Campbell v. Plant Health Intermediate, Inc.

Background

The three related actions arose from an October 19, 2018 equity purchase agreement. Plant Health Intermediate, Inc. purchased all of the stock of Growth Products Ltd. and all membership interests in GP Solutions, LLC. The agreement provided for two post-closing earn-out payments and required Plant Health, as buyer, to prepare calculation statements, allow reasonable access to its books and records, negotiate objections in good faith, and refer unresolved disputes to an independent accountant. Douglas Products and Packaging Company LLC guaranteed Plant Health’s payment obligations.

Nicole Campbell, as seller representative, sued Plant Health over the first earn-out payment and later sued Plant Health and Douglas over the first and second earn-out payments. Related claims and counterclaims alleged other breaches of the agreement, including failures to follow the earn-out procedures and requests for attorney’s fees.

Summary-Judgment Rulings

Summary judgment is a decision entered without a trial when there is no genuine dispute over a fact that could affect the result and the moving party is entitled to judgment under the law. Campbell argued that a February 4, 2019 calculation prepared by William Brenner became the final first earn-out calculation. The court disagreed, finding that Brenner did not prepare or deliver it on Plant Health’s behalf under the agreement. The calculation therefore did not trigger the review period, become final and binding, or create a payment obligation. Campbell’s cross-motion for summary judgment on the first earn-out claims against Plant Health and Douglas was DENIED.

The court also found that Plant Health’s later first earn-out statement and its 2019 and 2020 second earn-out statements were disputed and had not been resolved through the contract’s required process. Because the disputed amounts had not become final and binding, the court held that no payment obligation had yet arisen. Defendants’ motion was GRANTED as to the First Claim for Relief in Campbell’s First Action, the First Claim for Relief in Campbell’s Second Action, and the Second Claim for Relief in Campbell’s Second Action to the extent it was based on Douglas’s failure to pay the second earn-out payment. The motion was also GRANTED as to the PHI Action’s First Counterclaim to the extent it was based only on failure to pay the first and second earn-out payments.

The court did not decide whether Plant Health failed to provide reasonable access to books and records or failed to follow the required process for resolving objections. It found the record insufficient to determine those alleged breaches and noted that the agreement did not specify a consequence for those failures. Defendants’ motion was DENIED as to the PHI Action’s First Counterclaim to the extent it alleged failures to provide access to records or follow the objection-resolution procedure. It was also DENIED as to the Second Claim for Relief in Campbell’s Second Action to the extent that claim alleged failures involving access to records, Plant Health’s failure to pay the second earn-out payment, or the objection-resolution procedure.

Defendants’ motion for summary judgment on attorney’s-fee claims was DENIED. The court found that deciding entitlement to fees would be premature while the remaining breach allegations were unresolved. The court also noted that Campbell’s Second Claim for Relief in the Second Action remained pending against Plant Health because Plant Health had not moved for summary judgment on that claim.

Disposition and Remaining Proceedings

The court held that Defendants’ motion for summary judgment was GRANTED in part and DENIED in part, and that Campbell’s cross-motion was DENIED. The court consolidated Campbell’s Second Action with the Consolidated Action for purposes of trial, directed that future filings generally be made under docket number 19-CV-03017, and ordered the parties to meet and confer about simplifying the remaining claims and preparing pretrial materials. Judge Philip M. Halpern scheduled a pretrial conference for June 17, 2024.