Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

C-Ville Fabricating, Inc. v. Tarter

United States District Court, E.D. Kentucky, Central Division, Lexington

March 26, 2019

C-VILLE FABRICATING, INC. dba Tarter Industries, et al., Plaintiffs,
v.
JOSHUA DONALD TARTER, et al., Defendants.

          ORDER AND OPINION

          KAREN K. CALDWELL, CHIEF JUDGE UNITED STATES DISTRICT COURT.

         This matter is before the Court on motions to dismiss filed by Defendants Joshua Tarter [DE 11] and Thomas Gregory [DE 12]. Each Defendant attacks the Plaintiffs' Complaint on Fed R. Civ. P. 12(b)(1) and 12(b)(6) grounds. For the reasons set forth below, the Defendants' motions [DE 11; DE 12] are GRANTED in part and DENIED in part. The matter may proceed to discovery.

         BACKGROUND

         A.

         This commercial action was originally brought by Plaintiffs Anna Lou Tarter Smith, LuAnn Coffey, and Douglas Tarter, in their individual capacities and in their derivative capacities on behalf of four of the Tarter family's business entities: Tarter Industries, Tarter Management, Tarter Gate, and Tarter Tube. Smith v. Tarter, 305 F.Supp.3d 733, 736 (E.D. Ky. 2018). The Court will refer to these entities as the “Tarter Companies.”

         In their original complaint, the Plaintiffs alleged that Defendants Joshua Tarter, Thomas Gregory, and QMC Industry Company, Ltd., violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Defend Trade Secrets Act (“DTSA”), the Kentucky Uniform Trade Secrets Act (“KUTSA”), and the Kentucky common law through the operation of a pass-through scheme involving source components and parts. Id. As will be discussed infra, Judge Danny Reeves of the Eastern District of Kentucky dismissed the complaint in its entirety. Id. at 744. He did so, however, without prejudice. Id.

         The Tarter Companies maintain headquarters in Casey County, Kentucky. [DE 1, at 30.] Plaintiffs assert that each entity plays a distinct role in what is the largest animal management and farm gate manufacturing operation in North America. [DE 1, at 30.] For example, Tarter Industries is responsible for the manufacture and purchase of component parts, the hiring of new employees, and the research and development of new products. [DE 1, at 31.] Tarter Tube, on the other hand, specializes in the creation of tubing that assists in the manufacture of gates and other equipment. [DE 1, at 31.] It also sells hardware to the other Tarter Companies. Tarter Gate, presumably after buying components and parts from Tarter Industries and Tarter Tube, manufactures gates and other animal control equipment. These final products are then sold to two main distributors. [DE 1, at 31.] The final Tarter entity, Tarter Management, controls the compensation of the officers and executive employees of the Tarter Companies. [DE 1, at 31.]

         The Tarter Companies have always been family owned and operated, with the shares of each entity passing down generationally. [DE 1, at 8.] At one point in time, the aggregate shares of the Tarter Companies were held by two brothers, David and Donald Tarter, along with their wives, Anna Lou Tarter Smith and Joy Tarter. [DE 1, at 8.] The Court will refer to these individuals as the “Third Generation” of the Tarter family. David and Anna Lou had two children, Douglas and LuAnn, and were eventually divorced. [DE 1, at 8.] Donald and Joy remain married and have three children, Keith, Joshua, and Nell. The Court will refer to the descendants of David and Donald-Douglas, LuAnn, Keith, Joshua, and Nell-as the “Fourth Generation” of the Tarter family.

         Within the last ten years, three of the four members of the Third Generation (David, Donald, and Joy) transferred their interests in the Tarter Companies to members of the Fourth Generation. [DE 1, at 8.] As with many family-held entities, this transition was far from seamless. And, it has created a tangled web of ownership and responsibility that the Court must sift through in order to address the pending motions.

         Tarter Industries was incorporated under Kentucky law on May 18, 1993. [DE 1, at 3.] Members of the Third Generation divided the initial shares of the corporation. [DE 1, at 8.] David and Anna Lou each held 25% interests, while Donald Tarter and his wife, Joy Tarter, each retained 25% interests. [DE 1, at 9.] At the first annual shareholders meeting, David, Donald, Anna Lou, and Joy elected themselves to serve as Directors. [DE 1, at 9.] That very same day, the Third Generation family members, in their Director capacities, appointed themselves to various company positions. David became the President, Donald became the Vice President, Joy became the Treasurer, and Anna Lou became the Secretary of the corporation. [DE 1, at 10.] It appears that annual shareholders and Board of Directors meetings were held from 1993 to 1997. [DE 1, at 10.] However, no such meetings convened between 1997 and 2012. [DE 1, at 10.]

         On December 31, 2012, David, Donald, and Joy transferred their shares of Tarter Industries. [De 1, at 11.] David transferred his shares to him and Anna Lou's two children, Douglas and LuAnn. Likewise, Donald and Joy passed along their interests in Tarter Industries to their three children, Keith, Joshua, and Nell. [DE 1, at 11.] In the aftermath of these transfers, Anna Lou, Douglas, and LuAnn held a collective 50% interest in Tarter Industries, while Keith, Joshua, and Nell together owned the other 50%. [DE 1, at 11.]

         Amazingly enough, this new slate of shareholders did not elect a new Board of Directors. Nor did they formally appoint Officers. Instead, it appears that they simply assumed the Board seats and divvied up company responsibility in an informal manner. [DE 1, at 11.] From 2013 to 2017, Tarter Industries' annual filings with the Kentucky Secretary of State listed Joshua as President, Keith as Vice President, Nell as Treasurer, and Anna Lou as the Secretary. [DE 13-3.] These annual filings, however, did not state who the Directors of the corporation were.

         Tarter Management shares a similar story. Incorporated pursuant to Kentucky law, the original shares of Tarter Management were issued to David's wife at the time, Anna Lou, and Donald's wife, Joy. [DE 1, at 12.] Each retained a 50% stake. At the first shareholders meeting, Anna Lou and Joy unanimously voted themselves to serve as the Directors. They then appointed themselves to the positions of President (Anna Lou) and Secretary-Treasurer (Joy). [DE 1, at 12.] The record reveals that annual shareholders and Board meetings were held until 1997. From 1997 to 2012, however, no such meetings took place. [DE 1, at 13.] On July 28, 1998, Anna Lou divided her shares with David such that each held 25% interests in Tarter Management. [DE 1, at 13.]

         On December 31, 2012, David split his interest in the corporation between him and Anna Lou's two children, Douglas and LuAnn. [DE 1, at 13.] Similarly, Joy divided her interest in Tarter Management between her and Donald's three children, Keith, Joshua, and Nell. [DE 1, at 13.] From that point on, Anna Lou, Douglas, and LuAnn together owned 50% of Tarter Management and Keith, Joshua, and Nell collectively owned the other 50%. [DE 1, at 14.] Like Tarter Industries, the newly minted shareholders of Tarter Management failed to vote on a new Board of Directors and to formally appoint Officers. Again, it appears that these positions, and their accompanying responsibilities, were implicitly assumed.

         Because of the nature of the 2012 ownership transitions, the corporate structures of Tarter Industries and Tarter Management are severely muddled. While David, Donald, and Joy transferred their ownership interests to members of the Fourth Generation, they never formally resigned from their posts as Directors and Officers. Moreover, while it appears that Fourth Generation shareholders have taken on a significant portion of the day-to-day operations of the corporations and list themselves as Officers in the corporations' annual filings, they never voted themselves in as Directors or appointed themselves to Officer positions. Thus, there is a tension between who Directors and Officers are according to the bylaws and who actually runs the day-to-day affairs of the corporations.

         The other two Tarter businesses, Tarter Gate and Tarter Tube, are limited liability companies created pursuant to the Kentucky Limited Liability Act. [DE 1, at 14-15.] On December 31, 2012 the Third-Generation member/managers of both LLCs approved resolutions that transferred their ownership interests. [DE 1, at 15.] From that point on Anna Lou, Douglas, and LuAnn collectively owned 50% of Tarter Gate and Tarter Tube while Keith, Joshua, and Nell owned the other 50% of the two LLCs. [DE 1, at 15.] It is alleged that in 2014, the member/managers of Tarter Gate formally elected Josh as President, LuAnn as Vice President, and Anna Lou as the Secretary/Treasurer. [DE 1, at 15.] That said, nothing in the record suggests that a similar vote was held for Tarter Tube.

         Lastly, both parties have indicated that because of the divisions within the Tarter family, the shareholders executed an interim management agreement in October of 2017 that placed the day-to-day management of the Tarter Companies in the hands of Douglas's wife, J.J., and Keith. [DE 1, at 19.] Though the Plaintiffs and the Defendants both reference the agreement, the Court has certain doubts as to its validity. After all, it was only signed by one party, Joshua Tarter. 5:17-cv-334 [DE 33-4.]

         B.

         Defendant Joshua Tarter-a Fourth Generation family member-is a shareholder of the Tarter corporations (Tarter Industries and Tarter Management) and a member/manager of the Tarter LLCs (Tarter Gate and Tarter Tube). [DE 1, at 34.] Plaintiffs contend that at all relevant times, Joshua held himself out as a high-ranking executive of the Tarter Companies conglomerate. And in accordance with this assumed authority, Plaintiffs suggest that Joshua oversaw the entire operation of the Tarter Companies. He negotiated and executed vendor and sales agreements, transacted business with valued customers, hired and fired key personnel, and developed company strategies. [DE 1, at 35.] Plaintiffs also maintain that in his implicit top brass position, Joshua Tarter had access to “confidential and proprietary information” of the Tarter Companies. This information included business strategies, order information, customer relationships, research and development, market analyses, and most importantly, information regarding component pricing and profit margins. [DE 1, at 34.]

         It is alleged that Joshua Tarter's right hand man at the Tarter Companies was fellow Defendant, Thomas Gregory. [DE 1, at 36.] Gregory's official job description included general management duties for Tarter Gate LLC. Despite this description, Plaintiffs contend that Gregory's oversight extended much further. They claim that he had control over engineering and quality for the Tarter Companies and worked closely with Joshua “in confidential aspects of the business such as pricing, costing, and selecting vendors.” [DE 1, at 36.] On certain occasions, Plaintiffs suggest that Gregory held himself out as Vice-President of the Tarter Companies and executed contracts in that capacity. [DE 1, at 36.]

         C.

         In 2009, the Tarter Companies, like many other American manufacturers, began to source components and parts from Chinese suppliers. The reason? Cost savings. [DE 1, at 38.] The Tarter Companies employed an individual named Xiaofeng Chen to facilitate these transactions. [DE 1, at 38.] Chen would negotiate with the Chinese suppliers, who would then ship the components directly from mainland China to the Tarter Companies. [DE 1, at 38.]

         Plaintiffs allege that in 2010, Joshua Tarter, Thomas Gregory, and Xiaofeng Chen, concocted a scheme to divert the component cost savings to themselves. The Complaint provides an overview of how the operation purportedly functioned. First, the three individuals incorporated QMC Industry Company, LTD in Hong Kong, making themselves the sole shareholders. Next, Joshua Tarter and Thomas Gregory, using their implicit senior positions within the Tarter Companies, ensured that components and parts were sourced from QMC instead of from other Chinese suppliers. [DE 1, at 41.] Once QMC received orders from the Tarter Companies, it would forward the orders to Chinese suppliers. [DE 1, at 42.] The Chinese suppliers would then ship the components directly to the Tarter Companies, billing the true cost of the components to QMC in the process. QMC would turn right around and charge the Tarter Companies at an inflated rate for the components. To complete the transaction, the Tarter Companies would wire payments to QMC and its affiliates. Joshua Tarter and Thomas Gregory, using offshore accounts, would then funnel the profits to their own private bank accounts. Plaintiffs assert that the average markup on these transactions was roughly 28%. However, in some egregious instances, that markup ran as high as 85%. [DE 1, at 42.] Finally, in addition to selling components to the Tarter Companies, Plaintiffs contend that QMC also sold parts at an upcharge to competitors. [DE 1, at 46.]

         Plaintiffs also submit that Defendants Joshua Tarter and Thomas Gregory used their authority within the Tarter Companies to guarantee the favorable treatment of QMC. For instance, it was standard practice for the Tarter Companies to obtain multiple bids before selecting a supplier for a component. [DE 1, at 51.] This was not the case when it came to QMC and its affiliates. [DE 1, at 51.] Moreover, the QMC entities were paid 50% of their asking price in advance, while other suppliers received nothing. Lastly, Plaintiffs allege that the Defendants caused the Tarter Companies to accept defective products, shifting the loss from QMC to the various Tarter entities in the process. [DE 1, at 51.]

         This pass-through scheme allegedly persisted until 2016, resulting in the Tarter Companies wiring approximately $74, 857, 122.80 to QMC and its affiliates. Plaintiffs assert that during this period, Defendants Joshua Tarter and Thomas Gregory hid their interests in QMC, despite a duty to reveal the information. [De 1, at 50.] Plaintiffs further contend that in addition to concealing his QMC interests, Joshua Tarter affirmatively lied about them on two occasions. First, in early 2013, Plaintiffs assert that Joshua Tarter repeatedly told Anna Lou that he had no interests in QMC and that it would be “morally wrong” for him to do so. [DE 1, at 54.] And second, in April of 2016, Plaintiffs claim that Joshua again misrepresented his interests in QMC, stating, “I have nothing to do with QMC.” [DE 1, at 54.]

         The Complaint enumerates that in late 2016, after considerable investigation, Plaintiffs discovered Defendants Joshua Tarter and Thomas Gregory's ownership interests in QMC. [DE 1, at 63.] On September 5, 2016, Anna Lou and LuAnn met with Joshua. When confronted with allegations of his ownership interest in QMC, Joshua purportedly responded “it is what it is.” And on September 6, 2016, Joshua met with Tarter family members and apologized for his conduct-though he refused to return the money. [DE 1, at 63.] Finally, the Complaint alleges that on September 14, 2016, Thomas Gregory resigned after being confronted with allegations of impropriety. [DE 1, at 63.]

         C.

         On August 11, 2017, Plaintiffs Anna Lou Tarter Smith, Douglas Tarter, and LuAnn Coffee filed an initial lawsuit in this Court against Defendants Joshua Tarter, Thomas Gregory, and QMC, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Defend Trade Secrets Act (“DTSA”), the Kentucky Uniform Trade Secrets Act (“KUTSA”), and the Kentucky common law. Smith, 305 F.Supp.3d at 736.

         Defendants Joshua Tarter and Thomas Gregory, in turn, moved to dismiss the action on Fed.R.Civ.P. 12(b)(1) and 12(b)(6) grounds. Id. As to their 12(b)(1) claims, Defendants argued that the Plaintiffs lacked standing to bring the suit in their individual capacities and also lacked the standing to bring a derivative suit on behalf of any of the Tarter Companies. Id. at 738. Judge Reeves agreed, concluding that an individual shareholder does not have standing to bring a direct cause of action when the only injury being asserted is diminution in the value of his corporate shares. Id. at 739. Judge Reeves further rejected the Plaintiffs' argument that they possessed individual standing by way of their statuses as member/managers of the two Tarter LLCs: Tarter Gate and Tarter Tube. Id. at 740.

         Judge Reeves also discharged the Plaintiffs' claims of derivative standing. Id. at 744. To achieve derivative standing, Kentucky law requires that a plaintiff first make demand on the board or in the alternative, show that demand would have been futile. Id. at 741. The Plaintiffs argued that their requests that Josh Tarter fully disclose his interest in QMC and to return all profits satisfied the demand requirement. Id. Judge Reeves determined, however, that requests for information or repayment are not synonymous with requests to commence legal action. Id. As such, he found that the Plaintiffs failed to satisfy the pre-suit demand requirement. Id.

         Plaintiffs argued in the alternative that they were excused from the demand requirement because doing so would have been futile. Id. at 742. The general tenet of Plaintiffs' argument was that Joshua Tarter's siblings, Keith and Nell, could not exercise independent judgment because of their close relationship with their brother. Id. at 743. Moreover, Plaintiffs argued that Keith and Nell had an inherent interest in quashing any lawsuit against Joshua-if he was forced to tender his shares, their side of the family would no longer control 50% of the Tarter Companies. Id. at 743. Despite these contentions, Judge Reeves refused to invoke the futility exception, finding that the Plaintiffs had “provided no more than a conclusory allegation that the personal relationship between Joshua Tarter and his siblings would undermine the siblings' independence.” Id. at 743-44.

         In total, Judge Reeves found that the Plaintiffs had failed to establish both individual and derivative standing. As such, he dismissed the action without prejudice on 12(b)(1) grounds. He did not address the Defendants' Rule 12(b)(6) arguments.

         D.

         Since the dismissal of the original complaint, two important things have happened. First, in February of 2016, a new round of demand letters was sent to the potential combinations of Directors and member/managers for the four Tarter Companies. [DE 1, at 22.] And unlike the first alleged demands rejected by Judge Reeves, these ones explicitly requested the Boards of the corporations and the member/managers of the LLCs to vote on the specific issue of whether to sue the Defendants-Joshua Tarter, Thomas Gregory, and QMC- for their supposed misdeeds. [DE 30-1.]

         Second, the Board of Tarter Industries allegedly passed a resolution authorizing the corporation to file a lawsuit against the Defendants. On February 7, 2018, David requested that Anna Lou, in her capacity as Secretary of Tarter Industries, call for a special meeting to vote on whether to commence legal action against the Defendants. [DE 1, at 21.] Anna Lou obliged and set the meeting for February 22, 2018 at 10:00 a.m. at the Tarter headquarters. The notice explicitly stated the purpose of the meeting. [DE 1, at 22.]

         In addition to sending notice of the meeting to David, Donald, and Joy, Anna Lou also sent notices to Keith, Joshua, and Nell. [De 1, at 22.] Pursuant to the notice, David called the special meeting to order on February 22, 2018 at 10:00 a.m. A recording of this meeting has been submitted into the record. [DE 11-1.] The recording reveals that the meeting was called to order with David, Anna Lou, and Joy present (constituting a quorum pursuant to the bylaws). Anna Lou then moved to vote on the issue of whether to initiate a lawsuit against Joshua Tarter, Gregory, and QMC. At this point, Joy asked if Anna Lou could explain the motion to her in laymen's terms. Anna Lou refused. Instead, she read the motion out loud once more. David seconded the motion and a vote was called. David and Anna Lou voted “yea” while Joy abstained. David announced that the motion had passed and adjourned the meeting. [DE 1, at 24.] After the meeting had closed, Donald arrived and demanded that the vote be taken again. David and Anna Lou refused, noting that the original vote had taken place on time. [DE 11-1.]

         E.

         Hoping the second bite at the apple proves more successful than the first, Anna Lou Tarter Smith, LuAnn Coffey, and Douglas Tarter have filed another action in this Court against Defendants Joshua Tarter, Thomas Gregory, and QMC. They do so in their individual capacities and in their derivative capacities on behalf of the four Tarter Companies: Tarter Industries, Tarter Management, Tarter Gate, and Tarter Tube. Tarter Industries has also been joined as a direct Plaintiff in the action. As a collective, the Plaintiffs argue that the standing deficiencies of their first complaint have been cured, pointing to the newly issued demand letters and the Tarter Industries Board resolution.

         ANALYSIS

         Defendants Joshua Tarter and Thomas Gregory have now moved to dismiss Plaintiffs' claims pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). The Court will consider the 12(b)(1) motions first, as the 12(b)(6) challenges becomes moot if subject-matter jurisdiction is lacking. See Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990).

         I. Defendants' 12(b)(1) Motions

         The Plaintiffs argue that they have hit the subject-matter jurisdiction trifecta- enjoying individual, direct, and derivative standing to sue the Defendants. The Defendants contest this assertion. First, they argue that the Plaintiffs lack individual standing because they have not suffered an injury separate from that of the Tarter Companies. Second, Defendants maintain that the resolution passed by Tarter Industries on February 22, 2018 does not confer direct standing because the vote was invalid. Third and finally, Defendants argue that the Plaintiffs lack derivative standing to sue on behalf of the Tarter Companies because the recently issued demand letters are legally deficient. They also contend that the demand futility exception does not apply here.

         For the reasons stated below, the Court finds that the Plaintiffs lack the standing to bring the action in their individual capacities but have successfully established (1) Tarter Industries' direct standing to sue the Defendants, and (2) derivative standing to sue on behalf of Tarter Management, Tarter Gate, and Tarter Tube.

         A.

         “Standing goes to a court's subject matter jurisdiction.” Kepley v. Lanz, 715 F.3d 969, 972 (6th Cir. 2013) (internal quotation omitted). As such, a court may dismiss a lawsuit for lack of subject-matter jurisdiction under Rule 12(b)(1) if the plaintiff lacks standing to bring the action. See Allstate Ins. Co. Global Med. Billing, Inc., 520 Fed.Appx. 409, 410-11 (6th Cir. 2013) (observing that the lack of standing is treated as an attack on subject-matter jurisdiction and is therefore considered under Rule 12(b)(1)). When a defendant challenges the plaintiff's standing to sue under Rule 12(b)(1), the burden is on the plaintiff to show that jurisdiction exists. Lewis v. Whirlpool Corp., 630 F.3d 484, 487 (6th Cir. 2011); Golden v. Gorno Bros., Inc., 410 F.3d 879, 881 (6th Cir. 2005).

         Rule 12(b)(1) motions to dismiss come in one of two forms: a facial attack or a factual attack. Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007). When ruling on a facial challenge to subject-matter jurisdiction under Rule 12(b)(1), the district court must accept all material allegations of the complaint as true. Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 440 (6th Cir. 2012); Courtney v. Smith, 297 F.3d 455, 459 (6th Cir. 2002). A factual attack, on the other hand, is an attack on the factual existence of standing. See Id. No presumptive truthfulness attaches to the plaintiff's allegations and the court is “free to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” Id. In either case, “the plaintiff has the burden of proving jurisdiction in order to survive the motion.” Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir. 1986).

         Here, Defendants Joshua Tarter and Thomas Gregory have raised both facial and factual challenges to subject-matter jurisdiction. The facial attacks are geared towards the Plaintiffs' individual standing claims. Specifically, Defendants Joshua Tarter and Thomas Gregory assert that the Complaint, as written, fails to sufficiently allege injuries separate from those suffered by Tarter Companies.

         The challenges to direct and derivative standing are more factual in nature. For one, Joshua Tarter has questioned the validity of the resolution passed by the Tarter Industries Board on February 22, 2018. He argues, amongst other things, that the vote was rushed and taken in bad faith. In support of these arguments, he has submitted an audio recording of the vote into the record. [DE 11-1.] On the other hand, Defendant Gregory has challenged the content, and even the existence of, the new round of demand letters referenced in the Plaintiffs' Complaint. [DE 12, at 11] (“Plaintiffs do not allege the content of this ‘call,' nor do they attach a copy of it to their Complaint.”). Because these are factual attacks, the Court may consider extrinsic evidence, including the audio recording of the Tarter Industries special meeting and the alleged demand letters, without converting the Defendants' Rule 12(b)(1) motions to dismiss into Rule 56 motions for summary judgment. Moreover, when evaluating these factual attacks, the Court does not have to treat the factual allegations related to jurisdiction as true. See Ceballos v. United States, No. CIV.A. 11-21-ART, 2011 WL 5855290, at *2 (E.D. Ky. Nov. 22, 2011) (observing that “there is no presumptive truthfulness” when defendants bring a factual attack on subject-matter jurisdiction).

         B.

         In the original action, Judge Reeves rejected the Plaintiffs' claims of individual standing, concluding that they had not alleged any “injuries apart from the costs and loss of cost savings allegedly incurred by the Tarter Companies.” Smith, 305 F.Supp.3d at 739. Instead, they had only suffered diminution in the value of their corporate shares, which, according to Sixth Circuit precedent, is insufficient to confer standing. Id. (citing Warren v. Mfrs. Nat. Bank of Detroit, 759 F.2d 542, 544 (6th Cir. 1985)). Plaintiffs again seek to sue the Defendants in their individual capacities. [DE 1, at 19.] They, however, have not asserted any new facts or arguments in support of their position. With nothing additional to review, the Court adopts Judge Reeves' analysis and concludes that the Plaintiffs lack individual standing to sue the Defendants.

         C.

         The Plaintiffs also assert that Tarter Industries has direct standing to sue the Defendants due to a Board resolution authorizing the entity to seek legal redress. Defendants Joshua Tarter and Thomas Gregory, via their 12(b)(1) motions, challenge the validity of this resolution. First, they argue that David Tarter did not have the authority to order the call for the special meeting because he was not, at the time, the President of Tarter Industries. Second, Defendants contend that the members of the Third Generation (David, Donald, and Joy) were not actually the Directors of Tarter Industries and therefore, could not raise the matter for a vote. Third, Defendants argue that even if the Court determines that the Board was comprised of Third Generation family members, the vote was nonetheless invalid because it was called in bad faith and because of Anna Lou's conflict. Fourth and finally, Defendants argue that the interim management agreement precluded the vote altogether.

         Defendants Joshua Tarter and Thomas Gregory claim that David, Donald, and Joy abdicated their positions as Directors when they transferred their interests in Tarter Industries back in 2012. Though they are not specific as to who currently sits on the Tarter Industries Board, Defendants appear to be arguing that it consists of Anna Lou and some variation of Fourth Generation family members. The Defendants also argue that Fourth Generation members, in addition to occupying the corporation's Board seats, are also the acting Officers of Tarter Industries. They point to the annual filings with the Kentucky Secretary of ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.