Hollis v. Hil

232 F.3d 460 (2000)

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Nature of the Case

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Facts

P and D jointly founded First Financial USA, Inc. (FFUSA), a Nevada corporation. They marketed first lien mortgage notes and other non-security financial products. They also owned equal shares of a Texas broker-dealer, FFUI. D, a 50% owner of FFUSA, was a director and served as its president, and operated its Houston office. Hollis, a 50% owner of FFUSA, was a director and served as its vice president. Hollis operated its Melbourne, Florida office. FFUSA did very well financially and paid substantial salaries to P and D. In early December 1997, D began to complain that P was not carrying an equal share of the firm's workload. D stopped paying P's salary. P proposed mediation, relocating to Houston, placing a disinterested person on the board to break the deadlock, or exchanging his interest in FFUI for D's interest in FFUSA. D rejected all of the proposals. D proposed to buy P's interest in FFUSA in exchange for a ten-year, $1.5 million consultant agreement. P rejected the proposal. D threatened to close FFUI and establish his own broker/dealer business. D took FFUSA's annuity business and placed it into a sole proprietorship called 'Dan Hill d.b.a. First Financial U.S.A.' without telling P. D stopped sending FFUSA financial reports to P. D refused inspection of the books and records. D hired an attorney, and eventually, P and D reached an agreement. D would acquire P's interest in FFUI and would draw a salary of $200,000 from FFUSA, and P would draw an annual salary of $120,000. D again stopped sending company reports to P and unilaterally undertook a number of measures he claims were intended to lower the firm's costs, including reducing officer salaries by 50%. D reduces his own annual salary to $80,000 and reduced P's salary to zero dollars. D cut off phone service in the Florida office and the lease for the Florida office was be terminated. Phone service and car leasing were cut off for P. D even terminated P’s wife. P sued D alleging shareholder oppression. D then terminated P as vice-president and eliminated all of his company benefits. P continued as corporate secretary, board member, and 50% shareholder. D also made an unsuccessful 'capital call' on P. P also alleged a breach of fiduciary duty and sought to dissolve FFUSA. The court concluded that D's conduct was oppressive and ordered him to buy P's shares in FFUSA. D appealed.