The owners of an Aumsville company are hoping to overturn a $12 million judgment owed to their former CEO, claiming jurors in a related trial were improperly instructed.
On Dec. 1, Larry Gesher and Josh Smith, owners of HP Civil, Inc., filed a motion for judgment notwithstanding the verdict in Marion County Circuit Court regarding a lawsuit by former CEO Roger Silbernagel.
The motion claims jurors in a March 31 trial were given inaccurate instructions on the legal definition of fiduciary duty and the resulting verdict was invalid.
The jury found both Gesher and Smith individually breached their fiduciary duty to Silbernagel when they fired him in 2022 and undervalued his shares when enforcing a buyout clause. The jury awarded $100,000 in damages from each defendant.
This verdict was the basis for a Nov. 5 order by Judge Lindsay Partridge awarding Silbernagel more than $12 million in additional damages. This included $8.53 million for Silbernagel’s shares – almost double defendants’ offer of $4.6 million – $678,730 in lost profit sharing, and pre-judgment interest totaling an estimated $3.25 million.
The Dec. 1 motion said Gesher and Smith owed no individual fiduciary duty to Silbernagel because the two defendants were minority shareholders. Silbernagel and Gesher each owned 44 percent and Smith owned 11.12 percent.
Defendants said, according to state law, minority shareholders only have a fiduciary duty to fellow owners when acting in concert as controlling shareholders. The motion said Gesher and Smith operated individually during any actions that may have been adverse to Silbernagel’s interests, and that the jury was not instructed to consider this.
The motion asked Partridge to throw out the verdict and issue his own judgment based on the evidence and the law, or to hold a new trial.
Defendants also filed a motion Dec. 4 to stay enforcement of the judgment as they prepare an appeal.
According to the judgment, defendants had until Dec. 5 to make their first of five yearly payments for Silbernagel’s outstanding shares, amounting to roughly $1.7 million yearly. According to court records this payment was not satisfied.
Plaintiff attorneys opposed the motion to stay and in a Dec. 17 filing said there is no legal basis to grant the request.
A hearing was held Dec. 18. Partridge had yet to issue a decision by press time.
