The owners of an Aumsville construction company must pay the former CEO $12 million for his stake in the business as the result of a lawsuit over his ouster in 2022.
On Sept. 2, Marion County Circuit Court Judge Lindsay Partridge filed an opinion in Silbernagel vs. HP Civil Inc., et al., placing a value of $8.53 million on shares owned by plaintiff Roger Silbernagel.
Partridge also awarded $678,730 for lost profit sharing and 9 percent in pre-judgment interest to be calculated from the date of Silbernagel’s firing May 31, 2022.
Silbernagel was already awarded $200,000 by a jury in April for defendants’ breach of fiduciary duty. With the terms set in Partridge’s opinion, damages now total $12.4 million.
Silbernagel sued HP Civil and fellow owners Larry Gescher and Josh Smith in 2022 after Gescher and Smith fired Silbernagel and removed him from the board of directors. Silbernagel sought $15 million for alleged retaliation, wrongful termination, and breach of fiduciary duty.
In his lawsuit, Silbernagel claimed he was fired for investigating racial harassment and discrimination
against his son, who is black, allegedly committed by Gescher’s nephew.
Gescher and Smith denied wrongdoing and said Silbernagel was fired for poor performance. In Partridge’s opinion he said there was “no evidence that Roger Silbernagel’s performance as an employee or director
was deficient in any regard.”
Defendants filed a counterclaim and said Silbernagel breached a buy-sell agreement by refusing to sell his shares. Silbernagel argued he was obligated to decline a lowball offer from defendants of $4.6 million.
On April 8 a jury found that Silbernagel was in breach of contract, and Partridge was tasked with determining the value of Silbernagel’s 44.4-percent stake in the company.
In his opinion, Partridge said this was no small undertaking because the buy-sell agreement was not clear as to how shares would be valued if an owner was forced out without cause. He also said he could not risk undervaluing the company because this could represent further shareholder oppression of Silbernagel.
Partridge said Gescher and Smith “clearly” committed shareholder oppression by cutting Silbernagel out of critical decisions including his own firing. He said, even if Gescher and Smith owned a majority stake between them and had resolved to fire Silbernagel, they still owed a fiduciary duty to Silbernagel.
Partridge determined a fair and accurate value would be based on company income, as this represented the value each shareholder derived from ownership and was based on real numbers.
The judge gave Gescher and Smith five years to pay off the amount owed to Silbernagel in yearly installments. Silbernagel is to turn over his shares within 30 days of an order of judgment codifying the judge’s decision, which as of press time had yet to be entered.
