                    In the Missouri Court of Appeals
                            Eastern District
                                           DIVISION FOUR

VIRGIL KIRCHOFF REVOCABLE                              )
TRUST DATED 06/19/2009;                                )    No. ED102900
BENJAMIN KIRCHOFF and MICHAEL                          )
WENZEL, Co-Trustees of the VIRGIL                      )
KIRCHOFF REVOCABLE TRUST                               )
DATED 06/19/2009; FAIRLYN                              )
FORSYTH KIRCHOFF                                       )    Appeal from the Circuit Court
MOORADIAN; and THE KIRCHOFF                            )    of St. Louis County
LIMITED PARTNERSHIP,                                   )
                                                       )
         Plaintiffs/Appellants,                        )
                                                       )    Honorable Colleen Dolan
v.                                                     )
                                                       )
MOTO, INC.,                                            )
                                                       )
         Defendant/Respondent.                         )    Filed: March 8, 2016

                                               Introduction

         The Virgil Kirchoff Revocable Trust Dated 06/19/2009 (Trust); Benjamin

Kirchoff and Michael Wenzel, Co-Trustees of the Trust; Fairlyn Forsyth Kirchoff

Mooradian (Mooradian); and the Kirchoff Limited Partnership (collectively Appellants)1


1
 Moto asserts in its brief that this Court lacks jurisdiction to consider the appeal of Mooradian and the
Kirchoff Limited Partnership because they failed to file a notice of appeal, in that they were not included as
parties on appeal in the notice of appeal timely filed by Appellants’ counsel on behalf of the Trust.
Approximately two months after Benjamin Kirchoff filed his notice of appeal on behalf of the Trust,
Appellants filed a “Notice Regarding Clarification of Parties” with this Court asserting Benjamin Kirchoff
was listed as the only appellant due to a clerical error and seeking to add the additional parties as
appellants. Moto did not challenge this Court’s jurisdiction of the parties prior to filing its brief.
         The notice of appeal shall specify the parties taking the appeal. Rule 81.08(a). However,
“‘[t]echnical adherence to the formal averments of a notice of appeal is not jurisdictional, and the
appeal from the trial court’s grant of summary judgment in favor of Moto, Inc. (Moto) on

Appellants’ claim seeking dissolution of Moto due to shareholder oppression. We affirm.

                                Factual and Procedural Background

         Moto, doing business as MotoMart, is a Missouri closely-held corporation that

owns and operates gasoline convenience stores in Illinois, Missouri, Indiana, Ohio,

Wisconsin, and Minnesota.

         Virgil Kirchoff served as Moto’s Chief Executive Officer and Chairman of

Moto’s Board of Directors (Board) for many years before stepping down in 2005, and

was a shareholder prior to his death. The Trust is a shareholder of Moto. Mooradian,

Virgil Kirchoff’s ex-wife, is a shareholder and served on Moto’s Board from 1963 to

2012. Benjamin Kirchoff and Mooradian are the two general partners of the Kirchoff

Limited Partnership, which is a Missouri limited partnership and a shareholder of Moto.

In July 2010, Benjamin Kirchoff, the Trust, and the Partnership collectively held at least

20 percent of the issued and outstanding shares of Moto.

         In June 2011, Appellants filed suit against Moto and the Board. The trial court

dismissed all but Count I against Moto seeking dissolution of the corporation based on

minority shareholder oppression. Appellants alleged Moto engaged in oppressive

conduct by arbitrarily valuing Moto’s stock and failing to disclose to the minority



averments are to be liberally construed to permit appellate review so long as the opposing party is not
misled to his or her irreparable harm.’” McCrainey v. Kansas City Missouri Sch. Dist., 337 S.W.3d 746,
751 (Mo. App. W.D. 2011), quoting L.J.B. v. L.W.B., 908 S.W.2d 349, 351 (Mo. banc 1995). Here, the
Appellants are similarly situated, are bringing identical claims, and are seeking identical relief. Moto was
not misled in any way and will not suffer any irreparable harm by allowing Mooradian and the Kirchoff
Limited Partnership to proceed as parties on appeal. See also Tillis v. City of Branson, 945 S.W.2d 447,
448 (Mo. banc 1997) (finding no jurisdictional defect and treating the appellant’s suggestions in opposition
to the respondent’s motion to dismiss the appeal based on an untimely notice of appeal, as a timely filed
motion seeking a special order permitting a late filing of the notice of appeal pursuant to Rule 81.07(a)).
All Rule references are to Mo. R. Civ. P. 2014.



                                                     2
shareholders interest expressed by Casey’s General Stores, Inc. (Casey) in acquiring

Moto.

        On February 6, 2013, Moto moved for summary judgment. In response,

Appellants asked the trial court for a continuance to pursue written discovery and depose

various directors and officers of Moto, which the court granted. On November 25, 2014,

Moto filed its Amended Motion for Summary Judgment. On January 14, 2015,

Appellants filed their Response to Moto’s Amended Motion for Summary Judgment. On

February 4, 2015, Moto filed its Reply Memorandum.

        The following relevant facts are set forth in the summary judgment record:2

        Moto’s Amended and Restated By-Laws do not obligate the Board to buy back

shareholder stock. Nor is there any written agreement requiring Moto to repurchase a

shareholder’s stock. In the past, however, Moto has bought back shares to provide some

liquidity to its shareholders.

        The Board annually determines the price Moto will pay for each share of stock the

company repurchases from its shareholders. When valuing the stock for purposes of

redeeming a shareholder’s stock, the Board considers, among other things, the

corporation’s Earnings Before Interest, Taxes, Depreciation, and Amortization




2
   The non-movant may not rest upon mere allegations and denials of the pleadings, but must use affidavits,
depositions, answers to interrogatories, or admissions on file to show the existence of a genuine issue for
trial. Crow v. Crawford & Co., 259 S.W.3d 104, 113 (Mo. App. E.D. 2008). “Facts contained in
affidavits or otherwise in support of a party’s motion are accepted as true unless contradicted by the non-
moving party’s response to the summary judgment motion.” Premier Golf Missouri, LLC v. Staley Land
Co., LLC, 282 S.W.3d 866, 871 (Mo. App. W.D. 2009). Appellants’ Response contained several denials
of Moto’s uncontroverted statement of facts and additional statements of uncontroverted material facts
which were not adequately supported by evidence establishing such denials or statements of fact. In the
interest of brevity, this Court will not specifically address these deficiencies because Moto addressed the
deficiencies at length in its Reply to Appellants’ Response to Moto’s Statement of Uncontroverted Material
Facts and Response to Appellants’ Additional Statement of Uncontroverted Facts.


                                                    3
(EBITDA) and cash flow, the stock price of comparable publicly-traded c-store chains,

and recent mergers and acquisitions of c-store chains.

       Beginning in 1997, the Board used a three-year six times cash flow method to

determine share value for purposes of redeeming a shareholder’s stock. Benjamin

Kirchoff was part of the committee that recommended this valuation method to the

Board. The Board subsequently realized other companies routinely valued shares of

stock based on the EBITDA generated and believed utilizing the EBITDA method would

move Moto to a more standardized and recognized formula.

       In February 2003, the Board unanimously approved the 5.5 times three-year

average of EBITDA method as a guide to determine share value when buying back a

shareholder’s stock. The Board arrived at the 5.5 multiplier by taking the six times cash

flow multiple used prior to 2003 and multiplying it by 90 percent since 2001 and 2002

indicated that cash earnings calculated to 90 percent of EBITDA, resulting in a multiplier

of 5.4 which the Board rounded up to 5.5. This multiplier was checked against the

Trefethen Advisors, LLC (an independent financial advisory and investment management

firm) statistics which showed it was in the range of what other closely held corporations

were selling for at that time. The Board elected not to specifically reduce the multiple for

either a minority discount or lack of marketability discount. At times, the Board used a

one- or two-year average of EBITDA instead of a three-year average because of the

Board’s concern about Moto’s stock price decreasing, and the Board opted to keep the

share price the same or increase it.




                                             4
       The Board does not set the price at which a Moto shareholder may sell his shares

to any other person. Shareholders are free to market and sell their shares of Moto stock

to an outside third party for a mutually agreeable price.

        Moto presented a document to its shareholders at the annual meetings labeled

“Theoretical Market Value Per Share” that listed the share price set by the Board. Gary

Arnold, Moto’s CFO and a corporate representative, testified “Theoretical Market Value

Per Share” was intended to establish a fair price for purposes of Moto buying back shares

from stockholders or allowing for the reinvestment of dividends. Appellants concede it

was understood that “Theoretical Market Value Per Share” was the price at which Moto

agreed to buy back its shares. Appellants admit there is more than one way to value the

shares of Moto’s stock and are not claiming any actual damages.

       On March 13, 2015, the trial court granted Moto’s Amended Motion for Summary

Judgment. The trial court found Moto did not have a duty to inform Appellants of

Casey’s interest in acquiring Moto and that Appellants knew of Casey’s interest because

they were the parties who initiated discussion with Casey. The court held Moto did not

have a duty to buy back shareholder stock or, if it did so, to value the shares in any

particular manner. The court further found the valuation method used by Moto’s Board

was protected by the business judgment rule. This appeal follows.

                                     Points Relied On

       In their first point on appeal, Appellants argue the trial court erred in granting

summary judgment to Moto because genuine disputes of material fact exist on the record,

in that it is disputed whether Moto acted with reasonable care in its valuation.




                                              5
       In their second point on appeal, Appellants argue the trial court erred in granting

summary judgment to Moto because the law does not permit Moto to value its shares in

any manner it wishes, in that Moto voluntarily undertook the valuation and is a close

corporation with a higher duty to shareholders than a public corporation.

       In their third point on appeal, Appellants argue the trial court erred in granting

summary judgment to Moto because applicability of the business judgment rule should

have been decided at trial, in that it involves questions of fact such as whether the

valuation was done in good faith.

                                     Standard of Review

        We review the circuit court’s grant of summary judgment de novo. ITT Comm.

Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993).

Whether to grant summary judgment is purely an issue of law. Ashford Condo., Inc. v.

Horner & Shifrin, Inc., 328 S.W.3d 714, 717 (Mo. App. E.D. 2010). We will uphold

summary judgment on appeal only where there is no genuine issue of material fact and

the movant is entitled to judgment as a matter of law. ITT Comm. Fin. Corp., 854

S.W.2d at 376; Rule 74.04(c). The record is viewed in the light most favorable to the

party against whom judgment was entered. Robinson v. Lagenbach, 439 S.W.3d 853,

856 (Mo. App. E.D. 2014).

       A defendant, as the movant, can establish a prima facie case for summary

judgment by showing any of the following: (1) facts that negate any one of the elements

of a claimant’s cause of action; (2) that the non-movant, after an adequate period of

discovery, has not been able to produce, and will not be able to produce, evidence

sufficient to allow the trier of fact to find the existence of any one of the claimant’s




                                              6
elements; or (3) that there is no genuine dispute as to the existence of each of the facts

necessary to support movant’s properly pleaded affirmative defense. Sloss v. Gerstner,

98 S.W.3d 893, 896 (Mo. App. W.D. 2003).

           Once the movant has established a right to judgment as a matter of law, the non-

movant must demonstrate that one or more of the material facts asserted by the movant as

not in dispute is, in fact, genuinely disputed. Crow v. Crawford & Co., 259 S.W.3d 104,

113 (Mo. App. E.D. 2008). We will affirm the trial court’s judgment if it is sustainable

on any theory. Citibrook II, L.L.C. v. Morgan’s Foods of Missouri, Inc., 239 S.W.3d

631, 634 (Mo. App. E.D. 2007).

                                               Discussion

                               Points I and II – Shareholder Oppression

           Dissolution of a corporation is an equitable action in which jurisdiction is granted

by statute. Struckhoff v. Echo Ridge Farm, Inc., 833 S.W.2d 463, 466 (Mo. App. E.D.

1992).

           Section 351.4943 provides in relevant part as follows:

           The circuit court may dissolve a corporation:
           …
           (2) In a proceeding by a shareholder if it is established that:
           …
           (b) The directors or those in control of the corporation have acted, are
           acting, or will act in a manner that is illegal, oppressive, or fraudulent;
           …

           “Dissolution of a corporation is a drastic remedy and courts should resort to this

procedure only to prevent irreparable injury, imminent danger of loss or a miscarriage of

justice.” Struckhoff, 833 S.W.2d at 466. Before exercising its discretion, the trial court

should consider the effect the dissolution would have on the public as well as the

3
    All statutory references are RSMo. 2006.


                                                   7
shareholders. Id. Once the requisite showing is made, a court of equity can take

jurisdiction of the cause and then exercise its discretion in granting or refusing equitable

relief. Id.

        A successful claim of shareholder oppression requires a showing of (1)

burdensome, harsh, and wrongful conduct; (2) a lack of probity and fair dealing in the

affairs of the company to the prejudice of some of its members; or (3) a visible departure

from the standards of fair dealing and a violation of fair play on which every shareholder

is entitled to rely when entrusting her money to a company. Robinson, 439 S.W.3d 859.

The existence of shareholder oppression is determined on a case-by-case basis. Id.

“Allegations of oppressive conduct are analyzed in terms of fiduciary duties owed by

directors or controlling shareholders to minority shareholders.” Whale Art Co., Inc. v.

Docter, 743 S.W.2d 511, 514 (Mo. App. E.D. 1987), citing Fix v. Fix Material Co., Inc.,

538 S.W.2d 351, 358 (Mo. App. 1976). “Although controlling shareholders are not

fiduciaries in the strict sense, the general concepts of fiduciary law are useful in

measuring the conduct of those in control, particularly in the context of a small closely-

held corporation.” Whale Art Co., Inc., 743 S.W.2d at 514. “The complaining

shareholder has the burden of proof to establish grounds for dissolution.” Churchman v.

Kehr, 836 S.W.2d 473, 482 (Mo. App. S.D. 1992).

        Under Count I of their Second Amended Petition, Appellants sought dissolution

of Moto based on shareholder oppression. On appeal, Appellants have abandoned their

claim regarding the Board’s alleged failure to inform them of Casey’s interest in

acquiring Moto and now claim dissolution of Moto is appropriate based solely on the

allegation that the Board arbitrarily valued Moto’s stock. Appellants assert such act was




                                              8
burdensome, harsh and wrongful conduct and a visible departure from the standards of

fair dealing and a violation of fair play.

         In their Points I and II on appeal, Appellants argue summary judgment is

improper because Moto, as a closely held corporation, has a fiduciary duty to use

reasonable care in valuing its stock and genuine disputes of material fact exist as to

whether Moto’s Board acted with reasonable care. Appellants assert the Board should

have used a different method of valuation and that they were induced to sell their shares

at “lower than their true worth,” yet acknowledge they are not claiming any actual

damages. In challenging Moto’s selected form of valuation, Appellants repeatedly speak

in terms of negligence, reasonable care and due diligence. Appellants also contend the

Board’s use of the “vague” term “theoretical market value” was a confusing

misrepresentation and a violation of its fiduciary duty.

         Appellants’ claim, however, is one of shareholder oppression not negligence,

negligent or fraudulent misrepresentation, or breach of fiduciary duty.4 While alleged

oppressive conduct is analyzed in terms of fiduciary duties, a claim of shareholder

oppression is more than mere negligence or lack of reasonable care; it is burdensome,

harsh, and wrongful conduct; it is a lack of probity and fair dealing resulting in prejudice;

it is a visible departure from the standards of fair dealing and a violation of fair play.

Robinson, 439 S.W.3d at 859.

         Appellants do not dispute that Moto had no independent obligation to appraise its

stock or to repurchase its stock from them. See Section 351.455 (providing minority

shareholder entitled to an appraisal of his shares when he dissents from a merger or


4
 Appellants’ claims of breach of fiduciary duty of loyalty and good faith and fair dealing against individual
officers and shareholders were dismissed in the trial court. Appellants have not appealed those dismissals.


                                                     9
consolidation of corporation) and Delahoussaye v. Newhard, 785 S.W.2d 609, 611 (Mo.

App. E.D. 1990)(no statute or case law holding minority shareholders are entitled to

ratable redemption where directors redeem some outstanding shares). Here, neither

Moto’s corporate by-laws nor any other written agreement requires Moto to repurchase

its stock or to do so at a specific price.

        Furthermore, in the absence of actual fraud, the judgment of a board of directors

as to the value of the consideration received for stock will not be interfered with. See

Saigh v. Busch, 403 S.W.2d 559, 564-65 (Mo. 1966) (rejecting minority shareholder

argument that corporate board had no discretion to sell corporate shares pursuant to a

stock option for anything other than market price) and Section 351.185(3) (“When

payment of the consideration for which shares are to be issued shall have been received

by the corporation, the shares are full-paid and nonassessable. In the absence of actual

fraud in the transaction, the judgment of the board of directors or the shareholders, as the

case may be, as to the value of the consideration received for shares shall be

conclusive.”).

        Here, Appellants do not allege Moto’s actions in valuing the stock were

fraudulent, only that the Board failed to take reasonable care. Although Appellants

contend reasonable care was required because Moto assumed a duty by voluntarily

valuing its shares, this assertion is not legally supported. Appellants’ criticisms of the

valuation method chosen by the Board do not amount to a showing of oppressive conduct

and Appellants have not produced any evidence demonstrating the valuation method was

oppressive.




                                             10
       The Board’s alleged failure to take reasonable care in choosing a valuation

method and in using “vague” terminology to describe the resulting value is not sufficient

evidence of “oppressive” conduct. The trial court did not err in finding Moto did not

have a duty to value its shares for the purposes of repurchasing its stock or to use an

alternative method of valuation when doing so. The trial court did not err in granting

Moto’s amended motion for summary judgment. Appellants’ Points I and II are denied.

                            Point III − Business Judgment Rule

       In their final point, Appellants argue the trial court erred in granting summary

judgment in favor of Moto based on the business judgment rule because application of

the rule involves questions of fact and is incompatible with entry of summary judgment.

       The business judgment rule protects the directors and officers of a corporation

from liability for intra vires decisions within their authority and made in good faith,

uninfluenced by any consideration other than an honest belief that the action promotes

the corporation’s best interest. Robinson, 439 S.W.3d at 860. “‘The [] rule vests the

directors and shareholders with wide latitude in making judgments that affect the running

of the corporation.’” Ironite Products Co., Inc. v. Samuels, 17 S.W.3d 566, 573 (Mo.

App. E.D. 2000), quoting Herbik v. Rand, 732 S.W.2d 232, 235 (Mo. App. 1987). “The

rule precludes courts from interfering with the decisions of corporate officers and

directors absent a showing of fraud, illegal conduct, an ultra vires act, or an irrational

business judgment.” Robinson, 439 S.W.3d at 860.

       On appeal, Appellants argue the trial court’s application of the business judgment

rule was inappropriate because it required factual determinations regarding the Board’s

motivations in valuing the stock and an assessment of the propriety of Moto’s actions.




                                              11
Appeellants, howeever, have faailed to set fo
                                            orth facts or argument thhat would suupport a

findin
     ng that Moto
                o’s actions violated
                            v        the business
                                         b        judggment rule. Appellants acknowledgge

there are multiplee ways for a close corporration to vallue its stock and Appellaants’ bald

asserttion that Mo
                 oto should haave used an alternative
                                          a           m
                                                      method to doo so does nott suggest

fraud
    d, illegal conduct, an ultrra vires act, or
                                             o an irrationnal business judgment. The trial

courtt did not err in
                   i finding th
                              he Board’s method
                                         m      of valluation was protected byy the businesss

judgm
    ment rule. Appellants’
               A           Point
                           P     III is deenied.

                                         Conclusion
                                         C

       The trial court’s
                 c       judgm
                             ment grantin
                                        ng Moto’s A
                                                  Amended Mootion for Sum
                                                                        mmary

Judgm
    ment is affirm
                 med.




                                               SHERR
                                                   RI B. SULLIV
                                                              VAN, J.

Lisa S. Van Amb
              burg, C.J., annd
Kurt S. Odenwald
               d, J., concurr.




                                              12
