DAVID MATTHEW STEVENS; ADA STEVENS; DAVID MATTHEW STEVENS, JR.; AND BRIAN LEE STEVENS v. THE STEVENS' DAIRY FARMS, INC.; PATSY STEVENS; STEVENS HOLDING COMPANY; JAMES LEE STEVENS, JR.; PAULINE STEVENS

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RENDERED: January 29, 1999; 10:00 a.m. NOT TO BE PUBLISHED C ommonwealth O f K entucky C ourt O f A ppeals NO. 1997-CA-002952-MR DAVID MATTHEW STEVENS; ADA STEVENS; DAVID MATTHEW STEVENS, JR.; AND BRIAN LEE STEVENS v. APPELLANTS APPEAL FROM SPENCER CIRCUIT COURT HONORABLE WILLIAM F. STEWART, JUDGE ACTION NO. 97-CI-000077 THE STEVENS' DAIRY FARMS, INC.; PATSY STEVENS; STEVENS HOLDING COMPANY; JAMES LEE STEVENS, JR.; PAULINE STEVENS APPELLEES OPINION AFFIRMING ** ** ** ** ** BEFORE: GUDGEL, CHIEF JUDGE; GUIDUGLI AND MILLER, JUDGES. GUIDUGLI, JUDGE. This case involves an appeal from Spencer Circuit Court dismissing appellants’ complaint. Upon reviewing the record and the evidence therein, this Court affirms. Stevens Dairy Farms, Inc., is a closely held Kentucky corporation set up for the purpose of owning and operating the Stevens family’s agricultural farm operations. The major assets of the corporation consist primarily of five (5) farms, encompassing over 2,300 acres of farmland in Spencer County, Kentucky. A total of 740 shares of stock were issued and outstanding in the corporation. The Stevens Holding Company, Inc. was formed on September 22, 1995. James Lee Stevens, Jr., his wife, Pauline Stevens, and one of his sons, James Matthew Stevens, transferred their shares in Stevens’ Dairy Farm, Inc., totaling 148 1/3 shares, to the Stevens Holding Company, in exchange for an equal number of shares in that corporation on October 18, 1995. Thus, prior to transferring their individual stocks to the Stevens Holding Company, James Lee Stevens, Jr., and his family members were minority stockholders in Stevens’ Dairy Farm. Patsy Stevens, one of the appellees, was the majority shareholder in Stevens’ Dairy Farm, holding 235 shares. Appellants collectively held 168 1/3 shares. All directors of Stevens’ Dairy Farms received written notice of a special meeting of the Board of Directors to be held on October 24, 1995. David Matthew Stevens, one of the appellants, was a director at this time. Appellants acknowledged receipt of this notice through a “Response to Notice of a Special Director’s Meeting.” The Board of Directors, by majority vote, agreed to amend the articles of incorporation to reduce the number of authorized shares to two shares. As a means of doing so, the Directors authorized a reverse stock split in which those shareholders holding at least 148 1/3 shares could exchange their shares for a new share certificate representing fifty (50) -2- percent ownership in the corporation. This action was also approved by a majority of the Directors present at the meeting. A written notice of a special shareholders meeting to be held on November 6, 1995, was provided to all shareholders to vote on the proposed amendment to the articles of incorporation and the proposed reverse stock split. Of the 740 shares eligible to vote, 571 2/3 voted in favor of the proposals, with only the appellants voting against the proposals. The Stevens Holding Company and Patsy Stevens were the only shareholders with a sufficient number of shares to exchange for the new shares to be issued. The remainder of the shareholders were paid fair value for their shares. However, appellants elected to proceed under KRS 271B Chapter 13 for a valuation of their shares but failed to comply with KRS 271B.13-280 which states that: A dissenter waives his right to demand payment under this section unless he shall notify the corporation of his demand in writing under subsection (1) of this section within thirty (30) days after the corporation made or offered payment for his shares. Even though appellants did not comply with the time guidelines, they nonetheless filed an action in the Spencer Circuit Court, styled Civil Action No. 96-CI-00066, requesting that the court proceed with a judicial appraisal. In that action, appellants listed only Stevens’ Dairy Farms, Inc. as a defendant. The trial court dismissed the action upon defendant’s motion, and denied appellants’ motion to amend their complaint. The court issued an order on March 6, 1997, designating these orders as final and appealable. The appellants thereafter filed -3- a timely notice of appeal. However, that appeal was voluntarily dismissed by appellants. On July 25, 1997, appellants filed a second complaint with the Spencer Circuit Court. In addition to naming Stevens’ Dairy Farms as a defendant, appellants also named what they deem as the majority shareholders of the corporation as defendants-Patsy Stevens, Stevens Holding company, James Lee Stevens, Jr., Pauline Stevens, and James Matthew Stevens. This complaint alleged that the appellees’ mismanagement, fraud and breach of fiduciary duties owed to the minority shareholders resulted in a lowered fair market value of the corporate assets, which, in turn, resulted in a lower price paid for the minority shareholders’ interest in the corporation. The relief sought was damages to compensate the appellants for the loss in value of their shares or payment to the minority shareholders for their equitable interests. Appellees filed a motion to dismiss the second complaint on the grounds that KRS 271B Chapter 13 was the exclusive remedy and that appellants’ cause of action was barred by the doctrine of res judicata. response thereto. Appellants filed a timely After hearing arguments of the parties and reviewing the record, the trial court dismissed the complaint with prejudice on August 15, 1997. Appellants contend that there is only one issue before the court presently - whether the appraisal procedure of KRS 271B Chapter 13 is the exclusive remedy of a dissenting shareholder. However, appellants fail to address the res judicata issue which -4- appellees contend bars the current action. Before reviewing the substantive issues, the Court must determine whether this matter is properly before it. The doctrine of res judicata holds that a judgment on the merits in a prior suit involving the same parties or their privies precludes a subsequent suit based upon the same cause of action. Napier v. Jones By and Through Reynolds, Ky. App., 925 S.W.2d 193 (1996). Res judicata applies “not only to the issues disposed of in the first action, but to every point which properly belonged to the subject of the litigation of the first action.” Egbert v. Curtis, Ky. App., 695 S.W.2d 123 (1985). Thus, res judicata will prevent the litigation of an issue which has been raised, should have been raised, or was waived in a prior action. (1990). Huntzinger v. McCrae, Ky. App., 818 S.W.2d 613 Obviously, the purpose of res judicata is to promote the orderly administration of justice by ensuring that litigation will eventually come to an end. Gossett v. Commonwealth, Ky., 441 S.W.2d 117, 118 (1969). Although in the present case appellants have added additional counts and parties, the cause of action is nonetheless derived from the same set of facts. Appellants’ cause of action was previously dismissed by the Spencer Circuit Court. Appellants do not argue that they were not given the opportunity to fully and fairly litigate the current issue in the previous case. Additionally, appellants do not claim newly discovered evidence or that fraud or misrepresentation interfered with their litigation of the previous cause of action. -5- Thus, appellants present no reason why they did not present all counts and include all parties in the previous cause of action. Without such evidence, this Court cannot allow appellants to re-litigate issues which have previously been decided. The doctrine of res judicata simply does not allow litigants a second bite of the apple. Therefore, we conclude that the present case is barred by the doctrine of res judicata. With this determination made, there is no need to review the substantive issues in this case. MILLER, JUDGE, CONCURS. GUDGEL, CHIEF JUDGE, CONCURS IN RESULT ONLY. BRIEF AND ORAL ARGUMENT FOR APPELLANT: BRIEF AND ORAL ARGUMENT FOR APPELLEE: Robert M. Coots Taylorsville, KY Linda S. Bouvette Taylorsville, KY -6-

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