In an effort to gain justice while ignoring forgiveness, family members in family businesses suing each other is not uncommon. In the last couple of years, I’ve run across several situations in which family members sue each other to find justice. Nevermind that justice is never enough. Forgiveness needs to be part of the picture if a family business is going to survive with the family intact.
Families Sueing Each Other
For example, in Newton, PA, Nina Kaplan was successfully sued by her father and is now required to pay $2.13 million because of poor business results and suspicions about embezzlement. Her business was forced to close. A sign on the door read, in part, “My own father suing me. There are no words for this.” In 2018, Patrick Yu sued his father, Bong Yu, for stewarding their family business to the benefit of the Yu family, but at Patrick’s personal expense, creating a breach of the fiduciary duty owed to him by his family members who serve as officers in their family business. Hence, Patrick is seeking dissolution of the family business.
In a public, embarrassing action in the Twin Cities, Kim Lund was awarded $45.2 million for her shares in the Lunds & Byerly’s corporation. She had sought $80 million. At the time of this writing, it appears their family dispute is headed to the Minnesota Supreme Court. The judge in this case, Hennepin County Chief Judge Ivy Bernhardson quoted the Bible at the end of their trial: “But I tell you that anyone who is angry with a brother or sister will be subject to judgment”. She went on to say to both parties “Family life is too intimate to be preserved by the spirit of justice. It can be sustained by a spirit of love that goes beyond justice…while they are only words, there are profound thoughts behind these words. I wish the parties peace.”
In the last few years, I’ve seen a sister and brother divide and cutoff over $34,000 in a $1.1 million business. I’ve seen four siblings force their 5th sibling – their sister – out of their family business, driving a wedge within the family that will never be removed. I’ve seen a sister and her husband cutoff from their siblings because a $200,000 loan was not repaid when the $16 million business was failing. I’ve seen another brother and sister nearly cutoff from each other because of persistent conflict about capital expenditures in the range of $300,000 – $500,000 in a $4 million business. I’ve learned about two brothers who are 50-50 owners in their business and now communicate only through their lawyers.
More recently, Serene Warren has sued her brother Mark Evenstad over their now-deceased father, Ken Evenstad, gifting 1.5% more stock to Mark for his unusual success in quadrupling the value of Upsher-Smith to $1.1B. The judge called her “entitled” and awarded her $41M instead of the $328M she was seeking. The family is now estranged after a five-year toxic court battle. A wedge has been driven into the family that will likely never be removed.
When Transitions Are Viewed as Unfair
Most senior-generation owners attempt to be fair with their children when designing their estate and business succession plans, but a surprisingly high number end up being very unfair after their plans are fully implemented. Of course, they are not here to see the disastrous results of their planning, leaving their children with emotional and legal issues to work through.
A smaller number of senior-generate owners don’t care if they are fair with their children. Keeping the business functioning is their primary goal, so they give (or sell at a discount) their business to one child and throw a few dollars to the other children. I know of two instances where the father has gifted or is gifting the business to one of his sons, and the other siblings are made owners of the land and buildings in which the businesses operate. The siblings who got the land and builds feel slighted. Their net worth may be $1M – $3M in size after the gifting is completed, while the sibling who received the business has a net worth of $30M or more.
Is this fair? Yes and No.
“Yes” in the sense that the owner (dad in these two cases) had the right to give his business to whoever he wanted. “No” in the sense that one sibling was given much more than the others, which created resentment in the sibling group toward each other and their parents. Conflict resolution sometimes works in these situations, but as often as not, lawyers get involved. But even if we can reach resolutions for the siblings without lawyers, their will still feel slighted. Resolution is never enough. Forgiving one’s parents is essential to moving on and having a full life.
What family lawsuits really accomplish
In all these cases, several things were true:
- Retaining money and power was more important than preserving family relationships
- The need for justice and “I’m right” eclipsed the need to forgive
- The lawyers made a lot of money
- Everyone agreed that the loss of family relationships was the greater loss
- Nieces, nephews and grandchildren bore the full brunt of the conflicts
Justice vs. Forgiveness
Justice means that the law is applied without prejudice against those who have violated it: violators receive their just punishment for their wrongful actions. Forgiveness means I acknowledge you have violated the law while also accepting the hurt and pain you have caused me. But here’s the catch: I give up the right to hurt you back. I don’t require a just punishment be inflicted on you for your wrongful actions.
Forgiveness is tough stuff. It’s not for the faint of heart. While it doesn’t continue to accept abusive, illegal or violating behavior, it also gives up the right to find equitable outcomes where the offended party is made whole.
Forgiveness is born in love and grown in the soil of maturity. When you find people who can’t forgive in business (or in life), it demonstrates that their hurt is so deep that it has driven their love for the offender away. Revenge is the natural outcome for those who can’t forgive.
Forgiveness is always a choice. It is not an emotion. Forgiveness usually does not lead to reconciliation or restoration, but it does release the forgiver from the bondage of hate and bitterness that often hinders one from a successful and thriving life.
In order for family businesses to survive with the families thriving together, forgiveness must be present and exercised on a regular basis. At times, members must give up the right to be right. And at those same times, justice must be subordinated to love.
In our hyper individualistic, money-is-sacred-above-all-else, I-deserve-my-rights-all-the-time-oriented culture, the message of forgiveness and love can be counter-cultural. But without those two gifts that family members give each other, family businesses will likely fail and the family itself will be forever injured.
Bill English, Publisher
Bible and Business
