(CN) – An investment advisor wrongfully withheld a year-end bonus from her former business partner in order to pressure her into selling her shares, the Wisconsin Court of Appeals ruled.
Marilyn Holt-Smith and Kristin Yates were 50 percent partners in an investment advisory firm for 17 years until 2004, when each partner received a year-end bonus of $1.6 million.
In 2005, Holt-Smith told Yates she wanted to end their partnership. Holt-Smith had been concerned about Yates’ emotional problems and absences from work.
The business relationship ended in December 2005, when Yates was fired. No vote had been taken on the partners’ year-end annual payment. As a result, the firm had $1.7 million in cash on hand at the end of 2005.
Yates sued for breach of fiduciary duty, and each party sued for the removal of the other as a director of the company.
Judge Bridge upheld the trial court’s ruling for Yates, finding that the year-end payment was an equal division of the company’s profits exceeding $50,000.
Bridge ruled that Holt-Smith had engaged in self-dealing and was therefore not protected by the business judgment rule.
Bridge also ruled that Yates’ receipt of the bonus was not contingent on a vote from the board of directors.
Yates is not entitled to pre-judgment interest, but she is entitled to post-verdict interest, the judge ruled.