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Ex parte Sundy

Supreme Court of Alabama

September 26, 2014

Ex parte Tommy Sundy; In re: API Holdings, LLC
v.
Frost Cummings Tidwell Group, LLC

Released for Publication June 10, 2015.

Jefferson Circuit Court, (CV-12-902502). Caryl P. Privett, Trial Judge.

PETITION DENIED.

For Petitioner: Richard P. Petermann and Jeffrey L. Burns, Fort Walton Beach, Florida.

For Respondent: Robert M. Girardeau and Eris Bryan Paul of Huie, Fernambucq & Stewart LLP, Birmingham.

MURDOCK, Justice. Moore, C.J., and Bolin, Main, and Bryan, JJ., concur.

OPINION

PETITION FOR WRIT OF MANDAMUS

MURDOCK, Justice.

Tommy Sundy petitions this Court for a writ of mandamus directing the Jefferson Circuit Court to dismiss third-party claims asserted against him by the Frost Cummings Tidwell Group, LLC (" FCT" ), an accounting firm. We deny the petition.

I. Facts and Procedural History

In June 2005, Adams Produce Company, Inc. (" APCI" ), purchased Crestview Produce of Destin, Inc., from Sundy. As part of the transaction, APCI and Sundy executed a promissory note in the amount of $850,000. Sundy became an employee of APCI. FCT alleges that, based on representations from APCI and Sundy, certain budget and bonus projections were set for APCI, but those goals were not met. Because of the failure to meet those projections,

Page 1090

Sundy was not entitled to bonuses that had been paid to him throughout 2009. With the alleged help and direction of FCT, APCI recharacterized the bonuses as repayments of principal on the promissory note. The nonpayment of certain amounts to Sundy in the context of this recharacterization had the effect of increasing APCI's income and decreasing its indebtedness. APCI also allegedly entered into an oral, undocumented agreement with Sundy stipulating that it would make him whole in future years for the forfeited bonus payments.

In 2009, APCI's shareholders decided to sell the company to API Holdings, LLC. One step in that transaction involved APCI's creating Adams Produce Company, LLC (" APC" ). Another step in the transaction involved APCI's retaining FCT in March 2010 to perform an audit and to make a report concerning APCI's 2009 financial statements (" the audit report" ). FCT completed the audit and submitted the audit report to APCI in September 2010.[1] FCT admits in its third-party complaint that it investigated the recharacterization of bonuses paid to Sundy and that it confirmed in the audit report that the recharacterization was correct. FCT denies that it had any knowledge of the side agreement between APCI and Sundy to reimburse him for the forfeited bonuses in future years.

Pursuant to an " Asset Contribution Agreement" executed on September 3, 2010, APCI transferred all of its assets and liabilities to APC. On the same day, API Holdings entered into a " Membership Interest Purchase Agreement" pursuant to which API Holdings purchased all, or a controlling part of, the membership interests in APC for a total purchase price of $20,490,000. In the purchase agreement, API Holdings received assurances that all aspects ...


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