Middle District of Tennessee Dismisses Claims Against Lender for Refusal to Consent to Sale by Borrower | King and Spalding
[author: Frank DeBorde]
On May 9, 2022, the U.S. District Court for the Intermediate District of Tennessee dismissed a prospective buyer’s claims against the prospective seller’s lender arising from the lender’s refusal to consent to the sale. Ruby Tuesday, Inc. has agreed to sell its lease on a hotel property to BNA Associates, subject to the approval of Ruby Tuesday’s secured lender, Goldman Sachs Specialty Lending Group, LP, as required by the loan documents. Goldman Sachs did not consent to the sale and instead attempted, unsuccessfully, to acquire ownership of the hotel itself from Ruby Tuesday’s owner. Ruby Tuesday terminated its sale agreement for failing to obtain consent from Goldman Sachs, and BNA then sued Goldman Sachs for willful interference with business relations and misappropriation of a trade secret.
Regarding the allegation of intentional interference, the court found that BNA had not alleged facts which, if true, would indicate that Goldman Sachs had used “inappropriate means” to bring about the termination of the contract. of sale. Under Tennessee law, the court held that improper means giving rise to liability are those that “are unlawful, independently tortious, or violate an established standard of a trade or profession.” Goldman Sachs’ refusal to consent to the sale, the court found, was merely a decision not to deal with BNA and thereby preserve the status quo, a decision fully within “reseller privilege.” Tennessee’s acknowledgment of this freedom, which encompasses the refusal to deal, effectively dismissed the BNA’s claim that Goldman Sachs employed improper means by violating an alleged established standard of the lending profession.
The court also dismissed BNA’s federal and state trade secret claims in which BNA claimed that the amount BNA intended to pay for the hotel was a trade secret that Goldman misappropriated. The court found that the purchase price was not considered a trade secret because the sale agreement did not prevent Ruby Tuesday from sharing the proposed purchase price and did not contain any confidentiality provision preventing Ruby Tuesday from share confidential information.
The case is BNA Associates, LLC v Goldman Sachs Specialty Lending Group, LP, no. 3:21-cv-481 (MD Tenn. 2022 May 9). BNA Associates is represented by Bulso PLC. Goldman Sachs is represented by Cleary, Gottlieb, Steen & Hamilton and K&L Gates LLP. The order is available here.