Stephanie Keller v. Estate of Edward Stephen McRedmond, 495 S.W.3d 852

McRedmond Brothers, Inc. (MBI), a closely held family corporation, was dissolved after deadlock between brothers Louie and Stephen; a receiver sold MBI’s grease business and real estate to buyers (Stephen, Anita, Linda) who designated a new corporation, McRedmond Feed, to receive the assets.
At closing Louie resigned from MBI and soon operated a competing grease business (LAMI), allegedly diverting inventory, employees, and customers and undermining the going-concern value of the assets the buyers had contracted to purchase.
The buyers (individually) sued Louie claiming violations of court orders (contempt), breach of fiduciary duty to the original MBI, and intentional interference with business relations; the trial court awarded the buyers damages and a permanent injunction against Louie.
The Tennessee Court of Appeals reversed, holding the buyers lacked standing because alleged harms (lost value, lost profits, interference) were injuries to the corporation (McRedmond Feed), not to the individuals.
The Tennessee Supreme Court granted review to clarify the test for whether shareholder claims are direct or derivative, evaluated the claims under the adopted standard, and remanded for further proceedings.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Tennessee should retain Hadden or adopt Tooley test for direct vs. derivative claims	Buyers urged adopting Tooley (focus on who suffered harm and who gets recovery)	Louie relied on Tennessee precedent in Hadden	Court adopted Tooley and set aside Hadden’s formulation
Whether buyers had standing to sue for violation of the trial court’s orders (contempt/contract‑style claim)	Buyers: they were the intended beneficiaries and personally suffered loss of their bargain	Louie: any injury accrued to McRedmond Feed (the corporate designee)	Held: Buyers have standing to sue individually for contempt/contract‑style damages because orders were entered for their benefit
Whether buyers had standing to sue individually for Louie’s breach of fiduciary duty to original MBI	Buyers: breach harmed them personally as shareholders who purchased assets	Louie: fiduciary breach injured the corporation, so claim is derivative	Held: Claim is derivative—duty was owed to the corporation, not to buyers personally; no individual standing
Whether buyers could sue for intentional interference with business relations	Buyers: they suffered individual injury from interference with the business they purchased	Louie: any interference injured McRedmond Feed’s business (corporate injury)	Held: Claim belongs to McRedmond Feed (derivative); buyers lack individual standing

Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004) (adopts two‑question test: who suffered the harm and who would receive the recovery)
Hadden v. City of Gatlinburg, 746 S.W.2d 687 (Tenn. 1988) (formerly stated Tennessee rule distinguishing direct vs. derivative claims; expressly set aside in part)
NAF Holdings, LLC v. Li & Fung (Trading) Ltd., 118 A.3d 175 (Del. 2015) (clarifies that Tooley governs derivative/direct question for fiduciary‑duty claims and that contract claims may remain direct)
Franchise Tax Bd. of Cal. v. Alcan Aluminum Ltd., 493 U.S. 331 (1990) (discusses shareholder standing rule and distinction between individual and derivative claims)
Bayberry Assocs. v. Jones, 783 S.W.2d 553 (Tenn. 1989) (discusses that recoveries in derivative suits inure to the corporation)