Court reviews the "starting point" for determining the amount owed in a case involving a loan dispute

DELTA DEVELOPMENT CORPORATION, ZOO CONCESSION AND GIFT, INC., and SMITH & ROGERS COMPANY v. F. FANI GULF INTERNATIONAL, GULF INTERNATIONAL, FAROKH FANI, and F. FANI/GULF INTERNATIONAL v. FARIBORZ FERDOWSI; LELA FERDOWSI; FARZIN FERDOWSI; ZIBA FERDOWSI; FARSHEED FERDOWSI; TALIEH FERDOWSI; AZAR FERDOWSI; CYRUS AZHDARI; HOMAYOUN AMINMADANI; and ZOHRE AMINMADANI (Tenn. Ct. App. April 4, 2012)

Defendants made a series of loans to Plaintiffs and a dispute arose as to the interest and principal owed. A judgment was entered in favor of Defendants. However, Defendants appealed the award, claiming that the trial court erred in admitting evidence, which allegedly reduced the judgment amount, and in refusing to hold all shareholders of the Plaintiff companies liable for the judgment. Plaintiffs also claim, on appeal, that the Special Master and the trial court set an incorrect “starting point” for determining the judgment owed. We affirm the Special Master and the trial court in all respects.

Opinion available at:
https://www.tba.org/sites/default/files/deltadevelopment_040412.pdf

Court reviews breach of fiduciary duty, breach of contract, and other issues in a case involving an employee's termination

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:
https://www.tba.org/sites/default/files/kovacs-whaleyc_031912.pdf

Court Reviews Whether Plaintiff Sufficiently Alleged the Futility of Demanding a Board of Directors to Initiate a Lawsuit

IN RE HEALTHWAYS, INC. DERIVATIVE LITIGATION (Tenn. Ct. App. March 15, 2011)

Plaintiff in shareholder derivative action appeals the dismissal of his suit alleging breaches of fiduciary duty and other misconduct, including insider trading, by current and former officers and directors of corporation. Plaintiff filed suit without first making demand on the board of directors of the corporation that the directors initiate the lawsuit. Defendants moved to dismiss the suit on the ground that plaintiff failed to allege with requisite particularity that such demand would have been futile. We affirm the dismissal of the action.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/healthways_COR_032411.pdf