Two brothers who operate a nursery have prevailed against their siblings in a lawsuit over farming assets that ended up before the Oregon Court of Appeals.

Steven and Joseph Gold, operators of Gold Family Farms in Hillsboro, Ore., can compel their siblings to sell their half of a company that owns farmland, greenhouses and equipment for $850,000, the appellate court ruled.

The Court of Appeals rejected arguments by their brother and sister, Matthew Gold and Clarka Hill, who objected to the valuation and buyout procedures.

A key question in the dispute was whether the brothers who operate the nursery had “oppressed” the siblings who must sell their shares in the farmland company.

The appellate court has affirmed an earlier ruling that “there had been no oppression,” which effectively allows Steven and Joseph Gold to buy their brother and sister’s shares at a 22% discount, according to court records.

The legal battle over the company’s ownership escalated from a disagreement over property lease terms.

The nursery business operated by Steven and Joseph Gold leased about 176 acres from Gold Hill Properties, which is jointly owned by all four siblings and at the center of the case.

Rental payments topped $700,000 per year, which the brothers claimed was “far in excess of market rates, putting the company at risk for increased tax liability and penalties.”

Due to the deadlock over the lease, Matthew Gold and Clarka Hill offered to sell their half of the farming asset company for $2 million.

When that offer was rejected, they filed a lawsuit alleging their brothers were “insisting on an action that would benefit themselves while directly harming the other owners of the corporation” by reducing lease payments.

The complaint asked a state judge to decide whether Matthew Gold and Clarka Hill were obligated to sell their half of the company, and if so, whether their share values should be discounted due to a “lack of marketability.”

In 2019, Washington County Circuit Judge Janelle Factora Wipper ruled that the lawsuit triggered legal provisions under which the brothers could elect to buy their siblings’ shares.

She accepted an appraisal valuing those shares at $875,000 as “legally warranted and credible,” ruling that its use of a “marketability discount” was appropriate.

The Court of Appeals has now upheld those conclusions, agreeing the 22% discount was proper because shares in a “small family-run business” are difficult to sell compared to a publicly traded company with a “ready market.”

Marketability discounts are considered unsuitable if they reward a “wrongdoer” with a lower purchase price, but such “oppressive conduct” was not proven in this case, according to the appellate court.

“Evidence of fair market value is relevant to the question of fair value, and in the absence of oppression, the court may apply a marketability discount,” the ruling said.