Corporate Redemption Agreement – Appraisal

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WI Court of Appeals – District III

Case Name: Swiderski Equipment, Inc., et al. v. James J. Swiderski, et al.

Case No.: 2018AP171

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Corporate Redemption Agreement – Appraisal

This case is before us for the third time. It involves an ongoing dispute between James Swiderski and his father, Alex Swiderski, regarding the redemption of James’ shares of Swiderski Equipment, Inc. In our most recent decision, we affirmed the circuit court’s conclusion that an appraisal of Swiderski Equipment discussed in the parties’ corporate redemption agreement (CRA) should be performed by Mark Hanson, an employee of Schenck, S.C., Swiderski Equipment’s accounting firm. Swiderski Equip., Inc. v. Swiderski, No. 2016AP700, unpublished slip op., ¶¶3, 14, 23 (WI App Feb. 14, 2017) (Swiderski II). However, we concluded the court had erred by directing Hanson to conclusively presume, based on a jury verdict in a separate case, that Alex’s compensation as president of Swiderski Equipment was not excessive. Id., ¶¶3, 24. We therefore reversed in part and remanded for a new appraisal. Id., ¶3. Based on James’ other arguments, we provided specific directions regarding how certain additional issues should be addressed during the new appraisal. Id., ¶4.

On remand, Hanson issued a new valuation report (the Second Appraisal). Swiderski Equipment and Alex moved the circuit court to approve the Second Appraisal, and the court granted their motion. James now appeals, arguing: (1) the court misinterpreted our mandate in Swiderski II as preventing the court from rejecting the Second Appraisal, which was fundamentally flawed; (2) WISCONSIN STAT. § 907.02 (2015-16)—pertaining to the admissibility of expert testimony—applies to the Second Appraisal, and the court should have therefore held a hearing to determine whether the Second Appraisal complied with that statute and may properly be relied upon to value Swiderski Equipment; and (3) this court should exercise its inherent authority to ensure that the Second Appraisal is fair and was properly performed. We reject each of James’ arguments and affirm the order approving the Second Appraisal.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.