Allen v. Park National Bank

Raymond Allen (plaintiff) and Sanford Takiff (defendant) formed a holding company, P.N.B. Financial Corporation (PNB), to hold a controlling 84 percent interest in Park National Bank (the bank) (defendant). Takiff and his family’s trusts directly owned 13 percent of the bank’s common stock (the Takiff directly owned shares). Allen owned only 0.2 percent of the bank’s common stock directly, and other shareholders owned the remainder. PNB’s board of directors consisted of 14 members. Per PNB’s bylaws, Allen, as PNB’s president, had the power to vote PNB’s shares for electing the bank’s directors. The relationship between Takiff and Allen eventually soured. Consequently, Takiff sued PNB and sought the dissolution of PNB and the distribution of its shares in the bank to Takiff and Allen. Takiff and Allen reached a settlement agreement that did not dissolve PNB. Rather, the settlement agreement required PNB to nominate and vote all of its shares in the bank for the election of seven directors nominated by Allen and seven directors nominated by Takiff. Thereafter, the bank held a shareholders’ meeting to elect its board of directors. Takiff interpreted the settlement agreement as requiring Allen to vote all of PNB’s shares equally between the 14 directors nominated by Allen and Takiff. Accordingly, Takiff maneuvered to vote the Takiff directly owned shares to elect a majority of the board. Allen interpreted the settlement agreement differently and voted PNB’s shares unequally to keep the board deadlocked at seven directors nominated by Allen and seven nominated by Takiff. The bank adjourned the shareholders’ meeting. Allen moved for injunctive relief requiring the bank to finalize the board of directors in accordance with the votes cast. Although the district court conducted a bench trial, it found that the settlement agreement was unambiguous, agreed with Takiff’s interpretation, and ruled in Takiff’s favor. Allen appealed.