{"id":655,"date":"2013-08-07T14:16:09","date_gmt":"2013-08-07T14:16:09","guid":{"rendered":"https:\/\/www.bfvlaw.com\/sale-of-child-care-facility-spawns-non-compete-litigation\/"},"modified":"2013-08-07T14:16:09","modified_gmt":"2013-08-07T14:16:09","slug":"sale-of-child-care-facility-spawns-non-compete-litigation","status":"publish","type":"post","link":"https:\/\/www.bfvlaw.com\/sale-of-child-care-facility-spawns-non-compete-litigation\/","title":{"rendered":"Sale of Child Care Facility Spawns Non-Compete Litigation"},"content":{"rendered":"<p><em>Primary Investments, LLC v. Wee Tender Care, III, Inc.<\/em>, 2013 WL 3665318 (Ga. App. July 16, 2013), involves a dispute arising out of the sale of Primary Prep Academy, a child care facility.\u00a0 In 2008, Primary, LLC sold N&amp; N Holdings, LLC the assets of a child care business.\u00a0 Marguerite O\u2019Brien, who is a member of Primary, LLC, executed the asset purchase agreement on behalf of the seller.\u00a0 The asset purchase agreement contained a non-competition provision which provided that from three years after the closing date, neither the seller nor its agents would engage in certain competitive activities.\u00a0 In January 2010, Ms. O\u2019Brien, as well as two of her relatives who were the other two members and managers of Primary LLC, formed East Cobb Children\u2019s Academy, LLC and opened a new child care facility.\u00a0 This facility was located within the restricted territory under the non-compete in the asset purchase agreement.<\/p>\n<p>The buyers filed suit, alleging a breach of the non-compete.\u00a0 The trial court granted summary judgment with respect to the Defendants\u2019 liability, finding that the non-compete had been violated.<\/p>\n<p>The Georgia Court of Appeals reversed, relying on the fact that the asset purchase agreement was between only Primary, LLC and the buyers.\u00a0 The Court of Appeals found that there was no evidence that <em>Primary, LLC<\/em> (who was the Seller) was involved in opening the new child care facility.\u00a0 The Court of Appeals also found that there was no evidence indicating that when the O\u2019Briens opened the new child care facility, they were acting as agents of Primary, LLC, or were acting for any purpose related to the business and r affairs of Primary, LLC.\u00a0 Thus, the Court of Appeals concluded that Primary, LLC did not violate the non-compete.<\/p>\n<p>The Court of Appeals also considered whether the language in the non-compete \u2013 \u201cneither Seller <span>nor its agents<\/span>\u201d (emphasis added) \u2014 had the effect of barring the O\u2019Briens from opening the new child care facility in their individual capacities.\u00a0 The buyers relied on the fact that Ms. O\u2019Brien had executed the Agreement on behalf of Primary, LLC.\u00a0 However, the Court of Appeals concluded that Ms. O\u2019Brien had executed the asset purchase agreement in a representative capacity, not an individual capacity.\u00a0 The Court of Appeals thus found Mrs. O\u2019Brien\u2019s execution of the asset purchase agreement was insufficient to make Primary, LLC\u2019s obligations, including its obligations under the non-compete, binding on the individuals personally.\u00a0 According to the Court of Appeals, \u201cif N &amp; N Holdings and the Nixons wished to bind the O\u2019Briens to the terms of the noncompetition clause, they were required to make them parties to the APA and to obtain their signatures in their individual capacities.\u201d<\/p>\n<p>The Court of Appeals thus reversed the trial court\u2019s grant of partial summary judgment against the Defendants on the issue of their liability for breaching the non-compete.<\/p>\n<p>On a separate issue, the Court of Appeals affirmed the trial court\u2019s grant of summary judgment as to the Defendants\u2019 claim for rescission of the asset purchase agreement based on fraud or mistake.\u00a0 The Defendants\u2019 claimed that there had been a mutual mistake with respect to the size of the restricted territory in the non-compete in the asset purchase agreement.\u00a0 They contended that in the execution copy of the asset purchase agreement the radius had been increased from five miles to ten miles based on the buyers\u2019 fraud.\u00a0 However, the Court of Appeals found that the trial court had appropriately granted summary judgment on this claim.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Primary Investments, LLC v. Wee Tender Care, III, Inc., 2013 WL 3665318 (Ga. App. July 16, 2013), involves a dispute arising out of the sale of Primary Prep Academy, a child care facility.\u00a0 In 2008, Primary, LLC sold N&amp; N Holdings, LLC the assets of a child care business.\u00a0 Marguerite O\u2019Brien, who is a member [&hellip;]<\/p>\n","protected":false},"author":18,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_mo_disable_npp":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4,9],"tags":[25,16],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Sale of Child Care Facility Spawns Non-Compete Litigation - Berman Fink Van Horn P.C.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bfvlaw.com\/sale-of-child-care-facility-spawns-non-compete-litigation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sale of Child Care Facility Spawns Non-Compete Litigation - Berman Fink Van Horn P.C.\" \/>\n<meta property=\"og:description\" content=\"Primary Investments, LLC v. 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