Mart v. Severson

115 Cal. Rptr. 2d 717 (2002)

From our private database of 46,000+ case briefs, written and edited by humans—never with AI.

Mart v. Severson

California Court of Appeal
115 Cal. Rptr. 2d 717 (2002)

  • Written by Brett Stavin, JD

Facts

Bradley Mart (plaintiff) and Leland Severson (defendant) were each 50 percent owners of Bay World Trading Ltd. (Bay World). On February 24, 2000, Mart signed a written consent to wind up and dissolve Bay World and delivered the consent to Severson the following day. Severson threatened to sue Mart for breach of fiduciary duty, alleging that Mart intended to establish a competing company. Mart subsequently filed a petition in California Superior Court, seeking court supervision of the wind-up proceedings. In an effort to avoid dissolution, Severson elected to exercise his statutory right to have Bay World purchase Mart’s shares at their fair value. The superior court appointed three appraisers, and on November 30, 2000, the appraisers issued a report valuing Bay World at $5.6 million. Severson objected to the appraisers’ report, arguing that the appraisers used an incorrect valuation methodology. In response, the court ordered the appraisers to supplement their report and further explain their valuation process. The appraisers explained that they utilized a going-concern valuation that took into account Bay World’s client relationships, brand name, and historical and projected earnings. The appraisers did not, however, take into account Severson’s threat of litigation or the possibility of new market competition. The court found that the appraisers’ valuation would be approved only on the condition that Mart sign an effective noncompete agreement. Through counsel, Mart drafted a noncompete agreement, but the court found that it was too narrow. Accordingly, the court ordered that appraisers revalue Bay World on a piecemeal basis, although it offered Mart the opportunity to submit a revised noncompete agreement. On March 19, 2001, the appraisers issued a report finding that the piecemeal value of Bay World was $1.48 million. At a hearing on April 4, Mart submitted a revised noncompete agreement, but the court again found that it was not fully effective. The court confirmed the appraisers’ revised report. Then, on April 17, the court decreed that in order to avoid dissolution, Bay World or Severson could purchase Mart’s shares for $740,000 plus interest. Mart then filed an appeal. On appeal, Mart argued that the valuation of Bay World was erroneous as a matter of law.

Rule of Law

Issue

Holding and Reasoning (Haerle, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 742,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 742,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,000 briefs, keyed to 986 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 742,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,000 briefs - keyed to 986 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership