Restrictive Covenant Lawsuit Dismissed for Lack of Personal Jurisdiction
AmSurg Corporation sued a former division president, Frank Principati, in U.S. District Court in Nashville for allegedly violating a non-solicitation agreement with AmSurg. Judge Haynes dismissed the case without prejudice due to a lack of personal jurisdiction over the defendant. The case is Amsurg Corp. v. Principati, 2011 WL 780676 (M.D. Tenn. Feb. 28, 2011).
By Cautionary Tale About Guaranties
In Crossville, Inc. v. Kemper Design Center, Inc., et al., 2010 WL 5158641, the U.S. District Court for the Middle District of Tennessee addressed two matters related to interpreting and applying personal guaranties of corporate debt. Each of the issues arose from the fact that personal guaranties were executed at the same time as a first set of loan documents, and none were executed with a second set of loan documents. The parties did not agree about whether the second set was a “modification” of the first set, or a new transaction altogether.
“Going to the chapel and we’re gonna get…”: Husband Hides Wedding Business Assets from Wife
A husband and wife ran a wedding chapel business in Sevier County, Tennessee. In 2004, they added an overnight cabin rental business and ran them both under the name Mountain Mist Cabins & Weddings. After things soured between them, but before the divorce, the husband claimed that he abandoned the business.
Futility of Demand on Board of Directors in Derivative Suit
The U.S. District Court for the Eastern District of Tennessee recently rejected an argument that might have given shareholders an end run around the demand requirements for derivative suits. See Lay v. Burley Stabilization Corp, 2010 WL 2639931 (E.D. Tenn. Jun. 28, 2010). In Tennessee, plaintiffs in a derivative action must “allege with particularity the demand made, if any, to obtain action by the directors and either why the plaintiffs could not obtain the action or why they did not make the demand.” Tenn. Code Ann. §48-56-401(c). The demand requirement is typically excused if the plaintiff establishes that demand would be futile. However, to establish futility, plaintiffs must demonstrate that: (1) that the board is interested and not independent and (2) that the challenged transaction is not protected by the business judgment rule.
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