Thomas G. Ward v. Albert Cinelli

Arthur Wright and A. D. Wright (the
Wrights) were sole shareholders of two family-owned corporations:
Wright Businesses, Inc. (WBI), and Kentucky Data Link, Inc.
(KDL). The entities were engaged in the telecommunication
business. WBI and KDL were in default on a loan agreement with
Communications Credit Corporation. It appears, however, that the
Wrights were not exposed to personal liability thereon. The
Wrights sought to raise capital to avert the imminent foreclosure
of their businesses. In such vein, the Wrights began negotiating
with appellee, Thomas G. Ward (Ward), to sell the controlling
interests of WBI and KDL. In furtherance thereof, they entered
into a "no-shop" agreement, which prevented the Wrights from
negotiating with third parties. The no-shop agreement expired in
September 1995. On September 15, 1995, the parties entered into
an "Agreement" (the Agreement). The Agreement's legal import
is a matter of much contention between the parties.

In its most basic form, the Agreement contemplated that at a
future date Ward would "lend" to the Wrights $2.65 million, which
would be evidenced by a promissory note. At Ward's option,
the promissory note could be converted into stock representing
54% of WBI's and KDL's outstanding shares. Needless to say, the
proposed transaction between the parties never took place. It is
asserted that negotiations reached an impasse over three basic
issues:

(1) whether the Wrights would accept personal
responsibility for any breaches [sic] of
warranty or representation made by Data Link
or Wright Businesses;

(2) whether the Wrights would accept employment
provisions which allowed for them to be
summarily terminated from the companies they
created and developed; and

(3) whether the Wrights would agree to allow
Ward to have day-to-day control over Data
Link and Wright Businesses (in addition to
majority stock control).

In any event, by letter dated January 12, 1996, the Wrights
notified Ward that negotiations were terminated. It appears that
the Wrights, sometime in November 1995, entered into negotiations
with appellee, Albert Cinelli (Cinelli). On January 15, 1996,
Cinelli and the Wrights entered into a contract whereby Cinelli
acquired 51% of WBI's and KDL's outstanding shares in exchange
for $3 million.

On March 1, 1996, Ward filed the instant action against the
Wrights for breach of the Agreement, for breach of the implied
duty of good faith and fair dealing, and for conspiracy to
deprive him of an advantageous business relationship. Cinelli was
also named as a defendant for tortious interference with existing
and prospective contractual relationships.

The jury ultimately returned a verdict in favor of Ward in the amount of $987,000.00 against the Wrights and $867,000.00 against Cinelli.

Unknown

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Reversed by the Court of Appeals of Kentucky on January 8, 1999.