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Supreme Court refuses Disthene appeal

A court-ordered breakup of a family-owned central Virginia mining corporation will stand.

The Supreme Court of Virginia on Friday refused to review the decision of Circuit Judge Jane M. Roush calling for a sell-off of assets of The Disthene Group Inc., including a lucrative mineral operation in Buckingham County and the historic Cavalier Hotel in Virginia Beach.

Roush already had appointed a receiver to wind up and liquidate the corporation. The Supreme Court earlier denied a request to block the dissolution pending the possible appeal.

The refusal of the petition for appeal upholds Roush’s Aug. 30 opinion that capped a three-week trial at the Buckingham County courthouse. The judge recounted multiple instances of oppressive behavior by company president Gene Dixon Jr., who allegedly treated family outsiders – minority shareholders – as “irksome interlopers.”

Roush described a textbook case of a corporate “squeeze-out,” with a control group using its power to eliminate or marginalize other owners without fair payment. The drastic remedy of dissolution was justified, she said, by the “longstanding oppression” of shareholders as well as misuse of corporate assets.

In a companion case, Roush this month ruled that the minority shareholders will be allowed to proceed with conspiracy claims – carrying the possibility of treble damages – against the controlling owners of the company. That lawsuit is set for a two week trial in June in Buckingham County.

The Supreme Court’s decision to uphold the Disthene breakup came just three days after a court panel heard argument on the petition for appeal.

Thomas M. Wolf of Richmond, who represented the minority shareholders, said it was not surprising the appeal was refused, considering the detailed factual findings recited by Roush in her opinion. If the Dixon family succeeded, the description of their actions would be “a blueprint for legal oppression of minority shareholders in Virginia,” Wolf said in an email. “That’s a scary thought.  It would be horrible for small businesses trying to attract investors,” he added.

A call for comment to Alan D. Wingfield of Richmond, counsel for the Dixons, was not immediately returned.

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