The judicial removal of corporate directors, governed by a statute adopted in Nebraska from a model act enacted in many states, was without any judicial interpretation when an elderly Nebraska couple sought advice from Domina Law Group pc llo
The couple, owners of a large ranching operation, had become embroiled in a family dispute and removed from their offices as the only directors of their company.
"Although the removed directors owned nearly 85% of their company’s stock, their children persuaded the district court to enter summary judgment removing them from office. Their evidence consisted of aged data from previous lawsuits involving a bank dispute, and a dismissed bankruptcy filed, then allowed to terminate, as they sought protection from creditors during the bank suit.
David Domina “recognized that the Nebraska statute governing corporate director to removal had never been addressed in court. I thought that the statute provided an extreme remedy, and wondered if the trial court’s decision might have invoked a standard of proof lower than the Supreme Court would require.”
Domina Law Group pc llo work started “after the case had been decided. We had no opportunity to build the record, or controvert the evidence offered at the trial. So we worked with what we had,” Domina said.
On September 4, Nebraska’s Supreme Court issued its first impression ruling in favor of Domina Law Group pc llo's elderly couple. The Court reversed the lower court’s summary judgment, and also set aside its post-judgment ruling prohibiting the couple from serving on the board of directors for two years and requiring that they meet to elect a new board to govern the company. The case was remanded to the trial court for further proceedings.
“I recognize that the case will be of interest to many people with clients confronting corporate governance issues,” David Domina said. “The decision makes it clear that a court will have high evidentiary expectations before corporate directors are removed from office.”
"Our client farmed with his brother for many years. They were very close. His brother was a bachelor, and our client's family was his," Domina said. We contend the new short form act does not require that a power of attorney contain express language permitting the holder to make gifts of the maker's property to himself for his family," Domina continued. This contention is "based on the statute's language that clearly permits an all encompassing, widely expansive power, not limited by rules governing POAs prepared without the benefit of the short form act's provisions.
Domina Law Group pc llo is a firm of trial lawyers. We specialize in complex litigation on a national basis. Our lawyers are ethical, aggressive, and committed to providing spirit and vitality to the judicial system and our client’s legal rights.