Summary Judgment - Corporate Valuation
Lynd v. Marshall County Pediatrics, P.C., [Ms. 1160683, Apr. 27, 2018) __ So. 3d __ (Ala. 2018). The Court (Mendheim, J., and Stuart, C.J., and Parker, Main, and Bryan, J.J., concur) reverses a judgment of the Marshall Circuit Court in a breach of contract and specific performance action concerning valuation of shares in a pediatrics medical practice in Guntersville. The plaintiff, Dr. Lynd, upon resigning from the practice and surrendering her shares, contended that the remaining shareholders should purchase her shares in the practice at "fair value" pursuant to § 10A-4-3.02, Ala. Code 1975. The remaining shareholders insisted instead that valuation should be based upon the "book value" of Dr. Lynd's shares pursuant to § 10-4-228, Ala. Code 1975 (repealed in 1980) as referenced in the by-laws of the Articles of Incorporation of the practice. Under Dr. Lynd's proposed valuation, her shares were worth $230,000; in contrast, the book valuation method insisted upon by the remaining shareholders placed the value of Dr. Lynd's shares at $6,275. The Marshall Circuit Court granted the remaining shareholders' motions for summary judgment and concluded that the value was set at "book value" as of the date Dr. Lynd left the practice. Ms. *9.
After engaging in a detailed analysis of the practice's underlying incorporation documents, and because the incorporating parties failed to adopt a stockholder agreement specifying the manner of valuation of shares upon shareholder's resignation or disqualification from the practice, the Court was unable to conclude that the Marshall Circuit Court correctly applied the book valuation statute such that the entry of summary judgment in favor of the remaining shareholders in the practice was due to be reversed. The Court also determined, based on that same review of the incorporation documents, that the Marshall Circuit Court had not erred in denying Dr. Lynd's motion for summary judgment premised upon the fair valuation statute. Accordingly, the summary judgment entered in favor of the remaining shareholders in the practice was reversed and the cause remanded for further proceedings.