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Gallagher v. McKinnon4/13/2005
BLACKBURN, P. J., MILLER and BERNES, JJ.
These related cases regard Daniel John Gallagher's "hostile takeover" of Peliton, Inc., a close corporation, from its other director and shareholders. Both cases center on misrepresentations made by Gallagher to Thomas Robert McKinnon, Jr. in order to unduly coerce McKinnon to agree to an issuance of additional company stock to Gallagher, thereby giving Gallagher sole control of Peliton.
In case No. A05A415, following a jury trial, Gallagher, the acting president of Peliton, appeals the trial court's rulings invalidating the issuance of a controlling share of Peliton stock to him, contending that the trial court erred by: (1) denying his motion for a directed verdict regarding McKinnon's claim that Gallagher misled him in order to illegally receive a controlling interest in the corporation; (2) submitting an improper verdict form to the jury; (3) excluding testimony with regard to outside wages earned by McKinnon during the same time he was claiming lost wages from Peliton; (4) adding an improper amount of interest to the jury's award of lost wages to McKinnon; (5) reserving judgment on the issue of punitive damages; and (6) finding that Gallagher owed fiduciary duties to McKinnon.
In Case No. A05A0744, Peliton appeals the trial court's grant of summary judgment to its minority shareholders (collectively referred to as Shareholders), contending, among other things that the trial court erred by: (1) finding that the issuance of controlling shares to Gallagher was made without consideration; (2) the issuance of controlling shares to Gallagher breached Gallagher's fiduciary duties to Peliton's shareholders; and (3) rescinding the issuance of a controlling share in Peliton to Gallagher. For the reasons set forth below, we affirm in both cases.
Case No. A05A0415
Viewed in the light most favorable to the jury's verdict, the record shows that, in 1997, McKinnon and Ronald Johnson formed the company which later became known as Peliton. In January 1998, McKinnon and Johnson asked Gallagher to work for Peliton in management and sales, because they lacked expertise in those areas. Shortly thereafter, Gallagher was named president of Peliton, and Johnson decided to leave the corporation in September 1998 to pursue other ventures.
In order to more easily manage the corporation following Johnson's departure, McKinnon and Gallagher marshaled a redistribution of shares in the corporation in order to make themselves equal majority shareholders (each one held approximately 48 percent of the stock). And, to further facilitate their control, McKinnon and Gallagher were named the sole directors of Peliton by March 2002.
On July 24, 2000, Gallagher wrote a letter to Peliton's corporate counsel in which he made his intentions regarding control of the company clear. He wrote: "How can I end up with the majority of [Peliton] because, rest assured, I will, or I'll simply do it on my own."
On September 27, 2002, Peliton sponsored a birthday party for Gallagher at a local restaurant. At this party, a number of the employees were drinking alcoholic beverages, and, at one point, McKinnon got into the back seat of his truck with Annette Yeomans, another Peliton employee. Yeomans testified that, while there, McKinnon made unwanted sexual advances towards her. She testified further, however, that she did not have sex with McKinnon. McKinnon, on the other hand, testified that he was so inebriated at the time that he had no memory of his encounter with Yeomans.
The following Monday morning, McKinnon met with Gallagher, and, despite Yeomans's statements to the contrary, Gallagher told McKi
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