A decision of December 14th, 2010 by the Appeals Court reversed a Lower Court’s ruling that would have forced Paul Teutul Junior to sell his 20% interest in Orange County Choppers to his father at a price to be determined by the court. For those who are interested to understand the importance of this decision for Paul Jr., let’s come back in non-lawyer terms, to each step of this family legal fight.
In 2007, Paul Sr. gave to his son a 20% minority interest in OCC. In 2008, at the same time OCC moved to its new headquarters, the company entered into an employment agreement with Paul Jr. to retain his services. After tension escalated between father and son, in Fall 2008 Junior was fired from OCC. The Discovery Channel advised both parties that the split was a breach of contract of the original signed agreement between OCC and the network (the show could not continue with only Paul Sr because losing its entertainment value). To resolve the breach of contract, Paul Sr. and Paul Jr. signed a new agreement on January 21, 2009 amending the former 2008 Agreement, with Paul Jr.’s status changing from being an OCC employee to independent contractor. At the same time, the agreement gave the father the option on his request at any time to purchase Paul Jr.’s 20% interest in OCC at fair market value by a procedure to be agreed as soon as practicable.
In May, 2009, Paul Sr. sent a letter to his son stating that he wanted to purchase his shares and that an appraisal he ordered proved that Paul Jr.’s 20% shares in OCC were worth 0.00 dollar. Junior refused and consequently Senior asked in court his son to agree on a procedure to value OCC shares. Jr. legal reply was that the agreement with his father was unenforceable because it could not be a binding contract without the parties agreeing on a procedure for determine shares fair market value. At the same time Paul Jr. worried that his father was diluting OCC assets, requested that his father provide a weekly accounting of all OCC expenditures and receipts.
On April 21, 2010, the trial court decided to reject rejecting Paul Jr.’s argument that the option was not enforceable because fair market value method was not described in original agreement. Paul Jr. appealed this decision to the Appellate Division of the New York State Supreme Court. On December 14, 2010, the Appellate Division issued a decision reversing the trial court, concluding that the Option is neither valid nor enforceable. So, Junior can keep his 20% shares of OCC as long as he wants, but must be worried that OCC assets lose value. During litigation he already sought damages from his father for alleged self-dealing and destruction of OCC assets. Maybe, if proven, something he could use as a leverage to get a very favorable buyout of his 20% shares in OCC. The saga continues, on screen and in courts…