Mike Northrup and Sim Israeloff prevailed in a second appeal filed by the opponent with the Dallas Court of Appeals. Our client, a business that sells health-conscious, hemp-infused food and beverage products, sued its former CEO for secretly issuing company stock to himself and then selling those shares to a third party. After the former CEO refused to respond to discovery, the trial court granted sanctions and rendered a default judgment, which voided the stock and awarded the company the proceeds of the sale of those shares. The amount involved was $3.5 million.
In the first appeal, the former CEO asserted that the company had to make an election between voiding the shares of stock and recovering the value of the shares he sold. The court of appeals remanded the case to the trial court for the company to make its election. The client chose to recover the value of the shares sold by the CEO and a new judgment was entered on that basis.
The former CEO appealed the new judgment and argued that the company had already made its election because it had subsequently obtained a judgment against the third party that declared the shares of stock voided.
The court of appeals held that the trial court had not erred. The court further held that if the former CEO had wanted to complain that the judgment against the third party was an election, it could have and should have done so in the initial appeal. Therefore, the court affirmed the trial court’s revised judgment our client had recovered against the former CEO.
Bill Siegel was lead counsel, with Sim Israeloff at the trial level; Mike Northrup with Sim Israeloff handled the appeal.