Varnum secured a complete trial victory for two entrepreneurs facing a $70 million claim brought by the majority member of a company in which they formerly held minority interests.
The dispute began when a proposed financing transaction and asset purchase agreement fell through because the plaintiff, the company’s then-majority member, failed to deliver certain transaction documents required by the lender. Varnum’s clients later reached a separate agreement with the same lender, leading the plaintiff to sue for breach of contract and breach of fiduciary duty. The plaintiff claimed the clients had improperly pursued a corporate opportunity for themselves.
Following extensive pretrial motion practice and a multi-day bench trial, the court ruled entirely in favor of Varnum’s clients. Relying on the company’s operating agreement, the pertinent transaction documents, and the evidence presented by Varnum’s team at trial, the court found that the plaintiff had no cause of action, was not authorized to file the lawsuit under the company’s operating agreement, and was not entitled to any relief. The ruling resolved a bet-the-company dispute for the clients.
Varnum represented the clients through every phase of the case, including preliminary motion practice, discovery, summary disposition, trial, and post-trial briefing. Partner Tim Monsma led the litigation team, which included Hannah Cone.
Varnum’s relationship with the clients began through the firm’s MiSpringboard program, which supports entrepreneurs and emerging businesses. The firm has continued to work with the clients as their businesses have grown and their legal needs have evolved.
