National Parks Resorts Lodge Corporation v. Antonio Perfetto

Tenn. Ct. App.May 29, 2018No. E2017-01330-COA-R3-CV

Mixed ResultNational Parks Resorts Lodge Corporation$309,789 awarded

Case Details

Judge(s): Judge D. Michael Swiney, C.J.
Status: Published
Procedural Posture: appeal to appellate court affirming trial court judgment

Related Laws

No specific laws identified for this ruling.

Outcome

Appellate court affirmed the trial court's determination of fair value for dissenters' shares in a corporate merger, awarding defendants $186,913 for shares and $122,876 in attorney's fees after finding majority shareholder manipulated financial information.

Excerpt

This appeal arises from a judicial determination of the fair value of dissenters' shares in a corporation. In 2002, King Solomon's Palace, Inc., ("KSP") a corporation created in 1986 for the purpose of establishing a hotel in Pigeon Forge, announced its pending merger into another company, National Parks Resort Lodge Corporation ("Plaintiff"). Johnny Jess Davis ("Davis") was the majority shareholder of KSP. Dissenters Antonio Perfetto and David L. Donohue ("Defendants") each held 50 shares of KSP common stock. Plaintiff filed a complaint in the Chancery Court for Sevier County ("the Trial Court") seeking a judicial determination of the fair value of Defendants' shares. After a trial, the Trial Court awarded Defendants $186,913 for their shares and $122,876 in attorney's fees and costs. The Trial Court found, in part, that Davis had manipulated and withheld financial information to Defendants' detriment. Plaintiff appeals to this Court, arguing, among other things, that the evidence preponderates against the Trial Court's findings regarding Davis's conduct. Defendants raise an additional issue arguing that the Trial Court set the value of their shares lower than it should have under the evidence. We affirm the judgment of the Trial Court.

What This Ruling Means

This case involved a dispute over the value of company shares when two minority shareholders disagreed with a corporate merger. In 2002, King Solomon's Palace, Inc., a hotel company in Pigeon Forge, announced it would merge with National Parks Resort Lodge Corporation. Two employees who owned 50 shares each, Antonio Perfetto and David Donohue, opposed the merger and demanded fair payment for their shares under Tennessee law, which gives shareholders the right to "dissent" from major corporate decisions. The court found that the majority shareholder, Johnny Jess Davis, had manipulated financial information to make the company appear less valuable than it actually was. After examining the true worth of the business, the court awarded the two dissenting shareholders $186,913 for their shares, plus $122,876 in attorney's fees, totaling $309,789. This ruling matters for workers because it protects employee-shareholders from being cheated when companies merge or make major changes. If you own shares in your company through employee stock programs, you have legal rights when management makes decisions that affect share value. Courts will look beyond manipulated numbers to determine fair compensation, and you may be entitled to attorney's fees if you successfully challenge unfair treatment.

This summary was generated to explain the ruling in plain English and is not legal advice.

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Mixed Result

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