Primary Investments, LLC v. Wee Tender Care III, Inc.

Marguerite O’Brien, Kelli O’Brien, and Erin O’Brien (defendants) were the members and managers of Primary Prep Academy, LLC (Primary) (defendant), which was operated by Wee Tender Care III, Inc. (Wee) (plaintiff). In 2008, Martin Nixon and Stephenie Nixon of N&N Holdings, LLC (NNH) (plaintiff) told the O’Briens that the Nixons were interested in buying Primary. An asset-purchase agreement (APA) was signed between Primary as the seller and NNH as the buyer. Marguerite signed the APA on behalf of Primary, and the Nixons signed on behalf of NNH. Although Marguerite signed the APA on behalf of Primary, the O’Briens were not individually named in the APA and did not individually execute the APA. The APA contained a noncompetition clause providing that “neither [Primary] nor its agents” would solicit any clients for a one-year period or open a childcare facility within a 10-mile radius of NNH. In 2010, the O’Briens formed a new entity, East Cobb Children’s Academy, LLC (East Cobb) (defendant), and opened a new childcare facility within a 10-mile radius of NNH. NNH and Wee brought suit against Primary and the O’Briens, alleging that the O’Briens were personally bound to the noncompetition clause in the APA and had violated the noncompetition clause by opening East Cobb. The trial court granted partial summary judgment to the plaintiffs. The defendants appealed.