United States Court of Appeals for the Fifth Circuit
232 F.3d 460 (2000)
James Hollis (plaintiff) and Dan Hill (defendant) founded First Financial USA, Inc. (FFUSA), a Nevada company that marketed first-lien mortgage notes. Hollis and Hill also owned equal shares of a Texas broker-dealer. Hill owned 50 percent of FFUSA, served as president of FFUSA, and operated the Houston office. Hollis owned 50 percent of FFUSA, served as vice president of FFUSA, and operated the Florida office. At first, Hollis and Hill took salaries from FFUSA. Later, Hill began complaining that Hollis was not carrying equal weight, and Hill stopped paying Hollis’s salary. Hill proposed to buy out Hollis’s interest. Hollis rejected the offer. In response, Hill threatened to close the broker-dealer business and establish his own business. Hill also put part of FFUSA’s business in a sole proprietorship in his name without Hollis’s knowledge. Hill stopped sending FFUSA’s financial reports to Hollis and refused to allow Hollis to inspect corporate records. Hollis retained an attorney and asserted his rights as a shareholder to inspect the books and records of FFUSA and the broker-dealer business. Shortly before the inspection, Hill and Hollis agreed that Hill would acquire Hollis’s interest in the broker-dealer business and draw a $200,000 salary from FFUSA, and that Hollis would draw a $120,000 salary from FFUSA. Disagreements between Hollis and Hill resurfaced, and Hill again stopped sending company reports to Hollis. Hill also reduced his own salary and eliminated Hollis’s salary, disconnected phone service to Hollis’s office, terminated the lease at Hollis’s office, and eventually terminated Hollis as vice president and made a capital call on Hollis. Hollis filed suit against Hill, alleging shareholder oppression. Hollis also alleged that Hill’s actions were a breach of fiduciary duty and that equitable relief was available. Hollis sought to dissolve FFUSA. The district court concluded that Hill’s conduct was oppressive, but did not order dissolution and instead ordered Hill to buy Hollis’s shares. The district court ordered the buyout value backdated to the date the oppression began. Hill appealed.
Rule of Law
Holding and Reasoning (Politz, J.)
Dissent (Jolly, J.)
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