An agreement meant to keep a popular amusement park in the family has sparked a bitter dispute that has reached the Indiana Court of Appeals.
Attorneys representing Koch family members presented oral arguments Aug. 6 before the appellate court in Koch Development Corp. and Daniel L. Koch v. Lori A. Koch, as personal representative to the estate of William A. Koch, Jr., deceased, 82A-4-1212-PL-612.
The Koch family owns Holiday World & Splashin’ Safari near Evansville. Will Koch, grandson of the park’s founder Louis J. Koch, was the majority owner in partnership with his brother Dan Koch, an attorney in Florida.
After Will Koch’s sudden death on June 13, 2010, Dan Koch was elected president of the business and took over operations.
Lori Koch, Will’s widow, and Dan Koch are fighting over the share price of the business under terms of a buy-sell agreement the brothers had. Both sides told the court that the purpose of the agreement was to keep Holiday World in the Koch family.
At the end of oral arguments, Judge John Baker said that from his point of view the situation looks as if this is a fractured family and there is probably nothing the courts can do.
The buy-sell agreement in place at the time of Will Koch’s death dictated the sale of their respective shares in the family business. In this situation, Koch Development Corp. had to purchase as much of the decedent’s shares as the capital of the company would lawfully permit while the remaining shares were to be purchased by the surviving shareholders.
KDC tendered an offer of $5 million and Dan Koch made a separate offer which brought the total amount to just under $27 million.
Lori Koch rejected both offers, claiming her husband’s shares were worth more than $32.5 million. She pointed to the brothers’ agreement in 2009 that the price per share was $653.07. Dan Koch and KDC countered that the shares were worth $541.93 each.
In January 2011, Lori Koch filed suit.
The trial court entered a judgment in favor of the estate. It found that KDC’s and Dan Koch’s actions materially breached the buy-sell agreement and concluded the estate was permanently excused from the obligation to sell its shares to KDC and Dan Koch.
On appeal, Dan Koch argued the trial court should be reversed. He claims he and KDC did not materially breach the agreement and that the trial court erred in excusing the estate from selling Will Koch’s shares.
During oral arguments, the appeals court judges questioned the attorneys about the specifics of the buy-sell agreement and the intent of that agreement. Jim Johnson, partner at Rudolph Fine Porter & Johnson LLP, represented KDC and Dan Koch. Terry Farmer, managing partner at Bamberger Foreman Oswald & Hahn LLP, represented Lori Koch.
Judge Paul Mathias raised the 180-day time limit included in the agreement and questioned Johnson as to why Dan Koch waited until the 178th day to tender an offer.
Johnson replied his client was practicing law in Florida and Will Koch’s death put him in an unexpected position of running the park.
Mathias countered that Dan Koch is an attorney. Issues do not always come when it is convenient for the attorney, he said. When Dan Koch stepped into the leadership role at Holiday World, he had an obligation to meet in 180 days.
The judges also queried Farmer about the price Lori Koch is arguing each share is worth. Farmer explained that was the price agreed upon by the shareholders on Jan. 1, 2009.
Baker asked, since he had bought a Buick in 1974 for $3,500, was the automaker obligated to sell him another car at the same price?
Farmer explained that every two years the shareholders set the pricing mechanism within the agreement. The price of $653.07 agreed upon in Jan. 2009 would govern.