North Carolina Business Litigation Report

Praxair, Inc. v. Airgas, Inc., 1999 NCBC 5 (N.C. Super. Ct. May 26, 1999)(Tennille)

The claim here involved a Right of First Refusal. Plaintiff alleged that the defendants had engaged in a sham transaction designed to deprive it of its rights under the RFR, by effectively selling a controlling interest in the company in which plaintiff had the RFR through a Joint Venture Agreement.

The defendant sellers had been careful not to sell a majority interest to the buyer. The JVA gave the sellers various options to sell their remaining shares to the buyer after the expiration of the RFR, but buyer had no right to obtain those shares.

The Court held that the JVA did not violate plaintiff's first refusal rights, though it noted that "it is apparent from the Joint Venture Agreement that it was carefully and artfully drafted in an effort to avoid or negate any claims that the written agreement itself violated the RFR."

The Court, however, allowed the plaintiff to proceed on the theory that there was an oral agreement to convey the remaining shares, an agreement which the Court found would have violated the RFR.

The plaintiff was also permitted to proceed on its claim against the buyer for tortious interference with contract, though the Court dismissed the claim for tortious interference with prospective economic advantage, since the buyer had a lawful justification for competing with plaintiff to purchase the company. Since tortious interference is an unfair and deceptive practice, the motion to dismiss was denied as to that claim as well. It was also denied as to plaintiff's claim of civil conspiracy.

Full Opinion

Trackbacks (0) Links to blogs that reference this article Trackback URL
Comments (0) Read through and enter the discussion with the form at the end
Mack Sperling
Brooks Pierce, LLP
2000 Renaissance Plaza
230 North Elm Street
Greensboro, NC 27401

1600 Wachovia Capitol Center
150 Fayetteville Street
Raleigh, NC 27601