Scott Loses Again and Again

 


On January 29, 2025, the Court rejected Thomas Scott's Motion to Dismiss and fully granted his former partners' Motion to Amend, dismissing several of Thomas's arguments. These included claims that the legal actions against Brand Journalists were unfounded, the LLCs lacked standing, and that a claim for procurement of breach of contract was invalid. In short, the former partners won on all issues before the Court.

As anticipated, Thomas promptly filed an appeal. He has done so before and lost, and we believe he continues appealing in the hopes that the other side will eventually tire of the process and drop the case. NEWS FLASH-That's not going to happen ever!  

Importantly, the Court noted that, based on the evidence, a jury could find Thomas liable for intentionally or recklessly interfering with the operations of HBFG and the Franchising Entities. This includes encouraging franchisees to breach their contracts and file lawsuits, blocking access to former franchise owners, and preventing access to HBFG’s call rail system.

Thomas Scott while part of the Home based franchise group

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IN THE CHANCERY COURT FOR THE STATE OF TENNESSEE TWENTIETH JUDICIAL DISTRICT, DAVIDSON COUNTY
Case No. 22-1256-BC


LEIBY GOLDBERGER, CURT SWANSON, and
HOME BASED FRANCHISE GROUP, LLC, Plaintiffs,

v. 

THOMAS J. SCOTT, ANGELA SCOTT, SOPHIA SCOTT,
and BRAND JOURNALISTS, LLC, Defendants. 

ORDER DENYING PETITION TO DISMISS PURSUANT TO THE TPPA

This matter came before the Court on December 18, 2024, upon Defendant Thomas Scott’s Petition to Dismiss pursuant to the Tennessee Public Participation Act (“Petition”), set forth at Tenn. Code Ann. § 20-17-101 et seq. (the “TPPA”) and Plaintiffs’ Motion to Amend Verified Complaint. (1)

(1) Plaintiffs filed a notice striking their Motion for Preliminary Injunctive Relief prior to the hearing. Plaintiff’s Motion to Amend Verified Complaint is addressed in a separate order.

On December 14, 2022, the Court entered an order denying the Petition, and Defendant Scott filed an appeal. On July 9, 2024, the Court of Appeals rendered its decision to reverse and remand this matter for further proceedings. The appellate court held as follows:

[W]e hold that Mr. Scott established a prima facie case by showing that [sic] Plaintiffs’ filed suit                against him in response to his exercising his right of free speech in relation to a matter of public            concern.

Because the trial court denied Mr. Scott’s petition on the basis that Mr. Scott had not met the first        step of the TPPA burden-shifting framework, we remand this case to the trial court for further      proceedings, including consideration of whether Plaintiffs met their prima facia burden and, if so,         whether Mr. Scott nonetheless established a valid defense. See Tenn. Code Ann. § 20-17-105.


Goldberger v. Scott, No. M2022-01772-COA-R3-CV, 2024 WL 3339314, at *7 (Tenn. Ct. App. July 9, 2024).

Plaintiffs now contend that the law of the case has changed since the appellate court’s opinion due to the decision from the Tennessee Supreme Court in Flade v. City of Shelbyville, 699 S.W.3d 272 (Tenn. 2024), which allowed a plaintiff to take a voluntary nonsuit after the filing of a TPPA petition and held that “a TPPA petition does not constitute a counterclaim for purposes of Rule 41.01(1).” Flade, 699 S.W.3d at 301. Plaintiffs argue the Flade decision allows them to amend the complaint, and, accordingly, the Court should consider and allow Plaintiffs’ Motion to Amend prior to making any determinations under the TPPA. In response, Defendants contend that the appellate court’s mandate requires this Court to follow the analysis set forth in the TPPA and that the decision in Flade does not affect that analysis. Specifically, that the Court must determine whether the Plaintiffs established a prima facie case for each essential element of the claims remaining in this suit as of the Court’s Order entered on December 14, 2022 (2), and, if necessary, whether Defendant Scott established a valid defense to the remaining claims.

(2) The Court is not considering any additional evidence filed after that date. Thus, the record is limited to the record from December 14, 2022, the date of the original TPPA hearing.

Procedural History

On November 18, 2022, Plaintiffs voluntarily dismissed Counts 3, 5, 6, 7, and 8 with prejudice, and an order thereon was entered on November 23, 2022. (3)

(3) Those claims are as follows:

• Count 3 – Aiding and Abetting Breach of Fiduciary Duty of Loyalty (Against Brand Journalists, Angie Scott and Sophia Scott);
• Count 5 – Aiding and Abetting Breach of Duty of Care (Against Brand Journalists, Angie Scott and Sophia Scott);
• Count 6 – Business Disparagement (Against Defendants);
• Count 7 – Tortious Interference with Business Relationships (Against Defendants); and
• Count 8 – Inducement of Breach of Contract under Tenn. Code Ann. § 47-50-109 (Against Brand Journalists). Further, Count 9 for Judicial Expulsion under Tenn. Code Ann. § 48-249-503(a)(6) is moot, as Scott withdrew from HBFG in November 2022. Note, the Court is not dismissing this claim pursuant to the TPPA, but simply advising that it is considered moot.

The dismissal of these claims also resulted in the dismissal of Defendants Angie Scott, Sophia Scott, and Brand Journalists, LLC. The remaining claims for breach of contract, breach of the duty of loyalty, and breach of the duty of care, are against Thomas Scott, individually.

On December 7, 2022, the Court heard Scott’s Petition under the TPPA for dismissal of Plaintiffs’ Verified Complaint. The Court denied the Petition in an order entered on December 14, 2022, finding that the TPPA did not apply to the dispute and claims brought. Defendants appealed on December 15, 2022. Thereafter, on December 22, 2022, Plaintiffs filed their Motion for Leave to Amend the Verified Complaint. That motion was struck, and Plaintiffs filed a renewed Motion to Amend the Verified Complaint along with a Motion for Preliminary Injunctive Relief on January 6, 2023. The Court held the matter in abeyance until the disposition of the appeal.

On July 9, 2024, the Court of Appeals rendered its decision. The Court set the pending Motion to Amend as well as further proceedings on Defendant’s petition to dismiss pursuant to the TPPA on December 18, 2024. The Court has reviewed the motions, supplemental briefing, oral argument and the applicable law, and is ready to rule.

Analysis

Plaintiffs contend that the Tennessee Supreme Court overruled existing case law in between Defendant’s appeal and remand to this Court. Plaintiffs ask the Court to grant their Motion to Amend and find the TPPA petition is moot given the new claims, without prejudice to bring a new petition to dismiss pursuant to the TPPA under the amended complaint. During the hearing, Plaintiffs brought an oral Rule 41.01(1) motion seeking to voluntarily dismiss the case without prejudice if Plaintiffs’ Motion to Amend is not granted before a determination on the TPPA petition.

In between Defendant’s appeal in this case and the remand to this Court, the Tennessee Supreme Court in Flade discussed the issue of whether filed, but not heard, TPPA petitions should have been adjudicated by the trial court after a voluntary nonsuit by the plaintiff. Flade, 699 S.W.3d at 276-77. The Tennessee Supreme Court heavily analyzed the “intersection of the rule governing the voluntary dismissal of a civil action, Tenn. R. Civ. P. 41.01, and the statutory scheme of the [TPPA].” Id. at 276. In Flade, the defendant argued, inter alia, that the plaintiff’s right to voluntary dismissal was “subject to the provisions of” the TPPA statute as well as the implied exception for vested rights, but the Flade court rejected both arguments. The Court emphasized that the TPPA petitions had not been heard at the time of the nonsuit, and stated “we do not believe that the availability of a voluntary nonsuit at any time prior to the final submission of a TPPA petition to the trial court, see Himmelfarb v. Allain, 380 S.W.3d 35, 40 (Tenn. 2012) (citing Tenn. R. Civ. P. 41.01), deprives a TPPA petitioner of due process.” Id. at 296. Moreover, the Court noted that “the TPPA petitions had not been argued or submitted to the trial court for decision” and declined to address whether the result “would be the same were those circumstances different.” Id. at 296. The Court further held that a TPPA petition did not constitute a counterclaim for purposes of Rule 41.01(1) as it is considered a “substantive remedy” and “akin to a defense” rather than a private right of action. Id. at 299.

Here, Plaintiffs filed a motion to amend two days after the Court’s order regarding the TPPA petitions and an appeal initiated. (4) Further, Plaintiffs Rule 41.01 motion was not made until after the disposition of the appeal and the hearing on the pending motions. The Court declines to grant Plaintiff’s Motion to Amend prior to making a determination on the TPPA petition, because Flade was limited to a Rule 41.01 motion, and Plaintiffs’ Motion to Amend was made after a TPPA hearing had been held and a decision made on the Petition.

(4) Plaintiffs contend that after the Verified Complaint was filed, Plaintiffs discovered additional facts that warrant amendment, as described in the proposed Verified First Amended Complaint, including the formation of companies that directly compete with Home Based Franchise Group, LLC (“HBFG”) and the franchisors, the aiding of franchisees to breach their franchise agreements with HBFG, and trademark infringement. The proposed Amended Verified Complaint includes the franchising entities as plaintiffs, added new defendants, including various LLCs that were purportedly created by Scott, and asserted several new causes of action.

TPPA Petition to Dismiss

The appellate court held that “Mr. Scott established a prima facie case by showing that Plaintiffs’ filed suit against him in response to his exercising his right of free speech in relation to a matter of public concern,” and remanded the matter to the trial court to consider “whether Plaintiffs met their prima facie burden and, if so, whether Mr. Scott nonetheless established a valid defense.” Goldberger v. Scott, No. M2022-01772-COA-R3-CV, 2024 WL 3339314, at *7 (Tenn. Ct. App. July 9, 2024) (citing Tenn. Code Ann. § 20-17-105). The Court will address whether Plaintiffs have met their prima facie burden for each essential element of the claim in the legal action. See Tenn. Code Ann. § 20-17-105(b). The remaining claims brought by Plaintiffs include breach of contract, breach of the fiduciary duty of loyalty, and breach of the duty of care.

To establish a prima facie case under the TPPA, our Supreme Court has advised:

                           ... a party must present enough evidence to allow the jury to rule in his favor on that issue. This evidence may include “sworn affidavits stating admissible evidence” and “other admissible evidence.” Tenn. Code Ann. § 20-17-105(d). As is the case when a court rules on a motion for summary judgment or motion for directed verdict, the court should view the evidence in the light most favorable to the party seeking to establish the prima facie case and disregard countervailing evidence. See, e.g., Griffis v. Davidson Cnty. Metro. Gov't, 164 S.W.3d 267, 284 (Tenn. 2005) (summary judgment); Conatser v. Clarksville Coca-Cola Bottling Co., 920 S.W.2d 646, 647 (Tenn. 1995) (directed verdict). Charles v. McQueen, 693 S.W.3d 262, 281 (Tenn. 2024).

Claims Asserted

It is undisputed that Home Based Franchise Group, LLC (“HBFG”) was established in Tennessee on January 27, 2022, as a member-managed LLC, and that Goldberger, Swanson, and Scott each hold a 1/3 membership interest. Likewise, that Scott, Goldberger, and Swanson each hold a 1/3 membership interest in four franchisors that were created between October 2020 and June 2021: Clozetivity Franchising, LLC; Dryer Vent Squad Franchising, LLC; Frost Shades Franchising, LLC; and Magnetainment Franchising, LLC (collectively, the “Franchise Entities”). Further, that HBFG is not a member of any of the Franchise Entities. The Franchise Entities are franchisors that develop and sell franchises under their respective brands, and franchisees of the Franchise Entities contract directly with those entities.

Originally, Goldberger was HBFG’s President and CEO, Swanson was HBFG’s Treasurer and Chief Experience Officer, and Scott was Secretary and COO. Plaintiffs allege that, for a period of time, HBFG operated as a partnership between Goldberger and Scott and in 2021, Swanson was added and the business was converted to a limited liability company.

In the Verified Complaint, Plaintiffs allege that Scott breached the operating agreement of HBFG, titled “Stockholders Agreement,” at Sections 2.4 Standard of Care, 2.13 Dispute Resolution Procedure, and 10.12 Waiver of Jury Trial, as well as breached his duties of care and loyalty, by “contacting franchisee owners to disparage Plaintiffs, interfering with Franchise Entities’ operations, terminating access to Plaintiffs’ property and systems, and offering assistance to Plaintiffs’ competitors . . . .” (Ver. Compl. ¶ 38, 42, 49). Further, that as a member and co- founder, Scott owed duties of care and loyalty to Plaintiffs, “including the duty to avoid engaging in activities undermining or inconsistent with Plaintiffs’ business interests,” “intentionally disparaging Plaintiffs,” and “to avoid acting for his own interests (or the interests of a competitor) at Plaintiffs’ expense . . . .” (Id. at ¶ 41, 48).

Plaintiffs specifically allege that Scott told others that Swanson and Goldberger do not know how to run a business; interfered with the Frost Shades Intranet to the point that it is non- operational; cut off HBFG’s and the Franchise Entities’ access to the resources and websites they purchased from Scott’s company, Brand Journalists, LLC; cut off access by Swanson and Goldberger to HBFG’s Call Rail system, a call management system, as well as using it without the approval of Plaintiffs; publicly disparaging Plaintiffs by posting the following link on Brand Journalists’ website (https://brandjournalists.com/leo-goldberger-curt-swanson-sued-for-franchise-fraud/); and contacting many franchisees to distribute false and defamatory information about HBFG, Swanson and Goldberger, encouraging them to cancel their franchise agreements, and offered referrals to legal counsel for such purpose. (Id. at ¶ 33).

The Court will address the claims separately.

Breach of Contract

A party alleging breach of contract must prove “the existence of a valid and enforceable contract, a deficiency in the performance amounting to a breach, and damages caused by the breach.” Fed. Ins. Co. v. Winters, 354 S.W.3d 287, 291 (Tenn. 2011) (citing ARC LifeMed, Inc. v. AMC–Tenn., Inc., 183 S.W.3d 1, 26 (Tenn. Ct. App. 2005)).

The Stockholders Agreement was executed on May 17, 2022 and provides in relevant part:

    4.1 Contributions. It is hereby agreed and acknowledged that Leo Goldberger, Thomas Scott and Curt Swanson have each contributed to the Company on or prior to the date hereof for the preservation of assets of the Home Based Franchise Group, Dryer Vent Squad, Frost Shades, Magnetainment, Clozetivity, The Turf Boys, Move In Klean, and Comfort IV AND all the future business brands that will be under the Home Based Franchise Group umbrella.

The Stockholders Agreement listed Dryer Vent Squad, Frost Shades, Magnetainment, Clozetivity, Move In Klean, The Turf Boys, and Comfort IV beneath Home Based Franchise Group on the signature page of the document. Further, it provided that “ . . . each Stockholder/Officer of the Company shall have control over Franchise, Operating, Development and any/all Governing procedures to do with any/all aspects of decisions to do with running the Company.” (Stockholders Agreement, § 2.5(c)). “Franchise Procedures” is defined as “the operation, planning and management of the franchise business of the Company, including, developing franchising opportunities, managing existing franchises, assisting franchisees of the Company or its Affiliates to set up their franchises and the corresponding ongoing assistance and training with their operations.” (Id. at § 1.1). “Affiliate” is defined as “any Person . . . who, directly or indirectly . . . controls, is controlled by, or is under common control with, such Person . . . .” (Id.).

As to the standard of care, the Stockholders Agreement provides:

2.4 Standard of Care

        (a) Each Director shall discharge such Director’s duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner such Director reasonably believes to be in the Company’s best interest.

. . .

        (b) No Director shall be liable to the Company or any Stockholder for monetary damages for breach of any duty as a Director (including any breach of the standard of care specified in this Agreement or any breach of any provisions of this Agreement), except for liability for (i) the receipt of a financial benefit to which the Director is not entitled, or (ii) a knowing violation of law.

In the Affidavit of Curt Swanson, he testified that HBFG is the parent and umbrella company for the Franchise Entities. (10.11.22 Aff. Swanson, ¶ 4). Further, that the Franchise Entities are all owned and controlled by Goldberger, Scott, and Swanson. (Id. at ¶ 5). He further testified that HBFG “provides a centralized base for franchises under the umbrella, with online service for payroll, email communications, and other services the franchise locations use [that] . . . allows for further management of the franchises by a single entity, HBFG,” and that “HBFG is responsible for and controls all operations of the [Franchise Entities] under one umbrella, and by the membership of owners.” (Id. at ¶¶ 6 - 8). Further, both he and Goldberger testified that, although HBFG was not legally formed until January 2022, the Franchise Entities operated under the name of Home Based Franchise Group since October 2020.

Plaintiffs allege that Scott, rather than assisting the Franchise Entities and acting in the LLC’s best interest as required by the Stockholders Agreement, interrupted the operations of the Franchise Entities and encouraged franchisees to terminate their relationships with the Franchise Entities.(5) Further, that these actions caused damage to Plaintiffs by affecting HBFG’s ability to assist the Franchise Entities and disrupt HBFG’s operations. Plaintiffs point to several affidavits demonstrating that Scott or his agents contacted franchisees and encouraged them to terminate their franchise agreements and engage an attorney:

(5) Plaintiffs also allege that Scott stole assets and entered into direct competition with the Franchise Entities, but did not produce admissible evidence supporting those particular allegations as required by the TPPA. Tenn. Code Ann. § 20-17-105(d).

    • Michelle Taber, owner of Clozetivity of East Valley, AZ testified that Scott’s wife, Angie Scott and the owner of a Clozetivity franchise in Tennessee, contacted her on or about September 14, 2022 and encouraged her to terminate her franchise agreement. (10.10.22 Aff. Michelle Taber, ¶¶ 6 – 9). The declaration of Mrs. Scott confirms that she contacted Ms. Taber regarding her franchise agreements, although she disputes that she told her to terminate her franchise agreements. (10.13.22 Decl. Angie Scott, ¶¶ 6 – 10).

    • Brandon Whitley, the owner of Dryer Vent Squad of Fort Bend County, Texas, testified that Scott’s daughter, the owner of a Dryer Vent Squad franchise in Louisiana, contacted him on September 14, 2022 and encouraged him to terminate his franchise agreement. (10.10.22 Aff. Brandon Whitley, ¶¶ 9 – 10). The declaration of Sophia Scott does not dispute that Mr. Whitley’s affidavit is “generally accurate.” (10.7.22 Decl. Scott, ¶ 14).

    • Michael Burka, co-owner of Dryer Vent Squad of Katy, Texas and Clozetivity of West Houston, Texas, contacted Scott on or about September 15, 2022, and Mr. Burka testified that Scott encouraged him to terminate his franchise agreement. (10.11.22 Aff. Michael Burka, ¶¶ 6, 8).

Goldberger also testified in his affidavit that Scott had rendered the Frost Shades Franchising, LLC intranet non-operational and cut off Goldberger and Swanson’s access to HBFG’s Call Rail system. (9.21.22 Aff, Goldberger, ¶ 40).

The Court “should view the evidence in the light most favorable to the party seeking to establish the prima facie case and disregard countervailing evidence.” Garner v. S. Baptist Convention, No. E2024-00100-COA-R3-CV, 2025 WL 48205, at *13 (Tenn. Ct. App. Jan. 8, 2025) (quoting Charles, 693 S.W.3d at 281). Based on the testimony of Swanson and Goldberger, along with the affidavits and declarations discussed above, and the language of the Stockholders Agreement, the Court finds that a jury could find in favor on Plaintiffs’ breach of contract claim. The Stockholders Agreement implicates that HBFG oversees the management and operations of the Franchise Entities and requires the Directors to act in the best interests of the LLC, the purpose of which is to develop franchising opportunities, manage and assist the operations of the Franchise Entities. There is evidence in the record to suggest that Scott did not comply with the terms of the Stockholders Agreement by encouraging franchise owners to terminate their agreements and hire an attorney. Accordingly, there is sufficient evidence to allow a jury to rule in Plaintiffs’ favor on this issue, and the Court finds that Plaintiffs have established the prima facie elements of breach of contract.

Breaches of Duties of Care and of Loyalty

Plaintiffs assert that, as a stockholder of HBFG, Scott was also bound by Tennessee’s statutory fiduciary duties of loyalty and care. As a co-founder, Secretary and Chief Operating Officer of HBFG, Scott oversaw the day-to-day business operations of HBFG and the Franchise Entities, including support and training, sales and development. (Compl., ¶¶ 21 and 22). Plaintiffs contend that Scott’s actions amount to breaches of his fiduciary duties of care and loyalty. 

Specifically, Swanson testified that on July 28, 2021, without the approval or authority from HBFG, Scott entered into a 126-month lease agreement on behalf of HBFG for property located at 1823 Charlotte Avenue in Nashville, Tennessee, with rental payments starting at $7,000 per month. (10.11.22 Swanson Aff., ¶ 15, Exh. 1). Plaintiffs also rely on the affidavits and declarations discussed above indicating that Scott contacted franchisees and encouraged them to terminate their franchise agreements and hire an attorney. Goldberger testified in his affidavit that Scott had rendered the Frost Shades Franchising, LLC intranet non-operational and cut off Goldberger and Swanson’s access to HBFG’s CallRail system. (9.21.22 Aff, Goldberger, ¶ 40).

The Tennessee LLC Act provides that “[t]he only fiduciary duties a member owes to a member-managed LLC and the LLC’s other members and holders are the duty of loyalty and the duty of care . . . .” Tenn. Code Ann. § 48-249-403(a). The Tennessee LLC Act further provides that members shall discharge those duties to the LLC and other members in accordance with the obligation of good faith and fair dealing. Tenn. Code Ann. § 48-249-403(d). A member’s duty of care to a member-managed LLC, and the LLC’s other members, is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct or a knowing violation of law. Tenn. Code Ann. § 48-249-403(c). A member’s duty of loyalty to a member-managed LLC and the LLC’s other members is limited to account to the LLC and to hold as trustee for it any property, profit or benefit derived by the member, to refrain from dealing with the LLC as, or on behalf of, a person having an interest adverse to the LLC, and to refrain from competing with the LLC. Tenn. Code Ann. § 48-249-403(b).

The Stockholders Agreement attempts to limit liability for the duty of care and duty of loyalty. The Revised Limited Liability Company Act, set forth at Tenn. Code Ann. § 48-249-101, et seq. (“Revised LLC Act”), provides that a member-managed LLC cannot eliminate the duty of loyalty and cannot “unreasonably reduce” the duty of care, or the obligation of good faith and fair dealing. Tenn. Code Ann. § 48-249-205(b)(13)-(16). Furthermore, both the Stockholders Agreement and Tenn. Code Ann. § 48-249-403 require good faith and fair dealing by a member to the other members and the company. Reviewing the evidence in the light most favorable to Plaintiffs, the evidence demonstrates that Scott attempted to deal with HBFG as a person having an interest adverse to HBFG by soliciting owners of franchisees to terminate their contracts and compete with HBFG and that this could be considered a breach of his fiduciary duties. Further, that he acted intentionally or recklessly by interfering with the operations of HBFG and the Franchise Entities by encouraging franchisees to breach their franchise agreements and file suit, cut off access to Frost Shades Franchising, LLC’s intranet, and cut off Swanson and Goldberger’s access to HBFG’s Call Rail system. Accordingly, the Court finds that Plaintiffs have established the prima facie elements of a breach of the duty of care and loyalty.

Valid Defense

The last step of the TPPA burden-shifting framework provides that the trial court “shall dismiss the legal action if the petitioning party establishes a valid defense to the claims in the legal action.” Garner, 2025 WL 48205, at *16 (citing Tenn. Code Ann. § 20-17-105(c)).

    Scott contends that the Stockholders Agreement does not apply to Plaintiffs’ claims because HBFG is not a parent company of any of the franchising entities whose business Scott is allegedly interfering with; rather, that it is an affiliate of the Franchise Entities and that the Franchise Entities, not HBFG, contract with the franchisees. Thus, Scott argues, HBFG has no standing related to those agreements. Further, Scott avers that none of the members contributed to the company as provided in Section 4.1 of the Stockholders Agreement.

Based on the language in the Stockholders Agreement and the testimony in the record, the Court finds that HBFG may assert its claims under the Stockholders Agreement, as it implicates that HBFG oversees the management and operations of the Franchise Entities and requires the Directors to act in the best interests of the LLC, the purpose of which is to assist with the operations of the Franchise Entities. Plaintiffs testified via affidavit that Home Based Franchise Group acted as a parent or umbrella company for the Franchise Entities and that it was created prior to the Franchise Entities as a partnership and later converted to an LLC entity. It is not disputed that HBFG provides centralized administrative services to the Franchise Entities. The Court is required to take the evidence in the light most favorable to Plaintiffs, and the Court cannot find that Scott has a valid defense to this claim.

As for the fiduciary duty claims, Scott argues that Section 2.4(c) limits those duties and that Plaintiffs have not alleged that Scott receive a financial benefit to which he was not entitled or that he received a financial benefit to which he was not entitled. Similarly, Plaintiffs have not alleged that Scott knowingly violated any law or evidence that to support a claim that he knowingly violated any law. However, the Revised LLC Act makes clear that parties cannot eliminate the duty of loyalty or unreasonably reduce the duty of care. While there is no indication of what a reasonable reduction would be, the Court finds the Stockholders Agreement attempts to significantly restrict the fiduciary duties that likely contravenes the standards set forth in the Act. Pursuant to the fiduciary duties as set forth in the Act, the Court cannot find that Scott has established a valid defense to these claims. The Court cannot find that Scott has established a valid defense. Accordingly, the Petition to Dismiss is DENIED.


It is so ORDERED.

ANNE C. MARTIN 

CHANCELLOR

BUSINESS COURT DOCKET

PILOT PROJECT


cc by U.S. Mail, email, or efiling as applicable to:

L. Gino Marchetti, Esq.
Charles Michels, Esq.
TPMB Law, PLLC
2908 Poston Avenue
Nashville, TN 37203
gmarchetti@tpmblaw.com
cmichels@tpmblaw.com

Gregory H. Oakley, Esq.
BuildLaw PLC
4300 Sidco Dr., Suite 200
Nashville, TN 37204
greg@build.law
goakley@oakley-law.com

Roland W. Baggott III, Esq.
BAGGOTT LAW, PLLC
4525 Harding Pike, Suite 105
Nashville, TN 37205
roland@baggottlaw.com

Paul W. Moser, Esq.
Lawyers People Love
5409 Maryland Way, Suite 333
Brentwood, TN 37027
paul.moser.esq@gmail.com
paul@lawyerspeoplelove.com

Christopher M. Santomassimo, Esq.
Santomassimo Davis LLP
1 Gatehall Dr., Suite 100
Parsippany, NJ 07054
csantomassimo@ogcsolutions.com

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