Graydog Internet, Inc. v. Giller
Annotate this CaseThis case presented for the Oregon Supreme Court's review the question of when, if ever, the filing of a third-party complaint constitutes the “filing of a proceeding under subsection (1)” of ORS 60.952(6), such that the shareholder of a closely-held corporation who filed the proceeding could be bought out by the corporation or another shareholder. The corporation here, Graydog Internet, Inc., had only two shareholders: Douglas Westervelt, the company’s president and majority shareholder, and David Giller, an employee and minority shareholder. Graydog initiated the underlying case, at Westervelt’s direction, when it filed a declaratory judgment action against Giller raising an issue regarding his employment. As part of his response, Giller filed a third-party complaint against Westervelt. Graydog then filed an election to purchase Giller’s shares under ORS 60.952(6). Giller objected, arguing that filing a third-party complaint did not constitute the “filing of a proceeding” as that term is used in ORS 60.952(6) and that the claims in the third-party complaint were not “under [ORS 60.952(1)].” For those reasons, Giller asserted, Graydog could not elect to purchase his shares. The Oregon Supreme Court agreed that ORS 60.952(6) did not apply to Giller’s third-party complaint, and therefore reversed the decision of the Court of Appeals which held to the contrary.
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