTHORNE 2018 LLC,
619047 ONTARIO LTD,

                                             Defendants-Counter
                                             Claimants-Appellees,

JANICE SAUTNER,
ELIZABETH AUSTIN,
SMALLBIZPROS INC.,

                                             Defendants-Appellees

                    ____________________

          Appeal from the United States District Court
              for the Middle District of Georgia
             D.C. Docket No. 3:19-cv-00087-CDL
                   ____________________
USCA11 Case: 21-12034          Date Filed: 07/20/2022       Page: 3 of 6

21-12034                 Opinion of the Court                           3

Before WILLIAM PRYOR, Chief Judge, LUCK, Circuit Judge, and
MOORER, * District Judge.
PER CURIAM:
       This appeal requires us to decide whether three agreements
signed by a group of shareholders created an enforceable, weighted
voting scheme for a portion of shares in a company. A group of
aggrieved shareholders of SmallBizPros, Inc., appeal a summary
judgment in favor of rival shareholders in “a dispute about who
owns the controlling number of voting shares in the corporation in
which the parties share ownership.” The aggrieved shareholders
argue that three agreements signed in 2000 and 2003 created a 40-
20-40 voting scheme between three groups of shareholders. Be-
cause the district court correctly rejected that argument, we affirm.
       The parties dispute the meaning of three agreements: the
“Holdco Agreement” signed in 2000, an agreement signed in April
2003, and an agreement signed in November 2003. All three agree-
ments were signed by Dan Sautner, Brian Austin, and Steven Raf-
sky, and the November 2003 Agreement was also signed by their
spouses. Sautner and Austin were the founders of the Padgett com-
panies, the predecessors of SmallBizPros, and Rafsky was the new
chief executive officer of Padgett and the owner of Stegre, a
Padgett franchise.

* Honorable Terry F. Moorer, United States District Judge for the Southern
District of Alabama, sitting by designation.
USCA11 Case: 21-12034        Date Filed: 07/20/2022    Page: 4 of 6

4                      Opinion of the Court                21-12034

       The Holdco Agreement anticipated a restructuring of the
ownership interests in the predecessor companies and franchise us-
ing holding companies. The original shareholders of the predeces-
sor companies would own the holding companies, and in turn, the
holding companies would own 60 percent of SmallBizPros. New
shares of Padgett would be issued so that 40 percent of shares
would be available for new investors. The Holdco Agreement ex-
plained how the shares in the holding companies would be voted:
“[T]he Padgett Shareholders and the Stegre Shareholders w[ould]
vote their shares” in the holding companies such that “the Padgett
Shareholders w[ould] control and vote 40 [percent] of the stock of
[Padgett] and . . . the Stegre Shareholders w[ould] control and vote
20 [percent] of the stock in [Padgett].”
        The signatories eventually abandoned the plan to form the
holding companies and instead decided to merge the Padgett com-
panies and Stegre franchise to create SmallBizPros. The April 2003
Agreement provided that instead of creating the holding compa-
nies, Stegre and Padgett would be merged into one company called
SmallBizPros, and “all shareholders w[ould] be issued shares of
SmallBizPros stock.” The April 2003 Agreement also stated that the
companies’ “arrangements [we]re now governed by the Holdco
[A]greement . . . and this agreement.” And the November 2003
Agreement reaffirmed that SmallBizPros was “organized . . . ac-
cording to two documents: the Holdco [A]greement . . . and [the
April 2003 Agreement].”
USCA11 Case: 21-12034         Date Filed: 07/20/2022    Page: 5 of 6

21-12034               Opinion of the Court                         5

      The Sautners, Austins, and their allied shareholders alleg-
edly obtained a controlling interest in SmallBizPros by 2019, at
which time they acted to remove the members of SmallBizPros’
board of directors, including Rafsky, and to elect Sautner, Austin,
and another shareholder as the new directors. The aggrieved share-
holders—the Rafskys and several of the new investors—filed a
complaint in October 2019 against these rival shareholders, seeking
both declaratory and injunctive relief. Both sides moved for sum-
mary judgment.
        The district court ruled in the rival shareholders’ favor. The
district court rejected the aggrieved shareholders’ argument that
the plain meaning of the Holdco Agreement created a 40-20-40 vot-
ing scheme between the original Padgett Shareholders, the Stegre
Shareholders, and the new investors. And the district court ex-
plained that the April 2003 Agreement “cast further doubt that its
parties intended to abide by a 40-20-40 voting plan.”
       We review an appeal from summary judgment de novo.
Thornton v. E.I. DuPont de Nemours & Co., 22 F.3d 284, 288 (11th
Cir. 1994). A party is entitled to summary judgment if “there is no
genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” FED. R. CIV. P. 56(a).
      The district court correctly concluded that the Holdco
Agreement did not establish a 40-20-40 voting scheme. The Holdco
Agreement established only that the original Padgett Shareholders
would control 40 percent of the Padgett vote through their shares
in the holding companies. But the Holdco Agreement did not
USCA11 Case: 21-12034      Date Filed: 07/20/2022   Page: 6 of 6

6                     Opinion of the Court              21-12034

prohibit the original Padgett Shareholders from accumulating vot-
ing power by directly investing in Padgett and purchasing some of
the 40 percent of shares opened to new investors. So, the Holdco
Agreement did not establish a 40-20-40 voting scheme.
       In any event, the purported 40-20-40 voting scheme did not
survive the April 2003 Agreement, which abandoned the plan to
create holding companies. Under the April 2003 Agreement, all
shareholders were to become direct shareholders in SmallBizPros.
The Holdco Agreement’s vote-allocation provision became mean-
ingless after the plan to create the holding companies was aban-
doned, so it does not affect the voting weight of shares in
SmallBizPros.
       Because the agreements do not operate as the aggrieved
shareholders argue, the aggrieved shareholders cannot succeed in
their appeal, and we need not reach the parties’ arguments about
the proper interpretation of Georgia law. See GA. CODE ANN. § 14-
2-731.
     The summary judgment in favor of the rival shareholders is
AFFIRMED.