Northern California Record

Monday, December 16, 2019

Appeals court partially upholds ruling in stock-sharing case

By Nicholas Gueguen | Apr 24, 2017

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SAN FRANCISCO — The California First District Court of Appeal partially upheld the San Mateo County Superior Court's decision in Applied Medical Corporation vs. T. Peter Thomas et al.

In its April 12 decision, the appeals court said it would uphold the superior court's decision to give the defendants summary judgment on Applied Medical Corporation's accusation of fraudulent concealment. 

The appeals court said Applied Medical Corporation made those accusations because the company argued that T. Peter Thomas, a member of the company's board of directors, did not disclose his stock-sharing agreement with Reid W. Dennis of Institutional Venture Partners IV. The appeals court decided that the superior court got the ruling right when it said the statute of limitations stopped the accusations of fraud.

The appeals court also decided to uphold the superior court's decision to give Dennis and Thomas summary judgment on the accusations of "breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing and declaratory relief."

However, the appeals court decided to reject the superior court's summary motion approval on Applied Medical Corporation's accusation of Thomas of breaking his contract and the company's accusations of Thomas and Institutional Venture Partners IV of conversion. The appeals court held that the superior court erred when ruling that Applied Medical Corporation did not have a successful conversion accusation.

The appeals court said these charges came when Applied Medical Corporation filed a second amended complaint on Aug. 15, 2014.

According to the appeals court opinion, Dennis and Thomas, as partners in Institutional Venture Management IV "had an oral agreement regarding stock options obtained due to a partner’s service on the board of directors of a company in which IVP had invested." The appeals court cited Dennis' and Thomas' statements in which they affirmed that "Institutional Venture Management IV partners provide the funds to purchase stock, and when the stock is sold, the proceeds are shared among the partners."

The appeals court said Dennis and Thomas argued that Thomas told Applied Medical Corporation about the agreement.

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Organizations in this Story

California 1st District Court of AppealInstitutional Venture Management IVApplied Medical Corporation