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Miller v. Lynch

Court of Appeals of Georgia, Second Division

June 21, 2019

LYNCH et al.

          MILLER, P. J., RICKMAN and REESE, JJ.

          Miller, Presiding Judge.

         This is the second appearance of this case before the Court, the previous appearance being reported in Miller v. FiberLight, LLC, 343 Ga.App. 593 (808 S.E.2d 75) (2017) ("Miller I"). Michael Miller appeals from the trial court's grant of the defendants' motion for directed verdict, arguing that the trial court's decision purported to re-adjudicate the same issue we decided in Miller I and that the evidence would have allowed a jury conclusion that the defendants breached their fiduciary duties to him by rejecting offers to purchase FiberLight, LLC ("FiberLight"). Miller also appeals from the trial court's grant of the defendants' motions in limine and the trial court's decision regarding sanctions against the defendants. For the reasons elucidated below, we affirm in part and reverse in part.

         "A trial court may direct a verdict only if there is no conflict in the evidence as to any material issue and the evidence introduced, with all reasonable deductions therefrom, shall demand a particular verdict." (Citation omitted.) King v. Ga. Dept. of Corrections, 347 Ga.App. 606 (820 S.E.2d 445) (2018). "Where any evidence - even slight evidence - supports the opposing party's case, a directed verdict is improper. We review the grant of a motion for directed verdict de novo, construing the evidence in favor of the nonmovant." (Citation omitted.) Id.

         So viewed, the evidence at trial showed that FiberLight is a Delaware limited liabilty company that provides fiberoptic services for various technology companies. Miller was the chief executive officer of FiberLight and owned a minority interest in the company. Defendants Thermo Development, Inc., FL Investment Holdings, LLC, NT Assets, LLC and Thermo Partners, LLC (collectively, "Thermo"), are the majority members of FiberLight, and James F. Lynch, is the executive chairman of FiberLight's board of directors.[1] As the Thermo designee, Lynch also has the majority of votes on FiberLight's board.

         FiberLight's operations were governed by a limited liability company agreement, which was periodically amended. The fourth amended operating agreement, effective October 27, 2008, contained a schedule projecting how the proceeds of a sale would be distributed if the company were to be sold in 2007, 2008, 2009, 2010, or 2011. The fifth amended operating agreement, effective March 17, 2011, set out a different schedule for the allocation of proceeds from a potential sale. Miller testified, "when the operating agreements were put in place, they always had a . . . it looked like about a five-year plan for selling the company. And that's what the schedules proved out to show as well." Miller added that this was consistent with discussions with Lynch "coming up on 2011."

         In April 2011, Lynch reported numerous bids for the purchase of FiberLight to other individuals associated with the company. One bid was from a private equity firm, General Atlantic, at a price of $325 million. A second bid was from another private equity company, Summit, at a price of $320 million. Lynch's email also mentioned a plan to invite another one of the bidders to "meet management" and that management presentations could begin the following week. A letter of intent from General Atlantic, dated June 16, 2011, detailed a "non-binding proposal to acquire" FiberLight. General Atlantic explained the assumptions on which its valuation was based, its financing arrangements, and the projected timing for the acquisition. General Atlantic also indicated it had received investment committee approval, subject to due diligence and "customary closing conditions." Miller testified that General Atlantic pursued due diligence, a process in which he was involved. Miller explained this due diligence process and testified, "after we got through all that, it went back into [Lynch's] court to negotiate the deal." Miller, however, testified that Lynch thereafter stated that General Atlantic had "retraded" (meaning the company wanted to change the price), and therefore "[Lynch] wasn't doing the deal." Lynch did not inform Miller of General Atlantic's new bid amount.

         According to Lynch, General Atlantic had submitted an acceptable and "very strong offer," and there was a meeting scheduled with General Atlantic representatives. Lynch testified, "[w]e were going to go to New York, close ourselves in a room, get the asset purchase agreement done because we agreed on price, come up with a final document. But that was it. It didn't happen." On August 2, 2011, Lynch sent an email to various persons working with FiberLight, including an analyst and Thermo's lawyer, stating, "GA retraded as I expected they would and we are done."

         As to Summit's bid, Miller testified that around the end of 2011, he met with Summit, who wanted to "re-engage with FiberLight to buy the company." Summit submitted a letter of intent, dated March 10, 2012, in which it presented an investment summary and identified its source of funds for the acquisition and anticipated closing conditions. Miller testified that Summit engaged in a "very detailed" due diligence process. Miller testified, however, that Lynch "said the same thing he did on [General Atlantic]. He said they retraded the deal, and we're not going forward with it."

         At the close of all the evidence, the defendants moved for a directed verdict. They argued that when this case first came before this Court on appeal, we reversed the grant of summary judgment to the defendants because there were fact issues regarding whether the defendants had rejected offers to purchase FiberLight, and the evidence at trial showed that there were no binding offers that were capable of being accepted. Miller responded that his position was not that the letters of intent were final binding offers but that the defendants had shut down negotiations. Miller's counsel later contended that the defendants, acting through Lynch, "shut down negotiations, cut off negotiations, didn't do a deal that could have been done, and that's the breach of fiduciary duty." The trial court granted the motion for directed verdict, determining that although there were letters of intent, because there was no "binding offer," there was nothing to accept, and, resultantly, there was no breach.

         The defendants also argued that (1) the decision not to sell FiberLight was protected under the business judgment rule; (2) an exculpatory provision in the fifth amended operating agreement barred Miller's claims; and (3) and Miller had not presented any evidence of his damages. The trial court did not rule on any of these arguments.

         Miller appeals from (1) the trial court's grant of the directed verdict; (2) the trial court's ruling on its motion for sanctions against the defendants; (3) the trial court's grant of motions in limine filed by the defendants; and (4) the trial court's determination that he had no valid claim for prejudgment interest. We address each argument in turn.

         1. First, Miller argues that the grant of the directed verdict was clear legal error because the trial court violated this Court's binding holding in Miller I. Miller adds that even without an analysis of whether the trial court failed to abide by the holding in Miller I, the grant of the directed verdict should still be reversed. We agree that the grant of directed verdict was improper.

         "The requirements which must be met in a directed verdict situation are very strict." Hall v. Rome Auto. Co., 181 Ga.App. 621, 623 (3) (353 S.E.2d 542) (1987).

A motion for directed verdict should not be granted where there exists even slight material issues of fact, because the trial court is substituting its judgment for the jury's; only when there is an absence of evidence or when no evidence supports an essential element of the case should a directed verdict be granted, because the trial judge takes the determination of the facts from the jury. The appellate review of directed verdicts is based upon the "any evidence" rule to support the case of the nonmoving party; when there is "any evidence," a directed verdict must be reversed. The direction of a verdict is proper only where there is no conflict in the evidence as to any material issue, and the evidence introduced, with all reasonable deductions therefrom, shall demand a particular verdict. When there is opinion evidence, circumstantial evidence, presumptions of fact, or evidence subject to more than ...

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