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Court rules for widow in Holiday World suit

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The widow and children of the late William Koch Jr. can keep their shares in the southern Indiana theme park, Holiday World and Splashin’ Safari, after a ruling by the Indiana Court of Appeals concluded that William’s brother, Dan Koch, and Koch Development Corp. offered too little money for the shares.

In Koch Development Corporation and Daniel L. Koch v. Lori A. Koch, as personal representative of the Estate of William A. Koch, Jr., deceased, 82A04-1212-PL-612, the COA affirmed the Vanderburgh Circuit Court’s judgment against Dan and KDC. The lower court held that Lori Koch was the owner of 49,611.6 shares of KDC stock and because Dan and KDC materially breached the shareholders’ agreement, she did not have to sell the shares to KDC and Dan.

Writing for the court, Judge Paul Mathias acknowledged the pain the family fight has caused.

“While we regret seeing a family divide itself over an internal business dispute, our role is to determine whether the trial court’s findings were supported by sufficient evidence and whether these findings support the trial court’s judgment,” Mathias wrote. “Here, the evidence favorable to the trial court’s decision supports the trial court’s conclusion that Dan and KDC materially breached the terms of the Agreement and that this material breach excused the Estate of its obligation to perform under the Agreement.”

The dispute erupted after Will Koch died unexpectedly in June 2010 and Dan Koch, who had been an attorney in Florida, became the president of KDC, the owner and operator of the amusement park.

Under terms of the Share Purchase and Security Agreement executed in 2002, Will, Dan and their sister, Natalie, dictated that upon the death of any shareholder, KDC would purchase all the shares of common stock owned by the decedent.

In December 2010, KDC and Dan offered to purchase Will’s shares from the estate for $26.9 million, based on the value of $541.93 per share. The estate rejected the offer claiming the shares were worth $653.07 each, putting the total purchase price at $32.1 million.

Before the COA, Dan argued that despite the minutes from a July 2009 shareholders’ meeting that valued the stock at $653.07 per share, the shareholders did not agree to that price. He claimed the trial court erred by excluding testimony from Natalie and himself that would have supported his contention.

The appellate court found the trial court properly rejected the testimony since Natalie “was a sufficiently interested party with interests adverse to those of the Estate.” In particular, she had acknowledged that she was worried if Dan lost control of KDC, he might not be able to repay her the more than $10 million he still owed for shares he previously had purchased from her.

Both the trial court and COA highlighted that neither Dan nor KDC made any effort to correct their initial offer within the 180-day limit imposed by the agreement. Dan asserted the time provision in the agreement was “boilerplate” language.

Again, the COA rejected Dan’s argument. It held that because the shares’ value could fluctuate significantly, the decedent’s shares should be purchased in a short period of time.

In upholding the trial court’s finding that Dan and KDC materially breached the terms of the agreement, the judges dismissed, in particular, Dan’s assertions that he would suffer forfeiture if the estate was allowed to keep Will’s shares and that he did not have enough time to fix the situation.

The COA noted that the agreement does not give Dan the right to run the family business, only the opportunity to purchase the shares of the decedent. As to Dan’s claim he needed more time, the court pointed out that instead of making any effort to adhere to the terms of the agreement, Dan and KDC “stubbornly stood by their initial, low-ball offers.”

Finally, the judges concluded there is ample evidence that Dan and KDC did not act in good faith. Specifically, it found that Dan planned to increase his salary to somewhere between $875,000 to $1.16 million in an effort to decrease the dividends that would have benefitted Lori and her children, and that he took loans and bonuses totaling $875,000 from KDC in order to pay the money he owed Natalie.

The COA concluded these material breaches of the agreement did excuse the estate from its obligation to sell Will’s shares to Dan and KDC.

Dan claimed that despite his and KDC’s material breaches and bad faith, the estate should still be required to sell its shares. However, the appellate court held that Dan’s position is in direct contradiction to well-established Indiana law, as discussed in Wilson v. Lincoln Fed. Sav. Bank, 790 N.E.2d at 1048 (Ind. Ct. App. 2003), that a party in a material breach of a contract cannot seek to enforce the contract against the non-breaching party.•

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  1. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  2. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  3. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  4. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

  5. Seventh Circuit Court Judge Diane Wood has stated in “The Rule of Law in Times of Stress” (2003), “that neither laws nor the procedures used to create or implement them should be secret; and . . . the laws must not be arbitrary.” According to the American Bar Association, Wood’s quote drives home this point: The rule of law also requires that people can expect predictable results from the legal system; this is what Judge Wood implies when she says that “the laws must not be arbitrary.” Predictable results mean that people who act in the same way can expect the law to treat them in the same way. If similar actions do not produce similar legal outcomes, people cannot use the law to guide their actions, and a “rule of law” does not exist.

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