Matter of Kemp & Beatley, Inc.

Dissin and Gardstein (plaintiffs), longtime employees and significant stockholders holding a combined 20.33% of close corporation Kemp & Beatley (defendant), had for years received distributions proportional to their stock ownership alongside other shareholders; after Dissin resigned in 1979 and Gardstein was terminated in 1980, the company switched to distributing its annual payments based on service rendered rather than stock ownership, cutting off Dissin and Gardstein entirely. They petitioned for corporate dissolution, arguing the controlling shareholders had frozen them out through fraudulent and oppressive conduct; the trial court ordered dissolution unless the controlling shareholders bought them out, the appellate court affirmed, and Kemp & Beatley appealed.

Whether forced dissolution of a corporation is an appropriate remedy for minority shareholders when controlling shareholders have engaged in conduct that substantially defeats the minority shareholders' reasonable expectations.