Les Kepley v. Gerald Lanz
2013 U.S. App. LEXIS 9384
| 6th Cir. | 2013Background
- ATA shareholders Bruce and Les Kepley sued Lanz for anticipatory breach of the Investors Rights Agreement (IRA) over a threatened sale of Lanz’s restricted stock to a competitor.
- Lanz threatened to sell his restricted share and option to buy more common stock to Crimson Aero Holdings, a competitor, for $2,799,000.
- Kepleys sued in state court; declaratory judgment claim dismissed with prejudice; then filed another suit alleging breach/anticipatory breach of the IRA.
- Lanz removed to federal court; district court sua sponte dismissed for lack of standing, deeming the injury derivative to ATA.
- Court reverses and holds the Kepleys have standing to pursue a direct claim and remands to address claim preclusion
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Direct vs. derivative standing | Kepleys have separate and distinct injury | Injury to ATA; claims are derivative | Kepleys have standing to bring a direct claim |
| Claim preclusion applicability | No preclusion because separate proceeding | Preclusion bars subsequent action | Remanded to address claim preclusion first |
Key Cases Cited
- Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004) (test for direct vs. derivative under Delaware law (harm and benefit focus))
- Sahni v. Hock, 369 S.W.3d 39 (Ky. Ct. App. 2010) (applies separate-and-distinct injury concept in Kentucky)
- 2815 Grand Realty Corp. v. Goose Creek Energy, Inc., 656 F. Supp. 2d 707 (E.D. Ky. 2009) (recognizes Delaware approach as persuasive in Kentucky context)
- Kollman v. Cell Tech Int’l, Inc., 279 P.3d 324 (Or. Ct. App. 2012) (direct vs. derivative analysis applied to fiduciary breach)
- Bacigalupo v. Kohlhepp, 240 S.W.3d 155 (Ky. Ct. App. 2007) (standing post-merger; former shareholders’ remedies)
- VIBO Corp. v. Conway, 669 F.3d 675 (6th Cir. 2012) (standards for accepting allegations as true in standing analysis)