This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Plaintiff, a 5% shareholder in a closely held professional accounting firm, sought to enforce his rights as a stockholder after leaving the corporation in 1984. He had purchased shares for $35,600, partially financed by the corporation, and later filed a dissent to the corporation's 1987 asset sale. The Plaintiff alleged he was not compensated for his shares or granted stockholder privileges after his departure (paras 1, 3-4).
Procedural History
- Trial Court: The trial court awarded the Plaintiff $36,082.09, with interest, against the corporation and its major shareholder, holding them jointly and severally liable. The corporation's counterclaim for $9,431.91 was credited against this amount (para 1).
Parties' Submissions
- Defendants (Appellants): Argued that the trial court lacked subject matter jurisdiction, erred in holding the individual Defendant personally liable for corporate debts, misapplied the pre-trial statement, and incorrectly determined the valuation date of the Plaintiff's shares. They also sought an equitable offset for the Plaintiff's alleged failure to repay corporate funds (paras 2, 5, 12, 15-16).
- Plaintiff (Appellee): Contended that the trial court had jurisdiction, the pre-trial statement was binding, and the valuation of shares was correct. He argued that the Defendants waived any venue objections and failed to establish grounds for piercing the corporate veil to impose individual liability (paras 6-7, 13-14, 17-18).
Legal Issues
- Did the trial court have subject matter jurisdiction to hear the case?
- Was the individual Defendant properly held personally liable for corporate debts?
- Did the trial court err in its interpretation of the pre-trial statement and the valuation date of the Plaintiff's shares?
Disposition
- The trial court's finding of subject matter jurisdiction was affirmed.
- The imposition of personal liability on the individual Defendant was reversed.
- The trial court's interpretation of the pre-trial statement and valuation date was reversed, and the case was remanded for further proceedings (paras 2, 11, 22-23).
Reasons
Per Apodaca J. (Donnelly and Flores JJ. concurring):
Subject Matter Jurisdiction: The court held that the statutory language in NMSA 1978, Section 53-15-4(E), prescribing venue, did not limit the trial court's jurisdiction. The Defendants waived any venue objections by failing to raise them in the trial court (paras 6-11).
Individual Liability: The court found no evidence or legal basis to hold the individual Defendant personally liable for corporate debts. The Plaintiff neither pleaded nor proved the prerequisites for piercing the corporate veil, such as domination, improper purpose, or proximate causation (paras 12-14).
Valuation Date and Pre-Trial Statement: The court determined that the trial court misinterpreted the pre-trial statement, which only stipulated the stock's value at the Plaintiff's termination date, not at the time of the corporate sale. The trial court improperly restricted the Defendants from presenting evidence of the stock's value as of the day before the sale, as required by Section 53-15-4(A). The case was remanded for an evidentiary hearing on the correct valuation date (paras 15-21).
The court instructed the trial court to apply the $9,431.91 credit from the Defendants' counterclaim to the judgment on remand. Each party was ordered to bear their own costs on appeal (para 22).