Frandsen v. Jensen-Sundquist Agency, Inc.
802 F.2d 941


PROCEDURE: Appellant minority shareholder sought review of the order of the United States District Court for the Western District of Wisconsin, which entered summary judgment in favor of appellee companies. Appellant brought a suit for breach of a stockholder agreement and tortious interference with a contract.

FACTS: The majority block of shares in Jensen-Sundquist Agency, Inc. (D) was owned by a group of individuals that entered into a shareholders' agreement providing them with protection in the event of a sale of the corporation's stock, and when the company attempted to transfer its primary asset, one of the shareholders demanded to exercise his right of first refusal.

ISSUE:Does a merger constitute a sale of stock from one entity to the other?

RULE: The merger of two corporations is not the same as a the sale of stock from one corporation to another.

HOLDING:The United States District Court entered summary judgment in favor of defendants, and majority shareholder appealed. The Court of Appeals, held that: (1) minority shareholder's right of first refusal in regard to majority shareholders' sale of their stock did not apply to transaction by which acquiring entity purchased principal asset of corporation and corporation then liquidated, and (2) transaction did not amount to tortious interference with contractual relations on part of acquiring entity.

ANALYSIS: The court affirmed the entry of summary judgment and held that the agreement that gave appellant minority shareholder right of first refusal in the case of stock sale of majority did not apply to the sale of assets and liquidation of appellee company. Appellant's tortious interference with a contract claim also was meritless because appellee companies' conduct did not constitute unfair competition, and there was no breach of contract.