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Business Owner Disputes

Contact a Business Owner Disputes Attorney

Overview

Stoll Keenon Ogden’s Business Owner Disputes practice is an interdisciplinary group of litigators and business entity attorneys who advise on disputes between and among business owners. Disputes between business owners are complicated in that they always involve at least three sides: the plaintiff, the defendant and the business entity. The nature of this triad of relationships is based first upon the statutes and organic documents that govern the entity and the rights as well as the responsibilities of the owners.

Our goal is to resolve matters effectively and efficiently, with as little disruption to the business as possible. We represent clients on a variety of matters that include the following:

  • director’s and officers’ liability
  • dissenter right’s actions
  • shareholder derivative actions
  • control disputes among partners, LLC members, boards of directors and shareholders
  • advising majority owners in utilizing mergers, conversions and other organic transactions to protect a venture from minority threats
  • enforcing of stock buy-sell agreements
  • interpreting and enforcing operating agreements
  • advising minority owners of their rights, including the enforcement of fiduciary obligations

Work Highlights

Protecting Corporation’s Control of Assets from Shareholder Interference

Paul R. Plante, Jr. v. Frank D. Marcum, et al., Civil Action No. 12-CI-0040 (Fayette Circuit Court)

When minority shareholders in a closely-held corporation caused a bank to file an interpleader action regarding control of the corporation’s funds, SKO represented the corporation, and over the objection of the minority shareholders, ensured that the corporation controlled its funds, allowing the business to continue to operate.  

Defense of Alleged Breach of Fiduciary Duty in an LLC

SKO defended the majority member of a medical billing company from multiple claims of usurping corporate opportunities and breach of fiduciary duty.  Counterclaims were filed against the plaintiffs alleging breach of fiduciary. The case was quickly settled on favorable terms to SKO's client, resulting in the majority member being the sole owner of the company.

Defense of Majority Shareholder Against Breach of Fiduciary Duty Charges

SKO defended a majority shareholder against multiple claims of breach of fiduciary duty, self-dealing and fraud stemming from multiple construction and land use projects.  The case was litigated over the course of four years, with the plaintiffs eventually agreeing to settle the dispute for a small fraction of their demand.

Suit Brought on Behalf of LLC Member to Follow Operating Agreement

When a faction of an LLC purported to take control of its board notwithstanding the absence of a vote of the members, SKO represented a group of members in litigation insisting that the requirements of the operating agreement be satisfied. 

Terminated Shareholder Sued for Breach of Fiduciary Duty & Employment Agreements

A terminated shareholder/corporate officer was sued on a number of grounds, including breach of fiduciary duty and breach of an employment agreement. SKO represented the defendant corporation and its founding shareholder. SKO obtained a jury verdict substantially in favor of the defendant. 

Defending a Shareholder Derivative Action

When a single, dissident shareholder brought both derivative claims on behalf of the corporation and direct claims against certain directors, SKO successfully argued in litigation that the dissident shareholder had no standing to assert claims and lacked the ability to bring a derivative action for failure to satisfy the statutory requirements for doing so. The litigation continued to the enforcement of a stock buy-sell agreement, upon which our client was successful in both its enforcement and the valuation of the minority member’s shares.

Ending a Derivative Action by a Merger and Dissenter Rights

When a small minority of the shareholders prevailed in derivative action, SKO was brought in to advise the majority owners. A merger transaction both ended the derivative action by depriving the minority of standing and provided a means of redeeming their shares so similar suits may not be brought in the future. The minority shareholders initiated a dissenter rights action, which was resolved on a valuation favorable to our client.

Defending Against a Threatened Change in Control

When a dissident group of shareholders threatened to alter the structure of the board and thereby take control of the corporation, SKO advised the incumbent board on how to structure an asset sale to a related company that preserved existing relationships.

Competing Venture by an LLC Member

When a minority member of an LLC organized a competing venture, SKO brought suit and obtained injunctive relief on behalf of our client based upon minority member’s breach of his statutory duty of loyalty. After a two-week jury trial, obtained favorable settlement for client.

LLC Member’s “Salary”

When a terminated member argued that he was still entitled to his “salary,” SKO prevailed in the lawsuit, demonstrating that the “salary” was a distribution and that under state law the LLC was prohibited from making a distribution under existing circumstances.

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Publications

Nov. 2014