Docket – January 10, 2019

Supreme Court of Virginia

May v. R.A. Yancey Lumber Corp. (P), SCV (Goodwyn) from Albemarle (Higgins).

Code § 13.1-724(A) requires approval by shareholders if a disposition would leave their corporation without a significant continuing business activity, and Code § 13.1-724(E) requires that such dispositions must be authorized by “an affirmative vote of more than two-thirds of the corporation’s shareholders.” The circuit court erred in determining that the statute allows a majority of shareholders to obviate the need for more than two-thirds shareholder approval via corporate bylaw.

The plain language of § 13.1-724 does not support the corporation’s claim that it can adopt a bylaw that redefines the meaning of “significant continuing business activity” to be anything that the majority designates it to be. The statute’s safe-harbor provision providing for an exception to the statutory threshold does not give a corporation the authority to amend or create a new threshold that will be deemed sufficient as a matter of law to constitute a “significant continuing business activity.”

Here, a shareholder with over one-third ownership never abandoned her claim that the company’s proposed sale was unlawful. Given her continuous warnings on this point putting the company on notice, the circuit court abused its discretion when it found that laches barred the corporation’s request for a temporary injunction.

Reversed and remanded.

U.S. District Court – Virginia Eastern

McDonald v. Robinson, EDVA at Alexandria (Brinkema).

In this lawsuit alleging a sham real-estate investment scheme, sanctions are appropriate against a pro se defendant who repeatedly failed to comply with discovery rules, deadlines, and court orders.

The defendants repeatedly failed to make and then supplement their initial disclosures, as well as to appear for noticed hearings. Those failures continued even after this court made clear, as an explicit condition of the defendant’s probationary sentence in her criminal case. Contrary to the defendant’s assertions, the repeated, ongoing violations and lack of proactivity in this case was due not to the complex nature of federal litigation but rather to bad faith. The defendant’s actions were not harmless, undercutting the plaintiffs’ ability to conduct discovery necessary to prosecute their claims.

Despite her pro se status, the defendant is an educated woman who ran her own business and had the intellectual capacity to understand her obligation to follow court orders, especially following explicit court orders to do so.

Default judgment and motion for sanctions granted.

Categories: Daily Dockets

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