Walker v. Driven Holdings, LLC

Walker v. Driven Holdings, LLC, 

.


STATE OF NORTH CAROLINA                IN THE GENERAL COURT OF JUSTICE
                                           SUPERIOR COURT DIVISION
COUNTY OF MECKLENBURG                 15 CVS 17981 (Master File); 15 CVS 23044;
                                      15 CVS 23045; 15 CVS 23046; 15 CVS 23047

KEN WALKER; et al.,

                 Plaintiffs,

       v.                                     ORDER AND OPINION
                                             DISMISSING ALL CLAIMS
DRIVEN HOLDINGS, LLC,

                 Defendant.


      1.    THIS MATTER involves five consolidated cases: Walker v. Driven

Holdings, LLC, No. 15 CVS 17981 (the “Ken Walker Lawsuit”); Rauch v. Driven

Holdings, LLC, No. 15 CVS 23044; Walker v. Driven Holdings, LLC, No. 15 CVS

23045; Kirby v. Driven Holdings, LLC, No. 15 CVS 23046; and Moran v. Driven

Holdings, LLC, No. 15 CVS 23047. Now before the Court is the Motion to Dismiss of

Driven Holdings, LLC (“Motion”), which seeks to dismiss all claims in each of the

cases in this consolidated action. For the reasons explained below, the Motion is

GRANTED, and each of the separate cases is DISMISSED WITH PREJUDICE.

      Milazzo Schaffer Webb Law, PLLC, by David C. Boggs and Colin R.
      Stockton, for Plaintiffs.

      Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP, by Jackson
      Wyatt Moore, Jr. and Michael W. Mitchell, and White & Case LLP, by
      Glenn M. Kurtz (pro hac vice) and Kimberly A. Haviv (pro hac vice), for
      Defendant Driven Holdings, LLC.

Gale, Chief Judge.
                         I.   FACTUAL BACKGROUND

      2.       The Court does not make findings of fact on a Rule 12(b)(6) motion to

dismiss. It draws the following factual summary from the relevant allegations in the

amended complaints and the documents attached to and incorporated by those

complaints.    The allegations of the separate complaints are essentially identical

except for the company that each Plaintiff worked for, the individual agreements

signed by each Plaintiff, and the number of equity units alleged. (See Def.’s Br. Supp.

Mot. Dismiss 1 n.1; Pls.’ Br. Resp. and Opp’n to Mot. Dismiss 1 n.1.) Unless otherwise

specified, citations to the Amended Complaint refer to the third amended complaint

in the Ken Walker Lawsuit.

      3.       Plaintiffs Ken Walker, Ted P. Pearce, Mark Street, Warren C. Bickers,

Donald P. Rauch, Joel Walker, Tom Kirby, and Keenan V. Moran were employed by

franchises owned or operated by holding company Driven Brands, Inc. (“Driven

Brands”).     Plaintiffs owned stock in Driven Brands and sold their interests to

Defendant Driven Holdings, LLC (“Holdings”) through a multiparty transaction on

November 29, 2011 (the “Transaction”). Plaintiffs received as consideration a cash

payment, some of which was reinvested in Holdings, and certain vested and unvested

equity interests in Holdings, including a class of equity interests called “Common

Units (Special Profits Interest)” (“SPI Units”). (Am. Compl. ¶¶ 5, 11; see Am. Compl.

Ex. A(1).)

      4.       Following the Transaction, Plaintiffs were employed as executives for

companies maintained in Holdings’ franchise portfolio.       (Am. Compl. ¶ 15; Am.
Compl. Ex. A(1).) Each Plaintiff’s employment was terminated. (Am. Compl. ¶ 15.)

Ken Walker and some but not all of the remaining Plaintiffs executed severance

agreements at the time of their termination. (See Second Kurtz Aff. Ex. B.) All

Plaintiffs but Ken Walker later executed a one-page agreement titled “Equity

Repurchase” (the “Repurchase Agreement(s)”). (See, e.g., Am. Compl. Ex. D.)

      5.     Holdings is governed by the Amended and Restated Limited Liability

Company Agreement of Driven Holdings, LLC (“Operating Agreement”).                  (Am.

Compl. Ex. A(2) (“Operating Agreement”).) The Operating Agreement defines eleven

categories of ownership interests referred to as “Units.”        (Operating Agreement

§ 2.1(b).) The agreement subjects distribution to the various classes of equity units

to a defined waterfall, with the SPI Units being seventh in line.             (Operating

Agreement § 5.1(a).)

      6.     Plaintiffs allege that, on the date of the Transaction, the SPI Units had

a “deemed value” of $15 million (150,000 units at $100 per unit) and that each

Plaintiff became vested in those units upon consummation of the Transaction. (Am.

Compl. ¶¶ 6, 8.)

      7.     Article VIII of the Operating Agreement governs transfers of units in

Holdings. The agreement deems void any transfer that is not a “Permitted Transfer.”

(Operating Agreement § 8.1.) Section 8.2(a) enumerates nine types of Permitted

Transfers, including a broad category that covers transfers not listed as a Permitted

Transfer in other provisions of section 8.2(a) if the transfer is “permitted by a majority

of the Directors of the Board who are not officers, directors or employees of, or
partners in, the Person that proposes such Transfer.”            (Operating Agreement

§ 8.2(a)(vii).)

       8.         The Operating Agreement also lists as a Permitted Transfer Holdings’

option to repurchase units owned by Plaintiffs and other executives. (Operating

Agreement § 8.2(a)(viii).)

       9.         The Operating Agreement attached a document titled “Annex A” for

each Plaintiff. (See Am. Compl. Ex. B.) Each Annex A includes a provision that

subjected the executive’s units to Holdings’ Repurchase Right (the “Repurchase

Option”). (Am. Compl. ¶¶ 16, 18; see Am. Compl. Ex. B.) The Repurchase Option

gave Holdings the right, but did not obligate Holdings, to purchase the executive’s

units if the executive was terminated without cause, and imposed certain conditions

on Holdings’ exercise of the Repurchase Option, including giving timely notice and

performing a valuation.         (Am. Compl. Ex. B.)      Holdings had to exercise the

Repurchase Option within six months of the executive’s termination, and it had to

value the units being repurchased under the Repurchase Option at “the Fair Market

Value of the applicable Units on the date of termination of [the] Executive (as

determined in good faith by the Board).” (Am. Compl. Ex. B; see Am. Compl. ¶ 18.)

       10.        Plaintiffs were terminated without cause at various times in mid-2012.

(Am. Compl. ¶ 15.)

       11.        Ultimately, each Plaintiff other than Ken Walker transferred their SPI

Units to Holdings in exchange for cash payment and a broad general release.
      12.    In connection with his termination, Plaintiff Ken Walker signed a

document titled “General Release By and between Kenneth D. Walker and Driven

Brands, Inc.,” dated July 26, 2012 (the “Walker General Release”). (Second Kurtz

Aff. Ex. A (“Walker General Release”).) The agreement recites that Ken Walker was

not being terminated for “Good Reason” but that he would nevertheless be paid

severance benefits owed only to executives terminated for “Good Reason.” (Walker

General Release 1.)

      13.    The Walker General Release addresses the repurchase of Ken Walker’s

equity units. (Walker General Release § 2.) Section 2(a) of the release itemizes the

various units that Ken Walker held at the time he was terminated. (Walker General

Release § 2(a).) Section 2(b) defines Ken Walker’s units that became vested as of his

termination date and provides that all unvested units are forfeited and canceled.

(Walker General Release § 2(b).) Section 2(c) identifies Ken Walker’s vested units,

including his SPI Units. (Walker General Release § 2(c).)

      14.    As to the vested units, Ken Walker agreed that the fair market value of

the SPI Units on his termination date was zero dollars, and the total fair market

value of his other vested units on that date was an aggregate amount equal to $2.5

million. (Walker General Release § 2(c).) The Walker General Release further

provides that “[t]he Board of Directors of the Parent shall notify [Ken Walker] of any

election by Parent to repurchase the Units as set forth herein and in accordance with

the terms of Annex A.” (Walker General Release § 2(c).)
      15.    Section 3 of the Walker General Release includes a broad release of all

claims against Driven Brands and its “direct or indirect parents” for both known and

unknown claims that existed on the date the agreement was executed. (Walker

General Release § 3(a).)

      16.    In December 2012, Ken Walker accepted a $2.5 million payment from

Holdings. (See Am. Compl. ¶¶ 25–26, 28.)

      17.    Plaintiff Rauch entered into a Separation Agreement and Release in

connection with the termination of his employment with Maaco Franchising, Inc.,

dated August 30, 2012. (Second Kurtz Aff. Ex. B.) The agreement provides that

Rauch would be paid a severance benefit. (Second Kurtz Aff. Ex. B, § 6.) With regard

to his units in Holdings, the agreement identifies Rauch’s various units by category,

cancels those that had not vested, acknowledges that vested units were subject to the

Repurchase Option in Annex A, and provides that Rauch would be notified within six

months of any decision to repurchase his units. (Second Kurtz Aff. Ex. B, § 7.) The

agreement acknowledges that the “Fair Market Value on the Termination Date of the

[SPI Units] is zero dollars.” (Second Kurtz Aff. Ex. B, § 7(c).) The agreement includes

a broad release in favor of Maaco, as well as its parent and affiliates, which includes

Holdings. (Second Kurtz Aff. Ex. B, § 9.)

      18.    In connection with their respective employment terminations, Plaintiffs

Bickers, Joel Walker, and Kirby entered into separation agreements that contained

the same provisions as Rauch’s separation agreement.
       19.    Bickers entered into a Separation Agreement and Release with Econo

Lube N Tune, Inc., dated September 19, 2012. (See Second Kurtz Aff. Ex. B.) Joel

Walker entered into a Separation Agreement and Release with Forward

Development, Inc., dated August 13, 2012. (See Second Kurtz Aff. Ex. B.) Kirby

entered into a Separation Agreement and Release with Meineke Car Care Centers,

Inc., dated August 29, 2012. (See Second Kurtz Aff. Ex. B.)

       20.    In sum, Ken Walker, Rauch, Bickers, Joel Walker, and Kirby

contractually agreed that, at the time their employment was terminated, the fair

market value of their SPI Units was zero dollars.

       21.    Plaintiffs Pearce, Street, and Moran did not execute separation

agreements at the time of their termination.

       22.    In December 2012, all Plaintiffs but Ken Walker executed a one-page

Repurchase Agreement. (See Am. Compl. Ex. D.) The Repurchase Agreements all

contain the same terms with different amounts and personal information for each

Plaintiff.   (Am. Compl. Ex. D.)     Each Repurchase Agreement recites that the

respective Plaintiff was selling all categories of his vested and unvested equity units,

to Holdings for the stated purchase price. (Am. Compl. Ex. D.) The aggregate

purchase price for Plaintiffs’ equity interests was $4.3 million.

       23.    Before signing the Repurchase Agreements, each Plaintiff provided

handwritten bank information to allow the purchase consideration to be wired. (See

Am. Compl. Ex. D; Kirby Am. Compl. Ex. B; Joel Walker Am. Compl. Ex. C; Moran

Am. Compl. Ex. C; Rauch Am. Compl. Ex. B.)
      24.    Each Repurchase Agreement contains a comprehensive release in favor

of Holdings and related parties that bars all known or unknown claims related in any

way to the units, other than an action to enforce the Repurchase Agreement. (Am.

Compl. Ex. D.)

      25.    A cover letter accompanying each Repurchase Agreement provides that

Holdings “has decided to repurchase all of your vested Units for an amount set forth

in the attached repurchase agreement,” and that the repurchase was timed, in part,

to achieve Plaintiffs’ desired tax consequences. (Am. Compl. Ex. C.)

      26.    Plaintiffs contend that the purchases and releases did not extinguish

their rights in their equity units because the repurchase did not strictly comply with

the notice and valuation requirements of Annex A. (Am. Compl. ¶¶ 37–42.)

      27.    Neither the one-page Repurchase Agreements nor the cover letters refer

to Holding’s Repurchase Option under Annex A or to the Operating Agreement.

      28.    In 2015, Holdings paid compensation to record holders of SPI Units, and

Plaintiffs contend that they are entitled to similar compensation. (Am. Compl. ¶ 43.)

      29.    Plaintiffs assert a contract claim to enforce their ownership rights in the

Holdings equity units. They claim that any purported transfer of those units is void

unless the transfer was made through the Repurchase Option, as provided by the

Operating Agreement.       On that basis, they also assert claims of negligent

misrepresentation,   intentional   misrepresentation,    fraudulent    inducement    or

concealment, mutual mistake, unilateral mistake, breach of the implied covenants of

good faith and fair dealing, chapter 78A violations, and declaratory judgment.
                        II.     PROCEDURAL HISTORY

        30.   The Ken Walker Lawsuit is brought by Plaintiffs Ken Walker, Pearce,

Street, and Bickers. They filed their initial complaint in the Mecklenburg County

Superior Court on October 14, 2015, and filed an amended complaint on October 26,

2015.

        31.   Holdings timely filed a notice of designation in the Ken Walker Lawsuit

on November 12, 2015.         The Chief Justice designated the case as a mandatory

complex business case on November 13, 2015, and the case was assigned to the

undersigned on November 16, 2015. Plaintiffs in the Ken Walker Lawsuit filed a

second amended complaint on December 16, 2015.

        32.   Plaintiffs Rauch, Joel Walker, Kirby, and Moran filed their initial

complaints in the Mecklenburg County District Court on December 16, 2015.

        33.   On January 14, 2016, Holdings filed a consent motion in the

Mecklenburg County District Court to transfer the four district-court cases to the

superior-court division. Holdings concurrently filed a consent motion in this Court to

consolidate the four district-court cases with the Ken Walker Lawsuit.

        34.   On January 15, 2016, the Court granted the motion to consolidate and

designated the Ken Walker Lawsuit as the lead case in the consolidated action. The

district court entered an order transferring the other cases to the superior-court

division on February 2, 2016.
      35.      Plaintiffs Rauch, Joel Walker, Kirby, and Moran amended their

complaints on March 24, 2016, and Plaintiffs in the Ken Walker Lawsuit filed a third

amended complaint.

      36.      On April 26, 2016, Holdings moved to dismiss all claims alleged in the

March 24, 2016 amended complaints on the basis that those complaints and the

documents attached to them demonstrate as a matter of law that each Plaintiff has

either extinguished or transferred all of their equity interests in Holdings and

voluntarily executed a release that bars their claims.

      37.      The Motion has been briefed and argued, and it is now ripe for

disposition.


                           III.   LEGAL STANDARD

      38.      On a motion to dismiss under Rule 12(b)(6), the Court considers

“whether the pleadings, when taken as true, are legally sufficient to satisfy the

elements of at least some legally cognizable claim.” Arroyo v. Scottie’s Prof’l Window

Cleaning, Inc., 

, 

 (1995) (quoting Harris v.

NCNB Nat’l Bank of N.C., 

, 

 (1987)). The

Court is not required “to accept as true allegations that are merely conclusory,

unwarranted deductions of fact, or unreasonable inferences,” Strickland v. Hedrick,

, 

 (2008) (quoting Good Hope Hosp., Inc. v. N.C.

Dep’t of Health & Human Servs., 

, 

 (2005)),

and it may ignore the plaintiff’s legal conclusions, McCrann v. Pinehurst, LLC, 

, 

 (2013).
      39.    The Court will grant a motion to dismiss under Rule 12(b)(6) if (1) no

law supports the plaintiff’s claim, (2) the complaint does not plead sufficient facts to

state a legally sound claim, or (3) the complaint discloses a fact that defeats the

plaintiff’s claim. Oates v. JAG, Inc., 

, 

 (1985).

      40.    In ruling on a Rule 12(b)(6) motion, the Court “may properly consider

documents which are the subject of a plaintiff’s complaint and to which the complaint

specifically refers even though they are presented by the defendant.” Oberlin Capital,

L.P. v. Slavin, 

, 

 (2001). Likewise, the Court

“can reject allegations that are contradicted by the documents attached, specifically

referred to, or incorporated by reference in the complaint.” Laster v. Francis, 

, 

 (2009). “[T]he terms of an attached exhibit

control over contrary allegations in the complaint.” Highland Paving Co. v. First

Bank, 

, 

 (2013) (citing Wilson v. Crab Orchard

Dev. Co., 

, 

 (1970)).


                                IV.    ANALYSIS

A.    Plaintiffs’ Voluntary Repurchase Agreements Are Not Voided by the
      Operating Agreement’s Provisions Regarding Permitted Transfers.

      41.    Plaintiffs contend that, under the Operating Agreement, Holdings’ sole

method for repurchasing Plaintiffs’ equity interests was through the Annex A

Repurchase Option, and any equity transfer that did not comply with the Operating

Agreement is void.
      (1)    Plaintiffs Ken Walker, Rauch, Bickers, Joel Walker, and Kirby
             are bound by their agreement that the SPI Units had no value at
             the time those Plaintiffs were terminated.

      42.    If the Court first assumes, solely for purposes of Plaintiffs’ argument,

that the Operating Agreement restricted the transfer of Plaintiffs’ units in Holdings

to a repurchase through Holdings’ unilateral Repurchase Option, Plaintiffs

nevertheless acknowledged in their severance agreements, supported by valuable

consideration, that their SPI Units, although vested, had zero value at the time their

employment was terminated. Effectively, this admission rendered meaningless any

subsequent exercise of Holdings’ Repurchase Option as to the SPI Units.

      43.    The Court concludes as a simple matter of contract, and without the

need to cite authority, that Plaintiffs, in exchange for valuable consideration,

including payment of severance benefits, acknowledged that their unvested units

were canceled and that their SPI Units should be valued at zero dollars on the date

of their termination. Any subsequent purchase would be valued as of that date, as a

result of which Plaintiffs no longer had any valuable right in those units, and a

purchase of units at zero value would be a meaningless exercise, whether the

purchase be through Holdings’ Repurchase Option or through a separate voluntary

transfer.

      44.    Plaintiffs Ken Walker, Rauch, Bickers, Joel Walker, and Kirby present

no basis for setting aside their severance agreements. Accordingly, any claim that

they might have otherwise had in the SPI Units is barred by the admissions and

releases in their separation agreements.
      (2)    Plaintiffs’ claims depend on the erroneous assertion that the
             sole Permitted Transfer of their units was through Holdings’
             Repurchase Option.

      45.    Plaintiffs premise their various claims on the assertion that the

Operating Agreement restricted the transfer of Plaintiffs’ units to Holdings’ exercise

of its Repurchase Option through Annex A, that the December 2012 Repurchase

Agreements must be deemed to have integrated the Operating Agreement and Annex

A, and that the transfers of Plaintiffs’ units are therefore void because Holdings did

not complete the purchase in strict compliance with Annex A. (Pls.’ Br. Resp. and

Opp’n to Mot. Dismiss 10.)

      46.    There are multiple reasons why Plaintiffs overreach when making their

argument.

      47.    First is the assumption that Plaintiffs could not voluntarily waive the

requirements imposed by Annex A as part of a voluntary transaction by which they

accepted the tendered purchase price. Plaintiffs attempt to argue that they were

improperly induced to enter into those agreements on a reasonable assumption that

Holdings had first performed a valuation to determine the fair market value of the

units at the time of Plaintiffs’ termination when in fact no valuation was performed.

That argument is particularly hollow as to those Plaintiffs that expressly

acknowledged, in consideration of their receipt of severance payments and other

benefits, that the SPI Units had no value at the time of their termination.

      48.    Second,   Plaintiffs   argument   that   the   Repurchase   Agreements

incorporated, and therefore had to comply with, the Repurchase Option provided by
Annex A fails for the simple reason that those documents were not incorporated, and

the one-page Repurchase Agreements contain all necessary terms of an enforceable

agreement to sell Plaintiffs’ units for consideration. The Repurchase Agreements

identify the units being purchased, specify a stated purchase price, and contain

adequate language to consummate the transfer and a release of all claims.

      49.    “[W]here the parties have deliberately put their engagements in

writing . . . it is presumed the writing was intended by the parties to represent all

their engagements as to the elements dealt with in the writing.” Neal v. Marrone,

, 

 (1953) (holding that prior or contemporaneous

negotiations inconsistent with a writing, or ones that “tend to substitute a new and

different contract from the one evidenced by the writing,” are incompetent). Separate

documents may be integrated and construed together as one agreement only where

they are “contemporaneously executed written instruments between the parties” that

“relat[e] to the subject matter of the contract” at issue. Carolina Place Joint Venture

v. Flamers Charburgers, Inc., 

, 

 (2001).

      50.    There is no ambiguity that necessitates the trier of fact to interpret the

terms of the straightforward Repurchase Agreements that Plaintiffs voluntarily

executed. Under North Carolina law, “[w]hen the language of a contract is clear and

unambiguous, construction of the contract is a matter of law for the court,” Hagler v.

Hagler, 

, 

 (1987), “and the court cannot look

beyond the terms of the contract to determine the intentions of the parties,” Piedmont

Bank & Tr. Co. v. Stevenson, 

, 

, aff’d, 

, 

 (1986); see also Walton v. City of Raleigh, 

, 

 (1996) (“If the plain language of a contract is clear, the intention of

the parties is inferred from the words of the contract.”).

      51.    Plaintiffs allege that the Repurchase Agreements “did not reflect, state

or embody the agreement of the parties as expressed in and through the Stock

Agreement, Holdings Operating Agreement, [Annex A], or otherwise.” (Am. Compl.

¶ 27.) The Repurchase Agreements did not refer to any of those documents. The

Court is not persuaded by Plaintiffs’ argument that those documents were

incorporated into the Repurchase Agreement because the cover letter forwarding

those agreements provided that “capitalized terms used herein and not defined herein

shall have the respective meanings ascribed to such terms in the [Operating]

Agreement and Annex A.” (Am. Compl. Ex. C; see Pls.’ Br. Resp. and Opp’n to Mot.

Dismiss 10–11.)

      52.    Third, and perhaps most significantly, Plaintiffs’ core argument does not

square with the terms of the Operating Agreement that allowed Holdings to authorize

a voluntary agreement with Plaintiffs without having to rely on its unilateral

Repurchase Option.

      53.    Plaintiffs persistently argue that the Operating Agreement restricts any

Permitted Transfer of Plaintiffs’ units to the Repurchase Option referred to in section

8.2(a)(viii) of the Operating Agreement. That argument ignores the language of

section 8.2(a)(vii), which further defines a Permitted Transfer to include “any

Transfer of Units not described in any of clauses (i) through (vii) [of section 8.2(a)] if
permitted by a majority of the Directors of the Board who are not officers, directors

or employees of, or partners in, the Person that proposes such Transfer.” (Operating

Agreement § 8.2(a)(vii).)

      54.    Further ignoring this provision, Plaintiffs argue that they “did not know

and were unaware and had no reason to know of or be aware at any time” that the

Repurchase Agreements did not comply with the requirements of the Operating

Agreement and Annex A. (Am. Compl. ¶ 35.) As noted, the agreements did not

incorporate or depend on Annex A, and Plaintiffs must be assumed to have

understood the Repurchase Agreements that they read and executed.           See, e.g.,

Martin v. Vance, 

, 

, 309–10 (1999) (“[P]laintiff’s

execution of this document charges her with knowledge and assent to the contents of

the agreement.”).

      55.    In sum, the Operating Agreement allowed Holdings and Plaintiffs to

enter into a consensual, voluntary transfer of Plaintiffs’ equity units in Holdings.

Plaintiffs have demonstrated no facts to support a finding that they did not

voluntarily enter into their agreements, transfer their units for value, and execute

comprehensive releases by which they must be bound.

B.    The Comprehensive Releases Bar All of Plaintiffs’ Claims Related to
      Any Units.

      56.     “Releases are contractual in nature and their interpretation is governed

by the same rules governing interpretation of contracts.” TaiDoc Tech. Corp. v. OK

Biotech Co., No. 12 CVS 20909, 

, at *13 (N.C. Super. Ct. July

17, 2015) (quoting Chemimetals Processing, Inc. v. Schrimsher, 

, 

 (2000)). Thus, when the language of a release is clear, the

Court cannot look beyond the language of the release to determine the parties’ intent.

See Piedmont Bank & Tr. Co., 

, 

. As a result, the

Court must construe a contract that releases “‘all claims of any kind’ . . . to mean

precisely that: an intent to release all claims of any kind in existence.” Fin. Servs. of

Raleigh, Inc. v. Barefoot, 

, 

 (2004). “Where

the execution of a release based on valuable consideration is admitted,” the release is

“a complete defense to an action for damages.” Talton v. Mac Tools, Inc., 

, 

 (1995).

      (1)    Releases in the Repurchase Agreements

      57.    The Repurchase Agreements entered into by Plaintiffs other than Ken

Walker contain releases that provide that each Plaintiff

      hereby      expressly    and     irrevocably   releases    and    forever
      discharges . . . [Holdings] . . . from any and all claims, counterclaims,
      demands, debts, actions, causes of actions, suits, expenses, costs,
      attorneys’ fees, damages, indemnities, obligations, losses and/or
      liabilities of any nature whatsoever, whether known or unknown, which
      [Plaintiff] ever had, now has or hereafter can or may have against
      [Holdings] by reason of any matter related to the Units and/or this
      repurchase; provided, however, that nothing herein releases any claim
      [Plaintiff] has or may have against [Holdings] regarding the
      performance or nonperformance of obligations arising hereunder.

(Am. Compl. Ex. D (stylistic emphasis omitted).)

      58.    The Court rejects Plaintiffs’ argument that their claims are governed by

the carve-out provision for “claim[s] . . . regarding the performance or nonperformance

of obligations arising hereunder.” (Am. Compl. Ex. D; see Pls.’ Br. Resp. and Opp’n

to Mot. Dismiss 19–20.) Holdings paid, and Plaintiffs accepted, the purchase price
stated by the agreements. Plaintiffs admit that they “received the [SPI Units] in

exchange for selling their ownership interest in the company that [Holdings]

acquired.”   (Pls.’ Br. Resp. and Opp’n to Mot. Dismiss 21–22.)         That admission

precludes any argument that the releases fail for want of consideration. See Harllee

v. Harllee, 

, 

 (2002) (“[T]o defeat a contract

for failure of consideration, the failure of consideration must be complete and total.”).

      59.    In sum, Plaintiffs other than Ken Walker are barred by the general

release in the Repurchase Agreements, assuming that those Plaintiffs who earlier

signed separation agreements still had claims to release.

      (2)    The Walker General Release

      60.    Unlike the other Plaintiffs, Ken Walker did not execute the Repurchase

Agreement. (Am. Compl. ¶¶ 21, 28–29.) He must, however, be bound by the Walker

General Release that he executed on July 26, 2012.

      61.    As stated above, in section 2 of the Walker General Release titled

“Repurchase of Units,” Ken Walker acknowledged that the SPI Units had a value of

“zero dollars” at the time he was terminated and that the aggregate value of his other

equity interests was $2.5 million. (Walker General Release § 2(c).) He later accepted

Holdings’ payment of $2.5 million.

      62.    The Walker General Release was supported by consideration, including

payment of severance compensation. That consideration was adequate to support the

general release contained in section 3, by which Ken Walker “knowingly and
voluntarily releases and discharges” the released parties, “to the fullest extent

permitted by law,”

      of and from all actions, agreements, claims, damages, expenses
      (including attorney’s fees and costs), judgments, liabilities, obligations
      or suits of any kind whatsoever, in law, equity or otherwise, in any
      jurisdiction, whether known or unknown, suspected or claimed,
      specifically mentioned herein or not, which [Ken Walker] had, has or
      may have against any of the Released Parties by reason of any actual or
      alleged act, event, occurrence, omission, practice or other matter
      whatsoever from the beginning of time up to and including the date that
      [Ken Walker] signs this General Release.

(Walker General Release § 3(a).)

      63.    Although the Walker General Release was executed between Ken

Walker and Driven Brands, the language of the release extends to Holdings as the

direct or indirect parent of Driven Brands.

      64.    The Court concludes that the Walker General Release bars Ken

Walker’s claims.

C.    Plaintiffs’ Remaining Claims Depend on the Erroneous Assertion that
      the Repurchases Were Not Authorized Under the Operating
      Agreement.

      65.    In addition to the breach-of-contract claim, which the Court finds cannot

be sustained, Plaintiffs assert claims for negligent misrepresentation, intentional

misrepresentation, fraudulent inducement or concealment, mutual mistake,

unilateral mistake, breach of the implied covenants of good faith and fair dealing,

chapter 78A violations, and declaratory judgment. The allegations in the amended

complaints make clear that those claims depend on Plaintiffs’ transfers being voided
by failure to comply with Holdings’ Annex A Repurchase Option and the Operating

Agreement. For example:

            Plaintiffs’ claims for fraud and misrepresentation allege that Holdings

             misrepresented that it “had duly performed the requirements under

             Annex ‘A’ applicable to valuation of each of Plaintiffs’ classification of

             equity.” (Am. Compl. ¶ 45(a); see also Am. Compl. ¶¶ 45, 56, 59–60.)

            Plaintiffs’ claim for securities violations under chapter 78A relates to

             their “full and reasonable reliance on Defendant’s good faith compliance

             with its contractual obligations under Annex ‘A.’” (Am. Compl. ¶ 104.)

            Plaintiffs allege that Holdings breached the implied covenants of good

             faith and fair dealing by failing to perform its “contractual obligation to

             Plaintiffs to value Plaintiffs’ equity,” including the SPI Units, “as set

             forth in Annex ‘A.’” (Am. Compl. ¶ 81(a).)

      66.    Having rejected the critical assumption on which Plaintiffs’ claims other

than the contract claim rest, those claims also should be dismissed.


                               V.   CONCLUSION

      67.    For the reasons stated above, Holdings’ Motion is GRANTED, and all

claims in each of the cases in this consolidated action are DISMISSED WITH

PREJUDICE.
SO ORDERED, this the 7th day of August, 2017.



                               /s/ James L. Gale
                              James L. Gale
                              Chief Business Court Judge