Pagett v. Westport Precision, Inc.

Shareholder and former executive Michael Pagett (plaintiff) sued demanding to inspect the financial records of Westport Precision, Inc. (Westport) defendant), a closely held corporation. Pagett had made a written demand to inspect Westport’s financial records, including financial statements, tax returns, and accounting records, stating that he wanted to determine the value of his shares. Westport’s president and majority shareholder, Joseph Greco, denied Pagett’s request, citing litigation already pending between Pagett and Westport over Pagett’s termination. Pagett made a second request through his attorney, which Westport denied through its attorney, supplying only a certificate of incorporation, names and addresses of officers and directors, and two balance sheets. Pagett sued requesting a writ of mandamus requiring Westport to produce the records requested. By the time of trial, Westport had sold all of its assets. Westport’s accountant Floyd Ozeck testified that the balance sheets given Pagett did not include all the information necessary to value the company. Instead Ozeck said an accountant would need to analyze the company’s cash receipts and disbursements, payroll records, purchase journals, and accounts payable and receivable—all of which Pagett had requested. Ozeck also testified that valuing the stock of a closely held corporation required an appraisal, especially if the corporation contemplated an asset sale. An appraiser would need to analyze the same documents Pagett sought. The trial court granted the writ requiring Westport to produce its records. Westport appealed, arguing Pagett had not stated a proper purpose for his request with sufficient particularity.