Don’t underestimate the fight in Grizzly Law! The Grizzly Law team of Becky Rutz, Cathy Kahnle, Lee Henning, and Ashley McCormack just scored a big win for MontanaSky by obtaining a $1.2 million verdict in Flathead County on September 8, 2021.
This was a hard-fought, four-and-a-half-year legal battle against the third-largest Montana law firm, Boone Karlberg of Missoula.
In 2011, MontanaSky and Ronan Telephone purchased a cable company based out of Libby and formed a new company, “MontanaSky West” as a 50/50 partnership. In the following 5 years, the principals of these two companies could not agree on how to run this new business.
Financial stresses due to changes in consumer demand, declining Federal subsidies, and litigation before the Montana Public Service Commission for years of overcharging of national telephone carriers, pushed Ronan Telephone to give up most of its ownership interest in MontanaSky West and to eventually agree to merge with MontanaSky.
A Memorandum of Corporate Merger contract was executed on July 25, 2016, which also gave our client, Fred Weber, the controlling share of the company in both stock and board member appointments.
Soon thereafter, on August 15, the FCC officially published notice regarding Ronan Telephone’s receipt of a new government subsidy called “ACAM.” Ronan Telephone would receive approximately $785,000 in ACAM subsidy beginning in 2017.
Emboldened by the new infusion of funds, Mr. Preston, the principal of Ronan Telephone, began to back away from the merger contract. Mr. Preston had his regulatory attorney, Mr. Evilsizer, file a motion with the Public Service Commission (PSC) to stop the merger from being approved, claiming that the merger agreement (filed by Ronan Telephone) was incorrect and had been filed without Ronan Telephone’s knowledge or consent.
Mr. Preston then attempted to intimidate Ronan Telephone’s Chief Financial Officer, Mr. Erickson, into lying about his knowledge and participation in the PSC filing. Ultimately, Ronan Telephone fired Mr. Erickson, alleging he had conspired with Mr. Weber and MontanaSky to force Mr. Preston out of the company.
Mr. Preston also attempted to convince Mr. Weber to change the ownership structure of the company and board makeup. Mr. Weber refused to change the key control provisions of the Merger Agreement. Mr. Preston then hired a Portland lawyer to write bylaws inconsistent with the control provisions of the Merger Agreement.
The merger never closed and five years of litigation ensued.
Prior to trial, MontanaSky sued and settled with Mr. Evilsizer for malpractice and breach of fiduciary duty.
At trial, our clients, Mr. Weber and MontanaSky claimed breach of contract by Mr. Preston and Ronan Telephone.
Ronan Telephone counterclaimed that MontanaSky should have paid for $400,000 in construction and other services they assisted with during the period the parties were attempting to merge. They further alleged that Mr. Weber and former Ronan Telephone CFO, Mr. Erickson, had conspired against Ronan Telephone and Mr. Preston in an attempt to push Mr. Preston out of the business and take over Ronan Telephone’s investment account.
The jury determined that Ronan Telephone breached the contract to merge and awarded damages of $1.2 million to MontanaSky.
Grizzly Law is honored to have represented MontanaSky and Mr. Weber over the last five years and thrilled for the just result obtained in this 7-day trial.