IN THE CIRCUIT COURT OF COUNTY, MISSISSIPPI
PLAINTIFFS
VS. CAUSE No.
DEFENDANTS
COMPLAINT
COMES NOW the Plaintiffs, (hereinafter " "), individually and for ,
individually, by and through their attorneys, and files this complaint against Defendants,
(hereinafter " "), and in support thereof would show as follows:
PARTIES
1. Plaintiffs, , are adult resident citizens of , County, Mississippi.
2. Defendant, is an adult resident citizen of County, Mississippi whose
residence address at which process may be served is , or at his/her office address at ,
Mississippi .
3. Defendant, , is an adult resident citizen of County, Mississippi whose
residence address at which process may be served is , , Mississippi , or at her
office address at , , Mississippi .
FACTUAL BACKGROUND
4. (the "Company") is a Mississippi business corporation which was incorporated on
, . The Company is a contractor engaged in the construction of water and sewer
systems throughout the Southeastern United States.
5. At that time it was formed, the primary stockholder of the Company was . Upon
information and belief, states that acquired a minority interest in the Company
either at that time or at some time prior to . In addition to owning a minority ownership
during the time period prior to , who has a college degree in accounting, was
employed by the Company as bookkeeper.
6. Prior to , was also employed by the Company. , who only attended
school through the eighth grade and later obtained a G.E.D., was a job superintendent
responsible for overseeing actual job construction activities for the Company.
7. In late or early , decided to sell all of the assets of the Company at
auction. Upon learning of the planned auction, approached and suggested
8. At the time of said auction, the Company had essentially three unfinished jobs.
approached and and told them that (s)he would give them % of the profit
from the unfinished jobs and the company name in exchange for them completing the jobs.
and agreed to do so. Furthermore, and purchased , , a
and from the Company and subsequently traded part of their % of the
profits from the unfinished jobs as payment for these vehicles and equipment. In accordance
with 's understanding of their agreement, and split the net profits from these
jobs equally.
9. Shortly thereafter, and met alone, without , to finalize the transfer of
the remainder of tile Company, including the Company name, to and . After this
meeting, came to and explained that (s)he had elected not to be paid for his
minority interest in the Company so that (s)he would not have to pay taxes on the sale, and that
since (s)he had left the value of his minority ownership in the Company, would end up
acquiring less than % ownership of the Company to which the parties had originally
agreed.
10. Subsequently, showed a letter from a CPA valuing the Company at $ .
A copy of said letter is attached hereto as Exhibit A and incorporated herein by reference. Based
on this letter, tendered his/her check in the amount of $ , or one - third of the value of
the Company, to on , for his stock in the Company. A copy said check is
attached hereto as Exhibit B. Despite this payment, states upon information and belief that
issued shares which equaled only % of the outstanding stock of the
Company.
11. As a significant and material inducement for to invest in the Company,
agreed that would become Vice President and a Director of the Company and that all
decisions concerning the business affairs of the Company would be made jointly by and
. Moreover, was given repeated assurances by that (s)he would have free
access to the books and records of the Company at all times.
12. After acquired his/her stock in the Company, , through use of his/her
majority interest, voted to elect himself President, his/her wife, Defendant, ,
Secretary - Treasurer and , Vice - President. In addition, and voted their shares
to elect each other directors and used his majority shares to elect his wife, , the third
director of the Company. Each of these individuals held these respective positions until
, , when Defendants voted to remove as an officer of the Company.
13. On , , and entered into a "Stockholders' Agreement"
Pursuant to said agreement, the parties provided that each Shareholder would "devote his
or her full time, talents and best efforts to the.5uccessful management, promotion and operation
of the business known as Construction, Inc. and shall not actively engage in any other
business without the prior written consent of the other Stockholder." In addition, said agreement
provides that each Shareholder shall "vote his shares for the election of each other as a Director
of the Corporation." A copy of said , Stockholders' Agreement is attached
hereto as Exhibit C and incorporated herein by reference. Further, and verbally
agreed that in operating the Company (i) neither would use the Company's equipment or other
assets for their personal use; (ii) nepotism would not be allowed; and (iii)personal expenses
would not be paid from the Company's monies.
14. On , , and executed another Stockholders' Agreement.
This second Stockholders' Agreement superseded the , Stockholders'
Agreement but contains provisions identical to the ones set forth above. The only substantial
difference between the two agreements is the provision regarding insurance. A copy of said
, Stockholders' Agreement is attached hereto as Exhibit D and incorporated
herein by reference.
15. From the outset, the division of labor between and was that was
responsible for all bookkeeping, financial matters and day - to - day operation of the business
office and was responsible for overseeing all actual construction activities and personally
performed essentially all maintenance on the Company's equipment. This division of labor
continued until was forced to cease such activities as the result of an on the job injury, as
is discussed in more detail below.
16. For the first two years the Company operated, and received a minimum
weekly salary and nothing more as compensation. Thereafter, and agreed that they
would each receive their weekly salary and at the end of the year divide the profits of the
Company through the use of year end bonuses, rather than through the payment of dividends, in
order to avoid double taxation on the Company's profits. This division of the profits of the
Company continued until was forced to cease such activities as the result of an on the job
injury, as discussed in more detail below.
17. In , , and purchased certain real estate on which the
Company's shop and storage facilities are located. This real estate (hereinafter the "Shop
Property") is more particularly described in the Warranty Deed attached hereto as Exhibit E and
incorporated herein by reference. As provided by said Warranty Deed, and own the
Shop Property equally.
18. In , , the Company conveyed certain real estate on which the
Company's office building is located to Plaintiffs and Defendants. This real estate (hereinafter
the "Office Property") is more particularly described in the Warranty Deed attached hereto as
Exhibit F and incorporated herein by reference. The Warranty Deed from the Company
provides that ownership of the Office Property is an undivided % interest in the
Defendants, as joint tenants, and an undivided % interest in the Plaintiffs, as joint tenants.
Further, said Warranty Deed provides that the Plaintiffs and Defendants own 't' he Office
Property as tenants in common.
19. The Company does not have a formal lease on the Shop Property or Office Property and
the Defendants use their "control" of the Company to determine what the rent should be each
year, without regard to the market value of the two properties or the Plaintiffs. Moreover,
Defendants have repeatedly voted their shares to divide the payment of the rent for the Office
Property and Shop Property on the basis of % to and % to , in total
disregard of 's actual % ownership interest in the Shop Property.
20. Although is the owner of a substantial portion of the
Company, has engaged in a pattern and course of conduct which ignores this fact.
has repeatedly told others that was merely an employee, that made all the decisions
and that had no real say or input about Company decisions. In addition, Defendants have
not allowed to participate in the Company's decision making and he has been denied free
access to the books and records of the Company. Moreover, has breached the agreement
between the parties regarding operation of the Company in the following ways:
a. Paying personal expenses out of the Company's funds;
b. Using Company equipment and other assets for his/her personal use and on projects in
which he has invested but in which does not participate; and
c. Engaging in nepotism by employing and . Also, has manipulated the
books and records of the Company and the payment of year-end bonuses and rent so as to
provide the greatest tax benefits to himself without regard to consequences of such actions on
. Furthermore, has caused the accumulation of excessive amounts of cash by the
Company for no legitimate purpose.
21. On , , received a blow to the head while working on a piece of
Company equipment. Several days later, suffered a stroke. As a result of the stroke,
was unable to work for approximately six (6) weeks. returned to work early
, and resumed his old duties. However, in early , , 's doctors
determined that due to his stroke could not handle the stress of overseeing all of the
Company's field operations and maintaining the Company's equipment. As a result, 's
doctors ordered him/her to cease such activities.
22. After 's injury, hired (hereinafter " ") to work in the Company's
office at a salary of $ , approximately $ more than the base salary which was
receiving. In , , approached about acquiring 's stock in the
Company. Upon information and belief, avers that and had a plan whereby
Seal would first acquire the stock of and would later purchase the stock of .
further believes that supplied with confidential and proprietary information of the
Company and used or attempted to use his position as controlling shareholder to assist in
acquiring 's stock and renting the real property used by the Company for less than fair
market value.
23. Though and negotiated for several months, was not willing to sell on
the terms offered by . By letter to 's attorney dated , ,
terminated negotiations with for the purchase of 's stock and further stated that he
intended to resume negotiations with for the purchase of 's stock. Subsequently,
stated to 's counsel that Seal had left the employ of the Company and was seeking
other opportunities.
24. When and Seal were unable to reach agreement regarding the sale of 's
stock, instigated further efforts to force to sell his stock. Notwithstanding the fact
that his job related disability forced him to cease his previous activities, reasonably
expected and understood that he would continue to receive his normal compensation from the
Company and would remain on the Company insurance. However, , an attorney
representing , forwarded 's attorney a letter dated , which provided
the following:
As you know has not been actively engaged in the business for nearly two (2) months. His
final paycheck was mailed to him this past week. will not receive any further
compensation from the company other than his proportionate share of any bonus which may be
declared. For purposes of calculating any bonus payment to , , shall be
considered as his last date of service to the corporation.
In connection with any health insurance benefits to which may be entitled we suggest that
you contact Benchmark, Inc. to discuss the options available to . If you will be kind
enough to do so, please request that return all company keys and credit cards at his next
convenience.
Further, this , letter notified 's attorney that had decided to
exercise his rights under the Stockholder's Agreement and that had directed the
Company's accountant to determine book value.
25. The actions of in terminating 's compensation and health insurance and
requesting that he return all company keys and credit cards was done in bad faith and for the sole
purpose of attempting to exert pressure on to sell his stock on less favorable conditions.
Such actions by were a breach of his fiduciary duties to .
26. By letter dated , , counsel for notified 's attorney that "
will not be re - elected to the corporations board of directors" and that "it is not expected
that the board will appoint as an officer of the corporation." Further, this letter stated that
" should not expect to receive any bonus on profits earned by the corporation after
separated himself from active service to the corporation."
27. The statements of , by an through his attorney, that would not be re - elected
as an officer or director of the Company and that should not expect to receive his share of
the Company's profits earned after he ceased active participation in the Company was made in
bad faith and for the sole purpose of attempting to exert pressure on to sell his stock on
less favorable conditions. Such actions by were a breach of his fiduciary duties to .
28. By letter dated , , counsel for notified
's attorney that had decided not to purchase 's shares as stated in the
, letter. Furthermore, the , letter provided that 's health
insurance through the Company was terminated and that the premiums for 's health
insurance for the period from , through , , which had been paid by the
Company, would be deducted from the real property rental to which was due.
29. On , , the Company held its annual meeting. At that time, voted his
shares to elect director of the Company as required by the ,
Stockholders' Agreement. However, also voted his shares to remove as an officer
of the corporation and in so doing stated: "Okay, now I make the motion that the officers of the
corporation, the President would be and as Secretary Treasurer, and that
Vice - President, , effective this date, no longer be part of the corporation." The company's
books and records currently reflect that Defendant, , is the President and Defendant,
is the Secretary and Treasurer of the Company. Defendants, and are the two other
directors of the Company.
30. At the , annual meeting, Defendants and , in their capacity as
directors of the corporation, also voted to disburse a bonus to in the amount of $
and a bonus to in the amount of $ . These bonuses were based on a division
of the profits of the Company for the period from , to , as
reflected on the interim financial statements of the Company ending , . In
addition, Defendants, and , in their capacity as directors of the corporation, voted to
disburse an additional bonus to in the amount of $ . This additional bonus was
based on the operational profits of the
Company for the period from , to , . received no
bonus, dividend or other compensation related to the profits of the Company for the period from
, to , . voted against said bonuses awarded by the
Company.
31. As a result of the actions of Defendants, received, in the form of bonuses,$
from the profits of the Company from , through , . In
contrast, received $ for this same period.
32. Further, at the , annual meeting, Defendants, and , in
their capacity as directors of the corporation, also voted to pay rent on the real property and
improvements thereon used by the Company in the amount of $ , with $ of said
amount being payable to and $ , less $ for insurance, payable to .
voted against said action by the Company.
33. In , , notified that he no longer qualified under the Company's
health insurance plan and that he could not remain on the Company's group plan even though
was paying the monthly premiums. could have remained eligible for coverage
under the Company's group plan based on his position as a director except for Defendants refusal
to pay him any compensation from the Company. Subsequently, 's insurance was
terminated when changed insurance carriers for the Company's group health insurance.
has been unable to obtain health insurance and it is unlikely that will be able to
obtain insurance due to disability he incurred as a result of working for the Company.
34. On , , wrote and suggested that be removed from
the Master Surety Agreement which the Company has with USF&G. In said letter again
acknowledge his express intention of not allowing to receive any benefits from his
ownership in the Company by stating that it "...wouldn't be fair for you to share in a potential
loss of Construction when you're not actively participating in other benefits of the
company." further avers that this action by was not an act of fairness on his part,
but rather was, in fact, an attempt to induce to take actions which would limit his ability
to obtain information regarding the operations of the Company.
35. On , , 's attorney received a letter from inquiring whether
remained interested in selling his stock in the Company. It was at this time that
and his counsel first learned that Seal had not left his employment with the Company as
had represented. Upon information and belief, avers that it was the plan of and
Seal to "soften up" by cutting off his compensation, insurance, benefits and other
incidents of ownership in the Company for a period of six months or so in hopes of acquiring
's stock for far less than fair value.
36. After receiving the , letter from , , through his counsel,
contacted to obtain current financial information regarding the Company to assist him in
determining the value of the Company, and hence the value of his stock. declined to do
so, instead telling that it would be necessary for to hire and pay an accountant to
determine the current financial situation of the Company.
Based on 's unwillingness to provide current financial information, retained an
accountant to review the financial records of the Company in an attempt to make this
determination.
37. In addition, contacted by letter dated , and inquired as to
whether had reached agreement with to acquire 's shares in the Company and
on what terms. Such information was extremely relevant and would have significant impact on
whether was willing to sell his shares and on what terms he would be willing to do so.
Seal responded to 's inquiry by letter dated , addressed to 's
counsel and stated:
As I said in two previous letters, any deal with [ ] is contingent upon my reaching
agreement with [ ]. [ ] and I have not signed any written document nor reached a firm
deal, we are waiting on [ ].... It is my opinion that the price and terms for my buying
[ 's] interest are of no concern to you or [ ].
Further, the letter provides that "[by carrying the majority of the paper, [ ] insists on being
in control and totally cognizant of all happenings with the business."
38. During the review of the Company's financial records to determine current financial
information. The accountant retained by discovered numerous questionable accounting
entries, including the payment of excessive and unwarranted bonuses to Seal and two other
employees. One bonus to was approximately $ , only $ less than 's
scare of the Company's profits for all of . While the Company had paid bonuses to some
employees, other than and , in the past, never had the bonuses been so large.
39. After reviewing the Company's financial records, it was determined that the Company had
approximately $ in cash, without regard to any other assets of the Company, and virtually
no debt. As a result, the purchase price offered by Seal, in the amount of $ , was clearly
far less than the value of 's share of the Company. Therefore, the negotiations with Seal
again failed.
40. By letter dated , , notified that he had been contacted by a
party interested in purchasing 's stock in the Company. Further, notified that
he was offering his shares to at "book value" pursuant to the Stockholders Agreement
executed by and on , and that had 180 days from
, , or , , in which to exercise his option of buying 's stock.
Upon information and belief, avers that the individual alluded to by in his letter of
, is Seal.
41. Paragraph 4 of the Stockholders' Agreement provides that:
The Stockholders agree not to transfer, sell, assign or otherwise dispose of his shares
unless and until he shall have first offered to sell the shares at book value, as previously
explained, to the other Shareholders or to the Corporation. Such offer shall be made in writing
and shall remain open for one hundred eighty (180) days, but if not accepted, then the
Stockholder shall have the right to sell his shares to any interested person or he may exercise his
right to purchase the shares of the other Shareholder, on the same conditions, in the event of a
deadlock between the Stockholders.
A copy of said , Stockholders' Agreement is attached hereto as Exhibit D 42.
On , , counsel for wrote and asked to state what he
believed "book value" for 's stock to be. Moreover, was advised that it was 's
interpretation of the Stockholder's Agreement that the 180 day option period could not begin to
run until had been advised of "book value".
43. responded by his own letter dated , . In this letter, agreed that
it is necessary that a determination as to "book value" be made before could make an
informed decision but reiterated his position that the 180 day notice began to run on the date
received 's letter of , . Moreover, rejected the deadline for
determining "book value" as set by 's counsel and stated that he intended to determine
book value by using the financial statements prepared by the Company's accountant and that the
Company accountant would commence preparing this financial statement effective ,
.
44. In his , letter, also stated that he intended to proceed expeditiously
as possible to select an appraiser pursuant to Paragraph Three of the Stockholder's Agreement
and requested that do likewise. By letter dated , , notified
's counsel that he had selected as his appraiser.
45. By letter dated , , 's counsel notified
's counsel that had selected as his appraiser. In that same letter, counsel for
reasserted 's position that the 180 day option period does not begin until "book
value" is determined. maintaining that it is unreasonable to commence the option period
in when will not have the benefit of knowing "book value" until late or
early , especially when has "control" of the Company and can direct the Company's
accountant.
46. By letter dated , , counsel for contacted counsel for inquiring
about the determination of "book value" and informing counsel that was prepared
to exchange reports from the appraisers. By letter dated , 20 , counsel for
provide the report of 's appraiser but provided no information regarding the
determination of "book value". By letter dated , , counsel for again
renewed his request that 's Determination of "book value" be provided.
47. 's counsel responded by letter dated , . In said letter, counsel for
stated the following:
Today, and I met with , the CPA for Construction Company,
Inc., to discuss the actions he was taking incident to determining the book value of the
outstanding shares of the corporation. advised us that because the company's fiscal year
ends , , that in his opinion, it would be impractical and inefficient to calculate
book value at this time and then have to repeat the year - end calculations at the end of the fiscal
year. In order to make an accurate and realistic evaluation of book value of the company, it will
be necessary that the calculation include year - end adjustments for bonuses and taxes.
In view of the fact that there are still unresolved issues with respect to the
appraisal of the equipment and machinery, rolling stock and other assets of the company, it
doesn't appear that either or 's interest would in any [sic] be prejudiced by waiting
until the end of the fiscal year to calculate the book value of their respective shares of stock.
This assertion by that no prejudice will be incurred by
by waiting until , to calculate "book value" ignores 's position
that the 180 day option period expires on , . Further, the statements by
's counsel clearly indicate that intends to manipulate "book value" by the payment
of excessive, unreasonable and unwarranted bonuses.
48. The financial practices and management decisions of Defendants including but not limited to
the matters set forth herein above, have significantly and adversely affected 's investment
in the Company. Defendants have totally ignored and have used and manipulated the
Company as if it were a sole proprietorship to 's detriment.
49. is reasonably further informed and believes that
Defendants have recently embarked upon a course of action to dilute the value of the Company
by paying excessive bonuses and other compensation, without a legitimate business purpose, all
to the detriment of .
50. The Defendants are in control of the Company and have acted, are acting and, upon
information and belief, will act in a manner that is illegal, oppressive and/or fraudulent. Further,
avers that the corporate assets are 'being misapplied and/or wasted.
51. has not made demand on the Company's board of directors for any particular action
relative to his claims. However, should be excused from making such a demand because
the Defendants are in control of the Company’s board of directors, have taken intentional and
deliberate actions to harm and are the same individuals who be asked to correct such
actions. Therefore, such demand would be futile. Further, the delay associated with such demand
would result in extreme prejudice to .
COUNT I
DECLARATORY JUDGMENT ON
OPTION PERIOD AND BOOK VALUE
52. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
53. A dispute exists between and concerning the date on which the 180 day option
period provided for in the , Stockholders' Agreement begins to run. Also, the
Stockholders' Agreement is unclear as to whether book value is calculated as of the date the offer
to sell is made, the date the offer is accepted or the date the sale is closed and what adjustments
must be made in determining book value. Further, said
Stockholders' Agreement is silent as to when the transaction must be completed and payment of
the purchase price be made. Said matters are significant and it is likely that will be
adversely prejudiced if this Court does not determine these matters.
54. is entitled to a declaratory judgment that sets forth:
(1) the date on which the 180 day option period begins to run; (2) the date on which book value
is calculated; (3) what adjustments must be made in determining book value; and (4) the time by
which the transaction must be completed and payment of the purchase price be made.
COUNT II
BREACh OF CONTRACT
55. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
56. The actions of is refusing to provide with the "book value" of 's stock in
the Company is a breach of the Stockholders' Agreement between and .
57. In addition, , through his position a controlling shareholder. has breached other
agreements between he and by (i) using the Company's equipment or other assets for his
personal use, (ii) engaging in nepotism, and (iii) paying personal expenses from the Company's
monies.
58. As a result of the breaches of contract by , is entitled to specific performance of
the Stockholders' Agreement by requiring to provide "book value" for his shares
and money damages, in an amount to be established at trial, for all losses suffered due to such
breaches by .
COUNT III
INJUNCTIVE REUEF
59. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
60. will suffer immediate irreparable and substantial harm and injury if he is required to
either accept or reject 's offer to sell his stock at "book value" on or before ,
, without "book value" having be determined.
61. Also, is reasonably informed and believes that Defendants have or intend to (i)
distribute the profits of the Company to to the exclusion of , (ii) give excessive and
unwarranted bonuses to and other employees, (iii) take other acts to dilute the value of the
Company and (iv) act in a manner that is illegal, oppressive and or fraudulent, all without any
legitimate business purpose and to the detriment of . Without the assistance of this Court.
will suffer immediate irreparable and substantial harm and injury as a result of the
deliberate and willful actions of Defendants.
62. Accordingly, is entitled to a temporary restraining order and a preliminary injunction,
pursuant to Miss. Code Ann. 79 - 4 - 14.31 and the equity powers of this Court, prohibiting
Defendants from (i) selling 's stock in the Company, (ii) distributing any profits, (ii)
declaring or paying dividends, (iii) declaring or paying any bonuses, (iv) using any of the
Company's funds to pay Defendants attorney fees or other costs associated with defending this
suit, (v) taking any actions that would adversely affect book value of the Company, (vi)taking
any action or inaction detrimental to the Company or 's interest therein and ordering that
(i) the running of the 180 day option period be tolled and (ii) Defendants preserve and protect
the assets of the Company pending the full adjudication of this cause.
COUNT IV
BREACH OF JUDICIARY DUTY
63. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
64. Defendants, as 6fficers and directors of the company, and
as controlling stockholder, stood to benefit from their actions and as such are under a duty
to be intrinsically fair to the corporation and , the minority stockholder. Thus, the
individual Defendants, as officers and directors and , as the controlling stockholder in a
close corporation, were under a duty to bear toward the Company and , the minority
stockholder, the same relationship of trust and confidence which prevails in partnerships.
65. Defendants, Hugh T. and Alice , as directors and officers of the Company,
stood in a fiduciary relationship to the Company and , the minority stockholder. The duties
of the directors and officers include exercising the utmost good faith and loyalty in discharge of
the corporate office.
66. This duty extends first to the corporation, i.e., . This duty also extends to the
stockholders where, as in the case of the Defendants herein, the Defendants used their position
improperly to obtain a benefit for , the majority shareholder, to the exclusion of , the
other shareholder similarly situated.
67. Defendants, and intentionally and willfully breached their fiduciary duty as
officers and directors under the good faith standard required by Mississippi law. The majority
stockholder and those directors occupying the majority of the votes on the Board of Directors
held the same duty to , the minority stockholder, as the managing partner of a partnership
owes to the other partners in the management of partnership affairs.
68. Defendants, and , have breached their fiduciary duty to by distributing
the profits of the Company to the exclusion of , dissipating the assets of the Company by
paying outrageous and unconscionable bonuses, manipulating the profits and distributions of the
Company for their own benefit without regard to the impact on , paying personal expenses
from Company funds, interfering with 's efforts to sell his stock in the Company and other
abusive and oppressive conduct, all without any legitimate business purpose and to the
detriment of
69. As a result of the various breaches of the fiduciary duty by
Defendants, has suffered substantial financial losses which cannot be determined until a
complete accounting has been made and this case has been tried. The financial losses are in the
form of lost income and the decreased value of the common stock in the Company owned by
COUNT V
BREACH OF COVENANT OF GOOD FAIITI AND FAIR DEAUNG
70. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
71. Defendants, as officers and directors of the company, and
, as controlling stockholder, stood to benefit from their actions and as such are under a
duty to be intrinsically fair to the corporation and , the minority stockholder. Thus, the
individual Defendants, as officers and directors and , as the controlling stockholder in a
close corporation, were required to comply with the implied covenant of good faith and fair
dealing in their conduct towards the Company and , the minority stockholder.
72. This duty of good faith and fair dealing extends first to the corporation, i.e., , Inc but
also extends to the stockholders where, as in the ease of the Defendants herein, the Defendants
used their position improperly to obtain a benefit for , the majority shareholder, to the
exclusion of , the other shareholder similarly situated.
73. Also, is obligated to by the cov6nant of good faith and fair dealing, which is
implied in all contracts, in his dealing with pursuant to or in connection with the
Stockholders' Agreement between and dated , .
74. Defendants, and , in their capacity as officers and directors of the Company,
have intentionally and willfully breached their duty of good faith and fair dealing. Furthermore,
Defendant, , in his individual capacity, has intentionally and willfully breached his duty of
good faith and fair dealing under the Stockholders' Agreement with .
75. The breaches of the covenant of good faithful and fair dealing by Defendants, Hugh T.
and Alice , include, but are not limited to, (i) distributing the profits of the
Company to the exclusion of , (ii) dissipating the assets of the Company by paying
outrageous and unconscionable bonuses, (iii) manipulating the profits and distributions of the
Company for their own benefit. without regard to the impact on , (iv) paying personal
expenses from Company funds, (v) interfering with 's efforts to sell his stock in the
Company and (vi) other abusive and oppressive conduct, all without any legitimate business
purpose and to the detriment of
76. As a result of the various breaches of the covenant of good faith and fair dealing by
Defendants, Hugh T. and Alice , has suffered substantial financial losses
which cannot be determined until a complete accounting has been made and this case has been
tried. The financial losses arc in the form of lost income and the decreased value of the common
stock in the Company owned by .
COUNT VI
CONVERSION
77. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
78. The right to share in and the payment of the profits and other benefits of the Company
constitutes personal property. As minority shareholder, has a right to his pro rata share of
that property
79. Defendants have knowingly endeavored to obtain or obtained or used 's pro rata share
of this property with the intent to deprive of the right to said property and the benefits
therefrom.
80. Defendants have knowingly endeavored to obtain or obtained or used 's pro rata share
of this property with the intent to appropriate the property for their own use.
81. Defendants, with intent, have committed conversion pursuant to Mississippi law and
are liable to for all losses incurred p1w interest thereon.
COUNT XI
82. allegations contained in paragraphs 1 through 51, inclusive, of tile Complaint are
hereby adopted and realleged as if folly restated herein.
83. of Defendants intentional and malicious acts described above in attempting to squeeze
out by denying him foil participation in the profits of tile Company, by terminating
benefits, by denying him his right to participate in the management of the Company by
demonstrating willful and wanton insistence to 's rights, has differed severe
emotional distress and is entitled to damages in the amount of $ .
PUNITIVES DAMAGES
84. Allegations contained in paragraphs 1 through 51, inclusive, of tile Complaint are hereby
adopted and realleged as if folly restated herein.
85. Acts of Defends set forth above were intentional, willful and taint with reless disregard
for tile interest of to the extent that such conduct constitutes bad faith and an intentional
tort within the meaning of Mississippi law for which Plaintiff is entitled to punitive damages in
the amount of $ .
COUNT IX
DETERMINATION OF OWNERSHIP’S INTEREST
86. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
87. After the completion of a full accounting of the financial affairs of the company, this court
should make a determination as to the book value of the company as of the date of 's
investment of $ therein, the amount of money or other property or assets paid by as
a capital investment in the Company, and thereafter award a percentage ownership in the
Company of not less than one - third of the outstanding stock.
COUNT X
CONFUCT OF INTEREST
88. The allegations c6ntained in paragraphs 1 through 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
89. The actions of Defendants set forth above constitute a conflict of interest within the meaning
of 79 - 4 - 8.60, et seq., Mississippi Code of 1972 as amended. As a result, Plaintiff is entitled to an
award of damages pursuant to 79 - 4 - 8.61 in an amount to be determined at trial.
COUNT XI
ACCOUNTING
90. The allegations contained in paragraphs 1 though 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
91. As a result of the actions of Defendants, has been unable to ascertain the true financial
condition of the Company as well as obtain answers for numerous expenditures by Defendants
for no apparent business reason.
92. is entitled to a full and complete accounting of the
Company's operations through the present date. In particular, is entitled to a full and
complete accounting of all salaries, bonuses and fees paid to stockholders, directors, officers,
employees and their families and the basis or reason for which the bonuses and/or expenses were
paid from the funds of the Company.
93. After a complete accounting of the financial records of the
Company have been prepared and submitted to , is entitled to a judgment against
Defendants in an amount equal to any monies that were improperly paid to Defendants or
otherwise improperly handled and dissipated by Defendants.
COUNT XII
JUDICIAL DISSOLUTION
94. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
95. Defendants are in control of the Company and have acted, are acting and/or will act in a
manner that is illegal, oppressive and or fraudulent. Moreover, reasonably believes that
Defendants have caused the Company's assets to be misapplied or wasted. Without the assistance
of this Court, will suffer immediate irreparable and substantial harm and injury as a result
of the deliberate and willful actions of Defendants.
96. Pursuant to Miss. Code Ann. 79 - 4 - 14.30, et se~., is entitled to an order judicially
dissolving the Company and directing the winding up and liquidation of the Company's business
and affairs.
COUNT XIII
APPOINTMENT OF RECEIVER
97. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are hereby
adopted and realleged as if fully restated herein.
98. is reasonably informed and believes that Defendants have or intend to (i)distribute the
profits of the Company to to the exclusion of , (ii) give excessive and unwarranted
bonuses to and other employees, (iii) take other acts to dilute the value of the Company
and (iv) act in a manner that is illegal, oppressive and or fraudulent, all without any legitimate
business purpose and to the detriment . Without the assistance of this Court, will
suffer immediate irreparable and substantial harm and injury as a result of the deliberate and
willful actions of Defendants.
99. Accordingly, is entitled to the appointment of a receiver or custodian pendente lite,
pursuant to Miss. Code Ann. 79 - 4 - 14.31, with all powers and duties as this Court may direct in
order to preserve the corporate assets and carry on the Company's business until this matter can
be fully adjudicated.
COUNT XIV
ACCOUNTING FOR RENTS
100. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are
hereby adopted and realleged as if fully restated herein.
101. is entitled to a full and complete accounting of all rents paid or due from the
Company for the Shop Property and the Office Property.
102. After a complete accounting of the financial records of the
Company have been prepared and submitted to , is entitled to a judgment against
Defendants in an amount equal to any monies that were improperly paid to Defendants or
otherwise improperly handled or dissipated by Defendants.
COUNT XV
PARTITION OF LAND BY LIQUIDATION
103. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are
hereby adopted and realleged as if fully restated herein.
104. It is not feasible to equitably partition in kind the real property owned by the parties.
Therefore, Plaintiffs are entitled to have said real property sold and the proceeds therefrom
divided proportionately.
COUNT XVI
ATTORNEY FEES
105. The allegations contained in paragraphs 1 through 51, inclusive, of the Complaint are
hereby adopted and realleged as if fully restated herein.
106. As a result of the outrageous, unreasonable, improper, unlawful and negligent actions of
Defendants, and , Plaintiffs are entitled to a judgment requiring Defendants to
reimburse them in full for their expenses incurred in pursuing their rights herein, including
reasonable attorney's fees. Costs of litigation and costs of court, including all amounts provided
for by Miss. Code Ann. 79 - 4 - 7.46.
WHEREFORE, PREMISES CONSIDERED, Plaintiffs, and , pray for the
following relief:
A. A declaratory judgment that sets forth: (1) the date on which the 180 day option
period begins to run; (2) the date on which book value is calculated; (3) what adjustments must
be made in determining book value; and (4) the time by which the transaction must be
completed and payment of the purchase price be made;
B. A judgment for damages, in an amount yet to be determined, suffered as a result of
's breach of contract and ordering specific performance of the provision of the
Shareholders' Agreement between and regarding book value;
C. A temporary restraining order and preliminary injunction prohibiting Defendants,
and , from (i) selling 's stock in the Company, (ii) distributing any profits, (ii)
declaring or paying dividends, (iii) declaring or paying any bonuses, (iv) using any of the
Company's funds to pay Defendants attorney fees or other costs associated with defending this
suit, (v) taking any actions that' would adversely affect hook value of the Company, (vi) taking
any action or inaction detrimental to the Company or 's interest therein and ordering that
(i) the using of the 180 day option period be tolled and (ii)Defendants preserve and protect the
assets of the Company pending the full acquisition of this cause;
D. A judgment for damages, in an amount yet to be ascertained, suffered as a result of
Defendants, and , breaching their fiduciary duty to ;
E. A judgment for damages, in an amount yet to be ascertained, suffered as a result of
Defendants, and , breaching the covenant of good faith and fair dealing owed to
;
F. A judgment for the value of the property lost as a result of the conversion by
Defendants, and ;
G. A judgment in the amount of $ has a result of Defendants intentional
infliction of emotional distress;
H. Punitive damages in the amount of $ ;
I. A determination that owns not less than one - third of the stock of the
Company;
J. An award of damages pursuant to 79 - 4 - 8.61 in an amount to be determined at
trial;
K. A full and complete accounting of the Company's operations up to and including
the present date, including all salaries, bonuses and fees paid to stockholders, directors, officers
and their families and the basis or reason for which the bonuses and/or expenses were paid from
the funds of the Company;
After a complete accounting of the financial records of the
Company have been prepared and submitted, , individually and for and on behalf of the
Company, is entitled to a judgment against Defendants, and , in an amount equal to
any monies that were improperly paid to Defendant or otherwise improperly handled and
dissipated by Defendants;
M. An order judicially dissolving the Company and directing the winding up and
liquidation of the Company's business and affairs:
N. After a complete accounting of the rents paid for the Shop Property and Office
Property have been prepared and submitted, Plaintiffs are entitled to a judgment against
Defendants, and , in an amount equal to any rents that were improperly paid to
Defendants or otherwise improperly handled and dissipated Defendants;
0. A judgment ordering that the real property owned jointly by the parties be sold
and the proceeds therefrom be divided proportionately;
P. A judgment against Defendants, and , in an amount necessary to
reimburse for financial losses in the form of lost revenues and the value of the common
stock in the Company, which amounts will be determined after a complete and full accounting
and after a trial in this cause;
Q. A judgment reimbursing Plaintiffs in full for expenses incurred in pursuing his
rights herein, including reasonable attorney's fees, costs of litigation and costs of court, all in
accordance with Miss. Code Ann. 79 - 4 - 7.46;
R. Prejudgment and post judgment interest; and
S. Plaintiffs prays for such further and more general relief as the court deems
appropriate in the premises.
Property have been prepared and submitted, Plaintiffs are entitled to a judgment against
Defendants, and , in an amount equal to any rents that were improperly paid to
Defendants or otherwise improperly handled and dissipated by Defendants;
Prejudgment and post judgment interest; and
Plaintiffs pray for such further and more general relief as the court deems appropriate in
the premises.
Respectfully submitted,
_______________________________________
Attorney for
Of Counsel:
Telephone:
MSB #
Attorney for
