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  1. Case 5:12-cv-00103-TBR Document 1 Filed 07/20/12 Page 1 of 6 PageID #: 1
  2. Defendant.
  3. IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF KENTUCKY PADUCAH DIVISION
  4. DAVID GRIFFIN, ) ) Plaintiff, ) )
  5. v.
  6. ) BAKER & TAYLOR, INC., ) ) )
  7. COMPLAINT FOR DECLARATORY JUDGMENT
  8. For his Complaint against Defendant, Plaintiff David Griffin alleges as follows:
  9. PARTIES
  10. 1. Plaintiff David Griffin (“Griffin”) is a resident of Nashville, Davidson County, Tennessee.
  11. 2. Defendant Baker & Taylor, Inc. (“B&T”) is a Delaware corporation with its principal place of business in North Carolina.
  12. JURISDICTION AND VENUE
  13. 3. This is an action for a declaratory judgment pursuant to 28 U.S.C. § 2201, for the purpose of determining a question of actual controversy between the parties as more fully appears below. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332 because there is absolute diversity of citizenship and the amount in controversy exceeds $75,000, exclusive of costs and interests.
  14. 4. Venue is proper in this Court, pursuant to 28 U.S.C. § 1391, because a substantial part of the events or omissions giving rise to the claim occurred in this District.
  15. ) Case No. _____________
  16. 5:12CV-103-R
  17. 1
  18. Case 5:12-cv-00103-TBR Document 1 Filed 07/20/12 Page 2 of 6 PageID #: 2
  19. FACTUAL ALLEGATIONS
  20. 5. Griffin owns 50% of Integrated Computer Solutions, Inc. (“ICS”), a Kentucky corporation, and 50% of Blackrock Investments, LLC (“BRI”), a Kentucky limited liability company, both of which have their principal places of business in Murray, Calloway County, Kentucky. Charles Jones (“Jones”) owns the other 50% of ICS and BRI.
  21. 6. ICS and BRI own 8% and 92% interests, respectively, in SE Book Company, LLC (“SEB”) and College Book Rental Company, LLC (“CBR”). SEB and CBR are in the college textbook business.
  22. 7. Jones also owns and operates C.A. Jones Management Group, LLC (“CJM”) in Murray, Kentucky. CJM is the manager of SEB and CBR.
  23. 8. Griffin has never played any role in the daily operations or decisions of SEB, CBR or CJM. Instead, Jones has overseen those operations and made those decisions.
  24. 9. Since 2008, Griffin has invested and/or loaned considerable sums to SEB and CBR. Griffin has also guaranteed certain debts of those companies. In late 2010, Jones advised Griffin that he was considering having CBR and/or SEB do business with B&T.
  25. 10. On or about December 21, 2010, Jones signed an agreement on behalf of CBR
  26. with a B&T affiliated entity, Baker & Taylor Fulfillment, Inc., titled “Fulfillment Distribution Agreement” whereby B&T agreed to act as a fulfillment company for book orders received by CBR. The Fulfillment Distribution Agreement did not call for CBR to make an initial payment to Baker & Taylor Fulfillment, Inc.
  27. 11. In or around March 2011, Griffin received a document titled “Personal Guaranty.” A true and correct copy of the “Personal Guaranty” in Griffin’s possession is attached as Exhibit A.
  28. 2
  29. Case 5:12-cv-00103-TBR Document 1 Filed 07/20/12 Page 3 of 6 PageID #: 3
  30. 12. When Griffin received the “Personal Guaranty” document, the name of the debtor (identified as the “Applicant”) and the names of the guarantors were not written in the blanks provided. After learning that B&T believed that he had guaranteed debts owed to B&T by CBR, Griffin located a copy of the “Personal Guaranty” in his Helena, Arkansas office that has what appears to be his signature. That document is the original and bears Griffin’s signature in blue ink, but does not identify the debtor to B&T. (See Exh. A).
  31. 13. The “Personal Guaranty” was transmitted to Mr. Jones from Mr. Griffin’s assistant in Helena, Arkansas without reference to CBR by electronic mail in PDF format on March 9, 2011 and without any discussion or understanding as to when, how or for what reason that document might be delivered to B&T in the future.
  32. 14. Griffin did not witness or consent, and has not witnessed or consented, to listing CBR as the debtor (or “Applicant”) in the “Personal Guaranty.”
  33. 15. Griffin did not benefit personally from the debts purportedly incurred by CBR to B&T.
  34. 16. In August 2011, B&T entered into an “Online Customized Bookstore Agreement” (the “Online Agreement”) with CJM who was acting on behalf of SEB and CBR. Jones signed the Online Agreement on behalf of CJM.
  35. 17. The Online Agreement called for B&T, SEB and CBR to enter into a strategic alliance for the marketing of new and used books on identified Internet websites. The Online Agreement did not call for an initial payment from SEB and/or CBR to B&T.
  36. 18. Griffin was not aware of the Online Agreement or any obligations created under that agreement.
  37. 3
  38. Case 5:12-cv-00103-TBR Document 1 Filed 07/20/12 Page 4 of 6 PageID #: 4
  39. 19. Griffin learned in or around late November or early December 2011 that B&T and CBR had signed a “Memorandum of Understanding” (the “MOU”) on or about November 4, 2011. A true and correct copy of the MOU is attached as Exhibit B. CJM entered into the MOU on behalf of CBR, and Jones signed the MOU as Chief Executive Officer of CJM.
  40. 20. The MOU stated that B&T and CBR would enter in a written agreement “under which B&T would provide financing and acquisition of certain textbooks and related textbook products as defined by CBR, and CBR will meet its payment obligations for said inventory.” B&T and CBR did not execute a written agreement to formalize the terms set forth in the MOU.
  41. 21. The MOU stated “This initial payment will be personally guaranteed as have all previous initial payments.”
  42. 22. On December 8, 2011, Griffin’s attorney advised attorneys for CBR and SEB, as well as Jones’s counsel, that “[n]othing should be done with this proposal [the MOU] until Mr. Griffin understands more about it.”
  43. 23. IndirectcontradictiontoGriffin’srequest,JonescausedCBRtoincurover$10 million in debt to B&T between December 15 and December 22, 2011, pursuant to the MOU.
  44. 24. Upon information and belief, CBR ordered textbooks and related products from B&T between December 2011 and the present that created obligations by CBR to B&T currently totaling over $17.6 million. Griffin had no knowledge of the business transactions that resulted in the debt purportedly owed to B&T by CBR.
  45. 25. Griffin did not sign a guaranty for the benefit of B&T after November 4, 2011.
  46. 26. In April 2012 B&T provided notice to CBR, SEB, Griffin and Jones that CBR
  47. was in default of its obligations to B&T and demanded full payment of past due amounts. A true and correct copy of that notice is attached as Exhibit C. Soon after sending that notice, B&T
  48. 4
  49. Case 5:12-cv-00103-TBR Document 1 Filed 07/20/12 Page 5 of 6 PageID #: 5
  50. advised Griffin’s counsel that the “Personal Guaranty” serves as the sole basis for B&T’s claim that Griffin guaranteed CBR’s debts to B&T.
  51. 27. Griffin contends that he did not guarantee any debts of CBR or SEB to B&T and
  52. that the “Personal Guaranty” is not enforceable.
  53. COUNT ONE (Declaratory Judgment)
  54. 28. Griffin incorporates the preceding paragraphs as if set forth in full.
  55. 29. An actual controversy exists between B&T and Griffin as to whether Griffin
  56. guaranteed any debts owed to B&T of a third party, including CBR.
  57. 30. Griffin requests that the Court declare the rights of, obligations of and legal relationship between B&T and Griffin as follows:
  58. (A) The “Personal Guaranty” is not an enforceable contract between B&T and Griffin; and
  59. (B) Griffin is not obligated to pay any debts owed to B&T by any third party, including CBR, in the event that third party fails to pay said debts.
  60. WHEREFORE, premises considered, Plaintiff demands the following relief:
  61. 1. That Defendant be served with process and answer the allegations and claims set forth above;
  62. 2. That the Court declare the parties’ rights, obligations and legal relations, as set forth above; and
  63. 3. That the Court award to Plaintiff such other legal and equitable relief as it deems appropriate.
  64. 5
  65. Case 5:12-cv-00103-TBR Document 1
  66. Filed 07/20/12 Page 6 of 6 PageID #: 6
  67. Respectfully submitted,
  68. /s/ Charles M. Pritchett
  69. Charles M. Pritchett (KBA # 55975) Tonya J. Austin (KBA # 92268) FROST BROWN TODD LLC
  70. 400 West Market Street
  71. Suite 3200
  72. Louisville, KY 40202
  73. (502) 589-5400 Attorneys for Plaintiff cpritchett@fbtlaw.com
  74. taustin@fbtlaw.com
  75. NSHLibrary 0123534.0591366 117037v1
  76. 6
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