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Case No. 22-0259

Brian Hora and Gregg Hora, Individually and on behalf of Hora Farms, Inc., and Precision Partners Corp.
v.
Keith Hora and Kurt Hora, Individually and in their capacity as Shareholders, Directors, Officers, Managers, and Employees of Hora Farms, Inc., Heather Hora, and HK Farms, Inc

Brian Hora and Gregg Hora (plaintiffs) filed a shareholder derivative lawsuit on behalf of Hora Farms, Inc. (HFI), claiming breach of fiduciary duty and fraud, seeking appointment of a custodian for HFI, and requesting removal of Keith Hora as the trustee of a shareholder trust. The district court dismissed all of the plaintiffs’ claims. The court of appeals affirmed in part and reversed in part. The court of appeals found the district court erred in its application of the law regarding self-dealing and breach of fiduciary duty. The court of appeals found that Keith Hora and Kurt Hora breached their fiduciary duties. The court of appeals remanded to the district court to determine damages and to determine the applicability of an indemnification clause. The court of appeals also vacated the district court’s ruling regarding appointment of a custodian and removal of the trustee, and remanded for the district court to determine these issues in light of its ruling on the breach-of-duty claims. The parties seek further review.

County:
Washington
Trial Court Case No.:
EQEQ006366

Resister

Brian Hora and Gregg Hora, Individually and on behalf of Hora Farms, Inc., and Precision Partners Corp.

Applicant

Keith Hora and Kurt Hora, Individually and in their capacity as Shareholders, Directors, Officers, Managers, and Employees of Hora Farms, Inc., Heather Hora, and HK Farms, Inc

Attorneys for the Resister

John F. Lorentzen
Sarah J. Gayer

Attorneys for the Applicant

Stephen J. Holtman
Abram V. Carls
Joseph W. Younker
Matthew G. Barnd

Court of Appeals

Court of Appeals Opinion

Opinion Number:
22-0259
Date Published:
Feb 08, 2023
Summary

            Appeal from the Iowa District Court for Washington County, Sean W. McPartland, Judge.  AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH DIRECTIONS. Heard by Bower, C.J., and Badding and Buller, JJ.  Opinion by Buller, J.  (28 pages)

            Brothers Brian and Gregg Hora filed this shareholder derivative lawsuit on behalf of Hora Farms, Inc. (HFI), claiming breach of fiduciary duty and fraud, seeking appointment of a custodian for HFI, and requesting removal of the trustee of a shareholder trust.  The plaintiffs appeal the dismissal of their claims.  The defendants cross-appeal, seeking attorney fees.  OPINION HOLDS: The district court erred in its application of the law regarding self-dealing and breach of fiduciary duty.  We find Defendants Keith Hora and Kurt Hora breached their duties, and we remand for further proceedings consistent with this opinion, including a determination of damages and ruling on indemnification.  We also vacate the ruling on appointment of a custodian and removal of the trustees, and we remand for the district court to decide that question in light of this opinion.  Finally, we deny all requests for attorney fees.

Other Information

Date Further Review is Granted:
Apr 27, 2023
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