Nethery v. CapitalSouth Partners Fund II, L.P.Annotate this Case
Gregory Nethery appealed a Circuit Court’s decision to grant a motion to compel arbitration filed by Defendants CapitalSouth Partners, Harbert Mezzanine Partners, and On-Site Fuel Services (collectively, “Defendants”). Nethery retained a minority thirty-percent ownership interest in OSFS through his stock interest in OSFH. CapitalSouth and Harbert each held the remaining interest. In October 2016, Nethery filed suit in circuit court against CapitalSouth and Harbert, claiming breach of fiduciary duty, corporate freeze out, unjust enrichment, constructive trust, civil conspiracy, and negligence and mismanagement. As he claimed in the circuit court, Nethery argued on appeal that, based upon a choice-of-law provision contained in the Stockholders Agreement, Delaware law governed interpretation of the agreement. Nethery contended that under Delaware law, the arbitration clause did not apply because Nethery’s complaint did not allege breach of the Stockholders Agreement, nor did Nethery seek legal relief under the agreement. Rather, Nethery asserted only noncontractual state-law claims and his legal claims existed independently from the contract. Unpersuaded, the Mississippi Supreme Court found the circuit court correctly found Nethery’s claims were subject to the agreement’s arbitration provision.