Racing to Res Judicata
When two or more lawsuits over the same set of facts are being resolved simultaneously in bankruptcy and state courts, figuring out who has jurisdiction over what can get tricky. Yesterday, the Tennessee Court of Appeals issued a decision untangling a dispute between business partners that stretched between three different courts, and in doing so provided a helpful roadmap for resolving such disputes in the future. Spivey v. King, No. E2011-01114-COA-R3-CV (Tenn. Ct. App. Feb. 2, 2012)
By Dan Lins
Tags bankruptcy litigation, business litigation, jurisdiction
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When is Demand Prior to a Derivative Suit Futile?
In a shareholder derivative action against directors of a corporation, the Tennessee Court of Appeals discussed the standard (under Delaware law) for a plaintiff to be excused from making demand on the company’s board prior to filing suit. The case is In re Healthways, Inc. Derivative Litigation, 2011 WL 882448 (Tenn. Ct. App., March 14, 2011).
Breach of Contract or Unjust Enrichment — Pick One
RST and Plaintiffs entered into an agreement to pursue the development of a solid waste transfer station for use by RST in Davidson County, Tennessee. RST had an affiliate company, RSI, that was not a party to the contract but which would have been involved in the project as it moved forward. At some point the principals of RST stated they were terminating the agreement. Plaintiffs sued both RST and RSI for, among other things, breach of contract and unjust enrichment.
Limits on the Applicability of the Discovery Rule
Plaintiff brought a shareholder derivative action against current and former officers and directors of First Horizon for alleged breaches of their fiduciary duties. The Complaint asserted that the defendants pursued an aggressive growth strategy for First Horizon based on the origination of subprime mortgage loans, second lien mortgages, home equity loans, real estate construction loans to individual consumers, and commercial construction loans to single-family home builders without taking measures to control for risks inherent in this strategy. Plaintiff alleged that the acts of the defendants included the use of high-risk and unlawful banking practices, misleading financial reporting, and active concealment of their misconduct.
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