316 Ga. App. 744
Ga. Ct. App.2012Background
- CJ manufactures gaming equipment; founded in 1995 by Macke, who was president and sole shareholder.
- In 2004 Smart Games acquired 60% of CJ for about $14 million; Smart Games controlled by Boyko via Finstar Gaming Partners.
- From 2006 to 2008 CJ faced cash-flow problems and increasing debt; Chayevsky joined CJ’s board with Boyko.
- 2008 CJ restructured debt with Boyko-affiliated entities at 20% interest after considering an 18% outside loan; terms viewed as more favorable than the outside option.
- Macke was terminated in June 2008; his 40% stake was bought out for $2 million; Macke later owned property leased to CJ, with Zions holding a security interest.
- CJ revoked Macke’s guaranty in December 2009, triggering a default notice; Zions foreclosed later that year and property was sold for about $2.01 million.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did debt restructuring create a fiduciary duty breach by CJ directors? | Macke: conflict of interest; restructuring was unfair to CJ. | Court found terms fair; no showing of unfairness. | Summary judgment affirmed; no fiduciary breach proven on debt restructuring. |
| Did failure to provide adequate funding constitute a fiduciary breach? | Boyko controlled funding; bad faith undermined CJ. | Funding largely controlled by Boyko; multi-million loans nonetheless extended. | Summary judgment affirmed; no breach shown given funding control by Boyko. |
| Did Macke breach restrictive covenants and fiduciary duties in competing with CJ? | Evidence showed Macke’s wife formed Primero Games and competed with CJ. | Macke denied involvement; evidence contested. | Summary judgment denied on restrictive covenants; evidence adequate for jury. |
| Did Macke breach fiduciary duty and loyalty toward CJ in communications with the Puyallup Tribe? | Macke discussed funding with the Tribe; CJ harmed. | No direct causation shown; communications ambiguous. | Trial court properly denied Macke’s summary judgment; potential harm shown. |
| Was there civil conspiracy between Zions and CJ to wrongfully accelerate the loan and foreclose? | Circumstantial evidence shows concert of action to cause default and foreclosure. | No evidence of unlawful design; actions were legal or not proximate cause. | Summary judgment for Macke affirmed; no civil conspiracy shown. |
Key Cases Cited
- Matjoulis v. Integon Gen. Ins. Corp., 226 Ga. App. 459 (1997) (circumstantial evidence may raise issues of fact on matters of fiduciary duty)
- Rosenfeld v. Rosenfeld, 286 Ga. App. 61 (2007) (physical precedent; evidentiary standards)
- Jones v. Bd. of Regents &c. of Ga., 262 Ga. App. 75 (2003) (citation handling and statutory interpretation guidance)
- Forsyth County v. Waterscape Svcs., 303 Ga. App. 623 (2010) (contract interpretation and construction against drafter)
- KIXX, Inc. v. Stallion Music, 610 P.2d 1385 (Utah 1980) (defendant not required to tender delinquent installment after wrongful acceleration)