CYNTHIA H. KOVACS-WHALEY, DIRECTOR AND SHAREHOLDER OF WELLNESS SOLUTIONS, INC. v. WELLNESS SOLUTIONS, INC. ET AL. (Tenn. Ct. App. March 19, 2012)
Plaintiff, an employee, shareholder, and director of Wellness Solutions Inc., filed this action against the Company and shareholders Steven Scesa and Laura Reaves following the termination of Plaintiff’s employment with Wellness Solutions, Inc., asserting a shareholder derivative action and claims for breach of fiduciary duty and duty of good faith.
Following her termination and the initiation of this action, the Company exercised a call option contained within the Shareholders’ Agreement and purchased Plaintiff’s stock. Plaintiff then amended her complaint to include claims for breach of contract and false light invasion of privacy against Mr. Scesa.
The trial court summarily dismissed all of Plaintiff’s claims. We reverse the summary dismissal of Plaintiff’s claim for breach of contract finding there are genuine issues of material fact. We also reverse the summary dismissal of Plaintiff’s claim for false light invasion of privacy finding that Mr. Scesa, as the moving party, failed to negate the essential element of damages or demonstrate that Plaintiff cannot prove the essential element of damages at trial.
We affirm the summary dismissal of Plaintiff’s claims for breach of fiduciary duty, breach of the duty of good faith, and breach of the duty of loyalty upon the finding the Defendants demonstrated that the business judgment rule applies to their decisions at issue, which negates an essential element of each of these claims. Further, we deny Defendants’ request for attorneys’ fees pursuant to Tennessee Code Annotated § 47-56-401(c) upon the finding that Plaintiff did not properly bring a shareholder’s derivative action.
Opinion available here: