Weber v. Iowa State Bank & Trust Co. , 457 F.3d 857 ( 2006 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 05-4274
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James E. Weber, Trustee of the *
James E. Weber Revocable Trust *
u/d 2/18/04, *
*
Plaintiff-Appellant, *
v. * Appeal from the United States
* District Court for the
Iowa State Bank and Trust Company of * Southern District of Iowa.
Fairfield, Iowa; Iowa State Financial *
Services Corporation; Bill Adam; * [PUBLISHED]
Nelson Anderson; Joe Carr; Sarah *
Cochran; David C. Eastburn; Mike *
Greiner; Pat McMahon; Jay Silverman; *
Jon Simplot; Tom Thompson; Steve *
Triplett, *
*
Defendants-Appellees. *
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Submitted: May 17, 2006
Filed: August 10, 2006
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Before WOLLMAN, BRIGHT, and BOWMAN, Circuit Judges.
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PER CURIAM.
James Weber, a former shareholder of Iowa State Bank and Trust Company of
Fairfield, Iowa ("the Bank"), sued the Bank over its decision to enact a reverse stock
split that effectively eliminated Weber's shares. The district court1 granted the Bank's
motion for summary judgment, dismissing Weber's action, and Weber now appeals.
We affirm.
We state the undisputed facts. For more than fifty years, Weber, a Florida
resident, held a minority of shares in the Bank. In 1999, defendant Iowa State
Financial Services ("Holding Company") formed to purchase the Bank's outstanding
shares. Most of the Bank's shareholders were given the option to transfer their shares
in the Bank into Holding Company shares. Weber, along with certain other
shareholders outside of Iowa, was not given the option to transfer his shares; he was
given the choice of keeping his Bank stock or accepting cash for the shares. Weber
chose to keep his shares in the Bank.
In the fall of 2004, the Bank decided to effectuate a reverse stock split for the
purpose of eliminating the Bank's minority shareholders. This would allow the Bank
to reduce some costs and simplify some corporate procedures. The Bank informed
Weber that he could seek an appraisal if he felt the Bank had underpaid him for his
shares. Weber did not seek an appraisal. Instead, he filed the instant lawsuit,
contesting the Bank's right to engage in a reverse stock split.
Iowa law specifically states that an appraisal is the sole and exclusive remedy
for a shareholder in the event of a reverse stock split.2 Iowa Code § 490.1302.4.
1
The Honorable Ronald E. Longstaff, United States District Judge for the
Southern District of Iowa.
2
Iowa Code section 490.1302.4. states
A shareholder entitled to appraisal rights under this chapter is not
entitled to challenge a completed corporate action for which appraisal
rights are available unless such corporate action meets one of the
following standards:
-2-
Under section 490.1302.4., a shareholder is "not entitled to challenge a completed
corporate action for which appraisal rights are available." As the district court
observed in its expansive and well-reasoned opinion, this shareholder and appellant
completely failed to follow the statutory prerequisites for a determination of the value
of his stock above what the Bank offered. Under these circumstances, the district
court properly dismissed Weber's claim. Weber v. Iowa State Bank of Fairfield, Iowa,
et al, No. 4:05-CV-79 (Oct. 25, 2005).
We AFFIRM.
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a. It was not effectuated in accordance with the applicable provisions of
division X, XI, or XII or the corporation's articles of incorporation,
bylaws, or board of directors' resolution authorizing the corporate action.
b. It was procured as a result of fraud or material misrepresentation.
(Weber does not assert that he meets either of the listed exceptions.)
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