Eli Glob. v. Cieutat

• Docket Number: SC-2023-0058
• Decision Date: 01 December 2023
• Citation: Eli Glob. v. Cieutat, SC-2023-0058 (Ala. Dec 01, 2023)
• Parties: Eli Global, LLC, and Greg Lindberg v. Ronald Cieutat; Todd Vereen; Deborah Simison, as personal representative of the Estate of David Glenn Finnegan, deceased; Floyd Slay, Jr.;Timothy Andrews; Tyla Fowlkes; Mark Bier and Shawn Bier, as personal representatives of the Estate of Debra Little, deceased; Thomas Williams; Erin Bailey Kelso; Jan Wheeler; Eugene Dreher IV; Nancy Dreher; Joseph Moose; Phillip Epstein; Michael Dandurand; William McFarland; Angela Clark; Carol Jean Moorhead; and Michael Rudge
• Court: Alabama Supreme Court

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Eli Global, LLC, and Greg Lindberg v. Ronald Cieutat; Todd Vereen; Deborah Simison, as personal representative of the Estate of David Glenn Finnegan, deceased; Floyd Slay, Jr.;Timothy Andrews; Tyla Fowlkes; Mark Bier and Shawn Bier, as personal representatives of the Estate of Debra Little, deceased; Thomas Williams; Erin Bailey Kelso; Jan Wheeler; Eugene Dreher IV; Nancy Dreher; Joseph Moose; Phillip Epstein; Michael Dandurand; William McFarland; Angela Clark; Carol Jean Moorhead; and Michael Rudge

No. SC-2023-0058

Supreme Court of Alabama

December 1, 2023

Appeal from Mobile Circuit Court (CV-20-900993)

MENDHEIM, JUSTICE.

Eli Global, LLC, and Greg Lindberg appeal, challenging a summary judgment entered against them by the Mobile Circuit Court in an action commenced by Ronald Cieutat, Todd Vereen, and multiple other plaintiffs involving Eli Global's alleged failure to fulfill its obligations on a promissory note and Lindberg's alleged failure to fulfill his obligations on a guaranty of that promissory note. Eli Global and Lindberg also challenge the circuit court's award of attorney fees and expenses to the plaintiffs. We affirm the circuit court's summary judgment, but we remand the case to the circuit court for it to enter an order articulating its reasons for the award of attorney fees and expenses.

I. Facts

In 2002, Cieutat and Vereen founded Hemophilia Preferred Care Inc., a company focused on treating individuals with hemophilia. The company eventually expanded its business via several affiliated entities to include patients with conditions such as Crohn's disease, hepatitis C, multiple sclerosis, rheumatoid arthritis, and other specialized conditions. The flagship entity became HPC, LLC ("HPC"), and its affiliated entities were Hemophilia Preferred Care of Memphis, Inc.; HPC Biologicals Inc.; HPCNC, Inc.; HPC Specialty Rx West Virginia, Inc.; HPC Speciality Rx of Kansas, Inc.; Hemophilia Preferred Care of Oklahoma, Inc.; HPC Specialty Rx Reed, Inc.; and Hemophilia Preferred Care of Mississippi, Inc. Cieutat and Vereen served as the chief officers of those entities, and together they owned a majority stake in HPC and its affiliated entities, but 21 other individuals held smaller shares of HPC and its affiliated entities (Cieutat, Vereen, and the other owners are collectively referred to as "the Sellers").

In mid-2017, Eli Global agent Michael Pereira approached Cieutat, who was serving as chief executive officer ("CEO") of HPC and its affiliated entities, about Eli Global's interest in purchasing HPC and its affiliated entities.^[1] On November 16, 2017, Eli Global formed Specialty Pharmacy Investments, LLC, which later changed its name to HPCSP Investments, LLC ("HPCSP"), for the express purpose of acquiring HPC and its affiliated entities.

On January 19, 2018, HPCSP entered into an "Equity Purchase Agreement" with the Sellers in which HPCSP agreed to purchase a 100% interest in HPC and its affiliated entities. The Equity Purchase Agreement designated Cieutat as the "Sellers' Representative" for the transaction, provided that the "Sellers' Representative shall have the power and authority to receive from [HPCSP] any and all amounts payable by [HPCSP] to Sellers under this Agreement, the Sellers' Note and the Equity Equivalence Agreement,^[2] on behalf of Sellers," and stated that the "Sellers' Representative agrees ... to allocate and distribute such payments to Sellers in such amounts, at such times and on such terms as may be separately agreed by Sellers and Sellers' Representative." One of the "Conditions to Closing" provided in the Equity Purchase Agreement was: "Sellers' Representative shall have received a promissory note issued by Eli Global, LLC, in an aggregate original principal amount of $12,200,000, in substantially the form of, and having the terms set forth on, Exhibit D (the 'Sellers Note'), duly executed by Eli Global, LLC." Indeed, the Equity Purchase Agreement defined the "Purchase Price" for the transaction to be "the Closing Payment, plus the Equity Equivalence Agreement Payments, plus the Sellers' Note." The Equity Purchase Agreement provided that it was to be "governed by, construed and enforced in accordance with the laws of the State of New York without giving effect to the principles of conflict of laws."

As part of the acquisition of HPC and its affiliated entities, HPCSP also executed on January 19, 2018, an "Executive Employment Agreement" with Cieutat to retain Cieutat as CEO of HPCSP for an initial term of five years.

The sale of HPC and its affiliated entities closed on April 13, 2018. It is undisputed that, on that date, Eli Global executed a "Promissory Note" in the amount of $12,200,000 that Cieutat received as the Sellers' representative on behalf of all the Sellers. Because the terms of the Promissory Note are integral to the arguments in this appeal, we set out here the key provisions of the Promissory Note:

"For value received, the undersigned, Eli Global, LLC, a Delaware limited liability company ('Maker'), hereby promises to pay to the order of Ron Cieutat (on behalf of Sellers (as defined below)), as Sellers' Representative ('Payee'), at such place, or to such other party, as the legal holder of this Promissory Note may from time to time designate in writing, in lawful currency of the United States of America, the principal sum of Twelve Million Two Hundred Thousand Dollars ($12,200,000), together with interest upon the principal amount at the rate of 4.0% per annum, in immediately available funds. The principal balance of this Promissory Note and all accrued interest thereon will be payable as set forth below. This Promissory Note is being issued pursuant to Section 9.2(c) of that certain Stock Purchase Agreement, dated as of January 19, 2018 (the '[Equity] Purchase Agreement'), by and among [Cieutat], as Sellers' Representative, HPCSP Investments, LLC, a North Carolina limited liability company, as buyer ('Buyer'), and the individuals party thereto as sellers ('Sellers'). Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Purchase Agreement.

"1. Payments; Maturity Date. [Eli Global] will repay this Promissory Note in five (5) equal annual installments of principal in the amount of $2,440,000 each, plus all accrued interest to the date of each such payment, with such payments due and payable on the first five anniversaries of the date hereof (such final payment date, the 'Maturity Date'). If not sooner repaid, the principal amount of this Promissory Note and all accrued interest thereon will be due and payable in full on the Maturity Date. All payments of principal and interest and any other charges due hereunder shall be payable to [Eli Global] through any recognized means designated by [Cieutat, as the Sellers' representative,] including, without limitation, electronic transfer, wire transfer and/or debit. [Eli Global] agrees that the obligations to make the payments set forth in this paragraph are guaranteed pursuant to the Guaranty attached hereto as Exhibit A. "….

"5. Right of Offset. In accordance with Section 11.10 of the [Equity] Purchase Agreement, [Eli Global] is authorized, at any time and from time to time, to the fullest extent permitted by Law, to set-off and apply any and all amounts payable by [Eli Global] to [Cieutat, as the Sellers' representative,] under this Promissory Note against any amounts payable by [Cieutat, as the Sellers' representative,] to [HPCSP] under Article XI of the [Equity] Purchase Agreement or otherwise. In the event of such offset, [Eli Global] will provide notice to [Cieutat, as the Sellers' representative,] of such setoff amount and promptly deliver a replacement Promissory Note reflecting the new principal amount owed thereunder to [Cieutat, as the Sellers' representative]. [Cieutat, as the Sellers' representative,] agrees, in exchange for such replacement Promissory Note and upon receipt thereof, to return this Promissory Note to [Eli Global] for cancellation.

"6. Default. A default under this Promissory Note will exist if any of the following occurs (each an 'Event of Default'):

"(a) If [Eli Global] fails to perform any obligation or covenant under this Promissory Note and such failure continues for at least fifteen (15) business days after the date on which [Eli Global] has been given notice of such failure to perform ....

"….

"7. Acceleration. Upon any Event of Default under this Promissory Note, the entire principal sum hereof may, at the sole option of [Cieutat, as the Sellers' representative], be declared at once due and payable, without demand or notice, the same being expressly waived, time being of the essence of this obligation .... [Eli Global] shall pay all reasonable and actual costs and expenses incurred by [Cieutat, as the Sellers' representative,] in connection with collecting or attempting to collect any sums due under this Promissory Note or enforcing any provision of this Promissory Note, including but not limited to reasonable attorneys' fees and disbursements and applicable statutory costs, whether incurred out of court or in litigation, including pre-trial, appellate and bankruptcy proceedings.

"8. No Waiver; Remedies Cumulative. The failure of [Cieutat, as the Sellers' representative,] or [Eli Global] to exercise any right or remedy provided hereunder or available at law shall not be a waiver or release of such rights or remedies or the right to exercise any right or remedy at another time. The remedies provided [Cieutat, as the Sellers' representative,] in this Promissory Note and the [Equity] Purchase Agreement shall be cumulative and concurrent, and shall be in addition to every other right or remedy now or hereafter provided by law or

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